Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD 1388 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT FROM THE SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY TRUST FUND IN THE AMOUNT OF SWEDISH KRONER 70.6 MILLION (US$8.3 MILLION EQUIVALENT) TO THE REPUBLIC OF KENYA FOR THE KENYA INFORMAL SETTLEMENTS IMPROVEMENT PROJECT May 7, 2015 Social, Urban, Rural and Resilience Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. i Currency Equivalents (Exchange Rate Effective April 17, 2015) Currency Unit = Kenya Shillings Ksh 93.35 = US$1 Swedish Kroner 8.46 = US$1 Government Fiscal Year: July 1–June 30 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD Agence Française de Développement CPS Country Partnership Strategy CTAT Central Technical Assistance Team EA Environmental assessment ESIA Environment and social impact assessment ESMF Environmental and Social Management Framework IBRD International Bank for Reconstruction and Development IDA International Development Association ISR Implementation Status and Results Report KISIP Kenya Informal Settlements Improvement Project KMP Kenya Municipal Program MLHUD Ministry of Land, Housing and Urban Development O&M Operations and Maintenance PAD Project Appraisal Document PCT Project Coordination Team RAP Resettlement action plan RPF Resettlement Policy Framework Sida Swedish International Development Cooperation Agency Vice President: Makhtar Diop Country Director: Diarietou Gaye Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Acting Practice Manager: Sameh Naguib Wahba Task Team Leader: Abebaw Alemayehu ii REPUBLIC OF KENYA ADDITIONAL FINANCING FOR THE KENYA INFORMAL SETTLEMENTS IMPROVEMENT PROJECT CONTENTS Project Paper Data Sheet ............................................................................................... v Project Paper I. Introduction ...................................................................................................... 1 II. Background and Rationale for Additional Financing ...................................... 1 III. Summary of Proposed Changes ....................................................................... 6 IV. Appraisal Summary ....................................................................................... 12 V. World Bank Grievance Redress ..................................................................... 13 Tables Table 1: KISIP IDA and Sida financing by component (US$ million) ............................. 5 Annexes Annex 1: Results Framework and Monitoring................................................................. 14 iii ADDITIONAL FINANCING DATA SHEET Kenya Kenya Informal Settlements Improvement Projects - Additional Financing (P144966) AFRICA . Basic Information – Parent Parent Project ID: P113542 Original EA Category: B - Partial Assessment Current Closing Date: 30-Jun-2016 Basic Information – Additional Financing (AF) Additional Financing Project ID: P144966 Scale Up Type (from AUS): Regional Vice President: Makhtar Diop Proposed EA Category: Expected Effectiveness Country Director: Diarietou Gaye 29-Jul-2015 Date: Senior Global Practice Ede Jorge Ijjasz-Vasquez Expected Closing Date: 30-Jun-2016 Director: Practice Sameh Naguib Wahba Report No: PAD1388 Manager/Manager: Team Leader(s): Abebaw Alemayehu PHAppA uthTbl Approval Authority Approval Authority Board/AOB Decision Please explain. The PDO has changed. Borrower Organization Name Contact Title Telephone Email Principal +254 020 National Treasury Kamau Thugge ps@treasury.go.ke Secretary 2252299 Project Financing Data–Parent ( Kenya Informal Settlements Improvement Project (KISIP)- P113542 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P113542 IDA-48730 Effective 24-Mar-2011 23-May-2011 30-Jun-2011 30-Jun-2016 30-Jun-2016 Disbursements Can- Dis- Un- % Project Ln/Cr/TF Status Currency Original Revised celled bursed disbursed Disbursed iv Effec- P113542 IDA-48730 XDR 65.00 65.00 0.00 25.35 39.65 39.00 tive Project Financing Data –Additional Financing Kenya Informal Settlements Improvement Projects - Additional Financing (P144966 ) [ ] Loan [X] Grant [ ] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Project Cost: 8.30 Total Bank Financing: 0.00 Financing Gap: 0.00 Financing Source – Additional Financing (AF) Amount Borrower 0.00 Single Purpose Trust Fund 8.30 Total 8.30 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No Explanation Team Composition Bank Staff Name Role Title Specialization Unit Abebaw Alemayehu Team Leader Senior Urban GSURR (ADM Development Responsible) Specialist Efrem Fitwi Procurement Senior Procurement GGODR Specialist Specialist Josphine Kabura Financial Sr Financial GGODR Kamau Management Management Specialist Specialist Alexandra C. Sperling Counsel Legal Analyst LEGAM Dean A. Cira Team Member Program Leader AFCE4 Elizabeth Wairimu Team Member Team Assistant AFCE2 Karuoya James N. Karuiru Team Member Consultant GSURR Roderick M. Babijes Team Member Program Assistant GSURR v Sheila W. Kamunyori Team Member E T Consultant GSURR Svetlana Khvostova Environmental Natural Resources GENDR Specialist Mgmt. Spec. Wendy Schreiber Team member Senior Economist GSURR Ayres Yasmin Tayyab Safeguards Senior Social GSURR Specialist Development Specialist Yohannes Fisseha Team Member E T Consultant GWADR Extended Team Name Title Location Locations Country First Administrative Location Planned Actual Comments Division Kenya Thika Kenya Nyeri Kenya Nakuru Kenya Naivasha Kenya Nairobi Kenya Mombasa Kenya Malindi Kenya Machakos Kenya Kitui Kenya Kisumu Kenya Kericho Kenya Kakamega Kenya Garissa Kenya Embu Kenya Eldoret Institutional Data Parent ( Kenya Informal Settlements Improvement Project (KISIP)-P113542 ) Practice Area (Lead) Social, Urban, Rural and Resilience Global Practice Contributing Practice Areas vi Cross Cutting Topics [ ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Water, sanitation and flood protection General water, 40 sanitation and flood protection sector Public Administration, Law, and Sub-national 30 Justice government administration Transportation General transportation 30 sector Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Urban development Urban services and housing for the poor 60 Urban development Municipal governance and institution 20 building Urban development City-wide Infrastructure and Service 20 Delivery Total 100 Additional Financing Kenya Informal Settlements Improvement Projects - Additional