malawi - national water development program - appraisal report

Language: English Original: English

PROJECT: National Water Development Program COUNTRY: Malawi

PROJECT APPRAISAL REPORT

Date: March 2008

Appraisal Team

Team Leader: T. Roberts, Sr Water Engineer, OWAS.2 Team Members: J. Maula, Pr. Socio-economist, OWAS.2 P. Chileshe, Young Professional, OIVP A. Gomani, Consultant Financial Analyst Sector Manager: S. Jallow Sector Director: A. Rakotobe Regional Director: F. Black

Peer Reviewers

O. Amu, Sr. Socio-Economist, OWAS.2 M. Assefaw, Pr. Financial Analyst, OWAS.2 E. Schroten, Pr. Sanitation Engineer, OWAS.2

TABLE OF CONTENTS I – STRATEGIC THRUST & RATIONALE.............................................................................. 1

1.1. Program linkages with country strategy and objectives.................................................... 1 1.2. Rationale for Bank’s involvement .................................................................................... 1 1.3. Donors coordination.......................................................................................................... 2

II – PROGRAM DESCRIPTION ................................................................................................ 2 2.1. Sub-Program Components ................................................................................................ 2 2.2. Technical solution retained and other alternative explored .............................................. 2 2.3. Program type ..................................................................................................................... 3 2.4. Program cost and financing arrangements ........................................................................ 3 2.5. Program’s target area and population ............................................................................... 4 2.6. Participatory processes for design and implementation.................................................... 4 2.7. Experience and lessons reflected in program design ........................................................ 4 2.8. Key performance indicators .............................................................................................. 5

III – PROGRAM FEASIBILITY................................................................................................. 5 3.1. Economic performance ..................................................................................................... 5 3.2. Environmental and Social impacts.................................................................................... 5

IV– IMPLEMENTATION........................................................................................................... 7 4.1. Implementation Arrangements.......................................................................................... 7 4.2. Monitoring ........................................................................................................................ 9 4.3. Governance ....................................................................................................................... 9 4.4. Sustainability..................................................................................................................... 9 4.5. Risk management ............................................................................................................ 10 4.6. Knowledge building........................................................................................................ 10

V – LEGAL INSTRUMENTS AND AUTHORITY................................................................. 10 5.1. Legal instrument ............................................................................................................. 10 5.2. Conditions associated with Bank’s intervention ............................................................. 10 5.3. Compliance with Bank Policies ...................................................................................... 11

VI – RECOMMENDATION ..................................................................................................... 11 Appendix I. Malawi’s Comparative Socio-economic Indicators............................................... 12 Appendix II. Table of ADB’s Portfolio in Malawi .................................................................... 13 Appendix III. Similar projects financed by the Bank and other Development Partners............ 14 Appendix IV. Map of Malawi Showing Project Areas .............................................................. 15

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Currency Equivalents April 2008

1 UA = MWK 221.735 1 USD = MWK 134.834 1 UA = USD 1.64450 1 UA = EURO 1.04003 1 UA = CAD 1.69038

FISCAL YEAR 1st July- 30st June

WEIGHTS AND MEASURES l/c/d = litres per capita per day m3/d = cubic metre per day Km = kilometres

ACRONYMS AND ABBREVIATIONS AM Area Mechanic MWFO ADB Malawi Field OfficeCDC Capacity Development Consultant NBF Non-Bank FinancedCIDA Canadian International Dev. Agency NCB National Competitive BiddingCPC Catchment Protection Committee NGO Non Governmental OrganisationCSP Country Strategy Paper NWDP National Water Development ProgramCU Coordination Unit O&M Operaton and MaintenanceDCT District Coordination Team OSAN Agriculture and Agro-Industry Dept.DFID Dept for International Development OSHD Human Development Dept.DP Development Partners OWAS Water and Sanitation Dept.DWO District Water Officer PPF Project Preparation FacilityEIRR Economic Internal Rate of Return PSP Private Sector Service ProviderENPV Economic Net Present Value PT Part TimeFT Full Time PWS Point Water SystemGFS Gravity Flow Scheme RWSS Rural Water Supply and SanitationGOM Government of Malawi S+H Sanitation and HygieneGTZ German Agency for Technical

CooperationTA Traditional Authority

HS Health Surveillance Assistant U5 Children Under Age 5 ICB International Competitive Bidding VIP Ventilated Improved Pit LatrineIRWSSP Integrated Rural Water Supply and WaSHCO Water and Sanitary Health CommitteeLSP Local Service Provider WES Water & Environmental SanitationMGDS Malawi Growth and Development

StrategyWHO World Health Organization

MIS Management Information System WMA Water Monitoring AssistantMIWD Min. of Irrigation and Water Dev. WPC Water Point CommitteeMLGRD Min. of Local Government and

Regional Development

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Loan Information BORROWER: Government of Malawi EXECUTING AGENCY: Ministry of Irrigation & Water Development Confirmed Financing Plan (unless noted otherwise) Component ID. C-1 C-3 C-4Area of Intervention Urban a) Town b) Market

Centresc) Rural Piped

System

d) Rural WS & Sanitation

WRM Program Mgt. & Cap. Bldg.

Total

GOM 2.3 1.5 0.3 4.5 8.6Communities 4.1 4.4 0.1 8.6African Development Fund 7.6 10.4 2.4 5.5 25.9RWSSI Trust Fund 3.1 0.1 3.3CIDA (to be confirmed) 2.4 9.1 0.6 12.2Africa Catalytic Growth Fund (DfID) 2.6 0.8 4.9 5.2 1.8 15.2European Investment Bank 12.2 12.2European Union 12.2 12.2IDA 4.3 10.9 1.8 1.2 7.3 3.0 28.6JICA 0.0UNICEF 7.5 3.5 11.0OPEC Fund 6.1 6.1UNDP 0.6 0.6Water Aid 0.6 3.0 3.6Total Expected (next 5 years) 29.2 10.0 19.8 147.9

UA, millions

89.0

C-2

ADB’s key financing information

ADF loan and grant currency

UA

EIRR, ENPV (base case) 24%, 6.09 million Malawi Kwacha Timeframe - Main Milestones (expected)

Concept Note approval

Feb/08

Sub-program approval Jul/08 Effectiveness Mar/09 Last Disbursement Mar/13 Completion Dec/13

Program Summary The National Water Development Program (NWDP) has four components: C-1) Urban Water Supply and Sanitation, C-2) Town, Market Centre and Rural Piped and Point Water Supply and Sanitation, C-3) Water Resources Management, and, C-4) Program Management and Capacity Building. The Bank will contribute to the financing for components C-2 to C-4. The NWDP covers all of Malawi and aims at 80% coverage of improved water supply and sanitation by 2015. The financing for the rural water supply and sanitation (RWSS) component, which will benefit 4.45 million rural and district people, is UA 89.0 million, and the water resources component, which will benefit all Malawians, is UA 10.0 million. The impacts include a reduction in pre-mature deaths of children who die under the age of five (U5) from water borne diseases, and improved district and lower level governance. The program is needed now because of the very low water and

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sanitation coverage and functionality in the urban and rural areas and the lack of knowledge on available water resources. The Economic Internal Rate of Return of 24% is significantly higher than the opportunity cost of capital (10%) and therefore the investment is economically viable. The proposed funds have contributed to the leveraging of five other development partners into the program. The added value from the Bank is its experience in rural water supply and sanitation, and water resources engineering, both of which are its core competencies. Knowledge captured will be shared within the Bank (OWAS, OSHD, OSAN) and relevant lessons and approaches reflected in subsequent projects and programs.

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Malawi: National Water Development Program

Hierarchy of objectives Expected results Reach Performance indicators Indicative target and time frame Assumptions & risks Sector Goal To ensure sustainable provision of adequate quantity and quality of water and adequate sanitation services to the whole population of Malawi

Long Term Outcome Healthier population with easier access to improved water supply and sanitation

Beneficiaries Population of Malawi

1. Water coverage & access to sanitation to meet national targets 2. Incidence of death in U5’s from water borne diseases

By 2025: 1.1 Urban water supply & improved sanitation coverage increased from 96% & 66% to 100%, serving 0.3 & 0.7 million more people, respectively 1.2 Rural water supply & improved sanitation coverage increased from 53% & 35% to 100%, serving 8.8 & 11.0 million more people, respectively 2.1 Mortality in U5’s from water-borne diseases reduced from 80% in 2006 to 40%

Human and material resources are increased by Government with support from donors

Component Objectives C-1 Urban Water Supply & Sanitation By 2015, extend access and increase reliability through privatized water and sanitation services C-2. Rural Water Supply & Sanitation By 2015 for 80% of rural inhabitants: increase access to potable water to within 500m, increase access to improved sanitation & ensure sustainable catchment management C-3. Water Resources Management Establish the National Water Resources Authority to efficiently manage the country’s water resources using IWRM approach C-4. Capacity Building Establish capacity and hand over district water & sanitation infrastructure

Medium Term Outcomes 1. Increased reliability of urban and town water services 2. Increased coverage within easy reach of rural population 3. Improved sanitation & hygiene (S+H) practices pervade GOM & people 4. Improved catchment management 5. Enhanced capacity of GOM to manage its water resources 6. Sector decentralization

Urban Malawians Rural Malawians All Malawians Rural Malawians

1.1 Urban Water Boards under service contracts and Regional Water Boards covering all recurrent costs 2.1 Number of functioning improved Point Water Systems (PWS) & Gravity Flow Schemes (GFS) within 500 m 2.2 % of functioning PWS & GFS committees with females in management positions 3.1 Drop-out rate of girls students decreases 3.2 % of population with own improved latrines & hand-washing facilities 4.1 Catchment Protection Committees (CPC) formed, catchments protected & improved water quality 5.1 Establish water authority able to do hydrologic & hydraulic monitoring 6.1 District Water Offices (DWO)

By 2015: 1.1.1 Lilongwe and Blantyre have functional service contracts and 3 regional water boards cover all operations, maintenance, depreciation and debt service obligations 2.1.1 a) 100% functionality of 82 & 12,456 partially functioning GFS & PWS, up from 96% and 34%, respectively, partially functioning; b) serve 5.3 million more people, up from 6.7 million served in 2006 2.2.1 Establish 19,822 management committees functioning with women representing 50% to 75% of all membership and treasurer positions 3.1.1 Girls’ drop-out rates reduced to below the 2004 national average of 12.6% 3.2.1 a) sanitation facilities for 80% of schools, health centres & market places established, b) 80% of rural population built and use their own improved latrines & hand washing facilities 4.1.1 a) 100% of existing GFS catchments protected with 200 m vegetated buffer, b) 15% annual increase in water quality samples meeting national standards to 100% 5.1.1 National Water Resources Authority analysing statistical time series for 327 data collection stations 6.1.1 Establish 29 DWO’s overseeing O&M & management of all rural water schemes

As above, plus: Renewed effort in implementing National Decentralization Policy in all districts Systems sustainability is adequately enhanced through sensitization & adoption of O&M Framework for Rural Water Supply Reduced health care costs

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Hierarchy of objectives Expected results Reach Performance indicators Indicative target and time frame Assumptions & risks Activities Water Supply Infrastructure: procure works & services Rural sanitation & hygiene: procure goods & services Capacity Building: procure goods, works & services Water Resources Management: procure goods, works & services Inputs / Resources (millions) UAGOM 8.6Communities 8.6African Development Fund 25.9RWSSI Trust Fund 3.3Others 101.6Total 147.9

Short Term Outputs 1. Water supply systems rehabilitated, new ones constructed & catchments protected 2. A national approach to S+H, improved S+H in public & private places, trained sanitation facilitators 3a. District Water Offices constructed & fulfilling their decentralized roles b. Fewer non-functioning water schemes & less waterborne diseases c. Cross-sectoral support for S+H & book-keeper training 4. Enhanced capacity of Government of Malawi (GOM) to manage its water resource

Communities in 23 districts, private service providers (PSP) & NGO’s Communities in rural & urban Malawi, Private Sector Service Provider (PSP) & NGO’s Communities in selected districts, PSP & NGO’s Rural Malawi MIWD & Min. of Women and Child Dev., District Assemblies & communities All Malawians

1.1 Number of water systems sustainably rehabilitated, new ones constructed & population reached 1.2 No. of training programs, Catchment Protection Committees (CPC) & catchments protected 2.1 National S+H leadership document, number of public places & households with improved S+H facilities 3.1a) Number of district WSS development plans with clear gender activities approved for funding b) Number of: Water Monitoring Assistants (WMA), Area Mechanics (AM), GFS Operators & Health Surveillance Assistants (HS); %U5 mortality from waterborne disease c) No. of people trained: i) to mobilize on S+H; ii) female book-keepers for Water Point Committees 4.1 NWRA able to undertake hydrologic monitoring & archive data

By 2012: 1.1.1 a) rehabilitate 79 of 82 GFS and 19,743 of 70,522 PWS; b) construct 13,632 new PWS and 26 new GFS; c) serve 3.5 million more people, up from 6.7 million served in 2006 1.2.1 Catchment training programs: 23 level 1, 1,779 level 2 & 30,708 level 3; form 82: CPCs, community catchment plans, annual catchment rallys & 200 m buffer on GFS streams 2.1.1 a) MIWD develops & implements a multi-year National Sanitation Plan by 2012, b) improved S+H facilities constructed for 2,669 schools, 1,779 each of health centres & market places, and c) 762 thousand households construct own facilities 3.1.1a) 23 district water offices built & equipped, each with District Executive Committees & District Coordination Teams having at least 30% & 70% women, respectively, with development plans prepared & implemented through assistance of Capacity Development Consultants b) WMA’s, AM’s, GFS Operators & HS’s in 1,779 TA’s trained & regularly fulfilling their duties for all GFS & PWS schemes; U5 mortality reduced from 80% in 2006 to 60% in 2013 c) 80% of WPC’s (30,708): i) teach S+H to men, ii) have female book-keeper / treasurer 4.1.1 Establishment of 145 river gauging stations, 36 groundwater stations, 146 water quality stations, 1 rehab’d & 1 new laboratory, 1 MIS with 3 supporting databases

As above

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Program Timeframe TaskInternal Processing of Appraisal RptNegotiationsLoan & Grant Approval by the BankLoan & Grant Ratified by ParlimentSigning of Grant Protocol AgreementApproval of Shortlist of CDC ConsultantsCapacity Development ConsultantsDistricts & Communities Prepare RWSS PlansCivil Works Design & Tender Preparation, 4 DistrictsCivil Works Construction, 4 DistrictsTraining, StudiesMentoring period for GFS, WPCMid Term ReviewLaunching MissionParticipate in Joint Sector & TechnicalReviews, SuperviseCompletion of the RWSS sub-comp. Data Collection SystemMIS SystemCompletion of the Watres sub-comp. Endline SurveyRWSS + Water Resources Sub-components Completion Report

JanJan Apr Jul OctJan Apr Jul OctJan Apr Jul OctApr Jul Oct Jan Apr Jul OctQ2 2012 Q3 2012 Q4 2012 Q1 2013Q2 2011 Q3 2011 Q4 2011 Q1 2012Q2 2010 Q3 2010 Q4 2010 Q1 2011Q2 2009 Q3 2009 Q4 2009 Q1 2010Q2 2008 Q3 2008 Q4 2008 Q1 2009

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REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN/GRANT TO MALAWI FOR THE

NATIONAL WATER DEVELOPMENT PROGRAM Management submits the following Report and Recommendation on a proposed loan for UA 15.2 million and a proposed grant of UA 10.7 million to contribute towards the financing requirement of the National Water Development Program (NWDP) in Malawi.

I – STRATEGIC THRUST & RATIONALE

1.1. Program linkages with country strategy and objectives The 2005 – 09 Country Strategy Paper (CSP) three core principles are: (i) support the implementation of the 2006-2011 Malawi Growth and Development Strategy (MGDS) to achieve its goals and help eventually lead to the attainment of Malawi’s Vision 2020 goals and MDGs; (ii) provide a clear focus on results and outcomes, to improve the rate of return on the Bank Group’s interventions; and (iii) improve the coordination of Bank Group activities with government and other donors. The CSP targets increased selectivity, larger interventions and revolves around interventions in two pillars: Pillar I – Expanding Rural Infrastructure; Pillar II – Developing Human Capital and Institutional Capacity The Bank’s mid-term review of the CSP (Feb/08) highlights provision of safe water and sanitation through the National Water Development Programme (NWDP) for rural Malawi, as well as the enhancement of governance and capacity building in District and lower levels of Government for planning and implementation, which are all features of the RWSS component. The MGDS decentralization target to fully devolve all sectors, plus its targets of 80% and 95%, respectively, for access to clean water and improved sanitation, implies a major shift in focus to the districts. The NWDP is in line with the MGDS (ie. PRSP), the African Water Vision and Framework for Action and the current Country Strategy paper, Malawi Government’s Water Policy and draft National Sanitation Policy, the Bank’s Integrated Water Resources Management Policy and the Rural Water Supply and Sanitation Initiative.

1.2. Rationale for Bank’s involvement The Bank has been continually involved in urban and rural and sanitation interventions since the 1970’s, with the nearly completed Integrated Rural Water Supply and Sanitation Project in Mzimba and Ntchisi having so far exceeded appraisal targets by over 15%. The Bank was consulted during the PPF stage (2005-06) of the NWDP and agreed to participate in rural water and sanitation and the water resources components, as they are in line with RWSSI and the Bank’s Integrated Water Resources Management strategies. Strengthening District based institutions will enhance the sustainability of RWSS services by transferring and developing capacity for decision making closer to the rural population. Complimenting this will be the requirement for increased community contributions and more responsibility at the district and lower levels for monitoring and evaluation (M+E). The MGDS anticipates improved governance and allocated 5.4% of GOM resources over the 5-year MGDS time period to it. Governance has since received increased attention from the Bank, DFID, GTZ, Wateraid, and others. New sector approaches in the past 4 years have proven that increased rural water system sustainability can be achieved by focusing on a combination of technical and governance strategies. The Bank’s comparative advantage is that because it has provided some of principal strategies it is best placed to build on them.

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1.3. Donors coordination Strong donor coordination through monthly Water and Environmental Sanitation (WES) meetings led by the Principal Secretary, MIWD, have resulted in improvements in harmonization, coordination of sector activities and information sharing. CIDA has recently funded a consultant to assist the institutionalization of an annual Joint Sector Review to enhance sector dialogue and harmonize approaches. Donors are also using common implementation manuals developed for the NWDP and the use of country systems for national procurement. A draft set of Partnership Principals (PP) to strengthen the WES framework was recently prepared, and once signed, future programs and projects will be screened for compliance with the PP’s. The donor harmonization efforts through the NWDP will help reduce transaction costs for GOM and reduce duplication of efforts on the part of donors. The involvement of MWFO in water sector activities will enhance the Bank’s effectiveness and lead to greater expectations of it by DPs.

II – PROGRAM DESCRIPTION

2.1. Sub-Program Components The Bank’s sub-program as described below is further elaborated in Annex C4. Table 2.1: Sub-program component costs (see also Annex C4)

Sub-component name and ID

Cost (UA ‘000)

Sub-component description

Water Supply Systems C-2 (c + d)

23,200 Undertake water resources assessments Plan & implement catchment protection Rehabilitate & extend existing & construct new rural water schemes (GFS,

boreholes, springs) Post-construction mentoring of water schemes

Sanitation & Hygiene (S+H) C-2 (c + d)

3,000 S+H Training for School teachers, HSA, WaSHCO & community leaders, village heads

Construct VIP & Ecosan latrines & hand washing facilities at schools, market places & health centres

Household S+H achieved through demand driven approaches Prepare National 10 Year Institutional Sanitation & Hygiene Investment Plan

& Strategy Capacity Building C-4

5,300 Construct, furnish & equip district water offices Procure District based Capacity Development Consultants to build capacity of

District Coordination Team (DCT) Train women in functional literacy for committees, and as

accountants/bookkeepers Program Mgmnt. C-4

1,100 Contracts for sub-program coordinator, accountant & support staff Audit & Value for Money Study Baseline and Endline Studies

Water Resources C-3

2,700 Establish surface water, groundwater & water quality data collection stations in catchments

Establish MIS to archive & retrieve information

2.2. Technical solution retained and other alternative explored The NWDP was selected as the modality of intervention because it reinforces the Bank’s commitment to the Paris Declaration on Aid Effectiveness. The water and sanitation needs described in the MIWD’s Rural Water Supply and Sanitation Investment Plan highlights all the districts requiring support, and the Bank will contribute to new and rehabilitated water infrastructure and sanitation in four of the worst affected districts. Innovations taken by the Bank include: i) priority to training women as book-keepers for the water point committees, ii) post-construction mentoring to support the operators of the water systems in technical, financial, management and governance aspects, iii) linking program outputs to decentralization of the sector.

