Language: English
Original: English
PROJECT:
MOMBASA - NAIROBI – ADDIS ABABA
ROAD CORRIDOR PROJECT PHASE II
COUNTRIES: KENYA & ETHIOPIA
PROJECT APPRAISAL REPORT
Date: June 2009
Team Leader:
A. OUMAROU, Transportation Engineer, OINF.2
Team Members
N. KULEMEKA, Socio-Economist, OINF.2
D. KIDANE, Infrastructure Specialist, ETFO
Appraisal Team
T. OPIYO, Infrastructure Specialist, KEFO
Sector Manager:
Sector Director:
Regional Director:
Peer Reviewers
R. SHERMAN
L. EHOUMAN
P. KARANI
M. AJIJO
J. RWAMABUGA, OINF.2
G. MBESHERUBUSA, OINF
D. GAYE, OREA/OREB
Procurement Specialist, ORPF.1
Transport Economist, OINF.1
Environmental Officer, OWAS
Consultant Transport Economist, ONRI
TABLE OF CONTENTS
I.
STRATEGIC THRUST & RATIONALE ................................................................................................ 1
1.1.
1.2.
1.3.
1.4.
1.5.
II.
PROJECT BACKGROUND....................................................................................................... 1
PROJECT LINKAGES WITH COUNTRIES STRATEGIES AND OBJECTIVES .............................. 1
KEY DEVELOPMENT ISSUES ................................................................................................. 2
RATIONALE FOR BANK’S INVOLVEMENT............................................................................... 2
DONORS COORDINATION ...................................................................................................... 3
PROJECT DESCRIPTION ....................................................................................................................... 3
2.1.
2.2.
2.3.
2.4.
2.5.
2.6.
2.7.
2.8.
2.9.
2.10.
III.
PROJECT FEASIBILITY................................................................................................................... 10
3.1.
3.2.
IV.
ECONOMIC AND FINANCIAL PERFORMANCE ....................................................................... 10
ENVIRONMENTAL AND SOCIAL IMPACTS ............................................................................ 11
IMPLEMENTATION.......................................................................................................................... 12
4.1.
4.2.
4.3.
4.4.
4.5.
4.6.
V.
CORRIDOR DEVELOPMENT PROGRAM AND PHASING......................................................... 3
PROJECT DEVELOPMENT OBJECTIVES................................................................................ 4
PROJECT COMPONENTS ....................................................................................................... 4
TECHNICAL SOLUTION RETAINED AND OTHER ALTERNATIVES EXPLORED ......................... 5
PROJECT TYPE ...................................................................................................................... 6
PROJECT COST AND FINANCING ARRANGEMENTS .............................................................. 6
PROJECT’S TARGET AREA AND BENEFICIARIES .................................................................. 7
PARTICIPATORY PROCESS FOR PROJECT DESIGN AND IMPLEMENTATION ........................ 8
BANK GROUP EXPERIENCE, LESSONS REFLECTED IN PROJECT DESIGN ........................... 9
KEY PERFORMANCE INDICATORS .................................................................................. 10
IMPLEMENTATION ARRANGEMENTS ................................................................................... 12
MONITORING ....................................................................................................................... 14
GOVERNANCE ..................................................................................................................... 14
SUSTAINABILITY .................................................................................................................. 15
RISK MANAGEMENT ............................................................................................................. 16
KNOWLEDGE BUILDING ....................................................................................................... 17
LEGAL INSTRUMENTS AND AUTHORITY ..................................................................................... 17
5.1.
5.2.
5.3.
VI.
6.1
6.2
LEGAL INSTRUMENT ............................................................................................................ 17
CONDITIONS ASSOCIATED WITH BANK’S INTERVENTION .................................................. 17
COMPLIANCE WITH BANK POLICIES ................................................................................... 18
CONCLUSIONS AND RECOMMENDATION................................................................................ 18
CONCLUSION........................................................................................................................ 18
RECOMMENDATIONS ........................................................................................................... 19
ETHIOPIA – COMPARATIVE SOCIO-ECONOMIC INDICATORS .......................................................... 20
KENYA – COMPARATIVE SOCIO-ECONOMIC INDICATORS ............................................................... 21
KENYA - BANK GROUP ONGOING PROJECTS AS OF MAY 2009......................................................... 22
ETHIOPIA - BANK GROUP ONGOING PROJECTS AS OF MAY 2009.................................................... 23
KENYA - RELATED PROJECTS FINANCED BY THE BANK AND OTHER DONORS............................... 24
ETHIOPIA - RELATED PROJECTS FINANCED BY THE BANK AND OTHER DONORS .......................... 25
MAP OF PROJECT AREA ................................................................................................................... 26
MOMBASA-NAIROBI-ADDIS ABABA ROAD CORRIDOR DEVELOPMENT PROGRAM ......................... 27
COUNTRY AND SECTOR BRIEF ......................................................................................................... 28
LESSONS LEARNED........................................................................................................................... 36
PROJECT DETAIL COSTS .................................................................................................................. 37
IMPLEMENTATION ARRANGEMENTS ................................................................................................ 39
FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS ................................................ 41
PROCUREMENT ARRANGEMENTS..................................................................................................... 43
AUDIT ARRANGEMENTS ................................................................................................................... 46
SUMMARY OF FINANCIAL AND ECONOMIC ANALYSIS ..................................................................... 47
ENVIRONMENTAL AND SOCIAL ANALYSIS ........................................................................................ 49
PROJECT PREPARATION AND APPRAISAL ........................................................................................ 57
APPLICATION OF THE BANK ROAD UNIT COST STUDY RECOMMENDATIONS ................................. 58
Currency Equivalents
As of 01.04.2009
1 UA
1 UA =
1 UA =
1 UA =
= 1 SDR
1.4674 USD
119.696 KES
16.2183 ETB
Fiscal Year
8 July – 7 July (Ethiopia)
1 July – 30 June (Kenya)
Weights and Measures
1metric tonne
1 kilogramme (kg)
1 metre (m)
1 millimetre (mm)
1 kilometre (km)
1 hectare (ha)
=
=
=
=
=
=
2204 pounds (lbs)
2.200 lbs
3.28 feet (ft)
0.03937 inch (“)
0.62 mile
2.471 acres
Acronyms and Abbreviations
ADB
African Development Bank
KeNHA
Kenya National Highway Authority
ADF
African Development Fund
KES
Kenya Shilling
ADT
Average Daily Traffic
KPA
Kenya Ports Authority
AFD
Agence Francaise de Developpement
KRB
Kenya Roads Board
AIDS
Acquired Immune Deficiency Syndrome
LC
Local Cost
ASAL
Arid & Semi Arid Lands
MoFED
Ministry of Finance and Economic Development
CBO
Community Based Organization
MTP
Medium Term Plan
COMESA
Common Market for Eastern & Southern Africa
NACC
National AIDS Control Council
EAC
East African Community
NEPAD
New Partnership for Africa's Development
EIRR
Economic Internal Rate of Return
NGO
Non-governmental Organization
ERA
Ethiopian Roads Authority
NPV
Net Present Value
ESAP
Environmental and Social Assessment Procedures
OPADC
ESIA
Environmental and Social Impact Assessment
PASDEP
ESMP
Environmental and Social Management Plan
PAP
Oromia Pastaralist Area Development Commission
Plan for Accelerated and Sustained Development to End
Poverty
Project Affected Persons
ETB
Ethiopian Birr
PCR
Project Completion Report
EU
European Union
PID
Project Implementation Document
FE
Foreign Exchange
PS
Permanent Secretary
FTA
Free Trade Area
RAP
Resettlement Action Plan
GOE
Government of Ethiopia
RFP
Request for Proposals
GOK
Government of Kenya
RRA
Rural Roads Authority
GPN
General Procurement Notice
RSDP
Road Sector Development Program
HDM
Highway Design and Maintenance Standard Model
SPN
Specific Procurement Notice
ICB
International Competitive Bidding
STI
Sexually Transmitted Infection
IDA
International Development Association
TA
Technical Assistance
IGAD
Intergovernmental Agency for Development
TEU
Twenty-foot Equivalent Unit
JICA
Japan International Cooperation Agency
VOC
Vehicle Operating Costs
i
Loan Information
Client’s information
BORROWERS:
ETHIOPIA
KENYA
EXECUTING AGENCY:
ETHIOPIAN ROADS AUTHORITY
KENYA NATIONAL HIGHWAY AUTHORITY
Financing plan
Source
Amount (UA)
Instrument
ADF
210,000,000
Loan
EUROPEAN UNION
GOV. OF ETHIOPIA
GOV. OF KENYA
TOTAL COST
76,000,000
16,820,000
26,180,000
328,760,000
Grant
Counterpart
Counterpart
ADB’s key financing information
Loan currency
Interest type*
Interest rate spread*
Service Charge*
Commitment fee *
Tenor
Grace period
NPV (base case)
EIRR (base case)
Unit of Account (UA)
Not Applicable
Not Applicable
0.75% on amount disbursed and outstanding
0.50% on the un-disbursed loan amount
50 years
10 years
US$ 91.54 million
21.7%
Timeframe - Main Milestones (expected)
Concept Note approval
Project approval
March, 2009
July, 2009
Effectiveness
Last Disbursement
Completion
Last repayment
December, 2009
December, 2015
December, 2014
December 2059
ii
PROJECT SUMMARY
Project Overview
The Mombasa-Nairobi-Addis Ababa Road Corridor Project aims at promoting trade and
regional integration between Ethiopia and Kenya by improving transport communications
between the two countries. The project involves the construction to bitumen standard of 438
km road sections including 245 km Merille River-Marsabit-Turbi road section in Kenya and
193 km Ageremariam-Yabelo-Mega road section in Ethiopia. The total cost of the project is
UA 328.76 million. The project is co-financed by the Bank Group (64%), the European Union
(23%) and the Governments of Ethiopia and Kenya (13%). The expected outcomes of the
project include reduced transport and shipping costs between Kenya and Ethiopia; reduced
transit time for import and export goods; and increased volume of Ethiopian transit goods
using the port of Mombasa. The development of the corridor will expand market sizes
beyond national boundaries and foster a conducive and enabling environment for the private
sector and for attracting foreign direct investments. In addition to enhancing trade and
strengthening regional integration, the project will contribute to poverty reduction in both
countries by increasing access to markets and social services for the surrounding areas, and
communities, and by empowering women and other disadvantaged groups through
adequate roadside socio-economic infrastructure and services.
Needs Assessment
Ethiopia and Kenya share more than 1000 km of common border, and have a combined
population of more than 100 million people. Yet, there is currently not a single all-weather
road connecting the two countries. The main road connecting Addis Ababa to Nairobi has
more than 700 km of missing links. The poor condition of the road represents a major
constraint to trade between the two countries. The development of the Mombasa-NairobiAddis Ababa transport corridor is warranted by the anticipated great trade potential between
Kenya and Ethiopia and to a lesser extent between the Horn and East Africa countries to
include Uganda, Tanzania, Eritrea, and Djibouti. The corridor will also serve as the most cost
effective transit route to Mombasa Port for import/export goods to/from southern Ethiopia.
Bank’s Added Value
The rationale for Bank involvement is threefold: (a) The Bank is already involved in the
financing of the first phase of the project and the feasibility studies for the second phase.
Therefore, the continued support of the Bank is logical; (b) the objective of the project to
address the development constraints caused by poor transport infrastructure and regional
interconnectivity is in line with the Bank medium term strategy (2008-2012) on promoting
infrastructure development and regional integration; and (c) by supporting this flagship
regional integration project, the Bank will continue to play a leadership role in the
implementation of the key priorities of NEPAD’s infrastructure action plan.
Knowledge Management
The project provides a good opportunity to expand the knowledge on the impact of regional
infrastructure on cross-border trade and on appropriate legal and institutional arrangements
for transport facilitation particularly regarding the operation of one-stop-border posts. The
project component on Monitoring, Evaluation, and Knowledge Building was designed
specifically to capture the knowledge during project implementation and disseminate it
amongst policy makers, regional economic communities, and development agencies.
iii
MOMBASA-NAIROBI-ADDIS ABABA ROAD CORRIDOR PHASE II PROJECT
RESULTS-BASED FRAMEWORK
HIERARCHY OF OBJECTIVES
EXPECTED RESULTS
Sector Goal
Impacts
1
1
Promote trade and regional
integration.
Increased Intra-regional trade between Ethiopia
and Kenya and Eastern & Horn of Africa regions
PERFORMANCE
INDICATORS
REACH
Beneficiaries
Populations
of Ethiopia,
Kenya,
COMESA
Member
States
INDICATIVE TARGETS
Impacts Indicators
Impacts Targets
1
1
Volume of trade
Source: Kenya and Ethiopia Customs
statistics; Trade statistics from
COMESA, IGAD, UNCTAD, WTO
2
Outcomes
Beneficiaries
Outcomes Indicators
Outcomes Targets
1
1
Freight
Shippers,
Exporters and
Importers
Transport
Operators
Business
community
1
2
1
2
3
4
Transport and logistics costs between Addis
Ababa and Nairobi are reduced; transit and
travel times are reduced
Port of Mombasa becomes cost-effective
alternative for Ethiopia’s import/export shipping
Technical and Operational Capacity of Kenya
Road Agencies is strengthened
Improved economic and social welfare of towns
along the corridor
Transport and shipping costs
Transit time for imports and
exports
Volume of transit goods to/from
Ethiopia using the port of
Mombasa
Performance of Roads Agencies
Average household income
3
4
5
Source: Ethiopia Roads Transport
Authority, Port of Mombasa, NCTTCA
Transit transport surveys; customs
statistics, Financial & Procurement
Capacity Assessment of AfDB or World
Bank, AfDB project M&E
2
3
4
5
Port of Mombasa transit goods to/from Ethiopia to
increase from zero in 2009 to 500,000 t in 2014; and
to over 1000,000 t or 20% of total Ethiopian sea fret by
2018.
Average transport cost of US$ 0.50 per veh-km on the
corridor in 2009 reduced by 20% by 2011; and by 50%
by 2014.
Transit and travel time of 5 days between Addis and
Nairobi in 2009 reduced by 20% (1 day) by 2011; and
by 60% (3 days) by 2014
Technical, Operational, Financial Management &
Procurement capacity of Roads Agencies adhere to
broadly accepted good practices by 2011.
30% average household income increase by 2017 in
the project zone of influence.
Activities/Inputs
Outputs
Beneficiaries
Output Indicators
Output Targets
1
1
Contractors,
consultants,
Business
community,
population in
the project
area Kenya
Roads
Agencies and
their staff
1
1
2
3
4
5
6
Construction of Merille RiverMarsabit-Turbi road in Kenya (UA
209.09 M).
Rehabilitation of AgeremariamYabelo-Mega road in Ethiopia (UA
91.71 M).
Consulting services for construction
supervision, design, evaluation, and
audit services (UA 11.42 M)
Construction of OSBP and Roadside
socio-economic infrastructure (UA
9.33 M),
Technical Assistance for Kenya
Roads Agencies (UA 2.63 M).
Compensation & Resettlements (UA
4.57 M)
2
3
4
5
6
7
8
9
Road between Merille River and Turbi (245 km)
in Kenya constructed to bitumen standard
Road between Ageremariam and Yabelo (193
km) in Ethiopia rehabilitated to AC standard.
Technical Reports, Specifications and Cost
Estimates for dualling of Mombasa-Nairobi
completed.
Roadside socio-economic infrastructure
constructed
ICT & Survey Equipment & Software acquired
5-Year business plans for Road Agencies
completed
Management & Staff of Roads Agencies trained
in various areas
Population of project area and road users
sensitized to Road Safety, STIs, and HIV/AIDS
Employments created
Km of road constructed and open
to traffic.
Design Reports, Business Plan
Reports, Process Management
Reports validated by GOK and
Road Agencies.
Number of Roadside SocioEconomic infrastructure built.
Number of ICT & Survey
Equipment & Software Acquired
Number of staff-weeks of training
Number of people sensitized to
road safety, STDs, and HIV/AIDS
Number of jobs created
2
3
4
5
6
7
Source: ERA/ KENHA management
reports, Progress reports, supervision
reports, Completion reports
2
3
4
5
6
7
8
iv
1
Favorable
macroeconomic
conditions and
terms of trade.
1
Ethiopia &
Kenya remain
committed to
regional
cooperation
within
COMESA.
Peace and
stability is
maintained in
Kenya and
Ethiopia.
Trade between Ethiopia and Kenya estimated to grow
from US$ 48 M (2007) to US$ 200 M (500%) by 2017
Intra-COMESA trade for Ethiopia, Eritrea, Djibouti
currently stagnant, to grow at part or above the 11%
COMESA average by 2017;
Project Objective
To improve transport
communications between Kenya and
Ethiopia for the benefit of both
countries and the region.
ASSUMPTIONS/
RISKS
80 km of road in Ethiopia and 110 km of road in Kenya
completed and opened to traffic by project mid-term in
2012
245-km Merille River-Turbi road in Kenya and 193-km
Ageremariam- Yabelo road in Ethiopia completed and
opened to traffic by 2014.
All Technical Design Reports, Business Plan Reports,
& Process Management Reports validated by
stakeholders by 2011.
Three Road Stations and one OSBP built in Ethiopia;
Two Road Stations and one OSBP built in Kenya by
2013.
180 pieces of computer stations, servers, printers and
related software acquired by 12/10.
172 staff-weeks of training in road management, M&E,
financial management, procurement delivered by
2011.
3000 people (50% women) sensitized to road safety,
STIs, and HIV/AIDS by 2014.
2000 skilled and unskilled jobs (30% women) created
by 2014.
2
1
2
3
4
Availability of
counterpart
funding.
Security
situation does
not prevent
execution of
works
Effective
coordination of
project
implementation
Construction
costs
escalation
within
predictable
bounds
PROJECT IMPLEMENTATION TIMEFRAME
v
REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP
TO THE BOARD OF DIRECTORS ON PROPOSED LOANS TO ETHIOPIA AND KENYA
FOR THE MOMBASA-NAIROBI-ADDIS ABABA ROAD CORRIOR PHASE II PROJECT
Management submits the following Report and Recommendation on proposed loans for UA
85.00 million to the Federal Democratic Republic of Ethiopia and for UA 125.00 million to the
Republic of Kenya to finance the Mombasa-Nairobi-Addis Ababa Road Corridor Phase II
Project.
I.
1.1.
STRATEGIC THRUST & RATIONALE
Project Background
1.1.1 The project road is an important section of the Trans-African Highway Cairo-Cape
town. Within Ethiopia and Kenya, the road is a link on the main Addis Ababa – Nairobi Mombasa corridor (see map in Appendix 1). The Kenyan section of the road between Isiolo
and Moyale is about 525 km and was constructed as a gravel road in 1974. On the Ethiopian
Side of the border, the road is entirely bitumen-paved from Moyale to Addis Ababa.
However, the section of the road between Moyale and Ageremariam is more than 40 years
old. It has deteriorated and requires reconstruction/rehabilitation. In July 2003, the GOK and
the GOE approached the Bank to request the financing of the road under the Bank
multinational window. Owing to the low level of project preparation for some of the missing
links and the need to mobilize the required financing, the corridor development had to be
carried out in phases. For the first phase, the ADF Board of Directors approved a loan of UA
33.60 million and a grant of UA 2.55 million to finance the construction of the 136-km IsioloMerille section of the road in Kenya and the feasibility and design studies for 366 km road
section in Kenya and another 302 km of road section in Ethiopia in readiness for the second
phase. After a slow start due to procurement delays and insecurity in the project area, the
implementation of the first phase is now progressing at a satisfactory pace with the
contractual completion date set for April 2010. The feasibility and detail design studies of the
remaining missing links have been completed and provide the basis for this second phase of
the project.
1.2.
Project linkages with countries strategies and objectives
1.2.1 The Mombasa-Nairobi-Addis Ababa Road Corridor Project is in line with Ethiopia’s
and Kenya’s Poverty Reduction Strategies as well as the Bank Group’s assistance strategies
to the two countries. Ethiopia’s second Poverty Reduction Strategy (2005-2010), known as
the Plan for Accelerated and Sustained Development to end Poverty (PASDEP) accords
high priority to infrastructure development to support industrialization and development and
commercialization of agriculture. Within the context of the fifth pillar of PASDEP,
Strengthening the Infrastructure backbone of the Country, Ethiopia’s five-year Road Sector
Development Strategy III is putting emphasis on expanding the road network and improving
regional trade corridors and port linkages. In support of Ethiopia’s PASDEP, Infrastructure
Development is one of the three pillars of the Bank Group Country Strategy Paper (CSP)
2006-2009. The Ageremariam-Moyale section of the Mombasa-Nairobi-Addis corridor is
programmed for Bank financing under the ADF-XI Indicative Lending Program for Ethiopia in
the CSP. It will contribute to PASDEP and CSP objectives of improving trade corridors and
linkages to ports.
1.2.2 Kenya’s development strategy, Vision 2030 and the Medium Term Plan (MTP) 20082012 identifies infrastructure development as the main pillar in the GOK’s quest in
transforming Kenya into a globally competitive economy and in expanding intra-regional
trade with neighboring countries. The MTP underscored also the importance of infrastructure
to enhance incomes and social welfare in rural areas. In support of the MTP, one of the two
1
the pillars of the Bank Group Kenya Country Strategy Paper 2008-2012 is Infrastructure
Development for Enhanced Growth. The development of the Mombasa-Nairobi-Addis road
corridor with a branch to southern Sudan is one the key regional infrastructure programs
under the MTP. The project is programmed for Bank financing under ADF-XI Indicative
Lending Program in the CSP. The project outcomes will contribute to the objective of the
CSP and the MTP by enhancing trade expansion into neighboring countries and
strengthening Kenya’s position as a natural transport hub for East Africa.
1.3.
Key Development Issues
1.3.1 Ethiopia and Kenya share more than 1000 km of common border, and have a
combined population of more than 100 million people. Yet, there is currently not a single allweather road connecting the two countries. The main road connecting Addis Ababa to
Nairobi has more than 700 km of missing links including 366 km of gravel road in Kenya and
more than 300 km of low standard and deteriorated paved road in Ethiopia. The poor
condition of the road represents a major constraint to trade between the two countries.
COMESA trade statistics show for example that the value of trade between Kenya and
Uganda in 2007 is 10 times more important than trade between Kenya and Ethiopia, despite
the fact that Uganda has only 25 million people compared to the estimated 75 million for
Ethiopia. This disparity, and the apparent marginalization of the horn of Africa countries from
the recent intra-COMESA trade boom are largely explained by the lack of reliable road
transport infrastructure to link them to the rest of the region, which is consistent with the
findings of a World Bank study which estimated the elasticity of the flow of trade with respect
to transport costs to about –3. It implies for example that the volume of trade between two
countries would drop by 20%, if transport costs between them were to increase by 10%.
1.3.2 Ethiopia, as a landlocked country, relies on the neighbouring transit countries for its
sea freight. In order to reduce transport cost and improve the competitiveness of the
Ethiopian economy, the Government is striving to diversify its access to seaports as much as
possible. About 20% of the Ethiopian sea freight traffic originating or destined to southern
and south-western Ethiopia would normally be attracted to the Mombasa port, which has this
region of Ethiopia as its natural catchment area via Moyale. However, the poor condition of
the corridor forces the totality of this traffic to transit through more distant ports.
