Document of

The World Bank

FOR OFFICIAL USE ONLY îLL GNPY

Report No. 4758-MAG

STAFF APPRAISAL REPORT

DEMOCRATIC REPUBLIC OF MADAGASCAR

URBAN DEVELOPMENT PROJECT

May 24, 1984

Eastern Africa Projects DepartmentWater Supply and Urban Development Division

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

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CURRENCY EQUIVALENTS

Currency Unit = Malagasy Francs (FMG)US 1.00 -- FMG 400FMG 100 = US$ 0.25FMG 1,000,000 = US$ 2,500

WEIGHTS AND MEASURES (Metric System)

1 meter (m) = 3.28 feet

1 kilometer (km) = 0.62 miles1 square meter (m2) = 10.76 square feet1 square kilometer (km2) = 0.386 square miles1 hectare (ha) = 2.47 acres1 liter (1) = 0.26 US gallons1 cubic meter (m3) = 264 US gallons

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

BCT Bureau de Circulation et de Transport (TrafficManagement Bureau)

BPU Urban Project Unit (Bureau du projet urbain)BTM Rural Development Bank of MadagascarCATP Centre d'Application des Travaux Publics (Public Works

Training School)CEA Centre d'Expérimentation de l'Aménagement (Center for

Investment Policy Studies), Ministry of Public WorksCENAM Centre National de l'Artisanat Malagasy (National

Artisan Center)CFC Centre de Formation de la Comptabilité (Accountancy

Training Center)CUR Centre Universitaire Régional (Regional University

Center)DAUH Directorate of Architecture, Urban Planning, and

Housing, Ministry of Public WorksDGP Directorate General of Planning, Office of the

Presidencyfaritany Local government unit ("province")firaisana Local government unit: group of fokontany ("district")fivondronana Local government unit: group of firaisana

("municipality")fokontany Local government unit ("neighborhood")IFPB Impôt foncier sur la Propriété Bâtie (principal property

tax)ILO International Labour OfficeINPF Institut National de Promotion-Formation (National

Promotion and Training Institute)JIRAMA Jiro sy Rano Malagasy (water and electricity authority)SEIMAD Société d'Equipement Immobilier de Madagascar

(Madagascar Construction Corporation)TAFB Taxe Annexe à l'Impôt Foncier sur la Propriété Bâtie

(supplementary property tax)UNDP United Nations Development ProgrammeWHO World Health Organization

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

MADAGASCAR URBMA DEVELOPMENT PROJECT

STAFF APPRAISAL REPORT

Table of ContentsPage No.

I. SECTORAL CONTEXT ............... .. ............. . 1

A. Impacts of Urban Growth: Antananarivo and Toamasina ... 1B. Urban Institutions ...................................... .2

C. Goverament Initiatives.... o..... ................... 4D. The Bank's Involvement in the Urban Sector .............. 5E. Activities of Other Lenders ......................... , 6

Il. THE PROJECT .................... *............................ ....,..... 7

A. Objcivs........................ 7B. Project Description ............................. 7C. Choice of Project E lem enen........... ............... 8D. Record of Experience with Similar Projects 9

III. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ................. . 9

A. Estimated Costs . ........................................ 9B. Financing Plan ......a.......... ..*..... ...... ...... 12C. Flow of Funds ...................................... 12

IV. IMPLEMENTATION AND MANAGEMENT.` ........................... 13

A. Overview of Institutional Arrangements and Agencies ..... 13B. Procurement .. .. ......................................... 17C. Disbursement ......................................... . .. 19D. Training . ........... 20E. Accounting, Auditing, and Reporting Requirements .. 22F. Monitoring, Evaluation, and Supervision ................. 23G. Environment and Health ............ .. ............ . 23

V. FINANCIAL ANALYSIS, COST RECOVERY, AND AFFORDABILITY: ...... 24

A. Local Government Finance in Madagascar ........ ........... 24B. Cost Recovery ........................................ 27C. Affordability ..... .................................. 30D. Financial Impacts of the Project . ................ 32

This report is based on the findings of an appraisal mission which visitedMadagascar in June 1983. Mission members included Messrs. O. Grimes, J.Racki, and I. McDonald, I. Nahmias (consultants), and A. Konye (ILOconsultant).

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

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Page No.

VI. PROJECT JUSTIFICATION ..... .. .. . ... . .. . . . . .. ........... 33

A. Benefits and Impacts . . ....... .. .......... . 33B. Calculation of Economic Rate of Return................. 34C. Urban Poverty Aspects . ........................ , , , ...** 35D. Project Risks .... 35

VII. AGREEMENTS REACHED AND RECOMMENDATION ...................... 37

ANNEXES

1. Summary Description of Project Activities ..... . 402. Cost Estimates by Time: Main Components ..................... 473. Financing Plan: Main Components .... .......................... 494. Organization Charts ........................................ . 505. SEIMAD: Unaudited Financial Statements ...................... 53

6. CENAM: Unaudited Financial Statements . ....................... 557. Implementation Schedule ............................ 568. Project Execution and Management ............................. 579. Estimated Schedule of Disbursements ................ 6410. Municipalities of Antananarivo and Toamasina: Revenue and

Expenditure Statements ...................................... 6511. Distribution of Household Income, Isotry and Toamasina ....... 6712. Cash Flows of Project Entities ............................... 6813. Cost and Benefit Estimation and Economic Rates of Return ........ 7814. Selected Documents and Data Available in the Project File .... 81

TABLES

Table 1: Cost Estimates by Main Component ........................ ilTable 2: Project Financing Plan .................................. 12Table 3: Procurement Arrangements .. 17Table 4: Summary of Training Proposals .. 21Table 5: Schedule of Cost Recovery ............................... 29Table 6: Household Income Available to meet Upgrading Costs ...... 30Table 7: Affordability of Surcharge in Upgrading Areas . . 31Table 8: Economic Rates of Return, Global and by Component .. 35

MAPS

Antananarivo: Location of Project Components ................. IBRD No. 17492Toamasina: Location of Project Sites ......................... IBRD No. 17491Isotry-Anatihazo: Roads and Solid Waste Collection, Sewerage,

and Street Lighting ........................ IBRD No. 17485Isotry-Anatihazo: Storm Water Drainage ..................... IBRD No. 17487Isotry-Anatihazo: Water Supply ............................... IBRD No. 17486Morarano-Ambalakisoa: Water Supply, Storm Water

Drainage, Roads and Solid Waste Collection,and Street Lighting .. IBRD No. 17488

Ankirihiry-Mangarivotra: Water Supply,Storm Water Drainage, Roads and Solid WasteCollection, and Street Lighting ...... o..................... IBRD No. 17489

Antananarivo: Isotry Center Improvements . ..... ...... IBRD No. 17490

MADAGASCAR

URBAN DEVELOPHENT PROJECT

I. SECTORAL CONTEXT

A. Impacts of Urban Growth: Antananarivo and Toamasina

1.01 A steadily expanding portion of Madagascar's population of 8.5million people now lives in cities. From the present 17.5%, the proportionof the population living in urban areas is expected to reach 20 percent (3million) by the year 2000.1/ By then, 125,000 new residents would beadded to cities each year, three quarters of them through natural increaseand only one quarter through migration from rural areas. This sustainedgrowth has left the cities ill-equipped to provide the value added,employment, and services required for a viable economy. The stagnation ofthe economy's productive sectors has contributed to the spread oflow-productivity jobs in services and the informal sector. Moreover,because funds and equipment are scarce, essential infrastructure is notbeing maintained. The weak local tax base worsens this situation byforcing local officials to turn to the national budget for the most urgentexpenditures, at a time when the economy as a whole cannot generate thesavings required for investments in the priority sectors of agriculture,industry, and transport. Deteriorated service networks, low laborproductivity and earnings, run down housing, and inadequate urban transportshow that the impacts of poorly managed urban growth are pervasive. Theyare especially serious in Antananarivo and Toamasina, the capital and chiefport cities of Madagascar.

1.02 Antananarivo. With a 1982 population of 595,000 in the centralcity and another 250,000 in suburban districts, Antananarivo accommodatesnearly half the urban population of Madagascar. If Antananarivo is toincrease its effectiveness as the country's chief employment, trading, andmanagement center, it must meet the challenge of its unique spatialsetting. The crowded city center was built on steep hills above the ricefields and market gardens of the surrounding Plain of Antananarivo. Asland values rose, new households sought cheaper land outside the cityproper. The result has been an almost completely unchecked expansion,either onto the surrounding plain where flooding is frequent, or ontosteeply sloped hills whose access to the city is restricted to one or tworoad corridors.

1.03 Jobs and services have not kept pace with this expansion. Nearlyhalf of Antananarivo has neither sewerage nor lower-cost alternatives suchas septic tanks. Lack of adequate waste disposal and storm water runoffcreates pools of stagnant water on house lots and streets, permittingwaterborne diseases to spread more freely. Road congestion has beenworsened by the increase in private cars and in traffic along work triproutes to or across the city center. Poorly marked intersections and other"blackspots" contributed heavily to the nearly 3,000 traffic accidents in

1/ Urban residents are those living in centers of 4,000 or more.

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Antananarivo in 1978 (the latest year for which reliable figures areavailable), causing about US$1.5 million in damages. The difficulties ineven maintaining transport networks at their current levels were compoundedby the floods of January-February 1982 and the aftermath of hurricanes inJanuary and April 1984, which caused extensive buckling of streetsurfaces. For lack of equipment and organization of road crews, citystreets have remained virtually impassable for long periods.

I 04 Toamasina. Similar problems of inadequate services and poorurban management occur in a much different setting at Toamasina. Incontrast to the crowded districts of Antananarivo, Toamasina has reachedits present population of 100,000 by expansion at low density on a coastalplain where long narrow ridges of sand alternate with troughs of stagnant,swampy water. Although a 1954 realignment of the Pangalanes Canal (seeMap 17491) improved drainage for some districts, four neighborhoods to thewest and south of the city center completely lack basic drainage. Safe,piped water in addition to drainage is an urgent priority for theseneighborhoods, since about 40% of the population obtains drinking waterfrom contaminated ground sources. Lined privies, usually metal drumsburied in the sand, are rarely emptied because the city has not been ableto maintain its suction trucks in good repair.

B. Urban Institutions

1.05 Responsibilities for urban services, employment, and housing areorganized in a pattern similar to that of many other countries in theregion. A coordinating body, in this case the Directorate General ofPlanning (DGP) in the Office of the Presidency, is charged with preparingand reviewing urban investment programs and coordinating theirimplementation. The Interior Ministry supervises local governments.Technical ministries and public agencies are in charge of programs insub-sectors such as land servicing and housing (Ministry of Public Worksand Madagascar Construction Corporation, SEIMAD) and artisan promotion(National Artisan Center, CENAM). Municipalities are responsible for therepair ot streets and the maintenance of other essential services such asroad markings, drainage channels, and solid waste collection.

ln06 In practice, however, the weak coordination, outdated equipment,and inadequately trained staff that characterize urban institutions haveblurred lines of responsibility as new functions are created or taken overwithout redefining the old. Following a decentralization program begun in1974, responsibility for community facilities, minor drainage, streetmaintenance, and refuse collection is divided among four levels of localgovernment. Primary education and primary health care, for example,are to be handled by neîghborhood-level units (fokontany), numbering 500 -1,000 people. Markets and civil registration (births and deaths) are theresponsibility of district (firaisana) governments, while larger facilitiessuch as hospitals and Regional University Centers (CUR) are managed by theprovinces (faritany).

1.07 The Public Works Ministry, through its Directorate ofArchitecture, Urban Planning, and Housing (DAUH), has had little success înincreasing the stock of urban housing. DAUH has mainly relied on theexperience of the Madagascar Construction Corporation (Société d'Equipement

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Immobilier de Madagascar, SEIMAD), a mixed company 80% publicly owned, todesign, promote, and manage housing programs. Over the past several yearsthe scope of SEI'AD's housing programs has largely been confined tomanaging the current inventory of 7,000 units. Water and electricitynetworks on all housing sites are installed by Jiro sy Rano Malagasy(JIRAMA), the water and electricity agency.

1.08 The artisan and building trades receive assistance through theNational Artisan Center (CENAM), created in 1978 following an ILO study ofthe organization of job creation and training in Madagascar. UNDPfinancing since August 1978 has helped establish the main CENAM office inAntananarivo and six regional centers. With ILO assistance, CENAM ispromoting artisan cooperatives in bricks and ceramics, construction andagricultural tools, textiles, and leather. Cooperatives are given trainingand guidance in marketing, improvement of technical skills, and basicmanagement.

Municipal Management and Finance

1.09 Municipalities ("fivondronana") have the dual role of (a)managing programs of service provision and maintenance of infrastructure,including those initiated within their borders by national ministries; and(b) supervising their constituent districts (firaisana) and neighborhoods(fokontany), which in reality has often meant taking over tasks the lowertier governments are unable to carry out. Cities are managed by anExecutive Committee with an elected President (Mayor), and anAdministrative Committee. A Popular Council in each municipality votes onbudgets, taxation, and all major questions of economic and social policyfacing the city. The Executive Committee represents the nationalauthorities locally, maintains electoral rolls, and is charged withcarrying out decisions of the Popular Council. The day to day functioningof the local administration, as well as supervision of lower tier units, ishandled by the Administrative Committee, headed by a Delegate who reportsto the Executive Committee.

1.10 Lack of resources has severely hampered the effectiveness ofmunicipal administrations (see also paras. 5.01-5.10). The principalsources of municipal receipts, totalling about US$5.6 million forAntananarivo in 1982 and US$900,000 for Toamasina in 1981, are direct andindirect taxes, rents from municipal property, charges for services,government grants, and transfers of taxes collected nationally. Infrequentrevision of property valuations has contributed to a decline of 16% in realreceipts from direct taxes during the 1970s. The level of governmentgrants and transferred taxes has fluctuated greatly over the same period.Indirect taxes, rents, and charges for services have remained stable inmoney terms, resulting in a steep decline in real terms during the period1971-1980. The failure of all revenue categories to keep pace with servicerequirements has resulted in maintenance of service networks either beinggiven over to other agencies (principally the already overstretched PublicWorks Ministry), or simply not being undertaken. On issues that are bestdealt with on a metropolitan scale, such as transport policy, coordination

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between the main Antananarivo municipality2/ and the three othermunicipalities in the Antananarivo region Has proved elusive. No agency,for example, has been given responsibility for area-wide transportplanning.

C. Government Initiatives

1.11 Until recently, urban investment programs were aimed at meetingquantitative targets that were often remote from economic reality. The1974-77 Development Plan proposed to increase housing investment from 2-3%to 57O of GDP, while in the 1978-80 Three-Year Plan, "construction for thegreatest number" remained a priority but with a different goal: theconstruction of 20,000 dwellings units per year through 1980. Neithertarget was realized. Of the FMG 22 billion required over the 1978-1980period, only FMG i billion could be committed, and less than a quarter ofthat was actually spent, to build less than 1,000 houses. More recentinvestment strategy calls for a smaller urban program, with emphasis onmaintenance of infrastructure and efficient management of services, asattention continues to be focused on revitalizing agriculture and otherdirectly productive sectors.

1.12 New policy directions in employment, urban transport, and urbanplanning are being prepared or are beginning to be applied. In the currentplanning framework, cities of Madagascar are to be a major foeus of jobcreation and training that would promote the use of local buildingmaterials. Encouragement of small enterprise has so far largely meantstimulating the formation of production and marketing cooperatives,although small-scale house construction and upgrading are also beingencouraged for their positive effects on employment. Following studies oftraffic management financed by UNDP, city officials have introduced bettersign posting, signal systems, and one-way streets that have improvedtraffie flows in central Antananarivo. However, coordination between unitsresponsible for transport and traffic research, project preparation, andmanagement remains weak. Two urban planning studies also financed by UNDP,one to update the 1974 Antananarivo master plan and the other to prepareplanning guidelines and sectoral strategies for the Greater Antananarivoarea, are providing the physical planning framework for decisions on wherefuture urban growth should be encouraged. The updated master plan, nowbeing reviewed by the Government, takes better account of the extremelylimited resources available for urban investment than the 1974 plan, inthat financial and institutional issues are given more weight in investmentdecisions. A 25-year master plan and sectoral development programs for theAntananarivo region would be prepared under the planning framework study,which would be carried out in the Public Works Ministry for 18 monthsbeginning in July 1983. To improve coordination among these programs, aunit in the Directorate General of Planning has been functioning sincemid-1982. This unit was recently strengthened through technical assistancefurnished by the French aid agency and Foreign Ministry.

2/ The Fivondronana of Antananarivo-Renivohitra.

D. The Bank's Involvement în the Urban Sector

Rationale

1.13 During the 1980s, resources for urban investment in Madagascarwill be limited both by the slow and erratic growth foreseen for theeconomy and by policies to redirect investment toward the top prioritysectors of agriculture, transportation, and energy.3/ Since centralgovernment financing cannot be counted upon to meet even the most criticalurban needs, local governments and private savings must be relied upon togenerate the resources for maintenance and improvement of urban services.Opportunities to strengthen local government finance, as well asinstitutions with a key role in making urban investments moreeffective, provide the basis for the Bank's interest in this project.

1.14 The dialogue on these issues began on a sustained basis in 1978and intensified during 1980-1982, when the Bank acted as Executing Agencyfor a program of urban studies financed by UNDP. Other parts of the studyprogram included the two urban planning studies of Antananarivo (para.1.12), for which the UN Centre for Human Settlements (UNCHS) was AssociatedExecuting Agency. Through this dialogue, a foundation has been laid fortranslating sectoral plans and programs into permanent reforms by promotingthe repetition, financially and organizationally, of projects starting outon a modest scale.

Projects ln Related Sectors

1.15 Bank-assisted projects in water supply, industrial finance,education, and regional planning are most relevant to the objectives of theproposed project. Under WHO auspices, the French consulting firm OTH inthe mid-1970s prepared master plans for water, sewerage, and drainage forAntananarivo through the year 2000. In the process, the most urgentmedium-term needs were identified and formed the basis for a US$20.5million IDA credit for water and sanitation (Cr. 1002-MAG), approved inApril 1980. This project has been designed to improve water transmission,distribution, and maintenance in various parts of the city, and torehabilitate and extend the sewerage and drainage networks. TheAntananarivo municipality is carrying out a solid waste component includingthe construction of dumping containers, maintenance of the existing dumpsite, and improvement of an experimental composting unit. Execution of thedrainage and sewerage portions, however, has met with serious delays.Largely because water and electricity tariffs have not allowed JIRAMA to befinancially viable, the covenanted financial rates of return are not being

met. However, in April 1984 the Government announced a 20% increase inwater tariffs, effective April 1, 1984, as well as a commitment to pay in1984 FMG 3.2 billion of arrears owed to JIRAMA by ministries, publicagencies, and local governments, with the remainder to be paid in 1985.Although these steps are encouraging, further measures, in particular asecond water tariff increase by January 1985, will be required for JIRAMAto attain adequate financial rates of return.

3/ See the World Bank report, Madagascar: Current Economic Situation andProspects (Report No. 4400-MAG, March 28, 1983).

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1.16 A US$5 million line of credit to the National Industrial Bank(BNI) to finance medium and large scale industrial projects becameeffective in February 1981 (Cr. 977-MAG). A small portion of this credit(US$0.2 million) has been reserved to help small-scale industrial firms andartisans. Under the second IDA-assisted education project of US$14million, approved in 1976 (Cr. 663-MAG), buildings and equipment are beingfurnished for regional education centers in Toamasina, Fianarantsoa,Toliary, Mahajanga, and Antseranana and for a teaching materials center inAntananarivo.

1.17 Long run solutions to problems related to urban settlement of theAntananarivo agricultural plain (see para. 1.02) will require measures tolessen the severity of floods from the Ikopa, Sisaony, Mamba, and Andrombarivers which periodically devastate large sections of the city andsurrounding plain. The Government, assisted by a US$2.3-million IDAtechnical assistance credit approved in FY814/, has begun to distill theresults of many engineering studies into coherent technical proposals forland use in the Antananarivo Plain. This program includes studies ofagricultural production, water supply, and land servicing as well as floodprotection. A report issued by consultants SCET International/DINIKA inJuly 1982 was reviewed by a committee supervised by the Directorate Generalof Planning. On the basis of this first-stage report, only the benefitsfrom using land intensively--such as for urban settlement or marketgardens--seem likely to justify the substantial cost of flood protectionworks.

E. Activities of Other Lenders

1.18 External commitments to Madagascar for technical assistance,training, and studies under ongoing projects totalled US$50 million in1980, of which France supplied 57%, the UN system 29%, and Switzerland 7%.The largest share of this assistance was in education, followed byagriculture, natural resources, and health. In the urban sector,this type of assistance has been concentrated in employment and housing.With UNDP financing, technical experts and consultants from ILO have helpedestablish the National Promotion and Training Institute (Institut Nationalde Promotion-Formation, INPF), supervised by the Ministry of Economy andCommerce. INPF sponsors courses locally and overseas in industrial trades,production management, electronics, and mechanics.

1.19 In housing, France has funded technical training and fellowshipsabroad for staff of the Public Works Ministry, and has recently agreed tohelp support the newly established Center for Investment Policy Studies(Centre d'Expérimentation de l'Aménagement, CEA) in the Public WorksMinistry. Major studies in urban development carried out over the pastthree years include (a) the Antananarivo planning framework study andmaster plan framework (see para. 1.12); (b) an upgrading study ofAntohomadinika, a small neighborhood west of the Antananarivo city center;and (c) preparation of this project, all of which were financed by UNDP andthe Government with the Bank as Executing Agency. The Public WorksMinistry and the UN Centre for Human Settlements directly managed the firsttwo elements of this study program.

4/ Cr. 1086-MAG.

