Document of

The World Bank

FOR OFFICAL USE ONLY

Reqt N. 8446

PROJECT PERFORMANCE AUDIT REPORT

REPUBLIC OF KENYA

WILDLIFE AND TOURISM PROJECT(WAN 1304-RE)

MARCH 16, 1990

Operations Evaluation Department

Ms document has a restricted distribution and may be used by recipients only in the performance oftheir ofWal duties. Its contents may not otherwise be disclosed without World Bank authorization.

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REPUBLIC OF KENYA

FISCALYA

July 1 to June 30

COUNTRY EKCHANGE RATES

Name of Currency : Kenya ShillingsYear Exchange RateAppraisal (1975) Average US$1 - 8.05Intervening Years Avbrage : US$1 - 11.01Complation Year Average (1986) : US$1 - 16.04

CIDA - Canadian International Development AgencyERR * Economic Rate of ReturnIBRD - International Bank for Reconstruction and

Development (World Bank)MTW - Ministry of Tourism and WildlifeOED - Operations Evaluation DepartmentPCR - Project Completion ReportPMU - Project Management UnitPPAR - Project Performance Audit ReportRHEA - Regional Mission in Eastern AfricaSAR - Staff Appraisal ReportWCMD - Wildlife Conservation and Management

DepartmentWCMS - Wildlife Conservation and Management ServiceWPU - Wildlifa Planning Unit

VOM OUPNSAL I=5 ONLYTHE WORID BANK

Washington, D.C. 20433U.S.A

Opeeats IvalaIn

March 16, 1990

MEMOANDUN TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Performance Audit Report on Kenya Wildlifeand Tourism Project (Loan 1304-K) .

Attached, for information, is a copy of a report entitled"Project Performance Audit Report on Kenya - Wildlife and Tourism Project(LAan 1304-KE)" prepared by the Operations Evaluation Department.

Attachment

This docusent has a uestricted distribution and nay be ued by -ecipients e Iy in the pedbraaac eof their olAcial duties. Its contents may not otherwse be dibclosed without World Ban authortionw .

FOR OFFIA USB ONLY

PROJECT PERFORMANCE AU6lT REPORT

REPUBLIC OF KENYA

VIIDLIFE AND TOURISM PROJECT(LDAN 1304-EE1

TAL. OF CONTENTS

Pajge No.

PREFACE ........................................................ iBASIC DATA SHEET ............................................... iiEVALUATION SUMMARY ............................................. v

PROJEC-LPERFORMN AUDITMERD

I. BACKGROUND.......... 1

II. IMPLEMENTATION EXPERIENCE......................... 4

III. PROJECT OUTCOME............... 6

IV. FINDINGS AND ISSUES ....... 8

A. Weak Implementation....................... 8B. Economic Rate of Return Revisited......... 10

ATTACHMENTS

1. Comments from the Kenya Wildlife Service2. Comments from the Wildlife Conservation

and Management Department3. Comments from the Canadian International

Development Agency

NAP - IBRD No. 11845R1

This document has a astriced distrlbution and say be aged by ecipients only In th performanceof thei offcial dutie. Its contents may not otherwise be disclosed witheut World Bank authoriation.

PROJECT PERFORMANCE AUDIT REPORT

REPUBLIC OF KENYAWILDLIFE AND TOURISM PROJECT

(ALAN 1304-E

1. This is a Project Performance Audit Report (PPAR) on the Wildlifeand Tourism Project, involving an IBRD loan in the amount of US$17.0

. million to the Government of Kenya, with the objective of supporting theGovernment in implementing its policies for wildlife and tourism. Theloan was approved on July 1, 1976, and became effective on November 10,1976. W.$0.2 million of the loan was cancelled on December 31, 1985 at therequest of the Borrower. The original closing date of June 30, 1982 wasfirst extended to June 30, 1984 and ultimately to June 30, 1985. Finaldisbursement was made on December 31, 1985. The project was completed onJune 30, 1986. Parallel financing in the amount of Can.$2.0 million wasprovided by the Canadian International Development Agency (CIDA).

2. The PPAR is based on the Project Completion Report (PCR) preparedby the Africa Region and issued in 1989,1/ the Staff Appraisal and thePresident's Reports, the loan documents, the transcript of the ExecutiveDirector's meeting at which the project was considered, on a study ofproject files, and discussions with Bank staff. An OED mission visitedKenya in June 1989 and discussed the effectiveness of the Bank's assistancewith staff of the Wildlife Conservation and Managemenc Department (WCMD)and other public and private sector indviduals concerned with wildlife-based tourism. Their kind cooperatiou and valuable assistance in thepreparation of this report is gracefully acknowledged.

3. The PCR provided a reasonably satisfactory account of the projectexperience. This PPAR elaborates on particular aspects such as theinstitutional arrangements for project execution, limited commitment toproject objectives on the part of Government and weak supervision by theBank, and the economic rate of return.

4. Following standard OED procedures, copies of the draft PPAR weresent to the Borrower and CIDA. The comments received from the Republic ofKenya and CIDA are reproduced as Attachments to the PPAR.

I/ Project Completion Report, Kenya - Wildlife and Tourism Project (Loan1304-KE), Report No. 7727, April 20, 1989.