1.3.3 While addressing the road infrastructure bottleneck is paramount to foster trade
between the two countries, it should go hand in hand with reforms programs in the areas of
transport facilitation and trade liberalization – the so-called non-physical barriers. Both
Ethiopia and Kenya are members of COMESA; but while Kenya has also joined the
COMESA Free Trade Area (FTA), Ethiopia has not and continues to trade on preferential
terms applying 10% discount to duties granted to “the Most Favored Nation” to all COMESA
member states except Djibouti and Sudan with which it has bilateral agreements. Ethiopia
and Kenya are at an advance stage of negotiating a bilateral trade agreement. The proposed
improvement of the transport connectivity between the two countries underscores the need
for Ethiopia and Kenya to move quickly to conclude the agreement. From the Facilitation
standpoint, both countries have ratified the key COMESA instruments and common
standards to facilitate regional transport and trade including harmonized axle load limits,
harmonized transit charges, regional carrier licensing, regional third-party motor vehicle
insurance, Regional Customs Bond Guarantee, and Single Customs Document. The two
countries are in the process of re-engineering an existing transport transit agreement to take
into account the recent development in transport facilitation and the status and condition of
the transport and communication infrastructure along the corridor.
1.4.
Rationale for Bank’s involvement
1.4.1 The rationale for Bank involvement is threefold: (a) The Bank is already involved in
the financing of the first phase of the project and the feasibility studies for the second phase.
2
The first phase is progressing at a satisfactory pace and the feasibility studies for the second
phase have demonstrated the economic viability of the operation. Therefore, the continued
support of the Bank is logical. (b) The objective of the project to address the development
constraints caused by poor transport infrastructure and regional interconnectivity is in line
with the Bank medium term strategy (2008-2012) on promoting infrastructure development
and regional integration. The Bank has developed extensive experience in Kenya and
Ethiopia as well as multinational infrastructure projects across Africa. (c) The project road is
a continental priority under the Trans-African Highway Network and a flagship regional
integration project under the NEPAD short-term infrastructure action plan; by supporting the
project, the Bank will continue to play its leadership role in the implementation of the key
priorities of NEPAD.
1.5.
Donors coordination
1.5.1 Donor coordination in Kenya is carried out at both sector and national levels. The
Kenya Coordination Group meetings, chaired by the Minister of Finance, provide regular
opportunities for the government and the resident donor community to discuss matters of
mutual concern. Development partners meet among themselves each month in the
Development Coordination Group (DCG), chaired by the Embassy of Denmark. The DCG
meetings offer an effective forum for aid co-ordination among development partners, to
better align assistance with government programs, and to coordinate assistance more
effectively among themselves. The Harmonization, Alignment, and Coordination Group,
which includes the Ministry of Finance, actively promote the Paris Declaration on aid
effectiveness. All 17 of its members, covering some 90% of total official development
assistance (ODA) to Kenya, have joined to formulate the Kenya Joint Assistance Strategy
(KJAS). The ADB Kenya Field Office is currently the Chair of the Roads and Transport
Sector Donor Group and leads sector policy dialogue with the government. The group meets
regularly to harmonize donors’ response and positions with respect to institutional, policy
and projects’ financing and implementation issues.
1.5.2 In Ethiopia, aid coordination is carried out through the Consultative Group (CG)
meetings, which provides opportunities for donors both bilateral and multilateral to
periodically review Ethiopia’s development programs and co-ordinate their development
assistance. The co-financing under the Road Sector Development Program (RSDP) has
facilitated the complementarities of the development partners’ efforts and the extensive
internal donor co-ordination involved in monitoring program implementation. The Bank
actively participates in the Government-Donor Transport Sector Working Group. The
Working Group is chaired by the Minister of Transport and Communications and co-chaired
by one donor on a rotation basis, the European Commission holding the current cochairmanship.
1.5.3 During Project Preparation and Appraisal, the Bank project team held extensive
consultations with the main donors actively engaged in the transport sector in Ethiopia and
Kenya particularly the EU, the World Bank, AFD, and JICA. The European Union is cofinancing the project with the Bank, which is one of the positive outcomes of the Bank’s
engagement with the other donors.
II.
2.1.
PROJECT DESCRIPTION
Corridor Development Program and Phasing
2.1.1 The development of the Mombasa-Nairobi-Addis Ababa Road Corridor into a viable
trade route required an integrated approach, which took into account the construction or
improvement of the road, the capacity expansion of the port of Mombasa, the construction of
transit infrastructure facilities, and the policy and operational changes for trade and transport
facilitation. The Corridor Development Program and Action Plan are shown in Appendix 5.
3
The Development was planned in three phases owing to the magnitude of the program, the
low level of project preparation for some of the missing links and transit facilities, and the
need to mobilize the required financing.
2.1.2 Phase I of the Program comprised the following: (i) Construction to bitumen standard
of the 136-km road section between Isiolo and Merille River in Kenya co-funded by AfDB
and GOK; (ii) the expansion of Mombasa port facilities co-funded by JICA and GOK; and (iii)
the feasibility and engineering design studies for two corridor links in both Kenya and
Ethiopia totalling 670 km, and an Inland Container Terminal funded by AfDB in readiness for
the second and Third Phases of the Program.
2.1.3 The proposed Phase II of the Program involves: (i) the construction to bitumen
standard of 438 km road sections including 245 km Merille River-Marsabit-Turbi road section
in Kenya and 193 km Ageremarian-Yabelo-Mega road section in Ethiopia; (ii) the
construction of road stations and one-stop-border post facilities; and (iii) policy action to sign
a bilateral transit transport agreement. Phase II is co-financed by the AfDB, the EU, the
GOE, and the GOK.
2.1.4 The planned Phase III will include: (i) Rehabilitation of 300-km Awasa-Ageremarian
and Mega-Moyale, and construction of an Inland Container Terminal in Ethiopia; (ii)
Construction to bitumen standard of 125-km Turbi-Moyale in Kenya; and (iii) Transport
facilitation program to operationalize the bilateral transit transport agreement. Consistent
with its commitment to this corridor, the Bank will take the lead in mobilizing other donors to
finance the third and final phase of the program.
2.2.
Project Development Objectives
2.2.1 The sector goal of the project is to promote trade and regional integration. The
expected long-term impact of the project includes increased intra-regional trade between
Ethiopia and Kenya and the Eastern and Horn of Africa regions.
2.2.2 The objective of the project is to improve transport communications between Kenya
and Ethiopia for the benefit of both countries and the region. The expected outcomes of the
project include (a) reduced transport and shipping costs between Kenya and Ethiopia; (b)
reduced transit time for import and export goods; (c) increased volume of Ethiopian transit
goods using the port of Mombasa.
2.3.
Project components
2.3.1
The project will consist of the following components:
A.
Road Construction Civil Works (UA 300.08 million)
Ethiopia - Road Construction Civil Works:
This component involves the
construction to bitumen standard (Asphalt Concrete) with 7-m carriageway and 1.5-m
shoulders of the road section between Ageremariam and Mega (193 km). The civil
works will be subdivided in two (2) separate contracts: (Lot 1) Ageremariam-Yabelo
(94.5 km); (Lot 2) Yabelo-Mega (97.5 km).
Kenya - Road Construction Civil Works - This component involves the
construction to bitumen standard (Asphalt Concrete) of the road section Merille
River-Marsabit-Turbi (245 km) with 7-m carriageway and 2-m shoulders. It will be
subdivided in two contracts: (Lot 1) Merille River-Marsabit (122 km); and (Lot 2)
Marsabit-Turbi (123 km)
B.
Border Posts and Roadside Socio-Economic Infrastructure (UA 9.33 million)
4
Ethiopia - This component involves the construction and equipment of two (2) Road
Stations in Ageremariam, Yabelo, the construction of One-Stop-Border-Post facilities
in Moyale, and the drilling of twelve community water wells. The Road Stations will
incorporate public sanitation, market stands and shops, secured parking area, repair
and refuelling stations, etc. They will provide business opportunities for local
residents and serve as venues for the provision of multiple public services such as,
health care, education and training activities, and cultural activities.
Kenya – This component involves the construction and equipment of two (2) Road
Stations in Marsabit and Turbi, the construction of One-Stop-Border-Post facilities in
Moyale, the construction and equipment of security outposts, and the drilling of
community water wells and water harvesting schemes.
C.
Consulting Services for Supervision, Design and Audit (UA 11.42 million)
Ethiopia - Consulting Services for Construction Supervision, and Audit:
Engineering consulting firms will provide construction supervision services for the
civil works described above. The supervision services will also be divided in two (2)
lots corresponding to the civil works contracts; Technical and Financial Audit will be a
separate consultancy component.
Kenya - Consulting Services: (1) Consulting services for construction supervision
of the civil works described above; (2) consulting services for detail design of dual
carriageway of some sections; (3) Consulting services for evaluation and knowledge
building; and (4) Project Technical and Financial Audit.
D.
Technical Assistance (UA 2.63 million)
Kenya - Technical Assistance for Highway Authorities: The technical assistance
include consulting services to develop Five-Year Business plans; development of
modern business processes; capacity in procurement and financial management;
project coordination costs, and provision of specialized ICT and software for modern
highway management systems.
E.
Compensation and Resettlement (UA 4.57 million)
Ethiopia - Compensation and Resettlement of Project Affected People – This
component makes provision for the adequate compensation and resettlement of
Project Affected People identified in the Project Environmental and Social Impact
Assessment.
Kenya - Compensation and Resettlement of Project Affected People – This
component makes provision for the adequate compensation and resettlement of
Project Affected People identified in the Project Environmental and Social Impact
Assessment.
2.4.
Technical solution retained and other alternatives explored
2.4.1 The design consulting firms evaluated several alternative design, maintenance, and
financing strategies for the road. The recommended option is a 7-m Asphalt-paved
carriageway with 1.5-m to 2.0-m sealed shoulders. This design was found to be technically,
economically, and environmentally the most adequate solution. Stage-construction with an
initial lower standard pavement and subsequent reinforcement was assessed and rejected
because of the major risk of future construction costs as well as the remoteness of the
project area. The scope for private sector participation in the financing of the project was
assessed but not pursued because of low risk-adjusted financial returns.
5
2.5.
Project type
2.5.1 The ADF financing will support the construction and rehabilitation of identified
economic and social infrastructure. The investments against which funds are to be disbursed
are well defined and specific. Therefore, the specific project loan has been chosen as the
most appropriate instrument for the intervention of the Bank in this operation.
2.6.
Project cost and financing arrangements
Project Cost
2.6.1 The project cost estimate (net of taxes) is UA 328.76 million (USD 482.40 million) of
which the foreign exchange cost is UA 212.83 million (USD 312.29 million) or 65% of the
total, and the local cost is UA 115.93 million (USD 170.11 million) or 35% of the total. The
cost of the project components located in Ethiopia is UA 101.57 million (USD 149.05 million)
or 31% of the total; while the cost for the components in Kenya is UA 227.18 million (USD
333.36 million) or 69% of the total cost. The project cost estimates are based on feasibility
and detail design studies of the project as well as international norms and average unit
prices for the recruitment of high quality consulting firms and individual consultants for
similar services. The cost estimates also took into account the recommendations of the
2008 Bank’s study on the unit costs of road construction, which is detailed in Annex C1. The
project cost estimates by component and by country are summarized in Tables 2.1 and 2.2
below. Detailed costs and expenditure schedules are provided in Annex B3.
Table 2.1 - Project Cost Estimate by Component (Net of Taxes)
Component
USD (Million)
Foreign
Local
Exchange
Cost
132.35
4.79
3.35
0.77
Total
A. Road Construction Civil Works
B. Roadside Amenities
C. Consultancies & Audit
D. TA Institutional Support
E. Resettlement & Compensation
Total Base Cost
Physical Contingency
Price Contingencies
245.79
8.90
13.40
3.09
378.14
13.69
16.75
3.86
0.00
6.71
6.71
271.18
22.68
18.43
147.98
12.21
9.93
Total
312.29
170.11
Unit of Account (Million)
Foreign
Local
Total
Exchange
Cost
419.16
34.89
28.36
167.51
6.06
9.13
2.11
0.00
184.81
15.45
12.56
90.20
3.27
2.28
0.53
4.57
100.84
8.32
6.76
257.70
9.33
11.42
2.63
4.57
285.65
23.78
19.33
482.40
212.83
115.93
328.76
Table 2.2 - Project Cost Estimate by Component and by Country (Net of Taxes)
Component
A. Road Construction Civil Works
B. Roadside Amenities
C. Consultancies & Audit
D. TA Institutional Support
E. Resettlement & Compensation
Total Base Cost
Physical Contingency
Price Contingencies
Total
Ethiopia
US$
UA
Million
Million
117.02
79.75
6.33
4.32
6.33
4.32
1.81
1.23
131.49
89.61
8.78
5.98
8.78
5.98
149.05
6
101.57
Kenya
US$
UA
Million
Million
261.12
177.95
7.36
5.01
10.42
7.10
3.86
2.63
4.90
3.34
287.66
196.04
26.11
17.80
19.58
13.35
333.36
227.18
Sources of Finance
2.6.2 The proposed project will be co-financed by the Bank Group, the EU, the GOE, and
the GOK. The AfDB Group is the lead financing agency and will provide 64% of the total
financing requirements equivalent to UA 210 million (USD 308.15 million). The AfDB
financing will be in the form of two ADF loans to Ethiopia and Kenya amounting respectively
to UA 85.00 million and UA 125.00 million. The EU will co-finance the project in Kenya on
parallel basis for UA 76 million representing 23% of the overall project cost. The
Governments counterparts’ contributions represent 13% of the cost and are made up of UA
16.57 million from the Government of Ethiopia and UA 26.18 million from the Government of
Kenya. The financing plan for the project is shown in Tables 2.3 below.
Table 2.3 - Sources of Financing (in UA million)
AfDB Financing
Country
Cost
Ethiopia
Amount
Percent
101.57
85.00
84%
Kenya
227.18
125.00
55%
Total Project
328.76
210.00
64%
EU Financing
Amount
Counterpart
Percent
Amount
Percent
-
16.57
16%
76.00
33%
26.18
12%
76.00
23%
42.76
13%
-
2.6.3 The total ADF contribution to the project is UA 210 million. Fifty percent (50%) of the
ADF resources for the project will come from the ADF-XI PBA-based national allocations for
Kenya and Ethiopia. The remaining 50% will come from the regional operations (RO)
envelope. The source of ADF financing is shown in Table 2.4 below.
Table 2.4 – Source of ADF Loans (UA Million)
Loan
Country
Amount
ADF-XI PBA Country
Allocation
Amount
Percent
ADF-XI
RO Envelope
Amount
Percent
85.00
40.00
47%
45.00
53%
Kenya ADF Loan
125.00
65.00
52%
60.00
48%
Total Project
210.00
105.00
50%
105.00
50%
Ethiopia ADF Loan
2.7.
Project’s target area and Beneficiaries
2.7.1 In the general sense, the project road corridor by linking Kenya and Ethiopia, would
affect the whole of east and horn of Africa regions. As such, in terms of trade and regional
integration, the project area extends beyond Kenya and Ethiopia to include Uganda,
Tanzania, Eritrea, and Djibouti. However, the corridor being developed in phases, the
project area of influence for the first and second phases lies mostly in the Northeast arid and
semi arid region (ASAL) of Kenya and the Oromia Region of Ethiopia.
2.7.2 The ASAL region is an area primarily of pastoralists with relatively few services.
Livestock and dairy production dominate the local economy. The region accounts for 67% of
the red meat and 12% of the milk consumed in Kenya. Livestock production and productivity,
and the development of the livestock industry in general, are constrained by a number of
factors including poor veterinary services, and poor access to markets all of which are
greatly compounded by the lack of good road infrastructure. In recognition of these facts, the
7
GOK has created the Ministry of Northern Kenya to assist the region to fully integrate into
the national economy. Improving road infrastructure in the area will have a positive impact in
stimulating growth in the local economy, improving security, and reducing poverty.
2.7.3 The Oromia Region is one of the nine governmental regions of Ethiopia. About 89%
of the population is supported by subsistence agriculture. There is a wide variety of farm
animals and crops based on the favorable climate, rich soils and normally sufficient rainfall.
The main cash crops are coffee and khat. The development prospects brought by the road
are critical to the development of the region and to better integrating it into national
development. Stakeholders anticipate better market access, increased tourism, and better
distribution and lower cost for agricultural inputs, industrial goods and manufactured goods.
Stakeholders also expect improved public services including health and education, and more
efficient, less expensive distribution of food relief.
2.7.4 The road will strengthen the link of both border regions to their national capitals and
economic heartland and to social services. The road also has good tourism development
potential, which can generate many unskilled as well as skilled jobs. Other long-term project
beneficiaries include freight shippers, exporters and importers, transport operators, the
business community and the wider population of Ethiopia and Kenya.
2.8.
Participatory process for project design and implementation
2.8.1 The formulation, design, and financing of the project benefited from the wide
consultations carried out by the Design Consultants and the Bank project appraisal team,
through bilateral meetings, town hall meetings and sharing of interim and final project design
reports. The key stakeholders consulted include government agencies, regional economic
communities (EAC & COMESA), project beneficiaries, the donor community (AFD, EU,
JICA, World Bank), corridor groups, transport operators, shippers’ associations,
manufacturers associations, Community-based organizations, and NGOs.
2.8.2 One of the positive outcomes of the engagement with other donors is the forging of a
partnership with the EU to co-finance the project to the tune of UA 76 million. As a result of
consultations with project beneficiaries and transport operators, the project has incorporated
roadside socio-economic infrastructure – the so-called “Michinoeki”1 - that will enhance the
benefit of the road to the communities living in its zone of influence. The road stations will
provide much stronger links between local communities and the users of the roads by
offering business opportunities for local residents and serving as possible venues for the
provision of multiple public services such as, health care (including HIV/AIDS care),
education and training activities, and cultural activities. The scope for private sector
participation in the financing of the operation was assessed during consultations but deemed
insignificant because of below average risk-adjusted financial return. However, the
Management and operation of the Road Stations will mostly rely on PPP arrangements.
2.8.3 Consultations and participatory process will continue during project implementation to
provide regular feedback from the key stakeholders. The Regional Project Coordination
Committee discussed under the Project Implementation Section will carry it out. The process
will also aim to achieve greater complementarities and synergies between the project and
other related projects such as the JICA-funded US$ 223 million port of Mombasa expansion
or the ADF-funded Nairobi-Thika Highway and Arusha-Namanga-Athi River road project on
the same Cairo-Cape town Transafrican Highway. These synergies will globally improve the
region’s logistic chains and result in greater competitiveness of traded goods and exports.
1
Michinoeki (Concept Originated in Japan) are spaces for rest and exchange along highways. They create connections
between the highway and local communities.
8
2.9.
Bank Group experience, lessons reflected in project design
Status and Impact of Prior Bank Intervention in the Sector
2.9.1 The Bank Group has since 1967 participated in the financing of 18 operations in the
transport sector in Kenya amounting to UA 368.41 million and covering 16 projects in the
road sub-sector, one railway project, and one road study. Fifteen of the operations have
been completed. The transport projects financed by the Bank Group include the construction
of more than 1000 km of paved roads, and the maintenance and rehabilitation of 2900 km of
rural roads. The completed projects have made a significant contribution towards
strengthening the infrastructure base of the Kenyan economy by improving mobility and
access to socio-economic opportunities for several millions of people, and linking rural and
urban areas in the most productive provinces of the country, including Nyanza, Western,
Central and Rift Valley. In Ethiopia, the Bank Group has since its first sector intervention in
1967, financed 15 operations in the transport sector for a total amount of UA 311.17 million
consisting of 13 projects and two studies of which eleven had been successfully completed
and one terminated/cancelled. The intervention in the road sector has been significant and
involved construction of 1,890 km of rural roads in four regions, construction of 386 km of
link roads, maintenance of 2485 km of district roads and 143 km of rehabilitation of the
section on the Addis Ababa – Djibouti export corridor. These interventions have led to
opening up of isolated and inaccessible areas to markets. Post evaluation undertaken for the
completed projects has indicated that the constructed roads have brought about an all round
improvement and growth in production in the agricultural and livestock sectors.
Lessons Learned and Reflected in project Design
2.9.2 The project design has taken into account lessons learned from the ongoing phase I
of the project as well as previous interventions of the Bank and other donors in the transport
sector in both Kenya and Ethiopia. In past interventions of the Bank, implementations have
been characterized by long start-up delays, low disbursement levels, lack of local
counterpart funds, and poor reporting and auditing. For multinational projects, poor or
inappropriate regional coordination with ill-defined responsibilities and lack of resources has
been one of the weaknesses that were identified. For the ongoing phase I of the project,
insecurity in the project area and the scarcity of water for construction have posed a
significant challenge. In addition, due to an unprecedented level of construction activity in
Kenya, shortages of locally sourced construction material (lime) have been detrimental to the
project.
2.9.3 The proposed project design for the second phase of the operation has reflected
these lessons. By starting procurement prior to board approval (Advance Contracting),
project start-up delay will be considerably reduced by up to six months. The GOK has
engaged in several institutional reforms including the establishment of autonomous highway
authorities in order to improve governance and management in the road sector. The project
includes a Technical assistance to support the newly established Highway Authorities to
address poor reporting and auditing and improve on project management. The increases in
fuel levy, and budgetary allocation in Kenya, and donor road sector budget support in
Ethiopia have remarkably improved the mobilization resources for road financing in both
countries. However, to minimize the risk for inadequate budgeting of local counterpart funds,
particularly in Kenya, the ADF loan will cover all the project expenditure except for
compensation and resettlement costs. The project design includes a strong regional project
coordination steering committee with appropriate budgetary provisions to address poor
cross-border coordination observed in past projects. Finally, the project design incorporated
alternative design options and various sources of construction inputs supply to mitigate
potential shortages of water and locally sourced material such as cement, and lime.
9
2.10. Key performance indicators
2.10.1 The achievement of the project objectives would produce the following outcomes: (i)
Reduced transport and shipping costs between Kenya and Ethiopia; (ii) Reduced transit time
for import and export goods; (iii) increased volume of Ethiopian transit goods using the port
of Mombasa.
2.10.2 Basic indicators for monitoring and evaluating project outcomes are included in the
Project Results Framework. The outcome and impact indicators will be reviewed at the start
of project implementation and include: (i) Volume of cross-border trade between Kenya and
Ethiopia; (ii) transport and shipping costs of a 20-ft container from Mombasa to Addis Ababa;
(iii) transit volumes and time from Ethiopia to Mombasa port; (iv) other socio-economic
outcome indicators that are indirectly influenced by the project such as income levels,
Production and productivity levels of key commodities will also be monitored in Northern
Kenya and Southern Ethiopia. The project design consultants have collected some of the
baseline data. Additional baseline values will be collected at the beginning of project
implementation by the Supervision consultant. The indicators will be measured at project
inception, completion, and 3 years later, and results compared with the baseline. Where
relevant, indicators will be disaggregated by gender. Funding will be provided under the
project for monitoring up to project completion. The consultant for the Evaluation and
Knowledge Building component will be responsible for data collection and analysis under the
supervision of the Ethiopian Roads Authority and the Kenya National Highway Authority.
III.
3.1.
PROJECT FEASIBILITY
Economic and financial performance
3.1.1 The economic viability of the project has been assessed within the broad framework
of Cost Benefit Analysis using the Highway Development Management Tool (HDM) - IV that
was found to be appropriate. A discount rate of 12.0%, which is the opportunity cost of
capital in Kenya and Ethiopia, has been used for the economic evaluation. The costs taken
into account are the capital costs and the routine and periodic maintenance costs. For the
economic analysis, these financial costs were converted into economic costs by applying a
standard conversion factor (SCF) of 0.78. The economic benefits are calculated as the
difference between the “with the project” and “without the project” scenarios. The benefits
include road user incremental benefits in terms of Vehicle Operating Cost savings, time
savings for passengers and cargo, and road maintenance savings because of the new
facility. The Residual value after 20 years of service has been estimated at 25% of the
original economic investment cost.
3.1.2 The measures of project worth used are the EIRR, and NPV. Table 3.1 below gives a
summary of the economic analysis, whose details are presented in Annex A5.