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Il. THE PROJECT

A. Objectives

2.01 The proposed project, which was identified in November 1978 andappraised in June 1983, addresses two long term structural problems of theMalagasy economy: the deterioration of existing infrastructure, and theinadequacy of employment in cities and towns. More specifically, it isdesigned to:

(a) improve the financial and management capacity ofmunicipalities;

(b) strengthen the ability to maintain the most criticalmunicipal services at least at current levels;

(c) expand the income-earning opportunities of poor andmiddle-income families;

(d) demonstrate neighborhood upgrading as a technically effectivemeans of improving living conditions while reducing the needfor new housing investment; and

(e) build up capacity to design and carry out similar projects ona sustained basis.

2.02 With greater capacity for revenue generation and financialmanagement, the municipalities of Antananarivo and Toamasina could begin toimprove services and access to housing. Measures to strengthen technicalservices, in addition to one upgrading operation, are therefore proposedfor each city. An employment and income generation component would helpartisan groups to participate more fully in the supply of local buildingmaterials. Traffic management and transport planning in Antananarivo wouldalso be strengthened. Finally, technical assistance, training and studieswould support the agencies responsible for implementation and improve theinstitutional base for carrying out programs on a larger scale.

B. Project Description

2.03 The main features of the project are outlined below and describedin more detail in Annex 1:

(a) Municipal Revenue Generation and Financial Management: In themunicipalities of Antananarivo and Toamasina, measures toimprove property tax administration; improvements in othermunicipal receipts; financial management

(b) Municipal Technical Services: Vehicles, staff training, andupgrading of equipment in the same two municipalities tostrengthen the capacity to maintain essential urban services

(c) Upgrading: Improvements in basic infrastructure and communityfacilities in the Isotry district of Antananarivo and in four

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neighborhoods (Ambalakisoa, Ankirihiry, Mangarivotra, andMorarano) of Toamasina

(d) Employment and Income Generation: Technical and financialassistance to artisans in the building trades and to smallcontractors in construction

(e) Traffic Management: Improvements in traffic and pedestrianflows at the main junction of Isotry and at five otherintersections in Antananarivo; creation of a TrafficManagement Bureau (BCT)

(f) Project Management and Studies: Technical assistance andproject management; studies of land legislation and means ofimproving the financial and managerial capability of SEIMAD.

C. Choice of Project Elements

2.04 The most basic decisions on whether an urban project wasjustified in Madagascar involved trying to answer the question: How muchpolicy change, in pursuit of macroeconomic goals, is it both necessary andrealistic to expect a first operation to support? During preparation, theGovernment attached great importance to actions that would improve theliving standards of the urban poor. SEIMAD, assisted by consultants GroupeHuit/BCEOM, completed designs and cost estimates for two new housing sitesand four upgrading programs. Municipal finance issues would have beenstudied as the housing operations were carried out. Although the projectas designed will indeed better the living conditions of lower-incomefamilies (see paras. 6.01 and 6.06), this was not seen as reason enough forBank support. Reforms in the structure of municipal revenues and servicescame to be considered the central focus, so that cities could take overfrom national ministries a greater role in the maintenance ofinfrastructure and the financing of basic services. The two upgradingoperations were then seen not as free-standing, one-off actions but asdemonstrations of the increased municipal capacity resulting from theproject.

2.05 In a similar manner, one of the two new housing sites had beenincluded to demonstrate the feasibility of the serviced-site, self-helpapproach to housebuilding. This site was invaded in July 1982 bysquatters, against whom existing land laws proved ineffective. Theseevents prompted the inclusion of the land legislation study (para.2.03(f)), to provide a clearer legal basis for future public acquisitionand management of land.

2.06 Given the pilot nature of the civil works and the weakness ofinstitutions, upgrading sites in number and in type should clearly supportthe policy directions being pursued. Of the two upgrading sites proposedfor Antananarivo, Isotry, the more difficult and challenging case, wasincluded to show that the approach would be equally feasible, and probablyeven more so, at other sites and in other cities. The traffic managementmeasures concentrated in Isotry would be an additional practical example ofthe Government's intent to reverse the deterioration of this neighborhood.

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They should therefore strengthen the case in the minds of Isotry residentsfor paying the costs of upgrading, wholly apart from the transport-relatedbenefits of reduced traffic congestion and fewer accidents.

D. Record of Experience with Similar Projects

2.07 Urban projects recently completed in Botswana, Tanzania, andZambia5/ by and large reflect the achievements and the problems of suchprojects since the first Bank urban loan was made in 1972. Their role indemonstrating a workable approach to low cost shelter and service programshas been widely acknowledged. Beneficiaries are generally satisfied withthe housing and services provided. However, a number of implementationproblems remain. Estimates of the time required to carry out projects havesometimes been too optimistic. This problem has been dealt with in theproposed project by allowing ample time for completion of projectactivities and for the subsequent closing out of disbursements. Costrecovery is often poor when full economic charges are imposed onbeneficiaries used to receiving services free. In other cases costrecovery is initially good but suffers when services are not maintained.Strengthening of municipal maintenance capacity is a key feature of theproposed project. A major challenge in all such projects, especially inAfrica, is translating the success of one operation into permanent gainsthrough repetition on a broader scale.

III. COST ESTIMATES AND FINANCIAL ARRANGEKENTS

A. Estimated Costs

3.01 Total project cost is estimated at FMG 7.181.8 million (US$18million), with a foreign exchange component of US$8.9 million, representing49% of total project cost including taxes and 59% on a net-of-tax basis.Since the Government has determined that goods and services procured underthe project will be subject to taxation, the total cost includes customsduties and internal taxes amounting to US$2.9 million (16%). Baselinecosts are expressed in December 1983 prices on the basis of pricesprevailing in June 1983 adjusted for inflation. Estimated costs of civilworks have been derived from consultants' feasibility studies (15%),preliminary designs (15%), and detailed engineering (70%). The effectivedemand for housing loans at upgrading sites was estimated from income andconsumption surveys undertaken during preparation. Salaries of local staffwere valued on the basis of current civil service base pay and benefits,plus a small incentive premium at the top grades. Other operating costssupported within the project include office equipment and materials,gasoline, and spare parts. The full cost of land acquisition for a totalof 67 ha in Toamasina is included as a government counterpartcontribution. Costs for consultant and advisory services comprisingtravel, living allowances, fees, and overheads were estimated on the basisof recent provision of these services.

5/ Cr. 471-BT; Cr. 495-TA; and Loan 1057-ZA. See also "RetrospectiveReview of Urban Operations," March 1982.

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3.02 Physical contingencies amounting to 5.5% of total base cost havebeen estimated at 15% for building materials and toolmaking workshops, 10%for upgrading civil works, and 10% for equipment. No physicalcontingencies were allowed for technical assistance, studies, or houseconstruction loans. Price increases for local costs were calculated on thebasis of expected increases of 15% in 1984 and 10% thereafter. Pricecontingencies on the foreign component were based on anticipated inflationof 7.5% for 1984, 7% for 1985, and 6% thereafter. The resulting priceescalation factor represents 23% of baseline costs plus physicalcontingencies, or a total contingency of about 30% of baseline costs.Summary cost estimates are given in Table 1 below. A more detailedbreakdown is provided in Annex 2, while detailed cost estimates of eachcomponent are available in the Project File.

MADAGASCAR

URBAN DEVELOPMENT PROJECT

Cost Estimates by Main Component

Percent Percent PercentFMG million US$ million Foreign Base Total

Component Local Foreign Total Local Foreign Total Exchange Cost Cost

A. Municipal revenue generationand financial management 216.49 214.08 430.57 0.6 0.5 1.1 50 8 6

B. Municipal technical services 600.29 875.10 1,475.39 1.5 2.2 3.7 59 27 21

C. Upgrading1. Isotry 549.56 369.45 919.01 1.4 0.9 2.3 40 17 13

2. Toamasina 580.62 236.59 817.21 1.4 0.6 2.0 29 15 il

Sub-Total 1,130.18 606.04 1,736.22 2.8 1.5 4.3 35 32 24

D. Employment and incomegeneration 247.57 300.78 548.35 0.6 0.8 1.4 55 10 8

E. Traffie management 87.14 153.52 240.66 0.2 0.4 0.6 64 4 3

F. Project managementand studies 144.41 782.93 927.34 0.4 1.9 2.3 84 16 13

G. Design and supervision 198.51 0.10 198.61 0.5 - 0.5 - 3 3

TOTAL BASE COST 2,624.59 2,932.55 5,557.14 6.6 7.3 13.9 53 100

H. Contingencies

1. Physical contingencies 150.68 154.22 304.90 0.4 0.4 0.8 50 4

2. Price escalation 844.87 474.93 1,319.80 2.1 1.2 3.3 36 18

Total Contingencies 995.55 629.15 1,624.70 2.5 1.6 4.1 39 22

TOTAL PROJECT COST 3,620.14 3,561.70 7,181.84 9.1 8.9 18.0 49 100

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B. Financing Plan

3.03 The proposed IDA credit of US$12.8 million would cover 100% ofthe foreign exchange costs and 43% of costs in local currency, or 85% oftotal project cost excluding taxes and duties. The remaining cost would befinanced by the Government either directly or through budgetary allocationsto the implementing agencies. The foreign exchange risk would be absorbedby the Government. Prior to the start of each budget year, the quarterlyreports of progress during project execution would include a statementthat sufficient counterpart funds have been included in the Finance Law forthat year. Table 2 below and Annex 3 summarize the financing plan.

Table 2 Project Financing Plan

Local Foreign Total-(US$ million)-------

A. IDA 3.9 8.9 12.8

B. Government1. Investments and

operating costs 2.3 - 2.32. Taxes and duties 2.9 - 2.9Sub-Total 5.2 - 5.2

Total 9.1 8.9 18.0

C. Flow of Funds

3.04 The Government would make the proceeds of the credit and its owncontribution available to the implementing agencies either as grants (forcomponents for which there is traditionally no cost recovery) or assubsidiary loans (where costs would be recovered). Government and IDAcontributions would be placed in a Project Account at the Treasury, fromwhich payments would be made by the Project Unit (BPU). Each implementingagency would in addition maintain separate project accounts. All projectexpenditures would be subject to the prior authorization of BPU. TheGovernment would direct the US$18 million of IDA and counterpart funds to,implementing agencies as follows:

(a) US$5.9 million would be lent to the Municipality ofAntananarivo for upgrading civil works at Isotry,strengthening of municipal technical services and revenuegeneration/financial management, and traffic managementimprovements. Funds for civil works would be lent at 10%interest, a rate expected to be positive in real terms sinceinflation during the life of the project is forecast at 10%for local costs and 6% for foreign costs beginning in 1986.The loan would be repaid over 18 years including three yearsof grace. Terms of the funds lent for municipal technicalservices, revenue generation/financial management, and

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traffic management would be 10% for seven years including twoyears of grace.

(b) A second subsidiary loan of US$3.2 million would be made tothe Municipality of Toamasina for upgrading civil works (10%for 18 years including three years' grace) and municipaltechnical services, financial management, and tax collection(10% for 7 years including two years of grace).

(c) The Government would also conclude a subsidiary loan withSEIMAD for house construction and sanitation loans at Isotryand Toamasina (US$0.8 million), at 10% over 18 yearsincluding three years' grace. SEIMAD loans to beneficiarieswould be made at 12% for 15 years including one year ofgrace.

(d) US$0.6 million would be made available to CENAM in the formof a loan for the production units, and repaid by CENAM at10% over 12 years including two years' grace. The productionunits would repay CENAM at 12% over 12 years including twoyears of grace for civil works, and at 12% over seven yearsincluding two years of grace for equipment.

(e) Finally, the Government would make available US$7.5 millionin the form of grants for components whose costs would not berecovered. These include community facilities at Isotry andToamasina, the Traffic Management Unit, and technicalassistance, studies, and project management.

3.05 Repayments of the subsidiary loans and of the CENAM line ofcredit would be deposited into a special account that would constitute anInfrastructure Fund for Urban Housing. With operating provisionsacceptable to IDA, the Fund would be established by December 31, 1985. Itwould constitute a permanent source of lending to local governments formaintenance or extension of drainage, sanitation, and other urbaninfrastructure.

IV. IHPLEMEMTÂTION AND MANAGEMENT

A. Overview of Institutional Arrangements and Agencies

4.01 The organizational structure adopted for the project aims tobuild on a few existing agencies--the two municipalities, SEIMAD, and CENAMin this case. New units were created only where considered necessary toget the tasks accomplished (BPU), or, as with urban transport, where aclear gap in area-wide authority (BCT) could be filled. Reviews have beenscheduled before the project is completed to decide on the future of bothBPU and BCT, on the basis of their performance and of the institutionalpriorities of the late 1980s (paras. 4.29 and Annex 8, paras. 23 and 25).

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4.02 For each main implementing agency, the governing principle hasbeen concentration on strengthening one or a few functions. The foeus forthe municipalities is maintenance and rehabilitation, rather than newinvestment. Because their implementation capacity is still weak,municipalities for the foreseeable future are likely to delegateresponsibility for upgrading and serviced site projects to other agencies,of which the most capable at present is SEIMAD. In a similar manner,assistance to CENAM is concentrated in building materials, one of five mainbranches of artisan production CENAM promotes.

4.03 Within this framework, the municipalities of Antananarivo andToamasina would be responsible for carrying out measures to strengthentheir financial management and service capacity. For both upgradingoperations, the municipalities will rely on SEIMAD to organize and executethe required works, as well as to administer housing loans. CENAM wouldmanage the building materials production units, while SEIMAD would assistsmall contractors and artisans in the context of its upgrading programs.In addition to management and coordination of the project as a whole, BPUwould be responsible for studies and traffic management improvements, thelatter through the Traffic Management Bureau (BCT) to be established withinBPU. Responsibilities of the implementing agencies are summarized below:

Component Responsibility

Management/Supervision Implementation Coordination

Municipal revenue generation/ Municipalities Municipalities BPUfinancial management

Municipal technical services Municipalities Municipalities BPU

Upgrading Municipalities SEDIAD BPU

Employment and income generation CENAM CENAM and SEIMAD BPU

Traffic management BPU BCT BPU

Project management and studies BPU BPU BPU

4.04 So that operations may be fully supported by local budgets asrapidly as possible, only incremental salary and operating costs have beenincluded in the project. Disbursements against these items would ceasebefore the project is completed, and in the case of BPU and CENAM would becomplemented by an explicit review of plans for financing follow-upactions.

4.05 Details of the relationships outlined above were discussed atnegotiations, and would be confirmed in five agreements to be signed priorto effectiveness:

(a) implementation agreement ("convention de travail") among BPUand the executing agencies (SEIMAD, CENAM, and the twomunicipalities) to define responsibilities for projectexecution

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(b) management agreements ("accords de gestion`):

(i) between the Municipality of Antananarivo and SEIMAD,for Isotry upgrading;

(ii) between the Municipality of Toamasina and SEIMAD, forToamasina upgrading;

(iii) between CENAM and the Rural Development Bank (BTM) foradministration of loans to production units; and

(iv) between the Municipality of Antananarivo and BPU fortraffic management improvements.

Annex 7 sets out the implementation schedule for project activities, whileAnnex 8 gives a detailed description of actions planned in the executionand management of each component. The remainder of this section is devotedto a summary analysis of the capacity of SEIMAD and CENAM. In light ofrecent financial trends, the operational capacity of the municipalities isfurther assessed in Chapter V, Section A.

SEIMAD: Role and Financial Condition

4.06 SEIMAD manages a stock of 7,000 rented housing units, does designwork and construction supervision, and acts as contractor orsubcontractor. SEIMAD had built about 420 houses per year prior to themid-1970s, when concessionary financing from the Caisse Centrale deCoopération Economique (France) was discontinued. Since then, in additionto managing its inventory, SEIMAD has tried to define ways to bring housingcosts within reach of the 90% of urban families not able to afford thepublic housing built thus far.

4.07 With the addition of a newly-created Urbanization Unit in theoffice of the Director General, SEIMAD's structure is adequate to managetne upgrading works and housing loans of the proposed project. TheUrbanization Unit would call upon topographers and other specialists in theTechnical Directorate to assist with specific aspects of upgrading. By theend of the project its technical functions would be absorbed into theTechnical Directorate, which would thus gain a significant body ofexperience with these types of programs.

4.08 For this to occur, however, SEIMAD must stem the financial drainfrom its substantial overheads and losses on rental property. As seen fromAnnex 5, the recent operating performance of SEIMAD shows a deficit inthree of the four most recent years, which reached FMG 196 million(US$490,000) or 20% of turnover in 1982. Control of public housing rentshas been keenly felt in the Housing Directorate, responsible for rentalmanagement, where income from rents has remained static since 1979 andcosts have nearby doubled. Given also that the workload of the TechnicalDirectorate diminished further in 1982 and 1983, only strong measures toreduce costs and increase income from operations will allow the deficit tobe contained.

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4.09 A management audit of SEIMAD would therefore be undertaken todetermine the causes of the current imbalance between rising costs fromoperations and overheads and static (or even falling) receipts. Measuresto restore financial viability that would be analyzed in the audit reportinclude increases in public housing rents and outright sale of the rentalportfolio. An immediate increase in housing rents, even though justifiedin terms of its impact on SEIMAD finances, is not recommended because itmay prove to be only a temporary solution, more a symptom than a basiccause of the problem. Instead, the management audit would examine a broadrange of measures and recommend those which most closely correspond to therecommended role for SEIMAD in national housing policy and its revisedorganizational structure. The report of the management audit would beavailable in final form by June 30, 1985. Within six months thereafter,having consulted with IDA during its review of the report, the Governmentwould adopt an Action Plan for improvement of SEIMAD management andfinances.

CENAIM: Role and Finances

4.10 Support for CENAM within the project, including technicalassistance and incremental salary costs of higher-level staff, aims atstrengthening its promotional role in artisan production. Created in19786/ with the assistance of ILO and financing from the Government andUNDP, CENAM has encouraged a broad range of production (mainly textiles,leather, tools, ceramics, and building materials) through 68pre-cooperative associations and 16 cooperatives. While UNDP has financedthe national headquarters and six regional offices, funding of specificprojects has been left to Government, banks, and international aid.Activities have slowed noticeably since 1981 mainly because of fluctuationsin Government grants, but have recently recovered (the 1983 allocation was8 times that of 1981--see Annex 6). The fluctuations have so far beenabsorbed by variations in the pace of constructing new headquarters inAntananarivo, and by short-term borrowing. Continued support foradministration and for some projects has however been assured by UNDP,which in July 1983 signed an agreement extending its financing and ILOassistance through the end of 1985. To smooth the transition to fullGovernment support of project operations, CENAM would finance the last sixmonths of salaries of higher-level local staff, all salaries of supportstaff, and operating costs (except vehicles) of the employment unit.

6/ Decree No. 78.244 of August 18, 1978.

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B. Procurement

Arrangenuts

4.11 Procurement arrangements are summarized in Table 3 below:

Table 3 Procurement Arrangements(US$ million)

Not TotalProject Element ICB LCB a/ Other b/ Applicable C/ Cost

Civil Works 3.9 0.9 0.75 0.6 6.15(3.1) (0.7) (0.5) (0.0) (4.3)

Equipment and vehicles 4.7 4.7(3.0) (3.0)

Tools, materials, and 0.5 0.35 0.85office supplies (0.4) (0.2) (0.6)

Housing and sanitation 0.4 0.4loans (0.3) (0.3)

Incremental operating 0.7 0.45 1.15expenses (0.6) (0.3) (0.9)

Consulting services 0.1 4.5 4.6and training (0.08) (3.47) (3.55)

PPF advance 0.15 0.15(0.15) (0.15)

TOTAL 8.6 1.5 6.7 1.2 18.0(6.1) (1.18) (5.07) (0.45) (12.8)

Note: Figures in parentheses are the respective amounts financed by IDA.a/ "Local unrestricted bidding" (Appel d'offres ouvert local), Force account, direct purchase and hiring of consultantsCE Includes incremental operating costs and salaries, and refinancing of

PPF advance

4.12 Civil works for rehabilitation of streets and drainage networksin Isotry (US$2.9 million, including contingencies) and Toamasina (US$1million) would be carried out by contractors after procurement throughICB. Because the works are not excessively complex, prequalification ofcontractors would not be required. Contracts for traffic management works,buildings for the production units, and the sewerage network at Isotry(US$900,000 total) would be awarded through local competitive bidding("appel d'offres ouvert local") acceptable to IDA, in which foreign firmsare eligible to participate. Additional minor civil works totallingUS$250,000 that are not likely to interest foreign bidders (washing points,

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pedestals for water standpipes, and solid waste containers) would beundertaken by artisans and small contractors supervised by SEIMAD. Becauseof its experience, JIRAMA is capable of installing water and electricitynetworks economically on a force account basis. Qualified domestic civilworks contractors would be allowed a preferential margin of 7+% over thebid price of competing foreign contractors.

4.13 Heavy equipment, computer hardware, and vehicles would be groupedwherever possible into lots of at least US$50,000 and would be procuredthrough ICB. Miscellaneous items of equipment, materials, spare parts, andsupplies in lots of less than US$50,000 and not exceeding a total ofUS$350,000 may be procured from dealers on the basis of at least threeprice quotations. All works contracts over US$100,000 each and equipmentcontracts over US$50,000 each would be subject to prior IDA review. Intotal this represents close to 95% of civil works value and about 90% ofthe value of equipment contracts. Other contracts would be subject toselective post-award review.

4.14 Consultants for training and technical assistance would beselected in accordance with Bank guidelines. Incremental operatingexpenses include US$450,000 for staff salaries for which procurement isinapplicable. The remaining expenses (US$700,000) are for vehicle spareparts which would be procured from dealers on the basis of quotationsobtained locally.