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REUBIL!C 09 EENAE~Uf &Ramm awmc

(INNU 1306-1qn

LIT PRJ=T DATA

Appratsal atual orItem imtimta Enmaed Atua

Total Project Coat <$ million) 36.6 32.2Under~un (I) - -11.5Loan Aunt (U$ gilltoa) 17.0

Disbursed 16.8Canelled (US$ aillion) 0.2

Date Physlcal Cmpaa~ Completed 12181 06/86Proportlon ofpleted

by Abov Date (2) NA 100.0ProportLon of Tim Inderrun

or Overn M +96eoontam late of Raun (X> 15.6 -1.0

Finanatal Perfon~n Fair

Institutt~il Parfor Por

gUMLATå= ESTnTE A1m ACTU~ DISBUREME~T<in US$ million)

zmZ MfZ ZZ2 ZEm 2mf ZEm MZE ZæP MEE zæ

Appralsal Estimt (US$ a) 0.4 5.9 10.0 14.0 16.3 17.0 - - - -

Acrual (US$ a) 0.1 2.8 4.3 4.6 9.2 11.1 11.4 14.0 16.8 16.8Actual as X of Appraia~Estmate (2) 25 47 43 3$ 56 65 67 82 99 99

Date of final diaburs~ Jamay 15, 1988

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Orisinal

Firgt eton In Vile* • 05173Gove imm-t's application • 07173megottation~ 02123176 - 02/26176Board Approvat 07101176 - 07/01/76Loan Agrcement Date 07109176 - 07/09176Effectivensa Date 10107/76 11110176Completion Dat* 06/30/81 - 06/30186Closing Date 06130182 06/30,84 06110/85

(&taff weeks)Uf m m Mn mi MI M m£ EnR z= HRmi nu £m ffl 1

Preappratsal 8.7 .2 30.0 84.1 8.0 131.0Appraisal 1.7 96.3 .2 98.2Negottation 13.1 .6 13.8Supervision 31.9 37.9 21.1 21.2 21.2 14.4 13.2 11.5 4.7 .1 2.6 179.8Other 3.6 1.5 5.1

TOTA. 8.7 .2 30.0 85.8 117.4 32.8 37.9 21.1 21.2 21.2 17.9 14.7 11.5 4.7 .1 2.6 427.8

Tak LeaerDate No. et Specialisa- Perforr ~ypes of

misso (mø.ivr., Eagau tiona atiE ProblemA

Identification 09173 1Preparation I 06/74 1Preparation II 11/74 4Preappratsal 05/75 2Appralaal 07175 5

Supervision 1 11176 3 Eon. 2 ,Supervision 2 05177 2 Eng. 2 2 ",PSupervision 3 11/77 4 P.A. (no 590 report on ile)Supervision 4 03/78 I r.A. 2 1 NSupervision 5 08/78 2 P.A. 2 1 NSupervision 6 01179 2 F.A. 2 2 NSupervision 7 07/79 3 Eng. 2 1 mSupervision 8 02180 2 Eng. (no 590 report on fiMe)Supervision 9 07180 2 Eng. <no 590 report on £M1.>Supervision 10 03/81 2 Eg. (no 590 report <a file)Supervision 11 07/81 1 Eng. (no 590 report on file)Supervision 12 11/81 1 ng. 2 1 PSupervision 13 04/82 2 Eng. 2 2 PSupervision 14 10182 3 Eng. (no 590 report on il)Supervision 15 03/83 1 Eng. 1 2 ySupervision 16 10/83 2 Eng. 2 1 rSupervision 17 06/84 1 Eng. (no 590 report oan til)Supervision 18 10/84 2 Eng. <no 590 report oa fle)Supervision 19 06/85 1 Eng. <no 590 report o file)Completion 11/86 2 Eng.

Omu P=OJECT DATA

Sorrower: lepubito of KmnyaxecutIrSZ 6Ageoy: Ninatry of Touri= and ~LIIG, pråiaipally tbrouh it UIl8ife

Conervatfi and ~nae- Depare~an

gEon. - Snooa~tt, "S. - ngiee* I.A. • ia tal Malyst.

1 - Proble-ee or 0inr problema 2 Nodrate problem.g 1 - Iprovgs a - Statlonary.o N ~ Ngertl a T * T-a0n ala p - Polixtoals and F FIn otal.

PROJECT PERFORMANCE AUDIT REPORT

REPUBLIC OF KENYAWILDLIFE AND TOURISM PROJECT

(IAN 1304-RE)

SIntrodumtion

The project was intended to combine wildlife conservation with an. expanded visitor capacity in three of Kenya's more important wildlife

tourism areas, at a time when the tourism industry was experiencing stronggrowth and much concern was being expressed at the resultant congestion andenvironmental damage which was taking place in those areas.

Objectives

The project was designed to support the Government in implementingits policies for wildlife-based tourism through strengthening staffing,training and investment activities.

Implementation Experience

Progress was slow and halting throughout the project's almost tenyear implementation history. Weak management support for project policyobjectives, particularly at the senior levels of the WCMD; organizationalfailings: staffing deficiencies; budget shortages; civil works design andprocurement delays; poor performance by contractors; and progressiveworsening of the wildlife conservation situation due to the continuingpoaching of large herbivores (elephant and rhinoceros) all contributed toan unsatisfactory outcome.

Reults

The results have been most disappointing. The quality of civilworks construction was often poor and maintenance has been less thansatisfactory, while large numbers of project financed vehicles andequipment quickly became inoperative because of inadequate repair andservicing. A major rehabilitation effort will be necessary before projectfacilities can be brought back to a satisfactory operational condition.Many of the vehicles will have to be replaced.

The policy-based and institutional strengthening aspects wereparticularly disappointing. The reorganization of the WCMD did notstimulate the expected efficiency improvement; the untested. revenue andcost sharing arrangements for the reserves, parks and surrounding pastoralareas with county councils were never introduced, while those for groupranchers proved to be unworkable; and poaching of large herbivores and

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illegal export of their trophies, especially of elephant tusks andrhinoceros horn, continued unabated in the absence of effective regulatorycontrols and strong Government commitment.

SustaiMbilit

Progressive deterioration of the loan-financed civil works andequipment items observed at audit, which took place three years afterproject completion, clearly indicated the limited sustainability of projectprovided assets. Efficient management, aided by a dedicated staff andsupported by adequate rehabilitation, operating and mainterance funds are aprerequisite for improving the prospects of sustainability.