Table 3.1: Key Economic and Financial Figures
EIRR (base case)
21.7%
NPV (12% Discount)
US$ 91.54 million
EIRR (15% decrease in benefits)
16%
EIRR (15% increase in costs)
14.5%
EIRR (+15% costs & -15% benefits)
12.5%
10
3.2.
Environmental and Social impacts
Environment
3.2.1 Consistent with Bank’s ESAP, the project is Category 1 since it entails significant
earth works and vegetation clearing stretching over a long distance. The road passes
through several biodiversity-rich and ecologically sensitive areas. The major environmental
impacts will be due to destruction of forests and vegetation, disruption of animal migration
routes, and poaching. It is also likely to cause significant displacement of households. Full
ESIA and RAP reports and ESMPs have been prepared, and the ESIA/RAP Summary was
posted on the Bank website on 20 February 2009.
3.2.2 The potential impacts include soil erosion and run-off, overgrazing, vegetation
clearance, dust, noise and vibration, water pollution and wildlife conservation measures. The
main social impact will be the relocation of PAPs due to widening and realignments. The
project has developed an elaborate program of monitoring of environmental and social
impacts with responsibilities and costs identified. All these issues have been addressed in
the respective ESMPs and RAPs. The financial provisions to cover the related costs
including HIV/AIDS prevention programmes and road safety campaigns and monitoring have
been included in the project.
Climate change
3.2.3 The project area is arid and semi-arid and exhibits desert characteristics especially
on Kenyan side. The area has very low rainfall and is prone to drought. In some high
attitude areas however, above average rainfall (800 – 1000mm) may be experienced
resulting in flash floods. In such instances, the project design has incorporated storm drains
and drainage systems away from homes and property, raised level of road embankment
and intensified erosion protection measures such as grassing, sodding and mulching. On
the other hand, rising temperatures due to climate change would exacerbate water
shortages. To mitigate this, an extensive program of gravity fed water distribution
coordinated by OPADC is underway in Ethiopia. Similar initiatives are ongoing through the
Ministry of Northern Kenya (the Arid Lands Resource Management Project and the Drought
Management Initiative supported by World Bank and European Commission, respectively).
The project has incorporated water supply provision along the project road.
3.2.4 Increased traffic may lead to increased gas emissions. The two countries are taking
measures to monitor air pollution and curb emissions. NEMA in Kenya has provisions for
controlling air pollution and is developing guidelines with UNEP assistance. The EPA has
prepared guidelines “Ambient Environment Standards for Ethiopia” with assistance from
UNIDO. The project on its part has made provisions for financing an elaborate program of
tree planting along the perimeter of the road reserve to act as a carbon sinks. Already
ongoing, in the two countries, at district level, are community based indigenous tree
planting programs, which will take advantage of the project inputs. At Moyale, (Ethiopia),
there is a program of food for work linked to the Food Security Pastoral Development
Office.
Gender
3.2.5 The major impact on women will emanate from dislocation that may occur. The
communities are pastoralists where women bear the burden of the necessities of the
relocation process including house (tukul) construction. In addition, the patriarchal traditions,
give men control over household income, and therefore may be inclined to control
compensation payments. To mitigate the burden of relocation and control of finances is to
sensitize community leaders, elders and CBOs to ensure and monitor the compensation
process. The potential of an increase in the spread of HIV/AIDS may disproportionately
11
affect girls and women due to an influx of migrant male workers. Measures of mitigation will
include targeted awareness and prevention interventions. Women in the project area are
engaged in sell of milk and meat (sheep and goat) and roadside vending. The project will
provide milk and slaughter facilities and roadside market space for their use. The project will
improve the wellbeing of women by providing potable water resulting in time and energy
savings. This in turn is expected to have beneficial repercussions on family health and
education for girls.
Social
3.2.6 The project is expected to enhance the standard of living and socio-economic welfare
of the people living within its zone of influence. During construction, over 2000 skilled and
unskilled jobs will be created injecting into the two local economies an estimated USD
240,000 per month in form of wages. The workforce will create a demand for services, such
as catering and hospitality, supply of provisions, and thereby encourage small scale and
micro ventures to be established. Among the project interventions, contributing towards
wealth creation and distribution, are construction of roadside amenities, milk houses and
processors and slaughterhouses (for goats and sheep). Wellbeing of the people will be
improved through improved access to social facilities such as potable water, health facilities,
schools and enhanced security.
3.2.7 However, during and after construction traffic accidents will increase due to higher
traffic volumes and speeds, and there is a risk of the spread of STI/ HIV/AIDS. Road safety
and STI/HIV/AIDS awareness campaigns have been proposed to mitigate these impacts.
The project has included financial provisions under the bill of quantities for the civil works
and special clauses for the contractors to conduct or sub-contract to NGOs the campaign
against the spread of HIV/AIDS. Urban expansion and higher immigration rates along the
project road will lead to greater demand on infrastructure services and natural resources;
this will require regulation by the regional / district planning authorities in both countries.
Involuntary resettlement
3.2.8 Approximately 89 households (445 persons) will be affected (and may require
relocation) by the road works on the Marsabit – Turbi road section; while the Moyale –
Yabelo section has an estimated 524 households (2620 people) that will be affected with
150 requiring relocation. Land take, destruction of buildings (dwelling and commercial),
house fences, loss of trees and crops, and loss of livelihoods will occur because of this road
project. Bank Policy on Involuntary Resettlement requires that a full resettlement action plan
be prepared if more than 50 households (200 persons) are displaced. In this case, the
project has had full resettlement actions plans (RAPs) prepared for the two sides of the road
and estimated resettlement and compensation costs are estimated at KES4.71 million and
ETB20.0 million, respectively.
IV.
4.1.
IMPLEMENTATION
Implementation arrangements
Executing Agencies
4.1.1 The Kenyan National Highways Authority (KENHA) will be the executing agency for
the components of the project located in Kenya, while the Ethiopian Roads Authority (ERA)
will be the executing agency for the components of the project located in Ethiopia. The
Ethiopian Roads Authority (ERA) and the Ministry of Roads (now being replaced by the
Kenya National Highway Authority) have well established financial management and
procurement capacities. The two agencies have considerable experience in implementing
projects financed by donors including the ADF, IDA and the EU. Therefore, they have proven
12
capacities in meeting the reporting and procurement requirements of the Bank. However, the
Kenya National Highway Authority being a newly established agency, its procurement and
financial management capacity will be strengthened through technical assistance provided
under this project. The two agencies will each appoint a senior engineer as Project Manager
and focal points for the project. More details on Implementation Arrangements are provided
in Annex B3.
4.1.2 Most of the project components will be implemented in parallel and independently.
However, close cooperation is necessary for the project to achieve its long-term
development impacts. The overall cross-border coordination of the project will be provided
by a joint Regional Project Coordination Committee (RPCC). The Permanent Secretary of
Ministry of Roads in Kenya and the State Minister of Ministry of Works and Urban
Development in Ethiopia will co-chaired the RPCC. Its membership will include General
Managers of Ethiopian Roads Authority and Kenya National Highway Authority, a
representative of IGAD, a representative of COMESA, key stakeholder ministries in charge
of transport, immigration, customs, tourism, and livestock. The joint committee will raise
coordination/harmonization issues that may hamper or negatively affect the development of
the road corridor and advise on the necessary corrective measures. The establishment of
the RPCC, its composition and terms of reference shall be agreed upon between Ethiopia
and Kenya in an MOU. The signing of the MOU will be a Covenant of the loan.
4.1.3 Some progress has been made in aid harmonization and the implementation of the
Paris Declaration on Aid Effectiveness, particularly in information sharing and coordination of
missions in both countries. However, concerns over governance and inadequacy of country
systems, some of which do not adhere to broadly accepted good practices, have prevented
Development Partners from moving faster on this agenda. The present project alignment
and harmonization include the use of the countries financial management systems, and the
use of existing government entities for project implementation therefore avoiding the creation
of parallel project implementation units.
Procurement
4.1.4 All procurement of civil works and acquisition of consulting services financed by the
Bank will be in accordance with the Bank's Rules & Procedures for Procurement of Goods and
Works, or as appropriate Rules & Procedures for the Use of Consultants, using the relevant
Bank Standard Bidding Documents. The procurement of components funded by the EU will
follow EU procedures. For the components financed by the Bank, the different procurement and
consultants’ selection methods, the requirements for prequalification, post-qualification, and
prior review, the estimated costs of procurement packages, and the procurement plans were
agreed upon with ERA and KENHA. The procurement arrangement details are provided in
Annex B5.
Disbursement and Audit Arrangements
4.1.5 The loans will be disbursed for categories of expenditure including civil works, goods,
consulting services, and miscellaneous project coordination costs. The Direct Payment
Disbursement Method will be used for all the project components, except for the technical
assistance, which will be disbursed through special account. All disbursements will follow the
procedures and standard supporting documents outlined in the Bank’s Disbursement Hand
Book. Independent auditors will audit the project accounts annually. The audit reports of the
ongoing phase I of the project have been submitted by both Ethiopia and Kenya. The reports
were reviewed and found to adhere to accepted good practices. Further disbursement
details are provided in Annex B4.
13
4.2.
Monitoring
4.2.1 The Ethiopian Roads Authority (ERA) and Kenya National Highway Authority
(KENHA) shall regularly provide the Bank with quarterly progress reports for the project
including the implementation of the environmental and social action plan, in the established
format covering all project activities. These reports will include physical, financial, social,
and environmental indicators, which will assist in verifying the delivery of the project outputs.
A semi-annual project coordination meeting with the participation of the two executing
agencies and the regional economic communities IGAD, COMESA, and EAC will be held
every six month to ensure that proper execution and cooperation is maintained. In addition,
monitoring of the project will be done through the Bank’s semi-annual supervision missions,
in accordance with the Bank Group’s Operations manual. The Bank will undertake the
project mid-term review in 2012 to identify any major constraints facing the project and
provide the required corrective measures. The following table summarizes the project
monitoring timeframe and monitoring process.
Table 4.1 – Implementation Monitoring Timeframe
Timeframe
Milestone
Monitoring process /
feedback loop
Q4 - 2009
Project Launching
Supervision and Progress Report
Q2 - 2010
Procurement of Civil Works Completed
Procurement Plan/Progress Report
Q3 - 2010
All Contractors Mobilization Completed
Supervision and Progress Report
Q2 - 2011
30% of Civil Works completed
Supervision and Progress Report
Q1 - 2012
60% of Civil Works completed
Midterm Review & Progress Report
Q1 – 2013
Substantial completion of civil works
Supervision and Progress Report
Q1 – 2014
End of Defects Liability period
Supervision and Progress Report
Q1 – 2014
Project Completion
Project Completion Report
4.3.
Governance
4.3.1 Transparency and accountability in public financial management has improved
considerably in Kenya.
Donors’ support including the IDA-funded Public Sector
Management Technical Assistance Project and the ADF-funded Institutional Support for
Good Governance have improved financial accountability framework and strengthened
regulatory institutions. The Public Procurement Act of 2005 has created bodies for the
regulation of Public Procurement and has resulted in greater transparency in procurement
matters. In the road sector, governance will be enhanced with the operationalization of the
Kenya Roads Act of 2007, which provided a clear mandate and legal identity for each
organization involved in the road sector. The Act has now limited the role of the Ministry of
Roads to policy formulation and regulatory functions, while Autonomous Road Agencies will
handle executive functions of planning, programming, development, and maintenance of
roads on commercial basis with a management contract signed with the Minister.
4.3.2 In Ethiopia, the ongoing programs such as the Good Governance Package of the
District Level Decentralization Program (DLDP); the Public Sector Capacity Building program
(PSCAP); and the Expenditure Management Control Program (EMCP) are intended to
address the challenges related local governance and lack of capacity. The 2007 Public
Expenditure Financial Accountability Report concludes that although weak institutional
14
capacity requires attention, the fiduciary systems in place are adequate. The report
highlights improvements in the quality of accounting records, fiscal reporting and external
auditing. The existing governance structure in the road sector is generally well perceived by
development partners active in the sector. The Ethiopian Roads Authority (ERA) is an
autonomous Federal Government Agency with its own Board. A Road Inspectorate Unit,
which is accountable to the ERA Board, provides independent inspection and monitoring
reports on the performance of the road sector operations.
4.3.3 The specific governance risk mitigation measures of the present project include: (i)
the appointment of independent Financial and Technical Audit firms to ensure that funds are
used efficiently and for the intended purposes; (ii) Bank prior review and approval of all
project procurement activities; and (iii) the use of direct disbursement methods to channel
project funds to contractors and service providers.
4.4.
Sustainability
4.4.1 The sustainability of the project will depend largely on the ability of the two
governments to plan, program, finance, and implement timely maintenance of the road.
Sustainability will also depend on the implementation of effective axle-load-control programs
to prevent overloaded trucks from prematurely destroying the road.
4.4.2 The planning, programming, and implementation of road maintenance in Ethiopia is
done under a holistic sector wide approach – the Maintenance Action Plan (MAP-4) under
the Road Sector Development Program (RSDP). The Ethiopian Roads Authority implements
the program. In Kenya, the newly established Kenya National Highway Authority (KeNHA) is
now providing the needed streamlined management and improved governance structure to
tackle road maintenance problems in the country. As mandated by the Kenya Roads Act
2007, KeNHA is currently finalizing five-year Road Sector Investment Program to guide the
development and maintenance of the road sector. The recurrent costs after project
completion include the routine maintenance expenditure of the road undertaken annually at
a cost of US$ 500,000 in both Kenya and Ethiopia; and the periodic maintenance every ten
years in the form of resealing or asphalt overlay to protect the investment estimated a US$
13 million in Ethiopia and US$ 15 million in Kenya.
4.4.3 Both countries have established ring-fenced road maintenance funds to secure
stable flow of funds for road maintenance. The resources mobilized by the Ethiopian Road
Fund Administration rose from ETB 165 million in 1998 to more than ETB 700 million in
2008. The resources of the Road Fund can cover the annual maintenance needs of the
network in maintainable condition estimated at ETB 650 million. The Kenya Road
Maintenance Fuel Levy Fund (RMLF) is the biggest road fund in sub-Saharan Africa. The
fund is managed by the Kenya Roads Board and raised KES 19 billion (US$ 270 million) in
2008 from fuel levy and other road user charges. The amount is adequate to cover all
periodic and routine maintenance needs of the network but not including the backlog
maintenance.
4.4.4 The above-mentioned institutional arrangements for the management, financing, and
maintenance of roads have lead to the application of sound road assets management and
resulted in improved sustainability of road investments in both Ethiopia and Kenya. Another
policy direction that will ensure sustainability is the increased role of the private sector in
routine and periodic maintenance limiting the role of the force account units to emergency
response only. As of date, private contractors in Kenya carry out about 95% of periodic and
routine maintenance. In Ethiopia, the restructuring of ERA has transformed it from a supplier
of road infrastructure to a manager and purchaser of services and works for network
maintenance and development. Following its policy of commercialisation of its force account
unit, ERA is increasingly contracting out road maintenance to match the pace of
15
development of the domestic contracting capacity. The share of private sector in periodic
maintenance works in Ethiopia is expected to increase from the current 50% to 100% over
the next five years. This policy direction will lead to improved efficiency in road maintenance
and the emergence of strong domestic construction industry and further enhance
sustainability.
4.4.5 Both Ethiopia and Kenya are implementing policy measures with respect to axleload-control on their respective road networks with technical assistance funded by
Development Partners. These measures include the introduction of improved axle
configurations, the construction of additional weighbridge stations, and more efficient rules
enforcement. These protective measures and the improve sector governance and
maintenance funding mechanisms will contribute to the sustainability of the project.
4.5.
Risk management
4.5.1 The successful implementation of the project and achievement of its development
objectives predicates on several assumptions, each of which may constitute a potential risk:
Risk of political and civil unrest – both Ethiopia and Kenya have recently experienced postelection violence and civil unrest. Both countries have weathered those storms. The
mitigation of such risks is beyond this project; however, the repeat of similar events in the
near future is unlikely.
Insecurity in the project area is a major concern and may prevent the orderly execution of
the works – Lessons learned from ongoing construction activities have been incorporated in
the design of the project to address insecurity and mitigate this risk including the provision of
special security personnel by the government and the construction of several security
outposts.
Unpredicted escalation of construction costs – The risk of uncontrolled construction costs
are mitigated by having detail design documents and having substantial provisions for
contingencies. In addition, the global economic slowdown will have a dampening effect on oil
prices and positive outcome on competition.
Fiscal impacts of the Global Economic Crisis will affect the capacity of the concerned
governments to meet counterpart contributions – Despite improved fiscal discipline in both
Kenya and Ethiopia, the likelihood of this risk is high. The risk will be mitigated in Ethiopia by
the donor-funded road sector budget support, which provides the government with more
budgeting flexibility. In Kenya, the risk will be mitigated by the ADF loan financing all project
activities therefore reducing its immediate fiscal impact on government treasury.
Implementation risk due to newly established executing agency in Kenya – An Interim
Management Committee provided under the Kenya Road Act has been set up to oversee
the change management process and the smooth transfer of functions, rights, powers, and
project portfolios. The committee has prepared a roadmap to facilitate the process of
operationalizing the newly established Roads Authority. Therefore, disruption to project
implementation will be minimized; in addition, the present project has incorporated a
technical assistance to strengthen the institutional capacity of the Road Authorities.
Commitment of the two countries to COMESA regional economic cooperation and
integration initiatives that would boost intra regional trade – Kenya and at a slower pace
Ethiopia have been pursuing COMESA open trade agenda. Therefore, a reversal of these
decades’ old commitments and policies is unlikely. This risk is further mitigated by the fact
that the project will incorporate a trade and transport facilitation component to address nontariff barriers by harmonizing transport and customs standards and improving document
flows.
16
4.6.
Knowledge building
4.6.1 The type of knowledge expected to emerge from this operation stem directly from its
anticipated outcomes. Several empirical studies point out the critical role of transport in
reducing transactions costs, fostering cross-border trade, and improving the general welfare
of affected populations. The project provides a good opportunity to test this hypothesis and
expand the knowledge in this area. In addition, there is limited knowledge on appropriate
legal and institutional arrangements for transport facilitation particularly regarding the
operation of one-stop-border posts. By tackling this aspect, the project will produce valuable
information. The project component on Monitoring, Evaluation, and Knowledge Building was
designed specifically to capture the knowledge during project implementation and
disseminate it amongst regional economic communities, policy makers, and development
agencies involved in infrastructure development in Africa.
V.
5.1.
LEGAL INSTRUMENTS AND AUTHORITY
Legal instrument
5.1.1 The Bank instruments to finance this operation are two ADF concessionary loans to
Ethiopia and Kenya. The loan to Ethiopia amounts to UA 85 million broken down in UA 45
million (53%) from the Regional Operations Envelope and UA 40 million (47%) from
Ethiopia’s ADF-XI PBA-based allocation. The loan to Kenya amounts to UA 125 million
broken down in UA 60 million (48%) from the Regional Operations Envelope and UA 65
million (52%) from Kenya’s ADF-XI PBA-based allocation. The standard ADF loan terms and
conditions are applicable to the two loans.
5.2.
Conditions associated with Bank’s intervention
Conditions Precedent to the Entry into Force of the Loan Agreement
5.2.1 The entry into force of the Loan Agreements shall be subject to the fulfillment by the
Borrowers of the provisions of Section 12.01 of the General Conditions Applicable to Loan
Agreements and Guarantee Agreements of the Fund.
Conditions Precedent to First Disbursement of the Loans
5.2.2 The obligation of the Fund to make the first disbursement of the Loans shall be
conditional upon the entry into force of the Loan Agreement and the fulfillment of the
following conditions:
By both the Government of Ethiopia and the Government of Kenya
(i)
Submitted a resettlement action plan (RAP) together with a works and compensation
schedule detailing the sections into which each lot of the civil works will be divided,
and a timeframe for the compensation of project affected persons with respect to all
such sections in form and substance satisfactory to the Fund; and
(ii)
Submitted evidence of having compensated and/or resettled all project affected
persons with respect to the first section of the first lot of the civil works in accordance
with the RAP and the works and compensation schedule;
By the Government of Ethiopia
(iii)
Having appointed a senior engineer with qualifications and experience acceptable to
the fund to serve as Project Manager;
17
By the Government of Kenya
(iv)
Having opened a foreign currency project account in a bank acceptable to the fund
into which the proceeds of the loan to cover eligible expenditures for the technical
assistance component will be deposited as required.
Other Conditions of the Loan
(i)
The Borrowers shall have jointly provided evidence to the Fund that a Road Transport
Services Agreement between Ethiopia and Kenya, for a transit regime and transport
facilitation for the effective utilization of the corridor, has been signed by December 31,
2011;
(ii)
The Borrowers shall have jointly provided evidence to the Fund that an MOU between
Ethiopia and Kenya establishing a cooperation framework for coordinating the
development, financing, operation, management of the corridor has been signed by
June 30, 2010;
(iii)
The PS Ministry of Roads – Kenya shall submit to the fund yearly by 31 March,
detailed budgets for the institutional training program of the roads Authorities, and
the project coordination and oversight costs funded by the project for review and noobjection.
5.3.
Compliance with Bank Policies
( )
( )
This project complies with all applicable Bank policies.
The project does not require any exception from Bank policies.
VI.
6.1
CONCLUSIONS AND RECOMMENDATIONS
Conclusion
6.1.1 The project is expected to contribute to enhance trade and regional integration
between Ethiopia and Kenya, by reducing general transport costs, increasing market sizes
beyond national boundaries, increasing economic output, and giving rise to other socioeconomic benefits. The Economic Internal Rate of Return has been estimated at 21.7%,
which is higher than the opportunity cost of capital in Kenya and Ethiopia.
6.1.2 In addition to enhancing trade and strengthening regional integration, the project will
contribute to poverty reduction in both countries by increasing access to markets and social
services for the surrounding areas, and communities, and by empowering women and other
disadvantaged groups through adequate roadside socioeconomic infrastructure and
services. For Kenya, the project will improve access to Northern Kenya and enhance
integration with the rest of the country. For Ethiopia, the road will also provide a cost
effective alternative outlet to the sea. The project road will also enhance the development
effectiveness of several other donor-funded projects in agricultural, health, and education in
the two countries.
6.1.3 The project road is one of the missing links on the Trans-African Highway CairoCapetown and is one of the key priorities of the New Partnership for Africa’s Development
(NEPAD) and part of its short-term action plan for infrastructure. It is also consistent with the
Bank’s Medium Term Strategy (2008-2012) and the Bank Group’s Policy on Regional
Economic Cooperation and Integration.
18
6.2
Recommendations
6.2.1 Management recommends that the Board of Directors approve the proposed loans of
UA 85.00 million, and UA 125 million respectively to the Federal Democratic Republic of
Ethiopia and the Republic of Kenya for the purposes of financing the project described in this
report and subject to the above-stipulated conditions.