Procedures

4.15 Procurement procedures in Madagascar are often subject to longdelays.7/ Submissions from bidders are first reviewed by a Bid EvaluationCommittee (Commission d'appel d'offres) whose chairman is selected from theagency responsible for launching bids. Contract awards are decided by theCentral Commission for Contracts (Commission centrale des marchés, CCM).However, CCM does not base its opinion on the bid evaluation report but ona Decision issued by the ministry or agency authorizing the expenditure(ordonnateur des dépenses). The Decision may differ from the bidevaluation report, and moreover does not always have a firm technicalbasis. The following measures would be applied to streamline theprocurement process as it relates to this project:

(a) The Project Director would be represented on all bidevaluation committees.

(b) The executing agencies would react to a bid evaluation reportby issuing a Decision within ten days of its receipt.

(c) For equipment procurement, price would be given a weight of50-70% in bid evaluation, and in-country service and parts10-20%. Remaining factors (technical features, price ofspare parts, and standardization of inventory) would receivea total weight of 10-40%.

7/ Ordonnance 70.089 of January 28, 1970 is the main statute governingprocurement in Madagascar.

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4.16 other procedures not routine in Malagasy practice but which havecome to be applied to Bank-supported projects in Madagascar, such as publicbid openings and requirement of a performance bond or bank guarantee, wouldalso be in effect.

C. Disbursement

4.17 The schedule of estimated disbursements given in Annex 9 is basedon a six-year implementation period, plus 18 months to hand over BPUoperations to permanent agencies and close out disbursements. It isconsistent with the disbursement profile for the urban sector in theEastern Africa Region. A handing-over period of 18 months is justifiedprimarily by the need to plan successor activities carefully and securecommitments from implementing agencies.

4.18 Disbursements of the IDA credit would be made on the followingbasis:

(a) civil works, upgrading: 80% of total expenditures

(b) imported equipment, vehicles, and materials: 100% of totalexpenditures

(c) locally procured equipment, vehicles, and materials: 70% oftotal expenditures

(d) civil works, employment and traffic management: 85% of totalexpenditures

(d) housing and sanitation loans: 85% of total expenditures

(e) operating costs and salaries of implementing agencies: 100%of foreign and 80% of local expenditures

(f) consultant and advisory services: 100% of foreign and 50% oflocal expenditures

(g) 100% reimbursement of the PPF advance.

4.19 All disbursements would be fully documented, except fordisbursements of local expenditures for (a) promotion of small contractors;(b) operating costs and salaries of implementing agencies; and (c) housingand sanitation loans. Disbursements for the above items would be madeagainst statements of expenditure (SOEs), documentation for which would beretained by BPU and made available for IDA review during supervision. BPUwould forward withdrawal requests to the Treasury for review prior todispatch to IDA. Because of its growing familiarity with the Bankportfolio in Madagascar, the Treasury should be able to transmit requeststo IDA without undue delay. The recently established Resident Mission canalso help in this regard. Two advances from the Project PreparationFacility totalling US$241,000 were made in March 1983 and May 1984 forcompletion of detailed engineering, preparation of bidding documents forthe Isotry and Toamasina upgrading, and equipment, vehicles, and technical

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assistance required during start-up of BPU. All items would be procured inaccordance with paras. 4.11 to 4.16.

4.20 To ensure prompt availability of funds for the project, IDA andthe Government would each make initial deposits. Assurances were obtainedat negotiations that Government counterpart funds totalling FMG 150 million(US$375,000), mainly to finance land acquisition, would be deposited in theProject Account by the date of credit effectiveness at the latest, and thata balance of at least FMG 150 million would be maintained at the start ofeach quarter during implementation. Largely to enable the BPU to paysuppliers without delay in the months following effectiveness, a separateSpecial Account with an IDA contribution in U.S. dollars of $500,000 wouldalso be set up at the Central Bank. The Special Account opening balancewas calculated as the equivalent of three months' needs of the IDA share ofeligible expenditures in foreign currency, plus a 20% margin. Eligibleexpenditures do not include purchase of vehicles and equipment fortechnical services departments, for which the Government, through BPU, isexpected to request that suppliers be paid directly. Establishment of theSpecial Account is a condition of effectiveness of the credit.

B. Training

4.21 The staff of both municipalities have good job experience butlittle formal training: although the majority have been in post five yearsor longer, few have had instruction in skills they have acquired on thejob. Priority will therefore be given to upgrading of technical skills insanitation, maintenance of infrastructure, and accounting, together withtraining to reduce the acute shortage of middle-level managers. Thetraffic engineer responsible for BCT would furthermore observe theoperations of an applied studies unit, city traffic bureau, and publictransport corporation abroad for a period of three months. Table 4 belowsummarizes this program, amounting to nearly 1,000 staff-months oftraining:

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Table 4Summary of Training Proposals

TrainingStaff Locally/ Total

Implementing Agency Function No. Abroad s

Directorate of Financial financialAffairs, Antananarivo analyst,

economist 2 L 8

Toamasina Municipality accounting 2 L 8

Directorate of Urban seniorDevelopment, Antananarivo managers 5 A 6

technicalstaff andmiddlelevelmanagers 155 L 780

Directorate of Technical seniorServices, Toamasina managers 1 A 1

technicalstaff andmiddle levelmanagers 44 L 192

BCT trafficengineer/unit chief 1 A 3

TOTAL 210 998

4.22 Sessions regularly offered by three Malagasy traininginstitutions--the Public Works Training School (CATP), National Promotionand Training Institute (INPF), and Accountancy Training Center (CFC)--would make up the bulk of this program. These training agencies areequipped to handle a program of this magnitude. On behalf of themunicipalities, BPU would sign agreements on the scope, duration, and costof training assignments with each institution by March 31, 1985.

4.23 In addition to formal training, on the job experience would begained by staff of the Direct Tax Department in property valuation andanalysis of property value surveys. In Isotry, the Sanitation Unit shouldreach at least 2,500 families with demonstrations of improved methods ofmaintaining septic tanks. Locally recruited advisers would train managersand treasurers of the building materials production units in basicmanagement, accounting, and record keeping. This "stair-step" approach totraining relies on a small number of local counterparts trained on the jobto in turn train others. Although this approach does not ensure uniform

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training for all, it is the only means possible when technical advisersplay a major role in day-to-day operations and construction supervision inaddition to being trainers.

4.24 For both municipalities, the transition to more effectivefinancial and technical services calls for recruitment of new staff (24 inAntananarivo, 37 in Toamasina) in addition to training. Qualified recruitsin the numbers required would be available in the market, since localtraining agencies award over 1,000 diplomas and certificates in thespecific disciplines concerned every year.

B. Accounting, Auditing, and Reporting Requirements

4.25 Accounting procedures of the project would be those of thenational uniform system of accounts (Plan Comptable), which is an adequatebasis for recording project-related financial transactions ("comptabilitéde caisse"). Consolidated accounts would be maintained by BPU, while theMunicipalities, SELMAD, and CENAM would also keep separate accounts forproject-related expenditures. On the basis of these cash flow accounts,the Chief Administrative and Financial Officer of bPU with advice from themunicipal finance specialists and project auditors would set up separateaccounts by type of activity ("comptabilité analytique"). Assurances wereobtained at negotiations that this cost accounting system would beoperational by July 1, 1985. Cash flow accounts would meet the needs ofthe project in the meantime.

4.26 Financial statements including cash flows of project sub-accountsand year-end balance sheets reflecting the transactions of the mainimplementing agencies would be completed within three months after theclose of the Government fiscal year. Auditors' opinions on these financialstatements would be prepared by independent auditors acceptable to IDA andsubmitted to the Government and to IDA within eight months of the end ofthe Government fiscal year. The auditors' opinions would be required tocontain a special reference to SOEs (para. 4.19), confirming that theclaimed expenditures were used for the purposes for which they wereintended. Terms of reference of the first audit, of 1984 accounts, wouldbe broadened to include (i) guidance to BPU on the establishment of costaccounting systems; and (ii) a separate analysis of use of IDA funds underthe Special Account.

4.27 BPU would prepare progress reports each quarter that wouldbriefly identify major problems and recommend solutions; review theperformance of implementing agencies; and maintain key indicators ofprogress in fulfillment of project goals. Prior to the start of eachbudget year, the progress reports would include a statement that sufficientcounterpart funds have been included in the Finance Law for that year. Theformat for such reports was discussed at negotiations.

4.28 A Project Completion Report would be prepared and sent to IDAwithin six months of the close of disbursements.

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F. Monitoring, Evaluation, and Supervision

4.29 The Project Director, Chief Technical Officer, and ChiefAdministrative and Financial Officer of BPU would be mainly responsible formonitoring the progress of the project toward its stated objectives (para.2.01). BPU would also supervise two studies that would enhance theprospects for replicating key project features on a broader scale. Thesestudies would assess the impacts of municipal finance reforms and of theorganizational framework of the project itself, drawing lessons in bothcases for the conduct of future operations. The local finance study wouldbe done in early 1988 so as to review experience with the 1984 and 1987property revaluations and give guidance on how the Infrastructure Fund forUrban Housing could be mobilized to support the expenditure needs of localauthorities. The organization study (late 1988) is timed to coincide withthe period of reflection on the future status of BPU and the takeover byGovernment of 50% of BPU operating costs and salaries.

4.30 IDA supervision of the project would require up to 105 weeks ofstaff and consultant time during the six-year implementation period. As isnormal for a new sector, this level of involvement would be concentrated inthe first three years, after which some activities would be winding downand BPU would have acquired greater management experience. Staffrequirements for supervision include a financial analyst and an economistor engineer, plus specialized inputs from consultants in urban transport,job creation, and housing.

G. Enviroumnt and Halth

4.31 The project by its nature would have no detrimental impact on theenvironment. Designs for upgrading, derived in part from aerialphotographs, have taken full account of settlement patterns to minimizedisruption to existing layouts, especially in the denser sections ofIsotry. Displacement of dwellings has therefore been reduced to aminimum. On the contrary, Isotry and other upgrading sites would benefitfrom the enhanced environmental conditions brought about by reducedflooding.

4.32 Isotry should also receive a major share of health benefits, fromthe reduction in exposure to water-borne diseases and epidemics in aneighborhood with a mortality rate 70% higher than the average forAntananarivo. More immediate health impacts are anticipated from theAnkirihiry Health Center in Toamasina, where both the number of visits andthe quality of treatment from the expanded medical staff should rise.

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V. FINANCIAL ANALYSIS, COST RECOVERY, ANDAFFORDABILITY

A. Local Government Finance in Madagascar

5.01 The 1976-77 reorganization of local government8/ aimed todecentralize responsibility for many services and to establishdemocratically accountable bodies at the local level. Four levels of localgovernment were established:

(a) Fokontany: the most local unit which operates at thelevel of the neighborhood;

(b) Firaisana: the next level which represents a districtof a city;

(c) Fivondronana: covers several firaisana (six in the case ofthe main Antananarivo municipality);

(d) Faritany: the highest level which corresponds to theformer provinces.

5.02 The faritany of Greater Antananarivo comprises a population ofabout 840,000 (1982) and includes four fivondronana, 35 firaisana andseveral hundred fokontany. Among these authorities the Municipality ofAntananarivo (Fivondronana of Antananarivo-Renivohitra) is outstandinglythe most important, its population being over four times that of the nextlargest fivondronana and its budget of FMG 2,250 million (US$5.6 million)more than twice that of the other authorities together.

5.03 As set out during the local government reorganization, the maintax resources of each tier of local government are as follows9/:

(a) fokontany - 40% of the licence duty on the sale of alcoholicbeverages (transfer from Goverament)

- a number of indirect taxes, for example on motorcycles,dogs, traditional ceremonies, and public events;

(b) firaisana - 50% of the principal property tax (IFPB) when thefiraisana is situated in a former urban commune,otherwise 75%

- 100% of the supplementary property tax (TAFB) if outsideformer urban communes (otherwise no share)

8/ Ordonnance No. 76.044 (December 1976), applied by Decree No. 77.037the following year.

9/ The revenue and tax-raising powers of local authorities are specifiedin Law No. 77.005 of December 1977, modified or amplified inOrdonnances No. 78.009 and 78.010 in 1978.

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- a variable share of taxes on the slaughter of animals

- a number of indirect taxes similar to those received bythe fokontany

- 25% of the licence duty on the sale of alcoholicbeverages;

(c) fivondronana - 50% of the principal property tax and 100% of thesupplementary tax (former urban communes), otherwise25% and nothing respectively

- a one-third share of the transactions tax (T.U.T.) and15% of the business tax (taxe professionnelle)

- a share of the taxes on motor vehicles and animalslaughter

- 20% of the licence duty on the sale of alcoholiebeverages

- a number of indirect taxes on entertainment and publicevents;

(d) faritany - 85% of the business tax (taxe professionnelle)

- a share of the vehicle and slaughter taxes

- 15% of the licence duty on the sale of alcoholicbeverages.

5.04 In practice the local authorities are clearly dependent, fortheir autonomous resources, on property taxes and indirect taxes. Thebusiness tax and the licence duty on the sale of alcoholic beverages havebeen only irregularly transferred to local government. Other revenuesources available to local government are (i) the rents and chargesreceivable from municipal property; and (ii) services and grants paid bycentral government, in particular a share of the national taxes onconsumption and imports. These central government grants, which are beyondthe control of local government and which have varied in volume, havenevertheless become an important part of local government revenue.

5.05 Property tax rates are decided locally within ranges determinedby the 1978 Finance Law. The current tax rates in the Antananarivomunicipality are within the permitted ranges for the principal tax and atthe upper limit for the supplementary tax. A factor underlying localreluctance to levy the maximum rate in spite of the authority's shortage offunds is the decline in service standards which has eroded taxpayers'willingness to pay. The ceiling rates of most indirect taxes aredetermined nationally.

5.06 Collection of property taxes is undertaken by the TreasuryDirectorate of the Ministry of Finance. The taxes when collected are paid

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into an account in the name of the local authority which for convenience ismaintained at the Treasury. Local officials and elected representatives,however, play a critical role in day-to-day collection and in the pursuitof defaulters. Indirect taxes, rents, and charges are collected by thestaff of local authorities and paid into the same account at the Treasury.

5.07 Municipal revenues and expenditures are planned on an annualbasis through the municipal budget (budget primitif), which is prepared bythe officers and approved by the Popular Council (see also para. 1.09).Once approved by the Council, the budget has to be certified by theMinistries of Finance and Interior and by the Financial Controller in thePresidency. Expenditures are authorized by the President of the ExecutiveCommittee (acting in the name of the Council) and certified by theTreasury, and the books of account are maintained by the Treasury (a localrepresentative of the Ministry of Finance). An annual account (compteadministratif) is drawn up by the accounts staff of the municipality and isapproved by the same government bodies.

5.08 Total receipts amounted to about US$5.6 million equivalent forAntananarivo in 1982 and approximately US$900,000 in Toamasina the previousyear (see Annex 10). The principal revenue sources for both cities aredirect taxes (mainly property taxes), indirect taxes (a variety of taxeson, for example, public entertainment, advertisements, night clubs andslaughterhouses), rents from municipal property (housing and publicbuildings), charges for services, government grants, and taxes collectedcentrally but transferred to local government. Property taxes are inprinciple responsive to economic growth and inflation, being based onproperty values, but the base is revised only through periodic surveys andoccupiers? declarations and has not maintained its real value. As shown inAnnex 10, receipts in nominal terms stagnated or even declined during the1970s. The inevitable result has been a decline in the real value of totalreceipts from direct taxes, by 16% in the decade 1971-1980.10/

5.09 The next most important source of revenue in Antananarivo hasbeen government grants and transferred taxes (37% in 1982, 38% in Toamasinain 1980). These receipts are not within local government control and havefluctuated considerably during the past decade. Their real value inAntananarivo declined by 32% in the period 1971-80. Indirect taxes, rents,and charges for services are within local governnent control and in moneyterms have stagnated. Their real value has consequently declined rapidly:by 55% in the case of indirect taxes and by 44% in the case of rents andcharges (Antananarivo 1971-80). Indirect taxes represented 22% of incomein Toamasina in 1980, but only 6% of income in Antananarivo in 1982. Rentsand charges represented 17% and 12%o respectively in the two cities.Overall receipts (apart from exceptional items) declined by 30% in realterms in Antananarivo during the period 1971-80.

5.10 The fact that neither locally nor centrally controlled receiptshave maintained their real value, combined with the expenditure priorities

10/ A. Anizon, "Rapport technique, Volet 2: Propositions pourl'assainissement des finances des fivondronana du Grand Antananarivo,"UNDP/UNCHS, 1982.

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of the municipalities, have produced a differential impact on the mainexpenditure headings. First priority is given to staff remuneration, thereal value of which in Antananarivo declined by 16% during the 1970s.Whereas other operating expenditure declined by 42%, investments declinedby 71% and in 1982 represented only 7% of the municipality's normalrecurrent and capital expenditures. A lack of short-term borrowingfacilities means that expenditure programs are disrupted by cash-flowproblems as well as being subject to long-term distortions. Expenditurepriorities and declining receipts have rendered the municipalitiesincapable of servicing debts; they have therefore borrowed very little tofinance major investments. In sum, the failure of all classes of revenueto keep pace with needs, the unpredictability of receipts, and the lack offinancial planning to ensure an effective balance among expenditures arethe main reasons why municipalities have not been able to maintaininfrastructure or provide adequate services.

B. Cost Recovery

5.11 The objective of the cost recovery measures adopted is to relatethe charges to be borne by households as closely as possible to theirability to pay and to the benefits they receive. On-site infrastructurecosts in upgrading areas would be recovered directly through a surcharge tobe levied on residents. Establishment by the two municipalities concernedof surcharges based on property rental values and linked to the specificupgrading investments are conditions of effectiveness of the credit. Loansfor the improvement of housing and for the cooperative workshops would alsobe recovered directly through loan repayments by the beneficiaries. Coststo be recovered directly account for 22% of total project costs.

5.12 A further 41% of project costs, relating to the strengthening ofmunicipal revenues and financial management, tax collection in Toamasina,improvement of municipal technical services, off-site upgrading works, andtraffic management schemes in Antananarivo, would be recovered indirectlythrough the property taxes payable by the population of each city.Indirect as well as direct recoveries would be closely monitored by BPU andby IDA supervision missions. Actions being supported by the municipalrevenue generation component are designed to ensure that municipal receiptsincrease sufficiently to cover the debt charges and increased maintenancecosts arising from the infrastructure investments. The property tax is asuitable means of recovering these investments since property values wouldreflect the benefits received, especially as revaluations will be carriedout more frequently, and since property values are related positively(although not very strongly)li/ to household incomes.

5.13 Together, direct and indirect recovery account for 63% of totalproject costs. The balance of 37% concerns community facilities in theupgrading areas, land acquisition in Toamasina, assistance to CENAM andBCT, project management, studies and technical assistance. The costs ofthese elements are not considered to be recoverable and would be absorbedby the national government. Although it is customary to recover land

11/ Correlation coefficient of +0.298, where +1.0 indicates a perfectpositive correlation.

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acquisition costs from beneficiaries, the cost of land in Toamasina isactually a reserve against possible claims for indemnification arising fromthe original expropriation and transfer to public ownership during themid-1970s. This item therefore appears as a counterpart contribution, butone whose recovery from the present settlers of the area would not bejustified. Land acquisition at Isotry is included in on-site and off-siteinfrastructure costs recovered through surcharges and property taxes. Costrecovery provisions are summarized in Table 5 below:

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Table 5 SCHEDULE OF (DST REODVERY

(»1 million)

Absorbed by Costs Recovered byCcponent Total Cost Government Property Tax Lon Repayments Surcharge

micipal Pevenue GenerationAntananarivo aixnToanasin tax base 222.37 222.37

Collection Toemasina 4.92 4.92Financial nBnagant 30.29 30.29Tech. advisers 211.55 211.55

Mm. Tech. ServicesInvestments 904.31 904.31Training 140.82 140.82Operating costs 175.99 175.99

UpgradingLand Toamasina 269.68 269.68On-siteInfrastructure 820.06 820.06

Off-siteInfrastructure 871.43 871.43

Housing loans 322.68 322.68Caimiutyfacilities 96.66 96.66

FmploymentWorks1ops 178.59 178.59Assistance to CENl 66.23 66.23Tech. alvisers 320.27 320.27Road re-surfacing 20.38 20.38

Traffic ManagenentImprovements IsotryCenter and 144.04 144.04intersections

Traffic ManagementBureau 123.31 123.31

Project ManagEmentand Studies

Project Mnagent 1,080.58 1,080.58Studies 32.10 32.10

IOTAL 6,036.26 2,220.76 2,494.17 501.27 820.06US $ equivalent 15.1 6.1 5.7 1.3 2.0% 100 37 41 8 14

Note: Excluding taoes and duties.

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5.14 Local authorities would levy a surcharge in areas where works arebeing undertaken at a rate based on rental values that allows them torecover the annual cost of the works. Local authorities would set the rateand determine the period over which the surcharge would be payable.Antananarivo and Toamasina would have the demands for their specificsurcharges computed and printed by the Direct Tax Department, where rentalvalues are registered for the property tax and a computer will be availablefor calculating and printing the demands. The surcharges would be leviedin the name of the municipalities and collected by them. Since thesurcharges would provide the means whereby the municipalities would repay aportion of the subsidiary loan, the product of the surcharges would becredited to a separate account that can be drawn upon only to repay thesubsidiary loan.

