Page 1 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6074 Project Name Kenya Informal Settlements Improvement Program (KISIP) Region AFRICA Sector General water, sanitation and flood protection sector (40%);Sub- national government administration (30%);General transportation sector (30%) Project ID P113542 Borrower(s) GOVERNMENT OF KENYA Implementing Agency MINISTRY OF HOUSING Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared October 26, 2010 Date of Appraisal Authorization November 22, 2010 Date of Board Approval March 24, 2011 A. Country and Sector Background 1. Macroeconomic performance . From 2000 –2009 Kenya’s economy experienced strong but uneven growth, with an average annual growth rate of 3.7 percent. However, growth slowed significantly in the last two years, due to the 2008 post-election violence, to the global economic crisis, and to a severe drought in 2009. These events had a negative impact on trade flows and receipts from tourism, remittances, and foreign direct investment. Growth slowed to 1.6 percent in 2008, the lowest rate since 2002 and substantially below the population growth rate of 2.7 percent. Growth recovered slightly in 2009 to 2.6 percent. This is a moderately strong recovery given the global economic crisis, and exceeded that of the 2009 Sub-Saharan African average of 1.6 percent. Kenyan economic growth is projected to accelerate to 4.0 percent in 2010 and to 4.9 percent in 2011. 2. Structural transformation . Growth has been driven primarily by services (especially tourism, and transport and communications) and by industry (primarily construction). Services and industry accounted for 74.5 percent of gross domestic product in 2009. However, despite the strength of Kenya’s private sector, the economy continues to perform below its potential due to infrastructure bottlenecks, a poor investment climate, and outdated agricultural and trade policies. In the coming decade, the structural transformation of the Kenyan economy will continue, coupled with rapid demographic growth and increasing population and economic density. 3. The urban transition is well under way in Kenya and urbanization is projected to continue at a rapid pace . In 2009 about 39 percent of the Kenyan population was residing in urban areas and the total urban population was estimated to be about 15.2 million people. 1 Kenya’s five largest cities (Nairobi, Mombasa, Kisumu, Nakuru, and Eldoret) account for 1 Kenya National Bureau of Statistics. 2010. “2009 Population and Housing Census Results.” Page 2 approximately 34 percent of the urban population. It is estimated that urban areas will account for 54 percent of the population or 23.6 million people by 2030. 2 The urban transition in Kenya will play an important role in determining the country’s growth prospects and social stability, which remains fragile after the 2008 post-election violence. B. Sectoral and Institutional Context 4. Urban Kenya is unequal and the expanding urban population is being absorbed in informal or slum settlements with squalid living conditions, poor infrastructure, and high poverty rates. Rapid urbanization, poor management, and absence of planning has left Kenya’s urban areas with huge backlogs in critical infrastructure and basic services, and led to the emergence of sprawling, overcrowded, and impoverished informal settlements. It is widely acknowledged that a significant proportion of urban residents live in these under-served informal settlements. Not only is the full potential of productive and inclusive cities not being realized, the glaring inequality causes it own problems and tensions, one manifestation of which is increasing urban violence and insecurity. 5. Nairobi’s slums demonstrate the magnitude of the challenges and opportunities for poverty reduction in these settlements . The National Bureau of Statistics conservatively estimates that, within Nairobi’s administrative boundary, at least 30 percent of the population lives in slums. With the 2009 census reporting Nairobi’s total population as 3.2 million, the city’s slum population now stands at almost one million people. Recent in-depth research supported by the World Bank reveals both encouraging and discouraging development indicators in Nairobi’s slums. Taking economic poverty, employment, education, and living conditions as four dimensions of deprivation in Nairobi’s slums, the study finds the following. On the positive side, Nairobi’s slum residents are educated (78 percent have completed primary school) and the vast majority of them (68 percent) are working. Work includes not only regular and casual jobs, but also self employment. In fact, 30 percent of households operate a small enterprise and, all else being equal, these businesses are helping in the fight against poverty. On the negative side, the incidence of economic poverty is very high—an astounding 73 percent of slum residents fall below the poverty line. Unemployment is also high (26 percent), and living conditions are appalling—only 3 percent live in a house with permanent walls, water and electricity. Among the four dimensions of poverty, then, Nairobi’s slums score the worst on living conditions. Overall, the results show that a slum resident in Nairobi could be above the poverty line, have education and a job, and still live in appalling conditions. 