49917 Improving Municipal Management for Cities to Succeed An IEG Special Study IEG PUBLICATIONS Annual Review of Development Effectiveness 2008: Global Challenges Addressing the Challenges of Globalization: An Independent Evaluation of the World Bank's Approach to Global Programs Assessing World Bank Support for Trade, 1987­2004: An IEG Evaluation Books, Building, and Learning Outcomes: An Impact Evaluation of World Bank Support to Basic Education in Ghana Bridging Troubled Waters: Assessing the World Bank Water Resources Strategy China: An Evaluation of World Bank Assistance The CGIAR at 31: An Independent Meta-Evaluation of the Consultative Group on International Agricultural Research Debt Relief for the Poorest: An Evaluation Update of the HIPC Initiative A Decade of Action in Transport: An Evaluation of World Bank Assistance to the Transport Sector, 1995­2005 The Development Potential of Regional Programs: An Evaluation of World Bank Support of Multicountry Operations Development Results in Middle-Income Countries: An Evaluation of World Bank Support Doing Business: An Independent Evaluation--Taking the Measure of the World Bank­IFC Doing Business Indicators Engaging with Fragile States: An IEG Review of World Bank Support to Low-Income Countries Under Stress Environmental Sustainability: An Evaluation of World Bank Group Support Evaluating a Decade of World Bank Gender Policy: 1990­99 Evaluation of World Bank Assistance to Pacific Member Countries, 1992­2002 Extractive Industries and Sustainable Development: An Evaluation of World Bank Group Experience Financial Sector Assessment Program: IEG Review of the Joint World Bank and IMF Initiative From Schooling Access to Learning Outcomes: An Unfinished Agenda--An Evaluation of World Bank Support to Primary Education Hazards of Nature, Risks to Development: An IEG Evaluation of World Bank Assistance for Natural Disasters How to Build M&E Systems to Support Better Government IEG Review of World Bank Assistance for Financial Sector Reform An Impact Evaluation of India's Second and Third Andhra Pradesh Irrigation Projects: A Case of Poverty Reduction with Low Economic Returns Improving Investment Climates: An Evaluation of World Bank Group Assistance Improving the Lives of the Poor through Investment in Cities Improving the World Bank's Development Assistance: What Does Evaluation Show: Maintaining Momentum to 2015: An Impact Evaluation of Interventions to Improve Maternal and Child Health and Nutrition Outcomes in Bangladesh New Renewable Energy: A Review of the World Bank's Assistance Pakistan: An Evaluation of the World Bank's Assistance Pension Reform and the Development of Pension Systems: An Evaluation of World Bank Assistance Poland Country Assistance Review: Partnership in a Transition Economy The Poverty Reduction Strategy Initiative: An Independent Evaluation of the World Bank's Support Through 2003 The Poverty Reduction Strategy Initiative: Findings from 10 Country Case Studies of World Bank and IMF Support Power for Development: A Review of the World Bank Group's Experience with Private Participation in the Electricity Sector Public Sector Reform: What Works and Why? An IEG Evaluation of World Bank Support Small States: Making the Most of Development Assistance--A Synthesis of World Bank Findings Social Funds: Assessing Effectiveness Sourcebook for Evaluating Global and Regional Partnership Programs Using Knowledge to Improve Development Effectiveness: An Evaluation of World Bank Economic and Sector Work and Technical Assistance, 2000­2006 Using Training to Build Capacity for Development: An Evaluation of the World Bank's Project-Based and WBI Training Water Management in Agriculture: Ten Years of World Bank Assistance, 1994­2004 The Welfare Impact of Rural Electrification: A Reassessment of the Costs and Benefits--An IEG Impact Evaluation World Bank Assistance to Agriculture in Sub-Saharan Africa: An IEG Review World Bank Assistance to the Financial Sector: A Synthesis of IEG Evaluations The World Bank in Turkey: 1993­2004--An IEG Country Assistance Evaluation World Bank Lending for Lines of Credit: An IEG Evaluation All IEG evaluations are available, in whole or in part, in languages other than English. For our multilingual section, please visit http://www.worldbank.org/ieg. Improving Municipal Management for Cities to Succeed An IEG Special Study 2009 The World Bank Washington, D.C. http://www.worldbank.org/ieg ©2009 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 5 12 11 10 09 This volume is a product of the staff of the Independent Evaluation Group of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. This volume does not support any general inferences beyond the scope of the evaluation, including any inferences about the World Bank Group's past, current, or prospective overall performance. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Cover: Municipal service provision is imminent in Quixadá, Northeast Brazil. Photo courtesy of Roy Gilbert. ISBN: 978-0-8213-8043-7 e-ISBN-13: 978-0-8213-8044-4 DOI: 10.1596/978-0-8213-8043-7 Library of Congress Cataloging-in-Publication Data Improving municipal management for cities to succeed : an IEG special study. p. cm. Includes bibliographical references. ISBN 978-0-8213-8043-7 (pbk.) - - ISBN 978-0-8213-8044-4 (e-book) 1. City planning--Developing countries. 2. Municipal services--Developing countries. 3. Municipal government--Developing countries. 4. Municipal finance--Developing countries. 5. Economic assistance--Developing countries. I. World Bank. Independent Evaluation Group. HT169.5.I47 2009 352.1609172'4--dc22 2009019206 World Bank InfoShop Independent Evaluation Group E-mail: pic@worldbank.org Knowledge Programs and Evaluation Capacity Telephone: 202-458-5454 Development (IEGKE) Facsimile: 202-522-1500 E-mail: ieg@worldbank.org Telephone: 202-458-4497 Facsimile: 202-522-3125 Printed on Recycled Paper Contents v Abbreviations vii Acknowledgments ix Executive Summary xv Management Comments xvii Chairperson's Summary: Committee on Development Effectiveness (CODE) 1 1 Managing Engines of Growth 4 Evaluation of Good Municipal Management 5 World Bank Policy Underpinning Support to Municipalities 5 Findings of Earlier IEG Assessments 6 This Study 7 2 Bank Support for Better Municipal Management 9 Bank Assistance to 3,000 Municipalities 10 MDP Approaches--Wholesale and Retail 12 MDP Performance 13 MDP Objectives--The Aims of Bank Assistance 14 MDP Components--Instruments for Better Municipal Management 15 Limited Attention to Poverty Reduction 17 3 Better Municipal Planning 19 More Information for Planning 21 M&E 22 City Planning and City Development Strategies 23 Investment Planning and Strategies 25 4 Stronger Municipal Finances 27 Better Financial Management--Accounts and Audits 29 Mobilizing Own Revenues 30 Municipal Creditworthiness and Debt Management 32 Private Finance Participation 33 5 Managing Service Provision 35 Elements of Service Provision 38 Sectors Most Affected and Service Quality 39 Income Levels of Beneficiaries--Poverty Reduction 41 6 Conclusions 45 Appendixes 47 A: List of Bank-Financed MDPs, Fiscal 1998­2008 55 B: Banking on Municipalities: World Bank Support in Sub-Saharan Africa iii IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED 63 C: Banking on Municipalities: World Bank Support in East Asia and Pacific 71 D: Banking on Municipalities: World Bank Support in Europe and Central Asia 79 E: Banking on Municipalities: World Bank Support in Latin America and the Caribbean 85 F: Banking on Municipalities: World Bank Support in the Middle East and North Africa 91 G: Banking on Municipalities: World Bank Support in South Asia 97 H: Notes on Methodology of Evaluation 101 Endnotes 103 Bibliography Box 12 2.1 Defining Features of Different MDP Approaches Figures 9 2.1 MDP Trends, 1998­2008 10 2.2 MDPs across the Regions, 1998­2008 Tables 11 2.1 Completed and Ongoing MDPs by Region, 1998­2008 11 2.2 Completed MDPs with More Municipal Clients Perform Better 13 2.3 Completed MDPs: Performance by Region, 1998­2008 14 2.4 Focus of Objectives of Completed and Ongoing MDPs, 1998­2008 15 2.5 Focus of Components of Completed and Ongoing MDPs, 1998­2008 20 3.1 Summary of MDP Results in Municipal Planning 28 4.1 Summary of MDP Results in Municipal Finance 36 5.1 Summary of MDP Results in Service Provision iv Abbreviations CDS City Development Strategy ERR Economic rate of return FINDETER Financiera de Desarrollo Territorial SA (Local Development Fund, Colombia) ICR Implementation Completion Report IEG Independent Evaluation Group M&E Monitoring and evaluation MDP Municipal development project O&M Operations and maintenance PPAR Project Performance Assessment Report SINIM Sistema Nacional de Informaciones Municipales (National System for Municipal Information, Chile) TNUDF Tamil Nadu Urban Development Fund (India) WDR World Development Report v Local residents Shaoxing, China, are keen in for municipal planning to help them relocate. Photo courtesy of Roy Gilbert. Acknowledgments This report was prepared by the team of Roy World Bank's Urban Anchor). The study also Gilbert (task manager), Ramachandra Jammi, benefited from valuable comments and inputs by Kavita Mathur, and Heather Dittbrenner under the following Bank staff: Patricia Annez, Arup the supervision of Cheryl W. Gray (Director, Bannerji, Alain Barbu, William Dillinger, Peter Independent Evaluation Group [IEG]-World Freeman, and Christine Kessides. The study team Bank) and Monika Huppi (Manager, IEG Sector is grateful for all these valuable contributions, as Evaluations). Peer review was by George well as the positive collaboration of many urban Peterson (expert in municipal governance and sector staff and task managers during the finance, formerly of the Urban Institute) and planning and realization of this study. The report Eleoterio Codato (former sector manager for the was edited by William Hurlbut. Director-General, Evaluation: Vinod Thomas Director, Independent Evaluation Group­World Bank: Cheryl W. Gray Manager, Independent Evaluation Group Sector Evaluations: Monika Huppi Task Manager: Roy Gilbert vii Low-income housing has been upgraded with water supply and sanitation in Quixeramobim, Northeast Brazil. Photo courtesy of Roy Gilbert. Executive Summary C ities now host half the world's population and provide 70 percent of its gross domestic product, making them "engines of growth." Managing these economic centers well is essential for development. In nearly 3,000 municipalities worldwide, the Independent Evaluation Group (IEG) identified 190 operations as municipal development projects (MDPs). These MDPs have been the World Bank's principal instrument to help strengthen municipal man- agement over the past decade. Evidence from this experience can provide use- ful input to the design of future MDPs. The best MDPs led to stronger own-revenue were the subject of detailed IEG field assess- flows, better financial management, improved ments, summarized in Project Performance municipal information systems, and local Assessment Reports (henceforth called PPAR management of procurement. Weaker results MDPs). were common in monitoring and evaluation (M&E), operations and maintenance (O&M), The study focuses on three dimensions of munici- private finance of municipal services, and pal management--planning, finance, and service poverty focus. In these areas, MDPs can do more provision--that figure repeatedly in Bank- and do it better. MDPs serving many municipali- financed MDPs. The planning dimension refers to ties--called wholesale MDPs--have had better the capacity of a municipality to forecast and outcomes than retail MDPs, which serve just a oversee its own progress. It includes information few, although more in-depth analysis of causal systems, M&E, city planning, and investment factors is needed. strategies. The finance dimension refers to how a municipality manages the resources needed to The purpose of this IEG special study is to illumi- provide services to its constituents. It covers nate the scale and scope of Bank support for financial management, own-resource mobiliza- municipal development and to draw specific tion, access to credit, and private funding. The lessons from the achievements and failures of a service provision dimension refers to the capacity sample of individual projects. The findings of the of a municipality to manage the services required study are based on a review of all 190 MDPs by city residents and business people through the completed or ongoing during the period effective prioritization of investments, manage- 1998­2008. In consultation with World Bank ment of competitive procurement, and the ability operational staff, IEG identified MDPs as projects to sustain services through O&M. with objectives and components focused on strengthening municipal management in cities of Overview of Bank Support for Municipal 12,500 inhabitants or more. Of these 190 MDPs, Management the 114 completed operations are the principal Fromfiscal1998to2008,theBankcommitted$14.5 source for the evaluation findings. Ninety MDPs billion, 3.4 percent of its total lending, to these 190 were studied through IEG desk reviews of MDPs. The projects have assisted nearly 3,000 Implementation Completion Reports, and 24 urban municipalities--about 15 percent of all those ix IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED in developing countries, more than a third of which improves. Third, the study found that wholesale are in the Latin America and the Caribbean Region. MDPs allocate a significantly larger share of The level of MDP support to an individual munici- project spending to technical assistance and pality has varied enormously, from tailor-made institutional development. Fourth, it is possible technical assistance and significant investment that municipality size is a factor--for example, if funding to training just a few municipal staff. Up to wholesale MDPs deal more with smaller, less- 345 million people--IEG's estimate for the entire complex municipalities, although this could not population of the 3,000 participating municipali- be tested given the striking absence of popula- ties--might have benefited. tion data for the municipalities they serve. The Bank has supported MDPs in all six Each MDP in the portfolio of 190 has aimed to operational Regions. The largest number has strengthen municipal management in one or been in Sub-Saharan Africa (27 percent of the more of its planning, finance, or service total), and the largest lending commitment has provision dimensions. Surprisingly, given its been in East Asia and Pacific (38 percent of the priority in the Bank's urban strategy and the total). Seventy-four percent of the 114 Bank-supported Cities Alliance, better planning completed MDPs obtained satisfactory outcomes has been an objective of just one-third of MDPs; using IEG criteria, compared with 77 percent for that is, planning has received the least attention all Bank operations. The strongest Regional MDP among the three dimensions. Finance has been performers have been Latin America and the addressed in MDP objectives more than half the Caribbean and East Asia and Pacific, with 86 and time. Service provision has featured in the 80 percent satisfactory outcomes, respectively. objectives of nearly all of them. The number of municipal clients assisted by each Only 27 percent of the 190 MDPs in the portfolio MDP has varied significantly. Wholesale MDPs-- have had project objectives focused on assisting MDPs that serve seven or more municipalities-- the poor or have indicated how the poor might occupy the top 40 percent of this distribution. benefit from stronger municipal management. The average wholesale MDP covers 65 munici- Earlier IEG evaluations of urban lending found palities. Wholesale MDPs have been strong twice that share. The lack of MDP poverty focus performers, with 85 percent having satisfactory is a serious shortcoming, especially given the outcomes. Retail MDPs, which serve six or fewer poverty emphasis in the Bank's urban strategy municipalities, make up the bottom 60 percent and new estimates that put the number of poor of the distribution. The average retail MDP serves people in cities at 746 million. just three municipalities. Only 67 percent of these MDPs have obtained satisfactory In-Depth Findings from Project outcomes. Assessments In addition to the broad portfolio review Although more analysis is needed, several factors summarized above, IEG undertook detailed may help explain the stronger performance of field-based assessments of the performance of wholesale MDPs. First, wholesale MDPs can 24 MDPs. These assessments throw light on both spread the downside risk of failure broadly successful practices and remaining challenges across many municipalities. Second, competition along the three dimensions of planning, finance, among municipalities, a feature of all the and service delivery. wholesale operations reviewed, means both that municipalities that fail to meet MDP perform- Better municipal planning ance criteria may no longer be entitled to project Though planning is a priority in the Bank's urban support and that weak municipalities that do not strategy and is widely used by municipalities for qualify at the outset may become eligible for mapping future city development, it was not a project funding later if their performance consistent priority in the MDPs (17 of the 24 PPAR x EXECUTIVE SUMMARY MDPs focus on it). Six of those 24 PPAR MDPs where municipalities reacted coolly to the obtained substantial or better results in enhancing complex model of integrated planning proposed municipal information systems, one dimension of by one MDP and expressed little demand for city planning. A notable success was the establishment planning proposed in another. Notably absent and consolidation of Chile's Web-based National was the City Development Strategy, an instru- System for Municipal Information. In contrast, ment intensely promoted by the Cities Alliance centralized municipal information systems in Sri yet rarely supported in MDPs. Lanka and Mozambique failed, in part because municipalities themselves had restricted access to Municipal (nonspatial) investment strategies made them. Clearly, municipal involvement in the use of headway in five PPAR MDPs. Projects in Chile, such systems is a factor of success. China, India, Russia, and Tunisia enabled munici- palities to become more "business friendly," and M&E is another aspect of planning. When it two MDP clients in China rose to the top of a worked well, which was rarely--only four of the nationwide list of municipalities with the best PPAR MDPs had substantial results in this area--it investment climate in the country. was a hands-on instrument for the day-to-day management of project implementation and for Stronger municipal finances evaluation. The weak performance of the majority Most PPAR MDPs addressed the financial of the projects often reflected inadequate dimension of municipal management. This attention to project results themselves. Even evaluation found more good results in this where MDP information systems were good--as dimension than in the planning or service they were in Chile, China, and Indonesia--in most provision dimensions. cases project M&E measured only the delivery of project components and not the achievement of Half of these PPAR MDPs had substantial results an operation's objectives (such as reaching the in financial management. Good results came poor in the MDP in Ceará, Brazil). M&E generally through project technical assistance and on-the- worked better when countries used more widely job learning that enabled many small municipali- available municipal finance data, as in Tunisia and ties in Chile, Georgia, The Gambia, India, and Colombia. A very strong M&E system was built Tanzania to adopt computerized accounting and into the MDP in Kazan, Russian Federation, where financial systems for the first time. Larger munici- some M&E performance indicators doubled as palities--such as Kazan, Maputo, and Tianjin-- tranche release conditions, enhancing the status unified accounts and integrated financial and importance of the M&E itself. Moreover, the management across their large organizations. Kazan municipality saw the usefulness of M&E for Among the less-successful MDPs, Georgia and its own planning, and not just for fulfilling a Bank Uzbekistan were hindered by weak municipal project requirement. capacity before the project began. Relatively few MDPs attempted to strengthen city Again, half the PPAR MDPs achieved substantial planning. Eight cases yielded substantial results, results in enhancing revenue mobilization. These and two MDPs performed poorly. Among the successful MDPs updated tax records, expanded successes, retail MDPs in China helped the cities the coverage of cadastres or land registers, and of Ningbo and Tianjin develop city planning in a improved collections. Municipalities receiving way that served as a model for the whole country. such support in Brazil and Colombia saw their Sri Lanka's MDP enabled its capital Colombo to own revenues increase faster than fiscal transfers. update its master plan, as Zimbabwe's did for the Participating municipalities in Georgia saw signifi- small city of Victoria Falls. Wholesale MDPs in cant growth of own revenues that had fallen for Chile, Colombia, and Tunisia brought city nonparticipants over the 2002­05 period, and planning to many smaller municipalities for the own revenues of participating municipalities in first time. Weaker results came in Indonesia, The Gambia grew 50 percent faster than expected. xi IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Weaker results for eight MDPs in Brazil, Indonesia, services. Good M&E systems helped produce Mozambique, and Zimbabwe arose from political some of the data needed for ERRs. In all cases, reluctance by some municipalities to raise taxes. municipalities themselves were involved in the analyses. Given its successful application of ERRs Improvement of municipal access to credit was an in cases such as these, why did MDPs use ERR infrequent priority, with only six PPAR MDPs estimates so infrequently? Among the reasons focusing on it at all. Of these, five had substantial given were high cost, lack of data, and externali- efficacy in helping to "bring municipalities to ties. But simple methods that make full use of market." MDPs in Colombia were particularly existing data can help overcome these constraints. successful in establishing a local credit market, complete with recognized credit ratings of active Nine MDPs led to substantial strengthening of municipalities; some became able to issue munici- procurement management at the municipal pal bonds for the first time. Municipalities learned level; other MDPs dealt with municipalities that about prudent debt management through had already handled their own procurement and wholesale MDPs in Brazil, India, and--to a lesser needed little project support. Where municipali- degree--Georgia. ties handled procurement, local beneficiaries were better informed about the service improve- Stimulating private finance of municipal services ments. Even larger municipalities, such as Kazan, was an objective in only five MDPs, and only one Tashkent, and Tianjin, were introduced to more (in Colombia) yielded substantive results through complex procurement packages, including private funding of water, gas, and solid waste international competitive bidding, by their services in several municipalities. Many munici- respective MDPs. palities lacked the expertise to staff the contract management units needed to engage the private Few MDPs had substantial results in strengthen- sector. The less-successful MDPs promoted ing the municipal management of O&M, which is privatization of solid waste operations in Sri Lanka necessary to ensure ongoing service provision. and Uzbekistan; these did not go far, given poor The few successful cases were in Africa, where financial performance and uncertain regulatory MDPs helped computerize municipal mainte- environments. In Zimbabwe, funding of low- nance in Tanzania and establish and fund munici- income municipal housing was not forthcoming pal O&M accounts in The Gambia. Other from private building societies and their higher- successes were evident in Ghana and Tunisia. In income product lines. These weak results might contrast, lack of adequate O&M in MDPs led to have been averted with more accurate assess- service failures in Georgia, Indonesia, and ments of local financial markets and of the Zimbabwe. These cases show that the risk to demand for municipal services that are development outcomes can increase signifi- potentially profitable. cantly if O&M is neglected. Managing service provision Only MDPs in Brazil, The Gambia, Ghana, and Management of municipal service provision was a Tanzania had objectives that explicitly addressed priority in all 24 PPAR MDPs. In prioritizing invest- poverty alleviation or service access by the poor. ments in services, however, only seven MDPs Visual inspections of these projects during field successfully supported the clients' application of missions confirmed that there were poor benefi- cost-benefit analysis with estimates of economic ciaries, although little data on specific poverty rates of return (ERRs). Simple yet robust estimates impacts was available. Evidence elsewhere was of ERR were made for MDPs in China, Ghana, even thinner because of a lack of poverty focus India, Indonesia, Tanzania, and Zimbabwe. They and monitoring. The Bank still has much work to included accurate cost figures and realistic assess- do to address its poverty reduction mission ments of future benefits, often measured by the through partner municipalities. Being able to higher value of urban land that has infrastructure define poverty-related objectives and measure xii EXECUTIVE SUMMARY actual results of MDPs for the poor would make porated more of the winning elements of an important contribution. wholesale MDPs, such as performance-based incentives and a focus on finance. Lessons · More frequent use of cost-benefit or cost-ef- Several forward-looking lessons from the fectiveness analysis would help MDPs' munic- findings of this study are relevant for future ipal clients select the best investments and operations and the broader municipal manage- achieve outcomes efficiently. IEG found that ment agenda: only half of MDPs use such tools, with the best coverage in the Sub-Saharan Africa Region. · Among the three dimensions of municipal · For M&E to succeed in MDPs, it has to be use- management--planning, finance, and service ful and not unduly burdensome to municipal- provision--MDP support for strengthening ities themselves, and it must keep a focus on municipal finance most often yielded successful achieving results, particularly for the poor. results, according to field assessments. The Strong M&E can also help reduce the expense Bank should continue to support tightened of cost-benefit analysis by providing some of the municipal financial management, own-revenue data needed to estimate ERRs. Few MDPs have raising by municipalities, and municipalities succeeded with this. being brought to local credit markets when · Private financing of municipal services can be appropriate conditions are present. encouraged through better analysis of local fi- · Project documentation that routinely reports nancial markets and deeper understanding of basic data about each client (municipality name, demand to help municipalities gain the trust population, and MDP investment) is vital to de- of private investors. veloping a better understanding of the scope · Thus far, little evidence exists that stronger of MDP results. municipal management has benefited the · Wholesale MDPs that have assisted many mu- poor. MDPs need to give much more attention nicipalities have yielded better outcomes than to poverty reduction in defining MDP objec- retail MDPs over the past decade, but more tives, showing how the poor would benefit analysis is needed to understand the precise from municipal investments and how services reasons for the performance differentials. Re- would improve through stronger municipal tail MDPs might perform better if they incor- management. xiii A moderate-income housing development in a municipality on the periphery of Mexico City. Photo courtesy of Roy Gilbert. Management Comments M anagement welcomes the Independent Evaluation Group's (IEG) study on Bank experience in improving municipal management. The World Bank recently did its own review of experience with urban in- frastructure funds that serve smaller cities and towns, and one important finding was the need to understand better what works in building capacity at the municipal level. More than 90 percent of world population deserves further attention to understand this growth in the next decades will be in developing better. In particular, it would be useful to explore country cities, many of them secondary cities the extent to which the poverty focus in these and towns, whose systems are currently ill- projects may not be currently reflected in the prepared to provide services to all of their formal development objectives of municipal population. Strengthening management capacity development projects.1 is a thus a necessary condition for making cities livable. Improved and sustainable access to Poverty reduction is at the core of the Bank's services is a key pillar for poverty reduction on urban work and its forthcoming urban strategy. the urban agenda. The Bank directly addresses poverty reduction in cities through a variety of instruments that are The main lessons from the study are useful for designed to address immediate and basic needs the Urban Sector going forward: the successful of the poor while supporting institutional and role of municipal development projects' support management capacity to improve and lay a solid for strengthening municipal finance; continued foundation for the sustainability of services. support for tightening of municipal financial These include slum upgrading, or development management, raising of municipal own revenues, policy loans targeting policy reforms to improve and bringing of municipalities to local credit access to affordable housing. Typically low- markets when appropriate; the importance of income settlements are informal and thus project documentation for measuring results; beyond the reach of formal service delivery. The the relative success of wholesale versus retail MDPs studied in this report focus on systemwide approaches; the need for use of cost-benefit or improvements in planning, finance, and service cost-effectiveness analysis to select the best delivery and are thus a complementary tool to investments and achieve outcomes efficiently; a ensure sustainability and access to services for need to strengthen monitoring and evaluation all, including the poor, over the longer term. systems; analysis of local financial markets and demand to encourage private finance; and the It is important to place the role of municipal potential role that municipal development development projects in context. MDPs represent projects (MDPs) can play in reaching the poor. only about 35 percent of Urban Development projects prepared by the Urban Sector Board over The study finding that less than one-third of the the same time period. Among the other sector projects reviewed cited poverty alleviation as a boards covered in the study, the sample includes formal objective of the project is significant and only 2 percent of the Environmental Sector Board xv IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED projects, 7 percent of Water Sector Board A review of the Bank's recent work indicates that projects, 3 percent of Transport Sector projects, projects with components specifically targeting and 1 percent of Public Governance projects. the urban poor are trending upward and accounted for more than 40 percent of Urban It is also important to note that there may be a Sector Board lending in fiscal 2008. A number of reporting issue in capturing the poverty focus of recent pieces of economic and sector work have municipal development projects. The determi- also been developed or approved in the Urban nation of poverty focus in the study was based Sector, with a strong focus on urban poverty that only on the project development objectives of will help to build the pipeline. That being said, the projects reviewed, not on the actual project management's aim is to increase this further, content or field review. Projects focusing on reversing, for example, the decline in lending for systemwide improvements in accounting, slum upgrading over the previous two decades. planning, and tax collections are those least likely to set specific poverty objectives as the project The release of the IEG report coincides with the development objective, because as explained launch of consultations on the new World Bank above, impacts are more indirect and long term. Urban Strategy. This is an opportune time to Improvements in management municipal sys- build on the insights from the report as we tems will help the poor over the longer term as engage with clients, development partners, and the formal system expands its reach, but these civil society organizations, particularly in light of impacts may extend beyond the period under the report's call to scale up urban services to the evaluation. poor. This is an agenda that calls for strengthen- ing our analytical base, mainstreaming urban Management looks forward to guidance from IEG issues in Country Assistance Strategies and policy regarding best practice on how clearer articula- dialogue, and expanding the Bank's approaches tion of the poverty alleviation objectives and activi- for reaching the urban poor. Scaling up programs ties in municipal development projects can be for delivery of services to the urban poor, innova- captured, and on how to monitor the indirect and tive projects, and responsive instruments will all long-term impacts on poverty, including in smaller play a role as the Bank seeks to respond in a cities and towns, which may have limited capacity. rapidly urbanizing world. xvi Chairperson's Summary: Committee on Development Effectiveness (CODE) O n March 16, 2009, the Informal Subcommittee of the Committee on Development Effectiveness considered the Independent Evaluation Group (IEG) special study Improving Municipal Management for Cities to Succeed. The study covered a review of the entire portfolio of 190 munic- ipal development programs (MDPs) completed or ongoing during the 10-year period 1998­2008. Overall Conclusions Main Issues Raised The Committee welcomed the opportunity to discuss the IEG study, taking note that almost Poverty focus half of the global population lives in cities. The The Committee noted management's clarifica- discussion revolved around the main IEG tions that not all MDPs may be suitable tools for findings related to the poverty focus of MDPs and addressing the needs of the poor (for example, the three dimensions of municipal management: municipal finance) and that other Bank urban planning, finance, and service provision. projects are designed to focus on the urban poor, Members remarked that the study may such as slum-upgrading projects and develop- contribute to the overall update of the World ment policy loans that focus on policies to make Bank's urban sector strategy, for which the housing more affordable and to target subsidies Committee was expected to consider the more effectively. Mention was made of the Cities concept note in April. In this context, a member Alliance global program, supported by the Bank, remarked that the report could have clarified the which has slum upgrading as a major focus. implications of the study findings for the Bank's Members acknowledged the challenges of urban sector strategy update. Speakers also tracking urban poverty, given the shifting popula- urged management to consider a significant tion and the need to consider national and finding of the report, that the lack of MDP municipal level linkages in addressing poverty. poverty focus is a serious shortcoming, especially Nevertheless, speakers echoed IEG in urging given the poverty emphasis in the Bank's urban more attention to poverty in MDP objectives, strategy. Management noted that the IEG study taking into consideration the distinct nature of raised important questions that require further urban poverty. A member emphasized the need consideration, such as addressing urban poverty, to expand economic opportunities for the poor, taking into account the complexity of tracking observing that improving services for the poor is this, and the reasons for wholesale MDPs yielding not sufficient to address urban poverty. There better outcomes than retail MDPs. was a question about the decrease in poverty xvii IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED focus of MDPs over the years noted in the IEG Regarding private finance, there was general study and a comment on the possible applica- agreement on the need for a good regulatory tion of a Poverty and Social Impact Assessment stance by municipalities that recognizes stability, to measure the distributional impact for Bank effective demand, and potential for profitability. operations beyond policy reform programs. Yet a member also observed the need for more analysis of measures to increase tariffs for Municipal services promoting private finance. Interest was ex- Interest was expressed in a broader review of pressed in the role of financial intermediaries causality between improvements in municipal and public-private partnerships at the municipal planning and finance and enhanced service level. In addition, some members commented delivery. As well, more information was sought on innovative financing, such as the possibility of on the extent to which Bank support led to subsovereign lending without a sovereign increased quality and access to services, includ- guarantee and the use of performance-based ing for the poor. Some members drew attention grants. Management said that it will be holding a to the importance of strengthening the technical briefing on subnational lending