5.15 Any shortfall in housing loan repayments in excess of the 10% ofannual repayments that is covered by the Guaranty Fund would be at the riskof SEIMAD, which is responsible for allocation and recovery of the loansand repayment of its subsidiary loan. Loans for the production units wouldbe allocated and recovered by CENAM. The impacts of a serious default,which is considered unlikely because of CENAM's day-to-day involvement withthe workshops, would be mitigated by CENAM's ability to recover assets fromthe cooperatives. Any losses over and above those met through disposal ofrepossessed assets would be borne by the project in the form of a lessrapid buildup of the Infrastructure Fund for Urban Housing.

C. Affordability

5.16 Tenant households in Isotry currently spend about 20% of incomeon housing (rent, taxes, sanitation charges, and other housing expenditure)and owner households spend about 12.5% of income according to surveysconducted during preparation. The income distribution of households in thetwo upgrading areas is presented in Annex 11. Analysis of otherexpenditure categories, plus the savings of about 30% likely in non-rentexpenses (e.g., emptying of septic tanks) as a result of the projectsuggest that households could pay about 10% more for housing than they donow without affecting basic consumption patterns. The net amountsavailable to meet upgrading costs under these conditions are shown in Table6:

Table 6 Household Income Available to meet Upgrading Costs(%)

Owners Tenants

Gross housing expenditure(present % in brackets) 15 (12.5) 22 (20)

less rent - 10

less non-rent expenses (takingaccount of savings) 8.5 7

Net % available to pay surcharge 6.5 5

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5.17 Use of rental values as the base for the surcharge enables theburden to be borne by owners/occupiers of commercial premises as well ashouseholds. Households currently pay 87% of the property taxes payable inIsotry, and it has been assumed that they pay 95% in the Toamasinaupgrading areas. Results of a survey in Isotry in November 1982 suggestthat property taxes are positively correlated with income (see para.5.12). The surcharge will therefore include a built-in cross-subsidy infavor of poorer households. Table 7 below is based on the averagesurcharge per household and therefore presents a conservative estimate ofthe households for whom the surcharge will be affordable.

Table 7 Affordability of Surcharge in Upgrading Areas(December 1983 values)

Isotry Toamasina

Costs to be recovered (FMG million) 416.17 356.68

Total annual payment 51.66 44.26

Proportion borne by households 87% 95%

Annuity borne by households (FMG million) 44.94 42.05

No. of households 4,300 5,380Average monthly payment per household (FMG) 850 650

Minimum income required

(i) Owner income a/ 13,385 10,000Percentile at7which affordable 6-7 3-4

(ii) Tenant income b/ 17,400 13,000Percentile at which affordable 9-10 5-6

a/ 6.5% of household income available*É/ 5.0%

5.18 Taking account of the fact that tenants will not bear thesurcharge in full and that a portion of the surcharge will be borne byowners not resident in the area, the surcharge would be affordable by allbut the poorest 5% of households. An alternative assessment of the burdenof the surcharge and the revision of the property tax combined is providedby comparing the overall product of the property tax and the surcharge.The current tax product from households in Isotry is about FMG 12.7million, which would increase by about 2% as a result of the proposed 1983tax revaluation and which compares with the surcharge of FMG 44.94million. The combined effect of the revaluation and the surcharge will beto increase the average percentage of income absorbed by the surcharge andthe tax from 1.0%-1.5% to 4.5%-6.8%. This is a major increase, but aninevitable one given the very small tax payments made currently.Consultations with local community leaders have indicated that the paymentsrequired will be acceptable if the improvements are as significant as the

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proposals and the surcharge, for which the TAFB portion of the property taxis a precedent, is fully explained to the population at the time paymentsfall due.

5.19 Home improvement loans would be available for building additionalrooms at about FMG 270,000 (US$675) in Isotry and FMG 324,000 (US$810) inToamasina, and for building and repairing septic tanks in Isotry at aboutFMG 125,000 (US$313). At 15% of income spent on house improvements, theseloans for rooms (repayable at 12% over 15 years) would be affordable byhouseholds above the 17th percentile in Isotry and above the 32ndpercentile in Toamasina. Loans for septic tank repair would be affordableby households above the 5th percentile in Isotry.

D. Financial Impacts of the Project

5.20 Cash flow projections for both municipalities as well as SEIMAD,CENAM, and the project as a whole are presented in Annex 12. For theAntananarivo municipality the projections indicate a positive balance ineach year after taking account of the repayment of the subsidiary loansunder the project, a substantial increase in the expenditure of themunicipal technical services departments, and payment of annual charges toJIRAMA for water and electricity consumption. Arrears of the Antananarivomunicipality toward JIRAMA, estimated at US$3 million, would be paid by theGovernment as part of an effort to reduce all arrears owed to JIRAMA to amaximum of three months' billings by the end of 1985 (see also para.1.15). Assurances were obtained at negotiations that the Antananarivomunicipality beginning in 1986 will have no more than three months'equivalent of water and electricity bills outstanding.

5.21 The capacity to generate these annual surpluses depends on theadoption of revised valuations for property taxes, increases in rents andcharges for municipal property and services, and the payment by theGovernment of local taxes it has collected. Furthermore, the increasedmunicipal taxes and charges need to be collected effectively. Successfulexecution of this program would enable the Antananarivo municipality toraise 50% of its income from property taxes by 1990, compared with thepresent one-third. Although this improvement does not guarantee that theIsotry upgrading will be replicated throughout the city, it doesdemonstrate the type of urban operation that can be supported from astrengthened tax base.

5.22 The cash flow for Toamasina indicates that it will remain insurplus if early increases in income are achieved and surpluses generatedat the beginning of the project are carried forward to finance annualdeficits that will arise in the years 1989-1992 when loan repayments on theproject are at a peak. Surpluses would be deposited into a Special Account(compte d'affectation spécial) for use in covering the subsequentdeficits. The achievement of early surpluses depends on the municipalitybeing able to increase its revenue by about 55% by 1986, mainly throughincreases in property taxes, indirect taxes, and rents and charges formunicipal property and services. The additional income will enable themunicipality to repay the loans made under the project, to increaseexpenditure on technical services by 50%, and to generate a cumulativesurplus that will allow a modest increase in expenditure on other services.

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5.23 The cash flow for SEIMAD covers the impact of the housing loansprogram. A significant surplus is generated in the years 1988-1990 whenSEIMAD benefits from a three-year grace period on its loan repayments,compared with the one-year period enjoyed by individual borrowers. Thissurplus will allow for some slippage in the disbursement and recovery ofthe loans and enable SEIMAD to accumulate funds to meet the repayments atthe end of the loan period. The ongoing surplus of FMG 3.84 million thatis produced by the spread in interest rates could be reduced or eveneliminated by a higher rate of default on the loan repayments. There istherefore a significant incentive for SEIMAD to recover paymentseffectively.

5.24 As a government agency, CENAM would not handle loans in arisk-taking capacity. As the cash flow indicates, the project shouldtherefore leave CENAM's net financial position unchanged. CENAM will havereceived additional grants to meet the costs of staff and equipment and itwill have transmitted credit funds to enable the production units todevelop their productive facilities. It will recover repayments from theproduction units and transmit the proceeds to the Project (InfrastructureFund for Urban Housing) and to BTM which will keep accounts for the loans.The spread between the interest rates provides the fee (FMG 2.91 million orUS$7,275 initially and then FMG 1.14 million or US$2,850) for BTM'sservices (see also Annex 8, para. 20).

5.25 In the overall cash flow for the project, the housing GuarantyFund and project staff not financed by the project appear as budgetallocations and as items of expenditure. The substantial surplus, whichrises to FMG 2,277 million (US$5.7 million) by 1990, derives from the loanrepayments that are made by the agencies that will execute the project.These surpluses will constitute the Infrastructure Fund for Urban Housingthat will then be available for investment in basic infrastructure.

VI. PROJECT JUSTIFICATION

A. Benefits and Impacts

6.01 The project will have direct, immediate benefits for specificgroups as well as wider, longer-range impacts on the economy as a whole.Value added and employment would be generated for about 66 members ofbuilding materials cooperatives, 300 small contractors, 400 sidewalkmerchants at the Isotry Market, and close to 1,000 artisans and contractorslikely to be hired under loans for sanitation and house construction. Bythe end of the project, living conditions will have improved, oftendramatically, for 65,000 residents of upgrading districts plus 60,000 dailyusers of the five intersections in Antananarivo. The consequent effects onlabor productivity and health, although difficult to quantify, shouldnevertheless be significant, since the great majority of health problemsseen in local health centers arise from poor environmental sanitation.

6.02 Apart from the immediate benefits, measures to strengtheninstitutions, improve local finances, and support new policy directionswould generate induced benefits well beyond the scope and time span of the

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project itself. As is also the case for IDA-assisted projects in roadmaintenance,1 2 / this project would help the Government protect itsinvestment in basic infrastructure, whose deterioration has reached thecritical stage. Ultimately the aim is to increase the effectiveness ofpublic investment by ensuring a more dependable supply of urban services tothe economy. Demonstrations of the viability of upgrading are criticalelements in this respect, especially as Isotry has come to be a nationalsymbol that decline in the quality of living and working environments isseemingly inevitable.

6.03 Impacts on the national budget will be felt in two ways. First,the savings in foreign exchange through production of local buildingmaterials will make a small contribution to lessening the acute shortage offoreign exchange which continues to dominate economic developments inMadagascar. Second and more important, increasing the real resources inthe hands of city governments will relieve pressure on the publicinvestment program, which cannot now meet even the most urgent prioritiesin the social sectors. This would effectively apply the concept thatinvestments benefiting residents of a city should be financed by the city.

6.04 Strengthening of financial and managerial capacity will extendbeyond the two municipalities to CENAM and SEIMAD, increasing theirability to design and carry out national programs. Success in operatingthe production units would inspire more confidence in CENAM as the leadingedge of government policy to create productive employment. SEIMAD wouldgain experience with upgrading in two contrasting urban environments.Moreover, the audit of its management and finances would be a means ofstimulating debate on more fundamental issues of housing policy, such asrent control and public ownership of housing.

B. Calculation of Economic Rate of Return

6.05 Economic rates of return in December 1983 prices were calculatedfor quantifiable project components (municipal technical services,upgrading, employment, and traffic management improvements, including thetechnical assistance required for their implementation) representing 83% oftotal project cost (less price contingencies). The overallweighted-average rate of return is 17%. Municipal revenue/financialmanagement measures and studies were not included in these calculationsbecause of the difficulty in quantifying benefits. Table 8 below giveseconomic rates of return for each component and the results of sensitivitytests showing the changes in costs and benefits it is reasonable to expectmay occur. The economic rate of return for Toamasina upgrading is lowerthan that for Isotry principally because of the large amount ofcompensation payable for acquisition of land. Details of the approach andassumptions used are given in Annex 13.

12/ The Sixth Highways Project (Report No. 4399a-MAG) is one example.

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Table 8 Eomionc Rates of Return, Global and by CoQxment

EMployment GenerationMun. Tech. Isotry Toemasina Brick & Tool- Traffic TotalServices Upgrading Upgrading Tïle QCrpentry mkidng Maagennt Project

Base cse 17 16 14 20 19 17 29 17

Cost increased 10% 14 14 13 18 17 15 26 15

Benefits decreased 10%. 13 14 13 18 16 15 25 15

Costs increased andbenefits decrease1 10% 10 12 il 16 15 13 22 13

Benefits delayedone year 12 13 12 17 15 14 21 14

C. Urban Poverty Aspects

6.06 On the basis of household expenditure on rice, beef, and othertraditional Malagasy staples, plus an allowance for non-food expenditure,the absolute poverty threshold is estimated at FMG 44,304 (US$110) percapita per year. Both Isotry and the Toamasina upgrading neighborhoodsreflect the proportions of poor families, on this criterion, in theirrespective cities--12% and 13% respectively. The demonstration upgradingprograms would therefore benefit slightly more than 1,700 poor families.

D. Project Risks

6.07 Concrete applications of new policy directions are inevitablysubject to the risk that the applications will not resemble the policies,or that they will take longer to implement than foreseen. The main risksaffecting this project concern (a) the capacity of executing agencies; (b)cost recovery; (c) possible delays in land acquisition; (d) cost overruns;and (e) counterpart funding.

6.08 Capacity of executing agencies. SEIMAD, CENAM, and themunicipalities have yet to realize their potential for planning andexecution of programs on a sustained basis. Moreover, many of theimplementing agencies of this project are also involved in the AntananarivoWater and Sanitation Project, which has encountered serious problems(para. 1.15). The inexperience of ministries and agencies entrusted withthe project will be addressed by substantial amounts of technicalassistance and training to build up local capacity, and by confining theproject to actions already within their mandate. Centralized coordinationand management by BPU should more rapidly resolve problems ofresponsibility or turf, and expedite procurement procedures and Governmentreview of the results of studies. Close IDA supervision is an essentialingredient in this process.

6.09 Cost recovery. Several features of the project suggest that therisks from beneficiaries not paying property taxes or the surcharge areacceptable. First, subsidiary loan repayments in Antananarivo are never

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more than 15% of municipal receipts. A shortfall in revenue would first beabsorbed by the surplus on operations, which would be generated by theproject and is expected to reach US$5.8 million by 1991. This flexibilityis however not present for Toamasina, where loan repayments in the late1980s cause temporary annual deficits reducing the surplus. Particularlyin Toamasina, cost recovery performance would therefore be reviewed priorto this stage (during 1986). If considered necessary, equipment purchaseswould be delayed or cancelled to result in a more gradual buildup oftechnical services departments. Specific recommendations were made duringpreparation and appraisal on the details of collection procedures. Forexample, it was felt essential that the physical improvements be undertakenat roughly the same time as higher tax obligations come due. As for taxcollection, the project does not assume any improvement in collectionperformance for Antananarivo, and only a moderate one in Toamasina despitethe resources for collection provided within the project. Finally, thebeneficiaries of upgrading works consulted during preparation declaredtheir willingness to meet the charges, if the works were carried out asproposed and the benefits fully explained.

6.10 Land acquisition. Completion of expropriation is traditionallya major cause for delay. This risk is offset by the close attentionGovernment has already given to the process: in Toamasina, for example, adeclaration of intent to bring the site into municipal ownership was issuedin June 1983. As a condition of disbursement of the upgrading componentrather than a condition of effectiveness, land acquisition if delayed wouldnot affect the startup of building materials production, propertyrevaluations, and other essential measures not tied to the implementationschedule for upgrading. However, the process as a whole will be carefullymonitored to prevent delays from becoming excessive.

6.11 Cost overruns. Because the financing plan (para. 3.03) ishighly levered, a small cost overrun in local currency would result in alarge percentage increase in local participation. Should domesticinflation continue at the current 20% rate, cost overruns on portions ofthe project could indeed occur. If this happens, consideration would begiven to cutting back on sewerage investments at Isotry, municipalequipment, and housing loans. This should make it possible to deal withany reasonable cost increases without drawing further on the nationalbudget (see para. 6.12).

6.12 Counterpart funds. When viewed over a six-year period, theamounts required from the Government to meet the implementation scheduleare well within its capacity. The initial deposit in the Project Accountof US$375,000 equivalent in local currency would be an early indication ofthe timeliness that can be expected. Finally, the Quarterly Reports wouldindicate before the start of each budget year that the Finance Law of thatyear provides for the project's needs in local currency.

6.13 From the foregoing it is clear that the risks associated withthis project must be minimized through specific protection measures andcontinuous surveillance. As described in paras. 6.08-6.12, the specificmeasures proposed would keep the risks at acceptable levels.

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VII. AGREEMENTS REACHED AND REC(OMNDATION

7.01 At negotiations, assurances were obtained that

The Government will:

(a) eliminate by December 31, 1986 at the latest all arrears onthe transfer to Antananarivo and Toamasina of municipal taxesit has collected (Annex 1, para. 1(b))

(b) establish the Infrastructure Fund for Urban Housing, withoperating provisions acceptable to IDA, no later thanDecember 31, 1985 (para. 3.05)

(c) establish the Project Account at the Central Bank and make afirst deposit of FMG 150 million (US$375,000), chiefly tofinance land acquisition, no later than the date of crediteffectiveness. The balance in the Project Account at thestart of each quarter would be at least FMG 150 million(para. 4.20)

(d) ensure that recommendations from the management audit ofSEIMAD are available by June 30, 1985. Within six monthsthereafter, following consultation with IDA, the Governmentwould adopt an Action Plan for improvement of SEIMADmanagement and finances (para. 4.09 and Annex 1, para. 10)

(e) make budget allocations available to CENAM sufficient tosupport project activities, including the last six months ofsalaries of higher-level local staff, all salaries of supportstaff, and operating costs (except vehicles) (para. 4.10)

(f) firm up the training arrangements outlined in paras. 4.21 to4.24 in a training program and schedule to be available byMarch 31, 1985

(g) appoint a Chief Administrative and Financial Officer and aChief Technical Officer for BPU by December 31, 1984 (Annex8, para. 24)

The Municipality of Antananarivo and the Municipality ofToamasina will:

(h) keep arrears toward JIRAMA for current electricity and waterconsumption to a maximum of three months' billings (para.5.20) (Antananarivo)

(i) continue its policy of non-replacement of staff retiring fromservice, with the aim of reducing technical services staff to1,200 people by December 31, 1987 (Annex 8, para. 7)(Antananarivo)

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(j) carry out a reorganization of its technical servicesacceptable to IDA no later than December 31, 1984 (Annex 8,para. 8) (Toamasina)

(k) within two years of completion of the transfer of land in theproject area to the Municipality, deliver an Occupancy Permitin project areas with terms as described in Annex 8, para. 12(Toamasina)

(1) appoint by December 31, 1984 a Director of Financial Affairs,a Chief of Vehicle Maintenance, and a civil engineer as headof the Planning and Studies Division, with qualificationsacceptable to IDA (Annex 8, paras. 3 and 6) (Antananarivo)

(m) increase indirect taxes, rents on property, and othermunicipal receipts as indicated in Annex 1, para. 1(b)(Antananarivo and Toamasina)

CENAM will:

(n) appoint by December 31, 1984 a Chief of the Employment Unitwith qualifications acceptable to IDA (Annex 8, para. 19).

7.02 The following are special conditions of credit effectiveness:

(a) Signature of subsidiary loan agreements between theGovernment and implementing agencies as indicated in para.3.04

(b) Signature of implementation and management agreements asindicated in para. 4.05

(c) Establishment by Antananarivo and Toamasina of surcharges torecover a portion of upgrading costs at project sites (para.5.11).

(d) Deposit in the Project Account of FMG 150 million incounterpart funds (para. 4.20)

(e) Establishment at the Central Bank of a Special Account toreceive an IDA deposit of US$500,OOU (para. 4.20).

7.03 The following conditions of disbursement of funds against relatedexpenditures will also apply:

(a) For construction of the Ankirihiry Health Center, transfer ofthe site to the Ministry of Health (Annex 8, para. 12)

(b) For upgrading in Antananarivo (except community facilities):completion of land expropriation and municipal registry ofthe land acquired (Annex 8, para. 12)

(c) For upgrading in Toamasina, completion of transfer of theproject sites to municipal registry (Annex 8, para. 12)

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(d) For employment, (i) completion of transfer of the Andriantanysite (brick and tile plant) to CENAM; and (ii) transfer ofthe Soanierana site (carpentry/woodworking) from the PublicWorks Ministry to CENAM (Annex 8, paras. 16 and 19).

7.04 With the assurances and conditions indicated above, the projectis suitable for an IDA credit of SDR 12.1 million (US$12.8 million) to theGovernment of Madagascar.

May 2 4, 1984

-40- ANNEX 1

Page I of 7

MADAGASCAR

URBAN DEVELOPMENT PROJECT

Summary Description of Project Activities

Municipal Revenue Generation and Financial Management

1. Municipal Revenue Generation. Receipts of the Antananarivo cityadministration declined 30% in real terms during the 1970s, chiefly becausethe rolls of the property tax (accounting for three-quarters of municipallygenerated revenues) were not revalued and because the central governmentfailed to give back to the cities some receipts of municipal taxes it hadcollected. Proposals for strengthening local finance therefore focus on(a) increasing the frequency and improving the efficiency of propertyrevaluation and property tax collection; and (b) increasing receipts offive other city taxes, in part through a firmer government commitment onrevenue sharing. The proposals are summarized below:l/

(a) Property tax base and collection

(i) Provide for more frequent updating of values. The periodbetween updates of rental values, which make up theproperty tax base, would be reduced from five years tothree years. Vehicles, supplies, and staff costsincluded in the project would support full revisionsof property rental valuations in both cities in 1984,1987, and 1990. The 1984 revaluation would cover allregistered properties plus an additional 15,000 (23% ofthe total) not now on the rolls.

(ii) Clarify the role of the Municipal Committee. At present,a Municipal Committee composed of national and localofficials has the power to approve, amend, or reject theupdated values prepared by the Direct Tax Department ofthe Finance Ministry. The absence of clear proceduresfor resolving disputes over valuations has frequentlydelayed adoption of revised valuation rolls. To remedythis situation, the role of the Municipal Committee wouldbe changed to allow only one round of review of propertyvalues as estimated by the Finance Ministry. The valuesdetermined following this single review would be adoptedas the tax base.

(iii) Reduce the tax subsidy on new housing. New housing ispresently exempted from property tax payments for 10years. This period would be reduced to 5 years for

/ A complementary proposal, to introduce a surcharge that would recover aportion of upgrading investment costs, is discussed in Chapter V,Section B.

- 41 -ANNEX 1Page 2 of 7

construction above US$15,000 in value as an experiment togauge the possible impacts on housing construction.Should the reduction in the exemption period not affectpeople's incentive to invest in housing, a furtherreduction could be considered.

(iv) Improve collections. Collection of the property tax inAntananarivo does not pose major problems, since about60% of the total tax is recovered the first year, between70% and 75% in two years, and 80% within three years.However, to reduce the lags in collection that areevident in Toamasina, the project would cover thesalaries of five additional assistant collectors for oneyear and light vehicles for the team of collectors.