19
Appendix 1
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Ethiopia – Comparative Socio-Economic Indicators
Develo- Developing
ped
Countries Countries
96.4
92.1
44.5
41.8
47.5
33.3
25.6
40.8
4.5
91.0
105.0
88.0
45.8
51.0
26.6
19.0
34.2
3.9
102.3
102.0
99.5
100.8
82.0
1.2
0.8
1.6
5.9
2005-07
2000-07
2000-07
2005-07
10.0
0.8
10.0
0.1
6.0
0.7
10.9
1.0
9.9
0.4
…
1.9
11.6
-0.2
…
12.3
Environmental Indicators
Land Use (Arable Land as % of Total Land Area)
Annual Rate of Deforestation (%)
Annual Rate of Reforestation (%)
Per Capita CO2 Emissions (metric tons)
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators;
UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports
Note : n.a. : Not Applicable ; … : Data Not Available;
20
Ethiopia
Africa
Life Expectancy at Birth (years)
71
61
51
41
31
21
11
1
Ethiopia
Africa
Infant Mortality Rate
( Per 1000 )
98
96
94
92
90
88
86
84
82
80
Ethiopia
Africa
last update : July 2008
2007
97.8
91.7
34.0
28.0
45.4
52.5
45.7
59.3
6.0
2.1
2007
2006
2006
2006
2006
2006
2007
2007
2007
2006
2.2
2007
Education Indicators
Gross Enrolment Ratio (%)
Primary School
- Total
Primary School
- Female
Secondary School - Total
Secondary School - Female
Primary School Female Teaching Staff (% of Total)
Adult Illiteracy Rate - Total (%)
Adult Illiteracy Rate - Male (%)
Adult Illiteracy Rate - Female (%)
Percentage of GDP Spent on Education
2.3
2006
287.0
782.0
99.0
100.0
100.0
100.0
0.3
18.0
93.0
93.2
0.1
3 285
6.3
2.4
2006
78.0
98.0
59.0
80.0
80.0
50.0
1.3
275.0
85.0
78.0
27.0
2 675
1.8
2.5
2006
39.6
120.4
50.4
62.3
61.7
45.8
4.7
300.7
83.7
75.4
28.6
2 436
2.4
2006
1.5
13.7
6.0
42.0
55.0
13.0
2.2
343.9
72.0
63.0
38.0
1 840
3.0
2005
2004
2004
2005
2006
2004
2004
2005
2005
2006
2006
2005
2004
2005
2.6
2005
Health & Nutrition Indicators
Physicians (per 100,000 people)
Nurses (per 100,000 people)
Births attended by Trained Health Personnel (%)
Access to Safe Water (% of Population)
Access to Health Services (% of Population)
Access to Sanitation (% of Population)
Percent. of Adults (aged 15-49) Living with HIV/AIDS
Incidence of Tuberculosis (per 100,000)
Child Immunization Against Tuberculosis (%)
Child Immunization Against Measles (%)
Underweight Children (% of children under 5 years)
Daily Calorie Supply per Capita
Public Expenditure on Health (as % of GDP)
Population Growth Rate (%)
2.7
2005
0.3
0.5
16.7
16.4
47.7
94.3
31.4
76.5
80.2
11.1
10.4
7.4
8.9
1.6
8
75.0
2005
1.4
2.6
30.2
5.6
56.0
103.2
24.5
65.4
67.2
22.4
8.3
57.3
80.8
2.8
450
61.0
2004
2.3
3.5
41.0
3.5
80.1
99.3
24.2
54.2
55.3
36.1
13.2
85.3
130.2
4.7
723.6
29.9
2004
2.5
4.2
43.8
3.1
87.7
99.0
23.4
52.9
54.3
38.2
13.0
86.9
145.3
5.3
673.0
14.7
Africa
2004
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2005
2005
Ethiopia
2004
Demographic Indicators
Population Growth Rate - Total (%)
Population Growth Rate - Urban (%)
Population < 15 years (%)
Population >= 65 years (%)
Dependency Ratio (%)
Sex Ratio (per 100 female)
Female Population 15-49 years (% of total population)
Life Expectancy at Birth - Total (years)
Life Expectancy at Birth - Female (years)
Crude Birth Rate (per 1,000)
Crude Death Rate (per 1,000)
Infant Mortality Rate (per 1,000)
Child Mortality Rate (per 1,000)
Total Fertility Rate (per woman)
Maternal Mortality Rate (per 100,000)
Women Using Contraception (%)
GNI per capita US $
1200
1000
800
600
400
200
0
2003
54 658
1 223.0
74.2
23.0
36 487
54.6
44.9
0.911
n.a.
…
2003
80 976
5 448.2
43.5
65.7
2 000
45.6
39.7
0.694
n.a.
…
2003
30 307
963.7
39.8
31.8
1 071
42.3
41.1
0.486
n.a.
34.3
2003
1 104
83.1
16.7
75.3
180
42.0
41.9
0.393
169
12.5
2002
2007
2007
2007
2006
2005
2005
2005
2005
2004
2002
Basic Indicators
Area ( '000 Km²)
Total Population (millions)
Urban Population (% of Total)
Population Density (per Km²)
GNI per Capita (US $)
Labor Force Participation - Total (%)
Labor Force Participation - Female (%)
Gender -Related Development Index Value
Human Develop. Index (Rank among 174 countries)
Popul. Living Below $ 1 a Day (% of Population)
2002
Africa
2002
Ethiopia
2001
Year
Appendix 1
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Kenya – Comparative Socio-Economic Indicators
Develo- Developing
ped
Countries Countries
102.3
102.0
99.5
100.8
82.0
1.2
0.8
1.6
5.9
2005-07
2000-07
2000-07
2005-07
7.0
0.5
1.0
0.3
6.0
0.7
10.9
1.0
9.9
0.4
…
1.9
11.6
-0.2
…
12.3
Environmental Indicators
Land Use (Arable Land as % of Total Land Area)
Annual Rate of Deforestation (%)
Annual Rate of Reforestation (%)
Per Capita CO2 Emissions (metric tons)
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators;
UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports
Note : n.a. : Not Applicable ; … : Data Not Available;
21
2.0
Kenya
Africa
Life Expectancy at Birth (years)
71
61
51
41
31
21
11
1
Kenya
Africa
Infant Mortality Rate
( Per 1000 )
100
90
80
70
60
50
40
30
20
10
0
Kenya
Africa
last update : July 2008
2007
91.0
105.0
88.0
45.8
51.0
26.6
19.0
34.2
3.9
2.1
2007
96.4
92.1
44.5
41.8
47.5
33.3
25.6
40.8
4.5
2.2
2007
107.4
113.4
32.4
47.0
44.8
11.8
7.6
16.1
8.1
2.3
2006
2006
2006
2006
2005
2005
2007
2007
2007
2006
Education Indicators
Gross Enrolment Ratio (%)
Primary School
- Total
- Female
Primary School
Secondary School - Total
Secondary School - Female
Primary School Female Teaching Staff (% of Total)
Adult Illiteracy Rate - Total (%)
Adult Illiteracy Rate - Male (%)
Adult Illiteracy Rate - Female (%)
Percentage of GDP Spent on Education
2.4
2006
287.0
782.0
99.0
100.0
100.0
100.0
0.3
18.0
93.0
93.2
0.1
3 285
6.3
2.5
2006
78.0
98.0
59.0
80.0
80.0
50.0
1.3
275.0
85.0
78.0
27.0
2 675
1.8
2006
39.6
120.4
50.4
62.3
61.7
45.8
4.7
300.7
83.7
75.4
28.6
2 436
2.4
2.6
2005
27.6
121.9
41.6
57.0
77.0
43.0
6.1
641.0
92.0
77.0
19.9
2 149
2.5
2.7
2005
2007
2007
2003-05
2006
2004
2004
2005
2005
2006
2006
2003-05
2004
2006
Population Growth Rate (%)
2005
Health & Nutrition Indicators
Physicians (per 100,000 people)
Nurses (per 100,000 people)
Births attended by Trained Health Personnel (%)
Access to Safe Water (% of Population)
Access to Health Services (% of Population)
Access to Sanitation (% of Population)
Percent. of Adults (aged 15-49) Living with HIV/AIDS
Incidence of Tuberculosis (per 100,000)
Child Immunization Against Tuberculosis (%)
Child Immunization Against Measles (%)
Underweight Children (% of children under 5 years)
Daily Calorie Supply per Capita
Public Expenditure on Health (as % of GDP)
2005
0.3
0.5
16.7
16.4
47.7
94.3
31.4
76.5
80.2
11.1
10.4
7.4
8.9
1.6
8
75.0
2004
1.4
2.6
30.2
5.6
56.0
103.2
24.5
65.4
67.2
22.4
8.3
57.3
80.8
2.8
450
61.0
2004
2.3
3.5
41.0
3.5
80.1
99.3
24.2
54.2
55.3
36.1
13.2
85.3
130.2
4.7
724
29.9
Africa
2004
2.7
5.1
42.7
2.6
83.2
99.4
24.4
54.1
55.2
39.2
11.8
64.4
104.1
5.0
560
39.3
Kenya
2004
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2005
2003-06
2003
Demographic Indicators
Population Growth Rate - Total (%)
Population Growth Rate - Urban (%)
Population < 15 years (%)
Population >= 65 years (%)
Dependency Ratio (%)
Sex Ratio (per 100 female)
Female Population 15-49 years (% of total population)
Life Expectancy at Birth - Total (years)
Life Expectancy at Birth - Female (years)
Crude Birth Rate (per 1,000)
Crude Death Rate (per 1,000)
Infant Mortality Rate (per 1,000)
Child Mortality Rate (per 1,000)
Total Fertility Rate (per woman)
Maternal Mortality Rate (per 100,000)
Women Using Contraception (%)
GNI per capita US $
1200
1000
800
600
400
200
0
2003
54 658
1 223.0
74.2
23.0
36 487
54.6
44.9
0.911
n.a.
…
2003
80 976
5 448.2
43.5
65.7
2 000
45.6
39.7
0.694
n.a.
…
2003
30 307
963.7
39.8
31.8
1 071
42.3
41.1
0.486
n.a.
34.3
2002
580
37.5
21.4
63.3
580
50.7
47.1
0.521
148
45.9
2002
2007
2007
2007
2006
2005
2005
2005
2005
2005
Basic Indicators
Area ( '000 Km²)
Total Population (millions)
Urban Population (% of Total)
Population Density (per Km²)
GNI per Capita (US $)
Labor Force Participation - Total (%)
Labor Force Participation - Female (%)
Gender -Related Development Index Value
Human Develop. Index (Rank among 174 countries)
Popul. Living Below $ 1 a Day (% of Population)
2002
Africa
2002
Kenya
2001
Year
Appendix 2
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Kenya - Bank Group ongoing Projects as of May 2009
PROJECT NAME
Main Sector
Financing Source
Approval
Date
Effect. Date
Closing
Approved
Amount UA
Disbursement
Ratio
A - Public National Projects
1. Roads 2000 - Districts Rural
Roads Rehabilitation Project
2. Nairobi - Thika Highway
Improvement Project
Transport/
Roads
ADF Loan
12.07.2001
29.04.2002
30.12.2008
20,000,000
42.30%
"
ADF Loan
21.11 2007
29.07.2008
Dec. 2010
117,850,000
0.00%
"
ADF Grant
21.11 2007
29.07.2008
Dec. 2010
3,150,000
0.00%
3. Rift Valley Water Supply and
Sanitation Project
Water &
Sanitation
ADF Loan
07.07.2004
21.12.2004
31.12.2009
13,040,000
43.01%
"
ADF Grant
07.07.2004
6.09.2004
31.12.2009
5,020,000
40.39%
"
ADF Loan
Nov-07
26.11.2008
Dec. 2011
35,190,000
0.00%
"
ADF Grant
Nov-07
-
Dec. 2011
10,070,000
0.00%
Agriculture
ADF Loan
12.10.2005
27.02.2006
31.12.2013
25,040,000
35.77%
"
ADF Loan
22.04.2005
27.09.2005
31.12.2012
13,590,000
20.33%
"
ADF Grant
22.04.2005
16.06.2005
31.12.2012
2,890,000
34.65%
"
ADF Loan
17.12.2003
22.09.2004
31.12.2011
18,410,000
51.92%
"
ADF Grant
17.12.2003
09.08.2005
31.12.2011
3,170,000
59.03%
"
ADF Loan
31.05.2006
21.09.2006
30.09.2013
22,978,992
2.46%
"
ADF Grant
31.05.2006
20.10.2007
30.09.2013
1,153,332
2.08%
"
ADF Loan
05.09. 2007
20.5.2008
Jan. 2014
17,000,000
1.20%
Social
ADF Loan
17.12.2003
24.11.2004
31.12.2010
24,260,000
1.03%
"
ADF Grant
17.12.2003
24.11.2004
31.12.2010
6,750,000
0.73%
"
ADF Loan
07.07.2004
15.03.2005
31.12.2010
17,180,000
11.09%
4. Water Services Boards Support
Project
5. Green Zones Development
Support Project
6. Ewaso Ng'ïro North Natural
Resources Conservation Project
7. ASAL-Based Livestock and
Rural Livelihoods Support Project
8. Kimira- Oluch Smallholder
Farm Improvement Project
9. Small-Scale Horticulture
Development Project
10. Education III Project
11. Rural Health III Project
12. Kenya Institutional Support to
Good Governance
13. Community Empowerment &
Institutional Support Project
14. Kisumu District Primary
Schools Water and Sanitation
Project
15. Technical Industrial
Vocational and Entrepreneurship
Training (TIVET)
16. Integrated Land and Water
Management
"
ADF Grant
07.07.2004
15.03.2005
31.12.2010
6,000,000
52.86%
Institutional
reforms
ADF Grant
26.07.2006
08.12.2007
30.09.2009
5,520,000
14.20%
"
ADF Loan
17.12.2007
-
Mar. 2013
17,000,000
0.00%
"
AWF
19.12.2006
29.01.2007
Sep-08
198,317
100.00%
Social
ADF Loan
16.12.2008
-
31.12.2013
25,000,000
0.00%
Water &
Sanitation
AWF
1,936,000
0.00%
412,396,641
11.49%
Sub-total
B. Public – Multinational Projects
17. Mombasa - Nairobi - Addis
Ababa Road Corridor Project
18. Arusha - Namanga - Athi
River Road Development Project
19. Creation of Sustainable Tsetse
Eradication Program
20. Nile Equitorial Lakes Electric
Grid - NELSAP
Transport/
Roads
ADF Loan
13.12.2004
07.04.2005
31.12.2010
33,600,000
20.90%
"
ADF Grant
13.12.2004
07.04.2005
31.12.2010
1,200,000
29.01%
"
ADF Loan
13.12.2006
30.04.2007
31.12.2012
49,241,000
8.01%
Agriculture
ADF Loan
08.12.2004
07.04.2005
31.12.2011
6,550,000
48.49%
Energy
ADF Loan
27.11.2008
-
31.1.2014
17,730,000
0.00%
108,321,000.00
13.38%
520,717,641
11.89%
5,000,000
57.57%
525,717,641
12.32%
Sub-total
Sub total (A + B)
C. Other Projects
21. African Virtual University
Support Project
Social
ADF Grant
13.12.2004
Total
22
07.03.2005
30.09.2009
Appendix 2
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Ethiopia - Bank Group ongoing Projects as of May 2009
PROJECT NAME
Koga Irrigation And Watershed
Management Project
Koga Irrigation And Watershed
Management Project
Koga Irrigation And Watershed
Management Project
Rural Finance Interm. Support
Project
Rural Finance Interm. Support
Project
Agriculture Sector Support
Programme
Agriculture Sector Support
Programme
Genale Dawa River Basin
Integ. Dev. Mas
Awash River Flood Control
Study
Livestock Development
Masterplan Study
Fisheries Resources
Development Study
Instl Sup.For Women Affairs
Office
Wacha-Maji Road Upgrading
Project
Wacha-Maji Road Upgrading
Project
Butajira - Hossaina -Sodo
Road Project
Butajira - Hossaina -Sodo
Road Project
Jimma-Mizan Road Upgrading
Project
Mombasa-Nairobi-Addis
Corridor Phase I Project
Harar Water Supply &
Sanitation Project
Harar Water Supply &
Sanitation Project
Harar Water Supply &
Sanitation Project
Rural Water Supply &
Sanitation Program
Emergency Humanitarian
Assistance - 2006
Water Information Systems
Main Sector
Financing
Source
Approval
Date
Effect.
Date
Closing
Approved
Amount UA
Disbursement
Ratio
Agriculture
ADF Loan
19.07.01
30.06.10
25.02.02
32,590,100.00
48.91%
Agriculture
ADF Grant
19.07.01
30.06.10
25.02.02
1,330,000.00
75.45%
Agriculture
ADF Loan
19.07.01
1,639,767.69
100.00%
Agriculture
ADF Loan
13.10.03
31.12.09
07.07.04
27,170,000.00
61.12%
Agriculture
ADF Grant
13.10.03
31.12.10
13.10.03
8,000,000.00
77.95%
Agriculture
ADF Loan
12.02.04
31.12.10
25.01.05
21,240,000.00
49.05%
Agriculture
ADF Grant
12.02.04
31.12.10
25.01.05
17,761,200.00
34.23%
Agriculture
ADF Grant
16.11.01
30.12.09
27.06.02
3,928,000.00
96.58%
Agriculture
ADF Grant
15.10.03
30.06.09
19.08.04
1,830,000.00
92.29%
Agriculture
ADF Grant
05.03.04
30.06.09
05.03.04
2,340,000.00
57.71%
Agriculture
ADF Grant
16.05.05
30.12.09
16.05.05
920,000.00
100.00%
Agriculture
ADF Grant
15.09.04
31.12.09
15.09.04
1,060,000.00
97.52%
Transport
ADF Loan
13.10.03
31.03.10
18.06.04
22,710,000.00
34.55%
Transport
ADF Grant
13.10.03
31.03.10
13.10.03
990,000.00
71.50%
Transport
ADF Loan
16.11.01
30.12.09
19.03.02
41,310,000.00
71.02%
Transport
ADF Loan
16.11.01
4,860,463.39
100.00%
Transport
ADF Loan
12.01.07
65,000,000.00
18.98%
Transport
ADF Grant
Water
Sup/Sanit
Water
Sup/Sanit
Water
Sup/Sanit
Water
Sup/Sanit
Water
Sup/Sanit
Water
Sup/Sanit
31.12.12
03.10.07
1,350,000.00
ADF Loan
08.11.02
30.09.10
09.12.03
19,890,000.00
68.42%
ADF Grant
08.11.02
30.09.10
08.11.02
1,120,000.00
7.30%
ADF Loan
08.11.02
250,503.16
100.00%
ADF Grant
25.02.06
31.12.10
43,610,000.00
14.63%
ADF Grant
21.08.06
31.10.06
333,237.81
0.00%
ADF Grant
31.10.06
30.12.09
31.10.06
445,307.35
90.00%
30.06.09
12.12.02
37,670,000.00
87.66%
399,196.03
100.00%
25.02.06
Rural Electrification Project
Power
ADF Loan
14.03.02
Rural Electrification Project
Power
ADF Loan
14.03.02
Rural Electrification Project Ii
Power
ADF Loan
12.01.07
31.12.13
02.11.07
87,200,000.00
9.16%
Education Iii
Social
ADF Loan
20.11.98
30.06.09
19.07.00
32,000,000.00
98.85%
Education Iii
Social
ADF Grant
20.11.98
30.06.09
17.11.99
300,000.00
50.00%
Education Iii
Social
ADF Loan
20.11.98
11,502,394.67
100.00%
Rural Health Services Project I
Social
ADF Loan
17.12.98
29,670,000.00
65.15%
Rural Health Services Project I
Social
ADF Loan
17.12.98
8,852,537.93
100.00%
Multi-Sector
ADF Grant
08.03.01
3,000,000.00
99.92%
Privatisation Technical
Assistance Project
Capacity Building Of Mofed
Humanitarian Flood-Relief
Assistance
Ethiopia-Creation Of
Sustainable Tsetse
Ethiopia_Djibouti
Interconnection - Et
Protection Of Basic Services Ii
30.06.09
30.06.09
08.03.01
15.01.02
Multi-Sector
ADF Grant
15.01.02
30.06.09
Multi-Sector
ADF Grant
17.05.07
31.12.07
Agriculture
ADF Loan
16.05.05
31.12.11
Power
ADF Loan
16.05.05
Multi-Sector
ADF Grant
20.01.09
Total
23
22.09.99
519,171.00
92.23%
333,237.81
0.00%
09.01.06
9,550,000.00
8.49%
30.12.09
08.08.06
20,880,000.00
42.09%
31.12.11
20.01.09
110,000,000.00
45.48%
673,555,116.84
47.38%
Appendix 3
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Kenya - Related Projects Financed by the Bank and Other Donors
Project Title
Donor
Region
USD
million
Roads 2000 Districts Rural Roads Maintenance Programme
AfDB
North and South Rift
Valley Districts
29
AfDB
Eastern Province
54
AfDB
Rift Valley Province
72
Multinational: Mombasa - Nairobi - Addis Ababa Road
Corridor Development: Isiolo - Moyale Road (A2): Phase I
Multinational: Arusha – Namanga - Athi River Road
Development: Athi River - Namanga Road (A104)
Nairobi - Thika Highway Improvement (A2)
AfDB
Roads 2000 Maintenance Programme
AFD
Nairobi/ Central
Provinces
Muranga, Maragwa,
Nyandarua
166
29
AFD
Rift Valley
26
KfW
Rift Valley
26
Eastern Province
25
Rift Valley
30
Central
0.2
Mai Mahiu – Narok Road
BADEA /
OPEC
BADEA /
OPEC
BADEA /
OPEC
Wote - Makindu Road (E707)
Emali - Oloitokitok Road (C102)
Dundori - Ol Kalou - Njabini Road (C69)
Kipsigak- Serem- Shamakhoko Road
China
Rift Valley
16
Gambogi - Serem Road (D329)
China
Rift Valley
4
Rehabilitation and expansion of the JKIA - Museum Hill Gigiri Road
China
Nairobi
27
Construction of the Eastern By-pass
China
Nairobi
113
Agricultural Sector Programme Support - Agricultural Roads
Sub-component
Coast, Eastern
4
EC
Kenya
87
Strengthening of Capacity on Supervision and Operations
for Roads Maintenance Works through Contracting
JICA
Nairobi
3
Construction of Nairobi Missing Links No. 3, 6 & 7
JICA
Nairobi
13
Mombasa Port Development Project
JICA
Mombasa
223
Roads 2000 Maintenance Programme
KfW
Rift Valley , Nyanza
12
Roads 2000 Maintenance Programme
SIDA
Nyanza
25
Northern Corridor Rehabilitation Programme – Phase II
DANIDA
World Bank
Northern Corridor Transport Improvement Project
160
Kenya
NDF
Northern Corridor Transport Improvement Project Additional financing
15
World Bank
Kenya
253
Northern Corridor Rehabilitation Programme – Phase III
EC
Kenya
82
Roads 2000 Maintenance Programme Phase. II
EC
Eastern Province
15
Rural Road Rehabilitation in Mt. Kenya Region & Central
Kenya
Dualling of Nairobi-Dagoretti Corner Road (C60/C61)
KfW
EC
JICA*
Construction of the Garissa - Modogashe Road
BADEA/OPEC*
TOTAL FOR ONGOING PROJECTS
Eastern / Central
Province
17
31
Nairobi
11
North Eastern
Province
45
1,612
* Not concluded
24
Appendix 3
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Ethiopia - Related Projects Financed by the Bank and Other Donors
Contract Name
Donor
Road
Length
(km)
Amount
USD Million
95
19.67
Butajira-Hossaina
AfDB
Hossaina-Sodo
AfDB
94
19.26
Jimma-Bonga
AfDB
107
62.07
Bonga-Mizan
AfDB
120
67.22
Wacha-Maji
AfDB
175
70.17
Sub-total
591
238.40
Nazareth-Assela
World Bank
79
16.04
Assela-Dodola Junction
World Bank
117
36.10
Dodola Junction-Goba
World Bank
130
33.62
Gondar-Debark
World Bank
99
62.50
Adigrat-Adiabun
World Bank
109
25.62
Adiabun-Shire
World Bank
92
38.81
Gobgob-Gashena
World Bank
86
20.54
Gashena-Woldia
World Bank
108
33.55
Aposto-Irbamoda
World Bank
94
59.80
Irbamoda-Wadera
World Bank
109
55.89
Wadera-Negele
World Bank
65
26.23
Dera-Magna
World Bank
119
24.34
Magna-Mechara
World Bank
120
42.36
Assosa-Blue Nile
World Bank
70
18.10
Blue Nile-Guba
World Bank
66
21.77
Nekempt-Mekenajo
World Bank
127
27.21
Sub-total
1,590
542.46
EU
342
36.73
Dembi-Bedele
BADEA
62
21.25
Metu-Gore
BADEA
26
11.19
Gore-Gambella
BADEA
144
67.94
232
100.38
Addis Ababa-Jimma
Sub-total
Mekenajo-Nejo
OPEC Fund
61
12.54
Nejo-Mendi
OPEC Fund
70
13.37
131
25.91
Sub-total
Azezo-Gint
BADEA/OPEC/SAUDI
87
22.36
Gint-Metema
BADEA/OPEC/SAUDI
98
22.52
Assosa-Kurmuk
BADEA/OPEC/SAUDI
97
45.50
282
90.38
Sub-total
Goha Tsion-Dejen
JICA
41
28.89
Addis Ababa-Ambo
KfW
112
15.61
Ambo-Gedo
KfW
65
27.32
177
42.93
3,386
1,106.08
Sub-total
Total
25
Appendix 4
Map of Project Area
26
Appendix 5
Mombasa-Nairobi-Addis Ababa Road Corridor Development Program
Component/Action
Phase
Cost
(UA M)
Studies
Year
2004
Detail Design Isiolo-Moyale (Kenya)
Phase 1
1.20
Detail Design Moyale-Ageremarian (Ethiopia)
Phase 1
1.00
Detail Design Inland Container Terminal (Ethiopia)
Phase 1
0.35
Detail Design Awasa Ageremariam (Ethiopia)
Phase 2
0.65
Detail Design Dual Carriageway (Kenya)
Phase 2
3.00
Sub-Total Studies
2005
2006
2007
2008
2009
2010
Source of Finance
2011
2012
2013
2014
2015
AfDB
EU
JICA
GOE
6.20
Infrastructure Improvements
Construction Isiolo - Merille River (Kenya)
Phase 1
50.00
Expansion of Mombasa Port (Kenya)
Phase 1
175.00
Sub-Total Construction Phase 1
225.00
Construction Merille River Marsabit (Kenya)
Phase 2
96.99
Construction Marsabit - Turbi (Kenya)
Phase 2
112.20
Construction Ageremariam-Yabelo (Ethiopia)
Phase 2
43.99
Construction Yabelo-Mega (Ethiopia)
Phase 2
47.72
Construction of Road Stations & OSBP
Phase 2
9.33
Sub-Total Construction Phase 2
310.23
Construction Turbi-Moyale - Kenya
Phase 3
130.00
Construction Mega-Moyale (Ethiopia)
Phase 3
50.00
Construction Ageremariam-Awasa (Ethiopia)
Phase 3
120.00
Construction of Inland Container Terminal (Ethiopia)
Phase 3
15.00
Sub-Total Construction Phase 3
315.00
Policy and Operational Actions
Bilateral Trade Agreement Kenya-Ethiopia
Phase 2
Road Transit Transport Agreement
Phase 2
Trade and Transport Facilitation Program
Phase 3
Program Total Cost
5.00
861.43
53
175
313
320
Legend
Provided or Pledged Financing
Phase 3 Potential Funding Source
27
Year in which Funding was Secured/Expected
GOK
Others
ANNEX A
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Country and Sector Brief
Kenya Economic Outlook
With a population of 38.6 million (UN estimate) and a land area of 569 thousand square
kilometers, Kenya has the largest GDP in eastern Africa. Kenya averaged 5.4% economic
growth during 2002-2007, although this suffered in the post election unrest in 2008.