Findinas and Lessons

Effective management of the WCMD matched by a major supervisioneffort on the part of the Bank, upon uhich the success of this complexproject was heavily postulated at appraisal, did not material!xe; instead,limited commitment to project objectives by the agency top managementcoupled with a lack of determination on the part of the Bank in resolvingoutstanding problems with Government, commencing at an early implementationstage, led to a low level of project performance, which persisted throughto project completion (PPAM, paras. 33-41).

The unsatisfactory project outcome is reflected in the re-estimated economic rate of return (ERR) of minus 1% at audit, in contrastwith a PCR re-estimated 29%, which the audit believes to be insupportableon the basis of audit findings (PPAM, paras. 42-46) and the original SARestimate of 15.6%.

PROJECT PERFORMANCE AUDIT MEORANDUM

REPUBLIC OF KENYAWILDLIFE AND TOURISM PROJECT

(IMA 1304-KE)

1. In the mid 70's when this project was being prepared, Kenya wasexperiencing strong growth in its important foreign tourist industry.Growth in visitor traffic ias leading to congestion and environmentaldamage in the more popular wildlife viewing areas where vehicular accessfacilities were inadequate, while land pressure from pastoralists andadjudication of traditional pastoral lands around these areas, andindiscriminate game poaching, was threatening the survival of many of therarer species and, by inference, the future af wildlife tourism. Cnncern)out the situation led the Government and Bank to agree on the need for a

project which would focus on wildlife conservation and on expanea g visitorcapacity in three such affected areas of particular significance fortourist itineraries within Kenya.1/

Obectives

2. The project was designed to support Government in implementing itspolicies for wildlife-based tourism through strengthening of certainstaffing, training and investment activities..

3. The project as appraised included a diverse collection ofinvestment components comprising major infrastructural works incorporatingroads, buildings and equipment in three of the more popular wildlife-basedtourist areas (Amboseli National Park, and Masai Mara and Samburu/BuffaloSprings/Shaba Reserves); 2/ game proof barriers on the perimeters of theseand several other parks or reserves; construction and equipping of aWildlife and Fisheries Training Institute at Naivasha; establishment ofthree anti-poaching units; support for a Project Management Unit and aWildlife Planning Unit (WPU) and associated studies, including a tourism

, pricing study and a very large herbivores study; and smaller components for

* 1/ Agricultural Sector Survey - Kenya, December 1973, Report No. 254a-KE,Annex 15.

f/ National Parks are areas in which AU1 activities in conflict withwildlife preservation are prohibited; National Wildlife Reserves areareas in which hunting is prohibited.

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conserving important exposed paleontological sites at Lake Turkana; andproviding buses for the Wildlife Clubs of Kenya.

4. The project was to be implemented, in the main, by the Ministry ofTourism and Wildlife (MTW) largely through a newly created WildlifeConservation and Management Department (WCMD) formed in 1976 by a mergingof the Kenya National Parks (a statutory body) into the former GameDepartment, with support frcm the Ministry of Water Development, Ministryof Health and Ministry of Education for provision of water supply andopeation of clinics and schools respectively at the patk or reserveheadquarters sites. The National Museum was to be responsible for thepaleontological sites.

5. The reason for the merger of the Kenya National Parks into theGame Department is not clear from the Staff Appraisal Report (SAR), butBank files show that the incorporation of a statutory body having a highconservation reputation into a Government agency of lesser repute was notuniversally acclaimed. Much concern centered around the issue of ivorypoaching and a widespread belief, expressed locally and internationally, ina possible nexus between poachers and Government officials. The Bank,aware of these concerns and also conscious of the weak administrativecapabilities and capacity of the Game Department, discussed with Governmentthe alternative of building on the proven strengths of the Kenya NationalParks. But this option did not prevail, and thereafter the Bankrationalized its support for the Government's reorganization proposal onthe grounds that the Government would not support the alternative, andrecommended submission of a wildlife bill to Parliament permitting theestablishment of the new agency as a condition of negotiation.

6. The SAR laid great stress on the conducting of formal agreementsby the Government with county councils and group ranchers3/ in theneighboring wildlife dispersal areas,4/ whereby the landowners wouldundertake to follow ranching practices consistent with continued wildlifemigrations. In return, the Government would be committed to assisting thepastoralists to earn direct returns from their wildlife in the form ofconsumptive utilization through hunting or from tourism rentals, includingpayment when necessary to enable them to earn a guaranteed minimum returnfrom wildlife.

7. Coordination and supervision of project execution was to be theresponsibility of a project manager in ciarge of a Project Management Unit(PU) within the VCHD while the WPU was to be in the NTW.

2/ Group ranches are lands held on freehold by several families holdingequal undivided shares.

£/ Dispersal areas are the comparatively large pastoral lands surroundingthe parks and reserves wherein the herds of herbivores and theirpredators migrate during the rains.

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8. The Staff Appraisal Report (SAR) acknowledged that the projectwould be difficult to Implement in view of the major organizational changesInvolved, the application of new techniques of wildlife planning, the scaleof the constructions in relatively remote areas and the need for numerousagreements with rural landowners. Institutional weaknesses were alsrecognized, ranging from uncertainty surrounding the ability of Governmentto implement the various new policies and laws underpinning the investmentincluding a legal notice abolishing trade in raw ivory, strengthening ofstaff capabilities through training, and instilling of higher standards ofmotivation and discipline in the ranks of the WCMD. Competentadministration was considered crucial, and the effectiveness of thedirector of the WCND was seen as critical to the success of the project.It was recognized that a major supervision effort by the Bank would beneeded, but no specific proposals were made as to how the Bank woald ensurethat such resources would be forthcoming.