Financing ( P144966 ) Practice Area (Lead) Social, Urban, Rural and Resilience Global Practice Contributing Practice Areas Cross Cutting Topics [ ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender vii [ ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Water, sanitation and flood protection General water, 40 sanitation and flood protection sector Public Administration, Law, and Sub-national 30 Justice government administration Transportation General transportation 30 sector Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Urban development Urban services and housing for the poor 60 Urban development Municipal governance and institution 20 building Urban development City-wide Infrastructure and Service 20 Delivery Total 100 Consultants (Will be disclosed in the Monthly Operational Summary) Consultants Required? Consulting services to be determined viii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an Additional Financing in the amount of SEK 70.6 million (US$8.3 million equivalent) to the Republic of Kenya to scale up and restructure the Kenya Informal Settlements Improvement Project (P113542, Credit 4873-KE). The Additional Financing will be provided by the Swedish International Development Agency (Sida) in the form of a grant to be managed by the World Bank through a trust fund, which comes with full cost recovery in accordance with Bank policy. The Ministry of Finance requested the Additional Financing from the Sida in an Agreement dated December 9, 2013. 2. The Additional Financing will scale up the project’s impact and development effectiveness by upgrading an additional four informal settlements in the urban centers participating in the project. The Additional Financing will also result in a level 1 restructuring of the project, which will include (a) changes in the project development objective to reflect the government’s new institutional structure; (b) expansion of the scope of the project and revisions to the financing plan to account for Sida’s funds; (c) changes in the implementation arrangements to reflect changes in the institutional set-up of government that took place following the elections of March 4, 2013; (d) changes in activities; (e) revisions in the disbursement arrangements, (f) updating of the procurement implementation arrangements; and (g) revisions of the results indicators to reflect the changes in the project activities and the targets to account for scaling up of interventions. The proposed changes to the original project will not affect the safeguard category, the new activities proposed under the Additional Financing will continue to be rated as category B, and no additional safeguard policies will be triggered. 3. The Agence Française de Développement (AFD) has agreed to provide co-financing to the project of US$45 million disbursed directly to the Government of Kenya and has asked the Bank to provide overall implementation support, including fiduciary and safeguards, for the expanded project activities. For this purpose, a Bank-AFD co-financing agreement, including a reimbursable advisory services agreement, has been approved. This Additional Financing Project Paper covers only the funds from Sida, since those are being managed directly by the Bank through a trust fund. The Bank team will prepare a restructuring paper to reflect any administrative changes to the project (for example, disbursement arrangements), once AFD has signed its financing agreement with the Government of Kenya. II. Background and Rationale for Additional Financing Original Project Background Country and sector context 4. The urban transition is well under way in Kenya and urbanization is projected to continue at a rapid pace. In 2009 about 39 percent of the Kenyan population was residing in urban areas and the total urban population was estimated to be about 15.2 million people. 1 Kenya’s five largest urban areas (Nairobi, Mombasa, Kisumu, Nakuru, and Eldoret) account for approximately 1 Kenya National Bureau of Statistics. 2010. “2009 Population and Housing Census Results.” 1 34 percent of the urban population. It is estimated that urban areas will account for 54 percent of the population or 23.6 million people by 2030. 2 The urban transition in Kenya will play an important role in determining the country’s growth prospects and social stability, which remains fragile since the 2008 post-election violence. 5. Acknowledging the need to directly tackle the problem of poor living conditions in slums, the Government of Kenya has been implementing a national slum upgrading program since 2005. A new constitution that took effect in March 2013 provides for decentralization of resources and responsibilities to subnational governments and strengthens claims of citizens for access to basic services, including adequate housing and water and sanitation services. The constitution explicitly incorporates several principles elaborated in the National Land Policy of 2009, including equitable access to land rights and security of land rights. The government has requested support from development partners to facilitate a systematic scale-up of slum upgrading, one that can reach all slums in the medium to long term. 6. In response, the World Bank, Sida, and the AFD have been working with the government to jointly design and cofinance the Kenya Informal Settlements Improvement Project (KISIP). KISIP focuses on improving living conditions in existing informal settlements or slums by investing in infrastructure and strengthening tenure security. It is also supporting the government in planning for future urban growth to help prevent the emergence of new slums. Project background 7. The project’s estimated cost as presented in the Project Appraisal Document of the parent project was US$110.00 million, of which IDA would finance around US$100.0 million. KISIP was approved by the Board on March 24, 2011. The project became effective on June 30, 2011. Despite initial delays arising from the post-constitutional reform transition and reorganization, as of April 17, 2015, the project had disbursed US$35 million of the IDA credit. Another US$47 million has been committed. Thus a total of about 82 percent of the IDA credit has been disbursed or committed. Disbursements are expected to pick up significantly in the coming months, as a total of 13 works contracts under component 3 valued at US$45 million have recently been awarded for upgrading of infrastructure in 19 settlements in six towns. 