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Table 2.2: program alternative considered and reason for rejection

Alternative name Brief description Reasons for rejection Integrated Rural Water Supply & Sanitation Project 2

Repeater project with the same & more features as the IRWSSP

Does not promote donor coordination, alignment or support sector strategies, nor reduce the number of PIUs or transaction costs

2.3. Program type The NWDP is a national program for the entire water sector. The Bank’s financing supports the following NWDP components: RWSS; Water Resources; and Program Management and Capacity Building. This intervention modality was chosen because the components align to RWSSI and the Bank’s Integrated Water Resources Management Policy, both of which contribute to implementing the National Water Policy, the draft National Sanitation Policy and the National Decentralisation Policy.

2.4. Program cost and financing arrangements Of the total NWDP financing of UA 147 million, the Bank is the leading financial partner contributing 19.7% of the costs. The Bank is proposing: i) ADF loan of UA 15.2 million, ii) ADF grant of UA 10.7 million, and, iii) RWSSI Trust Fund grant of UA 3.3 million. This proposal is in line with the CSP mid term review proposal for increased volume of project financing. The Bank’s appraisal mission discussed and agreed with the relevant Ministries on the above financing and the proposed conditions stated in section V of this document. Table 2.3: Sub-program cost estimates by sub-component

(UA '000)Local Foreign Total % FE

Water Resources Management 1,149.7 1,206.3 2,356.1 51Rural Water Supply Infrastructure 7,612.2 11,528.4 19,140.6 60Sanitation & Hygiene 2,245.1 54.3 2,299.4 2Capacity Building 2,257.7 2,035.8 4,293.5 47Program Management 585.3 357.7 943.0 38Total BASELINE COSTS 13,850.0 15,182.6 29,032.6 52Physical Contingencies 1,328.6 1,484.2 2,812.8 53Price Contingencies 2,665.2 740.3 3,405.5 22Total SUB-PROGRAM COSTS 17,843.8 17,407.1 35,250.9 49 Note: Exchange rates are provided in the introduction of this report (page (i)). Table 2.4 below shows for the sub-program the foreign and local currency financing for each of the sources of finance, and the percent contribution per partner. Table 2.4: Sources of financing for sub-program

Foreign Local Total %

Communities - 2,301.8 2,301.8 6.5Gov. of Malawi 88.5 3,627.2 3,715.6 10.5ADF-Loan 7,410.0 7,804.2 15,214.2 43.2ADF-Grant 8,075.1 2,652.9 10,728.0 30.4RWSSI Trust Fund 1,833.5 1,457.7 3,291.3 9.3Total 17,407.1 17,843.8 35,250.9 100

(UA '000)

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Table 2.5: Sub-program cost by category of expenditure (UA '000)

Local Foreign Total % FEA. CIVIL WORKS 9,965.7 11,544.1 21,509.9 54B. GOODS 796.6 922.8 1,719.4 54C. SERVICES 2,310.4 2,595.8 4,906.2 53Total Investment Costs 13,072.7 15,062.7 28,135.5 54Total Recurrent Costs 777.3 119.9 897.1 13Total BASELINE COSTS 13,850.0 15,182.6 29,032.6 52Physical & Price Contingencies 3,993.8 2,224.5 6,218.3 36Total SUB-PROGRAM COSTS 17,843.8 17,407.1 35,250.9 49 Table 2.6: Sub-program expenditure schedule by sub- component

Base Cost (UA '000)2009 2010 2011 2012 Total

Water Resources Management 1,525.7 335.7 335.7 159.0 2,356.1Rural Water Supply Infrastructure 44.4 7,746.4 6,100.9 5,248.9 19,140.6Sanitation & Hygiene 385.6 508.4 796.2 609.2 2,299.4Capacity Building 1,239.3 788.6 1,317.3 948.2 4,293.5Program Management 389.1 169.6 169.6 214.7 943.0Total BASELINE COSTS 3,584.1 9,548.8 8,719.8 7,179.9 29,032.6Physical & Price Contingencies 379.5 1,667.4 2,070.9 2,100.4 6,218.3Total SUB_PROGRAM COSTS 3,963.6 11,216.2 10,790.7 9,280.3 35,250.9

2.5. Program’s target area and population The NWDP criteria (application for assistance, need and readiness, poverty level, socio-economic indicators, water supply coverage and geographical proximity) were used to select four districts for the Bank’s intervention: Lilongwe Rural, Zomba, Mulanje and Machinga. The Bank funds target 1.21 million people, who are the unserved rural inhabitants of these four districts. Expected outcomes include improved equity and proximity in distribution of water points, enhanced economic status of women scheme officers, and reduction in the death of U5’s from water borne diseases.

2.6. Participatory processes for design and implementation The NWDP was developed in 2006 and 2007 by GOM through a Program Preparation Facility (PPF) provided by the World Bank. The PPF developed each of the 4 components, established investment plans for them and also included the rewriting of existing and establishment of new program manuals. The Bank’s preparation and appraisal missions held field meetings with both regional MIWD offices and with district and TA authorities in two of the four target districts. Both missions also comprised face-to-face discussions with selected stakeholder communities, MOF, MEPD, MOH, MLGRD, MWCD, MOE, Environmental Affairs, and the World Bank, EU, DFID, UNICEF, CIDA, Wateraid, JICA, GTZ, WHO, and through email with Interaide (NGO) and Mulanje Mountain Conservation Trust. During implementation, the districts and communities will have increased scope of decision making during planning, design (Step 1) and implementation (Step 2) in deciding, within technical and financial constraints, which facilities to construct, where to locate them, how they will be maintained and what must be done in the event of failures.

2.7. Experience and lessons reflected in program design The Bank’s completed rural development project in Malawi (Women in Development Project, July/06) identified that: i) functional literacy programs are essential for the empowerment of rural adult women, and, ii) acquisition of essential business management skills, such as cash management, are key success factors for women. These lessons have been incorporated into the program design by focusing resources on training women through an ongoing literacy program of

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MWCD to develop book-keeping skills in rural women so they are suited as scheme treasurers. The Bank’s IRWSSP found that many failed to raise sufficient cash for repairs and the absence of spares, making the job of a part-time area mechanic (AM) unattractive; some AM’s had even vandalized works because they did not receive the expected benefits of their training. Schemes gradually stopped working and spare parts become scarce in the market. For this reason, the program is providing criteria for selection of AM’s and training for spare parts retailers, and requiring communities to sign written agreements with AMs based on a choice of curative or preventative measures. Previously, communities were required to contribute labour during construction during Youth Week and other self-help activities. GOM is considering re-instating similar strategies, but now recognizing as a result of progress made in democracy that communities require increased responsibility in decision making. The Step 1 and 2 activities have taken these considerations into account and consequently communities will be prepared to contribute more than the required 5% to the RWSS component, as either cash, construction materials or manual labour. Lessons taken from a completed World Bank water project (Malawi NWDP-1, June/04) were that: i) district-based, community-driven model for RWSS and catchment management are powerful and effective in scaling up and ensuring scheme sustainability, and, ii) the establishment of efficient, commercially-oriented water operators requires proper incentive structures and independent review and monitoring. These lessons have been incorporated into the design by empowering communities to plan, develop, maintain and enforce catchment protection; to enable incentive based remuneration for water scheme operators; and requiring independent review and monitoring of schemes post-construction.

2.8. Key performance indicators Key performance indicators will measure oucomes, such as water access, scheme functionality, sanitation facility access, hygiene access and use (Annex C1), as well as outputs, such as number of catchments protected, water schemes constructed and rehabilitated and institutional sanitation facilities constructed (Annex C2, C3). The NWDP Coordination Unit will report on outputs quarterly, with milestones linked to procurement and disbursement. Outcome indicators will be gradually introduced into the Sector Performance Report prepared by a consultant for the annual Joint Sector Review, the forum where lessons are shared with all sector stakeholders.

III – PROGRAM FEASIBILITY

3.1. Economic performance Key assumptions for this analysis include: i) projection based on constant 2008 Malawi Kwacha and USD prices over a 20 year program life-span, ii) Operation and Maintenance (O+M) costs are 2.5% of the investment costs, and, iii) the communities meet all of the costs for household latrine construction. Based on these and other assumptions (Annex B6), the program posts an Economic Net Present Value of Malawi Kwacha 6.09 billion using a discount rate of 10% which is a proxy for the opportunity cost of capital in Malawi. The Economic Internal Rate of Return of 24% is significantly higher than the opportunity cost of capital. The program is therefore economically viable. See Annex B6 for detailed calculations.

3.2. Environmental and Social impacts Environment The Bank financed activities in RWSS and water resources management have been classified as Category 2, in accordance with the Bank’s environmental and social assessment procedures. This is justified in that the works comprise rehabilitation and extension to existing surface and groundwater systems, and construction of new point water systems (boreholes, springs) distributed

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throughout the four districts. The water resources activities will not require the diversion of any flows and the monitoring equipment to be installed is benign to the receiving environment. There will be positive impact on the stakeholder population to outweighing minor detrimental and site specific negative environmental impacts that will be minimized by the application of mitigation measures included in the Environmental and Social Management Plan. This categorization is also in coherence with the Malawi Government's Environment Management Act, Number 23 of 1996; and the Government's Environmental Impact Assessment Guidelines of December, 1997. The District Environmental Officer will supervise and monitor the environmental aspects of the program as per the Environmental and Social Management Plan. The biggest adverse impacts will be the rehabilitation of GFS intakes where increased silt could be released to the stream, which will be mitigated by construction of temporary silt fences and silt traps, costing less than 0.01% of construction costs. The potential for contamination of wells by pit latrines will be mitigated by ensuring adequate separation of these facilities. The main positive impacts will be: i) enhanced protection of surface water catchments from erosion, ii) improved health from the hygiene and health education provided, and, iii) the knowledge and information provided to the sector to be able to know the quantitative and qualitative status of the country’s water resources. The detrimental impacts include influx of people to program areas, incidences of communicable diseases and health hazards to workers, spread of sexually transmitted diseases including HIV and AIDS (train program staff on AIDS), loss of agricultural land and/or crops resulting from establishing stream buffers, minor increases in soil erosion, soil and water contamination from construction activities, wastewater generation and noise during construction and drilling. These impacts remain negligible in magnitude. Climate Change The interaction of climate change with human drivers such as deforestation and forest fires threaten Malawi’s forest ecosystems. This negatively affects tourism and endangers mammal species, such as in the national conservation area known as Mulanje Mountain which is the source of several gravity flow schemes. The program is designed to reduce these negative effects by the formation of Catchment Protection Committees, who will be mobilized through citizens’ forums and rallies, and trained to identify catchment degradation hotspots, to prepare plans and implement corrective measures. An adaptation to climate change has been incorporated into the water resources component which targets controlling the outflow from Lake Malawi and reducing the risk of the Shire River going dry (it almost did in 1996), thus contributing to a more reliable power supply for Malawi and her neighbours. Gender The availability of nearby adequate quantities of potable water will save women and childrens’ time wasted in fetching water over long distances and collecting wood to boil the water. This in turn will result in better use of such time in other productive commercial services, which may lead to increased household income, and eventually to improved health and higher living standards, and also provide more opportunities for girls to go to school. In particular, the rehabilitated piped water systems will be expected to have a dramatic change in women’s and children’s use of time. Water system sustainability will be enhanced through the training of over 8,000 people in basic accounting, three-quarters of whom will be women. Household sanitation will get higher priority, as men, who traditionally hold control over house related construction activities, will be centrally involved in the training. Access to improved sanitation in schools is expected to result also in lower drop-out rates for girls, especially in higher grades. Women already play an important role in the management of traditional water sources and are usually responsible to ensure that children and animals do not contaminate the source. A possible negative impact is the taking over by men of the newly improved water source, which could reduce control of water by women and force them into

7

a new dependency relationship. The mitigation measure for this possibility is to train more women to be in positions of authority on the water committees. Social Positive impacts of the program include: improved safe drinking water supply and access, reduced incidence of water borne diseases, improved sanitation and hygiene facilities and practices in all target districts, full time (FT) and part time (PT) employment for district residents during construction (over 1,400 FT and 800 PT positions) and after construction (46 FT and 46 PT paid positions with GFS Operators, 4,000 PT point water source money collectors, 57 area mechanics, 327 PT gauging station inspectors, etc.). Apart from the direct hygiene benefits of the more than doubling of water consumed, one of the most significant benefits is the value of time saved from the water collection activity as a result of close proximity of water points. Other benefits will include direct expenditure avoided in health services per person due to less water borne diseases, better educated adult population, reduced school dropout rates and reduced absenteeism. Finally the sub-program will contribute to reduced infant mortality rates within the target area. The proposed program invests heavily on capacity building activities for catchment management, environmental health and education, community mobilization and district and scheme management training. Involuntary resettlement Establishment of catchment buffers will undoubtedly entail the relocation of agricultural or charcoal production activities where they encroach the source intake. For these cases a procedure and compensation package, where applicable, has been established by GOM. The types of activities requiring relocation are reportedly few. Relocation of dwellings are reportedly mainly temporary dwellings used only during the planting season. The total resettlement costs have been estimated at UA 70,000, and will be borne by GOM.

IV– IMPLEMENTATION

4.1. Implementation Arrangements The MIWD is the Executing Agency of the NWDP, providing technical assistance to the Districts through the NWDP Coordination Unit, zonal offices and a Capacity Development Consultant (CDC) per district during planning and implementation. The Bank will contribute to the staffing of the CU by providing a RWSS component manager, accountant and procurement expert, all of whom will report to the National Program Coordinator. The activities of the Ministry of Women and Child Development (MWCD) coordinator (Sanitation and Hygiene training and financial management training) will be funded by the Bank and report through the CU. A Program Steering Board, comprising principal secretaries of 8 Ministries, representatives of civil society, the private sector and NGOs, will approve, monitor and evaluate annual national work plans and budgets. The District Assembly, through it’s District Executive Committee, will do the same for district plans. District implementation for reviewing and assembling district water plans will be through the District Coordination Team. (Annex B3), with technical support from the CDC. Procurement Procurement using International Competitive Bidding (ICB) procedures will be carried out in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works and the Rules of Procedure for the Use of Consultants, including revisions to these Rules, using Bank Group Standard Bidding Documents. For procurements other than International Competitive Bidding procedures, the procurement rules and documents adopted for the National Water Development Program shall be used, which have been reviewed and found acceptable to the Bank. The Ministry of Irrigation and Water Development will be responsible for the procurement of

8

goods, works, service contracts, consulting services, training and miscellaneous items (Annex B5). The MIWD resources, capacity, expertise and experience are also described in Annex B5. Particular Arrangements In view of the many small contracts that will be processed and the need to maintain sustained implementation, contracts for goods and works, which are carried out through ICB, and NCB valued more than UA 100,000 will require the Bank’s prior review at all stages of the process. The non-ICB procurement activities and NCB procedures of values less than UA 100,000 will be reviewed posteriori and will not require Bank’s prior approval. Table 4.1: Procurement Arrangements (UA ‘000)

ICB NCB Short List Other N.B.F. TotalA. Civil Works 18,087.8 8,294.7 - - - 26,382.6

(13,339.4) (4,705.3) - - - (18,044.7)B. Goods

Vehicles & Motorcycles 294.5 - - - - 294.5 (273.1) - - - - (273.1)

Equipment 1,448.3 - - 118.6 - 1,566.9 (1,194.9) - - (103.3) - (1,298.2)

C. ServicesTraining - - 615.2 - - 615.2

- - (469.2) - - (469.2)Technical Assistance 997.7 176.1 4,009.9 - - 5,183.7

(997.7) (176.1) (3,864.6) - - (5,038.4)Audit - - 86.2 - - 86.2

- - (86.2) - - (86.2)D. Personnel - - - - 438.1 438.1

- - - - (243.1) (243.1)E. Operating Costs - - - 683.8 - 683.8

- - - (489.4) - (489.4)Total 20,828.3 8,470.8 4,711.3 802.4 438.1 35,250.9

(15,805.0) (4,881.4) (4,420.0) (592.7) (243.1) (25,942.2)_________________________________Note: Figures in parenthesis are the respective amounts financed by ADF Loan and Grant Financial Management An assessment of the MIWD financial management arrangement for the implementation of the program concluded that the Ministry has experience in satisfactorily managing other Bank financed projects; it will also be supported with additional dedicated program staff to enable it to implement the procurement and financial management arrangements for the program. As such, the MIWD meets the Bank’s minimum requirement as an executing agency. The detailed financial management assessment is attached in Annex B4. The National Audit Office will recruit and oversee an external private auditor. Audited program financial statements would be sent to the Bank within six months of the end of the respective fiscal year. The audit will be carried out in accordance with Bank approved Terms of Reference and include specific opinions on the program’s financial statements, including Statements of Expenditures on use of the Special Account, internal control systems, and procurement arrangements. The procurement of the external auditor will be finalized six months before the first financial year end and the audit report is expected before 31.12.09, covering the period from the Bank’s first disbursement until 30.6.09.

9

4.2. Monitoring The NWDP components supported by the Bank extend for 4 years from January 2009. The first year comprises capacity building activities and procurement of goods. Periodic monitoring will be supported by the Ministry of Education (MoE) through an OSHD funded monitor within the MoE. To monitor and support community management of the water schemes, post-construction mentoring will occur for one year. MWFO will supervise continuously during field visits, while OWAS supervision missions, including socio-environmental, procurement and disbursement officers, will coincide with the annual Joint Sector and Joint Technical Reviews. Indicators will be monitored at both the sector and program level by the DCT (Annexes C1, C2). Baseline and endline surveys will be undertaken in all 4 districts in order to measure achievements against the indicators. Outcomes will be measured on a sector wide basis and gradually introduced on an annual basis, with the related data gathering and analysis activities reviewed in the November 2008 Joint Sector Review. All monitoring at the district and lower levels will be assembled at the CU for dissemination through the annual Sector Performance Report.

4.3. Governance Risks are that lack of human resources at the district level will result in lack of transparency and following of procurement procedures. These will be mitigated through providing support from CDC’s who will have a team of staff with expertise in engineering, procurement, and accounting. The MIWD engaged a consultant in March 2008 to, among others, identify training needs in anti-corruption, enforcement and accountability. Also a value for money study will be financed by the Bank to spot any irregularities in contract implementation. In complimentary interventions, DFID provided $22 million to train rural populations to work with civil society, the Malawi Parliament and the Malawi Electoral Commission, all of which is intended to bring about a more accountable, transparent and responsible governance system (see Annex B4 for discussion of public financial management).

4.4. Sustainability Evidence that GOM is committed to the NWDP is found in the MGDS (ie. PRSP), which has targets for improved access to clean water and improved sanitation, with Rural Water Supply and Sanitation (RWSS) supported within the Integrated Rural Development Priority Area, the Irrigation and Water Development Priority Area, and the Health and Population sub-Theme. Based on the success of a recently completed World Bank project, GOM designed a repeat intervention which has attracted more donor support and increased scope. The NWDP is supported by the National Water Policy, which calls for integrated water resources management, improvement of the institutional framework, effective involvement of the private sector and protection of the environment; the National Decentralisation Policy which enables the provision and maintenance of water supply and sanitation services from the district level; the requirement for capital and O+M payments by communities, as is the practice and as seen in the ongoing IRWSSP; the National Sanitation Policy, which promotes government and individual responsibility for sanitation and hygiene in public and private places, respectively; and the proposed policy on water tariffs for rural communities. Technical sustainability will be assured by: i) requiring communities to take financial responsibility for management and O+M of the works, ii) certifying interested retailers through training to ensure the availability of spare parts, iii) the signing of contracts between AMs and communities and ensuring the supervision of their work, iv) providing up to two levels of training for AMs, and, v) ensuring latrines in market centres operate on a pay-per-use basis. Additionally, for completed works, a LSP will provide one year follow-on (mentoring) for capacity building of operations,

10

maintenance and management tasks, employing a ‘learning by doing’ approach and workshops, endowing them with an aura of importance that increases their interest and improves job performance. User fees for the vulnerable, such as disabled or HIV/AIDS victims, single-parent households, etc. will be paid by local informal solidarity funds, which exist in Malawi due to a strong community values system, especially in rural areas. Recurrent costs financed by GOM are UA 0.36 million (42.6%) and the Bank will finance 0.49 million (57.4%).