6. Compared to Dakar, living conditions —and especially infrastructure access—in Nairobi’s slums are much worse. An in-depth comparison of the slums of Nairobi and Dakar reveals surprising differences and provides important insights. Slums in the two cities are compared using three analytical frameworks —the development diamond, the infrastructure polygon, and the living conditions diamond. The analyses shows that as many as 74 percent of Dakar’s slum residents have access to a home with solid walls and a power and water connection, compared with 3 percent in Nairobi. Taking a closer look at all aspects of infrastructure provision, coverage for Dakar residents was found to exceed 70 percent versus 2 Governm ent of Kenya. 2008. “Harmonious Urbanization: The challenge of balanced territorial development.” Kenya Country Report. Fourth session of World Urban Forum, Nanjing, China, November 3–6, 2008. Page 3 only 20 percent for Nairobi residents. A key explanation is the lack of investment by the state in planning and in public infrastructure and services. A second reason lies in the contrasting tenure arrangements in the two cities. Some 92 perc ent of Nairobi’s slum residents are tenants, and turnover is high. Because settlements are informal, neither landlord nor tenant has much incentive to invest in housing improvements. In Dakar, on the other hand, tenants comprise just 26 percent of the residents, while 74 percent own their residences. Thus the population is more stable and provides residents with the incentive to improve the quality of their homes. This analysis highlights the need for investment in planning and infrastructure by the state. It also demonstrates the need to consider two tenure variables that—duration of stay and proportion of owner-occupiers to tenants—in deciding the approach to upgrading. In settlements with a high proportion of owner occupiers, there is no need to wait for tenure to be enhanced before upgrading infrastructure, as the owner-occupiers will benefit from the upgrading. 7. Education, employment and income do not automatically translate into better living conditions. The finding that living conditions are worse in the slums of Nairobi than in Dakar is particularly striking because Nairobi leads Dakar in terms of indicators of employment, education, and economic poverty (figure 1, box 1). In Dakar, only 38 percent of residents have completed primary education and 39 percent reported paid employment (compared to 78 percent and 68 percent, respectively, in Nairobi). Further, the incidence of economic poverty in Dakar is very high—82 percent of the slum residents fall below the poverty line. These findings strongly challenge the conventional idea that increases in education, jobs and/or incomes will automatically translate into better living conditions. In fact, a recent analysis of multi- dimensional poverty in 104 countries also shows that measures of income poverty are not always correlated with living standards, educational attainment and health outcomes. 8. Acknowledging the need to directly tackle the problem of poor living conditions in slums, the government has been working on a national slum upgrading program since 2005. The initiative, titled the Kenya Slum Upgrading Program (2005–2020), includes interventions such as participatory planning and development, strengthening of tenure security for residents, and provision of housing and infrastructure services. For the past few years, the government has allocated an annual budget of about Ksh 500 million (US$6.6 million) to this program. However, the limited funding combined with an approach that has favored testing several different types of investments in different locations (for example, building roads and sanitation blocks in the Soweto section of Kibera in Nairobi, new apartment housing in Athi River, expanding schools in Mombasa’s slums, and the like) have prevented the program from achieving large-scale and systematic impacts thus far. 9. A new constitution approved in a referendum on August 4, 2010 provides for decentralization of resources and responsibilities to subnational governments and strengthens claims of citizens for access to basic services, including adequate housing and water and sanitation. The constitution gives many of the responsibilities now held by central ministries to county-level administrations. County governments will now be responsible for provision of health and education services, construction and maintenance of county roads and street lights, stormwater management, and water and sanitation services. County governments will also be responsible for land surveying and mapping, housing, and markets in addition to other tasks. The constitution as part of its bill of rights also guarantees each person specific economic and social rights, including the right to accessible and adequate housing, to reasonable Page 4 standards in sanitation, and to clean and safe water in adequate quantities, among others. While the constitution is silent on the role of municipal authorities in country’s new governance structure, a sessional paper is being prepared that will clarify the issue. 