the operations and maintenance focus in MDPs. week of March 23, 2009. Though appreciating the importance of cost- benefit and economic rates of return analyses, a Municipal planning member cautioned about giving emphasis to Emphasis was put on ensuring that Bank support such analyses in crisis situations. IEG, however, is aligned with local city planning, including city stressed the importance of economic rates of development strategies (promoted by Cities return, which can still be estimated at the latter Alliance). Some members touched on the part of project implementation. importance of strengthening municipal institu- tions' capacity, and in this regard a member Municipal finance observed that the IEG study could have provided Strong financial management at the municipal additional analysis on accountability and level was considered one of the prerequisites to governance aspects. IEG responded that it is enhanced service provision, but not an end in planning to evaluate the implementation of the itself. In response to a member's comment, Governance and Anticorruption Strategy in a few management provided assurances that although years; that evaluation can incorporate some MDPs' efforts have been successful in municipal issues encountered in the urban sector. As noted finance, the Bank will respond to country by IEG, a member underlined the need to demand and not focus solely on this dimension. strengthen monitoring and evaluation. Some members noted the need to consider the complex interrelations with national policies Dissemination (including decentralization) and their impact on The engagement of Regions in the IEG special municipal fiscal management, including revenue study and the strong learning element of the mobilization and expenditures, as well as politi- process were welcomed. There was a question cal factors. A member remarked that manage- about the presentation of the findings in other ment of foreign exchange and rollover risks forums in the future. IEG said that after the should be addressed as part of Bank support for Committee's consideration of its study, the municipal access to credit. findings would be disseminated. Giovanni Majnoni, Chairman xviii Chapter 1 Evaluation Highlights · Good municipal management of cities--whichareimportantenginesof growth--is essential to development. · Improved municipal management has become increasingly challeng- ing as cities grow, costs increase, and service expectations rise. · ThisstudyreviewsWorldBankefforts to help strengthen three dimensions of municipal management: planning, finance, and service provision. · This meta-evaluation assembles the findings of existing IEG assessments of municipal development projects during the period 1998­2008. Planning city growth and conserving historic assets side by side in Ningbo, China. Photo courtesy of Roy Gilbert. Managing Engines of Growth C ities now host more than half the world's 6.6 billion people and pro- duce $42.4 trillion of gross domestic product--70 percent of the world's total. Hence, the management of these important development centers is crucial. Well-managed cities are "engines of growth," pal management strengthening. Effective city offering people opportunities to build produc- planning can minimize spatial externalities, and tive lives, an idea articulated by the 1999/2000 rational investment planning can help allocate World Development Report (WDR) Entering the limited resources efficiently to local strategic 21st Century (World Bank 2000b, pp. 125­138). priorities (chapter 3). This idea was endorsed by the World Bank at the June 2008 World Cities Summit in Singapore as Proper financial management can help ensure that well as through work done for the Commission cities have adequate revenues and that they spend on Growth and Development1 (Duranton 2008). them well (chapter 4). Good preparation and It falls to local city government administrations, delivery of urban infrastructure and services by called municipalities in this report, to provide municipalities can enhance livability for residents good management.2 and productivity for businesses (chapter 5). Most Bank assistance that has sought to strengthen Worldwide, some 31,000 municipalities--each municipal management has been deployed within with more than 12,500 inhabitants3--accommo- this framework. date the world's urban population. Twenty thousand of these are in developing countries, Other dimensions of municipal management the client base for the World Bank.4 Each munici- may be important in other contexts, but they are pality typically manages a single city, and this is addressed by less than 5 percent of the projects the unitary model of municipal management covered by this study and thus have not been considered in this evaluation.5 reviewed. They include, for example, the politi- cal dimension of strengthening local democracy, This report reviews performance findings for citizen participation and representation, the three dimensions of municipal management-- security dimension of policing cities, the welfare planning, finance, and service provision--and dimension of a municipality's role in providing a devotes a separate chapter to each. These social safety net, and the external relations of dimensions accommodate the most common municipalities in joining associations and objectives of Bank operations to support munici- forming twinning arrangements that encourage 3 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED the bilateral exchange of experiences between For the dimension of managing service pairs of cities. Some of these dimensions are provision, the study searched for evidence of beyond the mandate of the Bank. Other municipal management performance in three dimensions, such as the environment and areas related to better access and quality of climate change, housing, health, education, and municipal services. First, it examined techniques culture in which municipal management is of choosing the best performing investments for active, have been covered by other evaluations service delivery ex ante, as well as evaluating by the Independent Evaluation Group (IEG). performance ex post--using cost-benefit anal- ysis, for instance. Second, it used municipal Evaluation of Good Municipal ability to handle procurement for service Management provision itself as one indicator of capable As part of what the Bank calls capacity building, municipal management. Third, it assumed that assessing the effectiveness of Bank assistance to local attention to and funding for operations and strengthen municipal management requires maintenance (O&M) indicated municipal man- looking for evidence that explicit municipal agement that was able to sustain service management objectives were achieved or that provision and ensure that services remain managerial improvements contributed to accessible after the project assets are in place. All meeting other project objectives further down three areas, it should be emphasized, are the results chain. Within the municipal manage- concerned with the management of service ment framework, this evaluation highlights provision, not actual service delivery itself. notably successful operations worthy of emulation and others where shortcomings point Improving municipal management across these to important lessons for improvements. The dimensions has become increasingly challenging study reviewed evidence available on projects for four reasons: ever-larger cities to administer, that supported the planning, finance, and service continuous rapid urban growth, rising costs of provision dimensions of municipal management. urban investment, and citizens' increasing expecta- tions of the level and quality of municipal services. Within the planning dimension, this evidence Large municipalities, such as the 325 in the included information about the city, its local developing world that serve more than 1 million markets, and the local government itself, all as people each, require complex organizations. In inputs into planning. Also, evidence of a substan- this class, the large municipality of Montevideo, tial monitoring and evaluation (M&E) system Uruguay (population 1.3 million), is staffed by would indicate a municipality ready for planning 8,500 people, who administer an annual budget of and able to manage and oversee its own $261 million--which is equal in complexity to a progress. In addition, evidence of new and large corporation in many countries. updated city plans and investment strategies would reflect a municipality able to diagnose and Rapid urban population growth, particularly in manage future development expectations. Asia and Africa, requires that municipal manage- ment respond to demands for services and In reviewing the municipal finance dimension, the infrastructure that far exceed the capacity of study focused on examples of financial manage- existing resources and systems. Rising costs of ment and reporting at the local level, looking for service provision, driven by higher land prices in evidence of how effectively and transparently a particular, can outstrip even what the most agile municipality is able to manage its resources. Thus, municipal financial management can provide. As evidence of strong own-revenue flows would be expectations of municipal services rise, municipal an important indication of municipal autonomy in management has to respond. Should it fail, service delivery. Access to credit and private residents and businesses might move to more finance would also point to municipalities being successful and better-served cities. For these able to provide more services. reasons alone, good municipal management is 4 MANAGING ENGINES OF GROWTH essential, and Bank support to strengthen it is municipalities achieve sound finances and credit- important. worthiness through better municipal financial management. World Bank Policy Underpinning Support to Municipalities The fourth pillar, competitiveness, highlights City Municipal development has long been Development Strategies (CDSs) as a tool to help mainstreamed in development thinking at the urban markets work better. Thus, in relation to World Bank. Every WDR since 1990, for instance, this study, the strategy's livability speaks to this refers to municipalities. Most recently, the 2009 study's service provision dimension, good WDR Reshaping Economic Geography sees governance and competitiveness to the planning municipalities as key players in managing city dimension, and bankability to the municipal expansion as countries urbanize (World Bank finance dimension. 2008). A decade ago, the 1999/2000 WDR Entering the 21st Century stressed that munici- Findings of Earlier IEG Assessments palities have to raise substantial revenues to help IEG's review of the implementation of this provide the urban services and infrastructure strategy through the Bank's urban portfolio, in that cities need to succeed as engines of growth its report Improving the Lives of the Poor (World Bank 2000b, chaps. 5­7). through Investment in Cities (IEG 2004), found that urban projects did help improve livability The 2001 WDR Attacking Poverty posited an but recommended more explicit and operational important municipal role in urban land tenure targets to link municipal capacity building to reform in favor of ownership by the poor (World poverty reduction. Furthermore, that review Bank 2001, p. 94). The 2002 WDR Building urged more systematic M&E of the results Institutions for Markets saw municipalities playing obtained (IEG 2004, p. 31). An earlier IEG study an increasingly important role in contracting out of Bank support for municipalities, Developing and regulating private sector provision of services Towns and Cities: Lessons from Brazil and the (World Bank 2002, p. 160). The 2004 WDR Making Philippines (IEG 1999), found that these Services Work for Poor People placed municipali- operations had helped municipal reform in these ties within a "policymakers-providers-poor two countries. A lesson of the study was that people" triad as potentially efficient (local) service reform should be broadened beyond focusing providers to the poor when incentives are right on just one municipal instrument, such as and institutional responsibilities clear (World Bank property tax, to enhance own revenues. 2004, pp. 49, 185). Municipalities were a focus of IEG's Global Municipal management and the planning, Program Review of the Cities Alliance--part of its finance, and service provision dimensions evaluation of global programs that are partnered reviewed in this study remain at the center of the by the Bank (IEG 2008). Tightly focused on Bank's current urban strategy, Cities in Transi- upgrading low-income settlements in cities and tion: World Bank Urban and Local Government CDSs, Cities Alliance is a multidonor partnership Strategy (World Bank 2000a). The strategy sees that aims to improve the quality of development municipalities as key providers of local services cooperation and urban lending and strengthen for improving livability for the poor in cities, the the impact of grant-funded programs. This first pillar of the strategy. Global Program Review found that the program was well focused on its two main activities but The second pillar, good governance, is to be needed to do more to strengthen M&E and the achieved through Bank support for capacity dissemination of its work. Of particular interest building at the municipal level, especially munici- to the present study (as well as to the Bank's pal development itself, and city planning. The Urban Strategy) is the Cities Alliance champi- third pillar, bankability, calls for the Bank to help oning of CDSs, defined as action plans for 5 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED equitable growth in cities and surrounding implementation approaches of the 190 regions. component projects. Of these, 114 completed MDPs were the principal source for the evalua- This Study tion findings. Ninety MDPs were studied through This study is a meta-evaluation of the findings of IEG desk reviews of Implementation Completion IEG project assessments. Analogous to a litera- Reports, and 24 were the subject of detailed IEG ture review, the study assembles evaluation field assessments, summarized in Project findings of what worked and what did not so that Performance Assessment Reports (PPARs). project task managers and others can find examples of good municipal management The findings from these 24 PPAR MDPs, as they practice to emulate and replicate. They can also are called in this report, were assembled and see shortcomings that need to be avoided or analyzed to obtain a more in-depth view of the overcome. It does not determine if municipal performance of MDP assistance. Although these management in general improved following PPAR MDPs do not cover every single aspect of Bank interventions. the Bank's broad work with municipalities, and although they were not randomly selected from The study constituted a portfolio of 190 the portfolio, they do share the main characteris- operations,6 called municipal development tics of the portfolio as a whole, notably project projects (MDPs) in this report, either completed size, implementation period, and distribution.7 or ongoing during the period 1998­2008. The primary focus of these operations is on urban In one important respect, however, they are municipalities with populations of 12,500 or different: 83 percent of the 24 PPAR MDPs had more, so it does not include projects aimed at satisfactory outcomes, whereas across the whole rural development. Appendix H, on methodol- portfolio only 74 percent rated satisfactory. In ogy, details how the study identified MDPs this report, the results of the review of the through their "municipal" Bank activity codes and portfolio of 190 MDPs are presented in chapter 2 then verified with Bank Regional staff that project and the Regional appendixes (B­G); findings objectives and components really focused on drawn from the 24 PPAR MDPs make up most of strengthening municipal management. the material in chapters 3­5. The 76 ongoing MDPs are included in this report not to assess This portfolio review laid the groundwork for the outcomes and results that have yet to be evaluation by analyzing the scope of the MDP reported ex post, but to carry forward the review assistance provided and the design and of MDP designs and approaches. 6 Chapter 2 Evaluation Highlights · The Bank committed $14.5 billion to 190 MDPs in 76 countries over the period 1998­2008. · Bank-financed MDPs have assisted 3,000 municipalities, 15 percent of the total in the developing world. · Wholesale MDPs, each serving many municipalities, have been stronger performers than retail MDPs, which serve just a few. · Across the three dimensions of mu- nicipal management, MDPs focus most on service provision and least on planning. · Few MDPs focus on assisting the poor. MDP-funded municipal water treatment plant in Pereira, Colombia. Photo courtesy of Roy Gilbert. Bank Support for Better Municipal Management Bank Assistance to 3,000 Municipalities S ince 1998, the Bank has committed $14.5 billion, 3.4 percent of its total funding, to 190 completed and ongoing MDPs in 76 countries worldwide. The numbers of new MDPs approved and new Bank commitments show a growth trend in the second half of the period after an uneven but gen- erally weaker first half (figure 2.1). The portfolio of MDPs has assisted nearly 3,000 investment funding at the high end, to training municipalities,1 about 15 percent of the 20,0002 just a few municipal staff, often remotely, to no urban municipalities in the developing world. physical investment at the low end. Taken as a Across municipalities, the intensity of MDP whole, however, this support has the potential to support may vary considerably. It can range from help many people benefit from improved munici- tailor-made technical assistance and significant pal management. Figure 2.1: MDPTrends, 1998­2008 2,000 25 20 1,500 15 projects millions 1,000 of 10 US$ 500 5 Number 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Bank MDP commitments (US$ m) Number of projects approved Source: World Bank data. Note: MDP = municipal development project. 9 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Exactly how many, however, is rarely computed Europe and Central Asia have smaller ones. The accurately in Bank project documentation at average Bank commitment per project is nearly appraisal, during implementation, or at comple- three times larger in East Asia than in Africa (table tion. Of course, an accurate picture would 2.1). The size of individual MDPs varies consider- emerge if MDPs routinely reported the number ably, ranging from $300 million-plus megapro- of municipalities they served and provided jects in large countries--China, India, Mexico, summary details of each one, including the and Turkey--to small $5 million-or-less name, population, and investment received. operations with smaller clients such as Assuming the population size distribution of the Honduras, Kosovo, and Peru (details in appendix nearly 3,000 MDP beneficiary municipalities was A). Also, apart from operations in Latin America similar to that of all urban municipalities, an and the Caribbean, ongoing MDPs have larger estimated 345 million people would live in Bank commitments than completed ones, municipalities assisted by Bank-financed MDPs. pointing to increasing Bank support for these Although not all inhabitants would be expected projects. to benefit directly from the operations, a parame- ter such as this one nevertheless points to a MDP Approaches--Wholesale and Retail potentially significant and extensive impact of The design of most MDPs is quite simple. The municipal management improvements wrought majority has just two basic components: (i) institu- by Bank-financed MDPs. tional development/policy reform through techni- cal assistance and training for municipalities (and MDPs have been implemented in all Regions, their higher-level government minders) and (ii) with the greatest number in Sub-Saharan Africa infrastructure and service provision through and the largest share of commitments in East funding physical investments. Physical invest- Asia and Pacific (figure 2.2). East Asia and South ments accounted for more than 85 percent of the Asia have larger-than-average MDPs; Sub-Saharan total project costs of most of the 24 PPAR MDPs Africa, the Middle East and North Africa, and (with Chile I and Mozambique I as exceptions). Figure 2.2: MDPs across the Regions, 1998­2008 Share of all projects Share of Bank commitments South South Middle East Asia Asia Middle East and Sub-Saharan 6% 9% and North Africa Africa North Africa 9% 16% Sub-Saharan 6% Africa 28% Latin America Latin America and the and the Caribbean Caribbean 19% 18% East Asia and East Asia Europe Pacific Europe and and 39% and Pacific Central Asia Central Asia 23% 12% 15% n = 190 n = US$14.5 billion Source: IEG special study. Note: MDP = municipal development project. 10 BANK SUPPORT FOR BETTER MUNICIPAL MANAGEMENT Table 2.1: Completed and Ongoing MDPs by Region, 1998­2008 Latin America Middle East Sub-Saharan East Asia Europe and and the and South All MDPs Africa and Pacific Central Asia Caribbean North Africa Asia MDPs All (number) 52 44 28 36 18 12 190 Completed (number) 32 30 16 21 8 7 114 Ongoing (number) 20 14 12 15 10 5 76 MDP client municipalitiesa Completed + ongoing (number) 601 445 292 1,098 379 146 2,961 Average per project (number) 12 10 10 31 21 12 16 Average Bank commitment per project All (US$ millions) 47 129 61 74 53 112 79 Completed (US$ millions) 42 126 37 86 49 88 76 Ongoing (US$ millions) 56 136 94 53 56 146 82 Source: IEG special study. Note: MDP = municipal development project. a. Includes all municipalities served by at least one MDP. Physical investments are popular with municipali- of service provision through physical investments ties that wish to improve service provision in their in infrastructure also helped strengthen munici- jurisdictions, something that can affect the pal management. outcome of local elections. Consequently, most PPAR MDPs offered to finance such investments, Although most MDPs embody this basic design, but only in those municipalities that were commit- the number of municipal clients assisted by an ted to reform and institutional development. To individual MDP varies widely, ranging from just 1 support such reform directly, MDPs themselves to 257. Across all closed projects reviewed, 60 funded technical assistance and training for percent served 6 or fewer municipalities. These municipalities, which accounted for up to 15 are referred to as retail MDPs in this study. Those percent of the total costs of these operations. serving seven or more municipalities are called Beyond technical assistance, better management wholesale MDPs (table 2.2). Table 2.2: Completed MDPs with More Municipal Clients Perform Better Number of municipalities Percent with per project satisfactory Quintile Range Mean Approach Number of projects outcomes 1 1­1 1 Retail 23 69 2 2­3 2 Retail 23 61 3 4­6 5 Retail 22 69 4 7­31 15 Wholesale 23 83 5 33­257 96 Wholesale 23 87 Overall 1­257 24 All MDPs 114 74 Source: IEG database. Note: MDP = municipal development project. 11 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Box 2.1: Defining Features of Different MDP Approaches Wholesale (>6 municipalities) Retail (1­6 municipalities) · Many municipal clients--average of 65 per project in this · Few municipal clients--average of three per project in this study's MDP portfolio--competing to participate study's MDP portfolio · Bank wholesales project to special MDP agency that agrees · Project agreements made directly with municipalities; di- on policy with the Bank and retails project services and rect Bank contact with municipalities funding to municipalities; little direct Bank contact with · Rules of engagement crafted for each municipality and may municipalities vary within a project · Rules of engagement generally the same for all municipalities · Participating municipalities and investment subprojects usu- · Participating municipalities and investment subprojects not ally part of project design known up front Source: IEG. The defining features of wholesale and retail of 77 percent for completed projects over the MDP designs are summarized in box 2.1. The same period. During the first half of the period, most significant features of wholesale MDPs, MDP performance was weaker, with only 65 found in all those reviewed by PPARs, are percent of projects achieving satisfactory competition among municipalities and the use outcomes. Performance improved in the second of a special MDP agency as an intermediary half, when 85 percent were rated satisfactory. between the Bank and individual municipalities. Against the 74 percent satisfactory rate for the Such an agency provides (that is, retails) project MDP portfolio as a whole, 85 percent of support to many municipal clients in the form of completed wholesale MDPs achieved satisfactory funding for municipal subprojects. This leaves outcomes, compared with 67 percent for retail the Bank able to concentrate its support directly MDPs (table 2.3). This difference between the on the special agency itself.3 average performance of wholesale and retail MDPs is statistically significant.5 Retail MDPs, in contrast, do not need such an agency. Existing government departments and Though more analysis is needed, several factors the Bank itself are able to interact directly with might help explain the stronger performance of and provide tailor-made assistance to each of the wholesale MDPs. First, wholesale MDPs can spread few municipalities involved. MDPs used the the downside risk of failure broadly. Second, wholesale approach most intensively in Latin competition among municipalities in wholesale America and the Caribbean. That Region has a MDPs means that municipalities that fail to meet long history of municipal administration, where wholesale MDP performance criteria, for instance, wholesale MDPs outnumber retail MDPs. For may no longer be entitled to participate in the similar reasons, wholesale MDPs were also project. Conversely, initially ineligible municipali- common in the Middle East and North Africa ties that have a subsequently stronger perform- Region. East Asia hosted the largest number of ance can be brought on board. This gives retail MDPs, using this model to assist large cities wholesale MDPs the flexibility to allow changes in in China, which are managed by unitary mega- their client profile during implementation, thereby municipalities.4 stimulating competition among municipalities. MDP Performance Retail MDPs can choose their few municipal clients Overall, 74 percent of the 114 completed MDPs carefully, too, but this can only be done at the in this study's portfolio achieved satisfactory outset, and the selection criteria are not always outcomes, slightly below the Bank-wide average transparent. Once chosen, retail MDP clients 12 BANK SUPPORT FOR BETTER MUNICIPAL MANAGEMENT Table 2.3: Completed MDPs: Performance by Region, 1998­2008 Latin America Middle East Sub-Saharan East Asia Europe and and the and South MDPs Africa and Pacific Central Asia Caribbean North Africa Asia Total Completed wholesale MDPs (7­257 municipalities each) Number of projects 11 8 6 13 5 3 46 Percent satisfactory 92 75 67 92 80 67 85 Number of municipalities 416 210 54 858 59 112 1,709 Completed retail MDPs (1­6 municipalities each) Number of projects 21 22 10 8 3 4 68 Percent satisfactory 68 82 60 75 33 25 67 Number of municipalities 22 46 15 9 3 3 98 All completed MDPs Number of projects 32 30 16 21 8 7 114 Percent satisfactory 75 80 63 86 63 43 74 Number of municipalities 438 256 69 867 62 115 1,807 Source: IEG special study. Note: MDP = municipal development project. remain the same during implementation. Policy less-complicated, smaller municipalities. However, impact leading to improved municipal manage- this can only be tested when MDPs routinely ment is likely to be more widespread for wholesale produce population data of the municipalities operations, given the larger number of municipali- assisted, something that is missing from most of ties affected. In addition, at 10 percent of project the project documentation reviewed for this study. costs, wholesale MDPs spent more on technical Because the study did not examine all the possible assistance and institutional development than factors, there is still a need for more analysis to retail MDPs did; they spent only 6.4 percent.6 elicit the precise reasons for the performance differential observed. Other possible explanations for stronger performance by wholesale MDPs that might have MDP Objectives--The Aims of Bank been expected were not supported by evidence. Assistance Thus, location factors, such as wholesale MDPs All 190 MDPs reviewed here aim to strengthen being located in stronger performing Regions, municipal management in one or more of the did not come into play, as both types of MDP are three dimensions of this study's evaluation widely represented across all Regions (table 2.3). framework. Because project objective formula- The level of Bank financing was also not a factor, tions do not always use the same language as this being similar for both wholesale and retail framework does, this study used synonym operations. An initial review did not point to keyword searches of the formal objective substantive differences between the objectives statements of each MDP. This was done across all of wholesale and retail MDPs. However, the 190 operations to identify which dimensions of complexity of the issues addressed by each type urban management were targeted for strength- of MDP could affect performance and deserves ening (details in appendix H). The results are further inquiry. summarized in table 2.4. Another hypothesis is that wholesale MDPs MDPs gave the most attention to service provision perform better because they typically work with and the least to planning. Some MDP objectives 13 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED embraced broader goals, such as improving the Asia. A substantially larger share of wholesale urban environment or assisting with decentraliza- projects--63 percent--included finance objectives tion, issues reviewed by other recent IEG evalua- than retail MDPs did--46 percent (table 2.4). tions and not dealt with in detail here. Examples of actual MDP results in strengthening municipal finances are presented in chapter 4. Municipal planning, as a dimension of manage- ment, received the least attention among the Nearly all MDPs have explicit goals of strengthen- aims of Bank-financed MDPs in the portfolio. ing the ability of municipalities to better manage Only one-third of these MDPs included better the provision of good-quality and accessible planning as an objective. This poor showing is services. Among Regions, MDPs gave most surprising in the context of Bank support for attention to this in South Asia, East Asia and public sector capacity building in general and Pacific, and Sub-Saharan Africa. Wholesale and Bank endorsement of CDSs in particular. As retail MDPs were equally attentive to the goal of noted earlier, promoting good CDSs among strengthening the management of municipal cities worldwide is one of the two aims and lines services (table 2.4). Service provision's lead of business of the Cities Alliance program, which comes from the Bank's traditional support for the the Bank strongly supports. Good city planning delivery of urban infrastructure. MDP experience allows for city (population and economic) illustrates several ways of strengthening munici- growth and helps provide space for environmen- pal management of service provision. MDP tal and other public goods, as well as locations results with respect to municipal management of for services and amenities that market mech- service provision are illustrated through detailed anisms by themselves cannot. For the Bank itself, references to cases described in chapter 5. a greater focus on planning would have made the MDP portfolio more relevant to the goals of MDP Components--Instruments for stronger local governance espoused by the Better Municipal Management Bank's 2000 urban strategy. All MDPs in the portfolio chose project components to strengthen municipal manage- Despite the limited coverage, there have been ment in at least one of the planning, finance, or important examples of MDPs improving plan- service provision dimensions of this study's ning. These are discussed in chapter 3. evaluation framework. Table 2.5 summarizes their distribution. Municipal finance improvement was more prominent, addressed by the objectives of half the Planning, although the dimension least ad- portfolio's MDPs. Among the Regions, this received dressed by MDP components, is covered by most attention in Sub-Saharan Africa and South components of more than half of the operations Table 2.4: Focus of Objectives of Completed and Ongoing MDPs, 1998­2008 Latin America Middle East Sub-Saharan East Asia Europe and and the and South MDPs Africa and Pacific Central Asia Caribbean North Africa Asia Total Wholesale Retail Total (number) 52 44 28 36 18 12 190 72 118 Percent of all MDPs with OBJECTIVES focused on-- Municipal planning 23 50 29 39 22 17 33 31 34 Municipal finance 62 48 54 50 33 58 52 63 46 Service provision 92 93 86 78 83 100 88 86 90 Sources: IEG and World Bank databases. Note: MDP = municipal development project. 14 BANK SUPPORT FOR BETTER MUNICIPAL MANAGEMENT Table 2.5: Focus of Components of Completed and Ongoing MDPs, 1998­2008 Latin America Middle East Sub-Saharan East Asia Europe and and the and South MDPs Africa and Pacific Central Asia Caribbean North Africa Asia Total Wholesale Retail Total (number) 52 44 28 36 18 12 190 72 118 Percent of all MDPs with COMPONENTS focused on-- Municipal planning 48 48 61 50 33 25 47 38 53 Municipal finance 71 43 82 44 61 50 59 59 59 Service provision 99 95 86 92 89 100 94 92 95 Sources: IEG and World Bank databases. Note: MDP = municipal development project. in the Europe and Central Asia and Latin America providers of good-quality urban infrastructure and the Caribbean Regions (table 2.5). The kinds and accessible services. It is through better of instruments considered here include management of services such as these that performance-based municipal development municipalities, as local public sector entities, can agreements, training for municipal employees, directly benefit users in cities. city master plan updates, land mapping and land information systems, and preparation of strate- Examples of such components in MDPs include gic development programs for future invest- computerized management information systems, ments. This report reviews MDP results from model contracts for private sector operators, and using such components in chapter 3. on-the-job learning. In many MDPs this last item comes from implementing physical investments Finance components are found in slightly more in roads; drainage; lighting; water supply than half of MDPs overall, but in higher shares in (treatment plants and distribution networks); the Europe and Central Asia and Sub-Saharan sanitation; solid waste collection and disposal; Africa Regions, where municipal finances have social, educational, health, and cultural facilities; been particularly weak (table 2.5). For one- urban transport (including mass transit); housing quarter of all MDPs, these components include and communal services; neighborhood upgrad- the establishment of urban development funds ing; and environmental rehabilitation. These are to specifically finance municipal infrastructure discussed in chapter 5. and services, the subject of a recent Bank review (Annez, Huet, and Peterson 2008). Examples of Limited Attention to Poverty Reduction other finance components include municipal Relatively few MDPs--27 percent of the total financial rehabilitation plans, improved cash flow portfolio--have objectives focused on assisting management, credit to fund municipal invest- the poor,7 such as aiming to improve their living ment needs, training in budgeting and revenue conditions through service provision to low- generation, and technical assistance for munici- income areas. MDPs that omit poverty references palities to raise revenues from domestic capital in their objectives typically aim to improve markets. Their efficacy in contributing to good service delivery, too, but without specifying the project results is reviewed in chapter 4. poor among the beneficiaries. Service provision components are present in The sparse MDP attention to the poor is surpris- nearly all MDPs (table 2.5). This predominance ing in view of the urban strategy focus on poverty makes sense. After all, the ultimate purpose of and the Bank's own top priority of reducing it. strengthening municipal management is to make Municipalities have an important role in helping municipalities more effective and efficient low-income beneficiaries, the starting point of 15 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED the 2004 WDR Making Services work for Poor particularly if the faster urbanization of the poor People (World Bank 2004, pp. i, 75). The absolute than of the population as a whole persists (World number of urban poor, recently estimated at Bank 2004). Clearly, MDPs need to strengthen some 756 million worldwide (Ravallion, Chen, their poverty focus to ensure that they benefit and Sangraula 2007), is expected to remain high, the poor more effectively. 