4.5. Risk management The risk of not adequately addressing system sustainability during implementation requires a multi-pronged approach, based on both cure and prevention. As part of the focus on financial responsibility rather than just community ownership, higher expectations for cash (5%) and in-kind (3.5%) contributions are required, complimented with a higher threshold of community decision making responsibility; the elevation of women to selected higher positions after they have been adequately trained (book-keeping); the establishment of formalized agreements between communities, their service providers and district government, such as incentive based service contracts and signing of MOU’s; and bylaw development targeting enforcement of water tariffs, construction of household sanitation facilities and catchment protection. The risk of low impact on sanitation and hygiene behaviour change will be further mitigated by targeting Village Chiefs and prominent male and female community leaders to deliver S+H messages, thus ensuring a higher likelihood of prioritization on S+H at the household.

4.6. Knowledge building The proposed activities will contribute significantly to designing and implementing rural water supply and sanitation programs and expand the Bank’s role in water sector interventions. Lessons and experience from the program will be shared with Bank colleagues periodically.

V – LEGAL INSTRUMENTS AND AUTHORITY

5.1. Legal instrument An ADF grant, an ADF loan and a RWSSI Trust Fund grant would be used to finance this program.

5.2. Conditions associated with Bank’s intervention A. Conditions Precedent to Entry into Force of the Loan Agreement (i) The Loan Agreement shall enter into force subject to the fulfilment by the Borrower of the

provisions of section 5.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreement of the African Development Fund.

B. Conditions Precedent to First Disbursement for the Loan: (i) Provide evidence of opening special accounts in a bank acceptable to the Fund; (ii) Provide the Fund with the names and CVs of a component coordinator (rural water supply

and sanitation engineer), accountant and procurement specialist to support the MIWD in management and reporting of Bank financed activities;

C. Provide Undertakings to: (i) Prepare a policy by 31.12.2010 for setting of water tariffs for rural piped water supply

schemes, ensuring that they cover operations costs and minor maintenance costs.

11

D. Condition Precedent to Entry into Force of the Grant Protocol of Agreement for the ADF Grant and the RWSSI Trust Fund Grant (i) The Grant Protocol of Agreement for the ADF Grant and the RWSSI Trust Fund Grant shall

enter into force upon signature. E. Condition Precedent to First Disbursement of the ADF Grant and the RWSSI Trust Fund Grant The Funds’ obligation to make the first disbursement of the Grant to the Recipient shall be conditional upon the entry into force of this Protocol Agreement and fulfilment by the Recipient of the following condition: (i) The Recipient shall have to the satisfaction of the Funds provided evidence of having

opened one each of foreign currency Special Accounts in a commercial bank acceptable to the Funds into which the proceeds of the ADF grant and the RWSSI Trust Fund grant, respectively, shall be deposited.

5.3. Compliance with Bank Policies (X) This program complies with all applicable Bank policies.

VI – RECOMMENDATION

Management recommends that the Board of Directors approve the proposed ADF loan and grant of UA 10.7 million and UA 15.2 million, respectively, and a RWSSI Trust Fund grant of Euros 3.43 million (UA 3.3 million) to the Government of Malawi for the purposes and subject to the conditions stipulated in this report.

12

Appendix I. Malawi’s Comparative Socio-economic Indicators

Year Malawi AfricaDevelo-

pingCountries

Develo-ped

CountriesBasic Indicators Area ( '000 Km²) 118 30 307 80 976 54 658Total Population (millions) 2007 13.9 963.7 5 448.2 1 223.0Urban Population (% of Total) 2007 18.4 39.8 43.5 74.2Population Density (per Km²) 2007 117.5 31.8 65.7 23.0GNI per Capita (US $) 2006 170 1 071 2 000 36 487Labor Force Participation - Total (%) 2005 46.3 42.3 45.6 54.6Labor Force Participation - Female (%) 2005 48.5 41.1 39.7 44.9Gender -Related Development Index Value 2005 0.432 0.486 0.694 0.911Human Develop. Index (Rank among 174 countries) 2005 164 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 2006 45.0 34.3 … …

Demographic IndicatorsPopulation Growth Rate - Total (%) 2007 2.6 2.3 1.4 0.3Population Growth Rate - Urban (%) 2007 4.7 3.5 2.6 0.5Population < 15 years (%) 2007 46.9 41.0 30.2 16.7Population >= 65 years (%) 2007 3.1 3.5 5.6 16.4Dependency Ratio (%) 2007 99.0 80.1 56.0 47.7Sex Ratio (per 100 female) 2007 98.9 99.3 103.2 94.3Female Population 15-49 years (% of total population) 2007 22.2 24.2 24.5 31.4Life Expectancy at Birth - Total (years) 2007 48.3 54.2 65.4 76.5Life Expectancy at Birth - Female (years) 2007 48.4 55.3 67.2 80.2Crude Birth Rate (per 1,000) 2007 40.7 36.1 22.4 11.1Crude Death Rate (per 1,000) 2007 14.8 13.2 8.3 10.4Infant Mortality Rate (per 1,000) 2007 89.4 85.3 57.3 7.4Child Mortality Rate (per 1,000) 2007 131.8 130.2 80.8 8.9Total Fertility Rate (per woman) 2007 5.6 4.7 2.8 1.6Maternal Mortality Rate (per 100,000) 2004 984.0 723.6 450 8Women Using Contraception (%) 2006 41.7 29.8 61.0 75.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 2004 2.1 39.6 78.0 287.0Nurses (per 100,000 people) 2004 56.3 120.4 98.0 782.0Births attended by Trained Health Personnel (%) 2006 53.6 50.4 59.0 99.0Access to Safe Water (% of Population) 2006 74.2 62.3 80.0 100.0Access to Health Services (% of Population)* 2004 35.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2006 88.2 45.8 50.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2005 14.1 4.7 1.3 0.3Incidence of Tuberculosis (per 100,000) 2005 409.4 300.7 275.0 18.0Child Immunization Against Tuberculosis (%) 2006 99.0 83.7 85.0 93.0Child Immunization Against Measles (%) 2006 85.0 75.4 78.0 93.2Underweight Children (% of children under 5 years) 2006 19.4 28.6 27.0 0.1Daily Calorie Supply per Capita 2004 2 077 2 436 2 675 3 285Public Expenditure on Health (as % of GDP) 2004 9.6 2.4 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2005 120.0 96.4 91.0 102.3 Primary School - Female 2005 121.6 92.1 105.0 102.0 Secondary School - Total 2004 28.0 44.5 88.0 99.5 Secondary School - Female 2004 25.0 41.8 45.8 100.8Primary School Female Teaching Staff (% of Total) 2004 45.7 47.5 51.0 82.0Adult Illiteracy Rate - Total (%) 2007 34.1 33.3 26.6 1.2Adult Illiteracy Rate - Male (%) 2007 21.9 25.6 19.0 0.8Adult Illiteracy Rate - Female (%) 2007 46.1 40.8 34.2 1.6Percentage of GDP Spent on Education 2004 5.8 4.7 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2005-07 19.9 6.0 9.9 11.6Annual Rate of Deforestation (%) 2000-07 2.4 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2000-07 8.0 10.9 … …Per Capita CO2 Emissions (metric tons) 2005-07 0.1 1.0 1.9 12.3

Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports

Note : n.a. : Not Applicable ; … : Data Not Available;

April 2008

Infant Mortality Rate ( Per 1000 )

75

80

85

90

95

100

105

2002

2003

2004

2005

2006

2007

Malawi Africa

GNI per capita US $

0

200

400

600

800

1000

1200

2001

2002

2003

2004

2005

2006

Malawi Africa

Population Growth Rate (%)

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2002

2003

2004

2005

2006

2007

Malawi Africa

Life Expectancy at Birth (years)

111213141516171

2002

2003

2004

2005

2006

2007

Malawi Africa

13

Appendix II. Table of ADB’s Portfolio in Malawi

Project Date Approved Loan/Grant Amount (Million)

Amount Disbursed (Million)

% Disbursed

Agriculture Macademia Smallholder Development Project

15 July 1998 Loan 6.850 Grant 0.000 Total 6.850

3.871 57

Smallholder Irrigation Project 26 November 1998

Loan 5.020 Grant 0.000 Total 5.020

2.909 58

Horticulture & Foods Crop Development Project

15 December 1998 Loan 6.650 Grant 0.840 Total 7.490

4.586 61

Smallholder Outgrowers Sugarcane Production Project

15 December 1999 Loan 8.930 Grant 0.000 Total 8.930

5.315 60

Lake Malawi Artisanal Fisheries Development Project

29 January 2003 Loan 6.930 Grant 0.840 Total 7.770

3.450 44

Smallholder Crop Production & Marketing Project

7 July 2006 Loan 0.0

Grant 15.0 Total 15.0

0.147 1

Budget Support

Poverty Reduction Support Loan 11 April 2007

Loan 14.890 Grant 0.000

Total 14.890 0 0

Education and Health

Support to Secondary Education Phase IV 21 November 2001

Loan 15.0 Grant 0.0

Total 15.0 11.597 77

Skills & Income Generation Project

6 January 2002 Loan 9.590 Grant 0.000 Total 9.590

5.969 62

Support to Secondary Education Phase V 7 June 2006


0.250 2

Support to Health Sector Program SWAp

24 November 2005 Loan 0.0

Grant 15.0 Total 15.0

0.743 5

Water Supply & Sanitation

Integrated Rural Water Supply & Sanitation 5 December 2001


6.438 67

14

Appendix III. Similar projects financed by the Bank and other Development Partners

Last Supervision Ratings Sector Issues Project Implementation

Progress Development

Objectives Rural water supply and sanitation

Integrated Rural Water Supply and Sanitation Project (ADB)

S S

District-based RWSS, including rural piped systems

COMWASH (CIDA Canada)

S S

RWSS, focus on groundwater development

Mangochi East Groundwater Project (GTZ)

S S

Rural water supply, sanitation and hygiene promotion.

Rural Water Supply and Sanitation (UNICEF)

S S

Water supply and sanitation

National Water Development Project (World Bank)

S S

S = Satisfactory

15

Appendix IV. Map of Malawi Showing Project Areas

ADF Financed Districts This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

TECHNICAL ANNEXES

TABLE OF CONTENTS

A. Malawi Development Agenda and Donor’s Support.....................................................1 B1. Lessons learned ...............................................................................................................3 B2. Sub-Program costs (details) ............................................................................................4 B3. Implementation arrangements .........................................................................................9 B4. Financial management, disbursement and audit arrangements.....................................15 B5. Procurement Arrangements...........................................................................................18 B6. Audit Arrangements ......................................................................................................21 B7. Economic and financial analysis ...................................................................................22 B8. Environmental and Social Management Plan and Analysis..........................................25 B9. Project preparation and supervision ..............................................................................43 C1. Sector Wide Outcome Indicators ..................................................................................44 C2. Gravity Flow Schemes ..................................................................................................45 C3. Water Point System Indicators......................................................................................49 C4. NWDP Components Financed by ADB........................................................................51

1

1

A. Malawi Development Agenda and Donor’s Support

Challenges & Constraints

Poverty Reduction and Attainment of MDGs

Achievement of Sustainable Economic Growth and

Wealth CreationDecrease Aid Dependency

Priority In

terven

tion

s

Malawi’s Development Agenda

Donors’ Support

By SectorBy Aid

Modality

Improving macro‐economic conditions; Inefficient high costs of doing business; Poor Infrastructure; Weak private sector; Weaknesses in Human Resource Base;HIV/AIDS Prevalence;High levels of corruption

Low and stagnant agricultural yields,

overdependence on rain fed farming and low uptake of improved

farming

Degradation of water resources; inadequate

promotion of hygiene and sanitation

Inadequate and unreliable energy supply

Priority Reforms • Control of Corruption

•Regulatory Quality•Public Sector Reforms•Fiscal Policy•PFM

MGDS Priority Areas

• Agriculture and Food Security• Irrigation and Water Development•Transport Infrastructure Development•Energy Generation and Supply•Integrated Rural Development•Prevention and Management of Nutrition Disorders, HIV and AIDS

DBS +SBS34.2%

Project Support65.8%

Infra‐structure25.6%

Other28.9%

Long Term Medium Term Long Term

Donor Support=45% of National Budget

Human Capital 28.7%

Macro‐Economic & Gover‐nance16.8%

Total support from development partners to Malawi decreased between 2005/06 and 2006/07, from K65.0 billion to K62.6 billion. The decrease is due to the reduction in humanitarian support, which was much higher in 2005/06 than in 2006/07. Excluding humanitarian support, Malawi saw an increase in development support from K53.7 billion to K56.7 billion. However, part of this increase relates to increased data coverage. Development support increased from K53.7 billion to K54.1 billion. As in 2005/06, DfID was the largest donor, by some distance in 2006/07, providing K16.4 billion. Of this K1.4 billion was humanitarian support. As such, non-humanitarian support increased from K13.4 billion in 2005/06 to K15.0 billion in 2006/07. The next largest donors were Norway and the EU, which disbursed K8.6 billion and K8.1 billion respectively, excluding humanitarian support. Increased coverage of the UN System shows that it is one of the largest development partners in Malawi, collectively contributing K7.3 billion. However, the entire contribution of the WFP (amounting to K3.9 billion) was classed as humanitarian support. In absolute terms, the largest reduction in support between 2005/06 and 2006/07 was observed from the World Bank, from K13.0 billion to K6.3 billion, excluding humanitarian support. The largest increase was observed from the Norwegian Government, from K5.5 billion to K8.6 billion, excluding humanitarian support. This figure includes support from Sweden, administered by the Norwegian Government.

2

The high proportion of support administered as discrete projects, often implemented through parallel structures is a deviation from accepted good practice, as enshrined in the Paris Declaration. The high reliance on project support partly reflects the mistrust of Government systems of public financial management. However, as Government works towards improving PFM systems through the implementation of the Public Financial and Economic Management action plan, development partners will according to GOM need to respond by increasing their use of pooled funding and budget support.

B1. Lessons learned

Project Date & Amount

Intervention Areas Rating Lessons Learned

Malawi: Women in

Development Project (PCR)

Feb/06 UA4.97 million (ADB)

Training women in

book-keeping

NA

a) Functional literacy programs are essential for the empowerment of rural adult women, b) Acquisition of essential business management skills, especially in relation to the choosing of viable business ventures and cash management, are key success factors for women- undertaken income generating activities

Community Water

Supply, Sanitation and Health

Project (2007

Oct/07 CA 13.0 million (CIDA)

Post construction mentoring of

water scheme

operators

NA

A mentoring phase to strengthens the O&M capacity of scheme committees, clarifies maintenance activity schedule; technical, financial and management procedures and the upgrading of required skills to apply these procedures

Integrated Rural Water

Supply & Sanitation

Project

Ongoing Capacity building NA

Contractors to receive support on how to prepare a bid that will is competitive and profitable.

Catchment protection

by community

NA

A district-based, community-driven model for RWSS and catchment management is powerful and effective in scaling up and ensuring sustainability

National Water

Development Project - I

(ICR)

Jun/04 US 82.2 million (World Bank)

GFS & WP Management NA

Proper incentive structures are needed to establish efficient, commercially-oriented water systems

3

B2. Sub-Program costs (details)

ADB Sub-Program Rural Water Supply InfrastructureTotals Including Contingencies (US '000)

2009 2010 2011 2012 Total

I. Investment Costs A. CIVIL WORKS

1. Catchment Protection Machinga Catchments - 49.1 68.5 53.8 171.5Mulanje Catchments - 32.8 51.4 35.9 120.0Zomba Catchments - 32.8 51.4 17.9 102.1

Subtotal Catchment Protection - 114.6 171.3 107.6 393.62. Rural Water Supply Infrastructure

Machinga Rehab BH - 178.7 248.3 333.4 760.4Machinga New BH - 341.7 415.4 389.8 1,146.8Machinga Liwonde GFS1 - 466.8 - - 466.8Machinga Lifani GFS1 - 551.2 - - 551.2Machinga Chagwa GFS1 - 856.4 - - 856.4Machinga Kawinga GFS1 - - 2,955.2 - 2,955.2Machinga Milala GFS2 - - 81.5 - 81.5Machinga Naungu GFS2 - - 13.6 - 13.6Machinga Doza GFS2 - - 8.9 - 8.9Machinga Nkala GFS2 - - - 8.5 8.5Machinga Sumulu GFS2 - - - 39.8 39.8Machinga Chanyungu GFS2 - - - 38.3 38.3Mulanje SW GFS1 - 521.0 - - 521.0Mulanje Nalipili GSF1 - 743.0 - - 743.0Mulanje Namitambo GFS1 - 1,515.8 - - 1,515.8Mulanje Chambe GFS1 - 1,614.0 - - 1,614.0Mulanje West GFS1 - - 1,574.9 - 1,574.9Mulanje Lichenya GFS1 - - - 2,065.5 2,065.5Mulanje Pwere GFS2 - 8.3 - - 8.3Zomba West GFS1 - 1,118.0 - - 1,118.0Zomba East GFS1 - 2,873.3 - - 2,873.3Zomba Chingale GFS2 - 41.3 - - 41.3Zomba Chinkwezule - - 11.2 - 11.2Zomba Makwawa S GFS2 - - 63.0 - 63.0Zomba Makwawa N GFS2 - - - 75.0 75.0Mulanje New BH - 341.7 415.4 377.4 1,134.5Mulanje Rehab BH - 148.9 232.8 87.4 469.1Zomba Rehab BH - 178.7 310.4 207.1 696.3Zomba New BH - 683.4 1,068.0 940.5 2,691.9Lilongwe Rehab BH - 595.8 1,086.4 1,097.2 2,779.3Lilongwe New BH - 1,993.2 3,560.2 4,962.2 10,515.6

Subtotal Rural Water Supply Infrastructure - 14,771.3 12,045.1 10,622.1 37,438.5Subtotal CIVIL WORKS - 14,885.9 12,216.4 10,729.8 37,832.1B. SERVICES

1. Post-Construction Mentoring GFS +BH Zomba - - - 41.3 41.32. Post-Construction Mentoring GFS + BH Mulanje - - - 48.2 48.23. Post-Construction Mentoring GFS + BH Machinga - - - 68.9 68.94. Post-Construction Mentoring BH Lilongwe - - - 55.1 55.15. Studies

Water Resources Assessments 82.1 - - - 82.1Total 82.1 14,885.9 12,216.4 10,943.2 38,127.6

4

ADB Sub-Program Sanitation & HygieneTotals Including Contingencies (US '000)

2009 2010 2011 2012 Total

I. Investment CostsA. CIVIL WORKS

1. School, Market & Health Centre Sanitary FacilitiesLilongwe S+H Facilities - 244.3 475.9 400.5 1,120.7Mulanje S+H Facilities - 195.5 222.1 171.6 589.2Machinga S+H Facilities - 205.2 423.0 343.3 971.5Zomba S+H Facilities - 390.9 634.5 537.8 1,563.2

Subtotal School, Market & Health Centre Sanitary Facilities - 1,036.0 1,755.4 1,453.1 4,244.5B. SERVICES

1. Hygiene & Sanitation Training - Schools, HSA, WaSHCO, ChiefsHygiene & Sanitation Training - Lilongwe 274.3 - - - 274.3Hygiene & Sanitation Training - Mulanje 48.7 - - - 48.7Hygiene & Sanitation Training - Machinga 89.2 - - - 89.2Hygiene & Sanitation Training - Zomba 143.4 - - - 143.4

Subtotal Hygiene & Sanitation Training - Schools, HSA, WaSHCO, Chiefs 555.6 - - - 555.62. National 10 Year Institutional Sanitation & Hygiene Investment Plan & Strategy 167.1 - - - 167.1

Total 722.7 1,036.0 1,755.4 1,453.1 4,967.2

5

ADB Sub-Program Capacity BuildingTotals Including Contingencies (US '000)