10. The constitution explicitly incorporates several principles elaborated in the National Land Policy of 2009, including equitable access to land rights and security of land rights. Specifically, the land policy recognizes the need for tenure security for all Kenyans, including residents of informal settlements. The land policy further states that the government shall (a) facilitate the regularization of existing squatter settlements found on public land for purposes of upgrading or development; (b) d evelop, in consultation with affected communities, a slum upgrading and resettlement program under specified flexible tenure systems; and (c) put in place measures to prevent further slum development. 11. The government has requested support from development partners to facilitate a systematic scale-up of slum upgrading, one that can reach all slums in the medium- to long term. In response, the World Bank, the Swedish International Development Cooperation Agency (Sida) and the Agence Française de Développement (AFD) have been working with the government to jointly design and co-finance the Kenya Informal Settlements Improvement Program (KISIP). The KISIP will focus on improving living conditions in existing informal settlements or slums by investing in infrastructure and strengthening tenure security. It will also support the government in planning for future urban growth in a manner that prevents emergence of new slums. 12. The proposed KISIP will contribute to the goals of the government’s Vision 2030 and Medium-Term Plan. KISIP will assist the government to improve the living conditions of residents of urban informal settlements. The 2030 goal for urban areas is to achieve “a well- housed population living in an environmentally-secure urban environment.” This will be achieved by bringing basic infrastructure and services—roads, street lights, water and sanitation facilities, stormwater drains, footpaths, and others—to informal settlements. By strengthening tenure security in informal settlements, the KISIP will also foster private investment in housing and in businesses. The government’s Medium-Term Plan 2008–2013, which presents the first five-year program to implement the Vision 2030, also specifies improving urban informal settlements as a priority. One of its flagship projects is installation of physical and social infrastructure in slums in 20 urban areas to make them formal settlements, permit construction of permanent houses, and attract private investment. The proposed KISIP will direct contribute to this goal. 13. The KISIP will help achieve the objectives of the Bank’s Country Partnership Strategy 2010–2013 . The KISIP is an integral element of the Country Partnership Strategy (CPS) that was discussed by the World Bank’s Board of Directors on April 20, 2010. The CPS emphasizes the themes of growth, equity, and environment, with a special emphasis on governance. The KISIP contributes to governance, equity, growth, and improved environmental management agendas. It contributes to the governance agenda by promoting the participation of slum residents in the development and implementation of plans for upgrading, and the establishment of processes and mechanisms that allow citizens to monitor and give feedback on government performance. The KISIP contributes to the CPS’s equity objective by supporting the formal recognition of the rights of residents of informal settlements to occupy the land and Page 5 homes in which they live, thus helping to reduce the vulnerability of residents to displacement without warning or compensation, a not uncommon occurrence in Kenya today. The KISIP further promotes equity by upgrading infrastructure and services in the most underserved neighborhoods of cities, thereby helping to directly raise the quality of living conditions of Kenya’s poorest and most vulnerable citizens. The Bank’s 2009 Poverty and Inequality Assessment showed that access to infrastructure assists people move out of poverty, because it allows households to access opportunities to income-generating activities. Investment in infrastructure also contributes to the growth agenda by improving the competitiveness of Kenya’s cities as places to live and invest. Finally, the KISIP directly supports the environmental agenda through its investments in water and sanitation services, solid waste management, stormwater drainage, and public parks. 