16 Chapter 3 Evaluation Highlights · Only half the 190 MDPs in the port- folio focused on planning; the share was higher among the 24 MDPs re- viewed by PPARs, where 7 projects obtained good planning results. · Field work showed that developing municipal information systems for planning has had mixed results, with success coming from more munici- pal involvement. · M&E results of evaluated projects commonly counted the delivery of project components rather than monitoring the achievement of outcomes. · MDP coverage of city planning was thin, pointing to the need for more work in this area. "One-stop shop" for community participation in city planning and service provision in Novgorod, Russia. Photo courtesy of Roy Gilbert. Better Municipal Planning P lanning is a priority in the Bank's Urban Strategy and a tool widely used by municipalities for mapping future city development. For instance, plan- ning applies to strategic spatial plans and land use. It is surprising, therefore, that only half of the 190 MDPs in the portfolio focus on city plan- ning of any kind (tables 2.4 and 2.5). Among the 24 MDPs reviewed by IEG's PPARs, Municipalities (SINIM, http://www.sinim.cl/) was attention to the planning dimension of municipal launched (Chile I) and consolidated by system management was somewhat higher, with 17 improvements (Chile II). Both operations were projects focused on planning through their wholesale MDPs involving a strong higher-level objectives or components (table 3.1). This chapter agency, the Regional Development Sub- assesses the effectiveness of MDP support within Secretariat. At this writing, SINIM holds annual each of four broad categories of planning: informa- data for the 2000­07 period on local finances, tion management, M&E, city planning, and invest- administration, education, and health services, as ment strategies. The chapter highlights successful well as social and geographical indicators--250 projects, as well as examples of performance variables altogether for every one of Chile's 345 shortcomings, to inform MDP practitioners of municipalities. Being Web based and in the public what has worked well and what has not. domain, SINIM allows policy makers and citizens to know what their own--or any other-- More Information for Planning municipality has been doing and how well. Good information about a municipality and the Municipalities themselves upload the data into economic, social, and financial challenges and the database. Sustainability has been good. potential of its city are indispensable to sound planning. Good information feeds directly into The information system, created more than eight M&E, enabling municipal authorities to know years ago, is still going strong without further more about the problems they confront and Bank assistance. Although SINIM data are progress made in solving them. Altogether, 14 available to anybody with access to the Internet, PPAR MDPs specifically attempted to improve municipal information systems in other information systems. Of these, six obtained countries have often been less accessible. For substantial or better results and eight were less example, centralized information systems successful. The remainder of the PPAR MDPs did introduced by the Sri Lanka MDP in Colombo not try to strengthen these systems (table 3.1).1 (population 2.3 million) and Mozambique II in Maputo (population 1.2 million) and Nampula Perhaps the most significant MDP information (population 380,000) remained largely beyond success has been in Chile, where the central the control of or even access by municipalities government's National Information System on themselves and thus fell out of use. The clients of 19 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Table 3.1: Summary of MDP Results in Municipal Planning Overall Results in-- outcome City Investment Country MDP Project name of project Information M&E planning strategies Sub-Saharan Africa Gambia, The Pov. Alleviation & Capacity Building M Sat -- -- -- -- Ghana I Second Urban Sat -- -- -- -- Mozambique I Local Govt. Reform Unsat * -- -- -- Tanzania I Urban Sector Rehabilitation Sat -- -- -- -- Zimbabwe Urban Sector & Regional Dev. M Sat * * -- East Asia and Pacific China III Tianjin Urban Development Sat -- China IV Zhejiang Multicities Dev. Sat * China VII Shanghai Environment Sat * -- -- Indonesia II East Java/Bali Urban Dev. M Sat * * * -- Indonesia VI Second East Java Urban Dev. M Unsat * * -- -- Indonesia IX Municipal Innovations Sat * * -- Europe and Central Asia Georgia I Mun. Infrastructure Rehab. M Unsat -- -- -- -- Georgia II Mun. Dev. & Decentralization M Sat -- -- -- -- Georgia III Second Mun. Dev. & Decentral. Sat * -- -- Russian Federation IV Kazan Municipal Dev. H Sat Uzbekistan Tashkent Solid Waste Mgt. Sat -- * -- -- Latin America and the Caribbean Brazil II Ceará Urban Dev/Water Res. M Sat * * -- -- Chile II Second Municipal Dev. M Sat * Colombia I Municipal Dev. Sat -- -- Colombia IV Urban Infras. Services Dev. Sat -- -- -- -- Middle East and North Africa Tunisia I Municipal Sector Investment Sat * South Asia India I Tamil Nadu Urban Dev. M Sat -- -- -- -- India II Tamil Nadu Second Urban Dev. Sat * * -- Sri Lanka Colombo Env Improvement Unsat * * -- Sources: IEG PPARs. Note: Bold = MDPs focused on planning; = substantial or higher achievement of element; * = element tackled but with modest or lower achievement; -- = element not attempted. (Roman numerals are attached to MDPs in their sequence in the portfolio of 190 operations, being dispensed with altogether when there is only one MDP in a particular country.) M&E = monitoring and evaluation; MDP = municipal development project. Ratings: H Sat = highly satisfactory; Sat = satisfactory; M Sat = moderately satisfactory; M Unsat = moderately un- satisfactory; Unsat = unsatisfactory. the technical suppliers of such systems were A few MDPs also developed information systems central governments, meaning that the suppliers at the level of individual municipalities. Through themselves rarely responded to demands from a technical assistance contract under Indonesia municipalities. These shortcomings clearly point IX, a project that focused on municipal innova- to the need to involve municipalities actively up tion, the municipality of Bogor (population front. 769,000) developed a lively and informative Web 20 BETTER MUNICIPAL PLANNING site to interact with and inform the public; of a project's components instead of measuring basically, this was an online version of the munici- the actual achievement of intended outcomes. pality's earlier and successful public information Even an MDP that otherwise excelled in informa- booths. IEG found it still functioning well five tion management--M&E in Chile II--measured years after completion. only the number of technical assistance assign- ments completed and their cost, but not indica- In another innovation under the same project, tors of municipal governance improvements or the municipality of Surabaya (population 2.4 greater efficiency in service provision, which was million) set up a hotline for citizens' inquiries or what the project intended. complaints about municipal services. Unfortu- nately, it had fallen out of use for lack of funding M&E for Indonesia II and VI also ventured little to maintain it. In contrast, international consult- beyond counting the number of subproject ing contracts under China III helped the contracts awarded and the amount of disburse- megacity of Tianjin develop a computerized ment, so M&E in those projects was able to traffic information system. Set up more than 10 provide the exact number of community toilets years ago, the system is still operating without built and their precise unit costs, for instance, further assistance from the Bank. but not how much they were used, which proved to be very little. During field visits, IEG saw Staying engaged for the long haul can help communal toilet blocks designed for 15 families develop municipal information systems even in being used only by 1 or 2. Though China IV in the most challenging circumstances. Thus, the Zhejiang province excelled in many other elements of a basic municipal finance informa- respects, its M&E did little more than count and tion system are finally coming together after cost the delivery of individual subprojects. three successive MDPs in Georgia over 14 years. One-off efforts to improve information, as the Another shortcoming often found in the M&E of Bank tried through Zimbabwe's MDP, had thin MDPs was the lack of baseline data and the results even before the country's current crisis. absence of explicit, preferably quantified targets. Brazil II, for instance, did not describe the living M&E conditions of the poor at the outset in munici- When it worked well in MDPs, which was rarely,2 palities in the state of Ceará that were targeted M&E was a hands-on instrument for the day-to- for project improvements. Endline conditions day management of project implementation and may be easy for an evaluator to observe at for conducting evaluations. Of the 24 PPAR MDPs completion, but how much progress they reviewed, only 4 obtained substantial results with represent from the starting point can only be M&E (table 3.1). The performance of the remain- understood if there are also baseline data to der was weak, often reflecting inadequate show clearly how far the endline is from it. attention to project results. Before it helps map the direction and paths a project should take, Even when a baseline is known, it must be M&E begins as a planning tool; that is the reason expressed in terms and units that make measure- it is considered in this chapter. For M&E to ments of changes over time meaningful. High succeed, municipalities have to regard it as a inflation, for instance, can cloud the interpreta- useful tool for themselves, not just an instrument tion of financial and economic indicators for government control or academic research by expressed in current values, as they were in the others. This suggests that there should be more M&E of Uzbekistan's MDP. Sometimes, even interaction between municipalities, govern- good quality and quantified indicators, such as ments, and the Bank at the design phase of M&E. those measuring water quality of the environ- mentally stressed Huangpo River in Shanghai A common weakness of M&E design for MDPs under China VII, are of limited use when was excessive focus on monitoring the delivery baseline values are not comparable. In this case, 21 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED baseline and endline water samples were drawn adjustment loan design3 of the operation, which from different parts of the river. Water quality required the MDP to meet specific outcome measurements that were taken from the polluted targets--some as tranche release conditions-- Beira Lake in the city of Colombo under Sri over a period of just three years. Lanka's MDP can reveal its condition today, but not the reduction of pollution--because there Kazan was willing and even enthusiastic about are no baseline data. adopting M&E because the municipality found that the information generated was useful for its Experience shows that an initially weak M&E own financial management purposes, not just for design can be enhanced during project meeting the formal requirements of the project. implementation and later used effectively. This During PPAR missions to review other MDPs, happened under China III, when the strong however, IEG heard several municipal officials local planning team in Tianjin municipality, at its say that M&E information was being collected, own initiative, incorporated outcome indicators often at significant expense to their municipali- to measure municipal management effectiveness ties, just to please the World Bank. It is therefore that had been overlooked by the initial M&E important for project designers to ensure that design. Georgia I incorporated theoretically the M&E will be useful for the municipalities sound indicators in its M&E design, such as the themselves and that it still fulfills the require- number of days lost through schools and health ments of due diligence and project evaluation. centers having to close for bad weather, but there This can best be done by ensuring municipal were no unit-level data available for them in the involvement in M&E design from the outset. country at the time. M&E under Georgia II and III progressed to incorporate municipal finance City Planning and City Development indicators, for which data became available after Strategies more than 10 years of consistent effort. Although city planning has long been a traditional function of municipal administrations M&E of MDPs was strongest where its focus worldwide, IEG found relatively few MDPs included municipal finances. This was the case focused on it. Of the 24 MDPs reviewed by PPARs, with Colombia I and Tunisia I, both of which only 10 included a focus on city planning; most built up extensive knowledge about municipal of these achieved substantial results. The remain- management in their countries. Russia IV, a ing MDPs achieved little in strengthening such retail operation, also incorporated a strong M&E planning, not because they tried and failed, but system, albeit for one city, Kazan. But its design because city planning was not on their agenda included clear and easy-to-measure indicators (table 3.1). that addressed all project objectives. These included a declining municipal budget deficit, Among the successes, China IV in Zhejiang increasing targeted cash social assistance to Province helped the municipality of Ningbo eligible beneficiaries, and greater provision of (population 720,000) update its city master plan; housing and local infrastructure services by the that plan enhanced long-term land use planning private sector. This M&E was easy to implement and firmly embedded the conservation of and use, as the municipality of Kazan itself historic and cultural assets into its city center wanted to know these results and had the planning. China III also strengthened city capability to collect and analyze all the necessary planning in Tianjin (population 11.2 million). data. Several official delegations of foreign planners have visited the megacity to learn more about its This may not be the case in weaker municipalities. successful approach to planning, especially in In Kazan, however, it is still in full use, two years upgrading transport corridors and providing for after project completion. Part of the M&E success solid waste and sewage disposal. As retail MDPs, in Kazan comes from the programmatic structural these experiences point to how this approach 22 BETTER MUNICIPAL PLANNING can bring substantial improvements in planning looking management tools, CDSs and city to a few cities. planning of all kinds do help municipalities know the baselines of the spatial configuration of Chile II provided support for 25 municipalities urban development better. to prepare local city plans. MDPs also helped municipalities update existing master plans, as Investment Planning and Strategies they did in Tianjin, China, and Colombo, Sri Municipalities need to determine priorities for Lanka, or prepare one for the first time, as in the their investments, given the scarce resources small town of Victoria Falls (population 36,000) available; this can be called investment planning through the Zimbabwe MDP. Indonesia II or strategizing. Most MDPs of the 24 reviewed by supported Integrated Urban Infrastructure PPARs have not systematically tried to do this. Development Planning, which the Bank and There were five projects that did so, and they other donors hoped to establish as a modern- achieved substantial results. ized form of urban planning. But the approach was not adopted successfully by smaller munici- India II in Tamil Nadu, for example, provided palities in particular; they preferred to continue technical assistance to and facilitated exchanges with the traditional sectoral approach they knew. among 45 municipalities to help each one With its municipal demand-driven design, prepare corporate plans. These plans set out Indonesia IX also had little impact on strength- their investment priorities for 10 years. Under ening city planning, given the small demand for Chile II, some smaller municipalities est- it among the project's municipal clients. ablished Local Development Directorates to coordinate municipal investment planning Although CDSs are supported by the Bank and across sectors. Exchanges of experiences among other donors worldwide and are one important municipalities in the Indian and Chilean cases business line for the Bank-supported Cities probably mean that the dissemination of MDP Alliance,4 IEG assessments found that MDPs gave experience is much wider than is obvious from CDSs very little attention. To strengthen city the direct project results themselves. planning more, programming CDS work could be better coordinated with MDPs, and CDSs The experience of China IV in Zhejiang Province themselves could be integrated into MDP helped make municipalities more business operations. CDSs tend to be quite diverse, and it friendly. The cities of Hangzho (population 1.9 would be helpful if the Cities Alliance could million), Ningbo, and Shaoxing (population advise the Bank, MDP agencies, and municipali- 421,000), with planning and service provision ties which model of CDS would be best suited to directly assisted by the project, were among those a particular MDP. The current absence of CDSs with the best investment climate in the country, would appear to call for greater synergy on this according to a 2005 survey of 14,000 firms in 120 front. In addition to their strengths as forward- cities throughout China (World Bank 2006). 23 Chapter 4 Evaluation Highlights · Across the three dimensions of mu- nicipal management strengthening, MDP efforts in finance yielded suc- cessful results most often. · Some small municipalities benefited by adopting computerized account- ing systems for the first time. · Some large municipalities consoli- dated and unified their accounts. · Half of MDPs obtained substantial results in mobilizing municipal revenues. · Field work showed that the results of private funding of municipal services were thin and efforts inadequately prepared. Oversight of municipal finances in Fortaleza, Northeast Brazil. Photo courtesy of Roy Gilbert. Stronger Municipal Finances T he majority of MDPs addressed the financial dimension of municipal man- agement through their objectives, their components, or both (tables 2.4 and 2.5). Among the 24 PPAR MDPs, there was a strong focus on fi- nance. Altogether, 20 of the MDPs had objectives and components related to municipal finance (table 4.1). This study compiled PPAR findings of the per- formance of these projects within each of four categories: financial manage- ment, mobilizing revenues, access to credit, and private finance. Better Financial Management-- Where training was more intense--for instance, Accounts and Audits with more than 35 courses in double-entry Financial management was the most frequently accounting under India II in Tamil Nadu and with supported aspect among the projects reviewed, plenty of places for municipal applicants available being addressed by 15 PPAR MDPs. Of these, the through The Gambia MDP--account modern- evaluation identified 11 that obtained substantial ization was successful. Through technical results, and 4 had a weak performance. The assistance at the central and local levels, Tanzania remaining nine did not address the issue. I ensured that all municipalities participating in the project had--and still have today--up-to-date Assistance with computerizing municipal and audited municipal accounts. This was not the accounts was the tool most often used to case before the project, or for most other munici- improve municipalities' financial management. palities still, according to the government. Smaller and more remote municipalities in many countries--Chile, The Gambia, Georgia, Some very large municipalities took well to Tanzania, and Tamil Nadu State (India), for modernizing their accounting through MDPs. For instance--adopted computerized accounting instance, under China III, the mega-municipality thanks to technical assistance and training of Tianjin was able to integrate different financial packages offered by their respective MDPs. information systems, using the project-supported Software and hardware packages were generally expansion of its computer network. Russia IV provided by local commercial firms that were helped Kazan make municipal accounts more familiar with local conditions and able to provide transparent and strengthened municipal manage- the service in the local language. In most cases, ment. It did this by helping unify municipal municipalities were able to meet national accounts, introducing standard financial indica- standards of municipal financial reporting-- tors, and making projections to establish perform- requiring municipal financial information to be ance targets. This was achieved not through available in real time--promoted by their standard contracts with consultant providers of country's Ministry of Finance. technical assistance, but through intensive 27 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Table 4.1: Summary of MDP Results in Municipal Finance Overall Results in-- outcome Financial Mobilizing Access to Private Country MDP Project name of project management revenues credit finance Sub-Saharan Africa Gambia, The Poverty Allev. & Cap. Building M Sat -- -- Ghana I Second Urban Sat * -- -- Mozambique I Local Govt. Reform Unsat * -- -- Tanzania I Urban Sector Rehabilitation Sat -- -- Zimbabwe Urban Sector & Regional Dev. M Sat -- * -- * East Asia and Pacific China III Tianjin Urban Development Sat -- -- -- China IV Zhejiang Multicities Dev. Sat -- -- -- -- China VII Shanghai Environment Sat -- -- -- -- Indonesia II East Java/Bali Urban Dev. M Sat -- -- Indonesia VI Second East Java Urban Dev. M Unsat * -- -- Indonesia IX Municipal Innovations Sat * * -- * Europe and Central Asia Georgia I Municipal Infrastructure Rehab. M Unsat -- -- -- -- Georgia II Mun. Dev. & Decentralization M Sat * * -- Georgia III Second Mun. Dev. & Decentral. Sat -- Russian Federation IV Kazan Municipal Dev. H Sat -- * Uzbekistan Tashkent Solid Waste Mgt. Sat * * -- * Latin America and the Caribbean Brazil II Ceará Urban Dev./Water Res. M Sat -- * -- Chile II Second Municipal Dev. M Sat -- * -- -- Colombia I Municipal Dev. Sat -- * Colombia IV Urban Infras Services Dev. Sat -- Middle East and North Africa Tunisia I Municipal Sector Investment Sat -- South Asia India I Tamil Nadu Urban Dev. M Sat * * * India II Tamil Nadu Second Urban Dev. Sat -- Sri Lanka Colombo Env. Improvement Unsat -- -- -- -- Sources: IEG PPARs. Note: Bold = MDPs focused on finance; = substantial or higher achievement of element; * = element tackled but with modest or lower achievement; -- = element not attempted. (Roman numerals are attached to MDPs in their sequence in the portfolio of 190 operations, dispensed with altogether when there is only one MDP in a particular country.) MDP = municipal de- velopment project. Ratings: H Sat = highly satisfactory; Sat = satisfactory; M Sat = moderately satisfactory; M Unsat = moderately unsatisfactory; Unsat = unsatisfactory. interchanges between municipal officials and Progress in systemizing municipal accounts was Bank staff and consultants during the frequent slower under Georgia II, where computing skills Bank project supervision missions to the city. were in short supply among the weak municipal administrations; this shortcoming was slowly The municipality of Maputo in Mozambique was overcome by the follow-on Georgia III. Under able to unify its accounts in a similar way, thanks the Uzbekistan MDP, progress was slow in to later operations, Mozambique II and III. modernizing the accounts and financial informa- 28 STRONGER MUNICIPAL FINANCES tion systems of a financially stressed municipal the 1991­2001 life of the project. More recent solid waste utility that had little experience with reviews of the follow-on projects underscore that autonomous financial management. These the strong revenue performance is continuing. results show that a minimal existing capacity is a Large individual municipal clients of India I, precondition for MDPs to obtain substantial such as Madurai (population 909,908) and results in strengthening financial management. Tiruchirapalli (population 775,484), significantly increased their own revenues, enabling them to Mobilizing Own Revenues finance more infrastructure investments from Municipalities' own revenues, levied through their own resources. local taxes, user fees, and charges, have been observed to account for up to one-half of all Pointing to positive effects of project incentives and municipal revenues (Shah 2006). Most of the technicalassistance,Georgia IIparticipantmunici- remainder comes from transfers from higher- palities' own revenues grew by 11 percent during level governments.1 Because such fiscal transfers 1998­2002, but those of nonparticipants fell by 16 are usually beyond the control of a municipal- percent. Under Georgia III, own revenues of the level recipient, the Bank generally supports their 11 participant municipalities continued to grow by reform through Development Policy Lending. 58 percent from 2002 to 2005; nonparticipants saw MDP reform efforts instead have generally their revenues rise by only 35 percent. focused on strengthening own-revenue mobiliza- tion, which is more amenable to improvement Although such large figures may be the result of through MDP project assistance (table 4.1). increases from a very low base, more important for an evaluation is the assessment of the differ- Eleven of the 24 PPAR MDPs achieved substantial ences between the performance of municipalities results in revenue mobilization, eight MDP that participated in an MDP and the performance efforts yielded weaker results, and five did not of those that did not. Although details are scarce, focus on this. Successful MDPs updated tax Indonesia II did report enhanced revenue records, expanded the coverage of cadastres or collection among the 45 municipalities assisted by land registers, and enhanced collections.2 the project in East Java and Bali. The Gambia's Important factors contributing to the positive MDP also reported good results, as own revenues results were MDP incentives that required of participating municipalities grew by 9 percent municipalities to raise revenues to remain annually, well above the 5­6 percent target the eligible for project investment funding. MDP set for them. Tanzania I enabled municipal- ities to more than double their own revenues over Factors leading to weaker results included the project period with the help of modern revenues from other sources readily available to computer mapping and accounting. municipalities and lack of municipal control over parameters of local tax rates and collections. Through Russia IV, Kazan municipality was MDP technical assistance to the municipalities particularly successful in increasing its own (with tight oversight by capable higher-level revenues. It had a particularly important and authorities for wholesale MDPs) helped the urgent reason to do so. Following the establish- municipalities both update their tax rolls and ment of the new autonomous Kazan municipal monitor and follow up with delinquent taxpay- authority in 2004, existing large federal transfers ers. Technical assistance worked well in these were slated to be cut and had to be replaced cases when it was a condition of municipal access quickly. The effect was similar to that of a fiscal to MDP credit for popular infrastructure. shock, although not unexpected. The MDP helped Kazan municipality find alternative Municipalities participating in Colombia I, for sources of revenue, a task it did well, taking instance, saw their own revenues increase more municipal finances into surplus by mid-2007 after rapidly than revenues from fiscal transfers over a succession of deficits. 29 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Tunisia I produced excellent results as well that significant scale. The metaphor of "bringing continue, more than eight years after implemen- municipalities to market" through direct borrow- tation completion. Not only did MDP-parti- ing or issuing bonds appeals to the rigor such cipating municipalities there increase their own commitments impose on financial management, revenues more than other municipalities, but the as municipalities service their debts and seek to participants produced surpluses that were twice remain creditworthy.3 Exposure to credit and its the size targeted. These results show that accompanying opportunities and risks forged a important achievements in financial perform- new approach to municipal finance in some cities. ance can be obtained both through wholesale and retail models of MDPs. Six of the eight MDPs reviewed by PPARs that were focused on strengthened municipal access In two MDPs--Ghana I and Chile II--municipal to credit yielded substantial results. An important clients increased their own revenues, but the factor in these positive outcomes was the MDP growth could not be attributed to the projects. itself making resources available to municipali- Other municipalities that did not participate in the ties that became creditworthy. One other MDP projects enjoyed similar increases, caused by tried but failed to bring municipalities to market buoyant macroeconomic growth exogenous to because the availability of other grant funding the operations. In such cases, it is important not undermined their demand for credit. The to mistakenly read project success into the results. remaining 16 MDPs set no target for themselves Indeed, questions still need to be asked about in this area (table 4.1). Retail MDPs had too few what more the MDPs could have done to help municipal clients to start credit markets, which client municipalities achieve a better revenue generally require a large number of municipali- performance than nonparticipants. In the cases of ties to be functional. Brazil II, Indonesia VII, Mozambique I, and the Zimbabwe MDP, results in raising more own On the positive side, several small municipalities revenues were weak where some municipalities learned about servicing and paying off debt for the were reluctant to raise taxes further. first time under Brazil II in Ceará State. Colombia I and IV, successive wholesale MDPs, Instead of looking broadly at improving munici- both helped bring municipalities to market as pal revenues overall, the Uzbekistan MDP intended by introducing 179 of them to credit concentrated on stimulating direct cost recovery operations for the first time. These municipalities from the project investments themselves; the remain engaged today. Under these projects results were only modest. In this case, the Colombia's national Local Development Fund, municipality of Tashkent allowed necessary FINDETER,currentlywithaAAAFitchcreditrating, annual adjustments to the solid waste tariff to stimulated the supply of private credit to munici- lapse for four years, undermining the sustainabil- palities. It did this by rediscounting commercial ity of the service; a last-minute adjustment did bank loans to them for financing infrastructure and throw a financial lifeline to the system operator. municipal services; that enabled the successful In some other countries, notably China and Sri consolidation of a new local credit market. Further- Lanka, increasing local revenues, whether more, the operations fostered a municipal culture through MDPs or by other means, simply was not of creditworthiness that was publicly monitored by a priority for the national government. international credit-rating agencies that set up local operations in the country. Municipal Creditworthiness and Debt Management Eight municipalities were awarded a BBB or Through offering lines of credit for financing higher credit rating, which in Colombia is investments in infrastructure and municipal regarded as being equivalent to investment services, some wholesale MDPs were able to grade. Through Colombia I, the municipality of introduce many municipalities to borrowing on a Pereira (population 440,000), with an A+ Fitch 30 STRONGER MUNICIPAL FINANCES credit rating, went one step further: in 1998 it devaluations in several countries have laid bare successfully issued municipal bonds that were the question of who should be responsible for heavily oversubscribed in the local market. This the additional local currency payment needed to rich experience also revealed possible market amortize a foreign currency-denominated debt. constraints on the demand side, however. Even Standard MDP practice has been for the when creditworthy, several municipalities in borrower, usually the central government Colombia were reluctant to assume debt for financial intermediary, to take this risk, part of municipal services. Their leaders were cautious which it may be able to price into the credit about borrowing and their constituents seem- offered to municipalities. Municipalities, after all, ingly satisfied with the existing levels of local are rarely foreign currency earners. services provided. Under Colombia I and II, FINDETER itself was Local credit markets in other countries have been able manage this risk professionally through stimulated by other Bank-financed MDPs. India II forward pricing of foreign currencies and also by encouraged municipalities in Tamil Nadu to maintaining foreign account holdings, ensuring become creditworthy to have better access to loans that its own exposure did not exceed more than awarded by the Tamil Nadu Urban Development 12.7 percent of its total liabilities. Meanwhile, Fund. The state's second largest city, Madurai, went Colombian municipalities were shielded from one credit step further. With the project's technical that risk. India II took a similar approach, assistance, the municipality issued bonds to raise expecting the state-level Tamil Nadu Urban funds to pay for the construction of an inner ring Development Fund to manage the foreign road. But these successes were built on the back of exchange risks. It moved more cautiously, shortcomings of the earlier India I, which made however, given that fewer hedging instruments little progress with municipal credit. Concessional were available in that country's financial markets. state-level grant financing continued to be the major source of revenue for municipalities, far One MDP also provided temporary relief to a outstripping resources coming through the MDP's municipality that was hard pressed by short-term line of credit. debt that an earlier municipal administration had left unpaid. Colombia IV, through advice on Some progress, albeit modest and very protracted, portfolio management, helped the large munici- has been made toward establishing the building pality of Barranquilla (population 1.4 million) blocks of municipal credit systems in Georgia. pay off all its short-term debts, accumulated Georgia III helped make the country's nine during the 1990s, by the year 2001. largest municipalities creditworthy--at least in the eyes of the official Municipal Development Fund of Several questions about providing credit to Georgia. This was the first time this had been municipalities remain, however. Should lending accomplished in that country's history and was a conditions between public sector agencies try to necessary step toward a financial market recogni- simulate exactly what the market would itself tion of municipal creditworthiness. In both prescribe? Do municipal credit markets in countries--Georgia and India--several municipal- developing countries that are controlled or ities took out loans for the first time to finance tightly regulated by government agencies provide services and infrastructure, learning quickly how accurate pricing signals on interest rates, terms of to properly manage a debt portfolio. repayment, and other lending conditions? The Levy Report to the Bank (World Bank 1989) and Downside foreign exchange risks, especially the subsequent 1998 Operational Policy 8.30 on volatile at the end of 2008, have rarely been financial intermediary lending tended toward treated openly in the designs of MDPs. Nor have negative answers to these questions. This dis- they been found to constrain municipal credit. couraged earmarked lending, such as credit to But the consequences of sharp local currency municipalities, which was thought to fragment 31 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED broader financial markets and undermine their reasons. Privatizing the loss-making municipal efficiency. A recent study by the Bank's Urban solid waste management operation in the Anchor argued that this kind of lending to Uzbekistan MDP, a specific aim of the European municipalities could effectively improve service Bank for Reconstruction and Development, the delivery when the MDP is deliberately adapted to Bank's partner in the project, did not proceed the needs of its municipal clients (Annez, Huet, because of lack of interest by private investors. and Peterson 2008). The planned privatization of the municipal water Private Finance Participation utility in Kazan, supported by the Bank under MDP incursions into enabling and stimulating Russia IV, did not go far because the European private finance of municipal services have yielded Bank for Reconstruction and Development (not few positive results. The focus of the 24 MDPs partnering with the Bank in this operation) reviewed by PPARs on this aspect of municipal sought to strengthen the existing public sector management was very weak. To seriously engage operator instead. The Zimbabwe MDP's hope the private sector, municipalities have to build of stimulating private finance of municipal teams of experts to prepare and supervise housing was frustrated by private building contract management units, something that societies' own financial weaknesses, which arose many still lack. from their inability to compete with postal savings and their inability to provide an afford- Just seven projects addressed this, and only one able product for the needs of lower- and middle- obtained substantial efficacy in achieving greater income households. In hindsight, a more private finance (table 4.1). This was under thorough analysis of Zimbabwe's housing market Colombia IV, which helped municipalities would not have recommended pursuing this increase water, gas, and solid waste tariffs, thereby objective. Under Indonesia IX, private financ- making some services profitable for private ing of local municipal markets or other investors for the first time. At the same time it infrastructure did not appear on the scale hoped made some services less affordable to the poor for, as small municipalities especially were because it did not provide a corresponding safety unable to articulate a regulatory framework for net for them. Average household expenditure on the local investors. basic sanitation in Colombia rose by 204 percent between 1997 and 2003. Thus, an important factor The limited results in securing private finance for in this positive result was the ability and willing- local services point to several areas in which MDP ness of municipalities to increase local tariffs, design should be strengthened: accurate analysis albeit with some loss of affordability. of local financial markets, a realistic assessment of the demand for such services at the prices they Factors undermining successful private financing will be offered, and, most important, an are mostly related to private investors hesitating assurance of a reasonable chance of some profit. to participate in the face of pricing or regulatory In addition, it is important for an MDP appraisal uncertainties. Thus, land development for low- to affirm that municipalities understand their income families by private developers under responsibilities in relation to the regulatory India I did not go far, as the developers showed framework, especially for pricing that would little interest in the scheme, again for pricing govern such private finance. 