(v) Printed materials, vehicles, equipment, and amicro-computer would be acquired to facilitate analysisof the revaluations as well as storage and updating ofthe tax rolls. Computer hardware, programs, and trainingfor a local operator are included in this effort to speedup the analysis of revaluation survey results andissuance of tax demands (bills).

(b) Other municipal receipte

(i) In April 1984 the Antananarivo municipality doubled itsrents on municipal buildings and market stall fees.Rentals on municipal buildings would be increased by afurther 100% in real terms, and fees for market stalls by140% in real terms, over six years beginning in 1984.

(ii) Arrears on central Government transfers to Antananarivoof receipts of the Business Tax (FMG 140 million orUS$350,000), Vehicle Tax (FMG 230 million), and AlcoholicBeverage Tax (FMG 130 million) would be made up over the3 years 1984-1986. Transfers thereafter would be keptcurrent.

(iii) In April 1984 the Toamasina municipality doubled itsrents on private municipal property, increased rents andcharges on public buildings by 50%, and raised chargesfor municipal services by 185%. Toamasina would effectfurther increases in real terns of 100% in rents fromprivate municipal property, 50% in rents and charges onpublic buildings, and 50% in charges for municipalservices (primarily the emptying of septic tanks) during1984-1988. Indirect taxes would be increased by 50% inreal terms over the three years 1984-1986.

(iv) In Toamasina, arrears on central Government transfers tothe city of Business Tax receipts (FMG 16 million) wouldbe paid over 1984-1985. Transfers in later years wouldbe kept current.

Assurances on the above actions were obtained at negotiations.

- 42 -

ANNEX 1Page 3 of 7

2. Financial Management. Measures to increase revenues would becomplemented by a strengthening of municipal financial management, topromote (a) adequate linkage between financial planning and the planning oftechnical services; (b) continuous review of revenue sources and theability to improve the cost-effectiveness of services; and (c) adequatefinancial control of municipal operations. In Antananarivo a Directorateof Financial Affairs would be created and staffed, and a Committee forProgramming, Monitoring, and Evaluation established (see organizationchart, Annex 4). Economic and financial staff of the Directorate would betrained, and equipment, materials, and 24 specialist-months of advice inmunicipal finance would be provided. In Toamasina the present AccountingDepartment chief would be supported by the appointment of a deputy whowould handie much of the day-to-day management of the Department and theproject accounts. This will enable the chief to help the President of theExecutive Committee in the tasks of financial planning, coordination, andevaluation. The chief and deputy chief would be assisted by a municipalfinance adviser (12 specialist-months), and would each receive four monthsof training.

Nunicipal Technical Services

3. To improve the maintenance of essential urban services, citydepartments in Antananarivo concerned with street repairs, sanitation anddrainage, and logistical support would be strengthened through acquisitionof vehicles, staff training, and upgrading of equipment. Training, locallyand abroad, would be provided for technical staff and middle-level managerssuch as repair workshop chiefs. A similar program would be carried out inthe Street Maintenance Directorate (which is also heavily involved insanitation and refuse collection) of Toamasina.

lpgrading

4. Antananarivo. Isotry, a low-income district of 45,000 peoplewest of the Antananarivo city center, has suffered for decades fromfrequent flooding and poor sanitation. Improvements mainly in drainage andsanitation, described below, would drain all water in streets within onehour of subsidence of a peak downpour, compared with the current 2-4 monthsof standing water along major thoroughfares (see also Maps 17485, 17486,17487, and 17492):

(a) Streets: Existing vehicular streets would be repaired andadditional vehicle access roads built where necessary. Anextensive network of pedestrian streets would be constructedto a relatively high standard to ensure suitable access forall residents, as well as complement the drainage network tobe built under the project. The high standard is alsointended to facilitate easy maintenance.

(b) Drainage: Lack of suitable drainage is the most urgent andhistorically difficult problem in Isotry. An extensivenetwork of lined channels and box culverts is consequently tobe built. In order to offset the susceptibility to flooding,the swampy areas in the low-lying parts of the site would be

- 43 -ANNEX 1Page 4 of 7

retained as polders, linked to the network and each other byunlined canals and a system of small dikes. The polders inturn would feed into a retention pond which is to be drainedby a pumping station provided through the project.

(c) Water Supply: The existing network of public standpipes wouldbe increased by 26 in order to ensure a service of about oneunit per 80 households. Maximum distances to standpipeswould in general be 100 meters. Some 6U washing points (oneper 30 households) would also be constructed. All workswould conform to JIRAMA standards.

(d) Sanitation: The main road in Isotry (Route d'Anosipatrana) issubjected to a continual discharge of sullage and overflowfrom septic tanks. This is in part the result of existingflooding problems, but primarily because residents along theroad all have private water connections resulting in highconsumption. The project would provide a sewer line (150connections, privately financed) in the main road. Thesewer, which would include a small pumping station, wouldconnect to a second collector ("collecteur aval"). In sizeand depth the sewer is designed to allow for futureconnections as demand justifies the extension of thenetwork. In addition, 250 loans for the construction and/orrepair of existing sanitation units (based on the currentsystem of simplified septic tanks) would be provided.

(e) Street Lighting: The existing street lighting network wouldbe extended throughout the area.

(f) Solid Waste Collection: A total of 40 concrete and brickcontainers would be provided along all roads accessible byservice vehicles. This would provide service at a maximumdistance of about 150 meters from most households.

(g) Land Acquisition: Successful execution of the works,particularly the sanitation system, requires acquisition ofabout 1.8 ha of land in private ownership. While land forthe polders would not be expropriated, some of the mainchannels require expropriation, as does the retention basinadjacent to the pumping station. Limited expropriation isalso necessary for the road network.

(h) House Construction Loans: The size of this component islimited as a result of the large number of absentee ownersand the implementation capacity of SEIMAD. Based on surveysof demand, it is estimated that loans equivalent to about 200units of 12m2 (about 240 loans) would be appropriate.

(i) Community Facilities Existing schools and clinics areadequate, particularly given the land availabilityconstraints. The market in Isotry Center, together with the

- 44 -ANNEX 1Page 5 of 7

area reserved for vendors' stalls, is to be upgraded. Thistotal area of 1 ha includes:

a. development of the open site where about 400 merchants(60% with parasols, 40% with movable stands) arelocated. Works include:

-- resurfacing of open area

-- scouring of drainage canals and replacement of cementcovers

--improvement of access road near market fordelivery of goods, and

--repair of 2 solid waste containers and public toilets;

b. upgrading of 4 covered tile pavilions (500 m2), whichinclude 20 hardware shops, 40 grocery stores, 20 butchershops, and market offices. Improvements includerenovation or repair of awnings, stalls, finish, and tileflooring;

c. improvements to the 76-table restaurant: flooring, metalsupports, roof, cooking equipment, tables, and interiorlighting.

5. Toamasina. An improvement program centered on basic drainage,safe water, and secure tenure would be carried out in four neighborhoods of23,000 people comprising nearly a quarter of the city's population(Ambalakisoa, Ankirihiry, Mangarivotra, and Morarano - Maps 17488, 17489,and 17491):

(a) Streets: Main roads serving the neighborhoods would be paved(double surface dressing) or resurfaced, and 3 km of internalstreets wouldbe paved.

(b) Drainage: Cement-iîned drainage canals would be constructed(6 km) along the main roads. In addition, the AnkirihiryCanal, which drains surface water into the Pangalanes Canal,would be cleaned and reshaped in order to remove obstructionsand facilitate the flow of water (450 linear meters).

(c) Water Supply: The number of standpipes would be increasedin order to avoid use of polluted groundwater for drinking.Maximum distance to a standpipe would be 100 m, compared withas much as 600 m currently. A total of 37 standpipes wouldbe added to the present 24 in the four neighborhoods. Some112 washing points (one for each 40 families) and 7additional fire hydrants would be provided. All worksconform to JIRAMA standards. Sanitation is assured by pitlatrines, usually metal drums buried in the sand. Given thesuitable soil conditions, this is adequate and appropriate

- 45 -

ANNEX 1Page 6 of 7

for project areas for the foreseeable future as long as pipedwater rather than groundwater is used for drinking.

(d) Street Lighting: The street lighting network (medium voltageand low voltage), which currently serves only peripheralroads bordering the project areas, would be extended into theneighborhoods.

(e) Solid Waste Collection : A total of 44 solid wastecontainers of 1.2 m3 would be provided along the mainstreets. Three container trucks would also be acquired.

(f) Land Tenure: Security of tenure would be improved throughdelivery of of an Occupancy Certificate, once the projectsite is transferred from the public domain to municipalownership. The Occupancy Certificate would become aprovisional land title ("concession provisoire") when plotboundaries are fixed and staking is carried out.

(g) Loans for House Construction: Families in these areas do nothave credit available to them for house construction orimprovement. The project would make available to families aline of credit for upgrading their houses. Demand for loansis estimated at the equivalent of 1,000 12-m2 rooms, based onpreparation surveys. A take-up rate of 40% has been assumed,resulting in a volume of loans equivalent to the constructionof 400 12-m2 rooms (equivalent to about 280 loans).

(h) Counity Facilities: Primary and secondary schools andmarkets are sufficient to serve the project neighborhoods forthe foreseeable future. The maternal and child care (MCC)center at Ankirihiry fills a specific need in theseneighborhoods, but cannot offer more comprehensive healthcare to families who must therefore walk to the single,overcrowded hospital in the city center. Under the project,the MCC facility will be upgraded to a health clinic byenlarging the center physically and adding new staff.

Employment and Income Generation

6. Small businesses and artisans in the building trades would besupported through (a) creation of three cooperatives ("production units")to make building materials and tools; and (b) technical and managementassistance to small contractors. The production units include:

-- a facility to produce 2.4 million bricks and 600,000compressed tiles yearly at a site north of Antananarivo;

-- a semi-industrial woodworking unit to produce doors, windows,and roof supports; and

-- construction tools, which would be made and sold to smallcontractors working under the project as well as others onthe local market.

- 46 -ANNEX 1Page 7 of 7

7. Assistance to small contractors includes training, organization,and technical advice to teams carrying out samall-scale civil works andthose hired under loans to reconstruct septic tanks or improve housing.

Traffic Mbnagement

8. Measures under the project would alleviate the most serioustraffic bottlenecks in Isotry, improve traffic flows at 5 intersections,and lay the groundwork for more systematic transport planning inAntananarivo. The traffic management improvements consist of:

(a) Isotry Center: separation of vehicles from pedestrians andsidewalk vendors; reorganization of traffic flows;parking; bus shelters

(b) Signs, traffic lights, and lane markings at 5 intersectionsin and near central Antananarivo.

9. A Traffic Management Bureau (Bureau de circulation et detransport, BCT), headed by a traffic engineer, would function as thestudies and design bureau for national ministries, parastatals, andmunicipalities in the Greater Antananarivo region. During the projectperiod BCT would (a) supervise execution of the traffic management schemes(para. 8); (b) for the main Antananarivo municipality, prepare preliminarydesigns and cost estimates of measures to upgrade surfaces and edges ofroads and streets; (c) prepare a framework plan for traffic management inGreater Antananarivo; and (d) carry out an organizational study of publictransport.

Project Management and Studies

10. An Urban Project Unit (Bureau du projet urbain, BPU) in thePublic Works Ministry would manage all proposed activities. Technicalassistance would be assigned directly to executing agencies and would besupervised by BPU. BPU would also supervise (i) a study to reviselegislation governing land expropriation and measures to increase thesupply of buildable land; and (ii) a management audit of SEIMAD, whichwould recommend actions to improve SEIMAD's finances and managementperformance.

- 47 -

OADAOASCO .ANNEX 2__------Page l of 2

URW DEMOELOPNT PROJECT

COMT EUTIMATES T TiE: MAIN COIWEIITS

(F08 MILLIONS)

1984 l9m :1986 1987

sU- sua- sue- suE-caoIET LOCAL FOREIGN TOTAL TAXES LOCAL FOREIGX TOTAL TAXES LOCAL FOREIAM TOTAL TAXES LOCAL FOREIGN TOTAL TAXES

1 IU iPAL REVEUE GENERATIOt* FIANCIAL MNbASEMENT 56.46 98.80 155.26 44.74 12.75 66.09 78.84 0.00 3.33 44.19 47.52 0.00 43.18 2.40 45.58 4.61

2 ICIPAL TECHICAL SEROUCES 10,75 52.88 363.63 210.02 21.45 197.67 219.12 112.98 21.U4 129.72 151.36 69.68 21.64 129.71 151.35 69.68

1. UPOADING:ISOTRI 10.27 0.00 10.27 9.00 110.25 106.68 211.93 26.30 115.09 121.51 236.59 35.49 110.02 95.14 205.16 29.22TOIASNA 53.94 0.00 53.94 0.00 262.37 59.58 321.°5 9.56 59.91 90.51 150.42 22.53 64.73 62.19 126.92 19.05

4. EPLYMENT 97.32 163.12 260.44 D0.38 31.26 94.49 125.75 0.20 57.15 42.86 100.01 0.20 10.96 0.31 11.27 0.10

s. 1IRMIC WI TEM 5.29 12.80 18.09 2.19 40.66 86.59 127.25 16.26 14.38 54.13 68.51 4.98 2.59 0.00 2.59 0.16

6. PROJECT ENrT s STUDIES 14.29 55.69 69.98 5.97 34.53 207.07 241.60 5.80 30.72 236.64 267,36 0.00 28.20 203.14 231,34 0.60

S3--TOAL 240.32 68,29 931,61 313.30 513.27 818,17 1331.44 171.18 302.21 719.56 1021.77 132.88 281.32 492.8s 774.21 123.42

OCOIU ARO 91WERVISIGI 42.00 0.00 42,08 .o00 40.88 0.06 40.94 6.00 40.06 0.04 40.10 6.00 43.33 0.00 43.33 6.50

TOTAL BASE COST 2%.40 683.27 973.69 31930 554.15 018.23 1372.38 177,18 342.27 719.60 1061.87 138.08 324,65 492.59 817.54 129.92

PHTSICAL coMTINsEOC!ES 10.41 42.84 53.25 26.15 20,45 43.76 64.21 23.42 21.50 37.54 59.04 16.44 15,14 27.06 42.20 11.96

BAsE COST PLUS PrYSICALXiNTIOEHCIES 300,61 726.13 1026.94 345.45 574.60 861.99 1436.59 200.60 363.77 757.14 1120.91 155.32 339.79 51°.95 059,74 141.33

PRICE ESCALATION 22.62 27.60 50.22 25.92 118.94 96.79 215.93 41.53 119.25 139.32 258,57 51.14 156.63 137.50 289.21 65.41

TOAL COIT 323.43 753.73 1077.16 71.37 693.54 958.98 1652.52 242,13 483.02 896.46 13s9.48 206.46 496.42 652.53 l1'9.?s 207.29

- 48 -

ANNEX 2

URBAN XVELOPOENT PROJECT Page 2 of 2

COST ESTIIIATES Br TIME: KUN COOFOMEMTS

MFIL NIUIONS)

19E8 0a90 1990 TOTAL

SUB- oU UI- SUI-COPENT LOOAL FORESGN TOTAL TAXES LOCAL FOREXI TOTAL TAXES LOCAL FOREBN TOTAL TAXES LOCAL FDREIW TOTAL TAIES

1. fJIUPAL REVENUE ENERATIONAO FINANCIAL NANAGEIENT 0.00 o.00 0.00 0,00 0.00 0.00 0,00 0.00 46.44 2.60 49.04 4.91 162.16 214-08 376.24 54,33

2 MICIPAL TECONICAL SERVICES 21.38 33.29 54.67 15.19 10.69 31.03 42.52 15.19 0.00 0.00 0.00 0,00 107.55 875.10 92.65 492.74

3. WPOAING:TOOTRY 79.13 42.44 121.57 17,45 14.36 3.68 18.04 1.91 0,00 0.00 0.00 0.00 439.11 369.45 008.56 110.45TOMASIMA 60.79 21.42 82.21 11.15 15,08 2.89 17.97 1.51 0.00 0.00 0.00 0.00 516.42 236,59 753.41 63.00

4. 'LCtIT 0.00 0.00 0.00 0.00 0,-0 000 0.00 0o00 0.00 0.00 0.00 0.00 196.69 300.78 497.47 50,88

5. T IMFZC MANAGEMENT 0.55 0.00 0.55 0.0 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0 U00 63.47 153.52 216. 9 23.67

6. PROJECT MAGSEMENENT SrTiES 13.08 66.B6 79,94 0.63 7,46 7.30 14.84 0,63 2.50 6.15 8.65 0.00 130.78 752.93 913.71 13.63

SUS-TOAL 174.93 1- 4.01 338.94 44.50 47,59 45.78 93.37 19.24 48.94 8.75 57-69 4.98 1616.58 2932v45 4549.03 a09.50

ESISN AD SUPERVISION 3.33 0.00 3.33 0.50 3.33 0.00 3.33 C.50 0.00 0.00 0.0 0.00 173.01 0.10 173.1l 25.50

TOTAL BASE COST 170.26 164.01 342.27 45.00 50.92 45,78 9i,70 1.74 48,94 8.75 57.69 4.98 1709.59 2932.55 4722,14 83.00

PHYSICAL CNTINGENCIES 3.9 2.90 6,0S 1.08 0.10 0.12 D,M2 0.05 0.00 0.00 0.00 0.00 71.58 154.22 225,80 79,10

IASE COST PLUS PHYSICALCONTIIGENCIES 182.24 166.91 349.15 46.0B 51.02 45.90 96.92 19.79 48.94 8.75 57.69 4.90 1861.17 3006.77 4947.94 914,10

PRICE ESCALATION 110.62 55.25 165.,7 V,60 39.13 1I.86 50.00 15.18 46.20 4.33 50.53 4.70 613.39 474.S3 100.,32 231.48

MTOAL OST I 2n.86 22,196 515.02 73.68 90.15 U.76 14. N34.97 95.14 13.00 108.22 9.68 2474,56 3561.70 6036.26 1145.58

M "6221 1.2 7.8 9.3 6,6149

- 49 -ANNEX 3

MADAGASCAR

URBAN DEVELOPMENT PROJECT

Financing Plan: Main Components

(FMG million - current prices)

IDA Government

Component Total Cost Amount % Amount %

A. Municipal RevenueGeneration & Fin. 469.13 382.81 81.6 86.32 18.4Management

B. Municipal Technical 1,221.12 1,099.01 90.0 122.11 10.0Services

C. Upgrading 2,380.51 1,904.41 80.0 476.10 20.0

D. Employment & IncomeGeneration 585.47 507.01 86.6 78.46 13.4

E. Traffic Management 267.35 231.52 86.6 35.83 13.4

F. Project Management& Studies 1,112.68 1,001.41 90.0 111.27 10.0

Total Project Cost a/ 6,036.26 5,126.17 85.0 910.09 15.0

US $ equivalent 15.1 12.8 85.0 2.3 15.0

a/ Excluding taxes and duties.

- 50 -

MUNICIPALITY OF ANTANANARIVO: Organization Chart ANNEX 4Chart I

PRESIDENT OFEXECUTIVE COMMITTEE

EXECUTIVE COMMITTEE

| DELEGATE OF THE ADMINIST'RATIVE COMMIfTTEE COMMITTEE FOR

I ~~~~~PROGRAMMING,I ~~~~~MONITORING,

ANINISN AND EVALUATION

|DIRECTORATE, OF | DIRECTORA^TE | DIRECTOAT DIRECTORATE | |DIRFCTORATEGŒNERAL OF OF OF OF HEALTH

_ADMINI STRATION AND _ F INANCIAL _ ECONOMIC _ URBAN _ AND CULTURALPROOEDURE S AFFAI RS AFFAI RS DEVE LOPMENT AFFAI RS

Pe rmanent Department DepartOent Planning andSecretariat of _ of ._ _ of Studies |

Executive Financial Affaire Economic Affairs Health

Committee

Supervision AccountingUrban Services

Liaison a PlaPlanning ndingAssistance

l l l ~~~~~~Expenditures Electricity

|Correspondence | I Commercial

-|and Goverument Cs -|Sites and Marketsl Parsad Cultural Affairs|

| Supervision | LAcutn pnSae _

|Procurement Urban PlanningProcedures L 0 Urban Transport and Housing

Building

Personnel j l Budget l | ToPermit t

TopographieSurveys

Receipts l l l Land

|Collections Poiy é

LogisticalSupport

||Materialse

Equipment andVehicles

StreetMaintenance

Sanitationand Drainage

Firefighting

- 51 -

SEIMAD: Organization Chart ANNEX 4Chart 2

MANAGEMENTCOMMITTEE

GENERALDIRECTORATE

. ~~~~~~~ ~~HOUSING FINANCE AND SUPPORT TECHNICAL ADMINISTRATION ADMINISTRATION URBANIZATION

_ STAFF _ DIRECTORATE _DIRECTORATE _ DIRECTORATE .UNIT

Secretariat - Research Housing Personnel

Inspection - Supervision Agencies Land Titles andAdjudication

Low-CosIltData Housing Office Accounting

Processing (O.H.E.)