14. The Bank is supporting two related urban development programs that together with the KISIP will comprehensively address core issues that are constraining the development potential, efficiency , equity, and competitiveness of Kenya’s urban areas . Together, the three programs comprise a strategy for engaging in a systematic transformation of local governments in the country. The programs are: · Kenya Municipal Program (KMP) with the Ministry of Local Government as the lead agency (approved on May 4, 2010 and effective June 28, 2010). · Kenya Informal Settlements Improvement Program (KISIP), a multisector operation with Ministry of Housing as lead agency; and · Nairobi Metropolitan Services Project (NMSP), a multisector operation with Ministry for Nairobi’s Metropolitan Development as lead agency. 15. The KISIP is the second in the series of programs that will support the government in the urban and local government sector . The first, the KMP, is addressing institutional constraints—municipal capacity for budgeting, financial management, and participatory planning—and, simultaneously, supporting investments to improve infrastructure and local service delivery. The KISIP will focus on improving living conditions in slums. The NMSP will help to strengthen newly created metropolitan institutions and improve service delivery in the Nairobi metro area, the country’s largest and economically most important urban conurbation. This strategy has strong endorsement from the AFD and Sida, and they are partnering with the Bank to jointly design and co-finance all three programs. 16. The three programs support Kenya’s overall local government reform agenda and align fully with ministerial mandates and institutional arrangements . The KMP aligns with and contributes to two key national programs —the Kenya Local Government Reform Program and the Local Authority Transfer Fund—which commenced between 1996 and 2000, and have been managed by the Ministry of Local Government (MoLG) since inception. Similarly, the KISIP complements the national Kenya Slum Upgrading Program, established in 2003, and led by the Ministry of Housing (MoH). It also supports the efforts by the Ministry of Lands (MoL) to introduce planning and strengthen security of tenure in unplanned and poor urban neighborhoods, in accordance with the new national land policy. Finally, the NMSP will support the Ministry for Nairobi Metropolitan Development, created in 2008, in its mandate of establishing new metropolitan institutions for management of Nairobi City Council and 14 Page 6 neighboring municipalities and for enhancing infrastructure and service delivery in the metropolitan area. 17. KISIP will use a flexible framework approach for selection and financing of settlements and help test principles for a scalable program . The program will help create a broader framework for slum upgrading —a framework that is flexible and sustainable, and can reach all informal settlements over the medium- to long-term. The program will identify settlements for upgrading on a rolling basis. It will deploy transparent criteria for selection of settlements (see paragraph 20 below), and emphasize performance by making additional funds available to municipalities that meet minimum performance criteria under the KMP-supported Annual Municipal Performance Review. C. Objectives 18. The overall project development objective of the KISIP is to improve living conditions in informal settlements in selected municipalities in Kenya . This will be achieved by improving security of tenure and investing in infrastructure based on plans developed in consultation with the community. The KISIP will also create and test a national framework for systematic improvement and continuing investments in informal settlements, one that can reach all informal settlements over the medium to long term. In addition to supporting improvements in existing informal settlements, the KISIP will support the Ministry of Housing, Ministry of Land, and local authorities in planning that helps them anticipate and manage future demand for housing and environmentally healthy neighborhoods as cities expand. D. Description Project components: 19. The KISIP comprises four components. These are: (1) strengthening institutions and program management, (2) enhancing tenure security, (3) investing in infrastructure and service delivery, (4) planning for urban growth. The details of the four components and the proposed activities are presented below. 20. Component 1: Strengthening institutions and program management (estimated US$17 million; IDA US$10 million) . This component will support institutional strengthening and capacity building of the MoH, the MoL, and the participating municipalities. It will also support development of policies, frameworks, systems, and guidelines for slum upgrading. The component will support an institutional analysis of the Ministry of Housing to clarify the roles and responsibilities of the ministry under the new constitution. It will support municipal-level housing strategies to serve as input into the broader city strategic plans being developed under the KMP. In addition, this component will finance the community mobilization in slums to ensure that slum residents participate fully in designing and overseeing implementation of upgrading plans. In addition, it will finance the management activities associated with program implementation. Page 