Finance lan

9. Total project cost at appraisal was estimated at US$36.4 a, ofwhich the Bank was to provide US$17.0 m through a Third Window loan. Bankfunds were variously allocated for civil works, vehicles and equipment,consultant services, staff salaries and other operating costs.

Pre-implementation Processing

10. The initial project proposal from the Government was outlined in apreliminary report drawn up by a National Parks and Tourism Project WorkingGroup, with assistance from RMEA staff, which was presented to the Bank inmid-1974, and was followed by a full identificatin report in July 1974.

11. A pre-appraisal mission in November 1974 discussed theidentification report with Government and provided detailed advice onfurther preparation. Appraisal followed in July 1975.

12. The project as appraised was predicated on the assumption that theWildlife (Conservation and Management) Act which permitted the setting upof the WCHD would be presented to Parliament before negotiations. Thedecision memorandum concluded that a draft county councils and landownerswildlife revenue sharing agreement, together with procedural guidelines fordetermining dispersal area boundaries and a timetable for negotiations andsignature of such agreements, should be conditions of negotiation. Thedecisions memorandum also concluded that the appointment of the Director ofthe WCD should be a condition of Board Presentation (but this conditionwas not pursued, apparently at the insistence of the Government delegationduring negotiations), while appointment of the heads of the PMU (who wasalso the project manager) and the WPU were to be conditions ofeffectiveness.

13. Several issues arose during the SAR drafting stage, includingstatus of the county council and landowners agreements, MTW and WCXS

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staffing, and civil works design, which necessitated a pre-negotiationmission in November 1975. Finally, a couple of months prior tonegotiation, the Bank decided t( include an anti-poaching coiponent (notincluded in the original Government proposal) as a means for combating therapidly escalating threat to many forms of wildlife, which arose from theactivities of well organized groups of poachers over which the Governmentappeared to have little control. In support of this proposal the Bank alsodeclared the gazettement of a legal notice prohibiting private trade inivory as a condition for Board presentation.

14. At negotiation in February 1976 the Bank, in recognition of thecrucial importance of the role of the director in the new agency, proposedthat the person selected for this post would only be appointed afterconsultation with the Bank, but the Government did not accept the principleof consultation prior to appointment aid later proceeded unilaterally withthe appointment (para. 17). Following negotiations it was announced thatthe legal notice banning illegal trade in ivory would be gazetted in thefirst week of March.

15. Receipt of the legal notice by the Bank prompted a complaint fromthe Bank's Legal Department that the notice was "watered down" incomparison with what had been agreed at negotiation, in that, by includinga clause permitting dealings in game trophies under license, it did notunequivocally prohibit private trade in raw ivory as agreed at negotiation(Loan Agreement Section 3.13). Reluctance by the Government to modify thenotice to that effect led to a compromise whereby a supplemental letter wassigned confirming that legally acquired stocks of raw ivory could beexported or otherwise e' sposed of only until October 31, 1976, and that theGovernment would thereafter take measures to ensure that no private dealerwould be permitted to import, export or deal in raw ivory after that date.The project was approved by the Board on July 1, 1976 and the loan wassigned on July 9, with effectiveness scheduled for October 7.

16. Effectiveness was declared after one month's delay, on November10, after the appointment of the project manager and receipt and approvalby the Bank of a program for the carrying out of the anti-poachingcomponent.

II. IMPLEMENTATION EXPERIENCE

17. The project made very slow progress in the first two years ofimplementation due in large part to delays in appointing staff to the PMUand WPU, and more generally, to institutional problems arising from thecreation of the WCMD and the integration of staff from the two formeragencies. Supervision reports for the period refer to a steady increase inthe incidence of poaching, variously attributed to local hunters, foreignarmed gangs and highly placed profit oriented Kenyans suspected of having

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official connections. Many WCMD staff were reported to be demoralized, andthe Bank became concerned at what was taken to be the weak commitment ofGovernment to project objectives. The appoin'ment of a Director of theVCMD became a sensitive issue during the first year, leaving the Bankdissatisfied with the Government's choice and the Govern.ant aggrieved atthe Bank's attempts to influence the selection. Thereafter relationsbetween WCMD senior management and the Bank became strained and remained sofor much of the implementation period, to the detriment of projectprogress. Commitment to project objectives on the part of WCMD appears tohave weakened appreciably, following the assumption of duty by theGovernment nominee, and is shown most markedly in the delays experienced instaffing the PMU and the WPU, and in the extent of understaffing of thesekey units which became a regular complaint of Bank supervision missions.

18. In May 1977, independently of the project and without priordiscussions with the Bank, the Government banned all hunting throughout thecountry in an effort to control poaching, and in June a supplementaryletter to the Loan Agreement covering the anti-poaching component wassigned. The ban on hunting was criticized by safari operators and otherson the grounds that it would only make things easier for poachers.

Seauence and Design Changes

19. By the time of the fifth supervision, in August 1978 the projectwas gaining momentum. Some equipment had been procured, civil worksconsultants had been appointed, the tourism pricing study was underway,game proof fencing was being constructed, a small staff had been assignedto the WPU, a viewing tracks plan had been prepared for the Amboseli Park,and the anti-poaching units were being established.

20. Thereafter slow progress was made with most components through therema.aing life of the project, the closing date for which was extended bythree years to June 1985 mainly to permit completion of the larger civilworks contracts. In the closing years the pace of implementation,particularly of civil works, was again retarded, due to reduced Governmentbudgetary allocations at a time of serious financial stringency.

21. Consultants for the main civil works design (three park/reserveheadquarters and the Naivasha Institute) were only appointed in the secondhalf of 1978, i.e. almost two years after project effectiveness; designswere completed early in 1980; and the award for construction of theNaivasha Institute was not made until early 1981, just a few months beforethe SAR estimated (June 1981) completion date. Construction contracts wereawarded to numerous small contractors, in compliance with Government policyat that time. This gave rise to problems in construction supervision; muchdelay in completion, and often poor quality construction which has added tothe subsequent maintenance problem.

