Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24196 IMPLEMENTATION COMPLETION REPORT (IDA-27430) ONA CREDIT IN THE AMOUNT OF US$9.37 MILLION TO THE REPUBLIC OF GHANA FOR A MINING SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT June 12, 2002 CMPO Africa Region This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2001) Currency Unit = Cedi (C) C1.00 = US$ 0.00013 US$ 1.00 = C7300 FISCAL YEAR January 1 -December 31 ABBREVIATIONS AND ACRONYMS AP Action Plan CAS Country Assistance Strategy CR Consultant Report EPA Environmental Protection Agency EU European Union GIS Geological Information System GS Geological Survey LED Local Economic Development MC Minerals Commission MD Mines Department MDF Minerals Development Fund MME Ministry of Mines and Energy NGO Non-governmental Organization NDF Nordic Development Fund PPA Planning and Policy Analysis PPF Project Preparation Facility QAG Quality Assurance Group SDR Special Drawing Rights SH Safety and Health SER Sectoral Environmental Review SSM Small-scale Mining USEPA United States Environmental Protection Agency Vice President: Callisto Madavo Country Manager/Director: Peter C. Harrold Sector Manager/Director: Peter A. van der Veen Task Team Leader/Task Manager: Felix Remy FOR OFFICIAL USE ONLY REPUBLIC OF GHANA MININIG SECTOR DEVELOPMENT AND ENVIRONMENT PROJECT CONTENTS Page No. 1. Project Data I 2. Principal Performance Ratings I 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 11 5. Major Factors Affecting Implementation and Outcome 14 6. Sustainability 15 7. Bank and Borrower Performance 16 8. Lessons Learned 18 9. Partner Comments 18 10. Additional Information 21 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 28 Annex 3. Economic Costs and Benefits 30 Annex 4. Bank Inputs 31 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 32 Annex 6. Ratings of Bank and Borrower Performance 33 Annex 7. List of Supporting Documents 34 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Project ID: P000966 Project Name: MINING SEC.DEV & ENV Team Leader: Felix Remy TL Unit: CMNPO ICR Type: Core ICR Report Date: June 13, 2002 1. Project Data Name: MINING SEC.DEV & ENV L/C/TFNumber: IDA-27430 Country/Department: GHANA Region: Africa Regional Office Sector/subsector: NN - Mining & Other Extractive KEY DATES Original Revised/Actual PCD: 11/19/92 Effective: 03/04/96 Appraisal: 06/14/94 MTR: 06/20/98 07/14/98 Approval: 06/13/95 Closing: 12/31/2000 12/31/2001 Borrower/Implementing Agency: GOVERNMENT/MINERALS COMMISSION Other Partners: Nordic Development Fund (NDF) STAFF Current At Appraisal Vice President: Callisto Madavo E.V.K. Jaycox Country Manager: Peter C. Harrold Olivier Lafourcade Sector Manager: Peter A. van der Veen Mary Oakes Smith Team Leader at ICR: Felix Remy Leo Maraboli ICR Primary Author: Felix Remy; Sati Achath 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The overall objective of the project was to support the sustainable development of Ghana's mining sector on an environmentally sound basis through strengthened mining institutions and organizational support to small-scale minersW to introduce the use of appropriate and envirornentally responsible technology. Specifically, the objectives were to: (a) enhance the capacity of the mining sector institutions to carry out their functions of encouraging and regulating investrnents in the mining sector in an environmentally sound manner; and (b) support the use of techniques and mechanisms that will improve productivity, financial viability and reduce environmental impact of small-scale mining operations. The overall objective was clear and realistic, although it was somewhat broad and general. The first specific objective of institutional strengthening was realistic but its definition became clearer only at a later stage based on the Consultant Report (CR) called 'Study of Mining Sector Institutional Arrangements' prepared by Swedish Geological AB in December 1997. The second specific objective was clear from the beginning. In March 1999, the Consultant Study, 'On Common Ground - Integrating Socio Economic and Environmental Issues into Mining Sector Development in Ghana: Lessons Learned and the Way Forward' looked more into the social aspects such as the poverty-driven nature of small-scale and artisanal mining, which were needed to supplement the activities mostly of technical nature which the original project had considered. The project's over riding goal was consistent with the Bank's Country Assistance Strategy (CAS) of supporting the govermnent's program of accelerated growth through private sector development, poverty alleviation, capacity building and improvement of environmental management. This was consistent with the government's overall economic strategy, in particular the government's mining sector strategy, which emphasized the liberalization and rationalization of sector policies, establishing an efficient and transparent system of handling prospecting and mining licenses, and the divestiture of state-owned mines. This strategy encouraged foreign investment through creation of open exchange markets, realistic exchange rates, reasonable taxation policies, and freedom to market production through legal channels, while adhering to sound environmental standards. It also included successful efforts to privatize state-owned mines and encourage small-scale mining (SSM) activities, which were still rudimentary, through improved technology and better access to official marketing channels. The project envisioned several significant benefits to Ghana, which included: (a) strengthening mining sector institutions which would enable them to encourage and assist private investors to start or expand mining operations; (b) improving productivity and incomes of small-scale miners through active technical and organizational support; (c) reducing negative environmental impact of mining through improved regulations and more effective environmental monitoring and enforcement; (d) improving health, safety and working conditions for large numbers of small-scale miners through the introduction of appropriate technology and equipment, (e) minimizing environmental impact of SSM activities through the introduction of environmentally responsible technology and processing techniques; and (f) mitigating past environmental degradation caused by SSM activities through land reclamation and rehabilitation activities. The project took into account lessons learned from previous three operations in Ghana which focused on developing the mining sector (they were Export Rehabilitation Project; Export Rehabilitation Technical Assistance Project; and the Mining Sector Rehabilitation Project). These projects had no specific components to address issues concerning environmental impact of mining, nor the existence of a very large and growing SSM sub-sector, and related social and economic issues. This project, on the other hand, addressed these areas through capacity building assistance for environmentally sustainable sector development. However, the small-scale mining component was not designed to address the issues in an integrated way including discussion of this poverty-driven activity. Consistent with the Bank's 'Strategy, for African Mining' (1992), the project focused on providing technical and organizational support as well as improved social and health conditions for the SSM community. The project was not unduly complex since it just aimed to put in place a framework that would, in the medium to long term address a variety of issues such as legal, fiscal, institutional, environmental, and social issues, in addition to adjusting the role of the State in mining. Towards this end, the project - 2 - facilitated technical assistance to assist implementing partners in identifying different options for doing so. The project implementation was, however, made complex because of the involvement of many institutions such as Geological Survey (GS), Mines Department (MD), and Environmental Protection Agency (EPA), each of which had its own independent views of its role in the sector. This problem was compounded by the inter-institutional problems and delays in reaching agreement on mechanisms for intersectoral coordination. The project was quite demanding on local institutions, because the objective involved the process of reform and modernization of an important sector of the economy. Several activities which were derived from the recommendations of various studies required bringing foreign consultants. The,Mineral Commission (MC), the implementing agency, was capable of meeting the demands of project implementation since it was familiar with the requirements of the Bank project and also because it had a good team of professionals to execute the project. Further, exhaustive training was given to its staff members on environment, law, and SSM to strengthen their skills for project implementation. The project took into account the following two risk factors to successful project implementation, viz.: * the risk that the institutions responsible for carrying out the project would lack the staff, capability or incentive to carry ouf the project successfully. This risk was addressed by the capacity building nature of the project, which aimed to strengthen the mining institutions. * the risk that the possibility that new technologies appropriate to SSM in Ghana would not be adopted by the mine operators. However, since appropriate technologies for small-scale miners have been developed and proved to be financially viable in other countries with similar conditions, there was reason to believe that these techniques could be made to work in Ghana as well. In order to facilitate the adoption of the new processes by the miners, field demonstrations and equipment during trial periods were to be made available to them. In the SSM component, however, the project design did not take into account the potential risk of creating internal conflict between the miners and the community, or of generating internal conflicts within the community. 