7 21. Institutional strengthening for MoH . The role of MoH is to act as a facilitator in provision of housing for low and middle income households. This includes leading the development of new or revised policies for housing and delivery of serviced land. The following types of activities are going to be supported under component 1: · Review of the organizational structure, staffing, capacity and training needs of MoH in a decentralizing environment. · Support for implementation of a systematic training and capacity building program in MoH. 22. Institutional strengthening for MoL. The following activities are going to be supported: · Mechanisms for fast tracking delivery of land (that is, improving the speed and efficiency of the processes for moving through the stages of mapping, planning, survey, and land registration). · Support for development and implementation of a systematic training and capacity building program for MoL in the context of a decentralizing environment. · Capacity building for the new National Land Commission, established under the 2010 constitution, to process allotment letters and titles, and protect land records. · Strengthening of district land registries. 23. Institutional strengthening for municipalities. Support will assist local authorities to: (a) implement slum upgrading plans (including the facilitation of increased interaction of community development officers with communities and civil society organizations), (b) develop city-specific slum upgrading strategies and plans, and (c) develop and implement plans for financing infrastructure operations and maintenance and start-up costs. 24. Support for program management and implementation. Component 1 will finance the management activities associated with program implementation This includes establishing and operating a monitoring and evaluation (M&E) system. It also involves carrying out periodic socio-economic surveys of slum settlements that will collect information on the characteristics of slum residents and the living conditions of slums, with the aim of understanding how the project’s interventions are changing living conditions in these settlements and the impact these changes are having on residents. 25. Component 2: Enhancing tenure security (estimated US$13 million, IDA US$8 million) . This component will directly support implementation of the new national land policy in urban informal settlements through refinement, systematization and scale-up of ongoing efforts to strengthen tenure security in slums. · Preparation of guidelines for implementation of the 2009 Land Policy. · Establishment of a database on the land tenure status of slums. · Upgrading of the GIS labs at the MoL and in municipalities. · Community organization and mobilization. · Preparation of a part development plan, including demarcation of settlement boundaries. Page 8 · Detailed mapping of existing slum settlements. · Identification and verification of beneficiaries based on agreed eligibility criteria. · Preparation of local physical development plans. · Issuance of letters of allotment/offer to individuals or groups. · Surveying of individual plots and preparation of registry index maps. · Preparation, registration, and issuance of titles to individuals or groups. 26. Settlements are at different stages of tenure regularization. The MoL has been working on planning and tenure regularization of unplanned and poor settlements in various urban areas in the country. The project will support MoL in scaling up the process, and will assist with any of the steps to regularization, from community mobilization, to preparation and registration of a part development plan, to surveying, to the issuance of titles to individuals or communities. To the extent feasible, settlements benefiting from enhancements in tenure security will also benefit from infrastructure investments under component 3. 27. Tackling the land survey bottleneck by introducing bulk survey mechanisms. The MoL has been active in initiating tenure regularization projects in many urban informal settlements. A key insight emerging from this experience is that the regularization process often stops after letters of offer or allotment have been issued. This is because plot surveys, conducted by registered private surveyors, are usually too expensive for residents of informal settlements. In addition, owners have to pay several fees to formally register and obtain their title. To tackle this problem, the project will support introduction of bulk survey methodologies that entail simultaneous survey of all plots in a given settlement and help to significantly reduce unit costs. The project will also provide support to MoL in simplifying the steps and fees for title registration, including options for enhancing affordability of these fees for the urban poor. 28. Supporting improved systems and approaches for mapping and planning. The project will support enhancement of the systems and processes for mapping and cartography of informal settlements at the MoL, an area that is currently under-resourced and which is a constraint to scale-up. It will also support contracting out of physical planning activities to independent registered planners, thereby allowing the physical planning department of the MoL to move from its impossible task of drafting plans for each informal settlement in the country to one where it plays a role of enabler and approver of plans. 