2009 2010 2011 2012 Total

I. Investment CostsA. GOODS

1. District IT EquipmentDesktop Computer - - - 10.1 10.1Laptop Computer - - - 12.3 12.3UPS - - - 2.0Laser Printer - - - 6.9Photocopier - - - 12.3 12.3FAX Machine - - - 1.0

Subtotal District IT Equipment - - - 44.5 44.52. Water Quality Testing Equipment

Mulanje WQ Equipment 1.2 - - - 1.2Machinga WQ Equipment 2.0 - - - 2.0Zomba WQ Equipment 3.3 - - - 3.3Lilongwe WQ Equipment 2.3 - - - 2.3

Subtotal Water Quality Testing Equipment 8.9 - - - 8.93. District Office Furniture

Guest Chair - - - 4.0Executive Chair - - - 0.8 0.8Bookshelf - - - 4.6Cabinet - - - 11.7 11.7Desk with Extension - - - 10.7 10.7Desk without Extension - - - 5.4 5.4Coffee Table - - - 0.4

Subtotal District Office Furniture - - - 37.6 37.64. Vehicles

Lilongwe 4X4 66.5 - - - 66.5Lilongwe Motorcycle 48.7 - - - 48.7Machinga 4X4 33.2 - - - 33.2Machinga Motorcycle 42.2 - - - 42.2Zomba 4X4 33.2 - - - 33.2Zomba Motorcycle 68.1 - - - 68.1Mulanje 4X4 33.2 - - - 33.2Mulanje Motorcycle 26.0 - - - 26.0

Subtotal Vehicles 351.1 - - - 351.1Subtotal GOODS 360.0 - - 82.1 442.1B. WORKS

1. District Water Offices & Staff HousingMulanje - - 246.3 - 246.3Lilongwe - - 246.3 262.7 509.0Machinga - - 246.3 - 246.3Zomba - - 307.9 - 307.9

Subtotal District Water Offices & Staff Housing - - 1,046.8 262.7 1,309.6C. SERVICES

1. District Financial Management Training & ExposureLilongwe 290.0 - - - 290.0Machinga 47.9 - - - 47.9Zomba 74.2 - - - 74.2Mulanje 37.7 - - - 37.7Training Materials 20.5 - - - 20.5African Water Week Transport - - 4.2 - 4.2African Water Week, Fee + Perdiem - - 6.0 - 6.0

Subtotal District Financial Management Training & Exposure 470.2 - 10.1 - 480.32. Capacity Development Consultant Mulanje 166.7 170.0 173.4 176.9 687.03. Capacity Development Consultant Lilongwe 322.1 348.5 377.1 408.0 1,455.84. Capacity Development Consultant Machinga 279.2 302.1 326.8 353.6 1,261.75. Capacity Development Consultant Zomba 437.5 446.3 455.2 464.3 1,803.36. Training WMAs, AMs, SPRs & Artisans - 4 Districts 122.9 129.2 136.0 143.2 531.47. Rural GFS Scheme Tariffs - - 56.3 - 56.3

Subtotal SERVICES 1,798.6 1,396.1 1,534.9 1,546.1 6,275.7Total Investment Costs 2,158.6 1,396.1 2,581.8 1,890.9 8,027.3II. Recurrent Costs

A. Vehicles4X4 Six Seater Pickup 13.1 13.7 14.4 15.1 56.3Motorcycles 32.6 34.2 35.9 37.7 140.5

Subtotal Vehicles 45.7 47.9 50.3 52.8 196.8B. General Operation Charges

Office Supplies + Consumables 89.8 97.2 105.2 113.8 406.0Total Recurrent Costs 135.6 145.1 155.5 166.6 602.8

Total 2,294.1 1,541.2 2,737.2 2,057.5 8,630.1

2.06.9

1.0

4.0

4.6

0.4

6

ADB Sub-Program Management CostsTotals Including Contingencies (US '000)2009 2010 2011 2012 Total


1. Vehicles4X4 Six Seater Pickup 133.2 - - - 133.2

2. Coordination Unit IT EquipmentDesktop Computer 10.4 - - - 10.4 Laptop Computer 5.2 - - - 5.2 UPS 0.4 - - - 0.4 Laser Colour Printer 3.3 - - - 3.3 Laser Printer 1.4 - - - 1.4 Scanners 0.6 - - - 0.6 Photocopier 7.8 - - - 7.8 FAX Machine 0.6 - - - 0.6

Subtotal Coordination Unit IT Equipment 29.6 - - - 29.6 3. Coordination Unit Office Furniture

Guest Chair 0.7 - - - 0.7 AC 7.7 - - - 7.7 Executive Chair 0.4 - - - 0.4 Bookshelf 0.5 - - - 0.5 Cabinet 1.4 - - - 1.4 Desk with Extension 1.2 - - - 1.2 Desk without Extension 0.3 - - - 0.3 Coffee Table 0.1 - - - 0.1

Subtotal Coordination Unit Office Furniture 12.3 - - - 12.3 Subtotal GOODS 175.1 - - - 175.1 B. SERVICES

1. Audit 32.8 34.5 36.3 38.2 141.7 2. Value for Money Study 141.2 - - - 141.2 3. Baseline Study 82.9 - - - 82.9 4. Endline Study - - - 88.0 88.0

Subtotal SERVICES 256.9 34.5 36.3 126.2 453.8 Total Investment Costs 432.0 34.5 36.3 126.2 628.9 II. Recurrent Costs

A. Supervision & Program ControlLiteracy Coordinator - Gender Ministry 51.1 55.3 59.8 64.7 230.8 RWSS Sub-Component Coordinator 51.1 55.3 59.8 64.7 230.8 Accountant 3.2 3.5 3.7 4.0 14.4 Procurement Expert 4.3 4.7 5.0 5.5 19.5 District Water Officers 6.0 6.4 7.0 7.5 26.9 Water Monitoring Assistants 42.9 46.4 50.2 54.3 193.8 Drivers 1.0 1.0 1.1 1.2 4.3

Subtotal Supervision & Program Control 159.4 172.5 186.6 201.9 720.4 B. DSA

RWSS Sub-Component Coordinator 20.0 21.6 23.4 25.3 90.2 Drivers - - - - - Accountant 0.8 0.9 0.9 1.0 3.6 Steering Board 8.2 8.9 9.6 10.4 37.2

Subtotal DSA 29.0 31.4 33.9 36.7 131.0 C. Operation & Maintenance

1. Vehicles4X4 Six Seater Pickup 19.7 20.7 21.8 22.9 85.0

2. Infrastructure Maintenance 0.6 0.7 0.7 - 2.1 Subtotal Operation & Maintenance 20.3 21.4 22.5 22.9 87.1 D. General Operation Charges

Office Supplies 13.3 14.1 15.0 16.0 58.4 Public Utilities 10.6 11.3 12.0 12.8 46.8 Communication Charges 6.6 7.1 7.5 8.0 29.2 Rent 38.4 40.9 43.5 46.4 169.2

Subtotal General Operation Charges 69.0 73.4 78.1 83.2 303.6 Total Recurrent Costs 277.7 298.6 321.2 344.8 1,242.2

Total 709.6 333.0 357.4 471.0 1,871.1

7

Water Resources Management Support CostsTotals Including Contingencies (US '000)

2008 2009 2010 2011 Total


1. Water Resources MIS Equipment & Software 62.1 - - - 62.12. Equipment for Water Monitoring Systems 2,381.7 - - - 2,381.7

Subtotal GOODS 2,443.9 - - - 2,443.9B. SERVICES

1. Water Resources Monitoring System - 307.4 321.6 336.7 965.62. Water Resources MIS 106.4 - - - 106.43. Water Resources MIS - Consulting & Software - 341.5 357.3 - 698.84. Water Resources Institutional Support 159.3 - - - 159.3

Subtotal SERVICES 265.7 648.9 678.9 336.7 1,930.2Total 2,709.6 648.9 678.9 336.7 4,374.1 Bank Financed Sub-Program

TotalAmount % Amount % Amount % Amount % Amount %

Water Resources Management 260.1 9.8 - - - - 2,399.7 90.2 2,659.8 7.5Rural Water Supply Infrastructure 2,297.4 9.9 1,981.7 8.5 2,533.1 10.9 16,372.7 70.6 23,184.9 65.8Sanitation & Hygiene 526.4 17.4 258.1 8.5 612.2 20.3 1,623.9 53.8 3,020.5 8.6Capacity Building 258.6 4.9 61.9 1.2 146.0 2.8 4,781.3 91.1 5,247.9 14.9Program Management 515.9 46.0 - - - - 604.7 54.0 1,120.7 3.2Total PROJECT COSTS 3,858.4 11.0 2,301.8 6.5 3,291.3 9.3 25,782.3 73.2 35,233.8 100.0

ADFCommunitiesGov. of Malawi RWSSI T.F.

Sub-Components by Financiers (UA '000)

8

The per capita cost for the Bank financed sub-program for water and sanitation in the rural areas is US$ 44. This compares favourably with per capita costs for interventions of the same nature in Uganda for the 2006/2007 period, which were US$ 55.

B3. Implementation arrangements

Overview of the institutions that will be involved in the project implementation Following the adoption of the Decentralisation Policy and the enactment of the Local Government Act 1998 by Parliament, the country is currently following a bottom up approach to Development and Governance. At district level the development process is implemented through a strategy referred to as District Development Planning (DDP) System. Under the system communities identify their problems and possible solutions. In most cases they embark on the project to solve their immediate problems and only take the problem to the assembly for financial assistance where possible. The DDP’s will be cross-checked against the Rural WSS Investment Plan by the Capacity Development Consultant to ensure that communities that did not priorize water and sanitation will have an opportunity to do so. The MIWD has noted that some DDP’s do not show water and sanitation as a priority because the consultant helping in the development of the DDP did not have the capacity to estimate the needs. The process to seek assistance from the District Assembly starts from the VDC, which is composed of a chairperson elected from within a cluster villages, usually a Group Village head, Village Heads under his jurisdiction, politicians whose parties are represented in Parliament, and other prominent individuals. The VDC submit project proposals to the Area Development Committee (ADC) where the Area Executive Committee (AEC) comprising of extension workers offer technical advice before submission to the District Executive Committee (DEC). The DEC provides technical advice to the Development committee which later recommends to the District Assembly for funding. Assembly Members play a key role in guiding the people alongside extension workers to ensure that they embark on programmes that will solve their problems. The communities are encouraged to contribute to all development projects. This is also a major requirement promoted by most donors in the country to ensure ownership of developmental projects. . The Assemblies operate through a system of committees for finance, development, education, works and health and environment. The assemblies can establish a service committee for a particular purpose. All Assembly committees are composed of the elected members and ex-officio members with Members of Parliament, Chiefs, Sub-Chiefs and those from interest groups. Most of the government ministries and departments have representatives at district level. Table 1.. Institutional Structures at Community level for RWSS

9

Body Staff Responsibilities Village Development Committee (VDC)

One elected member from each village within the VDC, Ward Councillor, four women representatives nominated by people within the VDC and

• The basic development body at the grassroots level and usually formed by a cluster of several villages, often at group village level.

• Their role is to mobilize people and initiate development.

• To identify and prioritize community needs as well as to prepare project

elected extension workers.

proposals and submit them to ADCs. • To communicate on community-based

issues with the ADC and DEC. The VDC communicates messages from the ADC and DEC to the communities.

• To supervise, monitor and evaluate the implementation of development activities in the villages

• To initiate community self-help activities • To encourage and bring together

community resources for people’s participation in self-help activities

Table .2. Institutional Structures at Sub-district level for RWSS

10

Body Staff Responsibilities Area Development Committee (ADC)

ADC is a representative body of all VDCs under the jurisdiction of the Traditional authority (TA). The ADC is composed of representatives from all VDCs at the TA level. It is composed of ward councillors from the TA’s areas of influence, representatives of religious groups, youth and women groups, and the business community. It is chaired by an elected person within the members with the TA playing an advisory role and AEC as its secretary. There are 10-15 members and the chair person is selected from within its membership. The Traditional Authority is an advisor to the ADC.

• ADC’s function is to mobilize and coordinate development within the area.

• To set priorities, identify and prepare project proposals addressing community needs which cover more than one VDC

• To organize monthly meetings with the VDCs from their areas

• To supervise, monitor and evaluate implementation of projects at TA level

• To bring together community members and resources for self help projects

• To improve on and prioritize project proposals for submission to District Executive Committee (DEC)

Area Executive Committee (AEC)

AEC comprises extension workers of government ministries, NGOs and Statutory Corporations within the jurisdiction of a TA.

• Acts as a technical and advisory committee to the ADC

• To assist and advise ADCs to identify and prepare project proposals

• To carry out field appraisals of proposed projects

• To review project proposals from ADCs before submitting then to DEC for consideration

• To conduct data collection and analysis at community level

• To take lead in the organization

of VDCs • To train and assist VDCs in

setting their own guidelines and come up with development projects

Table 3. Local Government Institutional Arrangements for RWSS Body Staff Responsibilities District Assemblies

District Commissioner (DC) Ward Councillors, Members of Parliament, Traditional Authorities and members of interest groups as Ex-Officios (NB all the assemblies have been dissolved in 2004 and no local elections have taken place since then, so instead of Ward Councillors the Assemblies now consist of MPs)

• To make policy and decisions on Local Government and Development for the Local government area.

• To consolidate and promote local democratic institutions and participation.

• To promote infrastructural and economic development through the formulation, approval and extension of district development plans.

• To mobilize resources within the local government area for governance and development.

• To maintain peace and security in the local government area in conjunction with the Malawi Police service.

• To appoint, develop, promote and discipline its staff.

• To cooperate with other assemblies in order to learn from their experiences and exchange ideas.

• To perform other functions including the registration of births and deaths and participate in the delivery of essential local services.

• To make By-laws for the good governance of local government area.

11

District Executive Committee

Technical committee and advisory to the Assembly. Composed of heads of government line ministries, statutory corporations, NGOs and Faith Based Organizations (FBO) working in the district.

• To assist in setting priorities, identification and assessment of community needs and project proposals,

• To give special support to the formulation of DDPs

• To give advice on project implementation,

• To train all development committees (VDCs, ADCs and AECs) in leadership and management skills

• To liaise and coordinate district policies and activities with national level policies

• To advise the DA on sectoral policies and programmes

• To monitor and evaluate implementation of programmes and projects

12

NWDP Institutional Interactions for RWSS and Water Resources Components

MoF MEP&D

Program Steering Board

MIWD

Program Task Force

Program Coordination

Unit

MIWD Water Supply

Dept.

MIWD WRM Dept.

MIWD Regional /

Zonal Offices

District Assembly /

DEC

NWRMB Board

DCT (support by Capacity

Dev Consult.)

Villages (point & GFS

sources)

Catchments

13

Stepped Approach to Rural Water Supply and Sanitation

District Planning and Implementation

STEP 2

Capacity building to implement RWSS Programs

Consultants assist District RWSS Teams to: • Continue building district capacity in

management, accounting, procurement and contract management

• Continue training of local service providers to help communities to plan, construct, and manage their water and sanitation facilities

wb165198 wb165198 wb165198 02/29/2008 1:28:00 PM wb165198 C:\Documents and Se

STEP 1 Technical Assistance to establish District

RWSS Programs Consultants assist Districts to: • Prepare RWSS Plans • Improve their management. accounting,

procurement and contract management skills

• Select and train local service providers in community development, hand pump installation/repair and latrine

t ti

Main Criteria to Qualify for Step 2 Implementation • District RWSS Team equipped and trained • District RWSS Program Plan prepared and approved • Local service providers selected for training

Community Planning and Construction

14

STEP 1 Planning & Capacity

Building • Technical Assistance to

establish GFS Operator, WP Committee, select technology, prepare WATSAN Plan and collect contribution

STEP 2 Construction & Capacity

Building • WATSAN committee plans

its water supply and promotes improved hygiene and sanitation practices.

• Households practice improved hygiene, and construct latrines with assistance of latrine artisans

Main Criteria to Qualify for Step 2 • WATSAN committee established & trained • Facilities and management plan prepared • Community contribution to the capital costs

secured & bank account opened • Form catchment protection committee (GFS) • NGO identified to assist with mobilization • MOU signed for in-kind contributions

Promotion and community selection

B4. Financial management, disbursement and audit arrangements

Financial Management Assessment

Rating (Satisfactory or Unsatisfactory)

Comments

Implementing Entity S FM functions are to be centralized in the MIWD Coordination Unit, which has the basic capability to provide the required FM. This arrangement is further strengthened by separating and devolving implementation authority and budgets to the implementing agencies, with the additional control of their existing financial management systems at the component level.

Funds Flow S Program funding will be disbursed through Special Accounts in the Reserve Bank of Malawi. In addition, program expenditures will be paid through a limited number of local currency accounts, but all transactions on all bank accounts will be centrally accounted for in the program financial statements.

Staffing S Additional central and district based program staff will be added, who will be taken over by GOM as civil servants as part of its commitment to sector decentralization. The Bank will provide training on its procurement, financial, disbursement and auditing procedures and guidelines to all procurement and FM staff, respectively, at central and district levels. FM specialists / accountants will be provided in the Coordination Unit and will also be included in the capacity building consultant team at each district. Staff in existing Bank projects will be retained to safeguard procurement, disbursement and financial management

Accounting Policies and Procedures

S Accounting will be centrally done for the program as a whole, by staff experienced in ADB fiduciary requirements and previous ADB funded projects. The accounting system will be supported by a FM Procedures Manual.

Internal audit S Internal control is being strengthened by proper segregation of functions, use of trained staff, proper FM procedure manuals, processes and systems and also by deployment of independent internal audit services (at the program and component levels) to test the effectiveness of the control system.

External Audit S An external private auditor will be recruited by the National Audit Office (NAO) to execute an annual independent audit of the project financial statements, which NAO will oversee.

Reporting and monitoring

S Monthly, quarterly and annual financial statements reports will be prepared to support monitoring of program implementation. QPR and annual reports will be submitted to Project Task Force, with annual reports also submitted to the Accountant-general and Auditor-general.

Information Systems U The donors and GOM are planning to set up an overarching Management Information System to warehouse the country wide M+E data on the sector, which will include the NWDP.

Overall Financial Management Rating

S The overall FM rating is acceptable because inherent risks are offset by: (a) centralizing key aspects of the FM system using experienced existing and contract FM staff of the MIWD; (b) an internal control system, which allows for segregation of functions and other basic internal control elements; independent internal and external audit; (c) sound financial procedures and systems; and (d) preparation of quarterly consolidated FM Reports.

15

An assessment on the financial management processes listed in the table is as follows:

a) Implementing Entity: The MIWD has the basic capability at the centre to provide the

required FM. However, due to lack of sector decentralization, this capacity is extremely weak in the districts.

b) Funds Flow Program funding will be disbursed through one Special Account in the Reserve Bank of Malawi. For the Integrated Water Supply and Sanitation Project, counterpart funds were documented at over 40% more than agreed at appraisal. The MIWD is also well familiar with the Bank’s disbursement processes and is able to produce acceptable financial reports.

c) Staffing: Staff vacancies in the MIWD are about 70% of total positions available. The main impact is that externally supported programs must rely on consultancies for all but oversight activities.

d) Accounting Policies and Procedures The Public Finance and Economic Management framework is addressing fundamental weaknesses in the budget management and accounting system. Some key legislation under the PFEM includes reform of Public Finance Management..

e) Internal and External Audit The capacity for external audits needs to be enhanced by the use of external audit firms. Internal control needs to be strengthened by proper segregation of functions, use of trained staff, proper FM procedure manuals, processes and systems and also by deployment of independent internal audit services (at the program and component levels) to test the effectiveness of the control system.

f) Reporting and Monitoring At the project level, the MIWD is capable of producing monthly, quarterly and annual financial statements reports to support monitoring of program implementation.

g) Information Systems Existing information systems are weak and scattered across departments, and given their staffing shortages, not much is being done by the MIWD. At the sector level, there are increasing efforts by donors to finance country wide information gathering, such as the National Water Point Mapping Program. There is a proposal for establishment of a sector wide monitoring and evaluation program.