8. The project comprises four components. These are: • Component 1: Strengthening institutions and project management. This component will support institutional strengthening and capacity building of the Ministry of Land, Housing, and Urban Development, selected land institutions, and the selected counties. It will also finance the management activities associated with program implementation and establishment of a monitoring and evaluation system. • Component 2: Enhancing tenure security. This component will support systematization and scale-up of ongoing efforts to strengthen settlement planning and tenure security in urban informal settlements. 2 Government of Kenya. 2008. “Harmonious Urbanization: The challenge of balanced territorial development.” Kenya Country Report. Fourth session of World Urban Forum, Nanjing, China, November 3–6, 2008. 2 • Component 3: Investing in infrastructure and service delivery. This component will support investment in settlement infrastructure, and, where necessary, extension of trunk infrastructure to settlements. It will also support investment in basic infrastructure in select areas of urban expansion. • Component 4: Planning for urban growth. This component will support planning and development of options that facilitate the delivery of infrastructure services, land, and housing for future population growth. Performance of the project 9. The project has been consistently rated as satisfactory or moderately satisfactory for project development objective and for implementation progress. The government is committed to the project, and has complied with the covenants specified in the Financing Agreement. The project team at the Ministry of Land, Housing, and Urban Development is fully staffed and key staff have been trained. Compliance with environmental and social safeguards has been satisfactory. There are no outstanding or unresolved fiduciary safeguard problems. An assessment of the project’s financial management arrangements, including compliance with the legal covenants related to financial management, found that they provide reasonable assurance that the project funds are used for the intended purposes. The project account has been audited for the fiscal years ending June 30, 2011, 2012, 2013, and 2014, and an unqualified report has been issued for each year. Recent Implementation Status and Results (ISRs) rate financial management as satisfactory. Only procurement is rated moderately unsatisfactory, due to slow progress with procurement in the first three years of project implementation. An action plan has been agreed with the Client and performance in procurement has been improving. 10. Currently, civil works have begun in 19 settlements in six urban centers, including Eldoret, Machakos, Mombasa Nairobi, Naivasha, and Nakuru. Settlement upgrading plans have been prepared for 23 settlements in eight urban centers, including Kilifi/Malindi, Mombasa, Kitui, Kericho, Kisumu, Embu, Nakuru, and Eldoret. Works are expected to start in many of these settlements by September 2015. In anticipation of the Additional Financing from Sida and AFD, the Client is starting preparation of upgrading plans for additional settlements. In addition to civil works, KISIP has undertaken preparation of settlement-level development plans, surveys, registry index maps, and letters of allotment/titles that has strengthened security of tenure for some 2,015 people. Rationale for Additional Financing 11. The project’s estimated cost at the time of Board presentation was US$110.00 million, of which IDA was financing around US$100.0 million. However, the project was designed in the expectation that Additional Financing would become available from two development partners, Sida and the AFD. Activities will easily be scaled up to reach more informal settlements than would have been possible with the original financing. The Additional Financing will thus improve living conditions for more people than would have been possible with just the parent project. 3 12. The Project Appraisal Document (PAD) envisaged Additional Financing from Sida of US$10 million and of US$45 million from the AFD. Both Sida and the AFD are now ready to co- finance the project, each under different arrangements. This Additional Financing Project Paper covers only the funds from Sida, which have already been disbursed to the trust fund. The Bank team will prepare a restructuring paper to reflect changes in disbursement arrangements once AFD has signed its financing agreement with the Government of Kenya. 13. Sida has established a trust fund at the World Bank for a total of SEK 70.6 million (US$8.3 million equivalent) (TF number 72006). The Bank team will manage the funds for the project, following all Bank policies and procedures. 14. The AFD will not establish a trust fund at the Bank. Instead, it will enter into a credit facility agreement with the Government of Kenya, and will retain responsibility for the disbursements and financial management of its funds for the project. AFD and the World Bank signed a reimbursable advisory services agreement on November 17, 2014. Under this arrangement, the Bank will supervise all fiduciary and safeguard aspects of implementation of KISIP on AFD’s behalf. 15. Funds from Sida will cofinance all four project components in proportion to the contributions of IDA and Sida, starting with the date of approval of the Additional Financing. Financing from Sida will not take priority over IDA financing. The Sida KISIP Co-financing trust fund will close on the same date as the IDA-financed project, including any extensions of the closing date. 16. The scale-up of activities can be easily accommodated in the context of the ongoing project, as implementation will rely on the Recipient’s existing capacity and existing project arrangements. Activities would be completed within the closing date of the original project of June 30, 2016. The economic justifications of the additional activities remain the same as in the original project. The additional activities will not raise the environmental category of the original project. Several changes to the project’s outcome targets are proposed to reflect the investments to be undertaken with the Additional Financing. Consistency with OP/BP 10.00 17. The proposed Additional Financing is fully consistent with OP/BP 10.00. The project’s development objectives are to improve living conditions and strengthen security of tenure in informal settlements in selected urban centers in selected counties in Kenya. These will be achieved by enhancing security of tenure and improving infrastructure based on plans developed in consultation with the community. As indicated above, implementation of the project has been in the satisfactory range, as shown by ratings of moderately satisfactory or better in the ISR over the most recent 12 months, including those for implementation progress and development objectives. The outputs/outcomes and results recorded in the most recent ISR report for the project reveal that its impact thus far has been consistent with the expectations set out in the PAD, although with some delays. 