Nevertheless poverty (45.9% in 2007) is still a problem with the poorest 20% of the population
receiving only 6% of national income. Kenya is not well endowed with mineral resources, but
has rich agricultural land and abundant wildlife. The lack of adequate infrastructure (transport,
electricity and telecommunications) seriously inhibits economic growth. Among its regional
trading partners, Kenya exports mostly manufactured goods.
Over the past 5 years there has been a small movement away from agriculture and industry
and toward services, largely tourism. In 2007, 23% of real GDP was in agriculture, 16% in
industry and 60% in services. Agriculture is characterized by a commercial export sector and a
large subsistence sector. Kenya is the most industrialized country in East Africa. Industry
emphasizes agro-processing, textiles and consumer goods, while services include the booming
tourism and telecommunications sector. The construction sector grew by 6.9% in 2007 and is
expected to remain strong. Between 2000/1 and 2005/6, Kenya was able to hold its budget
deficit to an average 1.6%. Nevertheless, recovery efforts and infrastructure rehabilitation have
raised the 2008/9 budget deficit to 5.4%.2 Kenya’s economic growth rate fell to between 2 and
2.5% in 2008 as a result of post-election violence and global factors. The Government’s official
growth forecast of 4 to 4.5 in 2009 is probably overly optimistic as the global slowdown begins
to affect tourism and horticulture exports and the impact of the drought is felt.3
Inflation: Inflation in Kenya is strongly influenced by food prices which are volatile due to
periodic drought and rising demand. It climbed from 11.7% in 2004 to 14.5% in 2006, but
dropped to 9.7% in 2007. This was nevertheless high in relation to its neighbors – Uganda at
6.1%, Tanzania at 7% and Sudan at 8%.4
Investment and Growth Strategies: Vision 2030 guides development spending. The
Government plans to invest US$25 billion in key growth sectors, such as infrastructure, skills
training and social services. The goal is to make Kenya a middle income country by 2030. In
keeping with this goal, the 2008/9 budget provides KSh 65 billion for road works, rural
electrification, port dredging and the submarine fiber optic cable. Agriculture accounts for
about 20% of wage employment plus jobs in the agro-processing area and informal sector.
Liberalization in tea marketing is leading to expansion and the horticultural sector is attracting
substantial foreign investment. Mining is a minor part of the economy, however, there is some
international investment planned. Kenya is already the most industrialized country in East
Africa. With tax concessions for industrial growth, the sector is achieving healthy growth rates.
Ethiopia Economic Outlook
With a population between 74 and 81 million living in an area 1.2 million square kilometers,
Ethiopia’s economy has been growing quite rapidly since reforms began in 1991. Ethiopia’s
GDP remains strongly influenced by the yields of its rain-fed agriculture, which also affects the
agro-processing industries and the service economy. Ethiopia has considerable mineral
resources which have yet to be developed. The GDP growth rate was 11.1% in 2006-7, with
an annual average between 2002/3 and 2006/7 of 8.7%.
2
Economist Intelligence Unit, “Kenya Country Profile 2008”, pp. 17-22.
The Times, “What Crunch Means for Africa”, March 12, 2009.
4
Economist Intelligence Unit, op. cit., p. 23.
3
28
ANNEX A
In 2006/7, 43% of Ethiopia’s GDP was from agriculture and related activities, 12.5% from
industry and 38.2% from services. About 80% of the population draws its livelihood from
agriculture, including livestock. The road system is geared to delivery and redistribution of
agricultural produce from Addis Ababa, making intra-regional trade more difficult. There is a
recent effort to design roads that foster intra-regional trade as well. The project road will meet
this objective by linking Southern Ethiopia directly to East Africa and the Port of Mombasa. The
services sector grew by 13.5% in 2006/7. It is led by trade, hotels and restaurants at 14.7%,
real estate at 7.6% and transport and communications at 5.2%. Industrial growth has been
strong, growing by 9.4% in 2004/5, 10.2% is 2005/6 and 11% in 2006/7. Manufacturing is
centered at Addis Ababa and Dire Dawa, but the government is seeking to increase its role in
regional capitals.5
Inflation: Inflation is strongly influenced by food prices, which have a 60% weighting in the
national consumer price index. Even with good harvests, the high price of fuel has kept the
inflation rate high. Government protection of food prices to maintain a production incentive for
growers is another factor. The inflation rate for 2007 was 17.2 % and the average between
2003 and 2007 is 12.7%.6
Investment and Growth Strategies: The government has an active program for strengthening
the agricultural sector. It is encouraging greater trading in food crops, partial land tenure
reform, improved coffee marketing and domestic processing, further increasing the export
horticulture industry and local and foreign private investment in the livestock industry. Ethiopia
is one of the largest livestock producers in Africa. About 10% GDP comes from livestock and
30% of the agriculture labor force is in livestock. Since opening the sector to private
investment, it has become a significant export earner. Transport will play a key role in
expansion of this sector. Exploration of mineral, oil and gas resources has been encouraged
by the government. Manufacturing accounts for a small percentage of GDP. It is led by food,
beverages, textiles/garments and cottage industries. The government conducted some
privatization of SMEs in the 1990s, but most firms are still in state ownership, especially the
larger ones. There are a number of large foreign investor/Ethiopian owned consortia. The
government is seeking foreign investors to strengthen the leather products sector.
Regional Trade within COMESA
Both countries are members of COMESA (Common Market for Eastern and Southern Africa).
COMESA is Africa’s largest trading bloc with 19 member countries, land area of 12 million
square kilometers, population of 389 million and a combined annual import and export trade of
US$14 billion. It began as a preferential trade agreement and has now formed a Free Trade
Area, which Kenya has joined, but Ethiopia is still studying to determine whether to join.
The following tables demonstrate the current trade among COMESA members. Exports from
Kenya to COMESA countries in 2007 increased by 14.3%, accounting for 69.5% of total
exports to African countries. Exports to EAC countries increased by 20.8% in 2007. Imports
from COMESA went up by 62.8% while those from EAC more than doubled in 2007. The
major sources of Kenyan imports within the block are Egypt, Uganda, Tanzania, Swaziland and
Mauritius. The table also demonstrates the positive balance of trade Kenya has been able to
maintain within COMESA. The continual growth in exports and imports confirms the potential
of trade among East African countries and the impact of reducing tariffs and a transition from
reliance on customs duties to increased production based tax in fostering economic and
revenue growth.
It should be noted that COMESA countries are also the leading export destination for Uganda
having now exceeded EU exports. Total exports for Uganda rose 40% between 2006 and
2007, which is attributed to higher commodity prices, aggressive marketing with local industries
5
6
Economist Intelligence Unit, “Ethiopia Country Profile 2008”, pp. 22-24.
Ibid., p. 31
29
ANNEX A
to produce for the export market and relative peace and recovery in Southern Sudan. This
suggests that trade with Uganda via the project corridor offers good opportunities for Ethiopia.
Table A1: Total Kenyan Trade with COMESA Member States, 2001-2007
IMPORTS
Year
2001
2002
2003
2004
2005
2006
2007
Average 2003-07
Average 2005-07
EXPORTS
CIF Value USD Percent increase/ FOB Value USD Percent increase/ Trade balance
decrease
decrease
629,002,506
629,002,506
121,460,404
669,444,786
64.29%
547,984,382
155,439,389
809,310,027
20.89%
653,870,638
29.97%
18.02%
183,456,635
939,678,502
16.10%
756,221,867
11.24%
204,094,211
1,182,752,146
25.86%
978,657,935
18.51%
241,886,174
1,038,803,320
87.82%
796,917,146
74.32%
421,671,069
1,271,174,065
22.36%
849,502,996
241,309,496
289,217,151
1,048,343,612
1,164,243,177
807,034,116
875,026,026
Source: Kenya National Bureau of Statistics, Economic Survey 2008 , p. 136.
Ethiopian imports from COMESA countries have shown a constant increase during this period.
Exports have shown much more volatility, but in most years an increase in value. A high
percentage of Ethiopia’s exports are agriculturally based and the volatility reflects the impact of
periodic droughts on production. During the first three years, there is a favorable balance of
trade, but it is negative in the latter four years. The overall figures suggest the potential for
increased trade growth with the improved road connection between the regions.
Table A2: Total Ethiopian Trade with COMESA Member States (2001-2007)
IMPORTS
Year
2001
2002
2003
2004
2005
2006
2007
EXPORTS
CIF Value USD Percent increase/ FOB Value USD
decrease
47,707,456
78,015,817
11.54%
54,011,120
63,695,512
13.21%
91,255,846
141,737,366
68.96%
101,334,854
48,870,276
11.04%
136,988,885
92,223,537
35.18%
191,784,706
92,382,820
40.00%
196,408,118
119,465,249
2.41%
TRADE BALANCE
Percent increase/
decrease
31.65%
-18.36%
122.51%
-65.52%
88.71%
0.17%
29.32%
Average 2003-07
143,554,481
98,935,850
Average 2005-07
175,060,569
101,357,202
Source: Statistics Provided by the Ministry of Trade and Industry, Addis Ababa, Ethiopia
30,308,361
9,684,393
50,475,520
-52,464,578
-44,765,348
-99,401,886
-76,942,869
-44,618,631
-73,703,367
Opportunities for Trade between East African and the Horn of Africa Countries
Some people interviewed argued that East African countries produce similar products making
trade with outside regions more attractive. Nevertheless, the tables just presented suggest that
there is considerable opportunity for intra-regional trade within East Africa and that the free
trade area and customs union have a strong impact on this trend. The very fact that the East
African countries rely heavily on agricultural commodities, means that in times of drought, the
best source of food and other agricultural commodities may be a neighboring country with
better weather conditions in that year.
All of Ethiopia’s top 10 exports to the COMESA region are agricultural, including live animals.
Ethiopia’s top 10 imports from COMESA countries are petroleum products, cement, vegetable
oils and cigarettes. Kenya is a major trading partner, as well as Uganda, Sudan and Djibouti.
Kenya exports to Ethiopia include in order of value products of iron and steel, tobacco,
30
ANNEX A
vegetable materials, cleansing preparations, insecticides, paper and paperboard, vegetable
fats, aluminium, stationery and sugar confectionery. Kenyan imports from Ethiopia include
edible vegetables, spices, tools, coffee, engineering equipment, metal containers, oil seeds,
used clothing and iron. In both directions, there is a flow of both agricultural commodities and
manufactured goods. To Uganda, Ethiopia exports coffee, vegetables and cuttings, also
candles, synthetic fibre, footwear and handbags. From Uganda, Ethiopia imports both
agricultural commodities and heavy equipment. With the amount of project equipment imports
to Ethiopia in recent years, this should be an area of growth for the corridor. With Sudan and
Djibouti, it is necessary to identify which are goods in transit and which are imports and
exports. With Sudan, Ethiopia exports primarily agricultural products and imports primarily
petroleum products. This suggests there is a diversity of demand and product areas that can
be expanded.
The Regional Transport Gateways
Djibouti Port: The Port of Djibouti has been a major port for Ethiopia for the past 100 years,
with the exception of 1977 - 1998. The war with Eritrea, left Ethiopia a land-locked country.
Currently 98% of Ethiopian traffic uses the Port of Djibouti. Before the Eritrean conflict, Djibouti
Port volume ranged from 1.2 to 1.7 million tonnes a year including 200,000 – 400,000 tonnes of
domestic traffic. In 2007, port traffic reached 7.5 million tonnes of which 5.6 million tonnes is
Ethiopian transit traffic.
The Port of Djibouti has been managed by Dubai World since May 2000. The aim of the
concession is to provide efficient service, market the port internationally and attract foreign
investment. There has been growth in all areas of port activity in the period from 2005-7. The
high volume of Ethiopian traffic has brought significant revenue and job creation to Djibouti
through port charges, handling, forwarding, ship repairs and other indirect employment.
Mombasa Port - Cargo traffic increased 10.7% from 14.40 million tonnes in 2006 to 15.96
million tonnes in 2007. A major problem is the imbalance with 81.8% of the total cargo being
imports. This disadvantages both the shipping lines and the inland transport operators and
thereby affects tariffs. The container traffic is well above the volume for which the port was
designed. A second terminal is planned for 2013, about the time that the project road will be
completed. In the meantime, container congestion is a problem. Moving unloaded cargo
immediately to inland depots and consolidating for shipment at inland depots is advantageous
in maintaining efficient operations at the port. Kenya Ports Authority is currently implementing
a port community based, integrated information system in which all inputs will be made
electronically and where possible remotely as well. Once installed, this system can be used to
provide advanced arrival information and document handling through the entire port and inland
intermodal system. Cargo owners, logistics companies, customs and other border agencies
will all be able to input information electronically and track cargo processing and movement,
thereby enabling logistics companies to plan operations for maximum efficiency. Transport on
through bills of lading to Nairobi, Kampala, or even Isiolo or Moyale will address some of the
congestion at the port, make Mombasa more competitive with other corridors and make
movement of goods more seamless.
Intra-regional and Overseas Trade Corridors
East Africa is served by several main routes emanating from the key regional ports. The
Northern Corridor connects the Port of Mombasa with Nairobi, Kampala, Kigali and Bujumbura.
It is also considered to include routes through Uganda and Rwanda to DRC and several
northward routes to southern Sudan. A second major artery connects Nairobi to Tanzania
through Namanga. Tunduma-Dodoma-Namanga-Moyale is one of the six priority corridors for
the East African Community (EAC). Once improved through this project and EAC efforts, it will
link Ethiopia – Kenya – Tanzania – Zambia into a trading system as well. The road network
also incorporates connections to Kisumu, Entebbe, Mwanza and other regional centers.
Therefore the Addis Ababa –Nairobi – Mombasa route, not only connects Ethiopia to an
31
ANNEX A
alternative port, but also to a road network that connects it to all of East Africa and beyond to
DRC and Zambia. As a result, the project road enables much greater penetration of Ethiopian
products into East African markets and of East African products into markets in the Horn of
Africa.
In addition to direct shipments from the Port of Mombasa, the Port operates an inland depot at
Nairobi which would also be served by this route. It enables overseas goods to have a direct
bill of lading to Nairobi and to be warehoused and cleared by customs there for onward
shipment on the project road to Ethiopia and the Horn region. The Nairobi depot is served by
road and rail from Mombasa allowing for competition on volumes and price. It would allow a
more flexible road transport system, shortening the total road distance from Ethiopian/Horn
origins and destinations and allowing transporters to build roundtrips based on a combination of
regional and/or overseas cargoes. By reducing time and increasing two-way loads it would
reduce cost and increase vehicle utilization (number of trips per year) on the route. It also
increases the potential income from warehousing and logistics services in Nairobi. Several
inland container depots are under discussion on both the Kenya section of the highway and the
Ethiopian section of the highway so that direct bills of lading can be used further inland.
The Ethiopian road network emanates from Addis Ababa, which is the distribution and
consolidation hub for the country. The project road will provide East Africans with good access
to the Ethiopian market and distribution system to surrounding population centers within
Ethiopia and to Somalia, especially Somaliland, Djibouti and bordering areas of Sudan. The
development of this road would enhance the role of Addis Ababa as a transport hub for the
Horn region utilizing dry ports that it is establishing to facilitate trade. This economic
opportunity would be enhanced by capacity building for the Ethiopian logistics and road
transport companies.
Trade and Transport Facilitation
To be a competitive corridor, the goal of the project should be seamless movement throughout
the corridor for travellers, tourists and commercial cargo. COMESA has developed instruments
to facilitate cross-border travel and trade. Both Kenya and Ethiopia are members of COMESA
and have implemented most of the instruments. Kenya and Ethiopia signed a bilateral
transport and traffic agreement in 1979 that establishes reciprocal recognition of licenses,
registration and access. A new draft for this agreement has been written, but not yet signed
and ratified. Prior to this, a bi-lateral working group, including both public and private sectors,
should review transport operations between the two countries and what works well on other
corridors. Based on this analysis, the proposed agreement should be modified to provide for a
full cross-border and transit regime. It should be negotiated and then signed by the two
countries prior to completion of construction. This road provides a major corridor linking all of
the East African Community and beyond to the Horn of Africa. It is unlikely to realize its
potential unless the transit regime is reviewed.
Various measures should be instituted during the course of construction so that they are
completed by the inauguration of the Regional Corridor. Regulations need to be standardized
and the COMESA facilitation instruments fully implemented in both countries. This entails
conclusion and implementation of the revised road transport agreement between Ethiopia and
Kenya. The Agreement refers on a number of issues to obeying the rules of the country
traveled in. As much as possible, these regulations should be harmonized and stated clearly in
the agreement. Recognizing the need for controls along the route, such as weighbridges,
customs controls or security checks, they need to be minimized and coordinated as much as
possible, so that they do not become bottlenecks. Examples for agreement include:
Overload limits, vehicle dimensions, road worthiness and enforcement: There should be
agreement on all four of these so that vehicles can be loaded for the route without being forced
to load for the lowest weight. This was the goal for setting a limit for the whole COMESA
region. Kenya is currently investing in new weighbridges because of the problems with keeping
32
ANNEX A
the calibration consistent. Vehicles should be weighed when they leave the port or shipper
depot, once when they cross the border and on arrival at their destination, if necessary to
check load integrity. Seals should be introduced as much as possible to avoid the need for
inspections of cargo at borders or enroute. Common road worthiness standards and
inspections should be developed. Enforcement methods should be similar in the two countries.
Community-based system: This system is now being implemented. It will enable the port,
customs, and logistics companies to input and access information electronically thereby
simplifying and expediting the process of clearance. It will support through bills of lading to
Nairobi. This would mean that the shipping line would take responsibility for shipment to
Nairobi and the landside transport and logistics would begin at Nairobi to the final destination.
With the development and improvements at the Port of Djibouti, these improvements at
Mombasa are particularly important as well as maximizing direct trader input.
Customs reform: The East Africa Trade and Transport Facilitation Project, funded by the World
Bank and African Development Bank, is providing assistance to the Revenue Agencies in
Kenya, Uganda, Rwanda and Tanzania to facilitate improvements in the transit regime on the
Northern and Central Corridors. Several measures are being adopted that can be applied on
the Mombasa – Nairobi – Addis Ababa Corridor when it is completed.
Data exchange. Since both countries use the CD-20, they should be able to exchange
data electronically. An interface has been written so that the Simba system of Kenya
can communicate with the ASYCUDA system of Uganda. This interface can be
adapted for use for customs data exchange between Kenya and Ethiopia, which also
uses ASYCUDA. It will require insuring that field codes developed at the national level
are reconciled or an interface built so that both systems can read the field codes of the
other. Once done, it is possible to make declarations in one country that can be
downloaded in the other country and converted from an export or transit document to an
import document without re-entering all the data.
Tracking system for cargo. The cargo tracking system being developed for the
Northern Corridor can also be adapted for use on the Mombasa – Nairobi -- Addis
Ababa Corridor. The tracking system has been tested between Kenya and Uganda.
Once any problems have been resolved, it can be used for the project corridor. Once
the fiber optic cable is all laid along the Kenyan leg, the border posts should have full
access to headquarters and between the two countries. Interconnection at the border
should also be planned to allow for information exchange between the border facilities.
Common customs bond. This COMESA instrument is in the final development stage. It
has been piloted on the Kenya – Uganda border and is now being rolled out to the rest
of the Northern Corridor. A single bond in the amount of the highest of the individual
country bonds is lodged with the insurance provider. The tracking system is used to
acquit the bond as the cargo leaves each country and make it applicable in the next
country until it is fully canceled out when the cargo reaches the final destination. This
system will be ready for implementation by the time Phase 3 is completed and will be a
major facilitation improvement on the route.
Risk management systems. These systems are used to identify which shipments form
a threat of duty avoidance. Once implemented the number of manual inspections can
be greatly reduced. This saves time, cost and potential breakage or other damage to
cargo.
33
ANNEX A
One-Stop-Border-Post - As a regional corridor and Trans African Highway, new border posts
need to be constructed that enable efficient movement of vehicles, persons and goods through
the border. Both countries assume they can design joint tourism packages and attract crossborder tourists. Tourists are very sensitive to disorganized borders and unfriendly officers. To
decrease the time spent at borders and increase interagency cooperation, many borders are
being converted to one stop border posts (OSBP) in which exit and entry procedures are
implemented in a single facility during a single stop. It is recommended that the border posts
funded under the project are designed for one stop operation. This recommendation was
discussed with the Kenya Shippers Council and Ministries of Works, Transport and Trade in
Kenya
and
the
Revenue
Authority and Chamber of
Commerce in Ethiopia. All were
One‐stop border procedures
very supportive.