Country Financial Systems A review of the Country Financial Accountability Assessment done in 2003 indicated that: i) there was inadequate assurance that allocated resources were used economically and efficiently for the intended purposes and there was insufficient comfort that value for money was obtained); ii) there was a lack of completeness, accuracy and reliability of government accounting and reporting; iii) there was a lack of central agency support for the internal audit function and the independence of the internal audit to set their own program. Full utilization of the Malawi PFM system is not yet possible. Components that will be relied upon are the following: (i) Project activities will be subject to internal audit will be overseen by the Central Internal Audit unit of the Government of Malawi; and (ii) The National Audit Office will provide or oversee the external audit service. Disbursement Arrangements

16

The ADF Loan and Grant will be disbursed using the Direct Payment and the Special Account methods of disbursement. Disbursements for major contracts procured through International Competitive Bidding (ICB) or National Competitive Bidding (NCB) with value above UA 500,000 will be through Direct Payment, in accordance with Bank Group rules. Disbursements for the other contracts valued below UA 500,000 or other activities involving monthly payments or payments in amounts of less than UA 20,000 will be paid using the Special Account method. As a condition precedent to first disbursement, the executing

agency will open a Special Account in foreign currency at a bank acceptable to the ADF for the funds from ADF and the RWSSI Trust Fund. Other payments, including community mobilization, selected services consultancies, small works contracts as well as operating costs for the CU will be paid by the Special Account method. Other Bank disbursement procedures could also be used should it become necessary. The annual disbursement schedule is shown below.

Base Cost (UA '000)2009 2010 2011 2012 Total

Water Resources Management 1,525.7 335.7 335.7 159.0 2,356.1Rural Water Supply Infrastructure 44.4 7,746.4 6,100.9 5,248.9 19,140.6Sanitation & Hygiene 385.6 508.4 796.2 609.2 2,299.4Capacity Building 1,239.3 788.6 1,317.3 948.2 4,293.5Program Management 389.1 169.6 169.6 214.7 943.0Total BASELINE COSTS 3,584.1 9,548.8 8,719.8 7,179.9 29,032.6Physical & Price Contingencies 379.5 1667.4 2070.9 2100.4 6,218.3Total SUB_PROGRAM COSTS 3,963.6 11,216.2 10,790.7 9,280.3 35,250.9

17

B5. Procurement Arrangements Civil Works Procurement of civil works, comprising gravity flow scheme rehabilitation, new and rehabilitated boreholes and new district water offices in Machinga, Mulanje, Zomba and Lilongwe totalling UA 18,087,800 and valued at more than UA 500,000 per contract will be carried out under International Competitive Bidding (ICB) procedures. Procurement of civil works comprising gravity flow scheme rehabilitation, new and rehabilitated boreholes in Machinga, Mulanje, Zomba and Lilongwe totalling UA 8,294,700 and valued at less than UA 500,000 per contract will be carried out under National Competitive Bidding (NCB). These procurement modes under NCB are justified by the fact that the character, location or size of the construction works to be undertaken are such that they are unlikely to attract bids from outside Malawi, and there are local contractors, sufficiently qualified and in sufficient number to ensure competitive bidding. These modes are also in harmonization with the NWDP procurement modality. Prequalification is not required.

Goods Contracts for goods, comprising vehicles and equipment, totalling UA 1,742,000 and valued at more than UA 500,000 each, will be awarded under ICB procedures. Other miscellaneous goods, such as office and other equipment estimated to cost less than UA 50,000 per contract will be procured through other procedures described in the table below. These procurement modes were selected to be in harmonization with the NWDP. Prequalification, domestic and regional preferences will not be required. The use of other procurement modes is justified by the fact that the value or quantities or character of the goods are such that they could not possibly attract bids from outside Malawi, and there are local suppliers, sufficiently qualified and in sufficient number to ensure competitive bidding.

Consulting Services Procurement of consulting services, comprising water resources assessments, capacity development consultants, annual audits and miscellaneous studies will be carried out by consulting firms and individual consultants through contracts valued at UA 4,096,100. The process for selecting firms shall be through Short List and the method for evaluation will be based on combination of technical quality with price consideration. However, for individual consultants, the selection method shall be through the GOM procedure for the selection of individual consultants. For contract amounts valued at less than UA 350,000 for Firms and UA100,000 for individuals, the Borrower may limit advertisement of the procurement to national or regional newspapers. However, any eligible consultant, regional or not, who wishes to provide the requested services, may express his desire to be short-listed. For contract amounts valued at more than UA 350,000 for Firms and UA100,000 for individuals, advertisement of the procurement must be placed in the UNDB. Advanced Action for the Acquisition of Consulting Services has been requested by MIWD and accepted by the Bank.

Training

18

Procurement of sanitation training and financial management training services totalling UA 615,000 and valued at less than UA 100,000 per contract will be carried out using National Short List procedure. These procurement modes are justified by the fact that the value or duration or character of the services are such that they could not possibly attract bids from outside Malawi, and there are local suppliers, sufficiently qualified and in sufficient number to ensure competitive bidding. Prequalification, domestic or regional preferences, and

Advanced Procurement Action for the selection of consultants will not be required. Selection procedures will be based on combination of technical quality with price consideration.

General Procurement Notice The text of a General Procurement Notice (GPN) will be agreed with MIWD and it will be issued for publication in UN Development Business Journal, upon approval by the Board of Directors of the Loan and Grant Proposals. The Borrower requested and received the Bank’s approval for the use of Advance Action for the Acquisition of Consultancy Services in acquiring the Capacity Development Consultants.

Review Procedures The following documents are subject to review and approval by the Bank before promulgation: Specific Procurement Notices, Tender Documents or Requests for Proposals from Consultants, Tender Evaluation Reports or Reports on Evaluation of Consultants' Proposals, including recommendations for Contract Award, Draft contracts, if these have been amended from the drafts included in the tender invitation documents.

Post Review Contracts for goods, works and services up to an amount of UA 100,000 will be approved by the EAs, and will be subject to post review by ADF. Procurement documents, including solicitations of price quotations, evaluation sheets and contract awards will be kept at the EAs for periodic review by ADF supervision missions. The procurement post review audits to review the correctness of the procurement activities will be carried out during the first supervision mission after the procurement activities are completed. However, the Bank reserves the right to conduct its procurement audit at any time during the project implementation. This review will determine the need for modifications and improvement of the procurement arrangements. Information on procurement processing will be collected by the EAs quarterly and shall be included in detail in the Project Quarterly Progress Report to be submitted to ADF.

National Law and Regulations The national procurement Laws and Regulation governing public procurement in Malawi have been reviewed during a Country Procurement Assessment Review exercise in 2004. The main relevant conclusions were that although a Directorate of Public Procurement had recently been established, it did not have a director. The director has since been appointed. It also concluded that the planned procurement units in each ministry had not been established. To address this it recommended commitment at the highest level and oversight of the reforms through the creation of a high level steering committee of senior government officials and other key stakeholders. The procurement thresholds below are in harmony with those used by the NWDP.

Procurement Thresholds

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Items ICB NCB Shortlist Other Goods > UA 0.50 m UA 0.10 m - UA 0.50 m IS, NS, DP, < UA 0.10 mCivil Works > UA 0.50 m UA 0.10 m - UA 0.50 m DP. < UA 0.10 m.

Consultancy Services: a) Individuals > UA 30 k DNb) Firms All values

Miscellaneous According to the PIM (NS, IS, DP)

IS - International Shopping DN - Direct NegotiationNS - National Shopping DP - Direct Procurement

Executing Agency The MIWD will be responsible for the procurement of goods, works, consulting services and training services. The resources, expertise and experience of the MIWD have been reviewed and are determined to be adequate but its capacity has been agreed to be increased with a procurement specialist to carry out the procurement activities required for the program.

Procurement Plan The procurement plan below, which has been agreed by the MIWD, will be updated on an annual basis or as needed always covering the next 18 months period of project implementation. Any revisions proposed to the Procurement Plan shall be furnished to the Bank for its prior approval.

Service Contracts

WR-1 Water Resources Assessments - 4 Districts 49 NCB Post May 2009 Aug 2009 SAPC-1 Post-Construction Mentoring GFS + BH Zomba 25 NCB Post Feb 2012 Feb 2013 SAPC-2 Post-Construction Mentoring GFS + BH Mulanje 29 NCB Post Feb 2012 Feb 2013 SAPC-3 Post-Construction Mentoring GFS + BH Machinga 42 NCB Post Feb 2012 Feb 2013 SAPC-4 Post-Construction Mentoring BH Lilongwe 33 NCB Post Feb 2012 Feb 2013 SA

PO-110 Year Institutional Sanitation & Hygiene Investment Plan & Strategy 99 NCB Prior Mar 2010 Oct 2010 SA

CB-1 Capacity Development Consultant Mulanje 348 NCB Prior Apr 2009 Mar 2013 DPCB-2 Capacity Development Consultant Lilongwe 885 ICB (RP) Prior Apr 2009 Mar 2013 DPCB-3 Capacity Development Consultant Machinga 767 ICB (RP) Prior Apr 2009 Mar 2013 DPCB-4 Capacity Development Consultant Zomba 1,096 ICB (RP) Prior Apr 2009 Mar 2013 DPPO-2 Policy on Rural GFS Scheme Tariffs 34 NCB Post May 2009 Jul 2009 SAFI-1 Annual Audit 73 NCB Prior May 2009 Jun 2009 SAFI-2 Value for Money Study - sample Districts 79 NCB Prior Mar 2011 May 2011 SAIN-1 Baseline Study - 4 Districts 12.5 / dist DN Post May 2009 Aug 2009 SAIN-2 Endline Study - 4 Districts 12.5 / dist DN Post Aug 2012 Nov 2012 SAIN-3 Water Resources Institutional Support 85 ICB (RP) Prior May 2009 Jan 2010 SAIN-4 Water Monitoring System Establishment 550 ICB Prior Aug 2009 Apr 2012 DPIN-5 Water Resources MIS 57 NCB Post May 2011 Apr 2012 SA

Note: RP - Regional Preference Option

Disbursement Method SA/DP

Expected Proposal

Submission date

Expected Completion

Date

Cost Estimate '000 UARef No. Description of the Assignment

Selection Method

Prior/Post Review

Goods Contracts

LotNo.

Vehicles for CU & Districts 1 - 265,000 NS Prior Mar-09 Jul-09 DPOffice Furniture 2 - 27,000 NS Post Mar-09 Apr-09 SAOffice Equipment 3 - 41,600 NS Post Mar-09 Apr-09 SAWater Resources MIS 4 - 34,800 IS Post Jul-11 Sep-11 SAWater Quality Testing Equipment 5 - 5,100 DP Post Nov-10 Nov-10 SAWater Monitoring System Establishment (surface water, groundwater & water quality)

6 - 973,300 IS Prior Jun-10 Oct-10 DP

Description Package Number

Estimated Amount in

UAProcurement

Method

Prior or Post

Review

Expected Bid-

Opening Date of

Delivery

Disburse-ment

Method

20

21

The auditor will be paid through the proceeds of the loan.

Works Contracts Estimated Amount in Date

UA ContractAward SA or DP

Machinga GFS Scheme Rehabilitation 1 Lump sum ICB 2,553,000 Prior Aug-10 Nov-10 Dec-10 Jun-12 DPMulanje GFS Scheme Rehabilitation 2 Lump sum ICB 4,096,900 Prior Aug-10 Nov-10 Dec-10 Jun-12 DPZomba GFS Scheme Rehabilitation 3 Lump sum ICB 2,178,500 Prior Aug-10 Nov-10 Dec-10 Jun-12 DPMachinga BH - New & Rehabilitation - A 0.1 Lump sum NCB 239,300 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMachinga BH - New & Rehabilitation - B 0.2 Lump sum NCB 239,300 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMachinga BH - New & Rehabilitation - C 0.3 Lump sum NCB 239,300 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMachinga BH - New & Rehabilitation - D 0.4 Lump sum NCB 239,300 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMulanje BH - New & Rehabilitation - A 0.1 Lump sum NCB 248,800 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMulanje BH - New & Rehabilitation - B 0.2 Lump sum NCB 248,800 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAMulanje BH - New & Rehabilitation - C 0.3 Lump sum NCB 248,800 Prior Nov-10 Feb-11 Mar-11 Nov-12 SAZomba BH - New & Rehabilitation 6 Lump sum ICB 1,715,000 Prior Aug-10 Nov-10 Dec-10 Jun-12 DPLilongwe BH - New & Rehabilitation 7 Lump sum ICB 6,678,800 Prior Aug-10 Nov-10 Dec-10 Jun-12 DPLilongwe S+H Facilities 8 Lump sum NCB 499,050 Prior Feb-10 May-10 Jun-10 Nov-12 DPMulanje S+H Facilities 9 Lump sum NCB 249,900 Prior Feb-10 May-10 Jun-10 Nov-12 SAMachinga S+H Facilities 0.1 Lump sum NCB 218,300 Prior Feb-10 May-10 Jun-10 Nov-12 SAMachinga S+H Facilities 0.2 Lump sum NCB 218,300 Prior Feb-10 May-10 Jun-10 Nov-12 SAZomba S+H Facilities - A 0.1 Lump sum NCB 235,100 Prior Feb-10 May-10 Jun-10 Nov-12 SAZomba S+H Facilities - B 0.2 Lump sum NCB 235,100 Prior Feb-10 May-10 Jun-10 Nov-12 SAZomba S+H Facilities - C 0.3 Lump sum NCB 235,100 Prior Feb-10 May-10 Jun-10 Nov-12 SAMachinga District Water Office / Housing 12 Lump sum NCB 116,300 Prior May-10 Aug-10 Sep-10 Nov-12 SA

116,300 Prior May-10 Aug-10 Sep-10 Nov-12 SAZ 145,300 Prior May-10 Aug-10 Sep-10 Nov-12 SAL 232,400 Prior May-10 Aug-10 Sep-10 Nov-12 SA

DescriptionLot No.

Lump sum or BOQ

Proc. Method

Disburse-ment Method

Pkg. No.

Prior or Post

Review

Bid Invitation

DateMobili-zation

Date of Completion

11

10

5

4

Mulanje District Water Office / Housing 13 Lump sum NCB omba District Water Office / Housing 14 Lump sum NCB ilongwe District Water Office / Housing 15 Lump sum NCB

B6. Audit Arrangements The Loan and Grant Agreements will require GOM to submit audited annual financial statements for the project not later than 6 months after the end of the fiscal year. Besides expressing an opinion on the Annual Financial Statements in compliance with International Standards on Auditing and/or International Organization of Supreme Audit Institutions Auditing Standards, the auditors will be required to form an opinion on the degree of compliance with Bank procedures for the Special Account and the balance therein at the year-end. In addition to the audit report, the external auditors will be expected to prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Bank agreements. The management letter is considered as part of the audit report and therefore has the same submission deadline of six months after year end. The primary responsibility for the audit lies with the National Audit Office, who due to capacity constraints appoints private sector auditors to carry out the work on its behalf. The Bank requires that the audit is conducted by a technically competent and independent auditor. The auditor and the audit terms of reference have to be acceptable to the Bank. The firm undertaking the annual audit will have met the eligibility criteria, including proof of certification from the relevant national authorities. The multi-year audit contract period will be confirmed annually pending satisfactory performance of the firm. The Bank’s audit missions will be allowed to audit the firm’s files, including the firm’s legal status and the qualifications of its professional staff. (OAGL memo, 23/4/08)

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B7. Economic and financial analysis

US$ MK MK MK MK MK MK

Year Beneficiaries Cumulative Capital Investment O&M Total CostBenefits-Time saving Time saving Surplus

Proximity Latrine Benefits Heallth Benefits Total Benefits Net benefits

1 1,050,440,000 1,050,440,000 1,050,440,000 -1,050,440,000

2 188486 3,253,740,000 2,203,300,000 26,261,000 2,229,561,000 963,161 131,953,114 84,827,002 11,103,687 24,531,401 252,415,203 -1,977,145,797

3 588327 5,370,310,000 2,116,570,000 81,343,500 2,197,913,500 3,006,352 411,870,223 264,773,715 34,658,355 76,570,785 787,873,078 -1,410,040,422

4 1002821 7,026,370,000 1,656,060,000 134,257,750 1,790,317,750 5,124,414 702,044,757 451,314,487 59,076,173 130,517,127 1,342,952,545 -447,365,205

5 1212640 175,659,250 175,659,250 6,196,590 848,932,885 545,742,569 71,436,622 157,825,096 1,623,937,172 1,448,277,922

6 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

7 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

8 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

9 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

10 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

11 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

12 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

13 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

14 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

15 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

16 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

17 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

18 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

19 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

20 175,659,250 175,659,250 8,384,437 1,148,667,855 678,419,885 88,803,821 196,194,487 2,112,086,048 1,936,426,798

ENPV 6,090,687,555

Sensitivity Test EIRR 24%

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EIRR for NWDP Rural Water Supply & Sanitation Sub-Compnents

ECONOMIC ANALYSIS: Assumptions for the Calculation of Economic Benefits 1. The projections are based on constant 2008 Malawi Kwacha and US dollar prices 2. Project life: A 20 – year project life span is assumed 3. Investment Costs: The project will finance both the construction of new boreholes and

the rehabilitation of old ones. It will in addition finance the rehabilitation of gravity-fed schemes and extend the gravity- fed infrastructure. The sanitation component will construct latrines for schools, health facilities and public places in addition to provision of ecological latrines for selected demonstration places. It will also finance capacity building activities and project management. The project will in addition encourage the construction of individual latrines by the beneficiaries who will meet the bulk of the construction costs.

4. Numbers of beneficiary populations are provided in GOM’s Investment Planning for Rural Water Supply and Sanitation

5. The Average O&M costs will be the equivalent of 2.5% of the investment cost. 6. The minimum wage in Malawi is MK129/day and if one adds a housing allowance of

MK 1,000 per month the total package is MK165/day or US$1.18/day. For rural areas however we omit the housing allowance hence the daily wage will be 94 cents. The rural wage is usually 75% of this hence the figure for computation of the opportunity cost of labour in rural areas will be 70 cents.

7. It is assumed that a time saving on water collection activities is 2 hours a day (regional average). Most of the water collection activities are done by women and children. However discounting school going children, those under five and the elderly it is assumed that the time saving will accrue to 31% of the population. Under age (school drop outs) children’s benefits arising out of time savings will be assumed to go towards reducing the drop out rate which is accounted for separately. As such the number of beneficiaries to time saving is reduced to 24%. Their surplus time may go towards income generating activities and other consumption activities like leisure but as rational human beings it is expected time so saved shall be treated like the way time is used in a typical day. This translates into 30 days of work per capita per annum for this segment of population.

8. Due to the proximity to the water point there is likely to be an increase in the quantity of water consumed. Countries like Malawi are no different from other countries in the region. There will therefore be a doubling effect of water consumption to, for example, what is likely to be consumed by high density dwellers in major cities. It is assumed that they will be substantially below the norm for the lowest income earners in cities. Hence the assumption that there will be an increase in water consumption to 36 litres per capita per day. This will represent a major increase of 18 litres per capita per day or an annual per capita benefit of US$3.29.

9. It is expected that as a result of capacity building activities and demonstration pit latrines built a total of 350,000 pit latrines will be built by communities. This will improve access to sanitation facilities to at least 10 metres. Annual per capita savings according to UNICEF can be of the order of US$ 0.43.

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10. It is expected that US 0.95 per person per year will be saved due to reduced incidence of diarrhoea according to figures derived from UNICEF. US$ 0.11 per capita will be

costs avoided due to reducing school absenteeism, US$ 0.09 will accrue from parental productive days saved, US$ will accrue from direct costs avoided due to less illness at the household, and the balance from direct costs avoided at the health facilities.

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11. Benefits start accruing from year 2 with 188,486 beneficiaries to 1.21 million beneficiaries in year 5.

B8. Environmental and Social Management Plan and Analysis

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY

Project Title: Rural Water Supply and Sanitation + Water Resources Sub-Components of the National

Water Development Program Project Number: P-MW-E00-004 Country: Malawi Department: OWAS Division: 2 a) Brief description of the project and key environmental and social components The RWSSS program includes the following sub-components;

1. Rural Water Supply and Sanitation improvement to be implemented through the Lilongwe, Zomba, Machinga and Mulanje district administration.

2. Sanitation support through construction of latrines in public places, and associated technical assistance to promote it among the stakeholders.