Long-term SupplyProgramming

CENAM: Organization Chart ANNEX 4

Chart 3

MANAGEMENT|| COMMITTEE

r NATIONAL |DIRECTORATE

PROGXAMNING ADMINISTRATION REGIONAL TECHNICALAND MONITORING AND FINANCE MARKETING OFFICES DIRECTORATE PROJECT UNIT

El,,at | - | Market | Product i | Assistance to |Planning Administration Studies Research Studies l Production tTnlts|

Evaluation Management Sls ures Prototypes j | Training

project Deaign | Finance g | SpL xtension work | Training l - Admtnistratton|

r l l r ~~~~~~~~~~Financial | Fomtn_ Audio-vi s ual _ Suppl i es _ Management of Cooperatives Field Training

Promotion Coordination l | Monitoring

IREGIONAL FIELD L OFFICES

- 53 -

ANNEK 5Page 1 of 2

SEIMD

Irraome Statements, 1979-1982

(FM millim)Table 1

Expenses 1979 1980 1981 1982 Receipts 1979 1980 1981 1982

Opening stock Closing stockof studies 1.50 0.78 9.26 8.63 of studies 0.78 9.26 8.63 8.26

Staff 214.58 246.77 290.25 307,82 Rents 548.07 559.61 559.49 558.64

Taxes 31.49 40.22 45.80 49.04 Other receipts 124.91 168.94 157.62 86.41

Work & services by Interest receivable 22.13 33.40 10.48 23.40third parties 115.17 135.48 160.57 121.87

Wtbrks for own arcount a/ 139.98 153.91 129.76 107.21Travel 5.92 7.66 7.39 8.65

M2ugoentexpenses 19.01 32.11 42.22 43.87

Finacial charges 52.61 48.09 43.58 42.90

Depreciation& provisions 403.65 403.85 397.87 396.89

Result 10.16 Resuit 8.06 130.96 195.75

Total 843.93 925.12 996.94 979.67 Total 843.93 925.12 996.94 979.67

a/ Value of services pravided by staff on SEIMD housing stockSource: Published accounts 1979-81

Unpublished draft accounts 1982

- 54 -

RMI 5Page 2 of 2

SEMDW

Balace Sheets 1979-1982

(FM mi1Uic>

Table 2

Assets 1979 1980 1981 1982 Liabilities 1979 1980 1981 1982

Fixed assets Stockholders' capital 610.35 642.03 726.46 579.52

- productive a/ 2,780.19 2,535.99 2,318.36 2,116.57 legal reserve 1.38 3.05 7.50 ]O.00b/- unproductii;F 63.12 81.54 79.70 78.95- other 87.15 87.19 88.99 101.21 Grants reeived 547.65 509.11 474.22 442.28

Stocks & work inprogresa 1.93 10.37 9.29 8.63 Reinvestnt fuxns 350.25 369.90 387.73 409.18

Current assets 524.34 544.77 717.45 1,046.27 Provisions 597.44 636.13 709.28 805.01

Liquid assets 542.25 830.82 684.78 550.15 LIxi-term liabilities 1,271.16 1,139.10 1,009.60 875.44

Current liabilities 587.40 702.48 738.23 97 9. 81b/

Result - - 154.4 5c/ 19 9.4 6c/ Pesult 33.35d/ 88.88d/ - -

Total 3,998.98 4,090.68 4,053.02 4,101.24 Total 3,998.98 4,090.68 4,053.02 4,101.24

Source: Publishld accounts 1979-81;Unpublished draft accounts 1982. Differences in procedures for classification and recordirg of expenses apparently

expLin the sEal residual discreparcies between results of incoe statesents and balance sheets.

Notes: a/ net of depreciation- interpolated fram incOEiplete record

mi overall accuwalated deficit_i overall acclmiated surplus

- 55 -ANNE( 6

CENAM

Balance Sheets 1979-1981

(Fr million)

fable 1

Assets 1979 1980 1981 Liabilities 1979 1980 1981

Fixd assets(gross value) 47.80 141.11 158.71 overrnnent grant a/ 173.28 106.94 -

Stocks & work-in- Equipent grantsprogress 0.15 5.30 4.31 received 47"95 141.11 158.71

Current assets 181.98 110.85 37.50 Current liabilities 8.70 4.59 25.30

Iovt. & other borrowing - 4.62 16.51

229.93 257.26 200.52 j 229.93 257.26 200.52

a/ Carryover from previous period, due to processing of grants late in each acounting period.Source: PublisIed acounts 1980, tnpublished accounts 1979 and 1981.

CENAM

Operating Expenses 1979-1981;Government Grants Received 1979-1983

(FMG million)Table 2

1979 1980 1981 1982 1983Operating Expenses

Staff 38.83 100.07 114.71Taxes 0.31 0.54 0.86Supplies & servicespurchased 7.46 19.34 22.29

Transport 1.24 4.29 1.52Other management

costs 6.21 16.29 5.39Other expenses - 0.23 0.54

Total 54.05 140.76 145.31

Government GrantsReceived 235.00 160.00 35.00 88.00 277.00

Source: Published accounts 1980; unpublished accounts 1979 and 1981.

- 56 -

ANNEX 7

MADAGASCARURBAN DEVELOPMENT PROJECT

Implementation Schedule

CALENDAR YEAR 1984 1985 1986 1987 1988 1989 1990

QUARTER 1 2 13 4 1 2 3 4 I 2 3 4 1 2 3 4 1 3 4 1 2 3 4 1 2 3 4

A, MUNICIPAL REVENUE GENERATION!FINANCIAL MANAGEMENT

ANTANANARIVOl. Property Revaluations

2Computeruationi of TasxRolls

4 Issuance ofTaxDemonds... ....... ......... .5 Municapai Finance Aavisor.......

TOAMASINA1 . Property Revaluations ................2 ocalcStatisticîanforRevaluationSurveys .... ... m...... ......3. lssuance ofTaxDemanrds ... . ..4. Municipal FincanceAdvsor

B. MUNICIPAL TECHNICAL SERVIACESANJTANAN4ARIVO

1 Recruit New Managers &Technical Statff ~2 Streets & Sanitotion Equipment3.Equipmrent Rennainirig Urnts4. Trco ning5.Chutf Engineer-Adviscr6 Ma ntenance Advisor

TOAIMASINAI Recruit New Managers & Technical Staff2 War'Ks Departrnent Equipment3.Equipment Rennaining Units4. Training5. Ma ntenance Advisor

C. UPGRADINGISOTRYI Land Acquis tion2 Streets & Peaestrian Parthss.. ...3. Drainage

4 Sewerage. Connectar5. Se-werage Sanitation Unir6. W.ater SuopIy7 Street Ligntîng .8 lsotrr Massker. Washnirg Points, etc.9 Hausing &, Sarritation Loons

50 SFIMAD Engfrreer.ng Advisor- - - - - - - -

TOAMASINA1. -and Acqu sitian2. Street Impravements3. Drainage4 Water Supply .5 Street LightiirgS SoIra Waste Bins & Dispasal7 Ankirjiiiry Heatrh CenterB. HorîIg & Sanrtatian Loans

D. EMPLOYMENT/PRODUCTION UNITSI Plant & Buî dings2 Equipment & Maîerials3Bnîck &, T le Access Roaa (Andriantany)4 Operation .. .5.Training ot Managers/Treasurers6. inaustrial Engineer-Adeisar7 Products Engineers... ................

E TRAFFIC MANAGEMENTI Isotry Center Improvements2 Eau pment & Warks 5 intersections3 Raad Surfaces Sfudy4. Traiffic Pramework Plan5. Pua ic Transport Sfuoy6 Trattic Management Advisa ~*

F. PROJECI MANAGEMENT & STUDIESAdvisar fo Project DirectorAuaits & Evajluarions ........... ..

L.and Legisariion Study:

Secon n/Reporaf on......Ta &Cntat wr

CoeSEIMAD Management Audit

CalsgrforTendersto Bdeve o Ev qutionmCntacAwd ... Canstucton/Pxecurion * Bank Dsaurssan 0fCa 1 for Tenders Delivery of Equipment Banik Tev,ew of Designs. Bic Documenrs, Or DraPt Conrracts. Camnp erea Srudy

Wor d Bankr-25705

- 57 -

ANNEX 8Page 1 of 7

ADAGASCAR

URBAN DEVELOPMENT PROJECT

Project Execution and Management

hunicipal Revenue Generation and Financial Management

1. The municipalities and the Direct Tax Department (Ministry ofFinance) will focus during the first two years of implementation onimprovements in financial management and on the 1984 update of the propertytax base.l/ In Antananarivo a revision of a portion of the tax base(rented properties) based on 1978-79 values has been completed, but has notyet been approved. The project would meet the cost of temporary valuers towork with existing staff for five months during the 1984 revaluations,which would cover the entire tax base, plus a local statistician tosupervise execution of the revaluation survey. A micro-computer would beacquired to assist with survey results and the storage and updating of thetax roll. With the 1984 survey completed by end 1984, tax demands for80,000 properties (compared with 65,000 now) would be issued by May-June1985. Since the Ministry of Finance is planning to computerize all itsfiscal operations, the single micro-computer would be shared betweenAntananarivo and Toamasina. Three months' time of a fiscal adviser isincluded for assistance in the valuation process, analysis of surveyresults, and review of the valuation scale. A computer expert would helpprepare tender documents for the micro-computer, and would then advise onthe evaluation of bids. Temporary valuers, equipment, and supplies wouldalso be furnished for the 1987 and 1990 surveys. Cost estimates of thelater surveys allow for an increase of 2 1/2% yearly in the number oftaxable properties.

2. A similar range of equipment, supplies, and staff for propertysurveys is included in Toamasina for a total of about one-fourth theproperties now on the Antananarivo rolls. In addition to temporaryvaluers, two surveyors/tax officers would be recruited to strengthen thepermanent staff of the Direct Tax Department, and a local statisticianhired to supervise the first two surveys. Collection of the property tax,which has been inadequate in Toamasina, is the résponsibility of theMunicipal Treasurer, who relies on members and officials of lower level(firaisana and fokontany) governments to deliver the tax demands and pursuepayments. To improve collection performance, the project would cover thesalaries of five additional assistant collectors for one year and sevenlight motorbikes for the team of collectors.

1/ The property tax actually comprises a principal tax (Impôt foncier surla propriété bâtie, IFPB) and a supplementary tax (Taxe annexe àl'impôt foncier sur la propriété bâtie, TAFB). The supplementary taxwas originally a charge for sanitary and waste disposal services,but as cities have not been able to maintain these services, taxpayersnow view IFPB and TAFB indistinguishably as general revenue taxes.

- 58 -

ANNEX 8Page 2 of 7

3. The Directorate of Financial Affairs in Antananarivo wouldcentralize all financial operations of the city, including staffremuneration. A total of 58 people, including 3 Department heads and 22tax collectors, would comprise the staff of this Directorate. Much of theresponsibility for day-to-day management would be vested in the AssistantDirector, so that the Director can focus on issues of programming,monitoring, and financial review. With such an arrangement, the Directorof Financial Affairs is expected to be the main source of agenda items forthe Committee for Programming, Monitoring, and Evaluation, which comprisesthe Chief Administrative Officer (Délégué Administratif) and allDirectors. This Committee would be the formal channel for city-wide issuesto be reviewed and proposals prepared for submission to the President ofthe Executive Committee. The project would support the cost of theDirector of Financial Affairs and two professional staff for two years, inaddition to training (see para. 4.21) and 24 months of advisory assistancein municipel finance spread over three years. A Director of FinancialAffairs would be appointed by December 31, 1984.

4. In Toamasina a Deputy Chief of the Accounting Department,supported initially through the project, would handle project-relatedaccounts and much of the management of the Department. This will enablethe Chief of the department to assist the President of the ExecutiveCommittee in the tasks of financial planning, coordination, andevaluation. As technical adviser to the newly-formed Investment andFinance Committee, for example, the accounts chief would prepare studiesand proposals for consideration by this Committee. The project wouldsupport the salary of the new deputy chief for two years, training for thechief and deputy chief (see para. 4.21), and a municipal finance expert for12 months.

Municipal Technical Services

5. Building on the present organization, units in Antananarivohandling street and building maintenance, sanitation, and vehicle repairwould be strengthened. Equipment and materials would be ordered in twotranches, in late 1984 and in 1986-87, to match the necessarily gradualbuildup of technical capacity within the units. A street maintenancebrigade would repair 400 meters of streets daily, which allows for acircuit of the 168 km of paved and 24 km of paving-stone streets in thecity every two years. In addition to schools and other public buildings,the building maintenance unit would repair retaining walls, criticallyimportant in this city built on hills. Numerous retaining walls weredestroyed during 1982 floods, and have not been rebuilt. Moreover, newequipment and staff training would rejuvenate the capacity for emptying ofseptic tanks, to eliminate the present backlog of over 2,000 unsatisfieddemands. A planer/trimmer and other equipment would help the woodworkingunit handle the large volume of carpentry work from primary schools inaddition to the city. At present, good quality stones and aggregate areproduced at the municipal quarry, but in very low volumes. Spare parts tobe acquired would permit the existing stone crusher to be repaired. Forsolid waste disposal, the collection trucks, bulldozers, other equipment,and training provided under the Antananarivo Water and SanitationProject2/ meet the city's needs over the medium to long term.

2/ Cr. 1002-MAG.

- 59 -

ANNEX 8Page 3 of 7

6. The one essentially new unit in the organization of technicalservices is the Planning and Studies Division (PSD), responsible for designand coordination of urban investments and monitoring of municipal projectscarried out by others (e.g., SEIMAD). The engineering adviser to theDirector of Urban Development would also assist the civil engineer headingPSD. Prior to project completion, the engineering adviser would recommendwhether the performance and potential role of PSD justifies its being givenmore prominence, such as Department status, in the organizationalstructure. By December 31, 1984, the civil engineer heading PSD and aChief of Vehicle Maintenance, both with qualifications satisfactory to IDA,would be confirmed in their posts.

7. Maintenance units would be fully staffed, and training programswell underway, by the end of 1986. Although the staff for certain tasksneeds to be strengthened, more generally the staffing needs of technicalservices units with the project are some 35% less than present totals.Antananarivo has introduced a policy of non-replacement of retiring ordeparting staff, which has reduced the staff complement by about 3%annually for the past two years. Assurances were obtained at negotiationsthat this policy would continue, which would result in a reduction oftechnical services staff from 1,337 to about 1,200 by the late 1980s.

8. All technical services in Toamasina are currently grouped into asingle Street Maintenance unit. Ten distinct services haveinformally evolved within this grouping, many without even nominalleadership. During preparation and appraisal a reorganization into Works,Maintenance, and Technical Design Departments was proposed, and is nowbeing considered. As agreed at negotiations, Toamasina would put intoeffect an organization plan satisfactory to IDA by December 31, 1984.

9. A road surface team to be created would maintain the 64 km ofhard-surface streets and 26 km of sandy roads in Toamasina, whileadditional teams would scour the drainage canals. For any large-scalerepairs the city would continue to rely on the local Public Worksdepartment. As in Antananarivo, vehicle maintenance workshops would befurnished with repair equipment, gasoline pumps, and materials. The majorfocus in Toamasina however would be on solid waste, since collection nowcovers only 60% of the city and there is no organized dumping. Under theproject, collection would be extended to the entire city through theintroduction of movable metal containers, operated with container trucks.Following a review of designs prepared by the city, the presently scattereddump sites would be consolidated and maintained at a new public site 8 kmnorthwest of the city.

10. The above measures would permit Antananarivo and Toamasina toensure adequate maintenance of project operations as well as othermunicipal facilities.

- 60 - ANNEX 8

Page 4 of 7

Upgrading

11. Supervisory responsibility for all upgrading would lie with thetwo municipalities, which however would delegate actual execution toSEIMAD. JIRAMA would install water and public lighting networks.Construction of standpipes, washing points, and solid waste containerswould be done by local contractors and artisans supervised by SEIMAD.Administration of housing and sanitation loans, recovery of loan charges,and construction supervision would also be the responsibility of SEIMAD.

12. About 1.8 ha of land in private ownership would be acquired fordrainage channels and roads in Isotry. In Toamasina an ExpropriationDecree would also be issued, as part of the process of transferringland in the project area to municipal registry. The city would thenregularize land tenure through delivery of an Occupancy Permit to allresidents who at present have no written evidence of tenure. The OccupancyPermit, to be delivered free, would (a) confirm occupancy status, and (b)indicate that the steps required for obtaining title to the plot would bedefined by the municipalities at a later date. The Occupancy Permit wouldbe upgraded to a provisional land title ("concession provisoire") when plotboundaries are determined and staking is carried out. When in addition,the city is paid for the plot itself, the provisional title would become afull title. Transfer of land for the Ankirihiry Health Center to theMinistry of Health would be a condition of disbursement for construction ofthe Health Center. Completion of land expropriation procedures would be acondition of disbursement for the upgrading component (except Antananarivocommunity facilities) in each city.

13. Training in construction and improvement of septic tanks atIsotry would be handled by a Sanitation Unit comprising 1 unit manager and4 technicians/trainers, to be created in the city Directorate of Health andCultural Affairs. Incremental operating costs and salaries would besupported for a period of two years for this unit, which would be launchedin late 1986 after the bulk of drainage investments are completed.

14. SEIMAD would recover housing loans from beneficiaries at 12% over15 years, including 1 year of grace. The 2% spread of repayments over thesubsidiary loan obligations of 10% should provide an adequate reserveagainst arrears. A Guaranty Fund equal to 10% of repayments of principaland interest would however be established to supplement the 2% riskallowance. This Government grant of FMG 6 million would be a callablereserve, transferable to SEIMAD and non-recoverable in the event of use. A14% markup on sales of materials to loan recipients would cover SEIMAD'sadministrative overheads.

15. When expanded to a Health Center, the Ankirihiry facility wouldbe staffed with a doctor, 4 midwives, 5 nurses, 1 social assistant, and 6support staff. Assurances on these points have been received from theMinistry of Health, and would be reconfirmed at negotiations.

- 61 - ANNEX 8Page-5 of 7

Employment and Income Generation

16. The three production units (brick and tile plant, carpentryworkshop, and toolmaking workshop) would be managed as cooperatives with amanager and treasurer, assisted by CENAM technicians. A cooperativealready constituted ("Tsy Resy") employing 45 people would produce extrudedbricks and compressed roofing and flooring tiles at a 25-ha site 22 kmnorth of Antananarivo. Transfer of the site to CENAM is nearly completed.The access road leading to the site would be resurfaced along the final 8km by the Public Works Ministry, and would be maintained thereafter by 2skilled workers hired by the production unit. Portions of the site wouldbe raised through filling, to further lessen the risk of flooding from theadjacent Ikopa River. A Hoffman oven, extruder and mixer, and otherequipment would be acquired to produce high-quality bricks to be sold at anestimated 16% profit margin. The yearly output of the carpentry workshop,employing 9 people, would be 1,200 windows, 600 doors, and 130 m3 ofplanking for roof supports. It will share a 1,500-m2 site in southernAntananarivo with the toolmaking workshop, in which 12 people would produceabout 200 wooden wheelbarrows, 800 shovels, 100 picks, 200 hammers/mallets,200 pairs of pliers for formwork, metal supports, saws, and other tools.Transfer of the carpentry/toolmaking site from the Public Works Ministry toCENAM is underway.

17. Studies carried out during preparation show satisfactory marketprospects for each production unit. Engineering advisers specializing ineach product will be hired on a short-term basis to update these marketingstudies prior to the start of operations, and again, if required, afterfull production is reached. Half of brick and tile sales are expected togo to large customers and half to small. Based on the market study forwood products completed in April 1983, a 2% market penetration would berequired for the carpentry workshop to meet its sales targets. This isachievable after 2-3 years of operations. Production costs for toolmakingwere estimated using the current, historically high prices for scrap metal.

18. SEIMAD would form small contractors into 16 teams to carry outsmaller civil works such as washing stations, concrete solid waste bins,and improvements at the Isotry Market (see also para. 4.12). Thisinvolvement of about 130 semi-skilled and 170 unskilled workers would totalclose to 850 man/months, not including those contractors and artisans hiredby residents under housing and sanitation loans.

19. An employment unit chief responsible to the CENAM DirectorGeneral would coordinate activities of the production units. Designationof a unit chief with qualifications satisfactory to IDA would occur nolater than December 31, 1984. The unit chief would rely on existing CENAMdivisions, notably those of accounting, product studies, marketing, andtesting workshops, for specialized help. An engineer would advise the unitchief for a period of three years. The products engineers (para. 17 above)would participate on a periodic basis, mostly during formation and startupof the production units. Creation of the carpentry and toolmakingcooperatives would be conditions of disbursement for the respectivesub-components.

- 62 -ANNEX 8Page 6 of 7

20. Use of loan proceeds by production units would be monitoreddirectly by CENAM. Records of loan approvals and repayments would howeverbe kept by the Rural Development Bank (BTM), which has good experience inrecords management. CENAM advisers and staff would ensure that loans arerepaid on time, since further financing would be jeopardized in the eventof arrears. For this reason and because artisan credits are generallyrecovered more readily when artisans work together at one location ratherthan individually around the city, recovery of amounts lent to theproduction units is not expected to pose major problems.

Transport and Traffic Management

21. As its first priority, BCT would supervise the traffic managementimprovements in Isotry Center and other junctions in Antananarivo. Worksat Isotry Center include placement of metal stanchions along RueRaketamanga to separate pedestrians from vehicular traffic; displacement ofstreet borders and repair of sidewalks; painting of crosswalks and parkingareas; and construction of 6 bus shelters. Lane markings, signs, andautomatic traffic lights would be installed at 5 "blackspots" around thecity that have been responsible for numerous traffic injuries and propertydamage. These actions should be completed by the end of 1985.