29. Tenure security can be enhanced without titling, and can be further increased through infrastructure investments . Although the component 2 directly supports various stages of tenure regularization and titling, it is important to acknowledge that tenure security can be achieved at an intermediate stage of the regularization process. The discussion above suggests, for example, that for some residents issuance of letters of allotment/offer may confer sufficient security of tenure. In other cases, the approval of the physical development plan may be adequate, especially if this is complemented with public infrastructure investments. From a project implementation perspective, once the tenure regularization process has reached an intermediate stage in a given settlement, investments under component 3 can begin. Page 9 30. Component 3: Investing in infrastructure and service delivery (estimated US$129 million; IDA US$78 million) . This component will support investment in settlement infrastructure, and, where necessary, extension of trunk infrastructure to settlements. 31. Investment menu. The following areas of investments will be eligible for financing under KISIP: roads, bicycle paths, pedestrian walkways, street and security lighting, vending platforms, solid waste management, stormwater drainage, water and sanitation systems, electrification, public parks and green spaces. 3 Other investments, such as schools and health clinics, will not be eligible. The selection and prioritization of investments from the positive list will be based on a set of agreed criteria, consistent with the principles outlined below. 32. Principles for selection. Selection of investments will be guided by the following principles: · The service should be selected from the agreed investment menu. · The investment should be a priority specified in the physical upgrading plan developed by the residents of the informal settlement through a participatory process. · The chosen infrastructure investments should be economically justifiable (as shown by cost-benefit analyses or, for small investments (below US$500,000), by cost- effectiveness analyses). · Arrangements for operations and maintenance must be sound and give confidence that service delivery will be sustainable. · Environmental and social impacts of infrastructure investments are positive. · Budget and per hectare cost must be within agreed limits. 33. Collaboration with the Bank-financed Water and Sanitation Improvement Project ( WaSSIP). The Bank-supported WaSSIP currently under implementation will invest about US$8 million in water and sanitation improvements in the informal settlements of Nairobi (US$5 million), Mombasa (US$2 million), and Malindi (US$1 million). For this work, some settlements have already been selected and preparation is underway, including production of base maps, enumeration of households, development of physical plans, and preparation of engineering documents. Settlements benefiting from WaSSIP that also meet KISIP criteria will be given priority for investments under KISIP. The WaSSIP and the KISIP staff will coordinate closely together to ensure that support from each project complements that of the other to bring maximum benefits to communities. 34. Collaboration with the Bank-financed Electricity Expansion Project. The Bank- supported Electricity Expansion Project includes resources to extend electricity connections to slum areas. The KISIP team will coordinate closely with the team implementing the Electricity Expansion Project to facilitate access to electricity in the KISIP settlements. 35. Settlement readiness criteria for investment and scoring. Settlements that meet the eligibility criteria specified in paragraph 20 will be scored on level of preparation and readiness for infrastructure investments. The criteria include: 3 Proposals for investments not explicitly on the negative list will be considered on a case-by-case basis. Page 10 · Land tenure. Settlements where tenure has been regularized or where regularization initiatives are underway, will be accorded a higher score for readiness. · Planning and complementary investments. Higher scores for readiness will be given to settlements that have: o A part development plan either approved by the MoL or in advanced stages of preparation and approval. o A base map and physical development plan —including those prepared with support from development agencies and nongovernmental organizations (NGOs)—that can facilitate planning and infrastructure investment. o Some ongoing infrastructure investments, such as installation of a trunk sewer line, that can be complemented by support under the KISIP. 