3. Capacity building for water resources management and awareness raising related to health environmental hazards.

4. Institutional and technical support for strengthening NWDP and sector management activities 5. Water Resources Management will provide technical assistance to the new NWRA, support it to

set up a national water monitoring network and management information system. b) Major environmental and social impacts The Rural Water Supply and Sanitation Sub-Component is classified in the environmental category 2 as a result of that the activities entail relatively simple technologies with no major environmental impacts. Positive Impacts:

- improved safe drinking water supply and access, - improved sanitation facilities. - reduced the incidence of water borne diseases like malaria, cholera, gastro-intestinal

disorders etc. - increased productivity in particular for women as a result of saving time wasted in

fetching water over long distances; - better opportunity for girls to attend schools instead of spending their time fetching water

over long distances - increased representation and participation of women in water point committees and

holding responsible decision making positions. Their position in the committees is proportional to their recognized role in water supply and sanitation which is extremely important in rural areas

- increase in forest species diversity (Mulanje Conservation Trust) and increased forested riparian land through works by catchment protection committees

- increase income resulting from the use in agricultural activity of recycled waste from ecosan latrines

- improved living standard as a result of the availability of safe water and sanitation facilities

- empowerment of communities by giving them responsibility for planning, implementation and management of their water supply systems and improved public sanitation

Potential Negative Impacts: - influx of people to project areas and increased incidence of communicable diseases

posing health hazards to workers and the local population - spread of sexually transmitted diseases including HIV and AIDS within the area

25

- loss of agricultural land

- loss of crops for the local communities - increase in soil erosion during construction - soil and water contamination - wastewater generation - noise during construction and drilling

c) Enhancement and mitigation program Mitigation measures will be mainstreamed in the design (step 1) and implementation (step 2) processes of will include:

- establishing village committees to minimize environmental degradation - obtaining land for civil works in compliance with legislation (land act) and securing written agreement

of the authorities having jurisdiction - empowering the community for effective participation in program design and implementation by

providing sensitization and training. - avoiding interference with forest reserves in the district - using existing access roads - providing awareness raising on HIV/AIDS and control campaigns - Installing flow control valves in sedimentation tanks and where possible a return of overflow water

will be allowed back to a natural water course - allowing for compensational flow for all form of downstream users - Protecting catchment areas from environmental degradation through environmental training at district,

TA and community levels and formation of at least one catchment protection committee per gravity flow scheme

- Preparation of community environmental action plans, hold catchment rallies, and plant all trees required to provide a 200 m buffer around any source stream

- Minimizing wildlife disturbance and conservation of the forest and the biodiversity in it; - Protecting intake from contamination by animals and humans - Training in bylaws preparation outlining setbacks for construction of pit latrines and septic tanks - Septic tanks shall be constructed according to standard designs and specification recommended by the

National Construction Industrial Council (NCIC); - Installing proper drainage facilities and soak away pits at each water point - Constructing washing slabs at each water point to keep water point clean and dry - Carrying out of critical analysis of both water quantity and quality of before licensing boreholes - promoting rainwater harvesting to supplement borehole water - promoting use of good hygienic practices through awareness raising and education programs on

sanitation and hygiene - subjecting boreholes to licensing for water rights, and providing abstraction rights only after approval

of both water quantity and quality (MIWD) - sensitizing communities on environmental health hazards associated with water infection, poor

drainage and lack of hygienic practices (facilities cleanness) - separation of drinking points for humans and for the drinking of the livestock - Carrying out preventive maintenance of the water point to avoid breakdown and degradation of the

borehole. d) Monitoring program and complementary initiatives Environmental monitoring of the NWDP RWSS Component during construction and operation and maintenance phases will be carried out at the community level, with oversight from the TA and district. The members of the Village Development Committees and District Executive Committees will be responsible for the monitoring of the following environmental aspects of the project:

(i) during construction phase : monitoring of the application of mitigation measures related to proper storage of construction materials, sanitation, waste water disposal, solid waste disposal and noise reduction.

(ii) During operation and maintenance phase: leaks, stagnation of waste water, unsustainable water practices resulting in water resource wastage and maintaining proper hygienic practices

(iii) The NWDP Coordination Unit ensure all national environmental regulations are followed for mitigation and reporting of program activities potentially detrimental

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(iv) Bank supervision missions will also comprise an environmental specialist to follow up the implementation of the ESMP.

e) Institutional arrangements and capacity building requirements • The EA responsibile for implementation of the program’s ESMP is the MIWD. The NWDP will provide

staff training, technical assistance, improved mobility, and funding for staff recruitment and incremental operational needs. Training and environmental awareness campaigns will be provided and continued throughout the program period. Government efforts to improve environmental health will be also supported by the program.

• A National Program Coordinator heads the Coordination Unit that has been established in MIWD at national level. District level staff (District Coordination Team) will be assisted by Capacity Development Consultants with day to day program planning, implementation and supervision activities.

• The program will involve the development of monitoring systems that should help the government to have better systems to monitor water quality developments in the districts. Water quality test kits will be procured for each TA to carry out of regular water quality monitoring activities.

f) Public consultations and disclosure requirements The preparation of the ESMP followed a participatory approach whereby the views and opinions of major stakeholders were taken into consideration, in particular the consultation included the representatives from local communities in the affected villages, officials from the Districts Water Offices, the District Assemblies, local government and rural development ministry and the Ministry of Irrigation and water development. The communities will be involved in the siting land and initiating the construction of water supply and sanitation facilities, and take full responsibility for the operation and maintenance costs and some of the capital costs, either in kind through labour and land contribution. The program is judged by stakeholders as being highly positive to the target areas and it is suggested to increase awareness of the local village beneficiaries on the importance of ownership of the project in order to ensure its sustainability. g) Estimated costs All measures were mainstreamed in program design, so environmental mitigation costs are built in to the cost of various activities. h) Implementation schedule and reporting The environmental management and monitoring will be implemented following the same program schedule as all activities, as it is mainstreamed in program design. Achievements/problems will be reported in the quarterly progress reports and should be timely addressed by the CU and the Bank. Stakeholders

The project stakeholders will be the following: community members, men women and children, in the four target districts, local and district level institutions (water sub-committees, DAs, etc), Traditional authorities, village heads, Ministry of Water officials and national, regional and district levels, Ministry of Women and Child Development, Ministry of Community Development, Ministry of Health and Ministry of Education (national, regional, district and local levels), other donors and development partners. The consultation process that led to the design of the project was wide and covered all the major stakeholders, DPs, Ministries and communities in Mulanje and Lilongwe Rural District. Gender Analysis The objectives in terms of gender are: • To reduce under-five mortality in diarrhoeal diseases • To improve maternal health

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• To reduce school drop-out rates for girls and improve their possibilities to attend school even in higher classes

• To reduce women’s and children’s workload in fetching household water and allow thus women more time for adult education or productive and income-generating activities • To improve women’s literacy and other skills to allow them to take part and manage the local level water committees and by consequence to improve their social position During the preparation and appraisal phases a review of the gender issues in Malawi was conducted as a desk review and consulting the Ministry of Women and Child Development officials and other stakeholders, and the main findings are provided in the document and in the following. The project has a gender strategy in place. It includes training women in functional literacy and bookkeeping skills so that they would be able to advance to more responsible positions in the local level committees. At the same time, men who mainly control the family finances need to be involved in hygiene and sanitation training in order to encourage them to provide latrines for the household. Village heads and other traditional authorities who yield considerable respect among their constituencies will be trained in H&S and be expected to provide this training among the villagers. The Ministry of Women and Child Development has been consulted throughout the preparation and appraisal process. All data relevant to project has been provided in gender disaggregated form. No specific risks are linked to the gender strategy selected. Gender specialists (Min. of Women and Child Development) will be involved in the project implementation. The following gender specific indicators will be used to follow gender-elated questions throughout the project: - under-5 mortality rates - maternal mortality rates - school-enrolments for girls - drop-out rates for girls - time used in fetching water by households - share of women in: i) local level committees, and, ii) responsible positions - number of men trained in H&S issues Gender issues are an integral part of the overall national development agenda in Malawi1. The Gender Development Index for Malawi of 0.394 (2004) shows that large disparities between men and women do exist and Malawi’s GDI position is only 134 out of 144. Women constitute 51 % of the population but are marginalized in most social and economic spheres. The adult illiteracy rate among women stood at 46.0% in 2006, compared to 25.1% for men. Women’s lower level of educational achievement continues to keep them behind in terms of economic and social activity. It is not certain that Malawi will meet the MDG of gender equality by 2015. Malawi is characterised by low political empowerment of women, despite women’s large contribution to economy. Whilst the general participation in economic activities was 46,3% in 2005, the corresponding figure for women was 48, 5% (AfDB CSP, AfDB Nov.2007). Women hold limited positions at all levels of governance (only 13,6 % of the current MPs are women) and are poorly represented in the politics. Low status of girls and women extends to marriage

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1 Malawi Growth and Development Strategy – From Poverty to Prosperity 2006-2011.

and throughout society as a whole. The legal system is largely unresponsive to women’s needs and most rural women have little knowledge of their rights. (POA) There are gender dimensions to issues around natural resource management. Women and girls are responsible for fetching water and fuel-wood for domestic purposes, and once these become scarce, their work load increases. A long-term impact of environmental degradation is hence an increase in female dropout rates from school. Women have limited access to, and control over land, forest areas, and the benefits from these resources. They also have limited access to technology. It is noteworthy though that in large parts of Malawi there is a matrilineal marriage system in use, meaning that inheritance of land goes through the wife’s family and that the husband is supposed to move to the wife’s home. According to officials from the Ministry of Gender, the share of female MPs is higher from those regions where there is a matrilineal marriage system2. To address the serious gender imbalances in Malawi (cf chapter 3.2.), The Ministry of Gender, and Child Welfare and Community Services (MGCWCS) has formulated the Malawi National Gender Policy (MNGP) and Plan of Action (POA)3 in 2000. However, the MGCWS remains under staffed and under resourced, resulting in insufficient outreach The official goal is to have 50 % of both genders represented in the local level committees and that at least one of the three key positions (chairperson, secretary and treasurer) is occupied by a woman. Some subcommittees at village level, such as food security or water, usually have more women than men as members. The Ministry of Gender and Child Development, Department of Community Development manages several programs that will used as platforms for imparting sanitation and hygiene training in the districts. The Malawian framework for gender mainstreaming is described in the below figure.

The Ministry of Gender, Child Welfare and Community Services is responsible for organising adult literacy classes under the National Adult Literacy Programme (NALP). These are predominantly attended to by women. The programme fuses the theory of Paolo Freire with the methodologies of PRA. Abolishing the need for a text book, the approach enables groups to develop their own reading materials by constructing maps, calendars, matrices, diagrams or using forms of drama, story telling and songs, which can capture social, economic, cultural and political issues from their own environment. However, there are also training materials developed for Community Development Workers that also contain such issues as proper nutrition, HIV/AIDS, hygiene and sanitation, etc. (e.g. Community Leaders Training Manual for Community Development Workers).These programmes could provide an efficient platform to reach the women in the targeted district and impart training in hygiene and sanitation. The Handbook for Community Workers will be useful for training chiefs, village headmen and women in promoting hygiene and sanitation. It is imperative to train women in literacy, accounting and committee management if they are to play a more important role in the local level water tap and similar committees. Without literacy and adequate skills women are not able to advance from regular members to more responsible positions within the local level committees.

2 Ms Patricia Sawasawa, Deputy Director, Community Development, MGCWCS

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On the other hand, men need to be fully involved in sanitary issues at the household level. As they mainly control the household funds, without their active participation it will not be possible to advance the sanitary facilities being constructed at the household level.

Institutional Arrangements for the Implementation of NGP

Social Analysis

Malawi is one of the poorest countries in the world with dismal sociaregarding the education, the 2004 UNDP HDR puts combined primarenrolment ratio in Malawi at 74%, largely due to the universal free ppolicy introduced in October 1994. The youth literacy rate was 73% 1990 (AfDB CSP). The share of educational expenses was 6.0% of the year 2000. The school drop-out rate for girls increased from 10.2004, while the rate for boys dropped from 11% in 2003 to 8.2% infor girls increases consistently up to Standard 8, while that of boys staschool level, where approximately 39% of pupils are female. Reasonhousehold tasks, such as fetching water, lacking sanitary faciliti

Gender Advisory Committee P.S. Gender –Chair person

DAGG (Donors, UN, Civil Society and Government)

National Steering Committee (NSC)

Gender Affairs Department

Local Assemblies

Government Sectoral/Department

Communities

Private Sector, NGOs and Civil Society

Central GovernmentMinistries

l indicators. For instance y; secondary and tertiary rimary school education

in 2002, up from 63% in the public expenditure in 9% in 2003 to 12.6% in 2004. The drop-out rate bilizes. At the secondary s for girls’ drop-outs are es at schools and early

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marriages. At the tertiary level there are only 28% of female students and they are further under-represented in science and other professional degree programmes. (POA) Access to health services is poor, with only 2.1 medical doctors for each 100,000 inhabitants whilst the corresponding figure for Africa is 19 times higher (38.2). It is similar for nurses. The prevalence rate for HIV/AIDS was estimated at 23% for urban adults, compared to 12.4% for rural areas4. Evidence indicates that HIV prevalence has stabilised over recent years5. 58% of adults with HIV are women and young women aged 15- 24 are more than three times likely to be infected as young men. In some instances, girls withdraw from school to take care of their sick parents or orphaned siblings at home. Mortality rate for under-5 year olds is still 131.8 and the maternal death rate a staggering 984 for each 100,000 women. Malaria, acute respiratory infections, pneumonia and diarrhoea remain among the main diseases and top ten causes for mortality. Outbreaks of cholera are common especially during the rainy season Lack of basic baseline data or discrepancies in the data remains a constraint for monitoring and evaluation of programme impact. Various studies present widely different data on the same issues, e.g. percentage of population below the national poverty line in a certain year differs with some 10% according to various sources. Capacity for gathering data about progress in poverty reduction and growth through the National Statistical Office, remains weak. The possibilities of the DAs to provide the requested services remain very weak due to lack of human and material resources. Although the decentralization policy is in place, this is not reflected in the DA budgets. Officers at the DAs report to their line ministries rather than to the DCs. Ownership issues of water sources need to be given close attention. Experience in Thyolo (COMWASH project) indicates that establishing the management and other structures takes long time and needs much support. Experience also shows that the revenue collection improved considerably once a system of remuneration for revenue collectors (10 % of the collected) was put in place. However, most of the work in the scheme and other committees remains on the voluntary basis. It is not yet certain how sustainable this will be, especially considering the women’s already high work load. Alternative ways of remunerating the work of the committee members would seem worth while exploring. In the following information is provided about the basic socio-economic features in three of the selected four districts (Lilongwe Rural, Zomba and Mulanje). The fourth one (Machinga) has no recently updated socioeconomic profile. Lilongwe Rural District6 Lilongwe District is located in the Central Region of the Republic of Malawi. The total land area is 6,159 sq. kilometres representing 6.5 % of Malawi’s total land area and it had in the 1998 Census a total population of about 1,346,360 people, with a population density of about 219 per square kilometre. Based on the projected annual growth rate of 3.32%, the population

4 The GoM launched a National HIV/AIDS Strategic Framework (2000-04) and established the National Aids Commission (NAC) in 2001 to coordinate the national response. 5 Sources: Public Financial Management Assessment – Government of Malawi – May/June 2006, Lilongwe District Socio-Economic Profile, Dec. 2006, AfDB CSP.

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6 Lilongwe District Socio Economic Profile. Republic of Malawi. December 2006.

of the Lilongwe District was projected to be 1,138,582 in 2005.Percentage of poor households is 63.9 % in central region and 76.7 % in Lilongwe rural. The predominant ethnic group, Chewa, accounts for almost 99 % of the entire population. Four languages are spoken in the district with Chichewa as the most spoken language (93.5 according to the 1998 Population Census). However, English is the official language7. Christianity is the predominant religion in the district (1,077,434 out of the total population of 1,346,360). There are two systems of marriage in the district, namely matrilineal (Chikamwini) and patrilineal (Chitegwa). The development issues for the Lilongwe District Assembly that emerge from the Village Action Planning, ranked according to their frequency are the following: food insecurity, high mortality and morbidity rates, inadequate sources of safe drinking water, which the National Water Point Mapping Project estimated at 22% coverage in rural areas based on functionality. Lilongwe District has the largest population in Malawi and the health indicators are not favourable.. Only 46 % of the population has access to formal health facility within a 5 km radius, and 20 % of the population lives within 25 km of a hospital. The neonatal mortality rate in the district was 21 per 1000 live births, infant mortality rate was 73/1000 live births, child mortality rate was 78/1000 children and the combined under fine morality rate was 145/1000 children in 2004. (Sources: Malawi Demographic Health Survey 2000, Malawi Demographic Health Survey 2004) Between 2001-2004 the main three causes for OPD attendances in Lilongwe district were in descending order diarrhoeal disease, upper respiratory tract infections and diarrhoea. Also malnutrition and oral conditions were common. Pneumonia is the leading cause of death among under five year old children. Moreover, in Lilongwe 24.4% of children under five years were reported to have had diarrhoea in the two weeks before the health survey as opposed to 21.4 % in other districts in 2004 and 17% for Lilongwe in 2000 MDHS. Risk factors for diarrhoea include living in rural areas, and absence of piped water in the house. The District had (in 1998) a literacy rate of 59.9%, but this includes the city residents. There are 5 private primary schools and 411 public primary schools in the District. The total enrolment in these was only 320,086 or 50.8 % of school going age in 2005, although this is clearly higher than the enrolment of 42.8 % in 2002. There were more girls (167,324) than boys (152,888) enrolled in 2005 which could be due to a number of interventions targeting specifically girls. However, the drop-out rate from primary schools remains high at 17.2 % for boys and 15.8 % for girls. Among the reasons for dropout were traditional practices, lack of teachers and learning materials, unfavourable learning conditions and also the HIV/AIDS epidemic. In some areas schools are also far apart. Only 25 % of the villages in the District have a primary school. Total number of secondary school students in the district is 11,637 out of which 5,913 were boys and 4,841 girls. Girls drop out more often than boys from the secondary education due to early marriages. Zomba District Zomba District has a total land area of the district is 2,580 square kilometres, representing 3 per cent of the total land area of Malawi. The district currently has 6 Traditional Authorities and 4 Sub-Traditional Authorities. Its total population has been estimated 592,000 (1998 Census projections) and an annual population growth rate of 1.8 percent, with a population density at 209 persons per sq km. The main ethnic groups are Mang’anja or Nyanja, Yao and

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Lomwe. Chinyanja is the official language although other languages like Chiyao and Chilomwe are also spoken. The two dominant religions are Christianity (78%) and Islam (20%). Life expectancy at birth for the district was pegged at 43.66 years for males and 46.62 years for females in 2006. (Source: 1998 Population and Housing Census, NSO). The district registered a crude birth rate of 36.4 in 1987, 50.22 in 1999 and 48.10 in 20068. The Mortality Rate9 was placed at 12.8 in 1987 (later figures not available). On the other hand, the infant Mortality Rate was 106.30 and 86.08 for males and females respectively in 1999, as compared to 88.61 and 72.48 for 2006. Nevertheless, the infant mortality and child mortality (144/1000 children) remained among the highest in the country. Zomba district experiences a number of problems related to land matters, most notably land encroachment and grabbing. The commercial estates occupy most of the fertile and good land, whereas the local people are confined to the remaining marginal land. In addition, a number of villages that encroached into the private estates used to be of people who were formerly resident tenants within the estate lands. Most households own less than 1 hectare of land. In terms of access to essential resources and opportunities females in the district are at a disadvantage relative to males. As most females are illiterate, their involvement in economic activity is often limited to farming and other domestic chores. The overall annual average household income in Zomba District stands at MK 32,360, or on average MK 2,697 per month. This is low when compared to the Southern Region (MK 40,090) and Malawi (MK 50,904). The Southern Region has the lowest annual average household income of all three regions, and this amount is undercut by Zomba District by almost 20%. According to the HIS poverty line definition10, Zomba District is the third poorest district in the country. With 70 % overall poverty rate, 41.0% of households are considered ultra poor. Thus the district has the second highest share of households considered ultra poor in all of Malawi. The percentage of households defined as ‘poor’ and ‘ultra poor’ is higher than the Southern Region average (64.4% poor, 31.5% ultra poor), which in turn is higher than the other regions as well as the national average (52.4% poor, 22.4% ultra poor).