22. Construction of the Naivasha Institute was particularlytroublesome. The original contractor failed and was succeeded by a second,

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and construction costs rose from an SAR estimated K. Sh 29.5 m to an actualK. Sh 74.0 m. The facility displays a numbe.r of design or constructionimperfections which could prove costly to rectify.

23. By project completion only 491 km of wildlife viewing roads wereconstructed, well short of the SAR estimate of approximately 800 km and ofthe WPU plans. The shortfall was due to delays in establishing the WPU andin preparing plans, and to slow construction progress. In some cases thetracks were merely graded rather than surfaced with gravel.

24. Despite repeated efforts to negotiate revenue sharing agreementswith the county couvcils for the Masai Mara and Samburu/BuffaloSprings/Shaba reserves no such agreements were reached, because thecouncils, which were also expected to share some of the costs, were notconvinced of the advantages. Similarly, agreements allowing payments togroup ranchers for wildlife grazing rights were concluded only for theAmboseli Park dispersal area, and were suspended by the Government after afew years.

Management

25. Frequent changes at the ministerial policy level (PermanentSecretary) and at the senior management levels (Director, WCMD, and theHeads of the PNU, WPU and Anti-Poaching Unit) often interfered with thesmooth implementation of the project. Most of these staff carried outtheir duties as best they could under often difficult and even dangerouscircumstances, but a lack of commitment to project objectives of a few atall levels is discernible from a reading of Bank files, and was frequentlyalluded to by both Bank and Government staff during audit interviews.

26. The establishment in 1976 of the WCMD and its absorption of theindependent Kenya National Parks, which was strongly criticized by manywildlife and tourism interests at the time as a retrograde step, gave riseto much uncertainty and misgivings on the part of the staff involved.Their concerns were justified by the dismissal of many experienced formerNational Parks staff during the early implementation years, and this actionundoubtedly weakened the professional and managerial talents available tothe project.

III. PROJECT OUTCOME

27. The results have been most disappointing. The quality of civilworks construction at the Parks/Reserves and the Naivasha Wildlife andFisheries Training Institute was variable but often poor, and maintenancehas been less than satisfactory, to the extent that deterioration of manyassets, both buildings and roads, had progressed to a state of disuse atthe time of audit inspection (June 1989). Similarly, large numbers of theproject-financed vehicles and equipment quickly became inoperative, may be

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beyond repair and should be written off, and most of the remainder, as wellas many roads and buildings, are in need of major rehabilitation beforethey can be brought into a program of regular maintenance.

28. The seriousness of the situation with regard to project outcomeshould be apparent from the fact that civil works, equipment and associatedconsultant services cost US$28.3 m, or 88%, of the actual project cost ofUS$32.2 m (PCR page 8, Table 1).

29. The policy-based and institution strengthening aspects of theproject were particularly disappointing. The revenue and cost sharingarrangements could not be effectively concluded. The WPU did not developthe multi-disciplinary range of skills necessary for it to function as anefficient planning arm of the MTW, as envisaged at appraisal. It wasplagued by severe staffing deficiencies throughout the life of the project,to the detriment of the skills-transfer objective of a CanadianInternational Development Agency (CIDA) assistance project, which was notenvisaged at appraisal, but was introduced towards the end of the secondyear of implementation and operated in parallel with the Bank-assistedproject in 1979-83.

30. The Tourism Pricing and the Very Large Herbivore Studies, whichwere carried out under the supervision of the WPU, were eventuallycompleted to the minimal satisfaction of the Bank, but only aftersubstantial revision to re-address Government and Bank concerns at theinterim or draft final report stages. Government accepted some of therecommendations, but in most cases only after several years ofconsideration, so that it is open to question whether the changesintroduced (raising of park entrance fees and airport taxes, and lifting ofa ban on capture and export of game animals, for example) were a result ofthe studies per se or would have been adopted without the studies as anormal response of Government to changing circumstances.

31. Probably the most successful component has been the three anti-poaching units which were staffed and equipped through the project and, inspite of limited operational funding which particularly affected theirmobility, were able to exert some restraining influence over poacherswithin their restricted areas of operation.

32. The 301 km of game-proof barriers constructed (160 km moat, 101 kmhigh tensile fence and 40 km electric fence), although only 60% of the SARtargeted 500 km, appear to have been effective to varying degrees inprotecting cultivated lands from damaging intrus2ons by wildlife, and alsothereby avoiding retaliatory killing of the animals by cultivators. It islikely that barrier requirements will mount steadily owing to increasingpressure from agriculturists and pastoralists in the dispersal areas, andthe experience afforded to the WCMD through this component in terms of siteplanning, design and costing should serve its successor, the Kenya WildlifeService, well in the future.

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IV. FINDINGS AND ISSUES

A. Weak Imnlementation

33. The appraisal report emphasized that the project would bedifficult to implement since it involved the negotiation of numerousagreements with rural landowners, the construction of facilities inrelatively remote areas, and the application of new techniques of wildlifeplanning which would be accompanied by major organizational changes withinthe MTW (paras. 3-8). For these reasons a major supervision effort wasconsidered necessary (SAR, page 18. para. 4.01). Furthermore, uncertain-ties connected with the shift in values, institutions and management prac-tices in the dispersal areas in response to Government policies, and theuncertainty surrounding the ability of Government to implement these poli-cies, led the appraisal to caution that the effectiveness of the Directorof the WCMD would be of critical importance to project success (SAR, page26, para. 5.27). He was expected to provide competent administration tothe WCMD from the commencement of the project, and to exert a greaterdegree of order and discipline than had characterized the earlierorganizations (SAR, page 26, para. 5.25).