Cross‐border movements from Kenya to Ethiopia and from Ethiopia to Kenya : Juxtaposed facilities
Lessons Learned:
The East
Africa Trade and Transport
Kenya
Ethiopia
Facilitation Project (EATTFP)
Pedestrians Common control area
supports
the
design
and
Passenger cars
Freight trucks
implementation
of
One
Stop
Kenyan exit controls
Border Posts (OSBP) to improve
Ethiopian entry controls Security fence around cooperation and reduce time and
perimeter
Pedestrians paperwork at borders. As the
Common control area
Passenger cars
countries of the EAC seek to
Ethiopian exit controls
Freight trucks
implement, a number of lessons
Kenyan entry controls
are being learned. There are a
Border crossing
number of OSBP projects in
Southern Africa which may also
provide some lessons learned
that
would
benefit
implementation at Moyale.
34
ANNEX A
Table A3 - Status of Implementation of Road Transport Facilitation Programs in COMESA
Country
Angola
Burundi
Comoros
DR Congo
Djibouti
Egypt
Eritrea
Ethiopia
Kenya
Madagascar
Malawi
Mauritius
Namibia
Rwanda
Seychelles
Sudan
Swaziland
Uganda
Zambia
Zimbabwe
No. of Countries Implemented
No. of Countries Implementing
Percentage Implementation
ABBREVIATIONS/NOTES
N/A
CCL
CS
HFX
MWG
HTRC
COMESA Transit Plates
Overload Control
Harmonized
Road Transit
Charges
Axle Load
Limit
Max.
Length
22.0m
COMESA
Carrier
License
COMESA
Transit
Plates
Overload
Control
MWG
HFX
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
Yes
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
16
10
62.5
16
13
81.3
16
8
50
16
9
56.3
16
7
43.8
16
2
12.5
16
9
56.3
Not Applicable due to geographical location
COMESA Carrier License
Coupon System for payment of road transit charges
High Frequency X-border Land Mobile Radio Communications system
Multi-Disciplinary Working Group
Harmonized Road Transit Charges
Fitted at the front and rear of heavy goods commercial vehicles involved in COMESA transit operations
In application of fees based on pavement damage (fourth Power Law) and the use of COMESA procedures
and certificate of overload control
35
Nil
37.5
N/A
37.5
25.0
Nil
75.0
62.5
100.0
N/A
87.5
N/A
-
%
Performance
Yes
16
11
68.8
N/A
12.5
37.5
N/A
37.5
62.5
87.5
87.5
87.5
ANNEX B1
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Lessons Learned
Project
KENYA: Ziwa
- Kitale Road
Upgrading
Project
(PCR)
PCR
Date
Amount
Intervention
Areas
ETHIOPIA:
Alemgena –
Butajira Road
Project
(PCR)
April
2007
UA18.5
million
(ADF)
ETHIOPIA:
Road
Maintenance
and
Rehabilitation
Project
(PCR)
Aug.
2005
UA43.75
million
(ADF)
Lessons Learned
Road
Highways
1. Delays in project start-up resulting in implementation lags and cost over-runs caused by
inadequate design. Important to carry out detailed design reviews before launching bids. This
brings out deficiencies in original design and avoids costly modifications.
2. Delays in project execution due to lack of counterpart funds would lead to delay in the project
execution. As a measure to ensure adequate counterpart funds are available, the Bank has included
as loan condition, depositing funds into a special account on quarterly basis to finance project
1.4
expenditures. In this project, the risk for poor budgeting resulting in lack of counterpart funds has been
(overall)
minimised since the project shall cover all project expenditures except for compensation and
resettlement costs.
3. Although the Roads Department of the executing agency was well staffed with technical skills,
weaknesses were noticed during project implementation. Since the project on Kenya side will be
coordinated by a newly established authority, the project has included in the design TA to support
the newly established Highway Authorities.
Road
Highways
4. Implementation slippage caused by modifications in scope of works during project execution. This
results in extension of the contract period and related additional costs. Sufficient care has been
taken by the Bank and the Borrower in identifying all project components and review of the detail
designs by project appraisal.
2.4
(overall) 5. Considerable implementation delays due to lack of knowledge of Bank’s procurement rules and
procedures by the Executing Agency. This problem has been overcome through Bank’s
procurement workshops, easy access to information through the Bank’s Field Office and on-going
T.A programs financed by the Bank and the World Bank.
February
2006
UA17.04
million
(ADF)
Rating
Road
Highways
6. Execution of large works through Force Account should be avoided. Experience has shown that
this may result in construction delays and at times is not cost effective because of poor logistics
management, inventory controls and workmanship. The Bank should be cautious in the use of
2.2
Force Account even though this is one of the Procurement mode in the Bank’s “Rules of Procedure
(overall)
for Procurement of Goods and Works”. Its adoption should be restricted to small maintenance
works and activities.
36
ANNEX B2
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Project Detail Costs
Project Categories
Cost
Amount
UA (M)
AfDB Financing
Amount
UA (M)
Percent
EU Financing
Amount
UA (M)
Ethiopia Gov.
Percent
Amount
UA (M)
Kenya Gov.
Percent
Amount
UA (M)
Country
Percent
1. Civil Works
1.1 Civil works Merille River - Marsabit
1.2 Civil works Marsabit-Turbi
96.99
74.18
76%
22.81
24%
Kenya
112.10
112.10
100%
1.3 Civil Works Ageremariam - Yabelo
43.99
36.51
83%
7.48
17%
Ethiopia
1.4 Civil Works Yabelo - Mega
8.11
17%
Ethiopia
47.72
39.61
83%
1.5 Road Stations & OSBP (Ethiopia)
4.32
4.32
100%
1.6 Road Stations & OSBP (Kenya)
5.01
5.01
100%
310.13
197.55
64%
Sub-Total Civil Works
Kenya
Ethiopia
Kenya
74.18
24%
1.88
100%
15.59
5%
22.81
7%
2. Consulting Services
2.1 Supervision Merille River-Marsabit
1.88
2.2 Supervision Marsabit-Turbi
1.88
1.88
100%
Kenya
2.3 Supervision Ageremariam - Yabelo
2.13
2.13
100%
Ethiopia
2.4 Supervision Yabelo - Mega
2.13
2.13
100%
Ethiopia
2.5 Design Dual Carriageway - Kenya
3.00
3.00
100%
Kenya
2.6 Evaluation & Knowledge Building
0.26
0.26
100%
Kenya
2.7 Project Audit - Ethiopia
0.06
0.06
100%
Ethiopia
0.08
11.42
0.08
9.54
100%
84%
2.8 Project Audit - Kenya
Sub-Total Consultancies
Kenya
Kenya
1.88
16%
3. Institutional Support Kenya
3.1 ICT Equipment & Sofware
1.03
1.03
100%
Kenya
3.2 Specialized Equipment & Software
0.30
0.30
100%
Kenya
3.3 Staff Training
0.57
0.57
100%
Kenya
3.4 Five-Year Business Plans
0.23
0.23
100%
Kenya
3.5 Business Process Development
0.19
0.19
100%
Kenya
3.6 Procurement & FM Capacity
0.19
0.19
100%
Kenya
3.7 Project Coordination Cost
0.13
0.13
100%
Kenya
Sub-Total Institutional Support
2.63
2.63
100%
4. Compensation & Resettlement
4.1 Ethiopia Comp. & Resettl.
1.23
4.2 Kenya Conp. & Resettl.
3.34
4.57
Sub-Total Compensation
Total
328.76
1.23
100%
1.23
209.72
64%
76.06
37
23%
16.82
5%
Ethiopia
3.34
3.34
100%
26.16
8%
Kenya
ANNEX B2
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Expenditure Schedules by Component
Year
Component
2010
2011
2012
Total
2013
2014
1. Civil Works
1.1 Civil works Merille River - Marsabit
29.10
29.10
29.10
9.70
96.99
1.2 Civil works Marsabit-Turbi
33.63
33.63
33.63
11.21
112.10
1.3 Civil Works Ageremariam - Yabelo
13.20
13.20
13.20
4.40
43.99
1.4 Civil Works Yabelo - Mega
14.32
14.32
14.32
4.77
47.72
1.08
1.51
1.73
4.32
1.5 Road Stations & OSBP (Ethiopia)
1.6 Road Stations & OSBP (Kenya)
Sub-Total Civil Works
90.24
1.25
1.75
2.01
5.01
92.57
93.51
33.81
310.13
2. Consulting Services
2.1 Supervision Merille River-Marsabit
0.47
0.47
0.47
0.28
0.19
1.88
2.2 Supervision Marsabit-Turbi
0.47
0.47
0.47
0.28
0.19
1.88
2.3 Supervision Ageremariam - Yabelo
0.53
0.53
0.53
0.32
0.21
2.13
2.4 Supervision Yabelo - Mega
0.53
0.53
0.53
0.32
0.21
2.13
2.5 Design Dual Carriageway - Kenya
1.50
1.50
2.6 Evaluation & Knowledge Building
3.00
0.08
0.10
0.26
2.7 Project Audit - Ethiopia
0.012
0.012
0.012
0.012
0.012
0.06
2.8 Project Audit - Kenya
0.017
0.017
0.017
0.017
0.017
0.08
3.61
3.53
2.03
1.31
0.93
11.42
Sub-Total Consultancies
0.08
3. Institutional Support Kenya
3.1 ICT Equipment & Sofware
1.03
1.03
3.2 Specialized Equipment & Software
0.30
0.30
3.3 Staff Training
0.29
0.29
0.57
3.4 Five-Year Business Plans
0.11
0.11
0.23
3.5 Business Process Development
0.09
0.09
0.19
3.6 Procurement & FM Capacity
0.09
0.09
3.7 Project Coordination Cost
0.03
0.04
0.04
0.03
0.13
0.19
Sub-Total Institutional Support
1.94
0.62
0.04
0.03
2.63
4. Compensation & Resettlement
0.00
1.23
4.1 Ethiopia Comp. & Resettlement
1.23
4.2 Kenya Comp. & Resettlement
3.34
3.34
Sub-Total Compensation
4.57
4.57
Total
100.37
96.73
95.58
35.15
0.93
328.76
Expenditure Schedules by Source of Finance
Year
Source of Finance
African Development Bank
European Union
Government of Ethiopia
Government of Kenya
Total
Total
2010
61.55
2011
62.48
2012
61.33
2013
23.61
2014
0.75
209.72
22.72
22.72
22.72
7.70
0.19
76.06
5.91
4.68
4.68
1.56
0.00
16.82
10.19
6.84
6.84
2.28
0.00
26.15
100.37
96.73
95.58
35.15
0.93
328.76
38
ANNEX B3
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Implementation Arrangements
Regional Coordination
The implementation of the project will be done on a country basis following the arrangements
agreed to with each government. Therefore, the project components will be implemented in
parallel and independently. However, close cooperation is necessary for the adoption of a
Road Transit Agreement and harmonization of transport rules and regulations as well as for
the project to achieve its long term development impacts.
A Regional Project Coordination Committee (RPCC) will provide overall cross-border
coordination of the project. The RPCC will be co-chaired by the Permanent Secretary of
Ministry of Roads in Kenya and the State Minister of Ministry of Works and Urban
Development in Ethiopia. Its membership will consists of General Managers of Ethiopian
Roads Authority and Kenya National Highway Authority, a representative of IGAD, a
representative of COMESA, key stakeholder ministries in charge of transport, immigration,
customs, tourism, and livestock. The joint committee will raise coordination/harmonization
issues that may hamper or negatively affect the development of the road corridor and advise
on the necessary corrective measures. The establishment of the RPCC, its composition and
terms of reference shall be agreed upon between Ethiopia and Kenya in an MOU. The signing
of the MOU will be a dated covenant of the loan agreements.
Executing Agency in Kenya
The Executing Agency for the Kenyan Project components will be the Kenya National Highway
Authority (KENHA) under the oversight of PS Ministry of Roads. The Director General of
KENHA will nominate a Senior Engineer whose qualifications and experience shall be
acceptable to the Bank to be the Project Manager. The Project Manager will be the key contact
person for all issues related to the project and shall ensure proper co-ordination, monitoring
and supervision of implementation. The Letter of appointment of the Project Manager and his
terms-of-reference shall be forwarded to the Bank prior to loan negotiations.
Project Implementation Consultative Committee (PICC) – While KENHA is the sole
executing agency of the project, the smooth execution of the project requires the full
participation of several key stakeholder Ministries and Agencies. Therefore the need to
establish a high-level consultative forum - the PICC - to advise the executing agency to steer
and resolve all cross cutting issues. The PICC shall hold regular interval meetings and will be
chaired by the PS Ministry of Roads. The PICC shall include the following Ministries or
Agencies: Ministry of Finance, Ministry of Transport, Ministry of Northern Kenya, Ministry of
Water and Irrigation, Ministry of Information and Communications, Ministry of State for
Provincial Administration and Internal Security, Ministry of State for Immigration and
Registration of Persons, Ministry of Trade and Industry, Ministry of Tourism, Kenya Roads
Board (KRB), National Environment Management Authority (NEMA), the Kenya Wildlife
Service, and the National AIDS Council. The PICC shall be constituted at the initiative of PSMOR. The Letter of Appointment of the PICC and its terms-of-reference shall be forwarded to
the Bank prior to loan negotiations.
Executing Agency in Ethiopia
The Executing Agency for the Ethiopia Project components will be the Ethiopian Roads
Authority (ERA). The Director General of ERA will nominate a Senior Engineer whose
qualifications and experience shall be acceptable to the Bank to be the Project Manager. The
Project Manager will be the key contact person for all issues related to the project and shall
ensure proper co-ordination, monitoring and supervision of implementation. The Letter of
appointment of the Project Manager and his terms-of-reference shall be forwarded to the Bank
prior to loan negotiations.
39
ANNEX B3
Responsibilities of Executing Agencies
Pre-award activities – (i) Prepare project implementation plan; (ii) Prepare bidding documents;
(iii) invite bids according to ADB procedures; (iv) Conduct evaluation of bids; (v) undertake
contract negotiations, and select consultants and contractors according to ADB procedures; (vi)
Follow up on all actions agreed with the Bank, related to project implementation.
Project Management Activities – (i) Supervise project implementation; (ii) Supervise and
monitor consultants, and contractors; (iii) Facilitate taking-over of right-of-way for the road,
quarries, and camp sites; (iv) Ensure timely payments to consultants and contractors; (v)
Prepare and submit progress reports; (vi) Ensure timely execution and submission of audit
reports; (vii) Monitor implementation of Environmental and Social Management Plan; (viii)
Maintain all project records.
Implementation Supervision by the Bank
The executing Agencies shall regularly provide the Bank with quarterly progress reports for the
project including the implementation of environmental protection measures in the established
format covering all aspects of the concerned components. In addition, monitoring of the project
implementation will be done through the Bank’s supervision mission program, in accordance
with the Bank Group’s Operations manual. A provisional supervision program is shown in
Table B3-1 below.
Table B3-1 Provisional Supervision Program
Date
Activity
November 2009
Launching
Mission
June 2010
Supervision
November 2010
Supervision
May 2011
Supervision
October 2011
Mid -Term
Review
May 2012
Supervision
October 2012
Supervision
May 2013
Supervision
October 2013
PCR
Skill-Mix
Task Manager/ KEFO/ETFO
Infra Spec/ Disbursement
Officer/ Procurement Officer
Task Manager/ KEFO/ETFO
Infra Spec
Task Manager/ KEFO/ETFO
Infra Spec/
Task Manager/ KEFO/ETFO
Infra Spec
Division Manager/ Task
Manager/ KEFO/ETFO Infra
Spec/ Disbursement Officer/
Environmental Officer
Task Manager/ KEFO/ETFO
Infra Spec
Task Manager/ KEFO/ETFO
Infra Spec
KEFO/EFTO Infra Spec/
Environmental Officer
KEFO/EFTO
Staff Input
(Staff Week)
5
4
4
4
5
4
4
4
5
40
Agencies/Ban
k
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ERA/ KENHA/
AfDB
ANNEX B4
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Financial Management and Disbursement Arrangements
Financial Management
The Finance and Administration Division of Kenya National Highway Authority will be responsible
for financial management and reporting procedures for the project components in Kenya. A
finance officer from the Division will be assigned to the project. A well-documented Financial
Management Manual, which outlines internal control procedures as well as financial reporting
arrangement to Government and Donors, has been developed. The manual has been subject to
review by the the Bank appraisal team. The manual describes the accounting system, the
accounting records, supporting documents, computer files, authorizations procedures for
transactions, financial reporting and disclosures, and contract administration and monitoring
procedures. The Accounting System is fully computerized and operational. The Finance and
Administration Division would be able to monitor the expenditures of the project and meet the
financial reporting and auditing requirement under Donor funded projects. The financial reporting
under on-going road projects supported by IDA and ADF was reviewed and found acceptable.
The Finance Division of ERA will be responsible for the financial management and reporting for
the project components in Ethiopia. The Division has been strengthened through an IDA financed
technical assistance which has put in place an Accounting and Financial System Manual to
enhance accountability, managerial autonomy, and financial control. The division is fully staffed
with over thirty accountants, accounting clerks, and other support staff. The division accounting
and financial information is based on the ACCPAC software package provided under a technical
assistance support from GTZ. ERA has good internal control systems, which include segregation
of duties, physical control of assets, clear channels of commands for authorization and approval,
and appropriate supervision.
The Financial Divisions of the two executing agencies will open and maintain separate accounts
for the project, and maintain all the necessary documentation and records supporting project
related disbursement and financial transactions. The financial statements and project accounts
will be audited annually during project implementation following the Bank’s Guidelines for Project
Audit.
Disbursement Arrangements
Disbursement Conditions - The first disbursement on each loan will not be made until the loan enters
into force and the Borrower has fulfilled all the conditions precedent to first disbursement as
stipulated in the loan agreement. Prior to submitting the first request for disbursement, the borrower
shall communicate to the Bank the person (persons) authorized to sign the withdrawal applications
together with the authenticated specimen signature(s).
Disbursement Method - The Disbursement methods applicable to the various components of the
project are summarized below and are explained in detail in the Bank Disbursement Handbook.
Table B4-1 – Disbursement Arrangements
Project Components
Amount
UA Million
Disbursement
Method
117.11
39.23
40.90
Direct Payment
Direct Payment
Direct Payment
1.88
2.13
Direct Payment
Direct Payment
1. Civil Works
1.1 Civil works Marsabit-Turbi
1.2 Civil Works Ageremariam-Yabelo
1.3 Civil Works Yabelo-Mega
2. Consulting Services
2.1 Supervision Marsabit-Turbi
2.2 Supervision Ageremariam-Yabelo
41
ANNEX B4
Project Components
2.3 Supervision Yabelo-Mega
2.4 Design Dual Carriageway - Kenya
2.5 Evaluation & Knowledge Building
2.6 Project Audit - Ethiopia
2.7 Project Audit - Kenya
Amount
UA Million
Disbursement
Method
2.13
3.00
0.26
0.06
0.08
Direct Payment
Direct Payment
Direct Payment
Direct Payment
Direct Payment
1.03
0.30
0.57
0.23
0.19
0.19
0.13
Special Account
Special Account
Special Account
Special Account
Special Account
Special Account
Special Account
3. Institutional Support Kenya
3.1 ICT Equipment & Software
3.2 Specialized Equipment & Software
3.3 Staff Training
3.4 Five-Year Business Plans
3.5 Business Process Development
3.6 Procurement & FM Capacity
3.7 Project Coordination Costs
A change to a method other than that agreed upon in this table will require the prior approval of the
Bank.
Minimum Amount For Withdrawal Application - Unless otherwise agreed, the minimum
amount for any disbursement under the direct payment is UA 20,000 (see page 2 paragraph
1.2.4 of the Disbursement Handbook).
Correspondent Bank - Where the beneficiary is not located in the country of the currency of
payment, the application should indicate the correspondent in that country of the beneficiary's
bank. The correspondent's name, full address, telex number and swift code, if any, should be
shown.
Beneficiary's Bank - The full name and address of a beneficiary, his/her account number and
name and full address of his/her bank, should be accurately indicated in the application. The
telex and swift code, if any, should be stated.
Currency of Payment - An application should not be in more than one currency of payment.
For example, if the borrower requires payments in US dollars and Euros, then separate
applications should be submitted for the two currencies. No application carrying more than
one currency of payment will be processed.
Channeling Disbursement Applications - All applications must be addressed to the Director of
Financial Control Department, African Development Bank, Temporary Relocation Agency
(TRA), 13 Avenue du Ghana, B.P.323, 1002 Tunis Belvedere, Tunisia.
42
ANNEX B5
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Procurement Arrangements
The procurement arrangements under the project are summarized in Table 1. All procurement of
goods, works and acquisition of consulting services financed by the Bank will be in accordance with
the Bank's Rules and Procedure for Procurement of Goods and Works, or as appropriate Rules and
Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents.
Table B5-1 - Summary of Procurement Arrangements
Project Categories
Cost (UA Million)
Bank
Total
Funded
Selection
Procedure
PreQualification
(Y/N)
Bank
PriorReview
1. Civil Works
1.1 Civil works Marsabit-Turbi
117.11
117.11
ICB
N
Y
1.2 Civil Works Ageremariam - Yabelo
46.15
39.23
ICB
N
Y
1.3 Civil Works Yabelo - Mega
49.88
40.90
ICB
N
Y
2.1 Supervision Marsabit-Turbi
1.88
1.88
QCBS
N
Y
2.2 Supervision Ageremariam - Yabelo
2.13
2.13
QCBS
N
Y
2.3 Supervision Yabelo - Mega
2.13
2.13
QCBS
N
Y
2.4 Design Dual Carriage - Kenya
3.00
3.00
QCBS
N
Y
2.5 Evaluation & Knowledge
0.26
0.26
QBS
N
Y
2.6 Project Audit - Ethiopia
0.06
0.06
LCS
N
Y
2.7 Project Audit - Kenya
0.08
0.08
LCS
N
Y
3.1 ICT Equipment & Sofware
1.03
1.03
Shopping
N
Y
3.2 Specialized Equipment
0.30
0.30
Shopping
N
Y
3.3 Staff Training
0.57
0.57
SS
N
Y
3.4 Five-Year Business Plans
0.23
0.23
QCBS
N
Y
3.5 Business Process Development
0.19
0.19
QCBS
N
Y
3.6 Procurement & FM Capacity
0.19
0.19
N
Y
3.7 Project Coordination
0.13
0.13
QBS
Force
Account
N
N
225.31
209.41
2. Consulting Services
3. Institutional Support
Total
Civil Works - The procurement of civil works will be carried out under International Competitive
Bidding (ICB) procedures, with post-qualification of contractors. The civil works in Kenya for the
Marsabit-Turbi Road are valued at UA 117.11 million, and will be packaged in one contract. The
civil works in Ethiopia are valued at UA 96.03 million and will be packaged in two lots: the
Ageremariam-Yabelo road section (UA 46.15 million) and the Yabelo-Mega road section (UA
49.88 million).
Construction Supervision - The consulting services for the construction supervision will be
packaged in three (3) lots corresponding to the above civil works packages: Marsabit Turbi (UA
1.88 million) in Kenya; and Ageremarian-Yabelo (UA 2.13 million) and Yabelo-Mega (UA 2.13
million) in Ethiopia. The supervision consultancies will be procured based on short-lists of qualified
consulting firms. The selection procedure will be based on Quality and Cost- Based Selection.