36. Component 4: Planning for urban growth (estimated US$6 million; IDA US$4 million) . This component will support planning and development of options that facilitate delivery of infrastructure services, land and housing for future population growth. The objective is to provide an alternative to the current chaotic practice of informally establishing settlements on any open land. This component will be flexible in identifying and leveraging opportunities and will support the following types of activities: · A systematic study of the main bottlenecks or impediments to delivery of housing and serviced land that is affordable to the lower two quintiles of the urban population. · Analysis of housing supply and demand in selected municipalities, and development of municipal-level housing strategies and action plans. · Identification of land and development of settlement-level plans that facilitate delivery of additional housing. The land for additional housing can either be in greenfield sites or in existing settlements that are not fully occupied. · Identification and development of opportunities for public-private partnerships in delivery of housing and serviced land for low-income households. · Development of frameworks, policies, systems, standards or guidelines that facilitate delivery of serviced land and housing for low-income households. This includes, for example, formulation or implementation of affordable standards for building, construction and land subdivision. 4 · Analysis of the financing available to lower income groups for access to housing, as well as financing available for improving the supply of affordable housing both for ownership and for rental purposes. 37. This component is explicitly designed to be exploratory and to identify, develop or leverage innovations . Clearly, it is important to go beyond the problems plaguing the current stock of slum housing and plan for future demand for affordable housing. At the same time, there are few precedents—of cities or of development projects—in the developing world that have managed to deliver sufficient housing or land for low-income residents to prevent emergence of new slums. Accordingly, this component will support systematic analytical work to indentify key constraints to delivery of affordable housing in Kenya, development of city- 4 The KISIP may finance infrastructure in greenfield sites, but will not finance construction of housing. Page 11 specific plans for delivery of low-income housing in some municipalities, and settlement-level planning that facilitates delivery of additional affordable housing or land. For example, in cities such as Mombasa and Malindi, there are several informal and unplanned settlements that are not fully occupied or densely settled and introducing of planning can help. This would entail demarcation of right-of-ways for roads, carving out of plots for individual occupancy or multi- storey housing, and auctioning off or allocation of these plots for development of new housing. In some cases, these efforts could be completed by provision of basic infrastructure under component 3. This component can also support preparation of low-income housing projects that can be delivered as public-private partnerships. Finally, the component will provide support for development or adoption of systems, standards, and policies that enhance affordability. These may include, for example, reductions in minimum plot size, standards for roads and paths, set- backs, or housing construction standards can go a long way in increasing the affordability (and, potentially, the availability) of the least-cost formal-sector housing unit on the market. The more successful innovations or experiences under this component could subsequently be implemented at scale under a follow on project (a potential SIL 2). Given the emphasis on exploration and innovation, this component contributes only indirectly to the project development objective. E. Project financing Source: ($m.) BORROWER/RECIPIENT 10 International Development Association (IDA) 100 FRANCE: French Agency for Development 45 SWEDEN: Swedish Intl. Dev. Cooperation Agency (SIDA) 10 Total 165 F. Implementation Partnership Arrangements: 38. KISIP is jointly prepared and financed by the World Bank, AFD, and Sida. The World Bank, AFD, and Sida have partnered in preparation of the KISIP from its inception. In terms of financing, AFD intends to contribute 30 million (US$45 million equivalent), Sida will contribute US$10 million, and IDA will contribute US$100 million. The remaining US$10 million will come from the government. Sida expects approval from its Board shortly after the KISIP has been approved by the World Bank Board. AFD expects Board approval in late 2011 or early 2012. Sida will establish a freestanding, recipient-executed trust fund at the Bank, through which the funds will pass to the government. The Bank will manage the funds in accordance with its operational policies and procedures. Costs of activities will be shared in agreed proportions, once funds from Sida are made available for the KISIP. AFD is evaluating options for delivery of support