34. Unfortunately, these high appraisal expectations were notrealized. The county and pastoralist agreements proved to be impracticableunder prevailing social and political conditions (para. 24); the quality ofroad and building construction was often poor and many costs excessive(paras. 21-22), while maintenance of civil works and of vehicles andequipment has been inferior, to the extent that many of these investmentshave fallen into a state of serious disrepair (para. 27); the WPU wasunsuccessful in assuming the intended leadership role in policy or physicalplanning (para. 29); while the reorganization failed to produce theanticipated improvements in administrative efficiency, but on the contraryled to demoralization, and loss of many of the more experienced staff(para. 26).

35. These circumstances reflect poorly on project management,particularly in the WCMD, in terms of its commitment to project objectivesduring implementation (possibly reflecting limited political support), andon the Bank in terms of weakness in carrying out its supervision role.Relationships between Bank supervision missions and the Directors, WNDremained distant and formal throughout the project implementation years.Surprisingly, in view of the numerous problems experienced in the course ofimplementation which are documented in the Bank's supervision reports, theproject was almost invariably performance rated as having only moderateproblems, while the trend was recorded as improving more frequently thanstationary. At no time was the project rated as facing major problems, northe trend as deteriorating in the ten supervision reports located in Bankfiles by the audit. Regrettably, no 590 supervision report summaries couldbe located by the audit for the other nine supervision missions.

.9.

36. More seriously, actions by project management in respect toproject policy objectives appear to the audit to have been largely proforma rather than guided by profound conviction of their appropriateness orworth. This left the Bank, which was unwilling to terminate the projectbut lacked resolution in confronting Government with evidence of suboptimalproject performance especially in the "software" area of policy change,with little recourse other than to assist Government in pushing ahead withthe non-controversial "hardware" areas of civil works construction, andvehicles and equipment procurement aspects in the closing years. TheBank's own commitment also appears to have lessened when the TourismDepartment was phased out of the Bank organizational structure in mid-1979and the Urban Department took over responsibility for the project. At thattime a municipal engineer became supervision task manager and led allremaining 13 supervision missions. Not surprisingly, civil worksconstruction and disbursement issues tended to dominate the dialoguebetween Government and Bank from that point through to project completion.

37. In consequence, the audit is led to conclude that an opportunityto influence change in a favorable direction during implementation was lostbecause of a combination of limited commitment to project objectives on thepart of Government, and of a lack of determination on the part of the Bankin resolving outstanding problems by pressing Government more strongly intotaking corrective action.

38. In retrospect, deterioration appears to have set in within thefirst six months after effectiveness, when the first Director to beappointed to the newly established WCMD proved to be the candidate leastfavored by the Bank, and the first supervision mission reported thatpoaching controls were weak and that many of the agency staff weredemoralized due to rumors of corruption in high places. From that time onthe Bank's ability to influence change remained severely handicapped to theultimate detriment of the project.

39. Had the Bank been willing to address boldly the issues arising atthat time with a view to precipitating radical changes in organization andmanagement the subsequent project experience might have been morefavorable. But, the opportunity was lost and never returned.

40. This project experience raises (but does not answer) the difficultquestion of how the Bank should deal with the illusive problem of suspectedproject related corruption in the face of an intransigent borrower which,while pursuing the construction of project financed civil works andequipment procurement, evades the attainment of previously agreed policyobjectives. It is the view of the audit that in this instance the Bankshould have been more resolute in confronting the borrower on deficienciesin project implementation, even to the extent of risking premature loanclosure on the grounds of limited commitment to project objectives and non-compliance with specific covenants.

41. Avoidance of such action reflects poorly on the Bank's reputationas a development agency, and can be construed as a disservice to borrowers

- 10 -

which are thereby burdened with loan repayments incurred through poorlyperforming investments.

B. Economic Rate of Return Reisited

42. An economic re-evaluation presented in the PCR (pp. 11-13) claimsan ERR of 29% In contrast to an SAR estimated 16%. However, the auditfinds the reasoning employed in determining the ex-post ERR insupportable,and believes that the true economic rate of return is more likely to havebeen negative given the fact that most project investments have beenunsatisfactory and in consequence had only marginal effect on improvingfacilities for tourists or in influencing increased investment by the localtourism industry.

43. The PCR attributes all incremental tourism investments("superstructure") in the three project areas to the project, beginning inYear 2. It likewise attributes all incremental gross operating profits(from tourist hotels, safaris, etc.) and related park revenues to theproject, also starting in Year 2. This attributed impact of the project oncollateral investments and profits from tourism therefore begins soon afterthe start of the project's own expenditures. For example, the PCR derivesthe net benefit stream for the Masai Mara Reserve as follows:

Nasal MarA Reserves PC EconaMiC Evaluation

(1) (2) (3) (4) (5) (6) (7) (8) (9)Project Collateral Groas Estimated Incre- Net

Year InvAtments Investments Operatiag Go wo Mantal BenefitIn Profits ProjectlA GOP Strea

aSuperstructusre (00P) [(8)-(2)-(3)

((M)-7) -(4)*(5)]Original Renewals Orginal Renewals

S i------------------* Sh llion (1986 prices)----------------------------

1978 0.5 - 27.5 27.5 - - 0.51979 18.5 1.3 32.1 27.5 4.6 -15.2 LA1980 9.3 13.3 40.4 27.5 12.9 - 9.71981 16.5 6.1 41.7 27.5 14.2 - 8.41982 15.6 3.0 25.2 $6.2 27.5 28.7 -15.11983 6.0 3.0 13.3 1.0 64.5 27.5 37.0 13.71984 3.0 3.0 8.3 1.5 73.0 27.5 45.5 29.71985 0.9 4.5 25.4 2.0 78.8 27.5 51.3 18.51986 - 4.5 51.0 3.0 102.5 27.5 75.0 16.51987 - 4.5 - 4.0 102.5 27.5 75.0 66.51988 - 4.5 - 5.0 102.5 27.5 75.0 65.51989 - 4.3 * 6.0 102.5 27.5 75.0 !4o

2002 - 4.5 - 6.0 102.5 27.5 75.0 64.5IRR 35.94

J& Taken as equal to 8OP (with Project) in Tear 1.k The PC shows -17.9, apparently in error.gHMs PCR, Annes IV, p. 2.

