ICRR 10541 Report Number : ICRR10541 ICR Review Operations Evaluation Department 1. Project Data : Date Posted : 04/06/2000 PROJ ID : P000712 OEDID: OEDID : C2161 Appraisal Actual Project Name : Second Addis Ababa US$M ) Project Costs (US$M) 46.68 39.18 urban development Country : Ethiopia Loan/ US$M ) Loan /Credit (US$M) 35.06 31.39 Sector, Major Sect .: Urban Management , US$M ) Cofinancing (US$M) Urban Development L/C Number : C2161 FY ) Board Approval (FY) 90 Partners involved : Closing Date 06/30/1997 06/30/1999 Prepared by : Reviewed by : Group Manager : Group : Roy Gilbert Laurie Effron Gregory K. Ingram OEDST 2. Project Objectives and Components a. Objectives (Revised, 1997): (a) Improving basic infrastructure and environmental conditions in project areas; (b) Supporting a core housing development program primarily for lower -income families; (c) Providing assistance to urban service delivery agencies to carry out their activities more efficiently; and (d) Improving financial management and operating practices. b. Components (Revised, 1997): (a) Sites and services including supporting infrastructure and land compensation; (b) Kebele upgrading, including infrastructure; (c) Infrastructure improvement and maintenance; (d) Solid waste management; (e) Improvement of Akaki water supply; and (f) Institutional strengthening of project agencies . c. Comments on Project Cost, Financing and Dates There were no cofinancers. Project was extended for two years . US$2.26 million of the credit was canceled mainly due to substantial cost savings in local currency following its sharp devaluation . 3. Achievement of Relevant Objectives : (a) partly achieved through improved urban infrastructure and environmental conditions in Addis Ababa; (b) not achieved, since core housing provided became unaffordable to the poor; (c) achieved in part through technical assistance and studies that helped build service provision capacity in local agencies; (d) achieved only in part through improved practices in water and solid waste service provision, but little progress on financial management . 4. Significant Outcomes /Impacts : Substantial accomplishments in provision of urban infrastructure (gravel roads; asphalt roads; storm drainage; electricity supply; schools and health facilities ). Addis Ababa City Government adoption of cost recovery principle and practice for housing, albeit with the result of making housing less affordable to the poor in the short run . Community participation and consultation to ensure beneficiary ownership and sustainability of investments is beginning to be adopted at the technocratic and management levels of Addis Ababa City Government . Raising the level of awareness of city officials of the complexity of issues involved in planning, design and implementation of basic infrastructure improvement programs . 5. Significant Shortcomings (including non -compliance with safeguard policies ): Beneficiaries of housing component were higher -income than planned; in responding to market forces the project provided a higher standard product than intended . Failure to address head-on the major issues of budgeting, accounting and financial management of Addis Ababa City Government. Implementation delays hindered the full use of physical artifacts such as sites and services, community facilities and water supply systems . Economic rates of return of several components very low (notably sites and services and water supply in Akaki and street maintenance in general ). 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Unsatisfactory Project failed to achieve its major objectives, even though physical achievements were substantial and four out of six components accounting for 88% of total project costs were rated Satisfactory by the ICR. Institutional Dev .: Negligible Modest ICR reports capacity building and greater awareness in Addis Ababa agencies as well as significant improvements in water, solid waste and road safety management, although sustainability is uncertain . Sustainability : Unlikely Unlikely Bank Performance : Deficient Satisfactory Good performance at appraisal and satisfactory implementation of most of the physical components. Borrower Perf .: Deficient Unsatisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : If a project does not get incorporated within the mainstream policies of a borrowers, it risks becoming a enclave operation unable to significantly influence fundamental policy reforms and hence have a limited institutional development impact. Improvements to urban service provision can be won through a twin track approach involving : (a) capacity building efforts within local government; and (ii) simultaneous pursuit of alternative ways of provision through the private sector. With the assistance of the Bank, a borrower should ensure that a Project Management Unit specially set up to implement a broad based operation such as this becomes fully integrated within the mainstream of its local government host by implementation completion . Those responsible for the design and implementation of urban development projects in major urban areas should be aware of the important contribution of such projects to national development, and thereby focus upon strategies and components that most help the development of the nation as a whole . Addis Ababa, for instance, accounts for 53% of private investment nation-wide in Ethiopia. 8. Audit Recommended? Yes No 9. Comments on Quality of ICR : Satisfactory overall, providing convincing evidence of project outcomes, although not recognizing in the ratings the modest achievements and progress made by the project .