Zomba-Malosa is the only gazetted Forest Reserve within the district. It has an area of 19,018 hectares, consisting of 15,418 hectares of indigenous trees and 3,600 hectares of planted pine. Over the years, this area has experienced wanton cutting down of trees for firewood, timber and charcoal, as well as serious encroachment.

8 Birth rate is the number of births per 1,000 in a given year in a population. 9 Mortality rate is the number of deaths per 1,000 in a given year in a population. 10 The Integrated Household Survey defines the poverty line as ‘a subsistence minimum expressed in Malawi Kwacha based on the cost-of basics-needs methodology. It is comprises of two parts: minimum food expenditure based on the food requirements of individual and critical non-food consumption. Food needs are tied to the recommended daily calorie requirement. Non-food needs are estimated based on the expenditure patterns of households whose total expenditure is close to the minimum food expenditure…individuals who reside in households with consumption lower than the poverty line are then labelled ‘poor’. Using the minimum food expenditure as anadditional measure, we can identify the ‘ultra poor’, households whose total consumption per capita on food and non-food is lower than the minimum food expenditure’ (HIS 2005, p. 141).

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Medical care services are provided mainly at health posts/clinics, health centres and hospitals. In addition, many people get medical treatment from traditional practitioners and traditional birth attendants (TBAs). Malaria is endemic in Zomba and is a challenge to health providers (Table ), followed by acute respiratory infections. Table B8.1: Most common Diseases Disease No of Cases % Malaria over 5 years 105,809 37.3 Malaria under 5 years 83,657 29.5 Acute respiratory infection 24,863 8.7 Skin infection 19,616 6.9 Common injuries & wounds 11,855 4.1 Diarrhoea under 5 11,551 4.0 Eye infection 10,025 3.5 STI 9,744 3.4 Ear infection 6,302 2.2 TOTAL 283,422 100.0 As illustrated in the following table, during the period of July 2002 through June 2005, Malaria has caused the most mortality for inpatients of all age groups. Pneumonia for persons over five years was second, followed by malnutrition. Pneumonia for persons under five, meningitis and anaemia were fourth, fifth and sixth, respectively. Although HIV/AIDS caused the seventh highest level of deaths during the period, it is important to remember persons dying of other diseases may have also had HIV/AIDS. Table B8.2. : Trend of Mortality of the Top Ten Diseases, July/02- June/05 (in-patients only)

Causes of Death 3 Year Total Malaria 500 Pneumonia > 5 165 Malnutrition 73 Pneumonia < 5 117 Meningitis 81 Anaemia 71 HIV/AIDS 56 Tuberculosis 39 Diarrhoea < 5 27 Diarrhoea > 5 27 Obstetric 12 Typhoid 5 Cholera 2 Source: Statistics office – DHO Zomba

Zomba district provides educational services at the pre-school, primary, secondary and tertiary levels. Some institutions also offer adult literacy classes and vocational training. Government runs most of the education facilities while a few are owned and operated by missionaries and private individuals.

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The district has experienced a sharp increase in school enrolment. Primary school net enrolment is currently at 87.2 against the country rate of 80.0 (HIS, 2004-2005). However, the education sector in Zomba at all levels continues to face a number of challenges which include inadequate teachers, shortages in teacher and student accommodations, lack of or dilapidated classrooms and lack of both learning and teaching materials. The district has 192 public primary schools and 1 private primary school with an enrolment of 147,417. There are 23 public secondary schools, 1 grant-aided secondary school and 5 private secondary schools with an enrolment of 3,719. The literacy rate is at 61.9%, which is lower than the national rate of 64%. The district’s average gross enrolment rate of 96% is lower than the national figure of 126%11. There has been a general decrease in drop out for both boys and girls over the years. Table B8.3. Enrolment rate for primary education in Zomba District, by TA

TA Children of Prim.School Age Total Enrolment Enrolment Rate Mwambo 30,258 33,409 110% Mlumbe 37,860 39,284 104% Chikowi 48,964 46,016 94% Malemia 15,773 13,327 84% Kuntumanje 19,293 14,480 75% Mkumbira 1,220 901 74% TOTAL 153,368 147,417 96% Source: Zomba District Education Office Zomba, 2005

The toilet- teacher and toilet-student ratios for the district are unacceptably high at 1:8 and 1:234, respectively. TA Kuntumanje has both the highest toilet-teacher and toilet-student ratios of 1:89 and 1:2,069, respectively. Chikowi and Mlumbe both have the lowest toilet-teacher ratio of 1:7, and Malemia has the lowest toilet-student ratio of 1:116. Zomba district water supply has abundant water resources in form of rivers, lakes, dams and under ground water. This inherent potential has enabled a large proportion of households (79.6%) to enjoy access to improved water sources. According to an integrated household survey, the percentage of district households drawing water from sources considered unsafe or inaccessible has declined from 52% to 20%. This improvement is attributed to the availability of well-trained water point committees that maintain water facilities in most areas. Communal taps (17.3%), boreholes (20.6%) and unprotected shallow wells (62.1%) are the main source of self water supply. According to the district databank, the overall number of protected (shallow) wells has increased from 66 in 2000 to 269 in 2007. The National Water Point Mapping Project (2007) estimated at water coverage in rural areas based on functionality to be 54%. The challenges affecting efficient & effective provision of water services include: shortage of staff, low capacity in available personnel, high cost of maintenance materials, vandalism and base male rock or soil structure in other places. Irresponsible disposal of human excrement contaminates water sources, and communities relying on such water resources are consequently exposed to fatal water borne diseases, such as cholera, bilharzias, typhoid & dysentery. Lakeshore communities around Lake Chilwa often experience such problems during rainy season.

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11 Over 100% GER is due to the enrolment of under-age and over-age children).

Mulanje District12

Mulanje district is situated on the eastern side of Malawi in the Southern Region. The highest mountain in Malawi and Central Africa, Mulanje Mountain, with a peak of 3001 metres above sea level is found here. The population of Mulanje was 428,322 according to 1998 Housing and Population Census and the projection for 2006 were 540,000. The total land area of the district is 2,056 Sq.Km. 48 % of the population is below the age of 15 and 75% is below the age of 30. The main ethnic groups in the district are Lomwe, Yao and Nyanja. Chichewa (52.64%), Chinyanja (33.62%), Chilombe (10.26%) and Chiayo (2.34%) are the dominant languages and 89 % of the people are Christians whilst 5 % are Moslem. The people in the district have a diversified cultural background. However, most families follow the matrilineal system of marriage (chikamwini) whereby land is acquired through marriage and a man resides in the wife’s village. The husband is not part of the kingship structure with the children belonging to the wife’s village and clan. The district has 9 constituencies and 24 wards respectively. Half of the MPs from the District are women. The district is divided into 6 Traditional Authority areas: Chiefs are the overall in charge of the areas and below them are Group Village Headmen and Village Headmen. There are 75 Group Village Headmen and 496 Village Headmen. The following have been identified as the main development issues in the district: 1) Food insecurity; 2) Poor access to safe water; 3) Poor quality education; 4) High morbidity and mortality rates; 5) High prevalence of HIV/AIDS; 6) Inadequate accessibility to essential services; 7) Poor office accommodations; 8) Inadequate care and support to orphans, other vulnerable children, elderly and youth; 9). High crime rates; 10) Acute land shortage; 11) Environmental Degradation; 12) Poor sanitation in public places. Mulanje District differs from the national average figures: lower life expectancy, clearly higher infant mortality, lower fertility rate, higher crude birth rate and higher crude death rate. In 2004 in the Malawi Demographic Health Survey, still a very high infant mortality figure of 145 was registered compared to other selected districts, as well as a very high under-five-mortality rate of 221. The average household size in the District is 4.0 persons. According to the data from the Mulanje District Village Action Planning (VAP) out of all households 65% are male headed, 32 % are female headed and 3 % are child headed. The total number of child headed households is 4,050, which means on average almost 9 households per village are child headed. In the statistics of the MDHS it is indicated that in Mulanje District only 51 % of children under age of 18 live with both parents. Table B8.4. Indicators Malawi Mulanje 1998 2006 1998 2006 Expectation of life at birth 42 46 * 45

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12 Mulanje District Socio Economic Profile, March 2007, Mulanje District Assembly District Development Plan 2007-2010.

(years) Infant mortality rate (per 1,000 live births)

134 76 147 81

Total fertility rate 6.5 6.3 5.9 6.2 Crude birth rate per 1000 persons

50.0 48.2 49.6 49.4

Crude Death Rate per 1000 persons

20.9 16.3 24.1 17.7

* not available. Source: NSO, 1998 Malawi Population and Housing Census and Projections for 2006. Land pressure has become a severe problem in the district and 96 % of the subsistence farmers cultivate plots less tan a hectare in size and many have been forced to look for work outside the district. Due to the small land holding sizes, there are many chieftaincy and land disputes. High population growth (estimated annual growth rate 3 %) and a large portion of good arable land being taken up by tea estates has led to this phenomenon. The backbone of Mulanje’s economy is the tea industry which provides employment for a large number of labourers. Unemployment is high which is reflected in the low income levels and high crime rates in the District. The district has rich endowments of natural resources but environmental problems are rampant mainly because of high population. This leads to deforestation and extinction of some tree species. According to the Integrated Household Survey of 2004/5 provided by the National Statistical Office (NSO) the district has a proportion of 30.60 % ultra-poor people and 68.60% in the poor bracket compared to 22.40% ultra poor and 52.40% poor nationally. At the regional level (South rural) the rates are at 31.50% and 64.40% in the ultra-poor and poor bracket respectively. This shows that Mulanje district poverty rates are significantly higher than those at national and regional level. The total annual household income for Mulanje is MK 25,495 as compared to the Regional and National levels which (in 2007) were 40,090 and MK 50,904 respectively. The characteristics of the income for Mulanje are as follows: from salaries and wages MK 16,200, from agriculture MK 4,700; from enterprises MK 13,122 and from other income sources MK 1,972. Social services provided include health, water and sanitation, education, transport and communication. Access to these services is constrained by poor and inadequate delivery systems. All government departments are understaffed. People have to walk long distances to access any services. Although the district is poor it would have good potential for improved agriculture especially in the tea industry, water development and irrigation, small scale trade & industry and tourism. Table B8.5. Population estimates in Mulanje District (N= 539 573)

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Group Population estimates Children under 1 year (5%) 26,979 Children under 5 years (17%) 91,728 Under 15 years (48%) 258,895 Women of child bearing age (23%) 124,102

Expected number of pregnant women (5%) 26,979 Expected number of deliveries (5%) 26,979 Expected live births (5 %) 26,979 Prevalence of HIV/AIDS is at around 20 % higher in Mulanje than the national average but has in the recent years gone down from over 25 % in 2001. The epidemic has significantly affected operations at all levels of health service delivery system in Mulanje in a number of ways. The drop is mainly due to a number of interventions that are being carried out in the district by various stakeholders. Table B8.6. Some of the most common diseases presented at health facilities in Mulanje within the first quarter of 2006 Disease Category Month, 2006 Malaria Jan Feb Mar Apr Under Five 11,633 103,786 6,313 6,205 Over Five 13,404 10,629 5,474 5,700 Pregnancy 57 51 78 76 Total 25,094 21,056 11,865 11,981Diarrhoea 575 420 208 227AIDS 240 228 556 247Schistosomiasis 189 210 192 194Meningitis 49 53 10 3IDRS, Mulanje DHO, June 2006 Mulanje needs badly improvement in sanitary facilities which is evidenced by the high number of diarrhoeal outbreaks especially in the rainy season. There are notable cholera prone areas that need priority in distribution of resources. Within the past five years (before 2007), Mulanje had the worst number of recorded suspected cholera cases in the 2001-2002 rainy seasons. During that season alone, the DHO recorded 987 suspected cholera cases of which ten died. In the 2005/06 fiscal year there were 126 cholera cases with a case fatality rate of 0.8%. Hunger and unsafe water contributed to the last cholera outbreaks. Based on the 1998 Malawi Population & Housing Census for Mulanje District, out of the population aged 5 years or older 52,7% were able to read and write at least one particular language. The literacy rates for males was 61.8% and for females 44.8%. In the District, 52% of the population aged 5 years or above had attended primary school, 3.2 % had attended secondary education and 0.1 % university education. About 44.7 % had never attended any school. Table B8.7. School enrolment, number of teachers and teacher/pupil ratio in Mulanje District

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No. of schools 146 Number of pupils /Boys 60,457 / Girls 59,424 Total 119,881 Number of teachers/Male 865

/Female 362 Total 1,227 Teacher/pupil ratio 1:98 Short fall 800 Source: DEO 2006 There is an acute shortage of physical facilities for learning and the majority of the pupils still learn under trees, especially in junior classes. There are also schools without access to safe drinking water, latrines, classrooms, desks and this discourages pupils, especially girls, from going to school. The problem of absenteeism becomes worse during the rainy season. The schools are perceived as health hazards for pupils which contributes to the high drop-out of girls from senior classes. Adult literacy classes are organized under the National Adult Literacy Programme (NALP). Currently the department has 160 classes spread throughout the district with a total number of 4,319 learners of whom only 36 were male. Mulanje district has no major water bodies except for five major rivers whose source is Mulanje Mountain. The major negative environmental impact is deforestation along the rivers. Due to high human population and high demand on forest resources and extension of agricultural land. Neither in the rural nor semi-urban settlements proper housing plan has been developed regarding roads, toilet/latrine facilities or refuse disposal, creating risks of infections and environmental hazards. The quality of water is not documented. The National Water Point Mapping Project (2007) estimated at water coverage in rural areas based on functionality to be 48%. However, with rivers cutting human settlements and tea estates there is a high risk of contamination due to agriculture, waste dumping and also as chemicals and fertilizers at the tea estates are usually spread aerially. Pressure on the water resources has been increasing over the years mainly due to drought, abstraction and extraction or irrigation in the tea estates. B8.8. Major Demographic and Socio-Economic Indicators for Malawi and the target Districts

Indicator

Malawi Lilongwe Rural District

Zomba District Mulanje District

Area (‘000 Km2) 118 6.159 2.580

Population (millions) 13.913 1.138 (est. -05)

0.592 (-98) 0.540 (est. -06)

Sex ratio (M/F) 96.114 88.015

Urban population (% of total)

17,416

13 2007 14 1998 15 2007

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16 2007

Population density (per Km2)

117,5 219 (-98) 209 (-98)

Economically active population (%)

46,317

Economically active female population

48,5

GNI Per Capita (Euro) 17018

Female-headed households %

32.019

Child-headed households %

3.0

Consumer Price Inflation (%)

10.9

Gender Empowerment Index (2004)

0,394

Human Development Index (of 174 countries) 2004

166

Population living with less than I USD a day (%)

65,3

Population 20living under the national poverty line %

64.4 76.7 70.0 68.6

Share of “ultra-poor” %21 31.5 41.0 30.6

Population growth rate (%)

2,6

Urban growth rate (%) 4,7

Population below 15 years (%)

Population 65 years or older 65 years (%)

Dependency ratio (%)

M/F (number of men to 100 women)

Life Expectancy at Birth (years) MF

48,322 4523

17 205 18 2007 19 2007 20 Poverty Mapping, Integrated Household Survery, HIS 2004

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21 HIS Definition

Life expectancy at birth – F (years)

48,4 4624 46.6225

Life expectancy at birth – M (years)

43.6626

Crude birth rate (per 1000)27

40.7 48.1 49.4

Crude mortality rate (per 1000)

14.8 21.8 12.8 17.7

Infant mortality rate (per 1000)

111 M2898 F

73 (MF) 88.61 M29 72.48 F

145 (MF)

Under-5 mortality rate (per 1000) MF

131.8 145 144 221

Total fertility rate (per woman)

5.66.330

6.2

Maternal mortality rate (per 100,000)

984.0

% women using contraceptives

32.5

Adult illiteracy 31Rate (%) (MF)

35.9

Adult illiteracy Rate (%) F

46

Adult illiteracy Rate (%) M

25.1 40.1 38.1 38.2

Gross Primary School enrolment, MF (%)

12532 96.0

Net Primary School Enrolment (%), MF

80.0 50.8 87.2

Primary School enrolment F (%)

126 (N= 167,324 F, 152,888

M))

Secondary School enrolment, MF (%)

29 (N= 11,637)

22 2007 23 2006 24 2000 25 2006 26 2006 27 2007 28 2006 29 2006 30 2006 31 2006

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32 2004/5

Primary School Drop-out rates M/F

8.2 M12.6 F

17.2 M15.8 F

Secondary School enrolment, MF (%)

26.0 (N= 4,841 F, 5,923 M)

Daily calorie intake per person

2,077

% adults 15-49 with HIV/AIDS

12.5 20.0

Number of medical doctors per 100,000 inhabitants

2.1

Number of nurses per 100,000 inhabitants

56.3

Number of births attended by trained personnel (%)

56.1

The project’s anticipated impact on communicable diseases (in particular water-borne diseases such a cholera, typhus, etc.) and malaria will be positive. Impact on poverty is also expected to be positive as reducing the time used by households to fetch water it will be possible for more children to attend school and more women to undertake farming or other income-generating activities. Improved health will also have a positive impact on productive activities. Women who will learn literacy and other skills as part of t his project will have an improved social position in their communities. The project will also create income-generating opportunities for artisans and those selling the necessary materials and spareparts for water and sanitation facilities. Villagers will be involved in the implementation, monitoring and evaluation according to the guidelines of the GOM (see Annex B3). Protection of catchment areas will involve certain social risks as previous experiences in Malawi (e.g. Thyolo) show that relocated populations have tended to return to their original sites. These risks will have to be dealt with in consultation with and according to the GOM practices (sufficent compensation packages to the relocated populations, etc.) The social impact of the project will be monitored through the following indicators:

o under-5 mortality rates o maternal mortality rates o school-enrolments for girls o drop-out rates for girls o time used in fetching water by households o share of women in local level committees and the share of women in responsible positions o number of men trained in H&S issues

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o catchment areas protected

B9. Project preparation and supervision Preparation of the Rural Water Supply and Sanitation Component included consolidation of lessons and draft program guidelines, plus building consensus on key policies and implementation arrangements for RWSS. It involved compiling water supply coverage information, setting out a rural sub-sector investment plan, and developing a RWSS capacity building strategy. It also included the development of a strategy for RWSS hygiene and sanitation based on the draft National Sanitation Strategy, and ensuring the integration of gender equality into the component. Preparation of the Water Resources Management Component included preparing complete assignments for (i) enabling legislation from the National Water Policy; (ii) water resources management institutional and technical support, (iii) water resources investment strategy including costing for construction of nine multi-purpose dams, a Management Information System, and surface and groundwater monitoring stations for quantity and quality, (iv) pilot catchment management, and (v) Lake Malawi level control. The overall NWDP program comprised preparation of a program management implementation manual, updating and preparing new RWSS manuals, plus manuals outlining organizational arrangements/responsibilities, and procurement, accounting, information, and social/environmental safeguard systems. Activity DateIdentification Nov 2005Preparation Nov 2007PCN to Opscom Feb 2008Appraisal Mar 2008Presentation to Senior Management May 2008Negotiations Jun 2008Board Approval Jul 2008Planned Date of Effectiveness Nov 2008Planned Date of Mid-term Review Apr 2010Planned closing date Apr 2013

The preparation stage involved consultations with national and district government and stakeholders, plus Development Partners. Bank Staff involved in the mission comprised: T. Roberts, Water & Sanitation Engineer, J.Maula, Socio-Economist, P.Wadja, Rural Economist (consultant), R. Nafti, Environmentalist (consultant). The field visits comprised consultations with potential stakeholders to assess their interest in the intervention. Development Partners consulted were: CIDA, DFID, Wateraid, World Bank, GTZ, EU. Government of Malawi consultations included: Ministry of Irrigation and Water Development: Water Supply and Sanitation Department, Water Resources Board, Integrated Rural water Supply & Sanitation PMU, Environmental Affairs, Ministry of Economic Planning & Development, Ministry of Local Government and Rural Development, Ministry of Women and Child Development, Ministry of Health; Regional Education (Central West Region), Lilongwe District Assembly, Thyolo District Assembly).