Feasibility and Design Consulting Services - The feasibility and Design Consulting services for
dual carriageway of Mombasa-Mariakani and Kenol-Sagana-Marua valued at UA 3.00 million will
be acquired on the basis of a short-list of qualified consulting firms. The selection procedure will
be based on Quality and Cost- Based Selection.
43
ANNEX B5
Consultancy Services for Evaluation and Knowledge Building - The Consulting services for
Evaluation and Knowledge Building, valued at UA 260,000, will be acquired by soliciting proposals
from three universities or research institutions. The selection procedure will be based on Quality
Based Selection (QBS).
Audit Services - The financial audit services will be subcontracted to firms of auditors to be
procured through short-lists, subject to clearance by the Auditor General of Ethiopia and Kenya
National Audit Office prior to call for bids. The technical audits will be acquired on the basis on
short-lists of Expert Engineers. The selection procedure for both audits, at the costs of UA 60,000
and UA 80,000 for Ethiopia and Kenya respectively, will be based on establishing the Least- Cost
Selection (LCS).
Consulting Services under the Institutional Support - The consultancies of Business Plans and
Business Process Development, estimated at UA 230,000 and UA 190,000 respectively, will be
procured based on short-lists of qualified consulting firms. The selection procedure will be based
on QCBS. Individual consultants for assisting in the functions of procurement and financial
management totalling UA 190,000 would be procured based on QBS.
Staff Training - All staff training for the Executing Agencies in Kenya, estimated at UA 570,000,
will be procured on the basis of Single –Source Selection in accordance with a comprehensive
training program prepared by PS (MOR) and approved by the Bank.
Procurement of Goods – The procurement of ICT systems (UA 1.03 million) and specialized
equipment UA 300,000, for the Highway Authorities in Kenya will be through Shopping.
Project Coordination Cost – Project Coordination Cost in Kenya estimated at UA 130,000 will be
procured through force account in accordance with annual budgets approved by the Bank.
National Procedures and Regulations - The national procurement laws and regulations of
Kenya and Ethiopia specifically the Kenya Public Procurement Act of 2005, and the Ethiopia
Public Procurement Proclamation 430 of 2005 have been reviewed and determined to be
acceptable.
Executing Agencies – The Kenya National Highway Authority (KENHA) will be the executing
agency for the components of the project located in Kenya except for the Institutional Support that
will be managed directly by the Permanent Secretary-Ministry of Roads. The Ethiopian Roads
Authority (ERA) will be the executing agency for the components of the project located in Ethiopia.
The resources, capacity, expertise, and experience of the two executing agencies have been
reviewed and found adequate to carry out the procurement activities.
Procurement Plan - As part of the preparation of the project the Borrower shall prepare and,
before negotiating the Financing Agreement, furnish to the Bank for its approval, a Procurement
Plan acceptable to the Bank setting forth: (a) the particular contracts for the goods, works, and/or
services required to carry out the project during the initial period of at least 18 months; (b) the
proposed methods for procurement of such contracts that are permitted under the Financing
Agreement, and (c) the related Bank review procedures. The Borrower shall update the
Procurement Plan annually or as needed throughout the duration of the project.
General Procurement Notice - The GOE and GOK requested the authorization of the Bank to
initiate an Advance Contracting because of the high priority accorded to the Project and the need
to start construction works in early 2010. The Bank approved the request and the GPN will be
published on 31 May 2009. The advance action is being undertaken in accordance with the Bank’s
Procurement Rules. The Government of Ethiopia and Kenya have been advised that approval of
advance action does not commit the Bank to financing the Project.
Review Procedures - The following documents are subject to pre-review and approval by the
Bank.
44
ANNEX B5
General Procurement Notices
Invitation for pre-qualification/ Specific Procurement Notice/ Invitation for EOI
Tender Documents and Requests for Proposals from consultants
Tender Evaluation Reports, Evaluation of Consultants' Proposals, Pre-qualifications
Draft Contracts, if the Form of Contract document in the Standard Bidding Document has
been amended.
Procurement Schedules
Table B5-2 - Procurement Schedule Civil Works
Activity
General Procurement Notice (APA)
Preparation of Preq. Questionnaire
No-objection Questionnaire
Invitation for Prequalification
Closing for Prequalification
Prequalification Report & Bidding to ADB
No-objection Preq. & Bidding Documents
Issue of Bidding Documents
Opening of Bids
Evaluation of Bids Report
No-Objection of the Bank
Negotiation and Award of Contract
Construction Period (36 Months)
Action/Agency
Target Date
ADB/GOE/GOK
GOE/GOK
ADB
ADB/GOE/GOK
GOE/GOK
GOE/GOK
ADB
GOE/GOK
GOE/GOK
GOE/GOK
ADB
GOE/GOK
30 April 2009
15 April 2009
15 May 2009
31 May 2009
15 July 2009
15 August 2009
15 September 2009
20 September 2009
20 November 2009
20 December 2009
15 January 2010
15 March 2010
01 May ‘10-30 April ‘13
Table B5-3 - Procurement Supervision/Design Consultancies
Activity
Action/Agency
Target Date
General Procurement Notice (APA)
ADB/GOE/GOK
30 April 2009
Invitation for Expression of Interest
Closing for EOI
Evaluation of EOI, Short List & RFP
D
ADB
No-objectionSShort list
& RFP Docs
Issue of RFP Documents
Opening of Proposals
Evaluation of Proposals Report
No-Objection of the Bank
Negotiation and Award of Contract
Supervision Period (37+12 Months)
ADB/GOE/GOK
GOE/GOK
GOE/GOK
ADB
GOE/GOK
GOE/GOK
GOE/GOK
ADB
GOE/GOK
31 May 2009
15 July 2009
15 August 2009
15 Sept 2009
20 September 2009
10 November 2009
10 December 2009
30 December 2009
30 January 2010
01 April ’10-30 April
‘14
45
ANNEX B6
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Audit Arrangements
1.
Objective
In accordance with Bank policy, Borrowers are requested to commission external auditing
of Bank –funded projects and submit annual audit reports no later than six months after
the end of each fiscal year. The objective of the audit of the Project’s financial statements is
to enable the auditors to express a professional opinion on the financial position of the
Project and on the statement of receipts and expenditures covering the whole period of the
Project implementation activities. The audit should also enable the auditors to give an
opinion on the statement of the revolving fund bank account (special account if any) as well
as compliance with the provisions of the loan agreement and the Bank rules and procedures
in respect to project management.
2.
Scope
The audit shall be carried out in accordance with International Standards of Auditing (ISA)
or International Organisation of Supreme Audit Institutions (INTOSAI) audit standards and
will include such tests and controls, as the auditors consider necessary under the
circumstances. ERA and KENHA shall prepare detailed terms of reference (TOR) for the
audit to be agreed upon with the Bank during loan negotiations.
3.
Selection of External Auditors
The audit services will be subcontracted to firms of auditors to be procured through shortlists, subject to clearance by Auditor General of Ethiopia and Kenya National Audit Office,
prior to call for bids. The selection procedure will be based on establishing the comparability
of technical proposals and selection of the lowest financial offer. The external audits will be
financed from the proceeds of the loans.
4.
Audit Opinion
Besides a primary opinion on the financial statements, the audit report on the project
financial statements should include a separate paragraph each commenting on the items
described in the TOR, especially, compliance with the loan covenants, Bank’s rules and
policies; the disbursement and procurement guidelines; and the control environment in
which the project is being managed.
5.
Management Letter
The scope of the engagement as set out in the TOR should require the auditor to provide
a Management Letter with reference to the executing agency. This is a report on the
internal controls and operating procedures of the entity, covering all aspects included
during the normal course of the audit. Because an auditor is unlikely to cover all activities
of a client during an annual audit, the Management Letter may address only those specific
matters that came to the attention of the auditor during the review.
46
ANNEX B7
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Summary of Financial and Economic Analysis
Methodology
The economic viability of the project has been assessed within the broad framework of Cost
Benefit Analysis using the Highway Development Management Tool (HDM) - IV which is found
to be appropriate. The Nairobi – Thika Highway is divided into four links on the basis of
homogeneity of traffic with characteristics of the links varying from urban- high traffic to periurban and finally to rural. The project road condition data input into the HDM IV has been in
the “with and without” project scenarios using the characteristics of the different road sections.
HDM IV allows for modelling over the analysis period of each link, the interaction between
traffic volume, composition, road condition, geometry and characteristics and the vehicle
operating costs for the “with” and “without” project scenarios.
For the economic analysis, financial construction and maintenance costs have been converted
into economic costs by applying a conversion factor of 0.78. The measures of project worth
used are the EIRR, NPV, BCR and the FYRR. A discount rate of 12.0% which is the
opportunity cost of capital in Ethiopia and Kenya has been used for the economic evaluation.
The base year taken for economic evaluation is 2010, the year in which construction is
expected to commence with a construction period of 36 months and first year of opening the
facility to traffic put at 2013. In addition to the 3 years construction period, the analysis period
also take into account a service life of 20 years ending in 2033. All appraisal components have
been inputted into the model in USD and output values are also in USD. Investment costs have
been distributed over three years of construction period in line with the
projected
implementation schedules at 30, 40 and 30 percent of costs assumed to be incurred in the first,
second and third year respectively.
Appraisal Assumptions
Maintenance of the existing road has been fair and consists mainly of routine maintenance
undertaken yearly and involves day to day repairs and maintenance of road pavement,
structures cleaning of drainage system etc. Selection of the maintenance strategy, in the
“without project” case follows this historic maintenance pattern. The strategies incorporated into
the appraisal and fitted in the model are scheduled work items rather than responsive as
follows:
“Without project” do minimum: this is essentially the historic routine maintenance practice
comprising edge repairs, cleaning of culverts, crack resealing/patching or grading, maintenance
of road signs and road markings, drainage clearance, collection of litters etc; and periodic
maintenance of re-gravelling the gravel section in Kenya every 4 years and resealing with
SBST every 6 years for the paved sections in Ethiopia.
“With project” moderate paved standard: involves routing maintenance, patching 5 percent
of the surface area each year, and periodic maintenance of overlay/resealing every 6 to 7
years.
Residual Value
Residual values have been calculated for a road operating life of 20 years based on various
investment components of the project made up of general, earthworks, drainage structures,
ancillary & road works, bridges, and design and supervision services. This has been estimated
after 20 years of service life at 25% of original economic investment cost.
Costs
The costs taken into account are the Road Agency costs in the “with” and without project
situations which include both the cost of routine and periodic maintenance, the investment cost
of upgrading the project road to higher standard facility. The capital cost of the project taken
47
ANNEX B7
into account include the financial base cost for civil works plus the physical contingencies and
the consultancy services for supervision of civil works and project audit amounting to USD
441.97 million. These are converted to economic cost using the conversion factor of 0.78. The
financial contingencies are not taken into account, as they do not constitute consumption of
economic resources. The economic investment cost amounts to USD 344.74 million to be
disbursed over the period 2010 to 2013.
Benefits
The benefits include road user benefits in terms of Vehicle Operating Cost Savings, time
savings for passengers and cargo, road maintenance savings as a result of the new facility.
Accident cost savings are not quantified and valued due to incomplete documentation and
therefore not taken into account in the estimation of project benefits. Time savings would result
from the free flow of traffic under the new facility and has been estimated for both passengers
and cargo as difference in travel time under the ‘with and without’ project situations. The time
values for passengers in different categories of vehicles are estimated based on income and
employment, income distribution of Ethiopia and Kenya as applicable to the Project Influence
Area and purpose of trip. Work related travels are put at 80.2% while the remaining is nonwork related and is valued at 30.0% of work time value. Value of cargo time is estimated by
inventory method. Based on origin destination surveys and classified traffic counts, vehicle wise
weighted average value cargo is used and the time value is calculated using ongoing market
rate of interest. The forecast vehicle operating costs savings are derived from the road-planning
model HDM-IV.
Result of Cost – Benefit Analysis
The economic evaluation using the measures of investment worth based on most likely traffic
forecast scenario resulted in an Economic Internal Rate of Return of 21.7% which is higher than
the current opportunity cost of capital of 12.0% in Ethiopia and Kenya. Other measures of
project investment worth in the base case scenario indicated a FYRR of 11% and a NPV of
USD 91.54 million at 12.0% discount rate. The result of the analysis confirms the viability of the
intervention in the project.
Sensitivity Analysis
Sensitivity testing has been made on the result of the base case scenario with respect to all
measures of investment worth for the project road and the results indicated in the Table below
confirm the project viability. Switching value for capital works costs indicated that the costs
would have to go up by more than 81.7% before project viability is threatened and while the
result with respect to benefits indicated that benefits would drop by over 67.32% before the
project economic rate of return fall below the 12.0% which is the opportunity cost of capital in
|Kenya.
Table B7-1 - Cost Benefit Analysis Results and Sensitivity Tests
Change
(%)
EIRR
(%)
NPV
(USD million)
FYRR
(%)
-
21.7
91.54
11%
Capital Costs
+15.0
16.0
67.49
Benefits
-15.0
14.3
60.32
+15.0/15.0
12.5
52.73
Scenario
Base Case
Costs &Benefits
48
ANNEX B8
MOMBASA – NAIROBI – ADDIS ABABA ROAD CORRIDOR – PHASE II PROJECT
Environmental and Social analysis
B8.1
Environmental review, key findings and recommendations
B8.1.1 Kenya has various sector specific legal instruments that cover environmental and social
issues such as public health; soil erosion; protected areas; endangered species; water rights
and water quality; air quality, noise and vibration; occupational health and safety; cultural,
historical, scientific and archaeological sites; land use; resettlement; etc. The Environmental
Management and Co-ordination Act (EMCA) of 1999 provides a framework for integrating
environmental considerations into the country’s overall economic and social development,
improves the legal and administrative co-ordination of the diverse sectoral initiatives and
harmonizes the sector specific legislation touching on the environment in a manner designed to
ensure greater protection of the environment. Some pertinent regulations under the act cover
Environmental Impact Assessment and Audit, Waste Management, Fossil Fuels Emissions,
and Water Quality. As such there is no resettlement and compensation framework policy for
the roads sector in Kenya. So guidance is sought through existing legislation. In this context,
the Constitution of Kenya addresses expropriation of private land and Trust Land (the latter
making up most of the land bordering the project road corridor, apart from urban land). The
Land Acquisition Act provides for land to be acquired or granted access to for the purpose of a
project, while the Registered Land Act provides for absolute proprietorship over land (exclusive
rights), and such land can be acquired by the State under the Land Acquisition Act in the
project area. The Land Adjudication Act provides for ascertainment of interests prior to land
registrations under the Registered Land Act.
B8.1.2 Sustainable development and environmental rights are entrenched in the Constitution of
Ethiopia (1995), and are further supported by means of various policies and proclamations.
The Environmental Policy of Ethiopia (April 1997) aims to promote sustainable social and
economic development through sound management and use of natural, human-made and
cultural resources. The National Policy on Women ensures equal access of men and women to
the Country’s resources and specifically promotes participation by women decision making
processes. Other sectoral policies of relevance include those on Water Resources, Wildlife,
Population, Health, and HIV/AIDS. In addition, proclamations have been made on EIA;
Environmental Pollution Control; Research and Conservation of Cultural Heritage;
Development, Conservation and Utilisation of Wildlife; and Forest Development, Conservation
and Utilisation, Water Resources Management and Public Health. EPA has prepared
Environmental Impact Assessment Guidelines, while ERA has produced a manual on
Environmental Procedures. Legislation relevant to resettlement and compensation are the
Proclamation on Expropriation of Land for Public Purposes and Compensation (No. 455/2005)
which regulates land acquisition and compensation for the purpose of public projects, sets time
limits for acquisition, and provides the principles for compensation for properties on affected
land as well as for displacement compensation; and the Proclamation on Land Use and the
Right of Way (No.47/1975) which states that the Government shall pay fair compensation for
property found in the ROW. Guidelines for resettlement and compensation for the road sector
are contained in ERA’s Resettlement and Rehabilitation Policy Framework, which requires a
resettlement action plan to be prepared if more than 200 persons are affected by a project. The
principles of the Policy Framework correlate with the African Development Bank’s Involuntary
Resettlement Policy (2003).
B8.1.3 While legal frameworks for sustainable environmental and social management exist in
both countries, enforcement is weak due to a number of reasons, for example lack of
manpower and resources, lack of capacity and a failure to understand the implications of
environmental degradation. The responsibility for sustainable environmental management of
the project must therefore rest with the project proponents, in this case the Ethiopian Roads
Authority’s Environmental Monitoring and Safety Branch and the Kenyan Ministry of Roads’
49
ANNEX B8
Environmental and Social Unit, who need to ensure that environmental best practices are
employed both during and after construction, and so reliance on law enforcement is obviated.
B8.1.4 The road project will enhance the livelihoods of the people in the direct and wider
project area in a number of ways. Ageremariam is a major coffee producing area, while the rest
of the region is a key livestock-keeping zone and has potential for tourism. The project road will
provide improved access to markets for coffee and livestock. Ease of access to scenic or
fauna-rich localities will trigger tourism, which will provide some direct and knock-on
employment opportunities, and training skills, to the local people. Crucially the road will provide
connectivity to a region that is very remote, and this in itself will bring development. The
improved road will also enable emergency relief aid to reach people that may be affected by
drought, a cyclical - and previously somewhat predictable - phenomenon whose recurrence is
becoming more frequent and erratic as a result of climate change.
B8.1.5 Risks to health due to pollution have been addressed in the ESIAs for both project
roads. Sedimentation and water pollution resulting from excavation, spillage of hazardous
substances will be mitigated by carrying out cross-drainage works during the dry season, and
properly storing and handling hazardous substances. Water resource conflicts can be managed
by developing water supply sources specifically for the construction works and the campsite
requirements, and consulting with the local communities before doing so in order to ensure that
their water supplies are not threatened. Air, dust and noise pollution will be reduced by
restricting traffic speeds and regular watering of detours and other active construction sites
(where water is available), regular and effective maintenance of construction equipment and
vehicles, and locating contractor’s site establishments away from sensitive receptors like
settlements, water sources, schools, health centres and places of worship. Road workers will
be provided with appropriate protective personal clothing.
B8.1.6 Expansion of urban centres as a result of increased development will put a demand on
fuelwood, but will also allow charcoal to be delivered to markets some distance away. This has
serious implications on the natural vegetation of the project area, and could also affect the
microclimate along some sections of the road that were previously wooded. The regional and
district forest authorities will have to develop mechanisms to control this problem, and will have
to propose energy alternatives.
B8.1.7 Climate Change
The project area is generally characterized by very low rainfall (ranging between 150-350mm
per year in Kenya) hence would be susceptible to drought due to climate change. These areas
are classified as arid and semi-arid lands. For that matter, increases in temperatures would
exacerbate water shortages for both human and animal consumption. An extensive program
of gravity fed water distribution coordinated by the Oromia Pastoralist Area Development
Commission is underway in Ethiopia. Already identified are 22 underground water sources to
be distributed through an aggregate of 2000 km water pipe articulation system covering the
area. Similar initiatives are being implemented through the Ministry of Northern Kenya such as
the Arid Lands Resource Management Project and the Drought Management Initiative
supported by World Bank and European Commission, respectively. In addition, the project has
incorporated water supply provision in some areas along the project road. In areas, especially
around Marsabit, Moyale and Ageremariam, where rainfalls are high (above 1000mm), and
hence prone to flush floods, the project design has incorporated storm drains and drainage
systems away from homes and property, raised level of road embankment and intensified
erosion protection measures by grassing, sodding and mulching.
The road project will result in increased traffic volumes, which will lead to an increase in
greenhouse gas emissions, although the overall impact is likely to be minimal. While the project
may not have incorporated direct measures to curb emissions, both countries have, in place
legislation and guidelines for dealing with air pollution. For instance the Kenyan Environmental
Management and Coordination Act has provisions for controlling air pollution and guidelines are
50
ANNEX B8
being developed with support from UNEP; and EPA in Ethiopia has prepared guidelines
“Ambient Environment Standards for Ethiopia” with assistance from UNIDO. These offer an
opportunity to begin monitoring gas emissions and putting into place mitigation measures. The
project on its part has made provisions for financing an elaborate program of tree planting along
the perimeter of the road reserve to act as a carbon sink.
B8.2
Stakeholders
B8.2.1 For the Marsabit – Turbi section of the project road, meetings were held at Merille,
Laisamis, Logologo, Marsabit, Sololo, Turbi and Moyale, where district officers, counsellors,
chiefs, other local government representatives, local committees/CBOs (including women
groups), religious leaders, elders, and members of the communities (including women and
youth) participated. Informal discussions were also held with road users and transport operators
(truckers, public service vehicle operators, vehicle owners and bus inspectors). Consulted
stakeholders, particularly in Kenya, included the Kenya Wildlife Services both at national and
district levels. Issues regarding safety and prevention of animal kills were raised and particular
spots which are crossing corridors have been identified and measures taken to control speed
and warn vehicle operators of the situation. On the Ethiopian side, similar places were identified
but more so in relation to livestock crossing areas. For the preparation of the Resettlement
Plan, extensive consultations were held to brief the project affected persons on land acquisition
requirements and procedures.
B8.2.2 The stakeholders main concerns (Kenyan side) related to the resettlement process,
specifically the modalities for the payment of compensation, receiving fair compensation,
entitlements not being recognized (either because legal titles are not available for all land, or
because transfers were incomplete), discrepancies in valuation, lack of information on the land
acquisition process, and damage to existing infrastructure. In addition, stakeholders were
concerned about the impacts on their livelihoods (for example whether they would be denied
access to their grazing lands), whether there would be opportunities for employment, and
interaction between immigrant workers and the local communities. In the ESIA, ESMP and the
RP, recommendations have been made for inclusion / consideration of these concerns into the
design, construction, and operation of the project, and the implementation of the resettlement
plans.
B8.2.3 Along the Moyale - Yabelo section of the project road, formal consultations were
conducted at the meetings held at four key locations: Moyale town, Mega and Dharitu villages
and Dubuluk, Yabelo and Ageremariam Representatives of different groups such as woreda
(district) and kebele administrations, municipal representatives, woreda sector offices, and the
local communities including elders, women and youth participated in these consultations. NGOs
and CBOs operating in the area were also consulted.
B8.2.4 The consultations in Ethiopia, revealed that as livestock is the economic mainstay of the
project area, the upgrading of the road will improve much needed access both domestic and
export markets. In addition the road will assist in the development of the agriculture sector and
the local economy, and thus it will serve to advance the socio-economic status of the local
population. It was noted that the road is badly deteriorated and required major maintenance,
and that the existing carriageway width was too narrow. Livestock kills occurred occasionally,
particularly where they congregate at watering points. Other concerns related to construction
activities causing deforestation and loss of rangelands, disturbance to and killing of wildlife,
accident risks to pedestrians and livestock, hindrance to livestock movement, and dust
pollution. The stakeholders recommended that the upgraded road follow the existing alignment
so that all the towns and villages are not bypassed, and destruction to existing buildings and
business activities is minimised. The design has taken these considerations into account:
realignments have only been made in order to conform to DS3 standards, and provisions have
been made to enhance road safety through introducing speed limits, having warning signs and
51
ANNEX B8
pedestrian crossings and implementing road safety campaigns. The EMP in the ESIA
addresses issues raised regarding deforestation, impacts on wildlife and dust pollution.