3.2 Revised Objective: There was no amendment to the overall objective of the project However, based on CR's (December 1997) clearer definition of the first specific objective, a new model for restructuring and strengthening the governmental institutions was designed, which included: (a) modifying the regulatory framework as a basic condition for institutional reform; and (b) focusing the emphasis of the institutions on their core functions, clarifying their jurisdictional responsibilities, and streamlining their administrative, monitoring and enforcement procedures. 3.3 Original Components: The project consisted of two components, namely, institutional strengthening and assistance to SSM. These components were reasonably related to achieving the objectives and the priority agenda of the government. The project design was well prepared and it had all necessary elements to achieve the objectives. The Bank's substantial experience in the mining sector in other countries also facilitated in preparing a realistic project design. Capacity of the MC for successful implementation was satisfactory since it had competent and qualified professionals for managing the project. However, MC's performance was hampered by weak - 3 - coordination among agencies and the resulting delays in response. Component . Strengthening of Mining Sector Institutions This component had the purpose of ensuring that the institutional structure of the sector was adequate to respond to the demands of a private, competitive and growing mineral sector. It focused on providing support to mining agencies to be effective in implementing sectoral policy and legal and regulatory regimes with particular focus on protecting the environment and streamlining administration of mineral rights. This component also aimed at assisting the government to restructure GS with the goal of providing a basic geological infrastructure and developing new geological information for use in establishing a robust pipeline of priority prospect areas to attract investors and enhance promotional capabilities needed to attract investments in exploration and mine development. (i) Minerals Commission. This sub-component aimed to ensure that MC was fully equipped with the organizational structure, manpower and logistical capabilities required to carry out its responsibilities as the main operational promoter and coordinator of the government's strategy for private sector-oriented mineral growth. Specifically, the project supported: (a) an assessment of mining sector institutional arrangements to identify and formulate restructuring steps necessary to implement sector strategy effectively, including a review of the adequacy of monitoring and enforcement practices of environmental, health and safety standards; (b) the execution of promotional activities of MC to attract potential investors in exploration and mine development, including the design and preparation of promotional brochures and activities; (c) the establishment of a comprehensive minerals information system which consisted of: (i) a concession cadastral system; (ii) a mineral information database; (iii) a geological information database for promotional purposes, and an aerial survey; and (iv) a mining environmental information system; (d) the preparation of a pollution abatement strategy for ground and surface water systems of the Tarkwa, Dunkwa and Prestea areas to remedy environmental degradation caused by mining operations. (e) an assessment of the curricula of local universities and technical colleges in order to develop a program to introduce modem mineral exploration technologies and processing techniques. (ii) Mines Department. This sub-component provided technical assistance, consultant services, training, equipment and logistical support to enable MD to fully and effectively perform its responsibilities for inspection, monitoring and enforcement of sectoral and environmental regulations. Emphasis was given to strengthen the organization, manpower and logistical capabilities of MD and its district offices for executing periodic mine inspections, field verification of work programs and monitoring of mine health, safety and environmental aspects at both large and small-scale mining operations. (iii) Geologaical Survev. This sub-component focused on determining priority mining areas attractive for their subsequent promotion to potential investors in order to sustain further sectoral growth. Main elements included: (a) compilation and interpretation of available geological information; (b) definition of priority areas to be covered by the aerial survey; (c) preparation of an action program with detailed survey specifications; (d) selection of a survey contractor, and mobilization and execution of the survey; (e) reinforcement of geophysical capability at GIS; (f) processing and interpretation of survey data; and (g) publication and dissemination of results and raw data. - 4 - Component II. Assistance to Small-Scale Mining Enterprises This component included a testing phase (Phase I) and a disseminating phase (Phase II). (i) Testing of Improved Equipment and Processing. This activity consisted of pilot testing of specific combinations of equipment likely to be applicable to Ghana's SSM conditions, both for improving productivity and yields. It also consisted of analysis of the technical and cost effectiveness of various pieces of equipment and processes and their effect on productivity and total output. (ii) Dissemination of Equipment and Technology. The second phase was designed to expand the field testing of the equipment and processing procedures in an operational setting, and included workshops and field demonstrations of the new equipment and processes to small-scale miners. It also included the establishment of assay equipment at each of the seven existing SSM outreach offices. This phase included experimentation with mechanisms for the delivery of technology and equipment to small-scale miners, including the use of credit arrangements through rural banks, NGOs and cash sales through equipment suppliers. (iii) Improved Geological Information. This sub-component focused on making geological information available to small-scale miners by delineating areas with favorable geological prospects where SSM concessions could be granted. During the first year of the project, two teams were to be put into operation: one for regional mapping of prospective concession areas and the other for working directly with small-scale miners on their concessions. The information generated by producing these separate mapped areas were to be subsequently integrated into an overall geological map of the area in order to provide more detailed and integrated information to serve as a basis for future work in adjacent areas. (iv) Improved SSM Sub-Sector Framework and Set-up. The activity included: (i) reviewing the existing regulatory framework for the mining sector to analyze how these regulations affected SSM operations, especially the process and conditions for granting concessions, the length of time for which they were granted, and their cost; and operating restrictions, with special attention to restrictions on blasting by small-scale miners; (ii) studying market conditions and issues affecting small-scale miners and measures to improve the commercialization of gold and diamonds; and the ways of securing additional financial resources in the form of both equity and debt in order to expand their operations; and (iii) a program of in-country training in basic financial management and business practices for interested small-scale miners in order to enhance their creditworthiness and to improve their prospects for successful operations. (v) Land Reclamation for SSM Dearadations. This consisted of can-ying out reclamation and rehabilitation of high priority land areas on a pilot basis, with the objective of providing a basis to determine best practices and to assess efficient and cost-effective mechanisms for carrying out reclamation. This component also included activities to determine appropriate operating procedures, regulations, enforcement measures, and incentives to carry out future SSM operations on a basis that avoided degradation of past operations. 3.4 Revised Components: Even though the components were not revised, major updating was done on project activities based on the CR's recommendations. These recommendations aimed to assist the government in implementing sector strategy by: (i) enacting an updated mining policy; (ii) implementing a simplified non-discretionary administration of mineral rights; (iii) providing legal base to PMIs to facilitate the role in a private - 5 - sector-led mining industry; and (iv) restructuring the PMIs in accordance with the new sector policy. (A) Regulatory Framework Modifications of the regulatory framework included: modernization of the cadastral system; simplification and formalization of requirements for obtaining, maintaining and terminating mineral rights; provision of reasonable punitive criteria; inclusion of all minerals into the law regulating artisanal mining; setting specific timeframes within which the agencies are required to take certain actions. For the environmental management of mining and exploration, specific recommendations included: increasing representation of the public mining sector, and inclusion of the private mining sector in reviews of Environmental Impact Statements of new mining developments; incorporating environmental aspects in application for exploration rights; introducing Environmental Management Plans as a legal requirement to all mining operations in Ghana; and establishing a statutory required financial assurance of rehabilitation of exploration and mining sites. (B) Reformin' the public institutions. This activity included: (a) Strengthening the Minerals Commission. In order to overcome the pitfalls of an unwieldy