32 Chapter 5 Evaluation Highlights · Although all 190 MDPs focused on municipal service provision, less than one-third used cost-benefit analysis for evaluating or prioritizing investments. · More than one-third of the evalu- ated MDPs were able to substan- tially help municipalities manage procurement for the first time. · Most MDPs paid little attention to O&M, significantly increasing the risk to development outcomes. · Few MDPs focused explicitly on im- proving the lives of the poor, and ev- idence of actual results of better access to services obtained is thin. Municipal solid waste disposal in Tashkent, Uzbekistan. Photo courtesy of Roy Gilbert. Managing Service Provision T his chapter reports the findings of IEG assessments of the efficacy of the following elements of managing service provision: prioritizing in- vestments through cost-benefit analysis, conducting procurement for service investments, and handling the O&M of ongoing services. Elements of Service Provision notably data produced by project M&E. Ghana I made simple but methodologically robust Prioritizing investments in service provision estimates that did not require a lot of data. The When resources are scarce, municipal managers project's municipal slum upgrading components need to know, at the outset, the best options for in Tamale (population 360,579) yielded an ERR investment and how well those investments of 29 percent, using benefits derived from the perform at completion. To help them, the Bank (realistic) increases of land values following requires MDPs, like other investment operations project improvements. it finances, to conduct ex ante and ex post economic evaluations of investment perform- Tanzania I applied a similar method, and the ance. The present study found, however, that Zimbabwe MDP incorporated shadow pricing only 7 of the 24 PPAR MDPs did this effectively. into the assessment. Beyond Africa, China III, Those seven applied the instrument of choice, a Indonesia II, Georgia III, and India I all saw cost-benefit analysis that yielded an economic municipalities themselves directly involved in rate of return (ERR) or an estimate of the net the ERR work, under the guidance of the MDPs. present value, at appraisal and/or completion (table 5.1). Making the investments: Procurement Through MDPs, many municipalities engaged in Project documentation of the remaining MDPs competitive tendering for works and supplies for gave diverse reasons for the lack of economic the first time; traditionally that procurement had analysis. The reasons included the high cost of been in the hands of the central government. estimating ERRs, the complexities of measuring From its PPAR assessments in the field, IEG found external costs and benefits, and the exempt status that local MDP beneficiaries were better in- of some MDPs because of their quasi-emergency formed about service improvements to their status. Nevertheless, seven MDPs facing chal- neighborhoods when municipalities themselves lenges such as these were able to successfully had carried out the procurement. Nine MDPs assess their efficiency through ERR estimates. reviewed by PPARs across most Regions obtained substantial results in this area mainly by introduc- Most of these MDPs applied simple models of ing municipalities to procurement management cost-benefit analysis that used available data, for the first time. 35 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Table 5.1: Summary of MDP Results in Service Provision Overall outcome Results in-- Country MDP Project name of project ERRs Procurement O&M Sub-Saharan Africa Gambia, The Pov. Allev. & Capacity Building M Sat * * Ghana I Second Urban Project Sat * Mozambique I Local Govt. Reform Unsat -- * -- Tanzania I Urban Sector Rehabilitation Sat Zimbabwe Urban Sector & Regional Dev. M Sat * * East Asia and Pacific China III Tianjin Urban Development Sat * China IV Zhejiang Multicities Dev. Sat * * -- China VII Shanghai Environment Sat -- * -- Indonesia II East Java/Bali Urban Dev. M Sat * * Indonesia VI Second East Java Urban Dev. M Unsat * * * Indonesia IX Municipal Innovations Sat -- * -- Europe and Central Asia Georgia I Mun. Infrastructure Rehab. M Unsat -- -- * Georgia II Mun. Dev. & Decentralization M Sat -- -- * Georgia III Second Mun. Dev. & Decentral. Sat * Russian Federation IV Kazan Municipal Dev. H Sat * * Uzbekistan Tashkent Solid Waste Mgt. Sat * * Latin America and the Caribbean Brazil II Ceará Urban Dev. & Water Res. M Sat * -- Chile II Second Municipal Dev. M Sat -- -- * Colombia I Municipal Dev. Sat * * Colombia IV Urban Infras. Services Dev. Sat -- * Middle East and North Africa Tunisia I Municipal Sector Investment Sat -- * South Asia India I Tamil Nadu Urban Dev. M Sat * -- India II Tamil Nadu Second Urban Dev. Sat * * * Sri Lanka Colombo Env. Improvement Unsat -- -- Sources: IEG PPARs. Note: Bold = MDPs focused on service provision; = substantial or higher achievement of element; * = element tackled but with modest or lower achievement; -- = element not at- tempted. In the case of ERRs, achievements are rated according to the use made of the tool itself, not according to the value of the estimated rate of return. (Roman numerals are at- tached to MDPs in their sequence in the portfolio of 190 operations, dispensed with altogether when there is only one MDP in a particular country.) ERR = economic rate of return; MDP = municipal development project; O&M = operations and maintenance. Ratings: H Sat = highly satisfactory; Sat = satisfactory; M Sat = moderately satisfactory; M Unsat = moderately unsatisfactory; Unsat = unsatisfactory. In other cases, particularly in East Asia and Pacific already had experience with procurement and and South Asia, the impact of MDPs on procure- continued to handle it proficiently, as they had ment practice was less. But this does not mean done before an MDP whose design rightly did that they all failed. Several larger municipalities not focus unduly on this issue (table 5.1). 36 MANAGING SERVICE PROVISION For example, Brazil II enabled 49 mostly small municipal management of O&M. In the remain- municipalities such as Quixadá (population der of the cases, O&M was either disregarded by 49,328) in Ceará State to oversee competitive MDPs that focused primarily on supporting the procurement of works for upgrading low-income initial service investment, or it did not succeed neighborhoods for the first time. At the opposite for lack of funding (table 5.1). end of the scale, a very large municipality, such as Tianjin under China III, became quite expert in On the positive side, Tanzania I successfully conducting complex international competitive introduced computerized maintenance systems bidding after its purchase of sophisticated traffic to 10 municipalities that used them to track and monitoring equipment for the city and state-of- plan the maintenance of urban streets. Although the-art equipment for the solid waste disposal budget shortfalls are often given as a reason for site at Shuangkou. These became a model for all the lack of O&M, The Gambia MDP helped of China. nine municipalities, home to half the country's urban population, to establish O&M accounts The experience of Russia IV convinced Kazan that were adequately funded by the municipali- municipality that Bank-standard local competi- ties themselves. Although quite an achievement tive procurement procedures helped it obtain in itself, local administrations still lacked the lower prices. Kazan thus decided to apply these necessary equipment and technical and manage- procedures voluntarily to urban street upgrades rial capacity to carry out all the maintenance financed from its own budget. This practice needed. continues today, though the project has closed. Previously, Kazan had relied on sole-source Better results were obtained through Ghana I, acquisitions, typical of former Soviet practices, which even introduced parking controls in the which the MDP helped reform. Although munici- central areas of the cities of Accra (population palities themselves drive such results, for the 2.0 million) and Sekondi-Takoradi (population most part they have to be consistent with 371,791) to facilitate street cleaning and access national or higher-level legislation. by maintenance vehicles. Under Tunisia I, the remote municipality of Kasserine (population O&M of services 82,000) upgraded its Ezzouhour district, keeping For their own investments and for those made by it in good condition through careful mainte- others within their jurisdictions, municipalities nance, sometimes with the help of the local are generally responsible for the use and upkeep residents. of the assets provided by MDPs. Past urban development projects in which central govern- Inadequate attention to O&M led to negative ment authorities simply delivered infrastructure project results for MDPs. Insufficient O&M assets to a city without involving or sometimes funding meant, for instance, that the municipality even consulting the municipality about O&M of Bulawayo (population 699,000) under the generally failed for lack of municipal ownership Zimbabwe MDP could not pay for the pumping (IEG 2004, p. 18). needed to keep the project's Nkulumane sewage plant operating. Similarly, under Indonesia II, a By putting municipalities at center stage, MDPs water supply system for the Kintamani district of make municipal O&M responsibilities clearer. Denpasar (population 405,923), Bali, fell into They also provide both challenges and opportu- disuse because the municipality could afford to nities for local administrations to ensure that operate the pumps for only a fraction of the time urban infrastructure continues to provide good- needed each day. Other municipalities in East Java quality services and benefits to users. It is clear were able to conduct everyday maintenance such that many municipalities have yet to rise to this as patching minor pavement failures, but not challenge. This study found only four MDPs that heavier repairs. Even prosperous municipalities achieved substantial results in strengthening the may feel that incentives are not right to encourage 37 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED O&M. Under Tunisia I, for example, officials of Neighborhood upgrading and basic sanitation Ariana (population 237,395) felt that it was better took MDP support for services one step further to neglect routine maintenance in upgraded areas by introducing water and sewer services into and allow the infrastructure to fail, because that poor neighborhoods. The large scale of service increased the chance that the government would provision across Tamil Nadu by India I is evident finance a complete replacement. from the upgrading of 489 slums. Through the upgrade, 76,000 people gained better access to Sectors Most Affected and their homes and businesses through paved Service Quality footpaths and proper drainage. These improve- IEG PPARs show that MDPs cover a wide ments were implemented across 35 municipali- spectrum of municipal services in their efforts to ties that participated directly for the first time in strengthen municipal management: upgrading providing such better-quality services. India II existing infrastructure, providing new assets, continued to provide more of the same in 102 and improving the operation of existing additional municipalities, where sample benefici- infrastructure. MDPs typically supported ary assessments point to better-quality basic improvements to urban road and street paving, sanitation services. drainage and lighting, basic sanitation, solid waste and slum upgrading, environmental Tanzania I helped the smaller municipalities of improvements, transport, and others. By con- Mororgoro (population 251,000) and Tabora vention, Bank support for important municipal (population 145,000) significantly reduce education and health services has been unaccounted-for water by helping to repair leaky provided through dedicated sectoral projects, main lines. Consumers reported that water not through MDPs. By mandate, Bank assistance became available for more hours per day than has generally not been involved with the before the project. Unaccounted-for water important political and security work that continued to be a problem in some Colombia I municipalities in many countries carry out. municipalities, however, where network cov- erage was extended without achieving overall Street paving and drainage were the most system improvements. popular municipal services supported by MDP management strengthening in Colombia, Ghana, When trying to offer large-scale sewage India, and Georgia. Colombia IV helped treatment plants through MDPs, municipalities improve the urban environment of low-income had more limited success. Investment cost peripheral areas of several cities, improvements overruns and high operating costs put them out that are still being maintained. Paving streets of the reach of municipal finances and resulted reduced dust during dry seasons, and better in incomplete and nonoperational plants, as in drainage avoided repeat flooding and impassable the municipality of Tema (population 155,782) streets during rainy seasons. under Ghana I and in the Nkulumane district of Bulawayo under Zimbabwe's MDP. The innova- Ghana I radically transformed the central areas tive introduction of a low-cost, small-scale of Accra and Sekondi-Takoradi through street modular approach to sewage treatment by the paving and drainage, especially in places where municipality of Malang (population 747,000) street markets were held daily. This improved through Indonesia VI also has met with little access to markets, whose stallholders reported success. Beneficiaries continue to discharge increased business. The upgraded locations sewage into storm drains, rather than paying the made the cleanup after the markets easier, too, (modest) fee imposed by the new system. thereby improving the urban environment. Georgia's three MDPs improved residential MDPs provided basic sanitation through solid neighborhoods by paving streets. waste management, too, with generally positive 38 MANAGING SERVICE PROVISION results. China III led to the building and Other municipal services were mostly in the area operation of the country's first sanitary landfill at of urban transport. China III introduced better Shuangkou near Tianjin. Similar solid waste traffic surveillance and monitoring to the megacity disposal solutions were offered through MDPs in of Tianjin, although without giving much higher Sri Lanka, Uzbekistan, and Tanzania. priority to public transport. India I in Tamil Nadu, Although they did not fully meet all the ambitious however, brought considerable improvements to performance standards set for them, the MDP the quality of the bus service in the state capital solutions do represent significant advances over Chennai (population 4.3 million) through the previous practices of uncontrolled dumping. purchase of new bus chassis. Bus transport was a Solid waste collection equipment and technical key feature, too, of Tanzania I, which upgraded assistance provided through Tanzania I, for municipal bus terminals in eight municipalities, instance, raised the share of garbage produced providing paved areas for buses and covered that was actually collected from 40 percent across shelters for passengers. The terminals became the 9 cities to 55 percent, a significant improve- hives of commercial activity and are still booming ment in service quality and benefit for the urban today, in addition to handling 50 percent more environment. In the Uzbekistan MDP, the buses than before the project. A special MDP quality of solid waste collection improved transport improvement came through Georgia I, through more regular pickups at controlled which provided spare parts to enable the Metro collection points rather than through an increase system of the capital Tbilisi to continue operations in the quantity collected. after supplies had been interrupted following the collapse of the Soviet Union. In one case, a large number of municipalities benefited. Colombia I's help to 179 municipali- Income Levels of Beneficiaries-- ties had an impact on service levels that made its Poverty Reduction mark on indicators at the national level. Between Better municipal management of service delivery 1993 and 2003, when the project was imple- could benefit all income groups of the popula- mented, basic sanitation coverage of the lowest tion living and working within the jurisdiction of quintile of Colombia's population in income a municipality. But does it bring benefits to the distribution rose from 77 percent to 83 percent. poor and reduce poverty? Environmental improvements by MDPs beyond Only 27 percent of the 190 MDPs in the portfolio those resulting from street paving and basic explicitly aimed to bring municipal services to sanitation included both long-term and short- the poor. Evidence of actual results achieved by term provision of other services. Through Sri the 114 completed MDPs is patchy, at best. There Lanka's MDP, the municipality of Colombo is some evidence that MDPs benefitted the poor, (population 2.3 million) sought to reduce the but it is thin, which is to be expected from an pollution of the city's Beira Lake, but with limited MDP portfolio so little focused on poverty. Only demonstrable results. A significant short-term 4 of the 24 PPAR MDPs had project objectives environmental gain was made by China VII, explicitly aimed at improving the lives of the however. The project enabled the Shanghai poor: Brazil II, Ghana I, The Gambia, and municipality (population 14.6 million) to build a Tanzania I. A few others, such as Colombia I large water catchment plant on the upper, less- and II and Indonesia VI, introduced basic polluted reaches of the environmentally stressed sanitation to poorer districts of client municipal- Huangpo River. Today, more than five years after ities, even though their formal objective completion, the plant continues to provide safe statements did not specify a focus on the poor. drinking water to more than 8 million con- sumers, whose health had been seriously at risk IEG field inspections confirmed that basic from the poor water quality of the old intake. municipal services provided through Brazil II in 39 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Ceará State had indeed benefited poor districts of Implementation Completion Reports rarely what were mostly low-income municipalities in provide information about the income levels of this poor northeastern region of the country. The MDP beneficiaries. If future MDPs are to benefit Gambia MDP, with poverty alleviation in the the poor on a larger scale and are to be seen doing project title, benefited more poor, unskilled so, they will have to do two things. First, they need construction workers than targeted, albeit only to sharpen the focus of their objectives on helping temporarily through construction work arising the poor, making it explicit in project objective directly from the project implementation. statements and in project design. A more poverty- Tanzania I brought urgent relief to some 13,600 oriented approach would explain, for instance, poor residents of Dar es Salaam (population 2.8 how the poor would benefit from municipal million) through drilling 34 emergency boreholes investments and services rendered better through (serving 400 people each) during a drought MDP municipal management strengthening. emergency. Ghana I successfully introduced basic sanitation, street paving, and lighting to Second, they need to harness M&E so that the 24,000 poor people living in the Ashaiman design of these systems helps establish clear goals squatter district of Tema, in the port city of Accra. for poverty alleviation and so that M&E implementation shows exactly what has been The poverty results of these operations are achieved. As noted earlier, there is much work themselves worth further scrutiny by those who still to do in this area for the Bank to fully deploy wish to emulate such results in future its poverty reduction mission through its partner operations. Indeed, the evidence showing the municipalities. Being able to assess poverty- lack of poverty focus of most MDPs points to a related objectives and project design, as well as clear need to report the results of such experi- actual results of MDPs, would be an important ences much more thoroughly. contribution. 40 Chapter 6 Community life resumes for newly resettled residents of Ningbo, China. Photo courtesy of Roy Gilbert. Conclusions W ith cities now home to more than half the world's population and providing the majority of world gross domestic product, improving municipal management is crucial for development. The Bank's cho- sen instrument to support this has been the MDP, 190 of which have assisted nearly 3,000 municipalities in 76 countries worldwide over the past decade. IEG field assessments of 24 completed MDPs, tial. Retail MDPs might perform better if they desk reviews of 90 more, and an overview of 76 incorporated more of the winning elements of ongoing operations have highlighted the wholesale MDPs, such as performance-based strengths and weaknesses of these operations, incentives and a focus on finance. which are aimed at helping municipalities · More frequent use of cost-benefit or cost- strengthen their management in the planning, effectiveness analysis would help MDPs' mu- finance, and service provision dimensions. This nicipal clients select the best investments and study has found positive MDP experiences worth achieve better outcomes. IEG found that only emulation, as well as weaker results that point to half of the 114 completed MDPs did this, with areas in need of improvement. The following the best coverage in the Sub-Saharan Africa forward-looking lessons may help strengthen Region. municipal management. · For M&E to succeed in MDPs, it has to be use- ful and not unduly burdensome to municipal- · Among the three dimensions of municipal ities themselves; it must also keep a focus on management--planning, finance, and service achieving results, particularly for the poor. provision--MDP support for strengthening Strong M&E can also help reduce the expense municipal finance most often yielded successful of cost-benefit analyses by providing some of results. The Bank should continue to support the data needed to estimate ERRs. Few MDPs tightened municipal financial management, have succeeded with this. municipalities raising their own revenues, and · Private finance of municipal services can be en- municipalities being brought to local credit couraged through better analysis of demand markets when conditions are appropriate. and of local financial markets. Stable regula- · Project documentation that routinely reports tions also help municipalities gain the trust of basic data about each client (municipality name, private investors. population, and MDP investment) is vital to de- · Thus far, little evidence exists that stronger veloping a better understanding of the scope municipal management has benefited the poor. of MDP results. MDPs need to give much more attention to · Wholesale MDPs have yielded better outcomes poverty reduction in defining MDP objectives, than retail MDPs over the past decade, but showing how the poor would benefit from more analysis is needed to understand the municipal investments and services improved precise reasons for the performance differen- through stronger municipal management. 43 Appendixes Commitment Bank Borrower Project ID MDP Type Project name Perioda US$ millions Outcome performance performance Sub-Saharan Africa P000097 Benin I R Urban Rehabilitation & Management 1992­98 23 H Sat H Sat Sat APPENDIX P035648 Benin II R First Decentralized City Management 1999­2005 26 Sat Sat H Sat P082725 Benin III R Second Decentralized City Management 2006­ 35 -- -- -- P000297 Burkina Faso I R Urban Environment 1995­2005 37 Sat Sat Sat P084027 Burkina Faso II R Decentralized Urban Capacity Building 2007­ 10 -- -- -- A: P064961 Burundi W Public Works & Employment Creation 2001­ 40 -- -- -- LIST P084002 Cameroon R Urban & Water Development Support 2007­ 80 -- -- -- P072030 Chad R Urban Development 2007­ 15 -- -- -- OF P037575 Côte d'Ivoire W Municipal Support 1995­2004 40 Unsat Unsat Unsat P000712 Ethiopia I R Second Addis Urban Development 1990­99 35 Unsat Sat Unsat BANK P050938 Ethiopia II W Capacity Building for Decentralized Service Delivery 2003­ 26 -- -- -- P074020 Ethiopia III R Public Sector Capacity Building 2004­ 100 -- -- -- -FINANCED P101473 Ethiopia IV R Urban Water Supply & Sanitation 2007­ 100 -- -- -- P057997 Gambia, The R Poverty Alleviation & Capacity Building 1999­2007 15 M Sat Sat Sat P000910 Ghana I R Second Urban 1990­99 70 Sat Sat Sat P000936 Ghana II W Local Govt. Development 1994­2003 39 Sat Sat Sat MDP P000973 Ghana III R Urban Environment & Sanitation 1996­2004 71 M Sat Unsat Unsat P050624 Ghana IV W Fifth Urban 2000­04 11 Sat Sat Sat S P001074 Guinea I R Third Urban Development (APL) 1999­2005 18 Sat Sat Sat ,FIS P091297 Guinea II R Third Urban (Phase 2) 2008­ 15 -- -- -- C P001319 Kenya R Urban Transport 1996­2005 115 M Unsat Unsat Unsat AL P001512 Madagascar I R Antananarivo Plain Development 1990­2000 31 M Unsat Unsat Unsat 1998­2008 P001583 Madagascar II R Antananarivo Urban Works Pilot 1994­99 18 Sat Sat Sat P048697 Madagascar III R Urban Infrastructure 1997­2005 35 Sat Sat Sat P001636 Malawi R Local Govt. Development 1992­2001 24 M Unsat Unsat Unsat P001750 Mali I R Urban Development & Decentralization 1997­2005 80 M Unsat Sat Unsat P090075 Mali II R Second Transport Sector 2007­ 90 -- -- -- P034106 Mauritania I W Urban Infrastructure & Pilot Decentralization 1996­2002 14 Sat Sat Sat P069095 Mauritania II R Urban Development Program 2002­ 70 -- -- -- 47 P001791 Mozambique I R Local Govt. Reform & Engineering 1993­99 23 Unsat H Unsat H Unsat (Continues on the next page.) 48 IMPR Commitment Bank Borrower O Project ID MDP Type Project name Perioda US$ millions Outcome performance performance VING Sub-Saharan Africa (continued) P001806 Mozambique II W Municipal Development 2002­07 34 M Sat M Sat M Sat MUNICIP P096332 Mozambique III R Maputo Municipal Development Program 2007­ 30 -- -- -- P049691 Niger I W Urban Infrastructure Rehabilitation 1997­2003 20 Sat Sat Sat P095949 Niger II R Local Urban Infrastructure Development 2008­ -- -- -- AL P002074 Nigeria I R Oyo State Urban 1990­99 50 Unsat Sat Unsat MANA P071340 Nigeria II R Lagos Metropolitan Development & Governance 2007­ 200 -- -- -- P060005 Rwanda R Urban Infrastructure & City Management (APL) 2006­ 20 -- -- -- GEMENT P002365 Senegal I W Urban Development & Decentralization Program 1998­2005 75 H Sat H Sat Sat P084022 Senegal II R Local Authorities Development Program 2007­ 80 -- -- -- P076901 South Africa W Municipal Financial Management (TAL) 2003­ 15 -- -- -- FOR P002669 Swaziland I R Urban Development 1995­2005 29 Sat Sat Sat P095232 Swaziland II R Local Government 2008­ -- -- -- CI TIES P002758 Tanzania I R Urban Sector Rehabilitation 1996­2005 105 H Sat Sat Sat P070736 Tanzania II R Local Govt. Support 2005­ 52 -- -- -- T P002865 Togo R Lome Urban Development 1994­2003 26 Sat Sat Unsat O SUCCEED P002933 Uganda I R First Urban 1991­2000 29 Sat Sat Sat P059223 Uganda II R Nakivubo Channel Rehabilitation 1999­2004 22 Sat Sat Sat P002992 Uganda III R Local Govt. Development Program 2000­04 81 Sat Sat Sat P044679 Uganda IV W Economic & Financial Management 2000­07 34 Sat M Sat M Sat P078382 Uganda V R Kampala Institutional & Infrastructure Development 2008­ 34 -- -- -- P003241 Zambia R Urban Restructuring 1995­2002 33 M Sat Sat Sat P003294 Zimbabwe W Urban Sector & Regional Development 1989­2000 80 M Sat Sat Sat East Asia and Pacific P003564 China I R Beijing Environment 1992­99 125 M Sat Sat Sat P003565 China II R Shanghai Metropolitan Transport 1992­99 60 Sat Sat Sat P003568 China III R Tianjin Urban Development 1992­2001 100 Sat Sat H Sat P003473 China IV R Zhejiang Multicities Development 1993­2003 110 Sat Sat Sat P003580 China V R Southern Jiangsu Environmental Protection 1993­2001 250 M Unsat Unsat Unsat P003622 China VI R Second Shanghai Metropolitan Transport 1994­2001 150 Sat Sat Sat P003586 China VII R Shanghai Environment 1994­2003 160 Sat Sat Sat P003598 China VIII R Liaoning Environment 1995­2004 110 Sat Sat Sat P003603 China IX R Enterprise Housing & Social Security Reform 1995­2005 350 Sat Sat Sat P003602 China X R Hubei Urban Environment 1996­2005 150 M Sat Sat Sat P003646 China XI R Chongqing Industrial Pollution Control & Reform 1996­2003 170 Unsat Sat Sat P003599 China XII R Yunnan Environment 1996­2005 150 M Sat Sat Sat P040185 China XIII R Shandong Environment 1998­2006 95 Sat Sat Sat P041890 China XIV R Liaoning Urban Transport 1999­2006 150 M Sat Sat Sat P043933 China XV R Sichuan Urban Environment 1999­2007 152 M Sat Sat M Sat P049436 China XVI R Chongqing Urban Environment 2000­ 200 -- -- -- P045915 China XVII R Urumqi Urban Transport 2001­ 100 -- -- -- P056596 China XVIII R Shijiazhuang Urban Transport 2001­ 100 -- -- -- P040599 China XIX R Tianjin Second Urban Development 2003­ 150 -- -- -- APPENDIX P069852 China XX R Wuhan Urban Transport 2004­ 200 -- -- -- P081346 China XXI R Liuzhou Environment Management 2005­ 100 -- -- -- P081161 China XXII W Chongqing Small Cities Infrastructure Improvement 2005­ 180 -- -- -- P075732 China XXIII R Second Shanghai Urban Environment (APL) 2006­ 180 -- -- -- A: P003922 Indonesia I R Sulawesi--Irian Jaya Urban Development 1991­99 100 M Sat Sat Sat LIS P003943 Indonesia II W East Java/Bali Urban Development 1991­98 180 M Sat Sat Sat T P003998 Indonesia III R Surabaya Urban Development 1994­2001 175 H Unsat Unsat Unsat OF P003890 Indonesia IV R Semarang Surakarta Urban Development 1994­2002 174 M Unsat Sat Unsat B ANK-FINANCED P003951 Indonesia V R Kalimantan Urban Development 1995­2003 136 Sat Sat Sat P039312 Indonesia VI W Second East Java Urban Development 1996­2002 117 M Unsat Sat Sat P036053 Indonesia VII W Second Sulawesi Urban Development 1997­2003 155 Unsat Unsat Unsat P055821 Indonesia VIII W Urban Poverty 1999­2004 100 Sat Sat Sat P056074 Indonesia IX W Municipal Innovations 1999­2003 5 Sat Sat Sat P040528 Indonesia X R Western Java Environmental Management 2001­06 17 M Sat Sat Sat MDPs, P072852 Indonesia XI W Second Urban Poverty 2002­ 100 -- -- -- P071296 Indonesia XII W Urban Sector Development & Reform 2005­ 45 -- -- -- FISCAL P004175 Korea, Rep. of R Pusan Urban Transport 1995­2002 100 M Sat Sat Sat P036052 Mongolia R Urban Services Improvement 1998­2004 17 Sat Sat Sat P004592 Philippines I W Third Municipal Development 1992­2001 68 Sat Sat Sat 1 998­20 P048588 Philippines II W Local Govt. Unit Finance & Development 1999­ 100 -- -- -- P064925 Philippines III W Support for Strategic Local Development & Investment 2006­ 100 -- -- -- 49 (Continues on the next page.) 08 50 IMPR Commitment Bank Borrower O Project ID MDP Type Project name Perioda US$ millions Outcome performance performance VING East Asia and Pacific (continued) P004830 Vietnam I R Water Supply 1997­2005 99 Sat Sat Sat MUNICIP P004833 Vietnam II R Urban Transport Improvement 1999­2006 43 M Sat Sat Unsat P070197 Vietnam III R Urban Upgrading 2004­ 222 -- -- -- P082295 Vietnam IV R Coastal Cities Environmental Sanitation 2007­ 125 -- -- -- AL Europe and Central Asia MANA P094225 Armenia R Third Social Investment Fund 2007­ 25 -- -- -- P056192 Bosnia & Herzegovina I W Local Development 1999­2005 15 Sat Sat Sat GEMENT P070995 Bosnia & Herzegovina II W Community Development 2001­ 15 -- -- -- P057950 Bosnia & Herzegovina III R Solid Waste Management 2002­ 18 -- -- -- P083353 Bosnia & Herzegovina IV W Urban Infrastructure & Service 2005­ 20 -- -- -- FOR P065416 Croatia W Coastal Cities Pollution Control 2004­ 48 -- -- -- P008417 Georgia I w Municipal Infrastructure Rehabilitation 1995­2000 18 M Unsat M Unsat M Unsat CI P050910 Georgia II W Municipal Development & Decentralization 1998­2003 21 M Sat M Sat M Sat TIES P077368 Georgia III W Second Municipal Development & Decentralization 2003­ 19 Sat Sat Sat T P008506 Kazakhstan I R Social Protection 1995­2002 41 Unsat Sat Unsat O P008500 Kazakhstan II R Atyrau Pilot Water 1999­2005 17 Sat Sat Sat SUCCEED P079259 Kosovo W Second Community Development Fund 2004­07 4 M Sat Sat Sat P050719 Kyrgyz Republic I R Urban Transport 2001­05 22 Sat Sat Sat P083377 Kyrgyz Republic II W Small Towns Infrastructure & Capacity Building 2005­ 15 -- -- -- P034584 Latvia R Municipal Services Development 1996­2002 27 M Sat Sat Sat P035802 Lithuania R Municipal Development 1999­2005 20 Unsat Unsat Sat P035082 Poland W Municipal Finance 1998­2002 22 Unsat Unsat Unsat P042720 Russian Federation I R St. Petersburg Center City Rehabilitation 1997­2002 31 M Unsat Unsat Unsat P064238 Russian Federation II R Northern Restructuring 2001­ 80 -- -- -- P069063 Russian Federation III R St. Petersburg Economic Development 2003­ 161 -- -- -- P082018 Russian Federation IV R Kazan Municipal Development 2005­07 125 H Sat Sat H Sat P079027 Tajikistan R Municipal Infrastructure 2006­ 15 -- -- -- P009065 Turkey I R Bursa Water & Sanitation 1993­2001 130 Sat Sat Sat P081880 Turkey II W Municipal Services 2005­ 275 -- -- -- P100383 Turkey III R Istanbul Municipal Infrastructure 2007­ 322 -- -- -- P034083 Turkmenistan R Urban Transport 1997­2001 34 M Unsat Unsat Unsat P095337 Ukraine R Urban Infrastructure 2008­ 140 -- -- -- P049582 Uzbekistan R Tashkent Solid Waste Management 1998­2006 24 Sat Sat Sat Latin America and the Caribbean P006060 Argentina I W Second Municipal Development 1995­2005 210 Sat Sat Sat P060484 Argentina II R Basic Municipal Services 2006­ 110 -- -- -- P070448 Argentina III W Subnational Govt. Public Sector Modernization 2006­ 40 -- -- -- P006104 Belize R Belize City Infrastructure 1994­98 20 M Sat Unsat Unsat P006190 Bolivia I W Municipal Development 1994­2000 42 Sat Sat Sat P083979 Bolivia II R Urban Infrastructure 2007­ 30 -- -- -- P006524 Brazil I W Minas Municipal Development 1994­2002 150 Sat Sat Sat P006436 Brazil II W Ceará Urban Development & Water Resource 1995­2004 140 M Sat Sat Sat P006562 Brazil III W Bahia Municipal Infrast. Dev. & Mgmt. 1997­2005 100 Sat Sat Sat P081436 Brazil IV R Bahia Poor Urban Areas Integrated Development 2006­ 49 -- -- -- P089013 Brazil V R Municipal APL: Recife 2008­ 33 -- -- -- APPENDIX P006677 Chile I W Municipal Development 1994­98 10 Sat Sat Sat P055480 Chile II W Second Municipal Development 1999­2005 10 M Sat M Sat M Sat P006852 Colombia I W Municipal Development 1991­2001 60 Sat Sat Sat P006872 Colombia II R Bogota Urban Transport 1996­2001 65 H Sat H Sat H Sat A: P039291 Colombia III R Urban Environment (TAL) 1996­2003 20 Sat Sat Sat LIS P006861 Colombia IV W Urban Infrastructure Services Development 1998­2004 75 Sat Sat Sat T P074726 Colombia V R Bogota Urban Services Project 2003­ 100 -- -- -- OF P082466 Colombia VI R Integrated Mass Transit Systems 2004­ 250 -- -- -- B ANK-FINANCED P085727 Colombia VII R Disaster Vulnerability Reduction Project (APL 2) 2006­ 80 -- -- -- P007123 Ecuador I W First Municipal Development 1991­99 104 Sat Sat Sat P007128 Ecuador II R Environmental Management 1996­2002 15 M Sat Unsat Unsat P007292 Haiti R Port-Au-Prince Water Supply 1989­99 20 Unsat Unsat Unsat P064913 Honduras I W Natural Disaster Mitigation 2000­ 11 -- -- -- P057859 Honduras II R Sustainable Coastal Tourism Project 2002­06 5 M Sat Sat Sat MDPs, P088319 Honduras III W Barrio Ciudad 2006­ 15 -- -- -- P103881 Honduras IV R Water & Sanitation Program 2007­ 30 -- -- -- FISCAL P007710 Mexico I R Northern Border Environment 1994­2004 368 M Unsat Unsat Unsat P007612 Mexico II R Solid Waste 1994­2001 200 M Unsat Unsat Unsat P064916 Nicaragua W Natural Disaster Vulnerability Reduction 2001­ 14 -- -- -- 1 998­20 (Continues on the next page.) 51 08 52 IMPR Commitment Bank Borrower Project ID MDP Type Project name Perioda US$ millions Outcome performance performance O VING Latin America and the Caribbean (continued) P035740 Peru I R Lima Transport 2004­ 45 -- -- -- MUNICIP P082625 Peru II R Vilcanota Valley Rehabilitation & Management 2005­ 5 -- -- -- P078894 Peru III W Second Real Property Rights 2006­ 25 -- -- -- P008212 Venezuela I W Low-Income Barrios Improvement 1992­99 40 Sat H Sat Sat AL P008210 Venezuela II W Urban Transport 1994­2002 100 Sat Sat Sat MANA P040174 Venezuela III R Caracas Slum Upgrading 1999­2006 61 M Sat M Sat M Sat Middle East and North Africa GEMENT P094229 Egypt, Arab Rep. of R Alexandria Development 2008­ 100 -- -- -- P073433 Iran, Islamic Rep. of R Urban Upgrading & Housing Reform 2004­ 80 -- -- -- P070958 Jordan I W Regional & Local Development 2007­ 20 -- -- -- P081823 Jordan II R Cultural Heritage, Tourism & Urban Development 2007­ 56 -- -- -- FOR P050544 Lebanon I W First Municipal Infrastructure 2000­ 80 -- -- -- CI P050529 Lebanon II R Cultural Heritage & Urban Development 2003­ 32 -- -- -- TIES P005524 