B8.2.5 The project road(s) being national cross-border roads, consultations to determine their
need and priority involved national and central Government’s process. The Vision 2030 has
prioritised infrastructure as a catalyst to development and the subsequent development of the
MTP has isolated transport infrastructure as a priority sub-sector for development. Similar
process has taken place in Ethiopia where transport infrastructure is one of the sub-pillars of
PASDEP. In both instances, regional and local representatives have influenced the
improvement of these roads as a critical investment to stimulate growth in the Regions. The
recently created Ministry of Northern Kenya reiterated the importance of this road as a
necessary development to link North-Eastern Region to the rest of Kenya and also to harness
the potential for doing trade with Ethiopia. On the part of Ethiopia, opening up a reliable
alternative route to the sea is very important for the country, but more so for southern Ethiopia
which is rich in livestock, coffee and tourism which stands to benefit from synergies with the
Kenyan tourism sector.
B8.3
Gender analysis
B8.3.1 The demographic data shows a balance in sexual balance in Masarbit district (Kenya).
The 2008 population projection shows a population of 151,297 people. While the population
level as of 2005, shows 311,659 in the three districts traversed by the project road in Ethiopia
(Moyale, Dire and Yabelo). The sex ratio in Ethiopia is 80.5 in favor of women where women
numbered 176,311 as opposed to 130,348 in the three districts of. The number of female
headed households is equally high (43%) making it very hard for women to fend and provide
for household requirements single handedly. As the livestock culture dwindles further due to
persistent droughts, most men have resorted into moving away in search of employment
leaving families behind.
B8.3.2 Gender Inequality: The entire region faces high gender inequality in development as
women and youth participation in development is very low. In most cases, there are very few
women and youth involved in leadership and decision making at all levels, where traditional
and cultural practices are dominant. Despite efforts made by the government and
development agencies to bridge the gap in the region, gender disparities still exist and this has
increased poverty especially in rural areas where the majority of people live. The most
affected are women as they are discriminated against and have less economic opportunities
to exploit.
B8.3.3 Limited Economic Opportunities: Women and youth have limited economic
opportunities and less autonomy than men. Subsequently, their access to education and
training together with support services is limited. As a result, women are not able to contribute
actively in development, causing them to rely heavily on their male counterparts who dominate
all the leadership positions.
B8.3.4 Control Over Property: Women have less control over property and other resources.
Men dominate resources and women are left with no share although they contribute
significantly in resource acquisition. Women have very little participation in the way decisions
are made, customary law, cultural attitudes, and rigidities to gender roles overburden women.
Women perform many domestic chores including cooking, fetching water and firewood, child
caring and attending to the husband, together with caring for livestock and other property.
Women are also expected to construct the dwelling houses (tukuls). Although the women take
an active role in income earning mainly from sale of milk, they are however, denied a chance
to use this for any gainful economic use to improve their standards of living.
B8.3.5 Gender Discrimination: Gender discrimination also affects economic growth by
increasing poverty. In Marsabit District, boys are preferred to girls. This leads to discrimination
in education whereby a boy child is taken to school leaving a girl child to do domestic chores.
52
ANNEX B8
Even if a girl child is taken to school, she is expected to drop out and get married at a young
age without being given an opportunity to decide herself, as evidenced by the low total
enrolment rate in secondary school for girls. This leads to limited opportunities for the girl-child
to undertake meaningful employment. This discrimination against women has implications on
education, with 80% of the population being illiterate.
B8.3.6 Participation in Decision making: Over the entire project area, women have very little
participation in customary decision-making and are not involved in rangeland management
decisions. Women and youth have limited economic opportunities and less autonomy than
men. Subsequently, their access to education and training together with support services is
limited. As a result, women are not able to contribute actively in development, causing them to
rely heavily on their male counterparts who dominate all the leadership positions. Although
women are increasingly involved in trade and other income generating activities, their incomes
are used directly on household needs, and not necessarily on their wellbeing.
B8.3.7 Employment Opportunities for Women: While gender-related criteria were not
specifically considered in defining target beneficiaries of this project, it is expected that the
benefits derived from the project transcend gender. Consultations carried out in the project area
have shown that the project has potential to take into consideration all aspects that will enhance
the participation of both women and men during construction and as beneficiaries of the road
during operation. While there are no specific guidelines in the two countries to enhance the
recruitment of women at construction site, experience shows that women can and are willing to
work on construction sites as was the case with the optic fibre laying project implemented along
the project road on both Kenya and Ethiopia sides. Women may participate in road building as
direct employees (in digging, sign control (flagging), sweeping, etc.).
B8.3.8 Secondary Opportunities for Income Generation: Secondary opportunities as service
providers will result from the workforce creating a demand for services, such as catering,
cleaning or the supply of provisions (especially fuelwood). In the settlements, these services
are usually provided by women. The road will facilitate easier access to health facilities, and
this has a direct bearing on women and children who need these services most. Although the
project road may facilitate access to education facilities, this will only make a difference as
secondary school level. The traditions and culture of the area would not easily permit girls to
attend schools residing away from home. Improved transport services and existence of
secondary schools in the vicinity (like the situation in Ethiopia) will enhance chances for girls to
attend secondary education. Feedback received from the NGOs and CBOs operating in the
area indicates that there would, however, be need to stimulate demand for education, both
primary and nsecondary, among the pastoralist communities through CBOs and NGOs who will
be able to reach the communities now that the road will have been improved.
B8.3.9 Spread of HIV/AIDS/STI: The construction workers are likely to be predominantly male,
and may not all be sourced from the local communities, particularly as the population is mainly
nomadic. Interaction between the workforce and local women and girls may lead to family
conflicts and unwanted pregnancies and prostitution. In addition, this propagates the spread of
HIV/AIDS/STI. The ESMPs for both road sections have proposed the implementation of
HIV/AIDS awareness and prevention campaigns. The ESMPs have proposed specific genderrelated indicators to be monitored during construction: i) the number of women employed by the
contractors, ii) complaints received on gender bias, iii) reported cases of rape involving the
contractor’s employees.
B8.3.10 Water Provision: The project has incorporated specific activities that will benefit
communities but more so women. In Kenya, the project will make provision for drilling
boreholes and installing water pumps. Given that the project area is arid and semi-arid, water is
very scarce and is fetched from as long distances as 40 km. While most of it is drawn on
donkey backs, women especially girls have to drive them. This water will be useful for both
human and animal consumption. Time saved from this will be put into other use including
income generating activities.
53
ANNEX B8
B8.3.11 Self-help Groups: Self-Help women’s groups/projects have been formed across the
project area. These groups have the objective of providing services to the community, e.g.
water projects. Self-Help projects also have the objective of uplifting the living standards of the
community. Other reasons for establishing self-help groups/projects include alleviation of
poverty, improving nutrition, and increasing employment opportunities. The overall aim is to
assist a large number of women’s groups. The activities pursued in the women’s group
projects are focused on supporting a gender based revolving credit scheme, health education,
and advocacy of women rights.
B8.4
Social analysis
B8.4.1 Regional Integration and Facilitation: On a regional level, the rehabilitation of the entire
road from Merille River – Marsabit – Moyale – Ageremariam will play a key role in facilitating
development of northern Kenya and southern Ethiopia as well as providing a crucial link
between the two countries, and access to the port of Mombasa by Ethiopians. This is expected
to enhance regional trade, and marketing of coffee from the Ageremariam area and livestock
from the rest of the project region will become more efficient and cheaper. The potential for
tourism in the area may also be unleashed. Current oil exploration activities in Northern Kenya
will benefit from easier access to this remote region. A large part of the project area is prone to
drought and famine, and the provision of relief food and other forms of humanitarian aid is
therefore frequently necessary. The improved road is expected to enable rapid emergency
response.
B8.4.2 Employment and Income Opportunities: At a more local level, during construction it is
estimated that approximately 2000 skilled and un-skilled jobs will be created in total (1500 in
Ethiopia and 500 in Kenya). Although women are not usually associated with employment of
construction sites, evidence obtained in both Kenya and Ethiopia shows that women will equally
take advantage of the job opportunities in areas which they can participate as indicated above.
Indirectly, this will lead to jobs being created in service sectors (accommodation, food, provision
of groceries) as a result of the demand for these services by the workforce. Once the road is
complete, access to social and economic amenities such as health facilities, schools and
markets will be enhanced. Vehicle operating costs will be reduced, which implies that there will
be a greater number of transport providers; thus travel costs may reduce due to competition.
Markets will be reached more quickly and cheaply, which will encourage productivity. This in
turn should translate into increased earnings. Better access to health facilities also reflects on
productivity levels. Thus the upgraded project road is expected to enhance the standard of
living and socio-economic welfare of the people living within its zone of influence, as well as
other road users from further afar.
B8.4.3 Road Side Amenities: Furthermore, the project has incorporated in its design provision
of amenities and facilities for income generation. In Kenya, the project will construct road side
amenities which will include space for laying and selling merchandise by road side which is a
domain of women. In these amenities will be cold rooms for milk and animal preservation. As
has been observed, milk, goat and sheep meat are the sources of income for daily domestic
needs and are a concern of women. The project will therefore consider construction of small
slaughter houses (for goats and sheep) and milk houses with simple processors. These are the
two main activities that benefit women most and would potentially boost their income by
expanding the market and adding value. Provision of these facilities will be in collaboration with
the local district sector representatives and the local offices of the Ministry of Northern Kenya. On
the Ethiopian side, there already exist women associations which would manage and operate the
facilities. Approximately 3 locations have the economic potential for these ventures. According to
the Oromia Pastoralist Area Development Commission, sample slaughter house designed have
been obtained from Kenya and would cost approximately ETB140,000 each including equipment.
Similarly, the a milk house and processors would cost ETB138,000 each.
54
ANNEX B8
B8.4.4 Environmental Protection: While the project has a comprehensive list of actions and
measures to be implemented in environmental mitigation and protection, the project has made a
provision for planting of over 8500 tree seedlings along the project area on the Ethiopian side,
and a correspondingly large number of trees on the Kenyan side. This will serve as a carbon sink
for gas emissions from motor vehicles and also serve as a measure for erosion control given that
the area experiences excess soil erosion through overgrazing.
B8.4.5 Security Enhancement: Local security is a major problem in the project area. The area
is endemic to conflicts between rival pastoralist groups over resources mainly grazing land and
water; leading into insecurity and banditry. The project has built into its cost, a provision for
maintaining security for construction workers, and it is planned that the design of the roadside
amenities will include security enhancing facilities and space. Initiatives are already in place at
both district and community levels (in Kenya) to establish security through sensitization and
orientation campaigns for peace through the Peace Committees. Once the road is operational,
vehicles travelling at high speed would be less susceptible to bandit attacks, and if any do
occur, it will be easier for security officers to be reached and to travel to crime scenes.
B8.4.6 Dislocation and Property Damage: The most significant negative impact of the project,
which was a major concern raised during stakeholder consultations, will be the need land take,
destruction of buildings, loss of trees and crops, and loss of livelihoods. Along the Marsabit –
Turbi section, property and assets belonging to 89 households will be affected, as well as crops
and trees and fences. Along the Moyale – Yabelo section of the project road, an estimated
524 households (2620 people), 6 hectares of farmland, and some 1800 trees (not privately
owned) will be affected. Full Resettlement Action Plans have been prepared for both sections
of the project road, and it is imperative that these are properly implemented.
B8.4.7 HIV/AIDS awareness and prevention: Although the project area, especially on Kenyan
side, the HIV/AIDS epidemic is still at its infancy, with prevalence rates of 1.3% among men and
5.2% among women in Marsabit, concerns are justifiably high that with the construction works the
situation may be made worse. The situation on the Ethiopian side is less bleak with spot checks
conducted in Moyale showing 6% rate. The project has set aside a provisional sum that will cater
for HIV/AIDS awareness and prevention campaigns for construction workers and communities
during implementation of the project. In collaboration with the National Aids Council (NAC, Kenya)
representatives at district and constituency levels and NGOs and CBOs active in the area; the
contractor will sub-contract services of experts to implement the HIV/AIDS programs. During
operation, the Ministry of Roads will be responsible for ensuring that programs and activities will
continue. NAC has the responsibility of coordinating and lobbying for resources to be made
available through various service providers. The Ministry of Roads, through the AIDS Focal Point,
shall ensure adequate budget for a continued program of HIV/AIDS prevention and awareness.
In Ethiopia, the EMSB has a full fledge unit dealing with HIV/AIDS/STI issue for workers at ERA,
contractor workers and communities. In each case, the contractors will be obliged to sub-contract
the services for delivering the HIV/AIDS/STI component. Some elements of the TORs for such
services have been provided in Annex C1 below. Provisional sums of USD312,000 and
USD50,000 have been provided for Kenya and Ethiopia, respectively for HIV/AIDS mitigation
measures.
B8.4.8 Road Safety: Road accidents are bound to occur during construction and more so during
operation. Statistics in Kenya show that between 2000 and 2004, there was an average of 2732
fatalities per year. The situation in Ethiopia is equally bad with reported 2160 fatalities in 2007/08
corresponding to a fatality rate of 80/10,000. In addition to sound engineering designs that meet
road safety standards, the project has made a provision for road safety programs to be
implemented during construction and operation. The Ministry of Roads (in Kenya), in
collaboration with the National Road Safety Council, will ensure that information, education and
communication (IEC) materials are produced and awareness and educational activities are
implemented for the communities, road users, motorists and school children along the zone of
influence of the road. In addition, especially during operation, road safety campaigns will have to
consider the interaction of motor vehicles, non-motorized traffic (NMT), domestic and wild
55
ANNEX B8
animals. In this respect, the design has put in place measures to allow NMT and to calm speed in
built up areas, near schools and known animal (elephant) crossing corridors of Masarbit National
Park.
B8.4.9 The road sections on the Ethiopian side pass through areas of high animal density (cattle,
goats, sheep and camels). In addition, several of the small towns along the road have high risk of
pedestrian accidents. The mission is therefore recommending that, in has also taken into
consideration additional measures such as clear road signs, rumble trips to be constructed in
areas of animal crossing, and humps in towns and villages with high human activity. With regard
to access, the design has included foot steps in areas which have steep cuts. Such cases are
obvious at Mega. ERA working with the National Road Safety Coordinating Office will conduct
intensive and extensive safety campaigns in the project area.
B8.4.10 Conflict Over Resources: In as much as the project will provide water points, its
distribution and ownership will have to be carefully worked out in conjunction with the local
communities and local authorities. As mentioned above, scarcity of water and grazing land
have been sources of ethnic conflicts on both sides of the project. As development begins to
take off in the project area, it is likely that the urban centres will expand. Higher immigration
rates to urban centres along the project road will lead to greater demand on infrastructure
services on the same resources. This may exacerbate the problem. To ensure that both the
contractor and communities are served with adequate water, the project will make a provision for
supply of water for human and animal consumption. Various options ranging from borehole
drilling, construction of dry river basin dams (lagahs) and earth pans will be explored in Kenya.
The contractor will work in collaboration with the Northern Water Services Board, Water
Resources Management Authority alongside the Ministry of Water to determine the most
appropriate technology and site selection for the facilities. On the Ethiopian side, the Oromia
Pastoralist Area Development Commission has embarked on a large gravity fed water supply
project. Over 22 sites have been identified with adequate and good quality water to be sourced.
The water will be pumped to high ground and distributed over the whole region covering and
aggregate of 2000 km of piping. This is part of the modernization of the pastoralist areas.
B8.4.11 Monitoring of Social Impacts: The social impacts of the project along the Marsabit –
Turbi section will be monitored by the Ministry of Road’s ESU, with support from the District
Roads Engineers, and the District Environmental Officers. Along the Moyale - Yabelo section of
the road, monitoring will be by the ERA’s EMSB, with support from the Regional and woreda
administrations. In both cases, NGOs and CBOs operating in the area will be monitoring
specific aspects within their respective competencies.
56
ANNEX B9
MOMBASA-NAIROBI-ADDIS ABABA ROAD CORRIDOR PHASE II PROJECT
Project Preparation and Appraisal
Project Processing Milestones
Activity
Date
Identification
Preparation (Kenya)
Preparation (Ethiopia)
PCN Review by OpsCom
Appraisal (Kenya)
Appraisal (Ethiopia)
Presentation to Senior Management (OpsCom)
Negotiations
Board Approval
Planned Date of Effectiveness
Planned Date of Mid-term Review
Planned Closing date
October 2003
1 Dec 2008
8 Dec 2008
11 March 2009
15 March 2009
25 March 2009
03 June 2009
5-6 June 2009
01 July 2009
Dec 2009
June 2012
Dec 2014
Bank Staff or Consultants who worked on the Project
Name
Title
Unit
Amadou Oumarou
Chief Transport Engineer/Team Leader
OINF.2
Noel Kulemeka
Principal Socio-Economist
OINF.2
Dereje Kidane
Infrastructure Specialist
ETFO
Tom Opiyo
Infrastructure Specialist
KEFO
Arundhati Willetts
Consultant - Environmentalist
OINF.2
Lynn Harmon
Consultant – Transport Facilitation
OINF.2
Key Institutions Consulted during Project Preparation and Appraisal
Ministry of Finance & Economic Development
Kenya
Ministry of Finance
Ethiopian Roads Authority
Ministry of Roads
Ministry of Women’s Affairs
Ministry of Public Works
Environmental Protection Agency (EPA)
Office of Deputy PM & Ministry of Trade
Oromia Pastoralist Development Commission
Ministry of Northern Kenya
National Road Safety Coordination Office
Ministry of Information and Communication
Action For Development (AFD)
Ministry of State for Immigration
Moyale District Representatives
Ministry for Provincial Admin & Internal Security
Ethiopia
Mega Town - Dire District Representatives
Ministry of Transports & Communications
Ethiopian Chamber of Commerce
Ministry of Water and Irrigation
Ethiopian Revenue and Customs Authority
Ministry of Gender & Social Development
Ethiopian Road Transport Authority
National Environment Management Agency
Ministry of Trade & Industry
National Aids Council
Ministry of Transport and Communication
Kenya Wildlife Services
Akakas Logistics Private Limited Company
Masarbit District Representatives
Department of External Trade
Port Community Based System Team
Kenya Shippers Counci
Kenya International Forwarding Agents
57
ANNEX C1
MOMBASA-NAIROBI-ADDIS ABABA ROAD CORRIDOR PHASE II PROJECT
Application of the Bank Road Unit Cost Study Recommendations
OBJECTIVES/RECOMMENDATIONS
ACTIONS
Objective 1: Ensuring accuracy of project cost estimates
Ascertain that project design or design review is carried out by
renowned consulting firms recruited under appropriate selection
process as per Bank guidelines and with TORs requesting
specifically a supply chain analysis of contractors’ market as
well as of key inputs availability and projected prices in
determining the engineer’s cost estimates (Countries and Bank)
The road studies were funded through an AfDB
grant. The design of the road was prepared by
reputable international firms. The firms were selected
following the Bank’s procurement rules. The
estimated costs were reviewed by the Bank to
ensure that they reflected the current economic
conditions and the anticipated rise in the costs of
inputs in the region. The engineer’s cost estimates
were determined using first principle methodology
and were further checked and validated against the
rates of successful recent bids on similar projects.
Require sufficient level of geotechnical investigation at design
stage (Bank and countries)
The geotechnical studies were completed in
accordance with generally accepted best practices.
These were reviewed by Bank staff engineers and
the executing agencies and found acceptable.
Conduct systematic updates of cost estimates in case of project
delays, thorough cost review at appraisal and full design
reviews if more than 2 years have elapsed since initial design
(Bank and countries)
The Project Engineering Design was completed in
March 2009 and is therefore up to date.
Encourage, if warranted, the standardization of project design
requirements at national level or at regional level in the case of
multinational corridors (Bank and other donors)
The selected road design was validated by both
countries and complies with the design standards of
Kenya and Ethiopia.
Objective 2: Further enhancing competition in tenders
Systematically review on a country basis the merits of promoting
participation of local contractors, and define associated
measures in the project design by the appraisal team - e.g.
tender packaging, national preference, prequalification criteria,
etc. (Bank and countries)
Bidding for the major civil works is through
international
competitive
bidding
and
postqualification of contractors. Given the extremely
difficult conditions and remoteness of the project site,
participation of local contractors will be mainly
through sub-contracting of items such as road
stations, drainage structures, and general concrete
works.
Ensure appropriate tender advertising and execution, as well as
thorough review of implementing agencies’ procurement
procedures and capacity (Bank)
Bank Staff reviewed Procurement capacity of both
agencies
during
appraisal.
Advertising
of
procurement notices will be through UNDB.
Technical Assistance under the Project will reinforce
procurement capacity of KeNHA. Bank Staff will
conduct
spot
assessment
during
project
implementation.
Monitor procurement for competitiveness, and intervene when
tenders veer towards limited competition (Bank and countries).
Procurement of Road Works will be through
International Competitive Bidding (ICB) procedures
with post-qualification to ensure large participation.
Objective 3: Strengthening knowledge management on road cost and construction industry
Support development of updated national databases on
contractors active in the road and construction markets, using
information from project implementation and PCRs (countries,
Bank and donors)
58
Databases of contractors are already operational in
both Ethiopia and Kenya. The TA under the project
will assist the Road Agencies in Kenya in improving
the database.
ANNEX C1
OBJECTIVES/RECOMMENDATIONS
ACTIONS
Monitor changes of international and local prices of key inputs,
as early warning signal of contract price increases (countries)
Monitoring to be done by the Bank and the Executing
Agencies in Kenya and Ethiopia
Systematically apply FIDIC conditions for price adjustment
formula in contracts (countries and Bank)
Standard Bidding Document with Price Adjustment
Formula per FIDIC will be applied under the Project
Organize
internal
and
external
workshops
on
findings/recommendations of the study and the proposed action
plan (Bank)
Will be followed-up by the Bank
Objective 4: Minimizing project implementation delays
Assess in depth the capacity of implementing agencies and
include adequate capacity strengthening in project components
as needed (Bank and countries)
Ensure effective project supervision and compliance with
realistic procurement timetables (Bank)
Bank Staff assessed the capacities of the Executing
Agencies during appraisal. A technical assistance to
strengthen the capacity of KeNHA was deemed
necessary and included in the project.
The Bank will conduct regular and continuous
supervision of the project. Bank supervision will be
enhanced and more effective thanks to the field
offices in Ethiopia and Kenya.
Continue, as far as possible, minimizing non-essential
conditions precedent to loan effectiveness or disbursement, e.g.
by excluding conditions linked to sector policy reform that
should be advanced through development policy or sector
reform loans (Bank)
The loan conditions precedent to first disbursement
were reduced to the minimum to uphold Bank policy
for compensation of project affected persons. The
sector or policy reforms to support the project
development objectives were included as dated
covenants.
Consider systematically using advanced procurement actions
(Bank and countries)
Advanced Contracting was requested by the two
countries and was approved by the Bank.
Maintain continuity in project supervision and implementation
staff (Bank and countries)
The countries will undertake under the loan
agreement to minimized turnover of project
coordinators. In the Infrastructure Department,
average tenure of task managers is more than 5
years.
Assess the possible use of alternative procurement methods,
such as the design-build-maintenance approach, and the way
forward towards improvement/harmonization of associated
procurement guidelines (Bank and other donors)
The Bank Procurement Department is in the process
of developing the necessary guidelines for alternative
procurement methods.
Continue supporting road sector institutional reform and
capacity building (Bank and countries)
The opening of Bank field offices in Kenya and
Ethiopia has strengthened sector policy dialogues
with the two countries. The technical Assistance
under the current project is in support of the GOK
institutional reforms in the road sector.
Objective 5: Preparing better for possible price increases
Agree with Borrowers on a mitigation plan in case of price
increases higher than the projects’ contingencies, including
options such as increased counterpart funds and other
measures. (Countries and Bank)
Will be closely monitored
Justify price and physical contingencies in project cost
estimates to reflect adequately the projects’ and countries’
specifics, the perceived soundness of design cost estimates,
and the expected future variations in prices of key inputs (Bank)
The contingencies applied followed the best
practices and took into account the specific design
and input supply risks of the projects as well as the
specificities of Kenya and Ethiopia.
59