organization, the CR recommended creation of five Directorates within MC, each with separate and discrete functions: (i) Mineral Titles and Compliance Directorate in charge of all processes related to mineral titles, i.e. processing and administration of mineral titles, cadastral system, monitoring of compliance with agreements, titles-surrenders and suspensions. (ii) The restructured Planning and Policy Analysis (P&PA) Directorate aimed to focus on policy advisory functions, sector analysis, coordination, and on establishing a basis for comprehensive assessment of national mineral endowment. In addition, the Environmental Department under the P&PA Directorate aimed to address environmental issues from the sectoral perspective and interface between the sectoral administration, the industry, the EPA, MD, and other stakeholders. The organization and management of the Mining Infornation System is another responsibility of P&PA D. (iii) The Small-scale Mining Directorate, through its District Small-scale Mining Centres would be the main public institution charged with the responsibility for supervision of artisanal mining in Ghana, promoting its legalization, providing technological assistance to miners, and conducting environmental monitoring and compliance enforcement. (iv) The Finance and Marketing Directorate is given the charge of collecting and analyzing data on precious metals and other mineral, in addition to its routine accounting and budgeting tasks, and administrating MDF. (v) The Legal Secretariat is responsible for reviewing and preparing final drafts of regulations, processing complaints and other legal issues concerning mineral titles, and handling all other legal matters of the MC. The major part of MC's budget was to be financed through a provision from the Minerals Development Fund (MDF). However, a much larger proportion of the budget could be covered by service-related charges such as the consideration fees for the processing of titles applications; and additional fees for access to the cadastral system and the information system, for the access to open filed reports, and for access to statistical data compiled by MC. In general, fees would be charged to all customers for all MC's services, both primary customers (exploration and mining companies) and other governmental agencies. These fees would at least defray some costs of MC's service functions. (b). Reconstructing Geological Survev. CR recommended a complete overhaul of the GS and transformiing it into an effective organization. GS was proposed to be reconstructed as an - 6 - autonomous institution within the MEM and renamed as Ghana Geological Survey (GGS). GGS is conceived as a clean-cut service delivery organization, customer-oriented, initially mostly serving the mining sector, but gradually widening its services to other sectors. The justification of GGS as a governmental institution would be initially reviewed after three years, and each fifth year thereafter. The core activities of the GGS would comprise elaboration of geological maps, compilation of thematic maps, preparation and interpretation of airborne geophysical maps, processing and interpretation of satellite imagery data, regional geo-chemical surveys and compilation of geo-chemical maps, reconnaissance and general resource assessment as a support to artisanal miners, monitoring of micro-seismic activity, storage of geo-scientific data and geological samples, and dissemination of geo-scientific information. Under the new structure, GGS would not be engaged in mineral exploration. CR proposed that all future activities of the GGS should be carried out in the form of distinct projects, with specific objectives, time-span, financing and easily definable performance indicators. GGS would consist of three divisions, Geological Mapping, Thematic Mapping, and Professional Services and Information. Regarding GGS' funding, CR recommended that the autonomous institution would negotiate a time-limited agreement between itself and the MEM, specifying the results the GGS would achieve, and the budgetary framework within which it would operate. In addition, GGS' activities will be supported by service-related fees, such as fees for access to the data bank and geological and bibliographical information systems, fees for access to the geological repository, fee for minerals and rocks determinations, and various fees for other consulting services. Income from sales of GGS' products such as maps, reports, and airborne geophysical data would constitute another small portion of its financing. CR recommended that reconstructing the GGS be done with intemational expert assistance and financial aid, ideally through a twinning agreement with a geological organization from a country with a substantial mining sector. This twinning partner would place its staff in GGS' key positions, arrange training of GGS staff at the partner institution, and provide on-line support after the reconstruction. The actual reconstruction of the GGS was to be done with the help of two capacity building projects, one for the geological mapping, and the other for thematic mapping. In addition, CR also proposed that a geological repository also be established in three successive phases: (i) feasibility-study, engineering, procurement of equipment; (ii) construction of the repository and installation of internal fittings; and (iii) implementation, i.e. establishing a system for indexing and labeling samples, actual storing of samples. The complete reconstruction of the GGS was estimated to be accomplished in 36 calendar months. (c). Restructuring the Mines De artment. CR recommended restructuring MD into an autonomous agency within the MEM, essentially functioning as a compliance enforcement agency with minor service-delivery functions, related to: (i) supervision and regulation of safety and health (S&H) aspects in mines; and (ii) inspection and compliance enforcement of the environmental management of mining and exploration projects. The MD would be divided into the Mines Inspectorates and Environmental Inspectorates. Because of the large difference in the scope of functions and tasks performed by these two branches, the specific goals, outputs and performance indicators would be defined and set forth for each branch and each regional Inspectorate. - 7 - The restructured MD is to be financed from four sources: (i) A performance-based budget from the MEM. (ii) Performance and service-related fees, including the fee payable to MD for the work of its supervisory authority, by anyone carrying out environmentally hazardous activities. (iii) Fees for services rendered by the Mines Inspectorates, including fee for various training courses, certifications, and operating permits. (iv) Special charges on production and imports of explosives. Implementation of restructuring of MD is to be carried out with international assistance and financial aid, for giving training to Environmental hnspectors in a donor country in the preparation of the EMP for mining operations, EMP follow-up, report processing and field control; assistance in the development of inspection routines of the Environmental Inspectorates, development and introduction of a suitable database, and review of the inspection and reporting routines of the Environmental Inspectorates. Three-year Action Plan (AP) In order to implement CR's recommendations and thereby achieve project objectives, a three-year Action Plan (AP) was prepared by the previous administration during August-November 2000 and endorsed by the new administration soon after it came to power in January 2001. Accordingly the closing date of the project was extended to December 31, 2001 and the proceeds of the Credit was reallocated among the categories (in SDRs) as follows: Category Original Allocation Revised Allocation 1. Civil Works and Equipment Testing 1,550,000 750,000 2. Equipment Supplies 1,800,000 1,850,000 3. Geophysical Aerial Survey 850,000 750,000 4. Consultancy and Training 3,400,000 4,450,000 5.Unallocated 300,000 100,000 TOTAL 7,900,000 7,900,000 The specific goals of AP were: (i) enactment of the necessary legal, fiscal, and environmental policies to provide mining investors with security of tenure, clarity and transparency, access to the mineral resources while protecting the environment and ensuring a stable and equitable fiscal regime; and (ii) strengthening of public mining institutions to ensure the provision of reliable basic geological and environmental information, adequate administration of mineral rights and proper implementation of the new policies. Activities of the six programs under the AP were as follows: * Legal and Fiscal Reform. This program aimed to analyze the current legal and fiscal regimes of the sector and develop and propose an intemationally competitive framework that will ensure a strong legal base and a stable and equitable tax regime for the development of Ghanaian mining in the near future. * Strengthening and Refocusing of the Minerals Commission. This program was designed to strengthen the role of the MC with respect to mineral policy development; simplify and modernize the administration of mineral rights; assist in the implementation of the new structure of MC. - 8- * Strengthening of the Mines Department. The objectives of this program were to strengthen the MD to fulfill its traditional role to supervise and enforce the occupational safety and health obligations of mine operations; and support the restructuring of MD. To this effect, an international expert on health and safety in mines has been funded by NDF. * Restructuring of the Geological Survey. This program aimed to initiate the restructuring process of the GS and to design and implement sequential activities for GS. NDF financed a senior geologist from the Geologic Survey of Denmark and Greenland, who is now based in Accra and is assisting in the restructuring of GSD. * Environmental As.sessment (EA) Program. Activities considered in this program included: (i) a sectoral environmental review (SER), which was funded by NDF; (ii) EAs for SSM sub-sector to assess the environmental impacts of the introduction of equipment, technology and processing techniques for small-scale miners; and (iii) EAs for land reclamation to assess the environmental impacts and benefits to the ecosystem and affected local communities. * Local Economic DevelopmentProjects. This program aimed at establishing local economic development (LED) initiatives in selected mining communities in Ghana. The objective of a LED program was to implement or research initiatives, in the communities surrounding mining operations, that would create entrepreneurial and business opportunities and thereby strengthen the social and environmental fabric of a region. 