Morocco R Fes Medina Rehabilitation 1999­2006 14 Unsat Unsat Unsat P005687 Tunisia I W Municipal Sector Investment 1993­99 75 Sat Sat Sat T O P046832 Tunisia II W Second Municipal Development 1997­2003 80 M Sat Unsat Sat SUCCEED P064082 Tunisia III R Transport Sector Investment 2001­ 38 -- -- -- P074398 Tunisia IV W Third Municipal Development 2003­ 78 -- -- -- P043339 West Bank & Gaza I R Municipal Development 1996­2003 40 Unsat Sat Sat P053985 West Bank & Gaza II R Bethlehem 2000 1999­2004 25 M Unsat Sat Sat P058683 West Bank & Gaza III R Second Municipal Infrastructure Development 2000­05 14 Sat Sat Sat P078212 West Bank & Gaza IV W Emergency Municipal Services Rehabilitation 2003­06 20 M Sat Sat M Sat P005907 Yemen, Republic of I R Sana'a Water Supply & Sanitation 1999­2003 25 M Sat Unsat Sat P070092 Yemen, Republic of II R Taiz Municipal Development & Flood Protection 2002­ 45 -- -- -- P065111 Yemen, Republic of III R Port Cities Development Program 2003­ 23 -- -- -- South Asia P083919 Afghanistan R Kabul Urban Reconstruction 2005­ 25 -- -- -- P009467 Bangladesh I R Urban Development 1988­98 48 Unsat Unsat Unsat P041887 Bangladesh II W Municipal Services 1999­ 139 -- -- -- P057570 Bhutan R Urban Development 2000­06 11 M Unsat M Sat M Sat P009872 India I W Tamil Nadu Urban Development 1988­98 300 M Sat Sat Sat P050637 India II W Tamil Nadu Second Urban Development 1999­2005 105 Sat Sat Sat P083780 India III R Third Tamil Nadu Urban Development 2006­ 300 -- -- -- P079675 India IV R Karnataka Municipal Reform 2006­ 216 -- -- -- P010305 Pakistan I R Punjab Urban Development 1988­98 90 M Sat Sat Sat P010478 Pakistan II R North West Frontier Province Community Infrastructure1996­2003 22 M Unsat Unsat Unsat P083929 Pakistan III W Punjab Municipal Services Improvement 2006­ 50 -- -- -- P010467 Sri Lanka R Colombo Environment Improvement 1995­2001 39 Unsat Unsat Unsat Source: World Bank data. Note: MDP = municipal development project; R = retail; W = wholesale; -- = not rated, as project not closed yet. Ratings: H Sat = highly satisfactory; M Sat = moderately satisfactory; Sat = satisfactory; M Unsat = moderately unsatisfactory; Unsat = unsatisfactory; H Unsat = highy unsatisfactory. APPENDIX a. Entry amd exit years; projects not yet closed just show entry year. A: LIS T OF B ANK-FINANCED MDPs, FISCAL 1 998­20 53 08 APPENDIX B: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN SUB-SAHARAN AFRICA Bank Support With 280 million people--36 percent of the total Table B.1: Summary of MDP Portfolio, 1998­2008 population--living in cities, the Sub-Saharan Africa Region is experiencing rapid urban Completed (number) 32 population growth of 3.9 percent per annum. Completed MDPs (% satisfactory) 75 The World Bank financed 52 municipal develop- Ongoing MDPs (number) 20 ment projects (MDPs) in this Region that were IBRD commitments (US$ million) 174 active during 1998­2008, with loan commit- IDA commitments (US$ million) 2,179 ments of $2.4 billion. The portfolio aimed to Bank commitments per completed MDP (US$ million) 42 strengthen the management of 656 municipali- Commitments per ongoing MDP (US$ million) 56 ties in 27 countries. Wholesale MDPs (number) 12 Retail MDPs (number) 40 By the number of MDPs, the most active borrow- Countries served (number) 27 ers were Uganda (5 projects), Ethiopia (4), Ghana (4), Madagascar (3), Benin (3), and Municipalities served (number) 656 Mozambique (3). The following countries hosted Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- two MDPs each: Burkina Faso, Guinea, Mali, ment Association; MDP = municipal development project. Mauritania, Niger, Nigeria, Senegal, Swaziland, and Tanzania. Another 12 countries had just 1 Of particular note were two MDPs that achieved each: Burundi, Cameroon, Chad, Côte d'Ivoire, highly satisfactory outcomes. These can serve as The Gambia, Kenya, Malawi, Rwanda, South model operations for others to emulate. Africa, Togo, Zambia, and Zimbabwe. Nearly all the MDPs--more than 90 percent of the total-- The first, Benin I, helped improve urban were thus implemented in low-income services in the country's two largest cities, countries. The MDP portfolio covered all Cotonou (population 690,584) and Porto Novo countries in the Region with large urban popula- (population 234,168). This result was confirmed tions (15 million plus) except for the Democratic by beneficiary assessments at completion and Republic of Congo and Sudan. was helped by the introduction of delegated contract management practices. These enabled Portfolio Performance rapid processing and execution of service With 75 percent of projects achieving satisfactory contracts with local small and medium-size outcomes, the Region's MDP performance was enterprises that provided higher-quality, lower- similar to that of the worldwide portfolio. In cost urban infrastructure services and left terms of Bank performance, Sub-Saharan Africa's municipal administrations more time to concen- MDPs did better, with 81 percent satisfactory, trate on their planning and programming tasks. against a Bank-wide average of 78 percent satisfactory. For borrower performance, the The second highly satisfactory MDP, Senegal I, Region lagged behind, with 69 percent satisfac- was a wholesale operation that helped 67 munici- tory against 75 percent satisfactory Bank-wide. palities throughout the country strengthen their 55 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure B.1: MDP Portfolio Performance, Fiscal 1998­2008 100 81 78 80 75 74 75 69 60 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance Sub-Saharan Africa Region All Bank Source: IEG special study. Note: MDP = municipal development project. financial and organizational management and ment, to six municipalities. This success was improve programming of investments in urban extended to 11 more municipalities by Ghana infrastructure and services. The project achieved II. Ghana IV took the wholesale model further this through what were called "municipal by investing intensely in financial and technical contracts," participating agreements between training for the staff of 23 municipalities through central and individual local governments with the national Institute of Local Government benchmarks for municipal reform. Currently, Studies, which itself came out of the project more than 170 municipalities across French- considerably strengthened. speaking West Africa are implementing such contracts. The short-term results of the reforms Madagascar II and III helped municipalities were an increased municipal capacity to invest. improve municipal services through local Over 2001­03, for instance, municipal capital agreements with an AGETIP-style provider. By investment as a share of current revenues rose investing in sewerage and solid waste in particular, from 10 to 17 percent. Tanzania I improved environmental management in eight municipalities that a later government Other operations with good outcomes in Sub- assessment found be the best in the country. Saharan Africa included all five MDPs in Uganda. Initially conceived as a retail operation only for Uganda I introduced private sector participation Niamey (population 774,237) and Dogondoutchi in the municipal services of the capital Kampala (population 31,767), Niger I was successfully (population 1.4 million). Flooding in that city was broadened as a wholesale operation that, among curbed thanks to Uganda II's rehabilitation of other things, introduced new digital cartography the Nakivubo Channel. In providing investment skillsintourbanplanningin19othermunicipalities. funds and technical assistance to other munici- palities, Uganda III strengthened municipal Some MDPs performed poorly, however. Côte management across the country, using a D'Ivoire's MDP delivered fewer than half the wholesale approach. Uganda IV consolidated service improvements planned as the country this approach by helping 30 municipalities situation became more volatile and central tighten their management controls, deploying government support for the operation waned. novel distance learning techniques to this end. Ethiopia I failed to address the major issues of budgeting, accounting, and financial management Ghana also had a string of successful MDPs. of the client municipality of Addis Ababa (popula- Ghana I brought significant service improve- tion 2.8 million), and infrastructure investments ments, notably solid waste and stronger manage- for which demand was weak yielded inadequate 56 APPENDIX B: WORLD BANK SUPPORT IN SUB-SAHARAN AFRICA returns. Nigeria I failed to build municipal Table B.2: Municipal Management Focus of Region management capabilities in Oyo State as intended, Portfolio because of unresolved conflicts among the parties that led to implementation delays and cancella- Share of all MDPs with tion of key components. Mozambique I did not a project design focus on: Completed Ongoing implement the majority of the project's physical City planning components because of procurement problems, In objectives (%) 28 15 inadequate Bank-borrower communication, and In components (%) 44 55 poor performance by consultants. Municipal finance In objectives (%) 75 35 Better City Planning In components (%) 56 90 Service delivery More information In objectives (%) 94 85 Particularly notable have been MDP efforts and results of obtaining better information about In components (%) 97 95 spatial configuration of cities. Burkina Faso I, Number of all MDPs 32 20 for instance, helped create an information Source: IEG special study. Note: MDP = municipal development project. system and database for urban management based on street address mapping in the munici- palities of Ougadougou (population 1.1 million) missing. M&E systems of several MDPs were and Bobo Dioulasso (population 360,106). weakened by a focus on project outputs; this and Niger I introduced a set of simple planning and other factors resulted in the inadequate perform- programming tools covering digital cartography ance of the operations. IEG found this to be case and the production of an atlas, initially for 2 cities for Guinea I, the Kenya MDP, Tanzania I, and but extended through a wholesale approach to the Togo MDP. 21 cities in all. Under Ghana II, maps were produced for 11 municipalities, leading to Urban and spatial planning property valuations for twice as many properties SeveralMDPsmadeimportantcontributionstothe as planned; only two municipalities ultimately urban planning capabilities of client municipalities. developed land use structure plans on this basis. Under guidance and technical assistance through Mali I, five municipalities prepared strategic long- Monitoring and evaluation term physical and spatial plans that particularly Swaziland I incorporated a good monitoring and helped them better understand the workings of evaluation (M&E) framework with clearly designed the land markets in their cities. Through a performance indicators that enabled a clear wholesale approach, Mauritania I introduced comparison of targeted and actual results, as well several management instruments, including urban as of how far the municipalities had come from the plans, inventories of assets, and priority invest- baseline. Mali I also had good M&E, although its ment plans that were widely accepted by the local baseline references were less clear. Uganda III elected officials and staff of 13 municipalities. improved the evaluative capacity of the Ministry of Local Government, and Uganda IV helped the Through Uganda II and III, the municipality of project implementation unit consolidate project- Kampala (population 1.4 million) prepared its specific information that made it possible to Drainage Master Plan and Urban Transport undertake an evaluation of project outcomes. Improvement Strategy. Moving toward the wholesale model of MDP, Uganda IV helped 30 Mozambique II and Burkina Faso I provided municipalities make their existing municipal results frameworks with specific outputs and planning committees more functional, resulting outcomes, but the latter were not always measur- in 90 percent of them preparing 3-year develop- able, and baseline information was generally ment plans. In Benin I, in addition to the 57 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED successful project efforts to strengthen urban project audits confirmed that municipal financial planning at the municipal level, the central budgeting was placed on a sound footing in all of government itself adopted a declaration of urban them for the first time. This MDP also prepared policy, through which it elaborated a coherent the municipalities for incurring debt and long-term strategy for urban planning, including managing debt service. In actual practice, their its environmental and sanitary aspects. financial management was solid, as reflected in their being up to date in 95 percent of their loan Investment planning and strategies repayments. Tanzania I and Zimbabwe's MDP MDP results were thin in a Region where develop- helped the targeted municipalities--10 and 21, ment projects often propose ad hoc planning and respectively--routinely prepare and deliver up- implementation arrangements beyond the formal to-date and audited accounts. framework of central and local government. Thus, under Mozambique I, the five client municipali- Mobilizing own revenues ties that had prepared urban land-use and Evidence is beginning to emerge that municipali- structure plans saw none of them result in the ties assisted by MDP operations strengthened intended municipal investment strategies. their revenue mobilization, perhaps more so than unassisted municipalities, although robust Stronger Municipal Finances evidence of control group performance remains thin. Thus, under Uganda III and IV, some 30 Better financial management municipalities saw own revenues increase by 40 There is considerable evidence of MDP technical percent in real terms, mainly because of computer assistance and support helping municipalities processing of financial reports that highlighted improve their financial reporting and manage- arrears and areas of lax tax effort more promptly. ment. Under Mali I, for instance, three of the Under Swaziland I, the 4 client municipalities project's five targeted municipalities set up extended property tax collection from 65 to 80 computerized accounting. More would have been percent of eligible properties following training of achieved had there not been a shortage of munici- tax collectors, supervisors, and billing and finance pal staff qualified in finance and programming. staff. Tanzania I enabled municipalities to more This points to the need for more basic training in than double their own revenues, though from a municipal financial management in the future. low base, over the project period with the help of modern computer mapping and accounting. The Uganda I and II enhanced the Kampala munici- Togo MDP introduced improved collection pality's ability to plan, manage, and execute procedures and penalties for nonpayment, a complex investment decisions and report on computerized tax registry, and transparent them, but roles and responsibilities for executing methods for assessing property values, but the them remained ill defined at the project's end. impact of all these measures on revenue collec- This retail MDP focused on one municipality that tion is not known. Technical assistance through was particularly prone to political interference in Benin II enabled its three municipal clients to day-to-day operations. Uganda III and IV, in exceed targeted own-revenue growth. Burkina contrast, helped a much larger number of munici- Faso I saw revenue collection nearly double in palities strengthen and harmonize their planning the country's two largest municipalities after they and budgeting processes. The project-created developed a residential tax database with the help Audit Compliance Unit in the central government of project technical assistance. provided a strong incentive for municipalities to bring their financial records up to date and make In contrast, elections dampened the political will them audit compliant. to pursue energetic local tax collection in Kampala under Uganda I and II. Similar Under Senegal I, a wholesale operation aimed constraints prevented the five client municipali- at 67 municipalities throughout the country, ties of Mali I from actually collecting revenues 58 APPENDIX B: WORLD BANK SUPPORT IN SUB-SAHARAN AFRICA through a new urban tax that had been formally ERRs in half the cases. Estimates of internal rates instituted but not acted on, leaving the munici- of return were more readily available for road- pal finances of Bamako (population 1.3 million) and water-related components. The main issues and Mopti (population 108,456) in deficit. relating to ERRs were partial coverage of the investment, lack of credible data, and, still in a Aside from taxation itself, the municipality of few cases, an apparent lack of appreciation for Lomé (population 718,797) was able to create a the importance of conducting an economic cost- new municipal agency with the help of the Togo benefit analysis. MDP; this agency managed thriving local markets and collected user fees. Similar user charges Ghana I reported the highest ERR of 82 percent enhanced the revenues of six municipalities under after detailed assessments showed the high Ghana I. Progress with revenue mobilization impact of below-cost road improvements in the continued among municipalities participating in municipality of Accra (population 2.0 million) Ghana II and III but slowed somewhat in the that accounted for one-third of the MDP project face of municipal resistance to setting user costs. Efficient upgrading of existing urban roads charges high enough to cover costs. Revenue per- in 11 other municipalities also explained the 68 formance was weak under Nigeria I and left percent ERR reported for Ghana II, although in municipal billing and collection machinery at the this case the estimate covered only 13 percent of local level weak. Though Ethiopia I did adopt the total project costs. cost recovery for housing and some municipal services, it made them less affordable to the poor Seven more successful MDPs reported high ERRs in the short run. in the 25­40 percent range. Benin II also yielded a 73 percent ERR, nearly five times the appraisal Municipal creditworthiness and debt estimate, owing to much higher traffic volumes management than expected on the urban road improvements To date, MDPs have done little to involve munici- that accounted for most of the project costs. The palities in local credit markets, although more Gambia MDP reported a 38 percent ERR for can be expected in the future as incipient road paving and drainage works in two munici- markets develop. palities; again, these components accounted for only about one-fifth of the total project cost. Private finance participation Burkina Faso I yielded a 33 percent ERR, thanks Only modest results have been reported. to the rehabilitation of urban roads and streets in Swaziland MDP's attempts to bring together the country's two main cities, components that local governments and private sector financial accounted for 40 percent of project costs. institutions did lead to some private financing of municipal services on a small scale in the capital Interestingly, Niger I found ERRs in the 20­41 Mbabane (population 76, 218). Under Maurita- percent range for other components, such as bus nia I, better municipal management gave more stations, slaughterhouses, public latrines, and confidence for private suppliers to work with the leisure parks, using a beneficiary willingness-to- 13 MDP municipalities in that country. pay concept. A good cost-benefit analysis through Uganda II that carefully identified the Improved Service Provision counterfactual and the flood-protection benefits to the municipality of Kampala of reducing Investment priorities building and infrastructure damage and of time Of 32 completed operations, more than half savings yielded a 25 percent ERR at completion. reported economic rates of return (ERRs) at both Tanzania I also yielded an ERR of 25 percent, appraisal and completion, the highest propor- based on the benefits of road and water supply tion for any Region. ERR estimates at completion improvements across 10 municipalities, account- ranged from 7 to 84 percent, exceeding appraisal ing for 55 percent of project costs. 59 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Even though the Region has done the most cost- and II, drainage works helped protect 403,000 benefit analysis of all Regions, several MDPs did not people in 6 municipalities against flooding. include ERR estimates at completion even of Ghana I and IV had an impact on 11 municipal- municipal infrastructure and service provision ities by rehabilitating urban roads and markets components that are amenable to cost-benefit while increasing opportunities for small analysis.Lackofadequatedatawasmostcommonly businesses in vehicle repair and commerce. given as the reason for not estimating ERR. Senegal I financed 421 basic infrastructure Procurement subprojects across Senegal's 67 urban municipal- Municipalities' experience in taking charge of ities and introduced systematic street address procurement has been mixed, but there has been systems for the first time in 11 of them. The progress. Implementation of Mozambique I was Zimbabwe MDP enabled 21 municipalities to stalled by municipalities' difficulties in meeting rehabilitate urban roads and extend water supply procurement norms. In contrast, more recently and basic sanitation. Similar improvements to Tanzania I gave 10 municipalities the opportu- basic sanitation under Guinea I and Mali I may nity to manage procurement effectively for the have contributed to a steep decline in deaths first time. from cholera. Water metering and network improvements enabled Swaziland I to reduce Operations and maintenance unaccounted-for water in four municipalities. IEG found municipal clients of MDPs were Sewage treatment under Tanzania I meant that beginning to give more attention to operations the effluent quality nearly met World Health and maintenance (O&M). Under the Kenya MDP, Organization standards in three municipalities. for instance, four municipalities did more O&M Urban transport was less of an MDP focus in because of the incentive of special funding Africa than in other Regions, but indirectly provided by the National Road Fund. Nearly all Uganda II brought considerable improvements municipal water utilities funded O&M from their to traffic flows in Kampala by mitigating the own budgets under Tanzania I for the first time. impact of regular flooding prior to the comple- Although Uganda II and III raised the profile of tion of the Nakivubo channel. O&M in the eyes of municipalities in Kampala, the municipality was not able to raise all the revenue Services--Private provision needed to sustain this over the long run. The MDPs made considerable efforts to engage sustained impact of improved municipal services private operators in the provision of municipal under Benin I and II is only ensured if the three service in several countries. Some results were client municipalities continue to mobilize the achieved, but there is still a long way to go. Under necessary revenues on their own. However, Uganda I and III, for instance, the fact that municipal O&M continues to be weak in many nearly all the infrastructure investment was municipalities, as the results of the Côte d'Ivoire privately contracted was itself a significant result MDP, Swaziland I, and the Zambia MDP for the municipality of Kampala, which had showed. traditionally done its own work. The use of force account also ceased following Madagascar II Services--Most affected sectors and the Zambia MDP. Ghana I and Senegal I MDPs provided a wide range of municipal strengthened contractor and consulting in- services, from low-income area upgrading; to dustries within their respective countries. urban road and street paving and drainage works; to water and basic sanitation, other The competitive private sector approach to environmental improvements, and urban municipal service investment received a boost transport. In upgrading existing low-income under Tanzania I. That project, as well as areas, Burkina Faso I was particularly effective, Burkina Faso I, Ghana III, and Guinea I, using beneficiary participation. Under Benin I provided openings for private solid waste collec- 60 APPENDIX B: WORLD BANK SUPPORT IN SUB-SAHARAN AFRICA Box B.1: Key to MDPs Referred to inText Benin: I--Urban Rehabilitation & Management; II--First Decen- Mauritania: I--Urban Infrastructure & Pilot Decentralization; II-- tralized City Management; III--Second Decentralized City Man- Urban Development Program. Mozambique: I--Local Government agement. Burkina Faso: I--Urban Environment; II--Decentralized Reform & Engineering; II--Municipal Development; III--Maputo UrbanCapacityBuilding.Burundi: PublicWorks&EmploymentCre- Municipal Development Program. Niger: I--Urban Infrastructure ation. Cameroon: Urban & Water Development Support. Chad: Rehabilitation; II--Local Urban Infrastructure Development. Nige- UrbanDevelopment.Côte d'Ivoire: MunicipalSupport.Ethiopia: I-- ria: I--Oyo State Urban Development; II--Lagos Metropolitan De- Second Addis Urban Development; II--Capacity Building for De- velopment & Governance. Rwanda: Urban Infrastructure & City centralized Service Delivery; III--Public Sector Capacity Building; Management. Senegal: I--Urban Development & Decentralization IV--Urban Water Supply & Sanitation. The Gambia: Poverty Alle- Program;II--LocalAuthoritiesDevelopmentProgram.South Africa: viation&CapacityBuilding.Ghana: I--SecondUrbanDevelopment; Municipal Financial Management. Swaziland: I--Urban Devel- II--Local Government Development; III--Urban Environment & opment; II--Local Government. Tanzania: I--Urban Sector Reha- Sanitation; IV--Fifth Urban Development. Guinea: I--Third Urban bilitation; II--Local Government Support. Togo: Lomé Urban Development(APL);II--ThirdUrbanDevelopment(Phase2).Kenya: Development. Uganda: I--First Urban Development; II--Nakivubo Urban Transport. Madagascar: I--Antananarivo Plain Develop- Channel Rehabilitation; III--Local Government Development Pro- ment; II--Antananarivo Urban Works Pilot; III--Urban Infrastruc- gram; IV--Economic & Financial Management; V--Kampala In- ture. Malawi: Local Government Development. Mali: I--Urban stitutional & Infrastructure Development. Zambia: Urban Development & Decentralization; II--Second Transport Sector. Restructuring. Zimbabwe: Urban Sector & Regional Development. Source: IEG. tion operators, but a shortage of qualified local spaces efforts. Under Ghana III, in all project labor was a major constraint in sustaining these cities, lower-income communities benefited: the services. Urban road and street maintenance estimated number of beneficiaries for household contracts under these projects attracted more latrines was 60,000, for school latrines 100,000, private sector bids. and for public latrines 30,000. In most cases, road construction and rehabilitation opened access Income level of beneficiaries--Poverty between the poor neighborhoods and the reduction economic centers of the cities and improved Altogether, 60 percent of MDPs have objectives scope for informal and small-scale income- explicitly focused on the poor and on poverty generating activities. reduction. Some MDP results were quite impres- sive. Benin I, Madagascar III, Niger I, and Conclusions The Gambia and Togo MDPs generated jobs · Across Regions, MDPs in Sub-Saharan Africa for the poor. These jobs came through project have kept the greatest focus on improving the construction and required more than 1.3 million lives of the poor. person-days of labor-intensive employment, · Increasing the number of wholesale MDPs usually through local small and medium-sized would be constrained in a Region with few enterprises contracted for road and drainage higher-level agencies that are ready to take on maintenance and other works. the intermediation function that such opera- tions require. Municipal services provided through Burkina · Across countries, MDP performance with M&E Faso I, Ghana I, Mali I, Mauritania I, Niger I, varies considerably, pointing to opportunities Nigeria I, and Tanzania I all served low-income for fruitful exchanges of experiences. Their and squatter settlements through infrastructure performance in the use of cost-benefit analysis and water and sanitation, health facilities, access has been relatively good, pointing to opportu- roads, public lighting, school fencing, and green nities to apply the techniques in other Regions. 61 APPENDIX C: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN EAST ASIA AND PACIFIC Bank Support East Asia and Pacific has the largest urban popula- Table C.1: Summary of MDP Portfolio, 1998­2008 tion of any Bank Region; 805 million people--42 percent of the total population--live in cities, and Completed (number) 30 urbanization continues at a rapid pace, with the Completed MDPs (% satisfactory) 80 population in cities growing by 2.9 percent Ongoing MDPs (number) 14 annually. The World Bank, through 44 MDPs IBRD commitments (US$ million) 4,512 active during the 1998­2008 decade, committed IDA commitments (US$ million) 1,158 $5.7 billion to urban development. This portfolio Bank commitments per completed MDP (US$ million) 126 aimed to strengthen the management of 445 Commitments per ongoing MDP (US$ million) 136 municipalities across 16 countries. By number of Wholesale MDPs (number) 11 MDPs, the most active borrowers were China (23 Retail MDPs (number) 33 projects) and Indonesia (12), followed by a newer Countries served (number) 6 MDP borrower, Vietnam (4), and an older one, the Philippines (3). In addition, Mongolia and Municipalities served (number) 445 Korea hosted 1 MDP each. Thus, nearly all of the Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- Region's MDPs, 86 percent, were in lower-middle- ment Association; MDP = municipal development project. income countries. Countries in this Region with large urban populations (15 million plus) but no Bank-financed MDPs are Thailand and Myanmar. China, increasing sewage collection and treatment, improving traffic management, and Portfolio Performance consolidating municipal planning capability. On average, MDPs in the Region are strong Philippines I was particularly successful at performers, with 80 percent achieving satisfac- upgrading low-income areas by developing new tory outcomes. Also, 90 percent had satisfactory local markets and in training 9,129 staff from 74 Bank performance, and 83 percent had satisfac- municipalities. These efforts resulted in a new tory borrower performance, all well above municipal management style that was better averages for the worldwide MDP portfolio. adapted to the increasing responsibilities under decentralization. China IV got good results Although no project had an outcome rating of across the board in Zhejiang Province by improv- highly satisfactory, there are numerous examples ing municipal management as it related to urban of successful MDPs in several countries in this planning, land development, and environment Region that can serve as models for MDPs in key cities that offered among the best invest- elsewhere. China III, thanks to an outstanding ment climates in China. Indonesia V produced municipal team in the megacity of Tianjin good results in five municipalities in Kaliman- (population 10.3 million), succeeded on several tan, particularly through the successful fronts, building and operating a solid waste Kampung Improvement Program in Pontianak sanitary disposal facility that became a model for (population 455,173). 63 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure C.1: MDP Portfolio Performance, Fiscal 1998­2008 100 90 80 83 78 80 74 75 60 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance East Asia and Pacific Region All Bank Source: IEG special study. Note: MDP = municipal development project. Under Indonesia XIX, which focused on ture of enterprise housing. The Mongolia MDP municipal innovations, the municipality of Bogor helped develop the country's capability to (population 769,000) was particularly successful design, build, and operate urban services in developing a lively and informative public Web through the successful improvements the site that was an online version of the earlier project brought to the water supply of the public information booths. There were signifi- municipality of Ulaanbataar (population cant environmental gains in improved water 844,818). supply and sewage and solid waste disposal through China VII and VIII in Shanghai and Some MDPs in the Region performed poorly. Liaoning, respectively. Directly focused on Indonesia III achieved little, as the repeated retooling municipal management, China IX was turnover in municipal leadership in Surabaya effective in helping four municipalities manage (population 2.4 million) undermined commit- the deep structural reform involving the divesti- ment to agreements. This led to inaction on service provision to the city that should have called for a thorough project reappraisal. China Table C.2: Municipal Management Focus of Region XI did not lead to the hoped-for reduction of air Portfolio pollution by replacing old industrial plants in the municipality of Chongqing (population 32 Share of all MDPs with million) because of the slow divestiture of such a project design focus on: Completed Ongoing plants and the cancellation of the project's credit City planning component. Pollution did decline, but not In objectives (%) 50 50 because of the project; instead, that improve- In components (%) 40 64 ment occurred because of the slow-down of Municipal finance industrial activity. In objectives (%) 60 21 In components (%) 33 64 Indonesia VII intended to improve solid waste Service delivery and sewage treatment services in 41 municipali- In objectives (%) 90 100 ties in Sulawesi, but it was only partly In components (%) 97 93 implemented because of lack of government Number of all MDPs 30 14 commitment and concerns over misuse of funds. Source: IEG special study. This left municipalities without the management Note: MDP = municipal development project. progress intended, especially in operations and 64 APPENDIX C: WORLD BANK SUPPORT IN EAST ASIA AND PACIFIC maintenance (O&M), the project's model of baseline and endline water quality were available, which was too complicated to administer. but the samples were drawn from different locations on the river. Furthermore, the monitor- Better City Planning ing station built under the project was not fully operational. An implementation weakness under- More information mined the effectiveness of M&E for China XV in Some MDPs in the Region improved the informa- Sichuan Province, where records of measure- tion available to municipalities. Under China III, ment of the well-designed performance indica- for instance, the municipality of Tianjin (popula- tors were not systematically kept. tion 10.3 million) was able to develop a real-time information system for the megacity's intense But even when its design is weak, M&E can be traffic. Under Indonesia IX, Bogor's success in improved during implementation, as when the assembling and disseminating information on strong local team of China III in Tianjin, at its municipal services publicly on the Web is an own initiative, incorporated outcome indicators important information system achievement. to measure greater municipal management effectiveness, which had been overlooked by the Monitoring & evaluation initial M&E design. Finally, one of the most M&E systems exhibit the weaknesses found in complete M&E systems was introduced through other Regions and sectors. Thus, under China IV Vietnam I, where four project municipalities in Zhejiang Province, an operation that excelled used indicators that that covered all aspects of in many other respects, M&E did little more than improvement in water supply service, ranging count and cost the delivery of individual subpro- from physical provision to management jects. China XII, in Yunnan Province, did a little efficiency. better with monitoring the project's physical achievements, but it fell short on verifying Urban and spatial planning progress on the institutional front. M&E for MDPs have achieved a lot, especially in China, Indonesia II and VI ventured little beyond where many local municipalities have embraced counting the number of subproject contracts city planning in recent years. Thus, under China I, awarded and the amount of disbursements. This the Urban Master Plan of Beijing (population 14.9 meant that M&E was able to provide precise million) incorporated for the first time environ- information about the number of community mental priorities of the municipal environmental toilets built and their exact unit costs, but not how protection bureau. China III helped Tianjin much those facilities were used--which proved prepare its Master Plan and consolidate it with the to be very little. The Independent Evaluation indicative budget for 2005­20, again for the first Group (IEG) saw communal toilet blocks time. Particularly for the city of Ningbo in designed for 15 families being used by only 1 or 2. Zhejiang Province, China IV strengthened its long-term land use planning through technical China X in Hubei had weak M&E, as the indica- assistance and firmly embedded the conservation tors were defined too broadly to be measurable. of historic and cultural monuments into its city The M&E of China IX suffered the classic center planning, now recognized as one of shortcoming of not providing baseline values for China's best. 38 indicators that were selected to measure progress in divesting state-owned enterprise On the urban transport side, two operations, housing. China II and VI, enabled Shanghai (population 14.6 million) to improve its transport planning Even when indicators are good, M&E problems by providing expert input. Other countries also can arise. This happened when measuring water saw some of their city planning improve through quality of the environmentally stressed Huangpo MDP assistance. Thus, under Indonesia X, nine River in Shanghai under China VII. Data on municipalities prepared local environmental 65 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED plans and strategies for the first time, one of improvements in general revenues. In practice, which was the critical Drainage Master Plan for cost recovery has been as challenging in this Jakarta (population 8.5 million). Through Region as in others. China VII was unable to Philippines I, some 70 municipalities learned raise tariffs enough to enable five municipal how to incorporate specific investments of the sanitation companies in Liaoning Province to operation in subprojects into their local city cover their operating costs. China XII did not plans. enable the five municipal sanitation utilities in Yunnan Province to achieve full cost recovery, More innovative approaches to planning did not but there has been some progress in tariff adjust- always succeed. Under Indonesia II support for ment. China X reported similar constraints in Integrated Urban Infrastructure Development limiting cost recovery, but for solid waste Planning, a modernized and multisectoral management in Hubei Province. approach to planning, made only modest inroads in smaller municipalities, which found it Although the details are scarce, Indonesia II did too complex and were more comfortable with report enhanced revenue collection among the the traditional sectoral approach they knew well. 45 municipalities assisted by the project in East Java and Bali. Under Indonesia IV, however, Investment planning and strategies inflation eroded effective cost recovery of MDPs in the Region generally did not require municipal water utilities in Semarang (popula- client municipalities to strengthen the manage- tion 1.3 million) and Surakarta (population ment of their investment planning and strategies. 