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C1. Sector Wide Outcome Indicators

Ph.* Performance Theme Indicator

I 1 Water Access Rural % of people within 0.5 km (rural) and 0.2 km (urban) of an improved water source

I Rural I

2 Functionality Small Towns

% of improved sources that are functional at the time of a spot check

I Rural I

3 Value for Money Small Towns

Average Investment cost per person of new water and sanitation scheme

I Rural HH II Urban HH II

4 Sanitation access / use

Pupil : Latrine stance ratio in schools

% of people with access to and use of improved latrines / toilets (households and schools). Measure pupil to stance ratio.

II Protected (e. coli) II Treated (e. coli) II Treated (colour) III Wastewater: III - BOD III - Phosphorus III

5 Water Quality

- Total suspended solids

% of water samples taken at point of water collection / waste discharge that comply with national standards

I 6 Equity Rural Mean Village deviation from the district average in persons per improved water point

II HH II

7 Hygiene access / use Schools

% of people with access to and use of hand-washing facilities

I WUA I Trusts I

8 Gender

BH Committees

% of water and sanitation committees where at least 70% of the members are women and at least 2 women hold key positions

II Handpump systems II

9 Management Rural Piped systems

% of actively functioning WUA’s, Trusts and BH Committees

Note: * Gradual implementation by phase:

Phase Sector Performance Report I First SPR II Second SPR

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III Third SPR

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C2. Gravity Flow Schemes Elements of Management Fee Computation The monthly Management Fee payable to the Operator will be computed on the following basis:

COMPONENT UNIT BASIS AMOUNT Base Fee MWK. …… /month Water Sales Fee MWK. …… /m3 Billing Fee MWK………./ connection /

month

Pipe Network Maintenance Fee

MWK….. / km / month

New Connections Fee MWK. ……. / connection Instructions for computing the monthly Management Fee: 1. Base Fee amount is the fixed component agreed to be paid to the Operator every month to

cover the Operator’s fixed general, administrative and overhead costs plus a reasonable mark-up. This amount is the same for each month and shall never exceed 50% of the value of bills issued.

2. Water Sales Fee amount is the component agreed to be paid to the Operator to cover

production costs for water sold plus a reasonable mark up. Compute this amount by first filling the month’s paid for water (in m3) into the “BASIS” cell and then multiplying the BASIS by the corresponding UNIT fee in the second column.

3. Billing Fee amount is the component agreed to be paid to the Operator to cover costs of

servicing customers plus a reasonable mark up. Compute this number by first filling the actual number of customers billed for the month into the “BASIS” cell and then multiplying the BASIS by the corresponding UNIT fee in the second column.

4. Pipe Network Maintenance Fee amount is the component agreed to be paid to the

Operator to cover costs of routine maintenance of the pipe network plus a reasonable mark up. Compute this amount by first filling the total pipeline length at the end of the month into the “BASIS” cell and then multiplying the BASIS by the UNIT fee in the second column.

5. New connections Fee amount is the component agreed to be paid to the Operator to cover

costs of making new connections plus a reasonable mark up. Compute this amount by first filling the number of new connections made during the month into the “BASIS” cell and then multiplying the BASIS by the corresponding UNIT fee in the second column.

6. Compute the total Management Fee amount by adding the components in 1 to 5 above.

Guide for Financial Activities Financial Activity Who Checks How Often What to Check For Annual Budget Preparation

Scheme Committee/ Book keeper

Annual • Scheme book keeper/Treasurer along with Branch Treasurers to determine expected income and expenditures for coming year;

• Budget prepared and submitted to Scheme Committee and once approved submitted to Trustee Board;

• Board reviews and approves with input from DCT; and • Trust Board to submit budget for approval at Annual General Meeting.

Financial Review WPC Branch Scheme Committee/ Book keeper WMA/DCT

Weekly Monthly Monthly Monthly

• WPC Treasurer needs to keep checking on payments if done monthly; some might consider annual collecting at end of harvest; collection sheet filled monthly;

• Branch Treasurer collects funds on monthly basis, checking receipt book and WPC Collection Sheet;

• Branch Treasurer records in Branch Collection Sheet and hands collected amount to Scheme Treasurer or Book keeper (Issue—hand in all funds to Scheme Treasurer but receive funds for expenses anticipated based on monthly budget forecast?);

• Scheme Treasurer or Bookkeeper (if available) to collect monthly amounts from Branch Treasurers; must fill out monthly collection sheet and if no funds collected must be noted against that Branch (each Branch Treasurer should sign on line of Collection Sheet);

• Scheme Treasurer should make deposit & withdrawals on monthly basis (so only one trip to bank and on 2nd week of following month);

• Ideally all funds collected should be deposited in bank and separate withdrawal for monthly expenses anticipated based on monthly budget forecast;

• Treasurer/Book keeper to supply monthly financial report to Trustee Board member in charge of finances with performance against budget; copy should also go to DC?; and

• Treasurer’s monthly collection sheet reviewed by WMA/DCT during second week of following month.

Audit Outsider (DA financial or School Bursar, Coop Auditor)

Annual • All treasurer receipt books to be checked; • Checking on procedures and practices of scheme financial management; • Annual revenue and expenditure summary developed; • Audit report to Board & DCT; • Report made to Annual General Meeting. See Chapter 5 of CBM Manual for further detail.

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Guide for Scheme Management & Governance Governance Activity Who Checks How Often What to Check For Water Point Committee Branch Committee Monthly • WPC meets each month to review performance for maintenance, O&M collection,

involvement in community sanitation; • WPC members identifies main constraints in performing tasks and whether WPC

members has left or not participating; • Duties explained to new WPC members; • WPC prepares monthly sheets (see Appendix 7 of CBM Manual); and • Branch Committee member from area discuss with WPC members whether main

duties are performed and main constraints for: maintenance, O&M collection, involvement in community sanitation.

Branch Committee Scheme Manager Scheme Committee WMA

Monthly • Branch Committee members visit and report back to area WPCs monthly; • Branch Committee members perform O&M tasks as scheduled; • Holds meeting on monthly basis and reviews performance of scheme technically and

financially; • Sends monthly report to Chair and Treasurer of Scheme Committee; • Nominated Branch Committee members attend Scheme Committee meetings; and • WMA to visit Branch Committee monthly a check on any branch problems.

Scheme Committee Scheme Manager Trustee Board DCT

Monthly • Scheme Committee members perform O&M tasks as scheduled; • Holds meeting on monthly basis and reviews performance of scheme technically and

financially (Scheme Manager should be in attendance); • Sends monthly report to Chair and Treasurer of Board; • Nominated members attend Board Meetings quarterly & report back to Scheme

Committee; and • District Community Water Officer and Trustee Member visit each month?

Trustee Board District Assembly MoIWD

Quarterly Bi Annual

• Holds meeting on quarterly basis and reviews performance of scheme technically and financially;

• Sends quarterly report to District Assembly & MoIWD Regional Office; and • Regional Water Office visits scheme every 6 months to check on scheme.

Annual General Meeting

Attendance open to WPC reps.

Annual • Board presents review of Scheme performance technically and financially to those attending AGM;

• Audit results given and coming year budget explained and voted on; and • Members vote on acceptance of Board’s report and review other business.

• Organizational Structure • Assume ownership

• Trust in place • Protect the catchment area

• Main Committee in place: functional, number of members, gender • Clean intake and tanks annually• Branch Committees in place/functional • Prevention of vandalism• Tap Committees in place/functional • Elections (every X years)• Private connections • Meetings (main committee)• Fees per taps (MWK/tap) • Support hygiene and sanitation• Scheme Manager (incentive based pay) • Support Gender Equality and HIV/AIDS • Revenue collectors (incentive based pay)OVERALL ASSESSMENT OVERALL ASSESSMENT

• Business plan • Total taps (completed and hooked-up)• Budget • Amount in bank as of progress visit• Bank account • Taps providing water (A)• Monthly financial record • Taps paying monthly fees (B)• Audit of the Scheme’s financial system • Monthly revenue (C)• O&M fees collection falls below 65% • Monthly expenses (D)• O& M fee collection falls below 50 % • Taps paying (B/A) %

• Profit or Loss (C/D) %OVERALL ASSESSMENT OVERALL ASSESSMENT

• Technical staff to maintain the Scheme • Assume ownership - RT: repair team/salary • Protect the catchment area & report any infractions- C: Caretaker/salary • Clean intake and tanks annually- SS: Section supervisor/salary • Prevention of vandalism- SM: Scheme manager/salary • Elections (every X years)

• Records monthly status tap, branch line • Meetings (main committee)• Walk main & branch line each month • Support hygiene and sanitation• Quick response 2 days repair damage • Support Gender Equality and HIV/AIDS • RT check flow into tanks taps monthlyOVERALL ASSESSMENT OVERALL ASSESSMENT

Assessment rating: Ratings of start-up responsibilities and ongoing performance of GFS schemes range as follows:5: excellent, outstanding 4: very good, very capable or sound3: weaknesses, some deficiencies 2: weak, major deficiencies1: very weak, little or no activity, or poor results

GRAVITY FLOW SCHEMESManagement and Performance Indicators

1A. Organizational Responsibilities 1B. Organizational Performance

2B. Financial Performance2A. Financial Responsibilities

3A. Technical Responsibilities 3B. Technical Performance

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Catchment Protection Outputs for GFS

Output No.Level 1, environmental training programs (Districts)

4

Level 2, environmental training programs (TA, village chiefs)

57

Level 3, village awareness campaigns 6,231 Formation of CPCs (1 per GFS), 2 Pre

3paration of Catchment Plans

Inventory beneficial features and degradation hotspots

23

Community environmental action plans 23 Catchment rallies 23 Tree planting 12,500,000 Catchment Bylaws prepared & enforced 27

C3. Water Point System Indicators

Borehole Water Point Committee (WPC)

2 women trained in book keeping procedures

3 members form the repair team and trained in CBM 1

Meet and regulate use and care of water pointCollect and manage feesReport back monthly to water users on expenses and receiptsMaintain financial records, maintenance activities, MinutesOrganise cleaning and maintenance of water pointsSign contracts with area mechanics, supervise their their worksReport concerns to Village Development Committees

10 elected members (7 females members, 2 female officers)

Spare Parts Retailer

Identification in consultation with HAS, WMAs and GVHsShort list done with the assistance of HAS, WMA & GVHsPlacing of advertsing boeards outside the retail shopTrainingTraining for 2 daysIntroduction to different types of pump spare partsCertificate issued after training

Criteria for selectionBusy trading centre where communities buy commoditiesShould be an open placeThe background of the owner and his customer careShop should be opened most of the weekShould be able to read and writeWillingness to sell related products (jerry cans, water guard)

Facilties for retailersStarter pack of spares (MWK 15,000) given to retailersRetailers replenish from Maintenance Centres

Identification

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Output Indicators No.no women trained in book-keeping proceduresno WPS's with 70% women membersno. WPCs with 2 women as officersno WPC's who purchased spare partsno. retailers trainedno of AM trained CB1no of AM trained CB2no retailers stocking partsno retailers certifiedno AM's certifiedno WMA's trainedno maintenance contractsno repair contracts , cf broken down pumpsno WPC's collecting fees monthly, quarterly or semi-annually

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Area Mechanics (AM)

Inspect spare parts sales record of frequent buyers

NGO/WMA investigate how the person obtained repair skills

NGO assisted by TA, GVH and VHTrainingTrained in CBM 1 for 5 daysTrained in CBM 2 for 5 daysTraining conducted by WMACertificate not issued after training

Criteria for selectionA local person, at least 30 years of age, able to read and writeShould be interested in community development workIdeally should have attended training in CBM 1Honest and good reputationNeeds to have existing technical skillsMust be acceptable by TA, GVH and VH

Monitoring of AMsLocal NGO monitors activities of the AM'sWMA monitors activities of AM's (QPR submitted to District)Special Repair Contract (for complex repairs)Fishing out operation, or welding operationWMA or local NGO call a more qualifies LSPMWK 1500 per operation

Contract Typesi) Repair Contract (Pump not in working condition)Agreed cost of one repair contract is MWK 400Repair guaranteed for 30 daysAM dismantles pump and indetifies needed replacement sparesWPC purchases required sparesAM repairs pump

ii) Maintenance contract (Pump in working condition)1 year contract durationTo replace fast wearing spare partsContract price paid in advanceWPC buys spare parts in advanceAM dismantles the pump each quarter and replaces worn partsWPC signs receipt for work satisfactorily done

Note: if the break down could not have been prevented by the maintenance visit, or if the VPC was negligent, a cost is incurred. If the breakdown could have been prevented through maintenance vist, the repair is free of charge. In both cases the borehole committee has to buy spares for repair work.

Identification

C4. NWDP Components Financed by ADB The NWDP components are: C-1) Urban Water Supply and Sanitation, C-2) Town, Market Center and Rural WSS, C-3) Water resources Management, and C-4) Program Management and Capacity Building, the financing of which is in Annex B2. The Bank’s intervention contributes to components C-2 (rural aspect only) and C-3 and C-4. NWDP RWSS Component Central to the RWSS Component is the integration of water, sanitation and protection of the environment. A “package“ approach for rural water supply and sanitation that not only includes construction and installation, but also all soft aspects associated with the water supply provision namely mobilization, community-based planning and monitoring, hygiene education (including maintaining a safe water chain and promotion of household sanitation), gender awareness/creation, capacity building at user level required for continued use and sustainable operation. Another key mechanism is the demand-driven approach where the communities are empowered to lead their development needs. This overall approach will be implemented using a 2 step procedure (Annex B3) for the RWSS sub-components. The Water Resources component will be implemented through the newly created National Water Resources Authority, supported through the NWDP by the World Bank. Sub-Component – Water Supply Systems In line with MIWD priorities, the Bank will finance the rehabilitation and extension of existing water supply systems, and secondly new systems. For rehabilitation of a gravity flow scheme (GFS), the Step 1 and 2 planning and community financing pre-requisites must be met. Catchment Protection Committees (CPC) will be formed and their plans established. Coordination with the CPCs and supported by the WMAs, LSPs will undertake water resources assessments (WRA) to investigate water quality status in existing boreholes and management of water resources. Using the WRA survey output and CPC action plans, water quantity, quality and source management parameters will be set for the design stage. The civil works for boreholes and GFS will have a second community contribution of 3.5% during construction, either in cash or kind. The indicative civil works outputs are listed below.

District TA New BH Rehab BH Total BHRehab & Extend

GFSLilongwe 15 1,752 889 2,641 -Machinga 13 193 243 436 10Mulanje 8 191 152 343 7Zomba 21 452 224 676 6Total 57 2,588 1,508 4,096 23

Other outputs focus on increasing sustainability of rural GFS piped systems and comprise a minimum number of sustainably managed water source catchments for Mulanje, Machinga, and Zomba. These will be complemented with water resources / environmental assessments for water and sanitation for all four districts, as was done in the Bank’s IRWSS project. A summary of the Management and Performance Indicators describing organizational, financial and technical responsibilities and expected performance for the GFS is in Annex C3. Similarly, principal elements of the functioning of WPCs, Area Mechanics and Spare Parts Retailers are shown in Annex C3. The 4,096 completed BH schemes and 23 GFS in the four districts will be supported with one year of post-construction mentoring which, among others, will ensure the effective implementation of the MOU (PIM) signed with the district, community and scheme operator.

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CPCs will benefit from capacity building under the supervision of the District Coordination Team and implemented with the assistance of the District Forestry authorities. Technical guidance on tree species will be provided by the Mulanje Mountain Conservation Office. Village Chiefs, who have the power to allocate land, will be part of the mobilization force behind catchment protection.

Sub-Component – Sanitation and Hygiene (S+H) In line with MIWD priorities, the Bank will finance construction of sanitation facilities at schools, markets and health centres, with each unit comprising hand washing facilities, VIP or Ecological latrines and urinals in Traditional Authorities (TA) in all 4 districts. For the supported schools, it will provide separate and adequate improved facilities for boy and girl students and for male and female staff also ensure provision of functioning hand washing facilities with soap and running water, plus training on adequate security for all sanitary facilities in schools.

Type of Public Facility No. of Public Facilities S+H Unit to ConstructSchools 86 513Health 57 57Market 57 228Total 200 798

S+H will also provide institutional hygiene and sanitation (ISH) training in 200 public places and mobilize and train of 6,231 Health Surveillance Assistants, WaSHCO and Village Headmen. It will be coordinated by the MWCD and include at least one “sanitation teacher” in Participatory Hygiene and Sanitation Transformation (PHAST) to the 86 supported schools and draw on the latest methods to motivate students to take charge of improvements to their S+H conditions. A consultant will prepare a National 10 Year Institutional Sanitation and Hygiene (ISH) Investment Plan & Strategy. It will include: i) a specific 10 year financing strategy to promote and market sanitation and hygiene, ii) an implementation plan for elimination of the backlog of handwashing and latrines facilities in public places, iii) the institutional human resources costs of the health extension function as it relates to ISH, and iv) a strategy for strengthening budget mechanisms for sanitation. Activities surrounding the consultancy will include a National Sanitation Forum to raise the profile of ISH and adoption of a Declaration on Sanitation with ISH principles for government leaders to endorse to show their commitment to scaling up activities. Sub-Component – Capacity Building Activities will include preparation of tender documents for procurement of: i) district water offices and staff houses, ii) computers, office equipment and vehicles for the district office and MWCD, iii) 4 district based Capacity Building Consultants (CBC) and their mobilizing activities for Step 1. Other essential activities include preparation of training materials for: i) accountancy skills for WPC’s for cash and in-kind receipts, undertaken by MWCD, plus financial and management training for GFS operators, and, ii) Water Monitoring Assistants (WMA), Area Mechanics (AM), Spare Parts Retailers (SPR) and artisans, iii) administrative training in writing of bylaws. Outputs include: (i) construction of 4 district water offices and 12 staff houses, each with model roofwater harvesting systems, ii) procurement of office equipment and furnishing for 4 districts, including 5 vehicles and 57 motorcycles, iii) 4 District Water Supply and Sanitation Programs, with budgets, action plans and tender documents, iii) District, Area and Village based staff adequately trained and equipped to support rural water supply and sanitation at the community level. (iii) Community facilitators capable of supporting RWSS at the community level, (iv) sustainably functioning WPC’s through accountancy training to 8,192 persons, of whom 6,144 will be women,

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and the same for GFS through management and operations training to scheme operators, (v) 57 each of artisans, AMs, SPRs and WMAs trained and providing services during construction and operation of groundwater and surface water systems, (v) establishment or re-establishment of 4,096 WPC’s and 23 GFS private sector or community operators, all able to integrate S+H, CM and management of their water supply facilities on a cost recovery basis (O+M), administration from 57 TAs able to prepare and enforce bylaws on catchment protection, payment of tariffs and latrine construction and usage. Sub-Component – Program Management The NWDP Coordination Unit (CU) is already established and a coordinator appointed. A country-wide RWSS coordinator has been appointed and an M+E specialist will also be appointed. The CU has reserved offices for the staff hired under the Bank’s sub-Component, which will include a sub-component coordinator, accountant, secretary and driver. In addition, to ensure a leading role for women in the program, the MWCD Literacy Program Coordinator will be supported to implement the S+H activities and accountancy training. At the district and TA levels, 3 district water officers and 40 water monitoring assistants will be employed at government rates, and taken over by the public service before the end of the sub-component. Other outputs comprise: CU office furniture and equipment, 4 vehicles, 4 audits, 2 tracking studies and 2 value for money studies, baseline study for Machinga, and endline studies for all 4 districts. NWDP Water Resources Management Component Sub-Component – Institutional and Technical Support IDA are supporting establishment of the National Water Resources Authority (NWRA) through an institutional formation process and are funding engineering and environmental consultancies for a water level control structure and pumping scheme on the Shire River to control outflows from Lake Malawi. The Bank has been requested to contribute to water resources infrastructure and additional establishment costs for the the new institution. Activities comprise: establishing the MIS database structure, designing the data transfer and exchange networks, installing the meteorologic and hydrologic stations and setting up the procurement of office equipment, furnishings and vehicles. Outputs comprise contributing to the operationalization of the NWRA, establishment of a nationwide Water Resources Monitoring System on the Shire and/or Songwe Rivers and Lake Malawi, and a water resources management information system.

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