* 11 -

44. In particular, the PCR assumes without discussion that (1) am ofthe collateral investments in "superstructure" - the PCR's term for hotelsand private sector services - at the three Reserves between 1979 and 1986would have occurred without the project; and (ii) UM of the increase intourism in the three project areas between 1979 and 1986 would haveoccurred without the project. In this respect, the PCR has simply adopteduncritically the assumptions underlying the original appraisal evaluation.The audit believes that such assumptions are incorrect. Its own analysissuggests that both the timing of the onset of project benefits and theirlevel are much less favorable than assumed.

45. The poor standards of repair and maintenance and the low level ofefficiency at which project assets are being utilized, as observed at allthree project areas at the time of field inspection (July 1989) leads theaudit to assume a three year delay rather than one in onset of projectbenefits, and to attribute only 25% rather than 100% of incremental grossoperating profits to the project. Using these assumptions the ERR for theMasai Mara Reserve becomes 5%, as shown below:

Masft-as esewrve: Revised Sconoai Evaluation

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Project Collateral Gross Reestimated Incre- Net

Year Iatments Investments Operatin GOP vio mental Senefitin Profits ProjectIA oP due Stream

aSuperstructure (00P) to Project [(8)-(2)-(3)

xa9z [(6)-(7)] *(4)-(5)]Original Renewals Original Renewals- ---------------------K sh million (1986 prices)----------------------------

1978 0.S - 27.5 27.5 - - 0.51979 18.5 0.3 32.1 32.1 * -18.8

1980 9.3 3.3 40.4 40.4 - -12.61981 16.5 1.5 41.7 41.4 0.3 -17.71982 15.6 3.0 6.3 56.2 52.2 4.0 -20.91983 6.0 3.0 3.3 0.3 64.5 38.5 6.0 -6.61984 3.0 3.0 2.1 0.4 75.0 64.8 8.2 -0.31985 0.9 4.5 6.4 0.5 78.8 69.4 9.4 -2.91986 - 4.5 12.8 0.8 102.5 87.0 15.5 -2.61987 - 4.5 - 1.0 102.3 87.0 15.5 10.01988 - 4.5 * 1.3 102.5 8..0 15.5 9.71989 - 4.5 - 1.5 102.5 87.0 15.5 9.5

2002 - 4.5 - 1.5 102.5 87.0 15.5 9.5IRR 4.8

J. Taken as equal to CoP with project for Year* 1, 2 and 3, with subsequent increments equalto 75Z of difference between COP vith project and COP reached in Year 3.

* 12 -

46. Using similar assumptions for the Amboseli National Park and theSamburu/Buffalo Springs/Shaba Reserves and integrating these for a combinedproject evaluation gives a revised ERR of minus 1, as shown below:

Combined ProJect Pevised Roonante Evaluation

(1) (2) (3) (4) (M) (6) (7)Project Colateral insmental Set

Tear inavstmenta Investmense In Gross Operating BenefitaSuperstrueture Profits (GOP) Stromdue to ProjectLA due to [(6)-(2)(3)

ProjctLk -(4)-())oriainal Renewals Orignal Renevels--------------------- x sa million (1986 prices)------------------

1978 1.5 - - - * -1.51979 50.9 - 2.4 - - -53.31980 21.2 - 3.6 - - -24.81981 38.4 - 11.9 - 4.2 -46.11982 39.5 9.0 10.0 - 10.0 -48.5

1983 12.7 9.0 7.2 0.6 13.4 -16.11984 7.3 9.0 2.6 0.9 1.5S -4.319835 1.5 12.5 10.3 1.3 18.4 -7.21986 - 12.5 15.0 1.6 26.5 -2.61987 - 12.5 - 2.1 26.3 11.91988 - 12.5 - 2.6 26.5 11.41989 - 12.5 - 2.8 26.3 11.2

2002 - 12.5 - 2.8 26.5 11.2IRR -0.8

j, Taking 253 of PCR evels.1b As in the case of the revised Masal-Mara analysis, these figures

represent 25Z of increments in (vith project) GOP beyond Year 3(compared vith PCR's estimate of 1002 of increments.. .beyond Tear 1).

- 13 - ATTACINET 1

KENYA WILDLIFE SERVICETdopms: "WUMuV**, 1100 Comments from the Kenya Wildlife Service HEADQUARTETelepbmi: leagat s0ol81-2 P.O. Box 40241

Rdr. No ..........I.....-.- NAIROBIand date

Date ..

KTS/CONF//4 Q/1/97

Mr. Graham DonaldsonThe World ank118 H! Street, F.W.ashington, D.C. 20&33

U.S.A.

Dear tr. Donaldson,

Thank you for your letter of 22/12/89 #+ich came together withthe draft of the Project Performance Audit Report on Loan 1304-XF. I found the report very useful and in my personal view,the criticisms were fully justified and if anything,understated. I look forward to seeinA the final ternort.

Y s r y,

TIj.r,-AF

- 15 - ATTACHMENT 2

MINIStRY OF TOURISM AND WILDL Page 1

Comments from the Wildlife Conservationand Department

Telearams: *WwuW. Naioif W1LLIME CONSERVATION ANDTeephow: Laugata s9910.7 MANAGOMENT DEPARTMENT

nr quwHEADQUARTERS

d No P.O. Box 40241NAIROBI. KENYA

..... e.ruar ..............