3 The project is in substantial compliance with the key loan covenants, including audit and financial management reporting requirements. 3 No results were envisaged in the PAD until the end of year 2 of project implementation. 4 Partnership arrangements 18. The Bank has developed strong partnerships with two development partners, Sida and the AFD. The Bank, Sida, and the AFD will maintain their strong collaboration during the remaining years of project implementation. Sida and AFD will participate in joint implementation support missions. The Bank will seek their comments on draft terms of reference and other key documents relating to activities proposed for financing under the project. The Bank will also provide to Sida and AFD the project’s annual audit report and the Bank’s Management Letter prepared in response to the issues raised therein. The Ministry of Land, Housing, and Urban Development will share with Sida and AFD the project’s quarterly progress reports and other key documents. Table 1: KISIP IDA and Sida financing by component (US$ million) Component Original Revised Sida Total IDA Sida IDA IDA Additional Financing Percentage Percentage Financing Financing Financing Financing Financing 1. Strengthening 10.0 10.0 0.83 10.83 92.0 8.0 institutions and program management 2. Enhancing tenure 8.0 8.0 0.66 8.66 92.0 8.0 security 3. Investing in 70.3 78.0 6.48 84.48 92.0 8.0 infrastructure and delivery of services 4. Planning for urban 4.0 4.0 0.33 4.33 92.0 8.0 growth Unallocated 7.7 0.0 0.0 0.0 Total financing required 100.0 100.0 8.30 108.30 Bank’s country partnership strategy 19. The CPS for Kenya, discussed by the World Bank’s Board of Directors on June 5, 2014, focuses support on three strategic areas of engagement: (a) competitiveness and sustainability— growth to eradicate poverty, (b) protection and potential—delivering shared prosperity, and (c) consistency and equity—delivering a devolution dividend. KISIP is contributing to promoting competitiveness and growth by helping to improve living conditions for the many residents who live in informal settlements in urban Kenya. More livable cities are also more attractive to the investors who create jobs. KISIP is also contributing to delivering shared prosperity by upgrading infrastructure and services in the most underserved neighborhoods of cities, thereby helping to directly improve the living conditions of Kenya’s poorest and most vulnerable citizens. The Bank’s 2009 Poverty and Inequality Assessment showed that access to infrastructure assists people to move out of poverty, because it allows households to access opportunities for income- generating activities. 4 KISIP contributes to the CPS’s equity objective by supporting the formal recognition of the rights of residents of informal settlements to occupy the land and homes in 4 World Bank. 2009. “Poverty and Inequality Assessment.” Poverty and Economic Management Unit, Africa Region, Report 44190-KE, April. 5 which they live, thus helping to reduce the vulnerability of residents to displacement without warning or compensation, a not uncommon occurrence in Kenya today. 20. The proposed additional financing is consistent with Kenya’s Vision 2030 and its second Medium-Term Plan 2013–2017, which presents the first second-year program to implement the Vision 2030. The 2030 goal for urban areas is to achieve “a well-housed population living in an environmentally-secure urban environment.” This will be achieved by bringing basic infrastructure and services—roads, street lights, water and sanitation facilities, stormwater drains, footpaths, and others—to informal settlements. By strengthening tenure security in informal settlements, KISIP will also foster private investment in housing and in businesses. The government’s Medium-Term Plan 2013–2017 also specifies improving urban informal settlements as a priority. One of its flagship projects is installation of physical and social infrastructure in slums and informal settlements in selected urban areas to make them formal settlements, permit construction of permanent houses, and attract private investment. The proposed Additional Financing for KISIP will directly contribute to this goal. III. Summary of Proposed Changes The Additional Financing will result in a level 1 restructuring of the project, which will include (a) changes in the project development objective to reflect the government’s new institutional structure, (b) expansion of the scope of the project and revision of the financing plan to account for Sida’s funds, (c) changes in the implementation arrangements to reflect changes in the institutional set-up of government that took place following the elections of March 4, 2013, (d) changes in activities, (e) revisions in the disbursement arrangements, (f) updating of the procurement implementation arrangements, and (g) revisions of the results indicators to reflect the changes in the project activities and the targets to account for scaling up of interventions. No changes in the project’s design, components, or safeguards category are envisaged. The proposed changes reflect the findings and recommendations of the midterm review which concluded in August 2014 Change in Implementing Agency Yes [ X ] No [ ] Change in Project's Development Objectives Yes [ X ] No [ ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ X ] No [ ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] 6 Change to Components and Cost Yes [ ] No [ X ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [X] No [ ] Development Objective/Results PHHHDO Project’s Development Objectives Original PDO The overall project development objective of KISIP is to improve living