3.5 Quality at Entry: Since the project design predates the existence of the Quality Assurance Group (QAG), there is no official assessment of the project's quality at entry. Nevertheless, the ICR finds the quality at entry to be satisfactory. As mentioned earlier, the overall project objective was consistent with the CAS and the government priorities and met the critical needs of the mining sector. The two specific objectives were also very important because, performance of the mining sector depended largely on having strong mining sector institutions for providing adequate administration of mineral rights, protecting environment, and developing reliable, and quality technical and geological information. But there was no clear definition of the work required for the institutional component. This need was addressed by the CR. Likewise, the sector performance also depended very much on a quality insertion of mining activities in the local communities. Therefore, a more integrated approach, including the social side would have strengthened the small-scale mining component. During preparation of the project, major risk factors and lessons learned from other earlier mining projects in Ghana were considered and incorporated into the project design. In hindsight, however, the project would have benefited by using a Project Preparation Facility (PPF). Such an instrument would have facilitated timely implementation of recommendations on institutional component and also to undertake adequate analysis to define the required social and environmental measures for SSM. Another shortcoming of the project design was that funding was not provided for working on modernization of geological map of Ghana. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement ofobjective: The diagnostic study on Ghana's mining sector institutional arrangements and the resulting recommendations facilitated the govermnent to formulate a sector strategy effectively in a socially and environmentally responsive manfier. At project closure, these recommendations were being implemented by the govemment under the Three-year Action Plan which are expected to be brought to completion with the -9- EU support. On the institutional component, while the activities covered in the SAR were achieved according to schedule, implementation of the structural recommendations of CR got stalled for almost three years. Even though the assessment of mining institutional arrangements was completed in December 1997, and an Implementation Committee (IC) was appointed subsequently to follow-up on the recommendations, it was only in the last quarter of 2000 that the IC and the sector authorities took action to follow-up on the recommendations of the CR and submitted a three-year Action Plan. Considering that activities under AP would still be under implementation for two years after project closure, it is premature at this stage to assess the full impact of their outcome. In SSM component, the project improved efficiency and working conditions of the targeted small-scale miners. Installation of the central processing compound for hard rock material was completed successfully and equipment was provided to selected alluvial operations. The geological information developed by the project has led to improvement in the productivity of alluvial miners operating in the areas where geological information was collected, even though the large equipment provided to them was not very effective. The study, Integrating Socioeconomic and Environmental Issues into Mining Sector Development in Ghana: Lessons Learned and the W.ay Forward, which was supported by the project and co-financed by the Canadian Trust Fund, identified downstream and upstream impacts of mining on social issues and environment The findings and recommendations were the basis for launching the Sectoral Environmental Review and the pilot project to assess water and sanitation issues and safe access in the Prestea mining area, both of which are supported by NDF. 4.2 Outputs by components: A- Strengthening of the Mining Sector Institutions Minerals Commission. (a) Assessment of current mining institutional arrangements. Assessment of the institutional component was completed with the report "Study of Mining Sector Institutional Arrangements" of December 1997 by Swedish Geological AB; (b) Execution ofpromotional activities to attract potential investors. Activities executed included preparation of a CD, opening of a web site and preparing information on industrial minerals; (c) The establishment of a comprehensive minerals information system. Cadastral system, the mineral information system and the geological information database were implemented. (d) Pollution abatement strategies for Tarkwa, Dunkwa and Prestea. The project funded the tailings dam at Tarkwa and the rehabilitation and revegetation at Dunkwa. In Prestea, the NDF project is currently working on the effluent redesign and on the redesign and reconstruction of the tailings dam; (e) Assessment of the curricula of the mining and related programs in local universities and technical colleges. Mines Department. In order to enable MD to monitor and enforce sectoral regulations, extensive training on health and safety to all mines inspectors of MD, including a study tour to Zimbabwe, and hardware such as vehicles for transportation were provided. Similarly, activities to support the services of MD to small miners were also completed, including an agreement with SGS to provide the assay services, and courses run by MD trainers on health and safety. Geological Survey. Airbome geophysical surveys were carried out aimed to identify priority mining areas attractive for subsequent promotion. This has included the provision of software and hardware for the - 10- processing of data interpretation and production of digitized maps. NDF contributed substantially, to the tune of US$2.5 million, for the airbome survey, including data gathering, processing of the data, and purchasing equipment. Ministry of Mines and Energy (MME). The institutional assessment carried out by Swedish Geological AB, and discussed above, provided the assessment needed to improve the overall operational effectiveness to examine, address and coordinate the work of other PMIs and to conceptualize and oversee the execution of policy. The implementation of the recommendations of the CR -under the AP - is expected to have an important impact, in terms of improved sectoral management. B- Assistance to Small-Scale Mining Enterprises (a) Testing of Improved Equipment and Processing and Dissemination of Technology. Subsequent to the completion of the hard rock central processing compound at Bolgatanga, single and double trommels on alluvial ores in three different locations were tested; (b) Improved Geological Information. Fifteen areas were evaluated in southem Ghana by four teams of geologists; (c) Improved SSM Regulatory Framework and Set-up of the sub-sector. The analysis of the legal franework was completed and it concluded that regulations were needed to deal with the health and safety issues, as well as the environrnental impact of SSM; (d) Activities concerning the marketing conditions and basic business training of small miners were completed. The study on marketing issues affecting small miners was completed and the activity has been opened to private sector competition. Two firms now offer marketing service to SSM, one private and one state owned. Training was provided to small miners on principles of accounting and financial management. Similarly, training was provided on safety and environmerital protection which included training on the use of mercury retorts. Environmental Sub-Comonent (a). Land Reclamation. All the three pilot areas identified for intervention were reclaimed. The revegetation was carried out in all three areas with the participation and involvement of the communities. At the Achiaman site, in addition to the trees and oil palm being planted, the community has also planted food crops in between the tree crops, an initiative which could increase the benefits and enhance the sustainability of the program as a whole. In the Nueng North Forest Reserve, the afforestation program was imnplemented by the contractor in collaboration with the Forestry Department. At the Akwatia site, 800 citrus seedlings and 700 oil palm seedlings were planted in an initiative undertaken jointly by the community, the District Assembly and the contactor. (b). Small Scale Mining. Under this sub-component, geological information was made available to small-scale miners within the formal sector, and appropriate sites suitable for this type of mining, demarcated. This initiative resulted in reducing the potential for increased land degradation through haphazard clearing of land for SSM activities. At the pilot testing sites located in Bolga and Wa areas in Northern Ghana and in the Westem and Ashanti regions, the introduction of improved processing techniques, have raised environmental awareness and sensitized SSM to environmentally benign processes. (c). Training. Staff from the different sector agencies including the MC, MD, GS, and the EPA received training and exposure to environmental aspects of mining. Trining workshops were held under the auspices of this project with the support and partnership of USEPA. These workshops were attended by staff of other agencies including the EPA. - 1 1 - (d). Green Communities. This program was launched by MC with the support of the Bank and the USEPA and in partnership with the Chamber of Mines, to provide communities around the mining sites with an integrated program of assistance. The program included provision of water, sanitation services and promotion of alternative livelihoods aimed at: (i) improving the socio-economic conditions of the communities; and (ii) reducing the stress on mining concessions through encroachment and 'galamsey' (artisanal mining) activity. (e). Akwatia Transition Program. A masterplan and program for the rehabilitation of the degraded mining sites at Akwatia was formulated. The program also aimed to revitalize the community in the adjacent areas through the provision of basic amenities and the introduction of alternative livelihoods including agro-based industry and poultry farming. The program is designed as a pilot for promoting and implementing integrated mine decommissioning plans and programs. 