Mr. Graham Donaldson,Chief,Agriculture, Infrastructure and imanResources Division,Operations Evaluation Department,18181 Street, N.W.,Washngton, D.C. 20433,U. S. A.

Through

Resident Representative,Regional Mission in Eastern Africa,

P.O. Box 30577,JAIROI.

Dear Mr. Donaldson,

REt EENTA WILDIE AND TOURISM PROJE= (IDAN In-=ES)

PROJECP PEFORACE AUDIT REPORT

Thank you for your letter, datedl 22nd Deoember, 1989, forwarding thedraft Project Performance Audit Report (PPAR) for my comments.

This is an important document to me becanse it has shed light on thecomplex policy and institutional issues that took place prior to 1978when I joined the VCMD first as the Project Engineer and eventually asthe Project Manager, from a totally different environment of MunicipalEngineering. I have remained ignorant of these issues todate and one isbound to wonder vby since I was within VCMD. Throughout the Projectperiod (in my time) and immediately after, there persisted a distinctindifference towards the Project by most members of VCMD which leftthe Project staff feeling strangers within the Department. This hasremained a pussle until now because one would have expected enthusiasmand indulgement towardete new Project designed to better the managementof Wildlife. With this kind of environment, the project managementleadership ma guided solely on what was contained in the Jank's AppraisalReport (SAR) and the Loan Areement together with the normal GovernmentProcedures for project implThentation. It follows, therefore, that myfew comments on the report will be based on experience with the Projectviewed in the new light shed on the situation by the same report. Itwill be an addendum rather than a critique for the simple reason thatI largely concur with the findings of the report.

... /2

ATTACHMENT 2Page 2

1. County Council Agreements:

In the SAR and the Loan Agreement there a a condition that disbursement woulddepend on Matiefatory agrements under which goverment would m ge MasaiNara, Semburu, äufflo Springs and Shaba National ResOrves. These agreemntsas the PPAR rightly observes have never been accomplished and this to my mind,

togother with other policy and institutional issues dise*e in the PPARexplains the consequent failures in these areas.

I stand to be correoted, but it is a~parent that no disoussions vere keldwith the affected County Counils prior or &ring the projeot apyraisalto deterine the feasibility of imposing such a condition of effeotiveness.

If this is true, it is not surprising that an atmosphere of uistrust betveenVMND and the County Co~noils prevailed through~t the projeot period and after.

It did not only cause delays, but in these areas, there was a distinot hostilitytowars lCMD project staft by County Counils statt members, espeM~11l theroad construction units which made the borking environment in some instanoesalmost intorelable. This vms especially go in maajiNra National Reservewhere numerous Inoidents et mavtreatment wore reperted.

2. AT3D^L PARI AND ETIOKAL M =|

National Park are state lands and are established and managed by the CentralGovervment or by a 3oard of Trustees appointed by the 0mtral Goverment.The former case appliet during the Projeot perioa (TwCD) ~hle the lerapplies now under the Kerga Wildlife Service and betre the Nerger.

National Reserves are trustlands and are established and managed by thelocal authorities (County Councils) so long as the establihed wilålite policyis adhered to.

The above diffärence means that, unless management agreement are acomplihedgthe Central Government would not finance the maintenanoe of the facilities inthe Mational Reserves. That is the responsibility of the County Coun~*1.

Notwithetanding the above, the situation in Ambse.i National Pärk- shoulhave been better but it vas not possible due to the Central Governmentsbudgetary oonstraints.

3. IM0PM ION*

The SAR asmed that the project was to be implemented, .in the main, by theNIg through mDo, with rupport from oinistry of Water Development, Ministryof ealth and Ninistry of ducation.

In actual ftoty the Government policy towards projeot implementatien then wasfollowed. This meant that the Goverement implementing agencies, that isNinistry of Works (Civil Värki) and inistry ft Water Development (Water.wore ofpletely reeponsible for designs,terÄars and supervision. This inreality meant that W and VM vore merely rubber sta~ps ter these aspeotset the projeot and their major roles reined policy and institutional issuedand overall co-ordination of lm yrojeot. These isuaea are well coveredinie PPAR.

.... /3

ATTACKHEMT 2-17- 'Page3

4. EONDC EALfATION

The armguents presented in the PIAR are sound in 2y epinion but agan aI comented in the PCR, I feel Inompetent te omcnt on numwicalcalculations.

5. CL20US1OJ1

The PPAR is an important dooument with a nuber of lesa ioh wouldbe very useful for futur projets in this erganisation.

3. G. EINUrEAPOM=! PROJET MäCLGiM

Director,Kenya Wildlife Service,IAGATA

- 19 - ATTACHMENT 3

18 A nce canadienne de Canadian lnternationalinternational Development Agency

00, p~omenad. du Potagi 200 PRomenade du PorageHu (Oube) Huh. OuebecCANADA CANADAKiA OG4 KIA 004

Comments from the Canadian International Develo1-Amay

January 17, 1990

Graham DonaldsonChiefAgriculture, Infrastructureand Human Resources DivisionOperations Evaluation DepartmentThe World Bank, 18RD, IDA1818 N Street, N.W.Washington, D.C. 20433USA

Subject: KENYA: Wildlife and Tourism Project(Loan 1304-E) (CIDA Project 524/00702)Project Performance Audit Report;

Dear Mr. Donaldson:

Thank you for sharing with us your draft ProjectPerformance Audit Report.

CIDA's parallel contribution to the Wildlife and TourismProject amounted to $1,959,340.98, as shown in theattached CIDA Termination Report. Also enclosed for yourrecords is a copy of a mid-term evaluation done on theCIDA component of the project.

We look forward to seeing your final report.

Sincerely,

Stephen FreeCountry Program DirectorKenya

Canad5

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