conditions in informal settlements in selected municipalities in Kenya. Change in Project's Development Objectives PHHCPDO Explanation: A change to the PDO has been agreed with the Ministry of Land, Housing and Urban Development. This is intended to align the PDO with the new government structure. Because the former municipalities no longer exist, and their functions and resources have been taken over by new county administrations, the statement “in selected municipalities in Kenya” has been replaced with “selected urban centers in selected counties.” Proposed New PDO - Additional Financing (AF) To improve living conditions in informal settlements in selected urban centers in selected counties in Kenya. Change in Results Framework PHHCRF Explanation: The results framework has been revised. Some indicators have been dropped and new ones added to reflect changes in project activities. Relevant outcome targets have been adjusted upwards to reflect the expected increased impact of the project due to additional investments in informal settlements and further strengthening of the institutions involved. The revised results framework, including the rationale for the changes, is presented in Annex 1 of the Project Paper. Compliance l Covenants - Additional Financing ( Kenya Informal Settlements Improvement Projects - Additional financing - P144966 ) Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference Conditions Risk PHHHRISKS Risk Category Rating (H, S, M, L) 1. Political and Governance Substantial 7 2. Macroeconomic Moderate 3. Sector Strategies and Policies High 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Sustainability High 6. Fiduciary Substantial 7. Environment and Social Moderate 8. Stakeholders Moderate 9. Other OVERALL High Finance PHHHFin Loan Closing Date - Additional Financing ( Kenya Informal Settlements Improvement Projects - Additional financing - P144966 ) Source of Funds Proposed Additional Financing Loan Closing Date SWEDEN: Swedish Intl. Dev. Cooperation 30-Jun-2016 Agency (Sida) Change in Disbursement Arrangements PHHCDA Explanation: The disbursement arrangements have changed to reflect the funds of the Sida KISIP Co-financing Trust Fund. Revised Disbursement Schedule: IDA* Category Amount of the Percentage of Expenditures to be Financing Financed Allocated (inclusive of Taxes) (expressed in SDR) (1) Goods (including vehicles), and 12,800,000 89% consultants’ services for Parts A, B and D of the Project, and training costs for all parts of the Project (2) Goods, works, consultants’ services, 50,500,000 89% for Part C of the Project (3) Operating costs 1,700,000 89% TOTAL AMOUNT 65,000,000 * This table reflects the percentage of each expenditure item that IDA will finance. Sida will finance 11 percent of each expenditure item. The government is responsible for financing implementation of the resettlement action plans and other expenditures that neither IDA nor Sida will finance. 8 Change in Disbursement (including all sources of Financing)PHHCDE Estimates Explanation: The disbursement forecast reflects the addition of the funds from Sida KISIP Co-financing Trust Fund. Expected Disbursements (in USD Million)(including all Sources of Financing) Fiscal Year 2012 2013 2014 2015 2016 Annual 9.50 12.40 20.00 30.00 36.40 Cumulative 9.50 21.90 41.90 71.90 108.30 Allocations - Additional Financing ( Kenya Informal Settlements Improvement Projects - Additional financing - P144966 ) Disbursement %(Type Source of Category of Allocation Currency Total) Fund Expenditure Proposed Proposed SPTF USD 8,300,000.00 100.00 Total: 8,300,000.00 Other Change(s) PHHHOthC Change in Implementing Agency PHHCIAg Explanation: The project implementation arrangements will change in two ways. First, the implementing agency will change from the Ministry of Housing to the Ministry of Land, Housing, and Urban Development, in line with the constitutional changes following the 2013 elections. Second, Municipal Agreements are no longer envisaged, because the former municipalities have ceased to exist. Newly-created county governments have taken responsibility for the functions and revenues of the previous municipal governments. The ministry may decide to enter into County Agreements at a later date, but this is not envisaged at this time. The Operations Manual, which covers financial management and procurement, will be updated to reflect the changes in the project as reflected in the Additional Financing Project Paper. PHImplemeDel Implementing Agency Name Type Action Ministry of Land, Housing, and Urban Implementing Agency New Development Change in Procurement PHHCProc Explanation: Bank guidelines that will apply under the KISIP Additional Financing include Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, dated October 15, 2006 and revised in January 2011. Procurement associated with the project activities supported through the Additional Financing will be carried out in accordance with the World Bank’s “Guidelines for Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers,” dated January 2011 and revised in July 2014, and “Guidelines for Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank 9 Borrowers,” dated January 2011 and revised in July 2014, and the provisions stipulated in the Financing Agreement. Change in Activities Explanation: Several activities originally planned for components 1 and 4 will be dropped, due to the restructuring of government and a lack of data. Details are presented in the table below. Activities to be dropped Activities to be dropped Rationale Component 1: Strengthening institutions and project management Institutional analysis of the Ministry of The MoH and the MoL have been merged with a Housing (MoH) and of the Ministry of Lands new ministry, the MLHUD, which has undergone a (MoL). restructuring under government finance. Establishment of housing quality index. No data are available for constructing the index. Identification and implementation of measures This is underway with government finance. to improve the speed and efficiency of mapping, planning, survey, and land registration. Development of city specific slum-upgrading The counties, rather than the ministry, now have the investment plans. mandate for this activity. Instead, the ministry will support counties in developing strategies and plans for providing affordable housing. This activity has been added to component 4, below. Component 4: Planning for urban growth