4.3 Net Present Value/Economic rate of return: Not applicable 4.4 Financial rate of return: Not applicable 4.5 Institutional development impact: The project assisted in strengthening the capacity of the government institutions in various elements which are key for developing and adrninistering sustainable growth of the mining sector, such as: (a) administration of mineral rights; (b) provision of a reliable geological database; (c) policy design and definition; and (d) environmental protection. The project has also facilitated creating public awareness on environmental impacts and management of mining activities. Many studies financed by the project have. resulted in increasing the knowledge base on environment, actual capacity for screening, scooping, monitoring and evaluation. However, MC's collaboration with the EPA remains weak and the environrnental performance of sectoral agencies is still weak, since they have not developed pragmatic and practical mechanism for monitoring, enforcement, and compliance. In addition, the project is expected to contribute to the modernization of the mining institutional framework of Ghana, through follow-up activities by other international financial institutions. In order to bring to complete its institutional activities, NDF which co-financed the project has extended its financing by two full years until the end of 2003. Likewise, the European Union (EU) has decided to process a 38 million Euro grant from Sysmin funds - expected to be implemented during the 2003-2008 period - to finance a follow-up project which will bring to completion most of the activities covered in this component. 5. Major Factors Affecting Implementation and Outcome S. I Factors outside the control of government or implementing agency: Investment in mining in Ghana was affected by progressive depletion of previously known traditional exploration areas where most easily identifiable surface deposits were located. This was compounded by the decline in gold prices and increased competition in the international arena for private sector mining investment which has reduced the worldwide investment in exploration by over 55% between 1997 and 2001. - 12 - 5.2 Factors generally subject to government control: Lack of decisiveness on the government's part and weak coordination among the participating agencies led to delays in implementation. There were problems with the Geological Survey (GS) and to a small extent with the Mines Department (MD) in executing the recommendations of the CR for institutional strengthening. Because of the shortage of funds, GS had almost become dysfunctional and as a result, its work Qn geological maps and other geo-scientific task was delayed and affected. As a consequence, much of the data were unavailable or had become obsolete for large portions of the country , and opportunities to acquire new information were missed. Like GS, MD was also affected by scarcity of funds, and in addition, due to a rapid increase in the number of mines, MD had become overburdened in discharging its duties. Many of the activities recommended by CR were implemented late because of GS's reluctance to modernize and redefine its role and its resistance to restructure in accordance with the requirements of a GS working in a private sector-driven mining industry. The environmental components of the project were not implemented, as envisaged by project design , in full partnership with the EPA and the mining institutions. The key reason for this situation was the lack of cooperation between the EPA and mining institutions which resulted in inadequate inter-agency linkages including a lack of inter-ministerial and operational meetings. Until the very final stage of the project, when the new draft Mining Law was presented for discussion among stakeholders, there was a general lack of interest and commitment to consult with other stakeholders, which included private sector, civil society, and other agencies such as agriculture, water, forest, environment, and rural development. 5.3 Factors generally subject to implementing agency control: High rate of staff turnover from the implementing agencies including GS, MD, and EPA to private sector led to their inadequate institutional capacity. Likewise, lack of rapport between institutions prevented their closer collaboration and lack of transparency affected sectoral development process. 5.4 Costs andfinancing: The total cost of the project was US$ 13.27 million compared to the SAR estimate of US$13.65 million. The lower project cost was mainly due to strengthening of the US Dollar compared to SDR during the implementation period. The Bank financed US$9.37 million, NDF contributed US$3.6 million as of project closure on December 31, 2001 (NDF's total allocation was SDR4.00 million, which should be disbursed by December 31, 2003); and the Government financed US$0.30 million equivalent in local costs. The project disbursed 96.14% of the credit amount (7.94 million SDRs). However, because of the strengthening of the Dollar, the disbursement is shown as only 80.44% in terms of Dollar amnount (Annex 2c). 6. Sustainability 6.1 Rationale for sustainability rating: The overall sustainability of the project is likely. This assessment is based on the fact that the current administration is committed to continue its support to the sector policy reforns, institutional and management effectiveness, economical, technical, financial, and environmental matters. Future work will be - 13 - supported by NDF Credit which will close on 31 December, 2003; and EU, which is expected to approve a 38 million Euro grant for implementation in 2003-08, designed as a follow up to WB/NDF project. The project has resulted in increased private investment in Ghana, even though global investment in mining has been seriously affected because of the decline in metal prices. Once metal price is restored to normal level, it is expected that private investment in Ghana would be sustainable. Achievements made in the database system, effective administration of mineral rights, and environmental protection are also likely to be sustainable. Regarding SSM, sustainability should be linked to the capacity of MC and related agencies to ensure adequate administration and monitoring capability for artisanal and SSM activities. In particular, improved efficiency and better working conditions are likely for lode mining and unlikely for alluvial mining. On the other hand, sustainability of social impact and local community participation is marginally uncertain, bordering between likely and unlikely. Sustainability of environmental activities would depend on environmental management which focuses on monitoring compliance mechanisms and enforcement functions. To this effect, the project established a basis for raising awareness of inter-sectoral linkages and for identifying options for improved management of the impacts and potential impacts. The studies carried out under the project assessed the roles of different agencies involved in monitoring compliance and enforcement. These agencies such as EPA, MC, and MD, should collaborate with each other to reach agreement on best and practical approaches, and increase their commitment to recognize and support a greater role for the private sector and civil society in implementing the recommended reforms. It is equally important to get technical assistance as well as financing help. In addition to the NDF support which would continue to implement some of the environmental activities, the government should try to secure other funding (such as from the EU) to support the recommendations emanating from the Sectoral Environmental Review. With the assistance from development agencies such as NDF and the EU, sustainability of environmental activities would be highly likely. 6.2 Transition arrangement to regular operations: Because of the delay in implementing the recommendations of CR, institutional reforms are not fully in place. For environmental component, NDF has agreed to continue the activities after project closure. 7. Bank and Borrower Performance Bank 7.1 Lending: The Bank's performance in the identification of the project was satisfactory. The Bank was proactive in initiating the dialogue with the government and the Ministry of Energy and Mines for the sector reform. The project's identification was well organized and satisfactory. The Bank took into account the project's consistency with the government's development priorities and the Bank's CAS. The Bank's team had a good skill mix, which brought in state of the art expertise into project design. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects such as technical, financial, economic, institutional, including procurement and financial management, environmental, sociological, and consistency with the Bank's safeguard policies. In addition, during the appraisal, the Bank assessed the project's risks and benefits. The Bank had a consistently good - 14 - working relationship with the Borrower during preparation and appraisal. 7.2 Supervision: The Bank's performance during the implementation of the project was satisfactory. Over the five years of project implementation, there were ten supervision missions, with an average of about two missions per year. The Bank's client relationship was cordial and productive. Supervision teams included specialists in mining, environment, finance, regulatory framework, and institutional development. The Bank took a firm and dynamic role in the supervision of the project implementation. Aide-Memoires were regularly prepared and transmitted, which alerted the Govermment to problems with project execution and suggested remedies in a timely manner, in conformity with Bank procedures. The Form 590s and PSRs realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. With the exception of the implementation of the CR recommendations discussed earlier, whenever delays in implementation occurred, the Bank was able to define concrete steps and a timetable for putting the program on track. The Bank paid sufficient attention to the project's likely development impact. The quality of advice and the follow-up and agreed actions was adequate. Loan covenants and remedies were enforced. The staff also showed flexibility in suggesting needed modifications in implementation. External consultants were used for specific aspects of certain project components. Bank staff worked closely with the government and the implementing agency and provided them with extensive assistance, in terms of providing suggestions for drafting the laws and regulations, reviewing legal drafts, and giving technical comments. 7.3 Overall Bank performance: Overall, the Bank performance was satisfactory during project preparation, appraisal and implementation. Borrower 7.4 Preparation: The Borrower's performance in the preparation of the project was satisfactory. During the preparation stage, the Borrower displayed an adequate level of commitment to the objectives of the project and covered the adequacy of design and all major aspects such as technical, financial, economic, institutional, environmental and sociological factors, including stakeholder commitment. The government officials and staff of the implementing agencies worked closely with the Bank's project team on a continual basis, with full cooperation and enthusiasm. 7.5 Government implementation performance: The government's performance was satisfactory. The government had consistently maintained its commitment to project objectives throughout the implementation. It was enthusiastic in implementing all activities listed in the SAR and Credit Agreement, but hesitant to implement the recommendations of the CR. Because of the lack of political will and support, the government delayed the implementation of these recommendations. 7.6 Implementing Agency: Performance of the MC as the coordinating agency was satisfactory. The MC had a highly trained technical staff. It was well organized and effective in dealing with proc irement, disbursement, progress reports, and - 15 - in maintaining proper records of the project. Consequently, the day to day implementation of the project was very smooth. However, reflecting the political situation in Ghana, MC did not push the implementation of the CR recommendations until late in CY 2000. 7.7 Overall Borrower performance: The overall performance of the Borrower was satisfactory. 8. Lessons Learned * Technical assistance is not an optimal instrument to implement a sector reform, in case policy issues and restructuring requirements have not been clearly identified and not been agreed to by the government in the SAR and Credit Agreement. * Small-scale mining is a poverty-driven activity and any effort to deal with small-scale miners should recognize such a fact. Accordingly, the project design should take an integrated approach recognizing this activity as a poverty-reduction component. * For smooth project implementation, it is important to have effective inter-ministerial and inter-agency coordination. * Performance of a project of this kind tends to be affected by the performance of state agencies, which normally performs below private sector standards. 9. Partner Comments (a) Borrower/implementing agency: BORROWER'S EVALUATION REPORT A. BACKGROUND: In July 1995 the Ministry of Finance acting on behalf of the Republic of Ghana signed an agreement with the Intemational Development Agency (IDA) for a credit of SDR 7,900,000.00 (US$12.3 million) to support the Mining Sector Development and Environment Project (MSDEP). The Government contributed US$1.4 million as counterpart funding. The duration of the project is five (5) years and was due to be completed by 31 December 2000. However, the expiry date was extended to December 31, 2001 when it became obvious that some of the components could not be completed within the expiry date. On 9 September 1996, the Ministry of Finance signed another Credit Agreement of US$5.5 million with the Nordic Development Fund in Helsinki, Finland as co-financier to supplement IDA Credit. Project Objectives The overall objective of the project is to support the sustainable development of Ghana's mining sector on an environmentally sound basis through strengthened mining institutions and organisational support to small-scale miners to introduce the use of appropriate environmentally responsible technology. - 16 - Specifically the objectives were: (i) To enhance the capacity of the mining sector institutions to carry out their functions of encouraging and regulating investments in the mining sector in an environmentally sound manner (ii) Support the use of the techniques and mechanism that will improve the productivity, financial, viability and reduce environmental impact of small-scale mining operations. To achieve these objectives, the project consisted of several components B. ASSESSMENT OF THE PROJECT OBJECTIVE. DESIGN AND IMPLEMENTATION: Assessment of Project Objectives: The first objective was relevant, realistic and consistent with govemment policy of implementing new mining sector policy. Because of its significant contribution to the economy and also of its enormous potential, the mining sector was one of the priority areas that received greatest attention under the Economic Recovery Programme (ERP). The Government's role in the reform package was to focus on administration and regulation of mining areas, rather than the previous role as owner and operator. The private sector was to be the driving force in the new policy. It was important that the Government institutions dealing with the mining sector are strengthened to meet this challenge. The second policy was also realistic, relevant and consistent with government's policy of liberalizing small scale gold mining in particular; create opportunities for the small miners to have access to land, technical advice and encourage them to use appropriate mining and processing techniques to reduce environmental damage, and provide incentives for the miners to sell to government designated buying centres instead of selling into the informal sector. C. DESIGN: The project was designed to put in place a framework that would in the medium to long term address variety of issues such as legal, fiscal, institutional, environmental, socio-economic issues, health and safety, relating to the functions of the participating agencies, Minerals Commission (MC), the Mines Department (MD), the Geological Survey Department (GSD), the Ministry of Energy and Mines (MEM) (now Ministry of Mines) and to some extent the Environmental Protection Agency (EPA). The project provided extensive training programs to the participating agencies to enable them carry out their functions. D. IMPLEMENTATION AND MAJOR ISSUES AFFECTING PROJECT ACHIEVEMENT: The Credit Agreement was signed in July 1995, the credit was effective in March 1996, (a time lag of nine (9) months) before the first tranche of funds were released into the Special account. The MC is the coordinating agency for the project with MEM, GSD, MD as participating agencies. MC liaises with the EPA in regard to environmental components of the project. A project co-ordinator was appointed from MC and approved by IDA to manage and co-ordinate the implementation of the project. The Co-ordinator was assisted by a Technical Officer and an Accountant. Each participating agency appointed Project Liaison officers within their organisation to liaise with the - 17 - Project Co-ordinator. To ensure transparency and full participation of the agencies, a "Consultative Meeting" attended by representative of the participating agencies, and representatives of the Ministries of Finance and Mines, was held every month to review the progress of the project. Procurement A procurement committee comprising representatives of the participating agencies was set up to handle procurement of goods. Earlier members of the committee had undergone various training programmes on IDA procurement guidelines in Washington and in Accra where they acquired the necessary skills. In spite of the above efforts, the implementation process was sometimes slow, each of the agency had its own independent views of its role in the sector, often delaying agreement on proposed mechanism for inter sectoral co-ordination. Factors affecting implementation and outcome (i) Difference between the Bank of Ghana (BOG) and IDA At the start of the project it was agreed that IDA funds transferred into the Special Accounts be lodged at a Commercial Bank outside the control of Government. On two occasions during the course of the project BOG directed that all donor funds be transferred to the Central Bank. This situation created delays in disbursement, it