555,308). Mongolia's MDP achieved a lot on Larger municipalities in particular often had their the municipal finance front, but not the full own investment plans in place before the MDP. financial autonomy for the municipal sanitation utility of Ulaanbataar (population 844,818) Stronger Municipal Finances promised by the project's ambitious objectives. Nevertheless, computerized billing worked well Better financial management and considerably enhanced tariff collections. In China, a number of municipalities improved Philippines I achieved significant results across their financial management and accounting the 74 client municipalities, especially through procedures with the help of MDPs. China III, property tax cadastres that more than doubled for instance, helped the mega-municipality of assessed values; actual tax collections increased Tianjin integrate different financial networks by 64 percent over the 1994­2001 project period. across its very large organization, where comput- Vietnam's MDP enabled municipal water erization of all accounts within a local area supply utilities in Hanoi (population 1.4 million) network has now become standard. China V and Haiphong (population 602,695) to cover helped improve cost recovery for water supply, their O&M costs and even build up some allowing four municipalities in southern Jiangsu reserves. Province to cover operating, if not investment, costs. The municipal audit bureau of Shanghai Municipal creditworthiness and debt (population 14.6 million) was quickly able to management adopt international accounting standards, as This aspect of municipal management was required by China VII. explored on a small scale. Philippines I's Municipal Development Fund established a long- Mobilizing own revenues term credit window that loaned $34 million to Revenue enhancement through MDPs in the eligible municipalities. Although the lending was Region focused particularly on increasing direct small scale relative to municipal needs, the credit cost recovery from the project investments mechanism did introduce 74 municipalities themselves, rather than seeking broader across the country to debt service management. 66 APPENDIX C: WORLD BANK SUPPORT IN EAST ASIA AND PACIFIC Private finance participation onsite leachate treatment plant that became a IEG found little evidence of significant effort by model operation for the country. MDPs to enhance private finance for municipal services in the Region. Operations and maintenance The results of some MDPs call for municipalities Improved Service Provision to pay more attention to assuring financing for ongoing operations of existing infrastructure and Investment priorities municipal services. For instance, a municipal Some 60 percent of MDPs provided ERR water supply system provided under Indone- estimates for project investments at appraisal sia II for the Kintamani district of Denpasar and completion. They were widely used for (population 405,923) in Bali fell into disuse, as MDPs completed in China. China XIII yielded a the local authorities could not afford to pay to 39 percent ERR based on users' willingness to operate the necessary pumps for more than a pay for sanitation services in 38 municipalities in fraction of the time needed. In Sulawesi, Shandong Province. China II and VII reported Indonesia VII's 41 client municipalities were ERRs of 28 percent, from the benefits of time and unable to adopt the project's "performance- operating cost savings from improved traffic oriented maintenance management systems," flows in Shanghai. China III led to ERRs of 23 which they found too complicated. In Western percent Tianjin, based on benefits accruing Java Indonesia X saw that continuing uncertain- principally from urban land development for ties about the funding mechanisms for municipal housing and industrial uses. waste management corporations put the project's urban environmental achievements at But a more robust economic analysis, distin- risk. China XV, completed in 2007, reported that guishing new businesses from those that had the four beneficiary municipalities needed to simply transferred to the China IV project area raise more revenues to ensure O&M funding. in Shaoxing (population 421,283) in Zhejiang Province, would have evaluated the project's Services--Most affected sectors land development more precisely. Satisfactory MDPs in this Region provided support to munici- ERRs in the 14­18 percent range were reported palities to improve services connected with elsewhere through Mongolia's and Vietnam's water supply, basic sanitation, and other environ- MDPs, as well as Indonesia II. In some cases, mental improvements. In addition, they helped unpersuasive reasons were given for project improve urban transport, through new urban teams not estimating even simplified internal roads, street paving, and drainage and traffic rates of return. Thus, excessive cost and time management measures. The upgrading of low- needed were cited as reasons for not estimating income areas through the introduction of basic an ERR for China VII, despite the high cost of infrastructure continues through MDPs in East the project investment incurred to improve the Asia, but on a smaller scale than before, and quality of the water supply to Shanghai. elsewhere. Procurement To improve the municipal management of water MDPs in this Region reported few significant supply, MDPs made some notable achievements results, as far as changes in procurement practice in China in particular. A significant environmen- at the municipal level are concerned. One tal and public health gain for more than 8 exception was China III, through which the million inhabitants of Shanghai was the result of municipality of Tianjin conducted successful China VII's provision of a safer water supply. international competitive bidding to establish This was done by implementing a major intake the Shuangkou solid waste disposal site, China's upriver in less-polluted reaches of the environ- first fully sanitary landfill, complete with an mentally stressed Huangpo River, as well as 67 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED implementing mitigation measures in solid successful introduction of computer-controlled waste collection and disposal and restricting traffic lights in Hanoi (population 1.4 million), use of agricultural fertilizers to prevent runoff which led to average trip time savings of 30 from further polluting the river. Major munici- percent, well above the 10 percent targeted. pal water treatment plants under China IV improved service quality to the people living in Compared with other Regions, MDP coverage of key cities of Zhejiang Province, Hangzhou slum upgrading was thin, although Philippines I (population 1.9 million), Ningbo (population supported investments in this area across 74 719,867), and Wenzhou (population 865,672). municipalities. This focus was also found under Indonesia V in Kalimantan. The most successful MDPs also improved basic sanitation. The component of the latter MDP was the Kampung innovative, low-cost, small-scale "modular" Improvement Program in five municipalities, a approach to sewage treatment was adopted by program component that the Bank has the municipality of Malang (population 747,000) supported for more than two decades through- under Indonesia VI. However, its success was out the country. In contrast, an activity supported limited, as low-income residents continued to in East Asia but not found often elsewhere was discharge sewage without charge into storm the support under China I that enabled twice the drains, rather than paying the (modest) fee coverage by Beijing's interconnected district imposed by the new system. heating network. MDPs made more progress helping municipali- Services--Private provision ties improve their solid waste management, VeryfewMDPsfocusedattentiononexpandingthe especially in the final disposal of waste. China III role of the private sector in providing municipal led to the building and operation of the country's services. Consequently, IEG found few examples of first sanitary landfill at Shuangkou near Tianjin-- significant results in this area within the Region. now considered a successful model nationwide. Efforts were made through some MDPs to This experience built on earlier successful efforts stimulate private commercial operations in service to improve solid waste disposal in Beijing under delivery by closing old municipal service depart- China I. Under China X, the municipality of ments and replacing them with agencies, such as Xianfang (population 462,956) in Hubei Province the Beijing Drainage Company under China I and succeeded in disposing of 100 percent of its the Shanghai Public Transport Company under collected solid waste in a sanitary landfill built by China II, but these new enterprises remained the project. Indonesia V introduced controlled firmly harnessed to the state sector. The first steps landfills to five municipalities in Kalimantan that toward a private-public partnership in water also closed down their earlier unsanitary dumps, supply at the municipal level were taken in which had polluted the surface water of nearby Shandong Province under China XIII. settlements. Income level of beneficiaries--Poverty MDPs made significant improvements to urban reduction transport. The municipality of Shanghai was able Few MDPs in the Region--mostly those in Indone- to complete its high-capacity inner ring road sia and the Philippines--focused clearly on the under China II, an operation like others in the urban poor. Indonesia VIII, for instance, country that paid little attention to public supported 18,000 infrastructure microprojects transport. Mostly through traffic management that had been identified by participatory improvements, with construction limited to community development plans in low-income widening existing streets, China III introduced urban areas. Indonesia V, particularly through its better traffic surveillance and monitoring to the kampung improvement program of upgrading city of Tianjin. Traffic management was a priority low-income areas with basic services, is estimated under Vietnam II, too, especially through the to have benefited nearly half the population of the 68 APPENDIX C: WORLD BANK SUPPORT IN EAST ASIA AND PACIFIC Box C.1: Key to MDPs Referred to inText China: I--Beijing Environment; II--Shanghai Metropolitan Trans- hai Urban (APL). Indonesia: I--Sulawesi­Irian Jaya Urban De- port; III--Tianjin Urban Development Project; IV--Zhejiang Mul- velopment; II--East Java/Bali Urban Development; III-- ticities Development; V--Southern Jiangsu Environmental Semarang Surakarta Urban Development; IV--Surabaya Urban Protection; VI--Shanghai Environment; VII--Second Shanghai Development; V--Kalimantan Urban Development; VI--Second Metropolitan Transport; VIII--Liaoning Environment; IX-- East Java Urban Development; VII--Second Sulawesi Urban Enterprise Housing and Social Security Reform; X--Yunnan En- Development; VIII--Urban Poverty; IX--Municipal Innovations; vironment; XI--Hubei Urban Environment; XII--Chongqing X--Western Java Environmental Management; XI--Second Industrial Pollution Control and Reform; XIII--Shandong Envi- Urban Poverty; XII--Urban Sector Development and Reform. ronment; XIV--Liaoning Urban Transport; XV--Sichuan Urban Korea: Pusan Urban Transport. Mongolia: Urban Services Im- Environment; XVI--Chongqing Urban Environment; XVII--Urumqi provement. Philippines: I--Third Municipal Development; II-- Urban Transport; XVIII--Shijiazhuang Urban Transport; XIX-- Local Government Unit Finance and Development; III--Support Tianjin Second Urban Development; XX--Wuhan Urban Trans- for Strategic Local Development and Investment. Vietnam: I-- port; XXI--Chongqing Small Cities Infrastructure Improvement; Water Supply; II--Urban Transport Improvement; III--Urban XXII--Liuzhou Environment Management; XXIII--Second Shang- Upgrading; IV--Coastal Cities Environmental Sanitation. Source: IEG. five client municipalities in Kalimantan. Philip- · MDPs have enabled many municipalities to pines I started out with a strong focus on benefit- strengthen their management of service pro- ing the poor, but this became less clear in the face vision, especially for improving the urban en- of incentives for municipalities to embark on vironment. The sectoral focus varies across revenue-generating subprojects that would countries in the Region, pointing to possibili- benefit higher-income groups. ties of fruitful exchanges of successful experi- ences among them. Conclusions · Results in strengthening municipal finances · In countries with unitary municipal adminis- have been less evident across this Region, call- trations for very large cities (even megacities), ing for more MDP efforts to enhance revenue such as China, the retail approach to strength- mobilization for municipalities to fund the ening municipal management can be an ap- O&M necessary to sustain the service provision propriate model. achievements obtained thus far. 69 APPENDIX D: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN EUROPE AND CENTRAL ASIA Bank Support More than 280 million people live in cities in the Table D.1: Summary of MDP Portfolio, 1998­2008 Europe and Central Asia Region--64 percent of the total population. Through 28 MDPs active Completed (number) 16 during the 1998­2008 decade, the World Bank Completed MDPs (% satisfactory) 63 made commitments of $1.7 billion. This portfo- Ongoing MDPs (number) 12 lio aimed to strengthen the management of 292 IBRD commitments (US$ million) 1,496 municipalities in 16 countries. By number of IDA commitments (US$ million) 207 MDPs, the most active borrowers were the Bank commitments per completed MDP (US$ million) 36 Russian Federation (4 projects), Bosnia and Commitments per ongoing MDP (US$ million) 94 Herzegovina (4), Georgia (3), Turkey (3), Wholesale MDPs (number) 6 Kazakhstan (2), and the Kyrgyz Republic (2). The Retail MDPs (number) 22 remaining 10--Armenia, Croatia, Kosovo, Latvia, Countries served (number) 16 Lithuania, Poland, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan--hosted 1 MDP each. Municipalities served (number) 292 Thus, half of the Region's MDPs were in upper- Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- middle-income countries. Countries in the ment Association; MDP = municipal development project. Region with large urban populations but no Bank-financed MDPs are Romania and Belarus. derelict schools and health centers, bringing Portfolio Performance them back into full use. Kazan considerably Sixty-three percent of completed MDPs achieved improved its asset management, divesting some satisfactory outcomes, and the percentage of unnecessary inventory. Real estate assets remain- satisfactory Bank and borrower performance was ing on the municipal books are now leased at 90 a little higher. These figures are somewhat below percent of their market values, up from 50 the Bank-wide averages. percent prior to the project. Among successful cases in the Region's portfo- Other successful examples included Bosnia and lio, Russia IV stands out for its outcome rating Herzegovina I, which helped develop a munici- of highly satisfactory. The project considerably pal credit market as intended. In the process, it strengthened the financial management of the strengthened financial management both by the newly created municipality of Kazan (population municipalities and by five commercial banks that 1.2 million) by helping local officials organize and entered this market for the first time, making 28 unify municipal accounts, debts, and other loans for $13.3 million. obligations. The municipality turned a deficit into a small surplus. Outstanding payables, a Turkey I helped improve the efficiency of water major problem at the outset, were substantially use in municipalities by substantially improving reduced. Two-thirds of the project funding was worker productivity per connection as well as the used for urgent repairs to abandoned and bill-collection ratio. The Kyrgyz Republic project 71 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure D.1: MDP Portfolio Performance, Fiscal 1998­2008 100 78 80 74 75 69 69 63 60 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance Europe and Central Asia Region All Bank Source: IEG special study. Note: MDP = municipal development project. was successful in separating road planning, on the development of a commercial credit market budgeting, and contract administration from road for municipal investment. Its performance was construction, as intended, and it helped the undermined by a 1999 Finance Law that prevented municipalities of Jalalabad, Bishkek, and Osh set municipal borrowing, and the project disbursed up their own passenger transport authorities to very little. The Kazakhstan project failed to plan, contract, and monitor the private provision promote efficient municipal management of social of local services. Georgia III helped nine munici- assets divested by state-owned enterprises, mainly palities, housing three-quarters of the country's because the project gave insufficient attention to urban population, to become creditworthy and the financial challenges the municipalities faced. particularly increased the effectiveness of their The Lithuania MDP did not strengthen munici- delivery of street paving and water supply services. pal management, as intended, because the Associ- ation of Local Authorities of Lithuania, slated as the At the same time, three MDPs turned in a weak executing agency for the project, lacked the performance. The Poland MDP had little impact necessary capability and resources to perform this function effectively. Table D.2: Municipal Management Focus of Region Better City Planning Portfolio More information Share of all MDPs with Few MDPs in the Region aimed specifically to a project design focus on: Completed Ongoing strengthen information systems for municipal City planning management and planning. But the need for In objectives (%) 25 33 such information was acute in Georgia in the In components (%) 56 67 mid-1990s; three successive MDPs in that Municipal finance country introduced computer equipment and In objectives (%) 75 25 made municipal information more transparent In components (%) 75 92 under the law. However, much progress remains Service delivery to be made, and Georgia can learn from other In objectives (%) 88 83 good experiences, such as Chile's Information In components (%) 81 92 System on Municipalities. Russia I successfully Number of all MDPs 16 12 created a territorial information and analytic system for land, real estate, and infrastructure Source: IEG special study. Note: MDP = municipal development project. and a developer's manual, both of which have 72 APPENDIX D: WORLD BANK SUPPORT IN EUROPE AND CENTRAL ASIA had a positive impact on the housing market and laws to aid the planning process in improving the have become valuable references for potential availability of serviced land. The laws had yet to foreign investors and other parties. be ratified at the time of project completion. Monitoring and evaluation Investment planning and strategies M&E design in MDPs, as for many other projects, By training 550 staff in 30 municipalities, Kosovo's was often weak because it focused on the delivery MDP helped prepare five-year rolling financial of component outputs rather than achieving plans for the first time and incorporated project outcomes. Even some output indicators community inputs through participatory pro- were not always clear or measurable, lacking cesses. The Kyrgyz Republic MDP helped baseline and endline (target) data. This Jalalabad and Bishkek municipalities prepare plans prevented M&E implementation and use as a for financing and contracting urban road building, feedback mechanism to inform and improve which was separate from the construction itself. project performance. M&E in the Latvia and Kosovo projects did not distinguish between Stronger Municipal Finances output and outcome indicators. These projects especially lacked those indicators that could Better financial management measure actual institutional improvements Several MDPs achieved positive results in this against those planned and relied too heavily on area. Among the most notable was Russia IV in users' opinions, expressed through beneficiary Kazan, where project technical assistance helped assessments. Performance indicators could not local staff unify the municipal accounts for the be measured for lack of data--for example, on first time and make them more transparent. municipal action plans in the Kyrgyz Republic Among other things, computerized accounts MDP or on municipal finances under the first allowed Kazan's employees to receive their Georgia MDP. During Georgia II and III, M&E salaries on time. focused more on management information on municipalities, and this information slowly Other experiences show that equipment, technical became available in the country. The lack of assistance, or training alone is not enough to baseline data undermined the effectiveness of ensure better financial management. Initially, M&E in the Turkey MDP, which did not explicitly municipalities made limited use of computing cite preproject levels of pollution in the Sea of equipment provided through Georgia I. Marmara, for instance. Uzbekistan's MDP did not lead to improved financial management by the municipal solid waste The Kazakh MDP's M&E could not capitalize on utility, despite the technical assistance provided. technical assistance relating to financial manage- The actual modernization of municipal manage- ment methods and was unable to produce ment did not occur in the Turkmenistan's MDP monitoring data on a continuous basis to without the widely expected devolution of respon- measure its operating performance. Russia IV in sibilities to the local level. Under the Kazakhstan Kazan, in contrast, incorporated a strong M&E project,municipalwaterutilitiesdidnotimplement system, whose design included easy-to-measure modern financial management techniques, for indicators such as municipal debt and level of which training was provided, because of disconti- targeted cash-transfer subsidies that were also nuities in leadership. Similar weaknesses in the part of the conditions of tranche release of the Latvia MDPwerepartlyovercomebytwinningthe structural adjustment design of this loan. Daugavpils city water utility with the water works of the city of Tampere in Finland. Urban and spatial planning Most MDPs in the Region did not include signifi- Mobilizing own revenues cant urban planning activities. An exception was The Region's MDP portfolio obtained some good Russia I in St. Petersburg, which drafted several results in this area. Technical assistance through 73 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Bank supervision of Russia IV helped Kazan find potential foreign exchange risk inherent in alternative sources of revenue, which were external funding of municipal credit does not urgently needed, as large federal transfers were appear to have constrained municipal creditwor- soon to lapse. Municipalities participating in thiness in the Region. In Poland, with memories Georgia II increased own-source revenues by of that country's recent high inflation, commer- 11 percent during 1998­2002, compared with a cial banks tried unsuccessfully to transfer this risk decrease of 16 percent for other municipalities, to equally reluctant municipalities, stalling thanks in part to the incentives to become project implementation. But in most other creditworthy. countries, central governments and their agents have been willing to assume this risk. The Kyrgyz Republic MDP helped establish urban road funds and raised taxes threefold on Private finance participation private vehicles. The Uzbekistan MDP did not To date, MDP efforts and results in getting private succeed in establishing a stable self-financing finance into municipal services have been limited. mechanism for solid waste management through Poland's project did not succeed in channeling planned tariff adjustments, although a last-minute private bank funds into municipalities because of reprieve prevented the operation's collapse. the overall project failure. Private funding of Specific cost recovery from MDP investments Tashkent's solid waste management under themselves obtained good results in the Turkey Uzbekistan's MDP could not proceed while the MDP, where the Bursa municipal water and operation continued to operate at a loss. Private sanitation utility successfully maintained tariffs at funding of Kazan's water utility under Russia IV levels sufficient to meet its financial obligations. was held back because the public operator received support from other donors. Municipal creditworthiness and debt management Improved Service Provision Under Georgia I the Municipal Development Fund of Georgia became Georgia's main funding Investment priorities source for municipalities and an instrument for As in other Regions and sectors, few MDPs gave strengthening municipal management. Today much attention to estimating ERRs, either at the fund has become the government's principal appraisal or at completion. To be eligible for agency for financing major development project financing, Bosnia and Herzegovina I programs beyond just municipal development. did require participating municipalities to The latest Georgia III project saw 9 municipali- demonstrate that subprojects achieved at least ties, home to 73 percent of the urban popula- 12 percent ERR, but information on the actual tion, become creditworthy, also giving some of rates achieved was not systematically monitored. them access to additional concessional funding. After a poor start in neglecting ERR estimates in Under the previous Georgia II, some munici- its earlier projects, Georgia III ensured that all palities had overborrowed and defaulted on their subprojects met minimum rates of return. The loan repayments. Kyrgyz Republic MDP also reported, thanks to huge savings in operating costs, high ERRs for its Technical assistance to 32 municipalities and, urban road investments in Bishkek, Jalalabad, most significantly, to 5 commercial banks under and Osh. Bosnia and Herzegovina I helped municipali- ties become more creditworthy by increasing Although the project itself was barely revenue collections and helping banks under- implemented, the Poland MDP did lead stand their debt portfolio better. The govern- commercial banks to require that municipalities' ment supported a similar approach under the proposals for subprojects meet minimum ERR Kyrgyz Republic MDP, partly in the hope of requirements. Unconvincing reasons for the lack reducing the financial burden of subsidies. The of ERR estimates in this Region are similar to 74 APPENDIX D: WORLD BANK SUPPORT IN EUROPE AND CENTRAL ASIA those given in other Regions, such as Bank subprojects in 11 municipalities, with two-thirds guidelines not requiring them for emergency of project investment in Tbilisi and three-fourths projects and lines of credit. of investments in road rehabilitation and water supply. The greatest improvements were in urban Procurement road paving and clearing blocked drainage that Several MDPs gave municipalities a first opportu- caused periodic flooding. nity to become involved in the competitive procurement of works and services, with some Under Georgia I, during the country's post- positive results. Under Russia IV, Kazan munici- independence phase, infrastructure and services pality voluntarily adopted local competitive were preserved and improved for power, bidding--not required with a structural adjust- heating, and water. The Tbilisi Metro, which is ment loan--which resulted in lower-price con- used by 90 percent of the city's population, was tracts. Sole-source purchasing was reduced from "rescued" through the emergency funding of 55 percent of total to 25 percent, which was signaling systems and spare parts. Dysfunctional better than the target of 35 percent. sewerage systems in the municipalities of Batumi and Poti were restored to working order, though The Uzbekistan project introduced interna- service levels were still short of desired goals. tional competitive bidding to Tashkent munici- Restoring heating to hospitals and school pality that resulted in significant cost savings in buildings in five municipalities allowed contin- the acquisition of a new fleet of 270 solid waste ued operation throughout the winter. collection vehicles. Georgia III enabled munici- palities to play a greater role in procurement The Kazakhstan project allowed the water utility than had been possible under the earlier to supply good quality drinking water to 37,000 operations, although local management there people in two municipalities. The project's still needs to be strengthened more. More cleanup of sewage spills had an immediate health centralized political arrangements in some of the impact: between 1999 and 2002, the number of Region's countries leave procurement as a dysentery cases fell from 83 to 8, and typhoid government responsibility. cases fell from 83 to 0. According to the benefici- ary assessment of the Kosovo MDP, 90 percent Operations and maintenance of respondents felt that the 115 (mostly school There was little evidence of MDP attention to and water supply) subprojects implemented in ongoing O&M. In the Kyrgyz Republic MDP, 30 municipalities did respond to their needs; 84 however, each participating municipality had to percent were satisfied with results that they felt adopt a prioritized five-year road maintenance helped reduce water-borne diseases. program for its urban roads and streets. The Uzbekistan MDP established a repair and The Kyrgyz Republic project exceeded its maintenance depot, generously equipped with target by substantially improving 105 kilometers spare parts at the outset, to keep the fleet of new of roads, making the municipalities of Jalalabad, solid waste collection vehicles on the road. Under Bishkek, and Osh more accessible. Latvia's the Latvia MDP, the lack of such a facility put the MDP helped improve drinking water quality, and vehicles of one major Riga bus company at risk. untreated water was no longer being discharged into the Daugava River. The Lithuania MDP Services--Most affected sectors contributed only modestly to improvement in Among all activities undertaken, the projects conditions of municipal service infrastructure, performed best in improving services and related but it did help reduce street lighting energy costs infrastructure, especially for urban street paving in Vilnius. The Turkmenistan project helped and drainage, neighborhood upgrading, and basic increase bus and trolley services in Ashgabat, sanitation and other environmental improve- fully meeting targets, as well as contributing to ments. Georgia II successfully completed 89 enhanced reliability and frequency of services. 75 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Box D.1: Key to MDPs Referred to inText Armenia: Third Social Investment Fund Project. Bosnia and & Capacity Building Project. Latvia: Municipal Services Devel- Herzegovina: I--Local Development Project; II--Community opment Project. Lithuania: Municipal Development Project. Development Project; III--Solid Waste Management Project; Poland: Municipal Finance Project. Russia: I--St. Petersburg IV--Urban Infrastructure & Services Project. Croatia: Coastal Center City Rehabilitation Project; II--Northern Restructuring Cities Pollution Control Project. Georgia: I--Municipal Infra- Project; III--St. Petersburg Economic Development Project; structure IV--Kazan Municipal Development Project. Tajikistan: Munic- Rehabilitation Project; II--Municipal Development Project; III-- ipal Infrastructure Project. Turkey: I--Bursa Water & Sanitation Second Municipal Development & Decentralization Project. Project; II--Municipal Services Project; III--Istanbul Municipal Kazakhstan: I--Social Protection Project; II--Atyrau Pilot Water. Infrastructure Project. Turkmenistan: Urban Transport Project. Kosovo: Second Community Development Fund. Kyrgyz Repub- Ukraine: Urban Infrastructure Project. Uzbekistan: Tashkent lic: I--Urban Transport Project; II--Small Towns Infrastructure Solid Waste Management Project. Source: IEG. Wastewater collection systems and networks reading, billing, and invoicing. The Turk- with 80 percent treatment were put in place in menistan MDP helped increase private partici- Bursa city under Turkey I, which led to pation of the suburban and intercity transport to increased service coverage between 1993 and 70 percent, but greater effort could have been 2000--from 93 percent to 97 percent of the made at deregulation, to allow greater competi- population for water supply and from 73 percent tion. Under the Uzbekistan project, an interna- to 82 percent for sewerage. Over the same tional tender in 2003 for the private operation of period, unaccounted-for water fell from 65 Makhsustrans's Chilanzar and Shaihantaur percent to 45 percent. Uzbekistan obtained districts of Tashkent failed to yield any bids positive environmental results by helping restore because of doubts about the profitability of the Tashkent's solid waste management system. For operations without subsidies. the most part, the environmental impacts of roads, water, and solid waste subprojects of Income level of beneficiaries--Poverty Georgia I­III were positive, especially through reduction improving air and water quality in the poorer Only four MDPs have explicit poverty-reduction neighborhoods of the beneficiary municipalities. objectives. The Kosovo MDP broadly met its Regional poverty goals. The project directed the Services--Private provision majority of its social services toward the disabled, Private provision of services was relatively low women, and youth and generated 26,188 days of among this Region's MDPs. The Kyrgyz Republic temporary employment. But there is less MDP helped three municipalities--Jalalabad, evidence on outreach to other vulnerable groups Bishkek, and Osh--establish passenger transport such as widows, victims of conflict, inhabitants of authorities and plan, contract, and monitor the remote villages, and so forth. private provision of services. Construction is now awarded to private contractors, and major Under Russia IV in Kazan, the newly created equipment has been sold to the private sector. Municipal Department of Social Protection identi- fied eligible poor recipients through the munici- Under Turkey I, the Bursa Metropolitan Munici- pality's new computerized database of 23,900 pality contracted waste collection and landfill assisted families to replace earlier untargeted operations to private contractors. It also subsidies with direct cash payments, which also promoted private participation for meter produced an overall savings to the municipality. 76 APPENDIX D: WORLD BANK SUPPORT IN EUROPE AND CENTRAL ASIA Several "one-stop shops" were created to provide · New MDPs could make better and more in- these services to the beneficiaries. tensive use of simple ERR estimates to deter- mine investment priorities and measure Conclusions efficiency of results. · By continuing to do more wholesale MDPs · M&E of new MDPs needs to be stronger than that emulate the successful cases in this Region, in the past, especially in measuring the achieve- positive MDP impact can be broadened to ben- ment of objectives through quantified baselines efit more municipalities. and targets. 