22. Shortly before completion of the traffic management schemes, BCTwould launch a series of studies of traffic and transport problems inGreater Antananarivo. A study of street conditions in centralAntananarivo, on behalf of the Directorate of Urban Development, would bethe first to be carried out. This study would assess the deficiencies insurfaces and foundations of streets and roadway edges in the central city,and would prepare preliminary designs and costs of improvements. A localtraffic engineer heading BCT, who would be supported for three years wtthinthe project, together with survey teams would prepare a framework plan fortraffic management in Greater Antananarivo. Based largely onupdates of existing information for the central city3/ and on new surveysin the suburban municipalities, this framework plan would identify the mosturgent traffic measures and regulations required for the centralmunicipality and for "blackspots" in the other municipalities. This studywould also be conceived as a feasibility study, producing designs and costestimates of the recommended measures. The third study, of therestructuring of public transport, would have a more limited objective,that of diagnosing management and financial problems of the two buscompanies operating in Antananarivo. The main objective would be to laythe groundwork for a more informed discussion of the future of publictransport, taking account of the macroeconomic environment and the need toreduce operating subsidies of public companies.

3/ Couillaud, "Diagnostic pour la préparation d'un plan de circulation etd'un plan des transports en commun dans l'aire métropolitained'Antananarivo," 1981; E. Dimitrov, "Rapport de mission," 1978; E.Dimitrov, "Recommandations sur la prévention des accidents de lacirculation à Antananarivo," 1973, and "Rapport mission de retour,"1974; Meyer, "Le Transport en commun à Antananarivo," 1972.

- 63 -ANNEX 8age 7 of 7

23. A transport and traffic adviser would assist the head of BCT andhis 3-person staff for a total of 12 specialist-months spread over twoyears. A review of experience would be undertaken by the end of 1988, sothat BPU could recommend an appropriate framework for traffic management inGreater Antananarivo into which BCT would be integrated.

Project Management and Studies

24. BPU would consist of 6 people: a Chief Administrative andFinancial Officer, Chief Technical Officer, Accountant, Secretary, andDriver in addition to the Project Director. While the Director would beassisted by an expatriate adviser over the first four years of the project,BPU would assign other technical advisers directly to the implementingagencies. Terms of reference for technical assistance are available in theProject File. Selection of a Chief Administrative and Financial Officerand Chief Technical Officer would be completed by December 31, 1984.

25. The Public Works minister would exercise supervision ("tutelle")over BPU activities to ensure that they conform to the letter and spirit ofagreements reached on execution of the project. Salaries of BPU staffwould be fully supported within the project over the first four years, thenat 50% for the remaining two years during the evaluation of its performanceand transition to the status of a fully integrated governmental service.Estimates of BPU operating costs and salaries that would be met by thePublic Works Ministry during this period amount to FMG 4 million(US$10,000) in 1988, rising to FMG 10.2 million (US$25,500) yearly by1991.

26. In addition to the SEIMAD management audit (see para. 4.09), BPUwould supervise a study to revise legislation governing urban landmanagement. Because this study affects several branches of Government,discussion of draft terms of reference with the Finance and InteriorMinistries, the main Antananarivo municipality, and the PlanningDirectorate was made a condition of negotiations. The study would becarried out in two phases, beginning in 1985. A first report would reviewthe current situation and outline what instruments (land taxation;anti-speculation measures; public acquisition in advance of need;improvements in the expropriation process) could be brought to bear toimprove public land management. The Government would react to the reportwithin three months of receipt, after which a second report would describein detail the resource requirements, staffing, and organization required toput into effect the measures adopted.

- 64 -

ANNEX 9

MADAGASCAR

URBAN DEVELOPMENT PROJECT

Estimated Schedule of Disbursements(US$ million)

IDA Cumulative UndisbursedFiscal Semester Disbursements Disbursements BalanceYear Ending Amount % Amount % Amount %

1984 December 1983 0.0 0.0 0.0 0.0 12.80 100.0June 1984 0.0 0.0 0.0 0.0 12.80 100.0

1985 December 1984 0.70 5.5 0.70 5.5 12.10 94.5June 1985 0.50 3.9 1.20 9.4 11.60 90.6

1986 December 1985 0.69 5.4 1.89 14.8 10.91 85.2June 1986 0.70 5.5 2.59 20.3 10.21 79.7

1987 December 1986 1.17 9.1 3.76 29.4 9.04 70.6June 1987 1.28 10.0 5.04 39.4 7.76 60.6

1988 December 1987 1.32 10.3 6.36 49.7 6.44 50.3June 1988 1.26 9.9 7.62 59.6 5.18 40.4

1989 December 1988 1.17 9.1 8.79 68.7 4.01 31.3June 1989 1.05 8.2 9.84 76.9 2.96 23.1

1990 December 1989 0.89 6.9 10.73 83.8 2.07 16.2June 1990 0.72 5.7 11.45 89.5 1.35 10.5

1991 December 1990 0.57 4.4 12.02 93.9 0.78 6.1June 1991 0.41 3.2 12.43 97.1 0.37 2.9

1992 December 1991 0.37 2.9 12.80 100.0 0.00 0.0

- 65 -Akrmx 10

1BWCASCAR Page 1 of 2

llmfcipality of haitwmivo: Fesee S Fx EPntioe 1979-82(FM million)

REVENUE 1979 1980 1981 1982

Property taxes

- principal (IFPB) 185.3 356.3 279.3 244.8

- lard (IFT) 1.0 4.2 6.1 11.0

- supplementary (IAFB) (a) 119.4 278.0 354.0 30B.8

Coemircial taxes (b) - - 52.8 -

Other dirert taxes (c) 52.8 44.0 73.6 28.0

Indirect taxes (d) 64.5 74.5 82.2 74.9

Income frcm property and services 144.7 157.3 161.1 162.5

other receipts 623.7(e) 23.6 20.7 30.5

Government grants and transferred taxes 282.7 586.5 475.0 496.4

TOTAL CilERAL REVENUE 1,474.1 1,524.4 1,504.8 1,356.9

Exceptional and additional receipts (f) 603.9 478.5 711.5 910.4

TCIAL REVENUE 2,078.0 2,002.9 2,216.3 2,267.3

ilmicipal services

- personnel 828.5 932.8 842.1 891.3

- operatirg 330-.0 402.1 322.9 333.7

Investments 42.1 70.1 62.0 93.1

Various 25.6 14.0 28.9 35.6

Grants to others (g) 175.7 177.5 173.0 77.2

IOTAL GENERAL EXPENDITURE 1,401.9 1,596.5 1,428.9 1,430.9

Exceptional expenditure (h) 595.3 405.7 703.9 817.9

TOTAL EXPENITURE 1,997.2 2,002.2 2,132.8 2,248.8

SURPLES 80.8 0.7 83.5 18.5

(a) inixluding formerly separate taxes on drainage, cleansirg and weste disposal.(b) turnaver tax(c) mainly vehicle tax(d) a variety of taxes on entertainnent, advertisemerts and the sale of alcoholic beverage(e) mainly an exceptional governrent grant(f) the sarplus from the previous year and (mainly) special governentgrants for stocking and

distributing edible oils(g) mainly grants to low-er tiers of local geverrment(h) mainly special edible oils programs.

Source: Administrative Accounts

- 66 -

Ahnx 10

Page 2 of 2

»mitciplity of 2as1im: fve6 am Emmiibae 1977-1981

(FM million)

REVENUE 1977 1978 1979 1980 1981

Property tames

- prinripal (IEP8) 27.8 16.0 2.1 33.3 21.6

- land (IFT) 2.1 0.7 0.2 0.2 0.2

Ca.ercial tames (a) 8.8 0.5 - 4.5 66.1

Other direct taxes (b) 19.7 17.1 4.9 23.2 17.5

Indirect taxes 49.4 54.0 62.9 59.1 59.6

Inxw.e fran property arnd services 35.4 31.4 39.7 45.7 48.9

Other receipts 3.0 0.8 1.0 0.7 1.2

Governrent grants and transferred taxes 103.8 94.8 96.9 104.3 86.5

TOAL ŒERAL REVENE 250.0 215.3 207.7 271.0 301.6

Exceptional receipts (c) 4.8 19.6 195.7 127.0 42.7

TOTAL REVENUE 254.8 234.9 403.4 398.0 344.3

EXPBNDI1U1E

kmicipal services

- persomel 87.7 88.5 94.1 107.5 104.5

- operatirg 125.4 108.2 164.4 187.8 101.2

Investoents 0.7 0.1 11.3 29.8 38.7

Variooe 11.6 1.6 3.5 3.5 2.8

Grants to others (d) 9.9 3.7 17.6 20.5 -

TTAL GE2ERAL EXPENDITUÆ 235.3 202.1 290.9 349.1 247.2

Exceptional experxliture (e) - 12.7 29.1 6.2 53.8

OTAL EX>ENDITUPE 235.3 214.8 320.0 355.3 301.0

StRPUJS 19.5 20.1 83.4 42.7 43.3

(a) turnover tax in 1981(b) including supplemntary property tax (AFB) and its predecessor taxes(c) mainly the surplus fran the preceding year, also gevermîent ahvances in 1979 and 1980.(d) minly grants to lioer tier authorities(e) ircludes soe infrastructure investment

Source: Administrative Accounts.

- 67 - ANNEX 11

NADAGASCAR

URBAN DEVELOPHENT PROJECT

Distribution of Household Income: Isotry and Toamasina (unserviced areas)(FMG per month)

Percentile Isotry Toamasina

1 5,360 5,955

10 17,865 17,270

20 25,011 22,034

30 30,966 25,843

40 35,730 29,775

50 41,686 33,944

60 48,236 38,832

70 57,169 44,663

80 68,483 52,641

90 89,326 65,505

100 238,200 178,650

Source: Preparation surveys by consultants updated to December 1983

on basis of 6% average annual increase.

- 68 -

ANNEX 12Page 1 of 10

NADAGA SCAR

UltDAH DEVE1.OPMENT PROJECT

NUNICIPALITY GF ANTHIANARIVO - SOURCES AHOD APPLICATIONS OF FUNDS

(FmG MILLION)

1983 1984 1985 195J 1987 1988 198? 1990 1991 192 1993 1994A. SOLURES - - -- -

CURRENT:

1. PROPERTT TAYES 548.00 o37.00 825.00 1015.00 1205.00 1285.00 1350.00 1410.00 1490.00 1590.00 1690.00 1775.00(INCL, LAND TAX)

2. CO.MMCRCIAL TA'ES 60.00 110.00 105.00 105.00 60.00 60.00 60.00 60.00 60.00 60,00 60.00 60.003. VEHICLE TAX 120.00 330.00 325,00 325.00 250.00 250.00 250.00 250.00 250.00 250.00 250.00 250,004, INDIRECT TAXES 147.00 200.00 190.00 190.00 150.00 150.00 150.00 150.00 150.00 150l00 150.00 150.005. INCOIE FR0. PROPERTI

AND SERVICES 180.00 226.00 252.00 284.00 324.00 364.00 364.00 364.00 364.00 364.00 364.00 364.006. OTt4R FRECEIPTS 30.0N 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 20,00 30.00 30.00,. EOVE?.R.ENT GRP.NTS 500.N 500.00 500.00 500.00 500.00 500.00 500 00 500.00 500.00 SO.00 503.00 500.008. SURCHAREE 0.00 0.00 0.00 0.00 0.00 25.93 38.74 46.49 4t.49 46.Ai 46.49 46.49

SUD-TOTAL 1585.00 2033.00 2227.0 2449.00 2S19.00 2664.83 2742.74 2810.49 2890.49 2990,49 30i0.49 3175.49

CAPITAL - SUBSIDIARY LOANDISEURDBEhEETS

9, TECHNICAL SERVICES 0,00 585.90 295.24 48.37 48.37 48.37 38.54 0.00 0.00 0.00 0.00 0.00lO.ISOTiR UPERADIF.G - 0.0-SIE 0.0 3.87 120.59 182.39 53.67 55.65 0.00 0.00 0.00 O0.0 0.00 0,0011.ISOTRY UiREFADING - OFF-SITE 0.00 6,40 152.83 170.07 210.10 35.40 0,00 0,00 0.00 0.00 0.00 0.00l2.TRAFFIC ?.NAGEtOE'NT O.N .0.00 108.4B 35.96 0.00 0,00 0.00 0,00 0,00 0.00 0.00 0.0013.MUNICIPAL REVENJUE O.N 22.88 5.19 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0014.ISOTRe - CC.i. FACILITIES 0.00 0.00 31.61 0.00 0.00 0.00 0.00 0.00 0.00 0.0* 0.00 0.00

SUP-TOTAL 0.00 619.05 713.94 436.79 312.14 13S.42 38.54 0,00 0.00 0.00 0.00 0,00

TOTAL: SOURCES 1585.00 2652.05 2940.94 2885,79 2831.14 2804.25 2781.28 2810.49 2890.47 2990.49 3090.49 3175.4?

-69 -ANNEX 12Page 2 of 10

a. APPLICArIONS

CURENT

15.ADMlINISTRAtIVE SERVICES 110.00 114.00 114.00 114.00 114.00 114.00 114.00 114.00 114.00 114.00 114.00 114.0016.MEOICALY SOCIAL 1

EDUCATIONPAL 117.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.00 150.0017.TECHNICAL SERVICES 1 GARAGE

STAFF: 663.00 643.00 623.00 605.00 566.00 569.00 552.00 536.00 519.00 504.00 489,00 474.00OPERATING: 174.00 300.00 438.00 438.00 4iB,00 438.00 438.00 438.00 438.00 438.00 438.00 438.00

18.OTHER SERVICES 162.00 162.00 162.00 162.00 162.00 162.00 162.00 162.00 162.00 162.00 162,00 162.0019.IMVESTMENTS 93.00 93.00 93.00 93.00 93.00 93.00 93.00 93.00 93,00 93.00 93.00 93.0020.GRA.NTS t OTHER 113.00 113.00 113,00 '13.00 113.00 113.00 113,00 113.00 113,00 113.00 113.00 113.0021,JIRAMA SUPPLIES 150.00 400.00 400.00 400.00 400,00 400.00 400.00 400,00 400.00 400.00 400.00 400.00

9UE-TOTAL 1582.00 1975.00 2093.00 2075.00 2056.00 2039.00 2022.00 2006.00 1989,00 1974.0 1959.00 1944.00

LOAN REPAYMENTS

22.TECF'NICAL SERVICES 0.00 0.00 0.00 154,56 232.44 245.20 257.96 270.72 126.33 48.45 35.69 22.93.23*UPGRADINS - i; SITE 0.00 0,00 0.00 0*00 0.51 16,37 40.35 47.41 54.73 54,73 54.73 54.7324,UFGRAGINri - GFF SITE 0.00 0,00 0.00 0.00 0.84 20,94 43,30 70.93 75.59 75.59 75.59 75.5925.TRAFFIC M4sNAGEMENT 0.00 0.00 0.00 0.00 0.00 14.27 18.,9 18.99 18.99 18.9? 18.99 18.9926.JUNICIPAL REVENUE 0.00 0.00 0,00 6,04 7.40 7,40 7.40 7.40 7.40 1.37 0.00 0.00

SUR-TOTAL 0.00 0.00 0,00 160.60 241.19 304,19 368.00 415.45 283.04 199,13 185.00 172.24

CAPITAL - PROJECT IM.VESTMIENTS

27JTECHNICML SERVICES 0.00 585.90 295.24 48.37 48.37 48.37 38.54 0.00 0.00 0 , 1 0,C 0.008.UPGRA8ING - ON-SITE 0.00 3.87 120.59 182.39 53.67 55.65 0.00 0.00 0.00 0.00 0.00 0.00

29.UPGRADING - OFF-SITE 0.00 6.40 152.83 170.07 210.10 35.40 0.00 0.00 0.00 3.00 0.00 0.0030.TRAFFIC NAr3GENENT 0.00 0.00 108.48 35.96 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0031.MUNICIPAL REVENUE 0.00 22.88 5.19 0.00 0.00 0.00 0.00 0.00 0.00 00 0.00 0.0032JS1TRY - COrnf. FACILITIES 0.00 0.00 31.61 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

taU-TOTAL 0,00 619.05 713.94 436.79 312.14 139.42 39.54 0.00 0.00 0>00 0.00 0.00

TOTANL APPlCTIONS 1582.00 2594.05 2806.94 2672.39 2609.33 2482.60 2428.54 2421,45 2272.04 2173.13 2144.00 2116,24

EALACE: PANKLAL) 3.00 58.00 134.00 213.40 221.81 321.65 352.74 389.04 618.45 817.36 946,49 1059.25

BALANCE: (CUMULATIVE) 3.00 61.00 195.00 408.40 630.21 951.96 1304.60 1693.64 2312.09 3129,45 4075,94 5135.19

- 70 -

ANNEX 12Page 3 of 10

MADA6ASCAR

URBAN DEUELOPMENT PROJECT

SOURCES AND APPLICATIONS OF FUNDS - ?WNICIPALIIY OF TIDAASIN

(FMG NILLION)

1983 1984 1985 1986 1987 1988 l99 1990 l991 1992 193 1994A. SWRCES

1. PROERTY TAXES 57.77 69.53 125.95 127.53 120.74 112.03 116.05 121.15 126.00 131.04 136.28 141.73(INCL. LANO TAX)

2. COMECIAL TAXES 5.00 13.00 13.00 5.00 5.00 5.00 5.00 5S00 5.00 5.OO 5.00 5.003. VEJICLE TAX 6-00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.04. INDIECT TAX 60.00 70.00 80.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 ".00 9.05. INCOCE FRON PPOPERTY

AND SER'C'ES 50.20 60.20 78.20 78.20 78.20 78.20 78.20 78.20 78.20 78.20 78.20 78.206, MguOEONIT GRANTS 94.00 94.00 94.00 94.00 94.00 94.00 94.G0 94.00 94. 0 94.00 94.00 94.007. SURCARSE 0.00 0.00 0.00 22.13 33.20 39.83 39.83 39.83 39.83 39.83 39.83 39.B3

SUD-TOTAL 272-97 312.73 397,05 422.86 427.14 425.06 429.08 434.18 439.03 444.07 449.31 454.76

CAPITAL: SJPSIODART LCANOISIREBSENNTS

h. TECHNICAL SERVIOES 0.00 43.90 63.08 187.79 187.79 21.49 19.17 0.00 0.00 0.00 0.00 0.009. oPGRAZING - LAN2 0.00 53.94 215.74 0.00 0.00 0.00 0.00 0.10 0.00 0.00 0.00 0.0010.LIPGPAOI#G - ON-SITE 0.00 0.00 103.98 203.33 49.37 0.00 0.00 0.00 0.00 0.00 0.00 0.0v11.UPGRADIMG - 0FF-SiTE 0.00 0.00 0.00 17.10 82.40 0.00 0.00 0.00 0.00 0.00 0.00 0.»012.PROPERTY TAX - CCU.ECTION 0.00 4.76 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0013.FINANCIAL MANAKEMENT 0.00 27.73 0.00 0.00 0.00 0.00 0.00 0.N 0.00 0.00 0.00 0.00

SU-TOTAL 0.00 130.33 382.80 409.22 319.55 21.49 19.17 C*Xv 0.00 0.00 0.00 0.00

TOTAL SORCES 272.97 443.06 779.85 831.08 746.69 446,55 448.25 434.18 439.03 444.07 449.31 454.76

- 71 -ANNEX 12Page 4of 10

I. AffllCATIONS

14.HAYOR'S OFFICE I COECTION SERVICE 17.79 17.79 17.7? 17.7? 17.79 17.7? 17.7? 17.79 17.7? 17.7? 17.7? 17.7915JHYGIENEF SANIlATION I

EDUCATI.i 16.76 16.76 16,76 16.76 16.76 16.76 16.76 16,76 16.76 16.76 16.76 16.7616.TECHNICAL CERVICES S YEH. iAINTENANCE 141.12 165.19 189.26 2i3.33 213.33 213-33 213.33 213-33 213.33 213.33 213.33 213.-8317.CVERHEADS I GEN. ADMINISTRATION 30.10 30.10 30.10 30.10 30.10 30.10 30.10 30.10 30-10 30.10 30.10 30.1018.IN)ESTKENT 38.68 31.68 38.68 38.68 38.68 38.68 38.68 38.68 38.68 38-6U 38.68 38.6819.OTHER 2.82 2.92 2-82 2.82 2.82 2.82 2.82 2.82 2.82 2.82 2.82 2.82

LOI REPAYHENTS

20JTECHNICAL SERVICES 0.00 0.00 0.00 11.58 28.22 77.76 127.30 138.03 126.45 109.81 60.27 10.7321.UPGRADING - ON SITE 0.00 0.00 0.00 0.00 0.00 13.67 40.41 46.90 46.90 46.90 46.90 46.9022.UPGRADING - OFF SITE 0.00 0.00 0.00 0.00 0.00 0,00 2.25 13.09 13.07 13.09 13.09 13.0923.PROPERTY TAX t FINANCIAL

MAWAGEMENT 0.00 0.00 0.00 8.54 8.54 8.54 8.54 8.54 0.00 0.00 0.00 0.00

WI-TOTAL 247.27 271.34 295.41 339.60 356,24 419.45 497.98 526.04 505.92 489.28 439.74 390.20

CWITAL: PROJECT ACTIVITIES

2O.TECMICAL £EFvICiS 0.00 43-90 63.08 187.79 187.78 21,49 19.17 0.00 0.00 0.00 0.00 0.0025.UP5RADING - WU 0.00 53.94 215.74 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0026.UPGRADING - C-I'E 0.00 0.00 103.98 203.33 49.37 0.00 0.00 0.00 0.N 0.00 0.00 0.027.UPRADlING - OFF-SITE 0.00 0.00 0.00 17.10 82.40 0.00 0.00 0.00 0.00 0-00 0.00 0.1D2M.PROPERrY TAX - COLLECTICN 0.00 4.76 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0 0.00 O.h29.FINANCIAL iIANAGENENT 0.00 27.73 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0 0.00 o.0

Sui-TOTAL 0.00 130.33 382.80 408.22 319.55 21.49 19.17 0.00 0.00 0.00 0.00 0.'J

TOTAL ArLICATIONS 247.27 401.67 678.21 747.82 675.79 440.94 517.15 526.04 505.92 489.2e 439.74 390.-2

:MAL B" CE 25.70 41.39 101.64 83.26 70.90 5.61 -68.90 -91.86 -66.89 -45.21 9.57 64.56

N1JLATIVE BALANCE 25.70 67.09 168.73 251.99 322.89 328.50 259.60 167.74 100.l8 55.64 65.21 129.77

72 -

ANNEX 12Page 5 of 10

Assumptions concerning Financial Forecasts for Municipalities

A. Municipality of Antananarivo

1. Forecasts of revenue and expenditure are based on actualperformance over the years 1980-1982, with exceptional features duringthose years eliminated. Items that have been independently estimated andprojected are described below:

(a). Estimates of property tax revenue (line 1) assume that taxdemands for 1984 will be based on the revised scale ofvalues based on 1978-79 surveys, and that a further revisionof values derived from the proposed 1984 survey will beincorporated into 1985 tax demands. Property taxes areestimated to be recovered at the following rates:

-- 30% in the first year following the issue of tax demands

=- 35% in the second year following the issue of demands

-- 10% in each of the third and fourth years.