was after intensive negotiations with IDA that BOG reversed itself. (iii) Delays in having IDA disbursement forms endorsed at the Accountant General's Department and Finance Ministr' The turn-around of the disbursement application forms was about one month before the Special Account could be replenished. (iii) Delays in release of counterpart funds from BOG Government directed that its counterpart contribution of US1.3 million be met from the Minerals Development Fund. During the initial stages of the project, release of funds was regular, however as the economy slowed down, release of funds was very irregular affecting the execution of several components. (iv) Delays in procurement Cumbersome procedures in establishing letters of credit, delays in clearing goods from the ports, affected the completion of the components. E. BORROWERS PERFORMANCE: Before the start and during the course of the project key personnel from the participating agencies undertook extensive training both at home and overseas to prepare them to manage the project. The training programmes provided skilled, well-motivated and capable personnel who assisted the Project Co-ordinator in the management of the project. - 18 - The perfornance of the staff has been excellent. It is on record as being the only project in the portfolio of the Resident Director (in Accra) which did not receive any adverse comments from the Director's office. Of course there were few problems with procurement, but those were minor and were soon settled, without adversely affecting the implementation of the project. The performance of the institutions involved in the project was generally satisfactory. There was general co-operation among the heads of these institutions, often times however they reacted strongly when they realised that they have to give away part of their authority for intersectoral harmony. The EPA was reluctant to accede environmental monitoring of mining operations to MD who had the regional network and the personnel to carry out this function. GSD resisted attempts to restructure the department as recommended in the Swedish Geological AB report of March 1999. In these two instances, Ministerial intervention could have resolved the impasse. F. EVALUATION OF PERFORMANCE OF THE BANK: The Bank supervisory team was fully capable in performing their responsibilities with respect to identification, preparation and implementation of the project. Supervision missions were frequent with a total of nine (9) mission mounted during life of the project. The Bank's decision to support the extension period was very conmmendable. Special mention must be made of the Task Manager, through.whose initiative, major components namely; a) Drafting of new legal and fiscal laws, b) Health and Safety, c) Sectoral Environmental Review, d) Local Economic Developments (LED) projects for mining communities, e) report on learning experiences gained through land reclamation, f) EIA on small-scale mining, g) Advisor to the Director of GSD were addressed during the extension period. The cordial relationships among the borrower, the Bank and the co-financiers (Nordic Development Fund) coupled with the flexibility of the financiers enabled the project to extend some of the components beyond areas not originally covered in the design. For example, the IDA and NDF supported extensions of the airborne survey areas to include areas considered potential for mineralization. G. PROJECT OUTCOME: a) Minerals Commission The project is considered highly satisfactory since it met all of its objectives. Technical assistance, training and equipment provided to the MC have equipped it to be able to carry out its planning and policy formulation and investment promotion. Transparent and efficient system of handling mineral rights, promulgation of new minerals and mining laws with attractive fiscal regimes have encouraged direct investment of about USS$2 billion, into the mining sector, nine (9) new mines have been opened, while the bauxite mine has been successfully divested. The establishment of comprehensive information systems and the assessment of the curricula of local universities and technical colleges in order to develop a programme to introduce modern mineral -19- exploration technologies and processing techniques were accomplished. Land reclamation of mined out areas, socio-economic issues arising out of mining and alternative livelihood for the mining communities were addressed. Strict adherence to sound environmental mining techniques were enforced. Small-scale miners were provided with geological information and introduced to appropriate techniques and technologies in mining and processing. Between 1990 and 2000 small miners' contribution to annual gold production averaged 5%. The use of mercury retort in the extraction of gold reduced major environment hazards to health and enviromnent. b) Geological Survey Department The department was equipped with the relevant logistics and infrastructures to enhance the performance of its functions. Facilities provided include laboratory, drawing office, and office equipments. Tents, vehicles, compasses, campbeds were provided to facilitate fieldwork. An airborne geophysical laboratory equipped with computers, digitizers, and scanners was set up in the department to enable the processing and interpretation of the various airborne geophysical surveys which were carried out during the course of the project. The staff manning the laboratory benefited from overseas training and with technical assistance from foreign experts were able to process and interprete the acquired geophysical data. c) Mines Department An environmental laboratory was set up and equipped for the department to offer assay services and technical support to improve the productivity and viability of the small scale miners. Extension and training programmes were mounted to sensitize the miners on health, safety and environmental problems. The project provided training, equipment and logistic support to MD to enable the department effectively perform its responsibilities for inspection, monitoring and enforcement of environmental regulations, and mine health and safety. d) Ministhy of Mines (formerly Ministry of Energy and Mines) Key personnel from the Ministry benefited from both overseas and local training programmes designed to improve their overall operational effectiveness to co-ordinate the work of other mining sector institutions. The Ministry was also provided with vehicle and other office equipments to enhance and improve their productivity. e) Environmental Protection Agency DraI Envirownental mining regulations were prepared by local and external consultants with inputs from the EPA H. LESSONS LEARNT: 1. The Project has confirmed the relevance of involvement of the participating agencies in the initial formulation and design of the project. -20 - 2. Open lines of communication, the establishment of a high degree of trust and confidence between participating institutions and the Bank's supervision teams were critical in ensuring the successful implementation of the project. 3. The Bank's effort to understand the limitation and constraints facing local institutions, and the adoption of equal partnership approach in addressing issues has ensured effective implementation. 4. The flexibility of the Bank and the co-financiers enabled the implementation team to make necessary improvement in the project design 5. The implementation experience revealed the need for skill enhancement within the sectoral agencies. Without trained and skilled manpower the implementation could not have achieved the satisfactory success rating. 6. Implementation experience revealed the need for better clarity and delineation of responsibilities particularly between MD and EPA conceming environmental monitoring of mining operations. (b) Cofinanciers: NDF: In general, we agree with the content and observations made in the ICR. There is, however, one problem that NDF has experienced on a number of occasions for smaller contracts, i.e. the weakness of coordination on the part of the MC. This has resulted a number of activities for which NDF has given its retrospective no objection (where Ghana often has not followed NDF's procurement procedures) also once activities has been ongoing, or even completed. If possible, we would appreciate if this somehow could be reflected in the approropiate section of the ICR. (c) Other partners (NGOs/private sector): 10. Additional Information - 21 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: A. Institutional Component (i) Increased Private Investment Not Applicable USD2.0 billion of direct Investments are estimated to have been made In the mining sector dudng the six-year period 1996-2001, averaging $333 million per year. This consists of new mine development, exploration. rehabilitation of old mines and deDverables of service companies and consultants. (ii)Accessible, modem and reliable technical data base Old geological reports and maps have been updated and re-organised. Technical database at the Geological Survey Department (GSD) and Mincom have been upgraded and made easily accessible to Effective and effident administration of investors. Mineral Rights A modem cadastral system based on unified blocks of 15" x15" is being put in place. Concession map has been computerized making it accessible to: * Conduct searches for vacant ground Determine the exact positon of any mineral Environmental Protecion right Mineral environmental regulations have been drafted and awaitng cabinet approvals. A new regulation on health and safety In mines based on ILO Convention 176 is being drafted under NDF funding. B Small-Scale Mining Component Improved efficiency of small scale miners Basic geological Tnformaton acquired at a cost of USD1 475,195.39 is now availabie to the SSM before he/she decides to stake a claim. In this process, technical assistance Is provided by Mine Wardens in the field. Improved