77 APPENDIX E: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN LATIN AMERICA AND THE CARIBBEAN Bank Support Latin America and the Caribbean is the most Table E.1: Summary of MDP Portfolio, 1998­2008 urbanized of the Bank's Regions. Currently, some 435 million people, 78 percent of the total Completed MDPs (number) 21 population, live in cities. The urban population Completed MDPs (% satisfactory) 86 now grows at only half the annual rate of the Ongoing MDPs (number) 15 1970s. IBRD commitments (US$m) 2,485 IDA commitments (US$m) 166 During the past decade (1998­2008), the World Commitments per completed MDP (US$ million) 86 Bank had a portfolio of 36 active MDPs and Commitments per ongoing MDP (US$ million) 56 committed $2.6 billion to them. The Region's Wholesale MDPs (number) 16 MDPs aimed to strengthen the management of Retail MDPs (number) 20 1,098 municipalities in 13 countries. The most Countries served (number) 13 active borrowers were Colombia (7 projects), Brazil (5), Honduras (4), Venezuela (3), Peru (3), Municipalities served (number) 1,098 and Argentina (3). Mexico, Ecuador, Chile, Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- Bolivia, Nicaragua, Haiti, and Belize had 1 or 2 ment Association; MDP = municipal development project. projects each. Half the MDPs were in higher- middle-income countries; the other half--except were lowered by 77 percent, despite a sevenfold Haiti (low-income)--were in lower-middle- increase in the network between 1996 and 1999. income countries. The Region's MDP portfolio covered all countries in the Region with large Venezuela I introduced basic infrastructure on a urban populations. large scale to low-income barrios in 45 municipali- ties across the country, benefiting 66,000 poor Portfolio Performance families; this was 43 percent above target. The The Region's MDP portfolio has a strong project exposed these municipalities to lending performance record, with 86 percent of operations for the first time, supporting their completed operations rated satisfactory. This financial management and revenue growth Region reports the best MDP performance through detailed technical assistance. Colombia I among the six Bank Regions. and its follow-on Colombia IV together helped create a local credit market among 179 municipali- An outstanding performer, rated highly satisfac- ties around the country, although municipal tory, was Colombia II. It successfully strength- demand for credit was weaker than expected. ened the capacity of institutions in charge of Municipalities with conservative financial adminis- planning, managing, and maintaining urban trations were reluctant to take on debt, and other transport infrastructure in Bogotá (population creditworthy borrowers had alternative sources of 7.1 million). This MDP lowered sector adminis- credit. Between them, Brazil I and III, in the tration costs from 17 percent in 1996 to 10 states of Minas Gerais and Bahia, respectively, percent in 1998, and road maintenance costs brought technical assistance for improving 79 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure E.1: MDP Portfolio Performance, Fiscal 1998­2008 100 86 78 80 74 76 76 75 60 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance Latin American and the Caribbean Region All Bank Source: IEG special study. Note: MDP = municipal development project. financial management to 179 municipalities, each tion in the poorer municipalities, especially in the using a wholesale arrangement through their state Beni region. Ecuador I successfully helped make intermediaries. the fiscal transfers to municipalities more transpar- ent, as intended, while helping improve the Among the most important physical results administrative efficiency of 99 municipalities obtained were improvements in the urban throughout the country. environment that were attained through basic sanitation investments financed by the projects. In contrast, three MDPs had unsatisfactory Valuable results in the form of a nationwide outcomes. The Haiti operation (retail) failed to municipal information system came from Chile II. expand the water supply to the capital Port au A wholesale operation on a larger scale involving Prince or make it more efficient. Water metering 77 municipalities, the Bolivia MDP helped targets were not met, and illegal consumption strengthen administrative and financial controls. It continued unabated. Most of the loan for Mexico I also focused physical investment on basic sanita- was cancelled, as six municipalities on the U.S. border region were unprepared to meet the project's environmental requirements, in compli- Table E.2: Municipal Management Focus of Region ance with the norms of the North American Free Portfolio Trade Agreement. Deteriorating national economic conditions undermined the ability of Mexico II to Share of all MDPs with finance the modern municipal solid waste landfills, a project design focus on: Completed Ongoing although there was some progress in improving City planning municipal planning of solid waste management, In objectives (%) 43 33 thanks to project technical assistance that went In components (%) 24 87 ahead. The Bank was slow to restructure the Municipal finance project, which resulted in the cancellation of 70 In objectives (%) 71 20 percent of the loan. In components (%) 43 47 Service delivery Better City Planning In objectives (%) 90 60 In components (%) 95 87 More information Number of all MDPs 21 15 There were few instances in the Region of MDPs Source: IEG special study. generating or using information for planning. Note: MDP = municipal development project. Chile was a notable exception. Chile I and II 80 APPENDIX E: WORLD BANK SUPPORT IN LATIN AMERICA AND THE CARIBBEAN launched and consolidated the National System seemed inconsistent, providing only anecdotal for Municipal Information (SINIM), which has evidence of increased tax-collection rates, reported about the situation and performance improved health conditions, and improved through more than 250 indicators for all 345 access to water and sanitation services. municipalities since 2000. Available over the Internet, SINIM covers local finances, administra- Under Chile I, a lack of M&E on outcomes tion, health and education services, spatial meant that claims of strengthened municipal planning, poverty, other social indicators, as well management as a result of project technical as geographic characteristics of all Chile's assistance on information technology could not municipalities. But Colombia III failed to create be substantiated. Even Chile II, which otherwise a national environmental information system excelled in providing information for planning, based on municipalities, because the Ministry of did poorly on M&E. Its design included 18 the Environment did not play the coordination performance indicators, but these were mostly role expected of it. Brazil I and III, in the about the delivery of outputs, such as the respective states of Minas Gerais and Bahia, number of municipalities served and the number implemented similar databases at the state level of technical assistance contracts made. The two and helped individual municipalities build their indicators that came closest to monitoring own information systems. achievement of project objectives were those that considered municipal own-source revenues Most progress in compiling information was and municipal operational surpluses. made by extending and consolidating local property tax registers, or cadastres. Colombia II Honduras also lacked explicit and quantifiable improved these to such an extent that it indicators able to demonstrate progress toward exceeded its target of updating 4.5 million title sustained coastal tourism in the project region. registers by 57 percent. At the municipal level, For Mexico II, the logframe developed during performance in using the additional information supervision was specified only in broad terms. for strong taxation flows varied. The Implementation and Completion and Results Report cites several examples of project Monitoring and evaluation outputs used to justify conclusions on outcomes. As in other Regions--and other sectors, too-- Venezuela II lacked appropriate performance MDPs in this Region obtained at best modest indicators altogether, but Venezuela III paid results in designing, implementing, and using more attention to the design of the M&E system. M&E. The usual culprits were found: focus However, it was barely used, as baseline data mainly on outputs rather than outcomes, lack of were not collected because of lack of inadequate baseline data to compare against actual achieve- resources. ments, and inadequate collection of data on actual project performance. Urban and spatial planning Although nine MDPs had objectives focused on Under Argentina I, a well-conceived logframe strengthening municipal planning, there is little with performance indicators was established at evidence of what was actually achieved. Co- midterm review for infrastructure works, but a lombia III led to the preparation of 17 municipal similar effort for institutional development was environmental plans and the incorporation of less successful. Under Brazil II, the M&E environmental aspects into land-use plans. framework to verify the achievement of project objectives was weak. Under Brazil III, three Investment planning and strategies years after Board approval, the Bank and IEG found limited evidence of achievements in borrower agreed to adopt a set of indicators to this area. One reported instance was Argentina I, monitor outputs and outcomes. However, actual which helped many municipalities plan cost- outcome data appeared infrequently and effective investment programs. 81 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Stronger Municipal Finances ities to credit operations, providing them with assistance for managing such operations. In Better financial management particular, Colombia I and IV effectively est- The majority of MDPs in this Region aimed to ablished a local credit market with the official improve municipalities' financial management, Local Development Fund, called FINDETER; this starting with better accounting and financial currently has a credit rating of AAA, refinancing reporting systems. On balance, the results from commercial bank loans to municipalities to fund these efforts have been positive, sometimes with their investments in infrastructure and services. valuable demonstration effects on municipalities One municipality, Pereira (population 0.4 that were not part of the projects. Bolivia I million), was able to issue bonds that were helped 77 municipalities strengthen their financial oversubscribed, and another (Barranquilla, control systems. population 1.4 million) was able to pay off its short-term debt thanks to project advice on Brazil I in Minas Gerais provided technical portfolio management. assistance for financial management to about 50 municipalities, a good number but well short of Brazil I, II, and III enhanced the credit man- the ambitious plans to cover all urban municipali- agement capabilities of poor municipalities ties in the state. Under Chile I, municipal especially, as did Ecuador I. But such efforts to practices and technical capacity have been consolidate local credit in the Region have been improved, and equipment (computers, communi- thwarted in recent years by national efforts to cations, drivers' license testing) has been updated. control fiscal deficits at the local level. In Chile, Similar improvements were reported under borrowing by municipalities is forbidden Mexico I. In addition, Venezuela I provided on- altogether. the-job learning opportunities for 45 municipali- ties to manage credit operations for the first time. Private finance participation Progress in this direction was not widely Mobilizing own revenues achieved through MDPs. Colombia IV, however, Through technical assistance, Bolivia I municipali- helped municipalities increase water, gas, and ties improved their resource mobilization. Brazil II solid waste tariffs, for instance, making some reported that 26 municipalities assisted by the services profitable for private investors. This project increased their own revenues more than situation continues to this day, although services other municipalities, but IEG found the statistical are less affordable to the poor. Average significance of this evidence questionable. household expenditure on basic sanitation rose by 204 percent between 1997 and 2003. Attempts More significant is that own revenues for project to stimulate private funding and operation of municipalitiesgrewfasterthanhigher-leveltransfers municipalities made little headway under Brazil over the 2001­03 period. Under Brazil III, a survey I and III, mainly because of a lack of interest by indicated that the majority of participating munici- the municipalities themselves. Venezuela II palities increased efficiency in financial manage- found a similar reluctance toward privatization of ment and tax administration and showed a urban transport. sustained increase in the collection of property taxes and services between 1996 and 2000. Under Improved Service Provision Ecuador I, of a random sample of 99 municipali- ties, 53 percent had doubled revenues in real terms Investment priorities over the project period. About half the completed MDPs reported ERR estimates at appraisal and completion. High ERRs Municipal creditworthiness and debt (34­42 percent) at completion were estimated management for basic sanitation and slum upgrading invest- Several MDPs successfully introduced municipal- ments under Venezuela III and Brazil I and III. 82 APPENDIX E: WORLD BANK SUPPORT IN LATIN AMERICA AND THE CARIBBEAN Strong ERRs (29­34 percent) were also reported successful Transmilenio bus-operated public for municipal urban transport investments under transport to Bogotá (population 7.2 million), Colombia II and Venezuela II. MDPs that did leading other municipalities, including Barran- not report internal rates of return at completion quilla (population 1.4 million), Pereira (popula- included Mexico I and II, Ecuador I and II, tion 0.4 million), and Cali (population 2.4 million), Argentina I, and Honduras II. Operations such to plan similar bus projects. There was also as these, which included investment in municipal interest from other countries. Through financing infrastructure and services, would have been and training of 250 municipal staff, Venezuela II amenable to simple estimates of ERRs that would enabled municipalities to make simple traffic have informed the evaluation about performance management improvements such as road signals, efficiency. intersection improvements, and rationalization of bus routes to reduce traffic congestion. In Belize, Procurement street and traffic improvements--including traffic With long histories of decentralized municipal signal systems, improved street drainage, responsibilities, many municipalities have signifi- widened sidewalks for pedestrians, and bicycle cant experience with managing procurement. lanes--had a positive impact on road safety. Nevertheless, Brazil II did introduce 49 poorer municipalities in the state of Ceará to handling According to two surveys made at the completion competitive procurement for works. Similarly, of Brazil III, respiratory and intestinal diseases Venezuela I helped 45 municipalities learn to were reduced in municipalities in Bahia state in manage procurement themselves as decentral- low-income areas where street paving had ization gathered pace in that country. reduced dust particles and basic sanitation had prevented the pollution of the water supply by Operations and maintenance sewage. In contrast, sewage treatment remains a Although municipalities are typically responsible major challenge in the Region. Pereira is still for O&M of infrastructure and services within without sewage treatment for its 440,000 inhabi- their jurisdictions, few MDPs paid attention to tants, who live in an ecologically sensitive zone, this aspect of municipal management. One despite the successful participation of the munici- exception was Venezuela I's provision of pality in several projects, including Colombia I. technical assistance and training to participating Similar shortcomings in final sewage treatment municipalities for carrying out urban road were evident under Brazil I, which nevertheless maintenance activities, affecting 360 kilometers brought other basic sanitation improvements to of pavement. Another was Venezuela III, which 150 municipalities in the state of Minas Gerais. tried to build up local O&M capabilities but came The introduction of the final disposal and up against municipalities' unwillingness to curtail treatment facilities for solid waste proved investments by allocating more resources to challenging under Mexico II, where deteriorat- O&M, especially at times of financial crisis in the ing macroeconomic conditions meant that only capital Caracas (population 1.8 million). three of the seven facilities intended were built, and only partially. Services--Most affected sectors As in other Regions, the most popular services Other urban environmental improvements provided through MDPs included urban trans- introduced by MDPs included, in Colombia II, port, slum upgrading, basic sanitation, solid controls over discarding used tires and batteries, waste management, and other urban environ- as well as the reduction of noise pollution by mental improvements. urban traffic through the deployment and use of new monitoring equipment. Other MDPs helped Municipalities were able to improve urban reinforce municipal management of the urban transport through MDPs across the Region. environment. Thus, Colombia III helped 17 Colombia II, for instance, brought the very municipalities prepare environmental plans, and 83 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Box E.1: Key to MDPs Referred to inText Argentina: I--Second Municipal Development; II--Basic Mu- ment; V--Bogota Urban Services Project; VI--Integrated Mass nicipal Services; III--Subnational Government Public Sector Transit Systems; VII--Disaster Vulnerability Reduction Project. Modernization. Belize: Belize City Infrastructure. Bolivia: I-- Ecuador: I--First Municipal Development; II--Environmental Municipal Development; II--Urban Infrastructure. Brazil: I-- Management. Haiti: Port-au-Prince Water Supply. Honduras: I-- Minas Municipal Development; II--Ceará Urban Development & Natural Disaster Mitigation; II--Sustainable Coastal Tourism Proj- Water Resource; III--Bahia Municipal Infrastructure Development ect; III--Barrio Ciudad; IV--Water & Sanitation Program. Mexico: & Management; IV--Bahia Poor Urban Areas Integrated Devel- I--Northern Border Environment; II--Solid Waste. Nicaragua: Nat- opment; V--Recife Municipal APL. Chile: I--Municipal Devel- ural Disaster Vulnerability Reduction. Peru: I--Lima Transport; II-- opment; II--Second Municipal Development. Colombia: Vilcanota Valley Rehabilitation & Management; III--Second Real I--Municipal Development; II--Bogota Urban Transport; III-- Property Rights. Venezuela: I--Low-Income Barrios Improve- Urban Environment; IV--Urban Infrastructure Services Develop- ment; II--Urban Transport; III--Caracas Slum Upgrading. Source: IEG. the Ecuador MDP helped 23 municipalities percent to 83 percent for basic sanitation, and establish specific Environmental Management 18 percent to 33 percent for fixed-line Units within their municipal administrations. telephones. Colombia II survey data showed that most users of the Transmilenio urban Income levels of beneficiaries--Poverty transport system in Bogotá are within the two reduction lowest quintiles. About one-third of MDPs in the Region had objectives explicitly focused on assisting the Conclusions urban poor. Even for Argentina I, an MDP that · Doing more wholesale MDPs and scaling them was not specifically poverty focused, about one- up is likely to yield positive results in a Region fifth of the beneficiaries were poor. Bolivia I, where 100 percent of wholesale MDPs ob- which emphasized beneficiary participation in tained satisfactory outcomes. the choice of investments, made most invest- · More can be done to disseminate the good ments in municipalities where poor people lived, MDP practices in the Region. Globally, munic- such as in the Beni region of the Amazon. ipalities in other Regions could benefit from this experience in municipal information systems, Under Brazil I, municipalities in Minas Gerais municipal creditworthiness and financial man- state invested in lower-standard basic sanitation agement, urban transport, and poverty reduc- and upgrading only of interest to lower-income tion. Within the Region itself, the Bank is poised groups. Brazil III went one stage further in to share MDP experiences among borrower urban poverty mapping of the changes brought countries. Finally, within individual countries, about by municipal investment in street paving, national and state authorities have opportuni- provision of drainage, and water supply and ties to share and exchange experiences among sanitation; however, the mapping was discontin- municipalities from different parts. ued because of lack of resources. The poverty · Successful experience from other Regions can impact of Colombia I's work with 179 munici- be put to good use in those areas where short- palities can be inferred from national data, comings have been noted in the Region, such which show that service coverage for those in as in M&E, private financing of municipal serv- the lowest quintile of income distribution ices, O&M, and key environmental services, improved significantly between 1993 and 2003, such as sewage and solid waste disposal and from 80 percent to 91 percent for electricity, 77 treatment. 84 APPENDIX F: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN THE MIDDLE EAST AND NORTH AFRICA Bank Support About 180 million people live in cities in the Table F.1: Summary of MDP Portfolio, 1998­2008 Middle East and North Africa Region, about 57 percent of the total population. During the Completed (number) 8 decade 1998­2008 the World Bank had a portfo- Completed MDPs (% satisfactory) 63 lio of 18 MDPs spanning 8 countries in the Ongoing MDPs (number) 10 Region. The Bank commitments of $845 million IBRD commitments (US$ million) 652 focused on strengthening the municipal manage- IDA commitments (US$ million) 94 ment of 379 municipalities in Tunisia (4 projects), Bank commitments per completed MDP (US$ million) 37 West Bank and Gaza (4), the Republic of Yemen Commitments per ongoing MDP (US$ million) 55 (3), Jordan (2), Lebanon (2), the Arab Republic Wholesale MDPs (number) 6 of Egypt (1), the Islamic Republic of Iran (1), and Retail MDPs (number) 12 Morocco (1). More than 70 percent of the Countries served (number) 8 projects are in lower-middle-income countries, 17 percent in low-income countries, and 11 Municipalities served (number) 379 percent in upper-middle-income countries. The Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- Region's portfolio covered all countries in the ment Association; MDP = municipal development project. Region with large urban populations (15 million plus) except for Algeria. excellent results that continue more than eight Portfolio Performance years after completion. Not only did MDP-partici- Some 63 percent of completed MDPs in the pating municipalities increase their own revenues Region achieved satisfactory outcomes. Bank more than other municipalities, but the partici- performance was also satisfactory 63 percent of pants also produced a current surplus that was the time. These ratings are below Bank-wide twice the target. The project helped the remote averages. In contrast, 88 percent of MDPs have municipality of Kasserine (population 82,000) satisfactory borrower performance, well above upgrade the Ezzouhour district of town and kept the Bank average. The disconnect reflects good it in good condition through careful mainte- efforts by the borrower in West Bank and Gaza, nance, sometimes involving local residents. where exogenous factors of conflict prevented commensurate project outcomes. West Bank and Gaza III succeeded in meeting more modest objectives that focused on repair- The strongest performing MDPs in the Region, ing municipal infrastructure damaged during the each awarded satisfactory ratings for their intifada rather than providing completely new outcomes and Bank and borrower performance, services. Despite the difficult circumstances of its were in Tunisia and the West Bank and Gaza. implementation, the project succeeded in Tunisia I, a wholesale operation assisting 257 making timely and effective repairs, thanks in municipalities throughout the country, produced part to strong and enthusiastic local leadership. 85 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure F.1: MDP Portfolio Performance, Fiscal 1998­2008 100 88 78 80 74 75 63 63 60 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance Middle East and North Africa Region All Bank Source: IEG special study. Note: MDP = municipal development project. Weaker performance was turned in by the military response to it. Because of events beyond Morocco MDP, which failed to improve the the control of the project, the MDP was unable housing stock of the ancient city of Fez (popula- to assume any effective role in the national tion 964,891) as intended. Public-to-private system of central and local government that the leverage of investments for the rehabilitation of project hoped to constitute. the Medina is likely to remain at a 1:1 ratio, well below the projected target of 1:13. However, the Better City Planning Fez municipality was consolidated through the amalgamation of six local governments around More information the time of project restructuring in 2003, and MDPs in the Region rarely set out to make more municipal management improved on the techni- information available for municipal manage- cal but not the financial side. West Bank and ment. The best results were obtained under Gaza I also performed poorly. The start-up was Tunisia I, although they could have been made at the time of the 2000 intifada and the Israeli more widely available to the municipalities themselves to help them improve their manage- ment. Instead, detailed information on munici- Table F.2: Municipal Management Focus of Region pal financial performance remained in the hands Portfolio of the national Municipal Funding and Support Agency. A newer operation, Jordan I aims to Share of all MDPs with improve information on municipal finances at a project design focus on: Completed Ongoing the national level, as well as information for asset City planning management at the municipal level, too. In objectives (%) 25 20 In components (%) 38 30 Monitoring and evaluation Municipal finance There is little information on the extent to In objectives (%) 50 20 which M&E frameworks were designed and In components (%) 75 92 used in projects in this Region. Wherever Service delivery performance indicators were available, they In objectives (%) 100 70 mostly related to outputs (in the form of In components (%) 100 80 delivery of project components) rather than outcomes (in the form of achievement of Number of all MDPs 8 10 project objectives). Even in such cases, baseline Source: IEG special study. Note: MDP = municipal development project. data were rarely available. 86 APPENDIX F: WORLD BANK SUPPORT IN THE MIDDLE EAST AND NORTH AFRICA The Republic of Yemen I, for instance, did not municipalities assisted by the projects improved, have baseline data on before-project conditions which led to better financial results. Stronger to track the impact of new pipelines and financial management was initially the outcome household connections on improving water of rapid loan disbursements to finance priority supply. In Tunisia II's M&E, the chosen local investments, which then progressed to the performance indicators measured project adoption of computerized accounting in 32 outputs, such as the provision of project techni- municipalities for the first time and to three-year cal assistance, rather than moving toward the budgeting and of outsourcing municipal project objective of increasing the efficiency of services. public sector management at the municipal level, for which no baseline condition or targets were The municipality of Ariana (population 237,395) specified in the project design. IEG estimated became one of the country's top 10 tax-collection that this project alone accounted for one quarter districts--it ranks 23rd in population--after of all municipal investments in the country making its own tax administration more efficient, during the 1997­2003 period of its implementa- following intense training its officials had at the tion. Despite this high profile, M&E was unable new municipal training center specially created to show what impact the project had, only the by the project. Altogether, 10,000 local and levels of municipal services in the country as a central government staff received project training whole. that covered more than 50 percent of all munici- pal staff in Tunisia at the time. West Bank and Gaza IV operated under the very difficult circumstances of the intifada. In Under Republic of Yemen I, municipal the rush to plan and deliver emergency services management of the local water supply became a at the outset, baseline indicators were not reality as the water authority of Sana'a (popula- adequately set up. Overall, there was a persistent tion 1.9 million) became a fully autonomous inadequacy of information about government corporation able to cover operating costs for the processes, including budget and transfer data first time in this sector; this also happened in 12 that should have improved under the project. other municipalities. Municipal financial manage- ment began to improve under West Bank and Urban and spatial planning Gaza II, as local governments began to institute Little was achieved in strengthening municipal solid waste collection fees, for instance, but the planning capabilities in the Region. Under West deteriorating security situation after 2000 stalled Bank and Gaza I, three municipalities pre- further progress. pared three-year development plans for the first time. Mobilizing own revenues Tunisia I produced excellent results that Investment planning and strategies continue to this day. Not only did participating This too was not a common feature of MDPs in municipalities increase their own revenues more the Region. Tunisia II required 76 municipali- than other municipalities, but the participants ties to prepare investment plans to be eligible for produced current surpluses that were twice the project funding of municipal infrastructure, but target. In the municipality of Monastir (popula- it is not clear how many actually did prepare tion 64,222), for instance, municipal own them. revenues as a share of the total rose from 30 percent to 38 percent between 1991 and 1998. Stronger Municipal Finances Resources for Tunisian municipalities enabled them to finance more investments than initially Better financial management expected. Under Tunisia II, several municipali- Under Tunisia I and II during 1993­2003, ties were able to use these additional revenues to financial management by many of the 257 pay off short-term debts and build up net 87 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED savings. Morocco's MDP helped improve cost Project improvements to road and water recovery and contributed to mobilizing internal infrastructure in 10 municipalities that accounted and external resources in a nondeficit, noninfla- for 76 percent of all project costs generated very tionary way to help finance minor investments strong benefit streams, when compared with the by the municipality of Fez. This was a positive dire without-project counterfactual. At comple- result for a project that otherwise failed to tion, Republic of Yemen I yielded a 28 percent achieve its objectives. ERR (up from 25 percent at appraisal) that demonstrated the significant benefits obtained Municipal creditworthiness and debt when municipal water supply shifts from high- management cost tanker delivery to low-cost network Tunisia I introduced 257 municipalities to the provision. As well as demonstrating the positive management of credit. As the agency responsible results of the projects themselves, these examples for implementing the project and collecting demonstrate the feasibility of estimating ERRs municipal debt service, the Municipal Funding even in the most challenging circumstances. and Support Agency saw its own creditworthi- ness enhanced when it obtained a credit rating Procurement of AA+ and successfully issued its own bonds in There is little evidence of municipalities taking the local market, to the value of $23.5 million. charge of procurement in a Region where this has largely remained a responsibility of central Private finance participation government authorities. Under Republic of Only a few of the Region's MDPs assigned a Yemen I, delays were caused by the division of specific role for private sector funding to help procurement responsibilities between the strengthen municipal management. Apart from autonomous water authority for the municipality the bond issue under Tunisia I, there is little of Sana'a and the Ministry of Energy and Water. evidence of a concerted effort by MDPs in the The ministry finally oversaw the international Region to stimulate private funding of municipal competitive bidding for the works, which led to services at all. Even under that project, only cost savings at the outset, but these were off- minor private financing occurred at the munici- set by unfavorable foreign exchange rate pal level, such as for detailed service design work movements. for historic sites in Monastir. Significant private participation in municipal water authority in Operations and maintenance Sana'a has yet to occur as the Republic of There were mixed results in this Region. Under Yemen I had hoped. Under West Bank and Tunisia I, for example, the remote municipality Gaza II, private financiers on whom the project of Kasserine (population 82,000) upgraded the design had initially relied to fund some munici- Ezzouhour district of town and kept it in good pal investments shied away as the conflict condition through careful maintenance, some- worsened in 2000. times involving local residents. But performance at the municipal level can vary under the same Improved Service Provision project. Thus, officials of the municipality of Ariana (population 237,395) saw the advantages Investment priorities of neglecting routine maintenance in upgraded Only two MDPs used estimates of ERRs to assess areas. They felt that leaving drains blocked and the priority of the project investments at appraisal pavement broken gave them a better chance of and to measure the efficiency of project achieve- receiving central government aid to finance a ments at completion. Following careful analysis at complete replacement. The main shortcoming completion, the West Bank and Gaza III of the otherwise successful Republic of Yemen yielded a very high ERR of 55 percent, exceeding I was its inability to provide for adequate ongoing even the appraisal estimate of 47 percent. O&M of the facilities built under the project. 88 APPENDIX F: WORLD BANK SUPPORT IN THE MIDDLE EAST AND NORTH AFRICA Services--Most affected sectors developed greater understanding of the need for Municipal infrastructure and services constituted cost recovery. Twice as much in direct taxation was the most numerous objectives in MDPs of the collected in Kasserine after the project as before. Region. The sectors for which MDPs sought strengthened municipal management in the Republic of Yemen I helped improve the living Region included low-income neighborhood conditions in the Akama neighborhood of Sana'a upgrading, urban street paving and drainage, by reducing raw sewage flooding in residential water supply and basic sanitation, as well as other areas, thanks to 7,500 additional households environmental improvements such as solid being connected to the sewerage system, seven waste management. times the original target. Water supply also increased, though not as much as targeted, MDPs achieved mixed results in upgrading and because only 5,000 households of the targeted urban street and road improvements. West 18,500 were connected. However, despite replac- Bank and Gaza I, for instance, attended to ing 21,500 water meters and rehabilitating 30 planned rehabilitation work as well as kilometers of pipelines, the project did not subsequent damage caused by conflict. This succeed in reducing unaccounted-for water. would be done through 54 damage repair subprojects in 9 municipalities, sometimes West Bank and Gaza II constructed or rehabil- exceeding targets, as in the case of 184 kilome- itated 64 kilometers of water lines (as well as 77 ters of roads built against a target of 100 kilome- kilometers of roads, which was several times the ters. However, later border closures prevented original targets), but it is not clear if this was due the use of physical assets, which would deterio- to any dilution in design criteria. West Bank and rate through lack of upkeep. West Bank and Gaza III expanded the water network in several Gaza III successfully completed two road small settlements that reported 90 percent of projects (13.2 kilometers) and rehabilitated 67 their population receiving a 24-hour piped water kilometers of roads. These improvements supply. The extent of this achievement cannot be reduced travel costs and times by almost 50 fully evaluated, however, for lack of baseline data percent in the project area. about the level of before-project service, or even data on the population served. West Bank and Gaza IV reached 61 municipali- ties through 2,200 subprojects in water and sanita- Services--Private provision tion, roads, electricity, and solid waste, but the full MDPs in the Region did not put much emphasis extent to which this augmented services is not on increasing the private provision of municipal fully known. Under Tunisia I, the number of services, and there was little progress where such subprojects financed and their outlay exceeded attempts were made. Under Republic of expectations by 250 percent and 50 percent, Yemen I, the intended private management of respectively, but their impact on service levels was the Sana'a water agency had yet to be not fully documented. Improved streets gave implemented and the government remained people better access to their homes and uncommitted. Under West Bank and Gaza II, businesses, as well as providing drainage and renewed conflict in 2000 precluded any increase proper public lighting in central and residential in private sector participation. areas of the client cities. A participatory approach adopted by many municipalities encouraged The otherwise very successful Tunisia I made communities to contribute to the costs of some little progress in improving the incentive improvements, as IEG saw in Kasserine; there, 50 framework for building partnerships with the community leaders met with local officials to private sector and municipalities. Under identify the priority investments for their own Morocco's MDP, both the government's neighborhoods. This dialogue appears to have commitments for the rehabilitation process and 89 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Box F.1: Key to MDPs Referred to inText Arab Republic of Egypt: Alexandria Development. Islamic Re- Investment; IV--Third Municipal Development. West Bank and public of Iran: Urban Upgrading & Housing Reform. Jordan: I-- Gaza: I--Municipal Development; II--Bethlehem 2000; III-- Regional & Local Development; II--Cultural Heritage, Tourism & Second Municipal Infrastructure Development; IV--Emergency Urban Development. Lebanon: I--First Municipal Infrastructure; Municipal Services Rehabilitation. Republic of Yemen: I--Sana'a II--Cultural Heritage & Urban Development. Morocco: Fes Med- Water Supply & Sanitation; II--Taiz Municipal Development & ina Rehabilitation. Tunisia: I--Municipal Sector Investment; II-- Flood Protection; III--Port Cities Development Program. Second Municipal Development; III--Transport Sector Source: IEG. projections for leveraging private sector invest- reduction. Several stakeholders, especially in the ments fell far short of expectations during the municipalities themselves, appeared to be project period, and it appears too early to assess unfamiliar with the Bank's mission relating to whether projections made at project closing will poverty reduction and saw no contradiction in be realized to any significant extent. project investment being made in higher-income areas. Income level of beneficiaries--Poverty reduction Conclusions There was no explicit focus on the income levels · Development programs in the Region can of beneficiaries or on poverty reduction in most make more use of municipalities as partners in MDPs in the Region. Even in the few cases where service provision, even where central govern- this was directly or indirectly attempted, the ments prefer to retain overall responsibility results fell short of targets. West Bank and themselves. Gaza IV managed to create 270,000 person-days · Robust evidence from the Region shows that of employment for unskilled workers, but this MDPs can improve the performance of mu- was short of the target of 400,000, after some of nicipal finance, and the potential for strength- the resources allocated to employment genera- ening this dimension of municipal management tion were transferred to service provision appears to be under-exploited. instead. · Frequent claims that M&E and ERR exercises are too complex and costly to implement in Under Morocco's MDP, only 20 percent of the volatile country conditions are not borne out beneficiaries were classified as poor. Under by experience in this Region, where a few ex- Tunisia I, there was no clear focus on poverty periences have been quite successful. 