(b). Government payment of arrears of municipal taxes over theyears 1984-1986 as follows:

=- Commercial Tax: FMG 140 million (line 2)

-- Vehicle Tax: FMG 230 million (line 3)

-- Alcoholic Beverage Tax: FMG 130 million (line 4).

(c). Revenue from municipal property and services (line 5) isassumed to increase as follows:

-- leasing rents: plus 100% over five years beginning 1984

-- market rents and charges: plus 140% over five yearsbeginning 1984

-- revision of charges for municipal services (e.g.,emptying of septic tanks) in proportion to half theincrease in costs.

2. The surcharge (line 8) is levied on residents of Isotry, thecapital expenditure being recovered over 30 years at 12% per year.

3. Expenditure on technical services and garage (line 17) reflectsthe project proposals. Staff costs are reduced 3% per year throughout theproject period and operating expenses are increased over two years to thelevel required by the project.

- 73 -

ANNEX 12Page b ~of 10

4. No change in current collection performance is assumed.

5. A payment to JIRAMA (line 21) for annual water and electricitysupplies is included at FMG 150 million in 1983 and at FMG 400 million (theestimated amount billable by JIRAMA) thereafter.

6. Project components appear as funds made available by theGovernment from the IDA credit and its own resources (lines 9-14), asmatching items of expenditure (lines 27-32), and as repayments of fundsloaned (lines 22-26).

B. Municipality of Toamasina

1. Forecasts of revenue and expenditure are based on actualperformance over the years 1979-1981, adjustments being made to eliminateexceptional features. Items that have been independently estimated andprojected are described below:

(a). Property tax receipts are based on the following schedule oftax demands being issued:

== 1984: September 1984

== 1985: March 1985

-- 1986 and thereafter: March of the year

(b). Recovery of taxes is expected to improve in the followingmanner:

-- demands issued in 1980-1983: 35% recovery in the firstyear after issue of demands; 25% in the second year; 5%in the third year

-- demands issued in 1984 and onward: 40% recovery in thefirst year after issue of demands; 30% in the secondyear; 5% in the third year.

2. Tax revenue estimates for 1980-1983 are based on current propertyvalues and tax rates. The product for 1984 assumes an increase of FMG 50million (estimate of Provincial Direct Tax Department and of appraisalmission) of which the municipality's share is expected to be 82.9%. In1985 and subsequent years the product is estimated to increase 4% per yearas a result of additions to the housing stock.

3. It is assumed that Government arrears of commercial taxes (line2) will be eliminated (FMG 8 million in each of the years 1984 and 1985).

4. It is further assumed that indirect taxes (line 4) will berevalued to 1983 levels, implying a 50% increase implemented over threeyears 1984-1986.

- 74 -

ANNEX 12Page 7 of 10

5. Revaluation and slightly more effective recovery are expected toyield the following increases in the product of rent and charges formunicipal property and services (line 5):

-- rents for private property: plus 100% over 1984-1986

-- rents for public property: plus 50% over 1984-1986

-- charges for services: plus 100% over 1984-1986

These increases reflect partial achievement of revenue targetsthat the municipality expects to achieve.

6. Expenditure on technical services and the vehicle maintenanceworkshop (line 16) is increased over three years to the level required bythe project.

7. The surcharge (line 7) represents the repayment of the investmentfor upgrading that is chargeable directly to the residents benefiting(terms are 30 years at 12% per year).

8. Project components appear in the accounts as funds made availableby the Government from the IDA credit and its own contribution (lines8-13), as matching items of expenditure (lines 24-29), and as repayments ofthese funds that are in the form of loans (lines 20-23).

9. Cash flows for both cities are in December 1983 prices andinclude all taxes and duties.

- !5

ANNEX 12Page 8 of 10

INAN DE9EOPIIENT PROJECT

SDURCES MHD 4PLICUTIONS OF PROJECT FUNDS: SEINAD

(FMi MILLION)

1984 1MB 1986 1987 1988 1989 1990 1991 IM 1993 19Y4 19

SMIDIART LOMD DISWRSIENTS

1. DUSINIG LOANS ISOTRY 0.00 0.00 0,00 25,58 61.41 15.36 0.00 0.00 0.00 0.00 0.00 0.002. nUSING LONS IOA1SI o0.e oo 0.00 0.00 44.76 89.52 14.91 0.00 0.00 0.00 0.00 0.00 0.00

LON REPAIbNTS

3 ISOTRI 0.00 0.00 0.00 0.00 3.38 11.4` 13.52 13.52 13.52 13.52 13.52 13.524, TOAIASINR 0.00 0.00 0.00 0.00 5.91 17.74 19.71 19.71 19.71 19.71 19.71 19.71

AULOCATIONS FRON 6UARANTT FU14

5. ISOTMi 0,00 0,00 0.00 0.00 0.38 1.28 1.5 1,50 1.S0 1.50 1.50 1506. TOAASIMA 0.00 0o00 0.00 0.00 0.66 I.S? 2.19 2.19 2.19 2.19 2.19 2.19

TOTAL e8R36 0.00 0.00 0.00 70.34 1c1.26 62.75 36.92 .6.92 36,92 36.92 36.92 36.7T.

APIICATIONS

DIStlSSENT OF NCUSIN1 LOUES

7. NWISING LOANS ISOTRYe 000 0.00 0.00 25.58 61.41 15.36 0.00 0.00 0.00 0.00 0.00 0.FM.S. NOUSIHG LOUAS TOANSIKA 0.00 0.00 0.00 44.76 89.52 14.91 0.00 0.00 0.00 0.00 0.00 o.m

USIDIARY LCOA REPAYIDNTS

9. ISOTRT 0.00 0.00 0,0r 0.00 0.00 0.00 3.36 11.44 13.46 13.46 13.46 13,4.10.TOUIASINA 0.00 0.00 0.00 0o00 0.00 0.00 o ,89 17.66 19.62 1.62 19.62 1?.

TOTAL APLICATIONS 0.00 0.00 OO0 70.34 150.93 30.27 9.25 29.10 33.08 33.08 33.09 33.01

NiWt.ALA NC 0.00 0.00 0.00 0.00 10.33 32.48 27.67 7.82 3.84 3.84 3.84 3.EA

CWUTIVE 3IMOCE 0.00 0.00 0.0 CiOO 10.33 42.81 70.48 78.30 82.14 S5.98 89.82 93-c

- 76 -ANNEX 12Page 9 of 10

IRIAN DLOPMIET PROJCT

SOURCS N3 APUICATIONS Of PROjCCT FmDS' CEA1

<FIÇO MILLION)

19M3 1904 1985 186 1987 1918 1909 10 1; IM IM I994 1995

SUPFRT FOR CEtM

t. E00FItENPT ANTI VEHICLES 0.00 9.00 0.00 0.00 0.00 0.00 0o00 0.00 0.00 0.00 0. 0.00 0.002. LOrAL EXPERIS 0.00 4.70 18.27 18.27 10.96 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00'. '«UCLE OFPtATINO costs 0.00 0.41 0.79 0.79 0.41 000 e-o0 0.00 0.00 0.00 0.00 0.00 0.00

WISI J.L0CATIffS RIm FRGO£CT

4. 01CK rMO TITLE PLMT e.00 129.66 0.00 0.00 0,00 0,00 0.00 o 1.00 0.00 o.00 0.00 0.00 0.005. CPNTRY UR(SU 0.00 43.09 0.00 0.00 0.00 0.00 X.00 .o00 0.00 0.00 0.00 0.00 0.006. TOOLAIKie I0DRKSAOP 0.00 37.48 0.im 0.00 0.00 0.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00

MYrw lE ppFtQMtt3N URITS

7. CIVlT «i.S 0.00 c.00 0.00 14.10 14.10 14.10 14.10 14.10 14.t0 14.10 14.10 14.10 t4.108. Ir. E9UIl. S MAFERI.S 0.00 0.00 0,00 36.15 36.15 36.15 36.15 36.15 0.00 0.00 0.00 0.00 0.009T PJOCLT ALi.IAT1 FGF

565T hOT IN lRuDJCT 0.00 1.74 8.40 8.38 8.38 0.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00

TOTAL S£91 0.00 226.87 27.46 77.69 70,00 50-25 50.25 50.25 14.10 14.10 14.10 14.10 14.10

8. WI1CÀT51tS '

ŒHbl £IPmnT AI.D OpEn1T1 £ES

N0. EMIPET AND EHICLES 0.00 9.00 0.00 o.- 0.00 o.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00-i l, LOcL £Xporis 0.00 4.70 18.27 18.27 10.96 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0012. EH1ICL OPERATIKS COSTS 0.00 0.41 0.7o 0.77 0.41 0.00 0.00 0.00 0.00 0.00 0.00 0o00 0.0013. OpATINS COlTS r

3UTSITE FRLICI 0.00 1.74 0.40 8.38 8.38 0.00 0.00 0.00 0.00 0-00 0.00 0.00 0.00RE1tlSURS£HNT OF CREDIT

14, CIvL OCRAS 0.00 0.00 0.00 12.96 12.96 12.96 12.96 12.96 12.96 12,96 12.96 12.96 12.9615. PL"lT. F3USP. Z RA(ERIALS 0.00 0.00 0.00 34.38 34,38 34.38 34,38 34.38 0.00 0.0 0.00 0.00 0.00l6. FU TO BTH 0.00 0.00 0.00 2.91 2.91 2.91 2.91 2.91 1.14 1.14 1.14 1.14 1.14

tISWliSiM0T OF CR£DITSTg PRD3UCTION UNITS

17. 1RIK MOD IlIE PUfT 0.00 129. 6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0018. tARFBTRt OOTTHIp 0.00 43.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001t.31lNuimlti 6SP 0. --- .00 37.48 00 0.00 0.00 O XDQ 0.00 N X 00 e.00 0.00 0.00 0.00 0.80

10T1L P.PpLICAION)S 0.00 226.87 27.46 77.69 70.00 50.25 50,25 50.25 14.10 14-10 14.10 14.10 14.10

LAl U ffla 0.00 0.00 0.00 0.00 0,00 0.00 e.00 0.00 0.00 0.00 0.00 0.00 0.0c

- 77 -

ANNEX I2______>R Page 10 of 10

MI DEVELOPMENT PROJECT

PRECT CASH FLOI

<FN6 MILLION)

1904 1985 1996 1987 1988 1989 1990 1991 lm m3

9011<S OF FLUS

l. IDA CREDIT 376.78 1219.12 1198.62 972.01 279.27 74.54 46.79 0.00 0.00 0.002. GOYERNJET COUNTEART 479.91 421.21 323.07 270.11 98.38 31.55 14.64 0.00 0.00 0.00

-U UET ALLOCATIONS

3. HOUSINS LUAN 6UARANTY FUND 0.00 0.0 0 0.00 0.00 1.04 3.25 3.69 3.69 3.69 3.694. PROJECT UNIT STAFF /1 0.00 0,00 0.00 0.00 3.97 5,13 9.11 10.26 10.26 10.26

lAtENYT OF SUSIDIARY LOANS

5. ATANANARO MUNICIPALITT 0.00 0.00 160.60 241.19 304.19 368.00 415.45 283.04 199.13 185.006. TOMASINA NUNICIPALITY 0,00 0.00 20.12 36.76 99.97 178.50 206.56 196.44 169,80 120.267? SEIMA 0.00 0.00 0.00 0,00 0.00 0.00 9.25 29.10 33.08 33.09h. CENM LINE OF CREDIT 0.00 0.00 47.34 47.34 47.34 47.34 47.34 12.96 12.96 12.96

TAL SOURCES 856.69 1640.33 1749.75 1567*41 834*15 708,31 752.93 52549 428.92 365.25

APMICATION OF FUNOS

9. MNM, REENUE 6ENERATION 198,74 78.00 47.52 48.96 0.00 0.00 52.78 0,00 0.00 0.0010. MUNICIPAL TECHNICAL SERVICES 229.80 358.33 436.16 436.15 69.86 57.71 0.00 0.00 0.00 0.00Il. IPRADINf:

- ISOTRY 40.63 305.43 336,98 286.28 138.61 16.19 0.00 0.00 0.00 0.00- TOAMASINA 69.58 365,73 205,66 174.24 87.73 16.53 0.00 0.00 0.00 0.00

12. EDPLOYNENT 235,61 129.95 150.22 61.37 0.00 0,00 0.00 0.00 0,00 0.0013. ,TRAFFIC MANAGEMENT 20#68 154,62 76.89 2.88 0.69 0.00 0.00 0.00 0,00 0.0014 PROJECT MANAGEMNT 1 STUDIES 61.65 248,27 268,26 232,24 80,76 15.66 8.65 0b00 0.00 0.0015. eUARANTY FUND 0.00 0.00 0.00 0.00 1.04 3.25 3.69 3.69 3.69 3.6916. PROJECT UNIT STAFF 0.00 0.00 0,00 0.00 3.97 5.13 9.11 10,26 10.26 10.26

TOTAL APPLICATIONS 856.69 1640.33 1521.69 1242.12 382.66 114.47 74.23 13.95 13.95 13.95

BALANCE 1RASFERRED TOIFWRASTRUCTURE FUlID 0.00 0.00 228.06 325.29 451.49 593.84 678.60 511.54 414,97 351.30

COMLATIVE BLACE 0.00 0,00 228.06 553.35 1004.84 1598,68 2277.28 2788.82 3203.79 3555.09

NOTE: DECENDER 1983 PRICES, INCUDES TAXES,PHYSICAL CONTINGENCIES 1 DESIGN 1 SUPERVISION.

/I NOT SUPPORTED DY PROJECT.

- 78 -ANNEX 13Page 1 of 3

MADAGASCAR

UILAN DEVELOPMENT PROJECT

Cost and Benefit Estimation and Economic Rates of Return

A. Shadow Prices

Shadow prices were used for skilled labor, unskilled labor, andforeign exchange in all calculations as follows:

a. skilled labor: 1.15 x skilled labor cost (15% of total cost)

b. unskilled labor: 0.5 x unskilled labor cost (10% of totalcost)

c. foreign exchange: 1.2 x all foreign costs.

B. Upgrading Isotry

1. Capital costs included were all costs of installation ofinfrastructure, including off-site; land acquisition; technical assistance;design and supervision; and physical contingencies.

2. Costs of operation and maintenance were estimated at 1.5% ofcapital costs for the year following startup of works (1986), and 3% ofaggregate capital costs thereafter, land acquisition excluded.

3. Benefits were estimated as increases in average rental value ofdwellings generated by the project. The increase is assumed to beproportional to the increase in the total capital stock of housingimparted by the project. Since project costs represent 25% of the currentvalue of the housing stock, the increase in average rental value was takento be 25% on average. Closer-in residents (of Anatihazo district) directlyadjacent to the improvements would experience a 30% increase in value;residents in the next zone 25%; and those farthest from the improvements17%. Average rental value was FMG 6,670 per month in December 1983 priceswithout the project, a figure determined from survey estimates in mid-1981and adjusted for inflation. Although the survey has yielded the bestavailable estimates of rental values, the results may be subject tosampling problems and should therefore be interpreted with caution.

4. The assumed time path of benefits was as follows:

1986: 50% of benefits1987: 75% of benefits1988: 90% of benefits1989 onward: 100% of benefits.

C. Upgrading Toamasina

1. Capital costs included were all infrastructure costs, includingoff-site; the full estimated cost of land acquisition; technicalassistance; design and supervision; and physical contingencies.

- 79 -ANNEX 13Page 2 of 3

2. Costs of operation and maintenance: (same as upgrading Isotry).

3. Benefits were measured in the same manner as for for Isotry. ForToamasina the increase in average rental value was 50%. The startingaverage rental value (December 1983 prices, without project) was FMG 3,860per month, derived in the same manner as for Isotry.

4. Time path of benefits: (same as upgrading Isotry).

D. Employment

1. Capital costs included were costs of physical plant, equipment,vehicles, and management advisers for each production unit.

2. Costs of operation and maintenance: assumed 3% of capital costsyearly. Provision for replacing the Hoffman oven and other equipment after10 years is included in estimates of annual input costs for the brickplant.

3. Benefits are local value added generated by the production units,measured as estimated turnover less all input costs including salaries andamortization of equipment. The alternative earnings of cooperative membersin previous employment that would be foregone (estimated at one-third ofbenefits) were subtracted from benefits. For the toolmaking cooperative anadditional benefit in local value added, considered equal to 15% of inputcosts, represented the savings in foreign exchange from using local inputsto produce tools.

4. Time path of benefits: Full benefits would not be reached beforeyear 4.

E. Municipal Techbncal Services

1. Capital costs included all vehicles, equipment, technicalassistance, materials, and supplies.

2. Operation and maintenance cost: equal to operating costs coveredunder the project through 1989. Half the total vehicle fleet was assumedto require replacement every 7 years.

3. Benefits were considered to be the impacts on property values, asrepresented by average housing rental values, stemming from street repairs,garbage collection, emptying of septic tanks, maintenance of schools, andother amenities. Numerous studies demonstrate the impacts of amenities onproperty values, although direct measurement was not possible in thiscase. The question was asked instead: What increase in city-wide rentalvalues would justify the investments at a 15% rate of return? It was foundthat a rate of return of 17% was associated with a rise in rental values of5%. This is a reasonable increase to expect, given the importance ofefforts to improve services and the resulting difference in physicalaspects of neighborhoods with and without the project.

- 80 -

ANNEX 13Page 3 of 3

F. Traffic Management

1. Capital costs included were all civil works and equipment costs,technical assistance, design and supervision, and physical contingencies.

2. Costs of operation and maintenance: Assumed 3% of investmentcosts per year, beginning in year 4 (50% in year 2, 75% in year 3).

3. Benefits were measured as (i) savings in fuel (as a proxy forvehicle operating costs); and (ii) time savings.

Fuel savings benefits. Details of calculations:Gasoline price FM 400/liter. Consumption of average vehicle(1000 cc) 1.5 l/hr, or FMG 600/hr. Time savings 1 minute atIsotry, 30 sections at 5 intersections. Number of vehicles perday (at peak periods only): Isotry 10,462; 5 intersections51,993. Peak days per year 313 at Isotry; 200 at intersections.

Time savings benefits. Details of calculations:Savings of 1 minute at Isotry and 30 seconds at intersections,valued at one-third the wage rate (one-third of FMG 250/hr).Same number of vehicles per day and peak days per year.

- 81 -

ANNEX 14

MADAGASCAR

URBAN DEVELOPMENT PROJECT

Selected Documents and Data Available in Project File

Aide-Nemoires

Preappraisal mission (December 1982)Appraisal mission (June 1983)

Preparation Reports

SEIMAD with BCEOM/Groupe Huit: "Etude de factibilité - projet dedéveloppement urbain Madagascar: Rapport Final," 1982.

"L'Organisation du projet et le renforcement des institutions," J.Nahmias, SGS/SID, 1982 and 1983.

"Report of Technical Mission," I. McDonald, Roger Tym and Partners,1983.

Mission reports, A. Konye (ILO), 1982 and 1983.

"Analyse économique," A. Anizon, 1983.

"Rapport technique Volet 2: Propositions pour l'assainissement desfinances des fivondronana du Grand Antananarivo," A. Anizon,UNDP/UNCHS, 1982.

"Discussion of Sanitation Proposals for Isotry," B. Ellis(consultant), 1982.

Legislation

Ordonnance 70.089 (procurement)Ordonnance 78.010 (local government revenues)Ordonnance 74.021 (public acquisition of property)SEIMAD - statutes

CENAM - statutesCENAM - BTM Protocol of Agreement

Data and Working Documents

Detailed cost estimates by componentProject costs by time, each componentTerms of reference for technical assistanceSEIMAD: Annual Reports and Financial Statements 1979-1981CENAM: Annual Reports 1980, 1982Municipality of Antananarivo: Administrative accounts 1979-1981;budget 1982

Municipality of Toamasina: Administrative accounts 1977-1981;budget 1982

MADAGASCAR

URBAN DEVELOPMENT PROJECTPRoier To oeVeOPPCMeENr TURBAIN

ANTANANARIVO: LOCATION OF PROJECT COMPONENTSANTA NA NA P/ VO: LOCALISATION DES COMPOSANTES DU PROJET

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NEXISTING WATER SUPPLY SSSTEM . . PIPESPEt/ EuPOTABLE EXISTANTp /ItA/IX

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AfOIù&O. O/tAUX ~~~~~~~~~~STAViON OF P0MPA4GERATRAIENT WORKS MAIN D

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b-eg a Ceerg,cby COMAOROSÉh~~~~~~~~~~~~~~~~~~~~~~~~~~~~>

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ANTANANARIVO: ISOTRY- ANATIHAZOSTORM WATER DRAINAGE

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