Carrying out a systematic study of the main Several studies have already been carried out that impediments to delivery of affordable housing clearly identify the impediments (for example, the and serviced land. World Bank Urbanization review) to delivery of affordable housing and serviced land. The focus has shifted to finding practical solutions to address them. Analysis of the financing available for low- Such a study is underway under other sources of income housing, and development of strategies finance. to improve access to financing. Activities to be added. Proposed new activities by component, along with the rationale for their inclusion, are presented in the table below. Proposed new activities Activities to be added Rationale Component 1: Strengthening institutions and project management Undertake organizational and institutional A capacity needs assessment of the new institutions capacity gap analysis on matters related to created following the elections will help to define the settlement upgrading at MLHUD, county training needs to be supported under KISIP. governments, and the National Lands Commission (NLC). 10 Undertake gender mainstreaming analysis in The Central Technical Assistance Team (CTAT) KISIP project areas, and help build capacity includes a gender specialist, who will lead activities at all levels to ensure that KISIP addresses related to gender mainstreaming. the needs of women. Component 2: Enhancing tenure security Review and update the 2012 land tenure Since the land tenure regularization guidelines were regularization guidelines, with the aim of prepared, new land legislation has come into effect. aligning them with the new land legislation. The guidelines need to be updated in line with the new legislation. Prepare base maps of settlements to benefit Base maps are required prior to surveying. The lack from the planning and surveying. of base maps has slowed the survey process under the planning and surveying consultancy. Component 3: Investing in infrastructure services delivery Expand the menu of eligible activities to The county administrations now have the mandate to include expansion of primary schools, provide such educational and health facilities. In line clinics, and facilities for early childhood with the overall project design, the decision to invest education.* in such facilities will be on the basis of demand from communities, as reflected in the participatory settlement upgrading plans. Invest in basic urban infrastructure in areas Investing in urban expansion areas is critical to of urban expansion.* prevent the emergence of new informal settlements. The Bank will support investment in areas being developed for affordable housing. The areas will be agreed with the MLHUD, the county administrations, and the Bank. Component 4: Planning for urban growth Undertake a survey of housing conditions in This study reviewed the condition of the housing four urban centers, and use them to inform stock of low and moderate income households in four policies and strategies for increasing the urban centers, estimated how much low and moderate supply of affordable housing. income households can afford to spend on housing, reviewed existing sources of housing finance, and recommended policies and strategies to improve the supply of affordable housing. The next step is to publish the study report and disseminate its findings to facilitate policy dialogue. Undertaking a situational analysis of This study provided detailed information on the informal settlements in 15 urban centers and characteristics of some 400 informal settlements, supporting high-level dialogue and consensus including size, population, access to basic services, building on a national slum upgrading policy. residents’ sources of income, primary service providers, and an assessment of past upgrading strategies and approaches. The next step is to publish the study report and disseminate its findings to facilitate policy dialogue inform further studies on specific thematic areas. Prepare a planning manual for informal This will allow for planning of informal settlements settlements.* to take account of the realities on the ground. The manual will address county-specific issues, based on demand. 11 Host a workshop with international experts Such a workshop would provide ideas and contacts to and Kenyan stakeholders to share experience promote a focus on planning and affordable housing on planning and affordable housing for urban for urban growth. growth. Support counties in developing strategies and Some counties have requested such assistance from plans for providing affordable housing. KISIP, and this activity is within the scope of the project. * Items with an asterix will be undertaken only if adequate funds are available. Urban centers eligible for participation in KISIP. Based on a direct request from several county administrations, new urban centers will become eligible for KISIP support and will include Mumias (Kakamega county), Mavoko (also known as Athi River) (Machakos county), and Kilifi (Kilifi county). As long as the budget allows, additional requests may also be considered. IV. Appraisal Summary PHHHAppS Economic and Financial Analysis PHHASEFA Explanation: KISIP is financing infrastructure and services in settlements that are large, dense, and close to trunk infrastructure, where investments are expected to have high rates of return. Cost-benefit analyses of each proposed investment are being conducted as part of the feasibility studies of proposed resettlement upgrading plans. For small projects (for example below US$500,000) for which full feasibility studies are not required, the local governments will provide cost-effectiveness analyses, demonstrating that the proposed approach is the most cost effective way of achieving the desired outcome. Cost-benefit analyses are not required for the project’s institutional strengthening, enhancing tenure security, or planning for urban growth components. All investments will require funds for operations and maintenance. As part of their proposals for financing, counties or entities (such as Water Sector Boards) are providing estimates of costs for operations and maintenance over the expected life of the infrastructure project and plans of how the costs will be financed, including through user fees (water supply), or budgetary allocations (roads and street lighting). The operations and maintenance plans