90 APPENDIX G: BANKING ON MUNICIPALITIES: WORLD BANK SUPPORT IN SOUTH ASIA Bank Support Although South Asia is one of the world's less Table G.1: Summary of MDP Portfolio, 1998­2008 urbanized regions, more than 431 million people, 29 percent of the total population, live in Completed (number) 7 the Region's cities. Through just 12 MDPs active Completed MDPs (% satisfactory) 43 during the past decade (1998­2008), the World Ongoing MDPs (number) 5 Bank committed $1.3 billion. This small portfolio IBRD Commitments (US$ million) 671 aimed to strengthen the management of 146 IDA Commitments (US$ million) 673 municipalities in 6 countries. By number of Commitments per completed MDP (US$ million) 88 MDPs, the most active borrowers were India (4 Commitments per ongoing MDP (US$ million) 146 projects); Pakistan (3); and Bangladesh (2); Wholesale MDPs (number) 4 Afghanistan, Bhutan, and Sri Lanka hosted 1 each. Thus, all but two of the Region's MDPs Retail MDPs (number) 8 were in low-income countries. With an urban Countries served (number) 6 population of 4.5 million--16 percent of the Municipalities served (number) 146 total--Nepal was the only large country in the Source: World Bank data. Note: IBRD = International Bank for Reconstruction and Development; IDA = International Develop- Region not to host an MDP. ment Association; MDP = municipal development project. Portfolio Performance Only three of the seven completed MDPs in this second-largest city Madurai (population 909,908) Region (43 percent) achieved a satisfactory successfully issue municipal bonds for the first outcome, making this the weakest of the Bank's time, to finance an inner ring road. Regional MDP portfolios. Only four of them had satisfactory ratings for both Bank and borrower Several MDPs performed poorly. Implementa- performance. tion of Bangladesh I was hostage to land- acquisition problems and a lack of coordination The only fully satisfactory completed operation between borrower agencies, resulting in resettle- in the portfolio was India II, which set up a ment not complying with Bank guidelines. In municipal development fund that financed addition, municipal financial management investments by municipalities in the southern remained weak. Sri Lanka's MDP suffered from state of Tamil Nadu. This operation built on more poor design that did not take into account the than 20 years of continuous Bank assistance to public opposition to the project's plans for solid the urban development of Tamil Nadu and its waste disposal. The design was also based on an capital Chennai. By introducing computerized incomplete understanding of the baseline water accounting and modern financial management quality of the polluted Beira Lake in the capital methods, India II helped 45 municipalities in Colombo (population 2.3 million) that the the state prepare "corporative development project aimed to improve. The municipal plans" to help determine their priority invest- management in Colombo barely changed as a ments. This support also helped Tamil Nadu's result of the project. 91 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED Figure G.1: MDP Portfolio Performance, Fiscal 1998­2008 100 78 80 74 75 60 57 57 43 satisfactory 40 20 Percent 0 Outcome Bank performance Borrower performance South Asia Region All Bank Source: IEG special study. Note: MDP = municipal development project. Pakistan II did not succeed in the Northwest Nadu. As a result, 46 local municipalities have Frontier largely because efficiency criteria for prepared city corporate plans with a mapping of selecting subprojects and financing them were urban infrastructure using important baseline outweighed by political factors that determined data. However, these plans have yet to become the choices made. Bhutan's MDP did not key drivers of local municipal development, even succeed primarily because the design overesti- though they have facilitated municipal access to mated the management capabilities of local loans by the Tamil Nadu Urban Development municipalities. Fund, itself established by an earlier MDP project. The need for systematic data collection is now Better City Planning better appreciated; in fact, the State Municipal Administration and Water Supply Department More information plans to assist local municipalities prepare a India II provided technical assistance to 50 human development index for such basic municipalities, called urban local bodies in Tamil services as water supply, sanitation, health, poverty alleviation, and access to basic needs. Table G.2: Municipal Management Focus of Region's Under the Sri Lanka MDP, the Colombo master Portfolio plan benefited from the project's provision of a geographic information system for the Urban Share of all MDPs with Development Authority, but little expertise was a project design focus on: Completed Ongoing passed on to the Colombo municipality that is City planning responsible for cadastral and land-use applica- In objectives (%) 29 0 tions for the geographic information system. In components (%) 0 67 Municipal finance Monitoring and evaluation In objectives (%) 57 60 M&E was weak in MDPs. Its weakness came from In components (%) 43 60 too much focus on the delivery of project outputs Service delivery and too little on project impacts gained through In objectives (%) 100 100 achieving the MDP objectives. This M&E shortcoming was even evident in the otherwise In components (%) 100 100 well-performing India II, which gave little Number of all MDPs 7 5 attention to measuring the achievement of Source: IEG special study. Note: MDP = municipal development project. municipal service improvements, let alone the 92 APPENDIX G: WORLD BANK SUPPORT IN SOUTH ASIA impact on beneficiaries. For instance, a completed ing officials, as well as for elected representatives. bus stand was treated as fully achieved, even This training helped most local municipalities though it had not started functioning because it adopt the accrual accounting system and comput- did not have the necessary official permits. Even erize the collection of municipal taxes and fees. targets that had measurable goals did not have Now the collection performance of several local baseline data to compare against. municipalities can be monitored in real time, making information quickly accessible for However, some evaluation studies carried out at decision makers at the municipal and state level. the end of India II to inform the follow-up Compliance has become easier to monitor, and project did provide useful information on urban users find it easier to pay their taxes. environmental indicators. Some of the larger municipalities collect regular and reliable Under the Bhutan MDP, financial reporting information on service status and achievements, during implementation was weak and was made such as water supply per capita per day, though worse by lack of technical support within the this is still not typical of most municipalities in country for the computerized financial manage- the state. In Pakistan II, too, the M&E system ment system that had been customized for the was overly focused on inputs and outputs, and project. On a related matter, much needs to be even data that were collected were not used to done to build financial systems for cost recovery. improve implementation. Mobilizing own revenues Under the Sri Lanka MDP, the lack of baseline Under India I, Tiruchirapalli municipality data on the original condition of the Beira Lake (population 775,484) reported an increase of 60 water and the absence of systematic monitoring percent in revenue between fiscal 2004 and 2005. of changes to it made it impossible to assess The municipality used the additional revenue to properly the results obtained through the undertake new infrastructure investments of its project. own, such as the water supply in the Srirangam area. The Madurai municipality increased Urban and spatial planning property tax collections by 20 percent during Apart from the update to the Colombo master plan fiscal 2004­05, compared to 6 percent for the under the Sri Lanka MDP, there was not much previous year. In terms of direct cost recovery evidence of MDP impact on this in the Region. from MDP investment, there is little evidence of significant results in the Region. Investment planning and strategies India II in Tamil Nadu provided consultant Under India I, little was done to simplify technical assistance to and facilitated exchanges procedures for revising bus fares or to among 45 municipalities to help each prepare strengthen the transport corporation in Chennai corporate plans that set out their investment (population 4.3 million), which continued to be priorities for the following 10 years. a loss-making entity, unable to invest in or expand services. Under Bangladesh I, the cost- Stronger Municipal Finances recovery component through Agrani Bank loans was cancelled, and the property tax collection Better financial management system remained unchanged. Significant efforts to improve financial manage- ment were mainly confined to India and Bhutan, Municipal creditworthiness and debt with positive results in India but less so in Bhutan. management India I and II helped strengthen local municipal India II encouraged municipalities in Tamil Nadu capacity in finance and accounting, including to become creditworthy to have better access to computerization. This occurred through training loans awarded by the Tamil Nadu Urban Develop- (35 freestanding courses) for finance and account- ment Fund (TNUDF). Under this arrangement, 93 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED local municipalities were given easy access to cal solutions. The Bhutan MDP introduced discuss and access the TNUDF's knowledge base competitive procurement for municipal works of innovative funding, for which there was a high for the first time in that country, even though demand. By March 2005, 39 percent of TNUDF's municipal capacity in this area remains weak. portfolio related to investments in bridges and roads, 38 percent to sewerage and sanitation, and Operations and maintenance 17 percent to water supply. MDPs in the Region rarely addressed municipal responsibilities for O&M, and this neglect remains The state's second largest city, Madurai (popula- an ongoing concern. Thus, the benefits from tion 909,908), went one step further. With techni- physical works under Bangladesh I, for instance, cal assistance provided through the project, the are unlikely to be sustained because of continued municipality issued bonds to raise funds to pay for neglect of maintenance. Despite progress in the construction of an inner ring road that today improving sewerage under Pakistan I, there too yields $1.4 million per annum in toll charges. municipalities' O&M is adequate. As result, the uncollected waste accumulating in sewers and Private finance participation drains undermines the benefits of the upgrading MDPs in this Region did little to achieve private that was done. financing of projects. India I and II came closest by encouraging the TNUDF to create near- Services--Most affected sectors market conditions for municipal investment that MDPs in India, Bhutan, Bangladesh, Pakistan, and would begin to interest private financiers. But Sri Lanka helped improve urban services and India I failed to promote the intended private related infrastructure. In Tamil Nadu, India I and participation of shelter and land development in II contributed positively to services, infrastruc- the slums of Chennai because of the lack of ture, and security in slums and made some interest on the part of private developers. improvements to urban roads and transport services. The projects improved living conditions Improved Service Provision in 489 slums (against a target of 590), housing 76,000 people--or 5 percent of the slum popula- Investment priorities tion--in the 10 largest agglomerations in the state. Estimates for ERRs were rarely made for MDPs in This was done by providing paved pathways, the Region. One exception was Bhutan's MDP, drains, streetlights, public fountains and baths, which yielded a 25.8 percent ERR at completion, and tenure security. Beneficiaries reported health according to government estimates. improvements and greater social acceptance. There were some shortfalls in transport services: Procurement only 4 of 10 depots and 7 of 10 terminals were As in other Regions, MDPs involved local munici- completed. The widening of the inner ring road in palities more in preparing and sometimes fully Chennai was only partially completed because of managing procurement. Although some difficulties in acquiring necessary land. For the shortcomings were still reported, the procure- transport corporation in Chennai, 1,595 bus ment experience of Pakistan I highlighted the chassis were procured, but they could not all be effectiveness of spot checks, especially in the used because of financial constraints. municipality of Lahore (population 6.3 million), on the good faith of bids. Such checks helped prevent Under Pakistan I, about 300,000 low-income insider trading and the formation of local cartels. people in Lahore, Gujranwala, Sialkot, and Multan benefited from slum upgrading. In Under the Sri Lanka MDP, both the municipal- Lahore, 21 major roads were improved and new ity of Colombo and the national authorities street lighting and traffic signals were installed. perfected their skills in prequalifying bidders, so But the construction of stabilization ponds for that tenders always included high-quality techni- sewage treatment in Lahore was deferred for a 94 APPENDIX G: WORLD BANK SUPPORT IN SOUTH ASIA later project. Pakistan II's upgrading report- Box G.1: Key to MDPs Referred to inText edly reached 90 communities with 550,000 beneficiaries and engaged in road construction that saved travel time and improved environ- Afghanistan: Kabul Urban Reconstruction. Bangladesh: I--Urban De- mental conditions, but evidence for these velopment; II--Municipal Services. Bhutan: Urban Development. India: assertions was not always clear. They must be in I--Tamil Nadu Urban Development; II--Tamil Nadu Second Urban De- doubt, given the reports of lack of coordination velopment; III--Karnataka Municipal Reform; IV--Third Tamil Nadu among stakeholders and of failed project Urban Development. Pakistan: I--Punjab Urban Development; II-- infrastructure that had to be rebuilt prematurely. Northwest Frontier Province Community Infrastructure; III--Punjab Municipal Services Improvement. Sri Lanka: Colombo Environment Following Bangladesh I, 90 percent of slum Improvement. dwellers in three Dhaka slums (Islambagh, Source: IEG. Raulpur, and Shaheednagar) reported improved living conditions through construction of 482 latrines. But the project faced implementation Frontier Province, but the effectiveness of shortfalls, again because of difficulties in acquir- poverty targeting was unclear because of politi- ing land. The Bhutan MDP helped improve the cal interference in beneficiary identification. quality of life in 10 towns through enhancements Improvements in living conditions cannot be to water supply and other urban infrastructure, attributed to the project. although the results were short of targets. The project experience enabled municipalities there Under India I, a cross-subsidy from the sale of a to participate in the environmental screening of small number of lots for middle- and higher- subprojects. Under the Bhutan MDP, there was income households helped finance a number of improved interaction between central and local serviced plots for the poorest households, which governments on the environmental screening of included common open spaces that made best urban investments. A beneficiary survey revealed use of the land available. Under India II, benefits that 73­83 percent of respondents in 3 towns reached the poor through slum upgrading in considered the water supply to have improved, particular. Also an integrated sanitation program but this result has to be set against surveys in provided public complexes with toilets and towns that were not covered by the project that washing areas in underserved areas such as also reported similar improvements. slums. Beneficiaries--who are typically poor-- reported a substantial improvement in their The Sri Lanka MDP did not improve solid waste quality of life. As a result, open defecation was management in Colombo, despite the city reported to have decreased by 80 percent. building a large-scale compost operation, which the Bank had initially suggested was not the best Conclusions technical solution to the problem. The project · The positive experiences of India I and II, in- had greater success in reducing wastewater volving almost 20 years of continuous Bank as- pollution in the Beira Lake catchment area. An sistance to urban development in the state of industrial waste system was completed under the Tamil Nadu, suggest that adapting a whole- project, and several lakeside dwellings were sale, step-by-step approach to a particular con- hooked up to the sewerage system. text over a sustained period can yield positive results. Income levels of beneficiaries--Poverty · India II has contributed to improving urban reduction infrastructure services in Tamil Nadu, directly There is evidence that the modest results of the through projects funded by TNUDF and indi- Region's MDP portfolio did nevertheless bring rectly through capacity building in municipal- some benefits to the poor. Pakistan II aimed to ities that have made additional infrastructure reach low-income groups in the Northwest investments using their own funds. 95 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED · Even in projects that otherwise perform works and goods, as experience in Bhutan weakly, municipal management can be and Sri Lanka showed. To minimize risks, spot strengthened by increasing the responsibili- checks can be necessary, such as those made ties of local government for procurement of in Pakistan I. 96 APPENDIX H: NOTES ON METHODOLOGY OF EVALUATION Principles very close to the 50 percent now reported to live As a meta-evaluation, this assessment was in urban areas. designed to assemble and review existing IEG evaluation findings about Bank support for MDPs The correspondence is not exact, however, for from Project Performance Assessment Reports three reasons. First, a larger urban municipality (PPARs) and IEG Reviews of Implementation with an extensive jurisdiction might contain Completion Reports (ICR Reviews). As such, it is some rural inhabitants on its periphery, analogous to a literature review, where the litera- especially if the jurisdiction is large. Second, ture in this case consists of previous IEG assess- because concepts of urban population vary from ments, particularly in PPARs. country to country, a local definition of "urban" may not always be comparable with the criterion The 1998­2008 period of the review, chosen for used in this study. Third, it will not be the case of its immediate relevance to ongoing work in this a single metropolitan area composed of multiple area, encompasses a portfolio of all MDPs municipal jurisdictions--in such cases, there completed since 1998, as well as those still would be one city, yet many municipalities. IEG's ongoing. MDPs that exited between 1998 and methodology may overstate the number of cities, 2008 generally have an ICR, a self-evaluation because it counts peripheral rural populations in prepared by the Bank's Operations Region, and larger municipalities as urban. To ensure that an ICR Review, an independent assessment done estimates of the number of cities are reliable, IEG by IEG based on the ICR. About one-third of the triangulated the results with estimates of the closed MDPs were approved within the same urban population from the World Development decade; the approvals of the remaining two- Indicators. The calibration at the country level thirds in some cases dated as far back as 1988. confirmed IEG estimates for this study to be This study considered all MDPs that were within ±10 percent of the World Development completed since 1998 and those that are still Indicators estimates. ongoing. The MDP Portfolio Municipalities and Cities The study portfolio of MDP operations was The study used the online World Gazetteer identified through an internal Bank database. As database in Germany, which contains details of a first cut, IEG identified 231 operations classi- more than 167,000 named municipalities. fied by one of the Bank's four related activity Records include census populations, geographic codes: #71 Municipal Management, #72 Munici- coordinates of location, and the type of local pal Finance, #73 Municipal Services, and #74 authority, in English and in the local language. In Subnational Government Administration. Then extracting municipality-level population figures IEG conducted a keyword search for projects from this database, IEG found that 31,000 larger without these codes, but with the words munici- municipalities, each having 12,500 or more pal (and variants), city/cities, local government, inhabitants, were home to 3.25 billion people, and local authorities to identify projects that approximately half the world's population, and worked closely with municipalities and cities, but 97 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED not classified as such by one of the Bank's activity selected. When choosing them, IEG applied codes. various considerations: providing input for IEG thematic studies and Country Assistance Evalua- Next the study team eliminated 68 of these tions as well as ensuring that all six Bank operat- operations after finding that they did not have ing Regions were covered. municipal management objectives or com- ponents despite the activity coding. That left 163 Criteria for selection of the 24 MDPs chosen for MDP projects. IEG field review through PPARs were varied. As far as this study itself is concerned, the most IEG sent the preliminary listings (by Region) of relevant criterion was to use the PPAR as an input. this portfolio to Bank urban staff in each This applied to The Gambia MDP, Tanzania I, Operational Region, requesting that they help Indonesia II, VI, and IX, Russia IV, and India identify any Type I and Type II errors in the lists I and II. Others were chosen to feed into IEG by pointing out operations that had been Country Assistance Evaluations, including included that were not MDPs, and other Georgia I, II, and III and Colombia I and IV. operations that were MDPs but were not in the Some were selected from countries where IEG lists. Thanks to excellent responses, IEG was able evaluations of urban projects had been thin, to exclude some projects that did not fully meet namely China III, IV, and VII, Sri Lanka, and the criterion of a direct focus on improving Uzbekistan. The remaining projects were part municipal management. IEG could also include of IEG's regular program of PPAR assessments. additional projects overlooked in its first search, ones that lacked a municipal activity code but Prior to this study and as per normal practice, that were focused on strengthening municipal IEG carried out 114 desk ICR reviews, covering management. As a result of this dialogue with the 100 percent of the completed MDPs. From the Regions, 14 projects were dropped from the ICR Reviews, information on the objectives, portfolio and 41 projects were added, resulting components, and lessons of each operation were in a portfolio of 190 MDPs. compiled into the study database. The final study portfolio of 190 MDPs included Municipal Management Themes 114 closed MDPs and 76 ongoing MDPs. IEG To identify whether an MDP supported one of project reviews are only available for closed MDPs, the study's three municipal management of course. Entry MDPs have not yet been themes, IEG conducted keyword searches of the evaluated by IEG, nor will they be through this objectives formulated for each operation. When study. But they are considered in the present the appropriate keyword was found, the MDP study, where they stand as evidence of the lessons was classified as being focused on the particular of evaluated closed MDPs being carried forward. theme in question. For each theme, the follow- ing key words (in parentheses) were used: (i) About 92 percent of the MDPs in the portfolio are city planning (plan*, strateg*, program*, mapped to the Sustainable Development Network. *tech*, *inst*, *train*, *capa*, *manag*); (ii) Sixty-six percent are mapped to the Urban Sector municipal finances (finance*, fund*, budget*, Board, with 12 percent to the Water Sector Board, 9 fin*/manag*); and (iii) service provision (service, percent to the Transport Sector Board, and 5 infras*, water, env*). Because the three are not percent to the Environment Sector Board. mutually exclusive categories, it was possible for an individual MDP to focus on more than one IEG Evaluations theme at the same time. During fiscal 1998­2008, IEG completed 17 PPARs--all in different countries, covering 24 IEG adopted a similar procedure to identify the MDPs, about one-fifth of completed MDPs. The relevance of the design of an MDP, through MDPs chosen for the PPARs were not randomly similar keyword searches of the description of a 98 APPENDIX H: NOTES ON METHODOLOGY OF EVALUATION project's components. As with the focus on annexes to this report, at evaluation findings of all objectives, an MDP's design could cover more 114 completed MDPs for which there are ICR than just one of the study's themes. Reviews. Finally, the study also considered, without evaluation, the 76 ongoing MDPs, in Levels of Assessment of MDP Portfolio order to review how the current portfolio contin- The most intensive assessment in this study, ues to address the issues raised by this evaluation. presented in the main report, was based on Among other things, the different sets of MDPs earlier evaluation findings of the 24 MDPs explain the discontinuous nomenclature of reviewed by PPARs. The study also looked more individual MDPs in the main report and the extra broadly, reporting the findings in the Regional countries and MDPs referred to in the annexes. 99 Using new municipal services in Pereira, Colombia. Photo courtesy of Roy Gilbert. ENDNOTES Management Comments small settlements, but this usually occurs in lightly pop- 1. IEG confirms that its assessment is based on how ulated rural areas, which are not covered by the pres- often MDPs refer explicitly to the poor or poverty re- ent study. duction in their objectives. MDPs with poverty reduc- 6. This portfolio was identified in three stages. First, tion components or actions that lack a supporting a keyword search identified all operations within the objective would not be counted. Explicit poverty re- 1998­2008 period whose formal Bank coded activity in- duction objectives would increase the count of MDPs cluded the word "municipal" or "subnational." This gave covering poverty. They would also make the aims and a preliminary total of 231 projects. Second, 68 of these purpose of their poverty-related actions clear. operations were eliminated when closer review revealed that, despite their activity coding, they did not have mu- Chapter 1 nicipal management objectives or components. This 1. Launched in 2006 and reporting in 2008, the Com- lowered the count to 163 projects. For the third stage, mission had 22 leading practitioners, mostly from the IEG sent the list of 163 to all Bank urban sector staff, invit- developing world. They were charged with drafting the ing them to comment and make corrections. Feedback policy implications for sustained economic growth. The from these staff led to the removal of 14 and the addi- Commission was sponsored by bilateral and multilateral tion of 41 projects. These adjustments resulted in a donors (including the World Bank). portfolio of 190 MDPs (details in appendix H). 2. In some countries, municipalities might go by 7. To directly assess the effectiveness of municipal other designations not used in this report. Commune, management support, 17 of these 24 PPAR MDPs were county, opstina, and wilayat are just a few examples. purposefully selected from all Regions to serve as build- Whatever term is used, the generic municipality is typ- ing blocks for the present study. The remaining 7 were ically headed by an elected or designated council and chosen for other reasons, including ensuring IEG cov- mayor, who appoint technical staff and officials to carry erage of under-evaluated countries and more detailed out day-to-day municipal management. Also, as used in evaluations of operations whose rating by IEG differed this report, the term city refers to a built-up spatial from the Region's. concentration of wealth, population, and economic ac- tivity, as in the 2009 WDR Reshaping Economic Geog- Chapter 2 raphy (World Bank 2008). 1. Project documentation and government reports 3. Currently, the largest municipality in the world is may inform the number of municipalities served, but Chongqing, China, with an estimated population of without identifying each one by name, especially when 31.6 million people. a large number of municipalities is involved. Evaluation 4. Figures are taken from www.world-gazetteer.com would have been easier if all Implementation Comple- in Germany. tion Reports for MDPs routinely reported the name, pop- 5. The study does not cover two exceptional arrange- ulation, and project investment in each municipality ments. The first is where several contiguous munici- supported. In using these sources to estimate the total palities manage a single megacity, often constituting a number of municipalities and cities served for this study, metropolitan area; this example did not arise in the IEG exercised care to avoid double counting munici- Bank portfolio reviewed here. The second arrange- palities that may have been assisted by more than one ment is where a single municipality manages several very MDP operation in a particular country. Finding out just 101 IMPROVING MUNICIPAL MANAGEMENT FOR CITIES TO SUCCEED how many cities were assisted, something that has not objectives; 69 percent of ongoing projects had this been clearly done previously by the Bank, was one of focus (IEG 2004, pp. 11­12). the questions driving this evaluation. 2. IEG uses 20,000 municipalities as the denomina- Chapter 3 tor here. Countries hosting Bank-financed MDPs ac- 1. This report provides ratings of 11 specific MDP count for the vast majority of all developing country achievements across the municipal management di- municipalities--some 18,000, or 90 percent of the total. mensions of planning, finance, and service provision. For 3. Examples of apex agencies in wholesale MDPs re- the municipal information system results in this in- viewed by PPARs include Georgia II and III--The Mu- stance and for all others, the assessments are based on nicipal Fund of Georgia, www.mdf.org.ge/; Brazil the observed efficacy of the actual results obtained by II--Ceará state government, Secretariat of Cities, the specific management improvement. A rating of http://www.cidades.ce .gov.br/; Chile II--Subsecretariat "substantial" means that the expected result was fully of Regional Development, http://www.subdere.gov.cl; achieved; a rating of "modest" means that the expected Colombia I and IV--LocalDevelopmentFund(FINDETER), result was only partly achieved. http://www.findeter.gov.co/. 2. Since IEG began rating M&E performance in July 4. An extreme case of this is the municipality of 2007, only 18 percent of all completed MDPs achieved Chongquing, whose 82,000 square kilometer jurisdic- a rating of substantial for their M&E. tion embraces more than 30 million people in 7 large 3. This is now known more generically as a Devel- and 25 small and medium-sized cities, as well as nu- opment Policy Loan. merous tiny rural settlements. This extensive area is 4. For more detailed evaluation findings on the Cities more than 10 times the 8,051 square kilometers of the Alliance, see IEG (2008). municipality of Sao Paulo, Brazil, which is home to 10.4 million people. Chapter 4 5. For this, the study transformed the six category out- 1. Taking own revenues and transfers together, total come ratings into a six-point numerical scale, where municipal revenues can account for up to 6 percent of highly satisfactory = 6, satisfactory = 5, and so on. The gross domestic product (Shah 2006, p. 35). difference of the mean scores proved to be highly sig- 2. An earlier IEG evaluation of MDPs in Brazil (IEG nificant (t statistic = 2.3012, significant at 99 percent). 1999) found that these operations obtained robust fi- On this scale, the mean of the wholesale MDP rating was nancial results; the financial performance of munici- 4.46 (satisfactory), and the mean of the retail MDP out- palities receiving MDP support was significantly stronger come was 3.97 (moderately satisfactory). than that of unassisted municipalities. 6. This difference of means was found to be statis- 3. A primary objective of the World Bank Group's new tically significant (t statistic = 2.5821, significant at 99 subnational finance facility is to strengthen a (munici- percent). pal) borrower's ability to deliver key infrastructure serv- 7. This compares unfavorably with an earlier IEG find- ices and to improve their efficiency and accountability ing for the urban portfolio as a whole, which was 53 per- as services providers: http://www.ifc.org/ifcext/ subna- cent of completed projects with poverty-focused tionalfinance.nsf/ Content/Home. 102 BIBLIOGRAPHY Annez, Patricia, Gwenaelle Huet, and George Peterson. of the World Population 2007: Unleashing the Po- 2008. Lessons for the Urban Century: Decentral- tential of Urban Growth. New York: UNFPA. ized Infrastructure Funds in the World Bank. Di- World Bank. 2008. World Development Report 2009: Re- rections for Development Series--Infrastructure. shaping Economic Geography. Washington, DC, Washington, DC: World Bank. and New York: World Bank and Oxford University Boadway, Robin, and Anwar Shah (eds.). 2007. Inter- Press. governmental Fiscal Transfers. Washington DC: ------. 2006. 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State 4252, World Bank, Washington, DC. 103 THE WORLD BANK GROUP WORKING FOR A WORLD FREE OF POVERTY The World Bank Group consists of five institutions--the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID). Its mission is to fight poverty for lasting results and to help people help themselves and their envi- ronment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. THE INDEPENDENT EVALUATION GROUP IMPROVING DEVELOPMENT RESULTS THROUGH EXCELLENCE IN EVALUATION The Independent Evaluation Group (IEG) is an independent, three-part unit within the World Bank Group. IEG-World Bank is charged with evaluating the activities of the IBRD (The World Bank) and IDA, IEG-IFC focuses on assessment of IFC's work toward private sector development, and IEG-MIGA evaluates the contributions of MIGA guarantee projects and services. IEG reports directly to the Bank's Board of Directors through the Director-General, Evaluation. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank Group's work, and to provide accountability in the achievement of its objectives. It also improves Bank Group work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. ISBN 978-0-8213-8043-7 Ë|xHSKIMBy380437zv*:+:!:+:! SKU 18043