to this project. In the event that the development partners are unable to deliver their share of funds, the number of settlements which KISIP benefits and perhaps the scale of infrastructure projects will be reduced, but the KISIP will still be able to achieve its objectives. Page 12 G. Sustainability 39. Sustainability of investments in infrastructure and service delivery depends on incentives and availability of resources for operations and maintenance . In the past, institutions involved in providing infrastructure and services often lacked incentives, capacity, and resources for adequate operations and maintenance. The KISIP addresses each of these constraints. First, it will strengthen incentives by providing resources to municipalities on the basis of performance. Thus, municipalities that make progress in strengthening tenure security, that successfully implement infrastructure projects in informal settlements, and that include an adequate budget for operating and maintaining the services will be eligible to receive additional funds under KISIP to invest in informal settlements. Second, it will enhance capacity for operations and maintenance of the municipal administration by delivering tailored support for capacity building, complementing KMP’s efforts in this area. Third, it will finance infrastructure investments only if the municipality or relevant utility take responsibility for operating and maintaining the assets, and integrate these into citywide systems of infrastructure management. Operations and maintenance plans will be presented in each investment proposal. H. Lessons Learned from Past Operations in the Country/Sector 40. Experience in Kenya, other Sub-Saharan African countries (including Tanzania, Senegal, Burkina Faso, and Mali), as well as Bank experience in other regions (for example, Indonesia and Latin America) offers the following key lessons: · Tenure security can be achieved through a variety of approaches. Experience shows that tenure security can be conferred without full legalization. Strengthening security of tenure sufficiently to allow infrastructure investment to proceed can be conferred by simple governmental action: recognizing the settlement, stopping demolition, establishing a cooperative working relationship with local leaders, and investing in basic infrastructure and services. The KISIP will support tenure regularization as well as infrastructure investments in slums. · Improvement of informal settlements cannot be achieved without the active involvement of slum communities. Many attempts to upgrade informal settlements have had limited success because of failure to fully involve community residents in the planning, implementation, monitoring, of investments. The proposed KISIP will not invest in any informal settlement until communities, through a participatory process, agree on a vision, prepare upgrading plans, and submit a community resolution to the municipality and the MoH. · Training and capacity building of different groups are essential to success . The KISIP offers capacity building support to the MoH, the MoL, municipalities and informal settlements, tailored to demand. (Municipal administrations will receive most of their capacity building support under the KMP). · Upgrading interventions need to be tailored to local context and conditions. For example, an approach that focuses only on infrastructure upgrading (and not on issues Page 13 pertaining to tenure) may work in certain cities and settlements, but is likely to fail in other slums. The upgrading program for Kenya needs to flexible and must allow for improvements in planning, tenure and/or infrastructure depending on the context. · Upgrading programs need to be city wide to sufficiently augment supply of improved settlements and to integrate them into city systems. Experience in other countries shows that rents will increase in upgraded settlements to levels unaffordable by their current poor residents, unless upgrading is city wide. It is only by investing at a large scale and by dealing with the broader housing market that upgrading programs can successfully hope to reach the poor. Moreover, upgrading slums simultaneously facilitates their integration with city-wide infrastructure systems. I. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment ( OP / BP 4.01) [X] [ ] Natural Habitats ( OP / BP 4.04) [ ] [ ] Pest Management ( OP 4.09 ) [ ] [ ] Indigenous Peoples ( OP / BP 4.10) [ ] [ ] Physical Cultural Resources ( OP/BP 4.11 ) [X] [ ] Involuntary Resettlement ( OP / BP 4.12) [X] [ ] Forests ( OP / BP 4.36) [ ] [ ] Safety of Dams ( OP / BP 4.37) [ ] [ ] Projects on International Waterways ( OP / BP 7.50) [ ] [ ] Projects in Disputed Areas ( OP / BP 7.60) * [ ] [ ] J. Contact point Contact: Sumila Gulyani Title: Sector Leader Tel: 5368+6355 / 254-20-322-6355 Fax: Email: Sgulyani@worldbank.org Location: Nairobi, Kenya (IBRD) K. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: pic@worldbank.org Web: http://www.worldbank.org/infoshop * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas Page 14