for infrastructure projects are generally being carried out as part of the feasibility studies. The planned expenditures for operations and maintenance costs of approved infrastructure projects will be reflected in the proposed budgets of the counties in which the urban centers are situated. Technical Analysis PHHASTA Explanation: The project approach builds on and strengthens systems and institutions already in place in Kenya. The design conforms to international standards (a) by investing in infrastructure only after tenure security has been or is being enhanced, (b) by recognizing a variety of approaches for strengthening tenure security, (c) by investing only on the basis of slum upgrading plans prepared by the community, and (d) by combining investment in existing informal settlements with support for increasing the supply of serviced land. 12 Social Analysis PHHASSA Explanation: During the preparation of KISIP, the client prepared environmental and social safeguards documents to address issues specific to the identified subprojects. These have been updated to reflect changes in the project, as reflected in this Project Paper. Implementation of environmental and social safeguards is satisfactory. The KISIP project coordination team (PCT) includes a safeguards specialist who oversees the management of the social and environmental impacts of the subprojects, guides the consultants preparing the (RAPs), and oversees their implementation. Environmental Analysis PHH Explanation: Implementation of the safeguards under KISIP has been satisfactory. KISIP is rated Environmental Assessment Category B, and the rating will not change as a result of the Additional Financing. The Additional Financing does not trigger additional safeguards policies. Risk PHHA Explanation: The risk of the original project is rated high. The Additional Financing is not expected to result in any additional risks that could jeopardize the achievement of the project’s development objectives. Although additional work will be required to deliver infrastructure and services to additional settlements, the project coordination team at the MLHUD and in urban centers/counties have gained substantial experience during the past three years with project implementation. With such experience, challenges are much easier to anticipate and to address. Funds are available under KISIP to further strengthen the capacity of the project coordination teams at both central and urban/county levels. V. World Bank Grievance Redress 21. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 13 Kenya Informal Settlements Improvement Project Annex 1: Results Framework and Monitoring Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed The Project’s development The new PDO is to improve living The Project’s development objective objective is to improve living conditions in informal settlements in has been revised to reflect the conditions in informal settlements selected urban centers in selected government set-up, with counties in selected municipalities in counties in Kenya. now serving as the entry point. The Kenya. overall objective of the Project remains unchanged, and KISIP will continue to focus on improving living conditions in informal settlements. PDO indicators Current (PAD) Proposed change* Direct project beneficiaries No change. Target increased. (number) 5 Female beneficiaries No change. People in urban areas provided No change. Target increased. with access to improved drainage infrastructure under the project. People in urban areas provided No change. Target increased. with access to all-season roads within a 500 meter range under the project. People in urban areas provided No change. Target increased. with access to improved water sources under the project. People benefiting from improved No change. Target increased. tenure security under component 2 of KISIP. Intermediate Results indicators for each component Current (PAD) Proposed change* Component 1 Policies, frameworks, and Policies, frameworks, and No change in substance; the name of guidelines for slum upgrading guidelines for slum upgrading the ministry adopting the policies has developed and adopted by the developed and adopted by the changed. MoH. MLHUD. 5 Direct beneficiaries are people or groups who directly derive benefits from the project intervention (for example, people living in informal settlements who benefit from improved water and sanitation services, or people who benefit from increased tenure security). People who benefit from more than one intervention (for example, people benefiting from both enhanced tenure security and from improved infrastructure) will be counted only once with respect to this indicator. 14 Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Housing quality index established. Dropped. No data available for constructing the index and the team has decided to focus on other priorities. Database with KISIP project data The indicator now has more detail The clarification will help in and inventory of informal on what the database will cover. assessing progress towards the goal. settlements in KISIP urban centers operational and accessible to the public. Component 2 Informal settlements benefiting No change. Underway. from enhanced tenure security under KISIP. GIS labs at the MLHUD upgraded No change. Complete. and operational. Component 3 Infrastructure sub-projects Dropped Infrastructure subprojects will be functioning one year after implemented in accordance with the completion and with operations bidding documents, which are and maintenance arrangement in reviewed. Construction quality will place. be reviewed during regular implementation support missions and monthly contractor meetings. County budgets reflect the capital and recurrent costs. Recurrent costs are minimal for the kind of infrastructure being prepared under KISIP. Moreover, assessing operations and maintenance arrangements one year after completion is difficult. This will be especially true for sub-projects that will end in the final year of the project. Therefore, this indicator is redundant to measuring the completion of works undertaken. People in settlements provided No change. Underway. with access to improved shared sanitation facilities under KISIP. New piped household water No change. Target increased. connections under KISIP New sewer connections No change. Target increased. constructed under the project Roads rehabilitated, non-rural No change. Target increased. New street or security lights put No change. Target reduced to reflect actual into place under KISIP investments. Drainage systems rehabilitated. Added to reflect a major investment category under KISIP. Footpaths rehabilitated. Added to reflect a major investment category under KISIP. 