working conditons for small scale Miners have been ntroduced to effident miners mining methods and processing techniques and some have been supplied with Improved processing equipment which were developed by the project at a total cost of USD2,404,610.34 Improved environmental protection and awareness of the potential future of mined Use of mercury retort is now mandatory for al out areas MPilot reclamation has been carried out In three sites to Introduce SSMs about the process to restore mined-out lands at a cost of USD686,631.62. Already some SSMs In the Bonte area have started some reclamation and re-vegetation on the areas already mined-out as a dedvative of the experience gained from the pilot reclamation scheme. - 22 - Output Indicators: A. InsUWional Component Strengthening Insttutional and Policy Not Applicable Frameworic Completed, and mining sector Institutions are * Assessment of Institutional arranments being restructured. Currentty there is an adviser attached to the Director of GSD to contnue with the restructuring of the Department which had already been started. Cost: USD232,500 Updated mining and environmental legal This has been compleed end awaidng framework cabinet approval. * Institutional restructuring This Is on-going. Technical strengthening of the hndhdual government miring insitudons: * Minerals Information systems This has been completed at a total cost of USD727,266.92 * Cadastral modernzaton First part of the pmoject has been completed at a total cost of USD16,773 Support to MM, GSD, MD The sector agendes benefited from supply of computers and software, laboratory equipment, drawing office equipment, field equipment, vehicles and overseas and loal training, all at a cost of USD7,883,078.06. Currently there is an adviser to the Director of GSD supported by a bcal counterparLt Health and safety regutatons In mines In Ghana are being drafted as part of support to MD. Technical data base and investment promotion: * Aerial geophyskcs 274,772 Ilne-ckms were flown under GTK and High Sense to generate data that have been processed both at a cost of USD 3,352,366.48 and modem geophysical maps produced. Geological maps Geological map for Northem and South-westem Ghana has been updated at a CD Rom, Technical brochures cost of USD119,500. CD-Rom for promoting investment in the mining sector and other technical brochures have been produced to make infomnation accessible to investors at a cost of Improved Environmental Protection: USD34,781.28. Sectoral Environmental Review Environmental Regulations Enforcement support/strengthening Completed. Cost: EUR172,102 Completed. Cost: USD69,948 Pollution abatement stratgy for Identified New mining regulaifons are being drafted -23 - problem areas with NDF support of EUR47,186 Prestea water and sanitation were identified as the problem to be tackled. The design has been completed and tender documents have been prepared for the physical constructon to be completed In 2003 under NDF supporL Cost of design: USD403,784. Total project cost: USD1 5 million. B. Small-Scale Mining Component Improved sub-sectdor framework and conditions: Completed. Apart from this review, SSM laws * Regulatory revlew are also being reviewed under the legal and fiscal regime. * Review of marketing and financing Completed at a total cost of USD105,000 arrangements Private parUidpation in the marketing of gold and diamonds are now In now being encouraged. About 15 companies are engaged in the business. * Norms and enforcement of health and Field officers have been trained to train the safety condllons SSMs on the use of mercury by applying the appropriate retorting equipment, MD's Code of Conduct for small miners MD has developed the code of conduct for SSMs that Is being effectvely enforced in the field by the field officers. Improved Environmental Protection: * Land reclamation and re-vegetation of mined-out areas Project successfully completed. Three reclamaton schemes In areas that have been devastated by SSMs. All the reclaimed lands have been re-vegetated with economic trees to serve as a model that mined-out lands could be used for other economic activites. Total Cost: USD666,989.85 MD's code of Conduct for small miners This is being drafted as part of the general regulations for health and safety in mines. End of project - 24 - Annex 2. Project Costs and Financing Poect Cost by Component (in US$ million equivalent) Pilot Testing 2.92 2.37 82.12 lInpr-oved Geology 1.87 1.46 78.53 Improved SSM Framework 0.76 0.19 24.27 Land Reclamation 2.63 0.66 26.05 Prestea Water & Sanitation 0.38 Minerals Commission 2.47 .2.94 123.92 Mines Department 0.81 0.68 86.57 Geological Survey Dept. 1.65 4.28 254 Ministry of Mines & Energy 0.48 0.31 64.7 Total Baseline Cost 13.59 13.27 Total Project Costs 13.59 13.27 Total Financing Required 13.59 13.27 ProJect Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1. Works 0.00 3.65 0.00 0.00 3.65 (0.00) (3.40) (0.00) (0.00) (3.40) 2. Goods 2.38 0.00 1.62 0.00 4.00 (2.38) (0.00) (1.40) (0.00) (3.78) 3. Services 0.00 0.00 5.60 0.00 5.60 (0.00) (0.00) (5.10) (0.00) (5.10) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 2.38 3.65 7.22 0.00 13.25 (2.38) (3.40) (6.50) (0.00) (12.28) Project Costs by Procurement Arrangements (Actual/Latest Estimate) US$ million equivalent) 1. Works [ 0.00 1-1.00 1.26 -25 - (0.00) (1.00) (0.00) (0.00) (1.00) 2. Goods 0.00 2.03 0.61 0.74 3.38 (0.00) (2.03) (0.61) (0.00) (2.64) 3. Services 0.92 3.26 1.95 2.50 8.63 (0.92) (2.86) (1.95) (0.00) (5.73) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.92 6.29 2.82 3.24 13.27 (0.92) (5.89) (2.56) (0.00) (9.37) 1" Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 21 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Flnancing by Component (in US$ million equivalent) Pilot Testing 2.54 0.39 2.27 0.10 89.4 25.6 Improved Geology 1.55 0.33 1.41 0.05 91.0 15.2 Improved SSM Framework 0.77 0.19 24.7 Land Reclamation 2.13 0.51 0.57 0.09 26.8 17.6 Prestea Water & 0.38 Sanitation Minerals Commission 2.40 0.08 2.60 0.05 0.29 108.3 62.5 Minerals Department 0.75 0.07 0.67 0.00 0.01 89.3 0.0 Geological Survey Dept. 1.64 0.01 1.35 0.01 2.92 82.3 100.0 Ministry of Mines & 0.49 0.00 0.31 0.00 63.3 0.0 Energy I I_I I I_I_I_I Note: The amount of US$0.38 million for Prestea Water & Sanitation is as of December 31, 2001. This is an on-going activity funded by NDF, which has allocated US$1.5 million for this purpose. This amount should be disbursed by December 31, 2003. - 26 - Annex 3. Economic Costs and Benefits Not applicable - 27 - Annex 4. Bank Inputs ) Missions: Stage of Project Cycle No. of Persons and Specialty' Performance Rating (e.g. 2 Economists, I FMS, etc.) Implernentation Development Monti/Year Count Specialty Progress Objective Identification/Preparation April/94 5 1 Mining Engineer, I Env. Specialist, I Financial Analyst, I Consultant, I Lead Adviser Dec/94 2 1 Mining Engineer, I Env. Specialist Appraisal/Negotiation July/94 S 1 Mining Engineer, I Env. Specialist, I Financial Analyst, 2 Consultants Feb/96 2 1 Mining Engineer, 1 Env. Specialist Supervision June/96 2 1 Mining Engineer, I Env. S S Specialist April/97 2 1 Mining Engineer, I Env. S S Specialist July/97 2 1 Mining Engineer, I Env. S S Specialist Feb/98 2 1 Mining Engineer, I Env. S S Specialist July/98 I I Mining Engineer S S Sept/99 I I Mining Specialist S S May/00 2 1 Mining Specialist, I Env. S S Specialist Nov/00 I Mining Specialist S S May/O I Mining Specialist S S Oct/01 I Mining Specialist S S ICR Oct/01 I Mining Specialist (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 39.1 136.90 Appraisal/Negotiation 42.8 111.10 Supervision 117.27 392.09 ICR 9.00 38.10 Total 298.17 678.19 - 28 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macro policies O H OSUOM O N * NA OI Sector Policies O H *SUOM O N O NA El Physical OH OSUOM ON ONA Ol Financial O H OSUOM * N O NA Ol Institutional Development O H O SU O M O N 0 NA Ci Environmental O H *SUOM O N O NA Social Ol Poverty Reduction O H OSUOM * N O NA O Gender O H OSUOM ON *NA O Other (Please specify) O H OSUOM O N * NA O Private sector development 0 H O SU O M 0 N 0 NA l Public sector management 0 H O SU O M 0 N 0 NA O Other (Please spec6fy) O H OSUOM O N * NA -29 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bankperformance Rating O Lending OHS OS OLU OHU O Supervision OHS OS O U 0 HU O Overall OHS OS O U 0 HU 6.2 Borrowerperformance Rating O Preparation OHS OS O U 0 HU L Government implementation performance O HS OS O U 0 HU O Implementation agency performance OHS OS O U 0 HU OL Overall OHS OS O U O HU - 30 - Annex 7. List of Supporting Documents 1. Aide Memoires, Back-to-Office Reports, and Project Status Reports; 2. Project Progress Reports; 3. Consultant Study Reports financed under the Project; 4. Borrower's Evaluation Report dated April 30, 2002; and 5. Staff Appraisal Report for Republic of Ghana Mining Sector Development and Environment Project dated May 19, 1995 (Report No. 13881-GH) - 31 - IBRD 2101 IRI 3° 2° I. o o . 2° U R K I N A FASO 1-0 0 10--- - 1°0 1 , . . .,;S \\ /' Sf C;UIIm:Om GHANA Te g 4 > 4 C S pt t | 4 MINING SECTOR S £;- E, v GIQN<>;U. REHABILITATION PROJECT UPPER EST 6bo V - N \~~~REGION I/ Oeo I 5> % ~~~~NORTHERN !°a \/tIE;ON (vg% _90 * \f;mbulgu, Qj7ZubtX SSM Mining Areas 90 -9. %A~ ooono Main Mines 5 ¢U'pe/5> \\ \ (1/ j cj lilmb t r- Primary Roads < - , > t Ct 1+ / <}\ Major Secondary Roads COTE \ 0o\ / t aa > t l \KW Other Secondary Roads - 4 ~~~~~~~~~~~~~~~~~~~~~~Railroads D'IVOIRE \ S~o @Region Headquarters 1D-d I National Capital Region Boundaries -8. g 1 vo; AHAF t _ - _ International B oundaries / d' Khong - TOG 7ee0 ( k~~~~~~~~Bk 0 \d_ ( ~~~~~~TOGOr -60 WEST 6 \ m ;; 6 TRAVTema 9 ¢9to~~iib RE(;IO 4rkwo- .7q / < \,JJSEK(ONDI O 110 ^ 330 4,0 50 MILES 0 20 40 60 80 KILOMETERS Gulf of Guinea Thr'o nro.pd onopr ytheop oso ' o,t o -ThoWorldook or occoptooco of such odooo ;pA, anj!h° p.,t. The ~ JUN 19971 JUNE 199 7 IMAGING I Report No.: 24196 I Type: ICR