15 Revisions to the Results Framework Comments/ Rationale for Change PDO Current (PAD) Proposed Component 4 Study of constraints to delivery of Dropped. Such a study has been undertaken by serviced land completed. others. Preparation of city-specific Dropped. The counties, rather than the housing strategies and action plans. ministry, now have the mandate for this activity. The ministry will support counties in developing strategies and plans for providing affordable housing in urban areas, the nature of which is still being discussed. Situational analysis. Already achieved. Survey of housing conditions in Already achieved. four urban centers. Strategy and plans for providing This activity is planned. affordable housing for at least one urban center. * Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of Project target value 16 Kenya: Informal Settlements Improvement Project Additional Financing REVISED PROJECT RESULTS FRAMEWORK Project Kenya Informal Settlements Improvement Projects - Project Additional Financing Status: Name: Additional financing (P144966) Stage: Team Requesting Leader(s) Abebaw Alemayehu AFCE2 Created by: Roderick M. Babijes on 03-Mar-2015 Unit: : Product Responsible Recipient Executed Activities GSURR Modified by: Roderick M. Babijes on 09-Mar-2015 Line: Unit: Country: Kenya Approval FY: 2015 Lending Region: AFRICA Investment Project Finance Instrument: Parent Project Parent Project P113542 Kenya Informal Settlements Improvement Project (KISIP) (P113542) ID: Name: . Project Development Objectives Original Project Development Objective - Parent: The overall project development objective of KISIP is to improve living conditions in informal settlements in selected municipalities in Kenya. Proposed Project Development Objective - Additional Financing (AF): To improve living conditions in informal settlements in selected urban centers in selected counties in Kenya. Results Core sector indicators are considered: Yes Results reporting level: Project Level . Project Development Objective Indicators 17 Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target No Change People in urban areas provided Number Value 0.00 0.00 100000.00 with access to Improved Water Date 03-Apr-2012 31-Dec-2014 30-Jun-2016 Sources under the project Comment Revised People in urban areas provided Number Value 0.00 0.00 1000000.00 with access to all-season roads Date 03-Apr-2012 31-Dec-2014 30-Jun-2016 within a 500 meter range under the project Comment Revised People in informal settlements Number Value 0.00 0.00 1000000.00 provided with access to Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 improved drainage infrastructure under the project Comment Revised Direct project beneficiaries Number Value 0.00 2015.00 1070000.00 Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment No Change Female beneficiaries Percentage Value 0.00 1010.00 535000.00 Sub Type Supplemental Revised People benefiting from Number Value 0.00 2015.00 71000.00 improved tenure security under Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 component 2 of KISIP. Comment Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Planning manual for informal Yes/No Value No No Yes settlements Date 31-Dec-2014 30-Jun-2016 Comment 18 New Housing Survey Yes/No Value No Yes Yes Date 31-Dec-2014 30-Jun-2016 Comment New Situational Analysis Yes/No Value No Yes Yes Date 31-Dec-2014 30-Jun-2016 Comment New Footpaths Rehabilitated Kilometers Value 0.00 0.00 37.00 Date 31-Dec-2014 30-Jun-2016 Comment New Drainage System Rehabilitated Kilometers Value 0.00 0.00 40.00 Date 31-Dec-2014 30-Jun-2016 Comment Revised New Sewer connections Number Value 0.00 0.00 3000.00 constructed under the project Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment Sewerage works in Kayole Soweto commenced in Feb/March 2014 and expected to be completed in 18 months. Marked for Preparation of city-specific Number Value 0.00 0.00 5.00 Deletion housing strategies and action Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 plans. Comment To be dropped. Marked for Study of constraints to delivery Yes/No Value No No Yes Deletion of serviced land completed. Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 19 Comment To be dropped. Revised New street or security lights Number Value 0.00 0.00 40.00 put into place under KISIP. Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment Revised Roads rehabilitated, Non-rural Kilometers Value 0.00 0.00 1540.00 Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment No Change New piped household water Number Value 0.00 0.00 4000.00 connections that are resulting Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 from the project intervention Comment No Change Database with slum inventory Yes/No Value No No Yes operational and accessible to Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 the public. Comment Database operational and accessible to the public. Marked for Housing quality index Text Value 0.00 Housing quality Deletion established. index updated and published. Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment This indicator to be dropped. Revised Policies, frameworks, and Number Value 0.00 1.00 1.00 guidelines for slum upgrading Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 developed and adopted by the MLHUD Comment Activity completed. 20 Revised People in settlements provided Number Value 0.00 0.00 2250.00 with access to improved shared Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 sanitation facilities under KISIP. Comment Marked for Infrastructure sub-projects Percentage Value 0.00 0.00 90.00 Deletion functioning one year after Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 completion and with operations and maintenance arrangement Comment in place. No Change GIS lab at the ministry Yes/No Value No No Yes upgraded and operational. Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 Comment GIS lab operational Revised Informal settlements benefiting Number Value 0.00 13.00 64.00 from enhanced tenure security Date 25-Oct-2010 31-Dec-2014 30-Jun-2016 under KISIP. Comment (218 hectares) (2200 hectares) . 21