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Document of The World Bank

Report No: ICR2763

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-40640 IDA-44880 IDA-49040)

ON A

CREDIT

IN THE AMOUNT OF SDR9.9 MILLION, SDR 3.1 MILLION, SDR 6.4 MILLION

(US$15 MILLION, US$5 MILLION, US$10 MILLION EQUIVALENT)

TO THE

REPUBLIC OF CABO VERDE

FOR A

ROAD SECTOR SUPPORT PROJECT

May 28, 2014

Africa Transport Country Department AFCF1 Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 30, 2013)

Currency Unit = CVE 83.579 CVE = US$1 US$1.53057 = SDR 1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AF Additional Financing ARAP Abbreviated Resettlement Plans BADEA Arab Bank for Economic Development BOQ Bill of Quantity CAS Country Assistance Strategy CCE Conselho Consultivo de Estradas – Road Consultative Council CVE Cabo Verde Escudos CV-FMR Fundo de Manutenção Rodoviária – Road Maintenance Fund DFID Department for International Development (UK) DGISB General Directorate of Infrastructure and Basic Sanitation DGTR General Directorate of Road Transport Services ECV Escudos de Cabo Verde – Currency of Cabo Verde EIS Environment Impact Study EMP Environmental Management Plan ERR Economic Rate of Return EU European Union FMR Financial Monitoring Report FMR Fundo de Manutenção Rodoviária – Road Maintenance Fund GEP Directorate of Planning GMANS Gestão e Manutenção por Nivel de Serviço – Performance-Based Maintenance Contracts GPOBA Global Partnership for Output-Based Aid GPRSP Growth and Poverty Reduction Strategy Paper GoCV Government of Cabo Verde HDM4 Highway Design Standards Model IE Instituto de Estradas – Road Agency IDA International Development Association IGOPP General Inspectorate of Public and Private Construction Works IRR Internal Rate of Return ITP Infrastructure and Transport Project LEC Civil Engineering Laboratory M&E Monitoring and Evaluation MCC Millennium Challenge Corporation (USA) MIT Ministry of Infrastructure and Transport MTR Mid Term Review MIEM Ministério de Infraestrutura e Economia Maritima – Ministry Maritime Economy and

Infrastructure NPV Net Present Value Performance-Based Maintenance Contracts PBC Performance-Base Maintenance Contracts PCO Project Coordination Office PDO Project Development Objectives PIU Project Implementation Unit RA Road Agency (also referred to as Instituto de Estradas) RED Roads Economic Decision Model RMF Road Maintenance Fund RSSP Road Sector Support Project SIL Sector Lending Instrument

SSATP Sub-Saharan Africa Transport Policy Program TSRP Transport Sector Reform Project TSS Transport Sector Strategy VOC Vehicle Operating Costs VPD Vehicles Per Day

Vice President: Makhtar Diop Country Manager/Director: Vera Songwe

Sector Director: Jamal Saghir Sector Manager: Supee Teravaninthorn

Task Team Leader: ICR Team Leader:

Pierre Graftieaux Jose Domingos Diogo Lopes Chembeze

REPUBLIC OF CABO VERDE Road Sector Support Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ................................................... 1

2. Key Factors Affecting Implementation and Outcomes .................................................. 5

3. Assessment of Outcomes .............................................................................................. 11

4. Assessment of Risk to Development Outcome ............................................................. 18

5. Assessment of Bank and Borrower Performance ......................................................... 19

6. Lessons Learned............................................................................................................ 22

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 24

Annex 1. Project Costs and Financing .............................................................................. 25

Annex 2. Outputs by Component...................................................................................... 26

Annex 3. Economic and Financial Analysis ..................................................................... 29

Annex 4. Bank Lending and Implementation Support/Supervision Processes ................. 32

Annex 5. Beneficiary Survey Results ............................................................................... 34

Annex 6. Stakeholder Workshop Report and Results ....................................................... 35

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 36

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .......................... 39

Annex 9. List of Supporting Documents .......................................................................... 40

MAP- São Vicente ............................................................................................................ 41

MAP- São Nicolau ............................................................................................................ 42

MAP- São Tiago ............................................................................................................... 43

MAP- Maio ....................................................................................................................... 44

DATA SHEET

A. Basic Information

Country: Cabo Verde Project Name: CV Road Sector Support Project

Project ID: P087004 L/C/TF Number(s): IDA-40640,IDA-44880,IDA-49040

ICR Date: 05/28/2014 ICR Type: Core ICR

Lending Instrument: SIL Borrower: REPUBLIC OF CAPE VERDE

Original Total Commitment:

XDR 9.90M Disbursed Amount: XDR 19.08M

Revised Amount: XDR 19.08M Environmental Category: B Implementing Agencies: Ministry of Infrastructure, Transport and Telecommunication Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 12/18/2003 Effectiveness: 08/09/2005 08/09/2005

Appraisal: 02/07/2005 Restructuring(s): 06/26/2008 04/05/2011

Approval: 05/19/2005 Mid-term Review: 02/18/2008 02/18/2008 Closing: 08/31/2010 06/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Unsatisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory

Overall Bank Performance: Moderately Satisfactory Overall Borrower

Performance: Satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

Satisfactory

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Central government administration 33 33 Rural and Inter-Urban Roads and Highways 67 67

Theme Code (as % of total Bank financing) Administrative and civil service reform 33 33 Infrastructure services for private sector development 33 33 Rural services and infrastructure 17 17 Trade facilitation and market access 17 17 E. Bank Staff

Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Vera Songwe Madani M. Tall Sector Manager: Supee Teravaninthorn C. Sanjivi Rajasingham Project Team Leader: Pierre Graftieaux Gylfi Palsson

ICR Team Leader: Jose Domingos Diogo Lopes Chembeze

ICR Primary Author: Jose Domingos Diogo Lopes Chembeze

Papa Mamadou Fall F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The proposed Credit will enhance the Borrower's road sector Management. This will be achieved through: (i) institutional reform of the road sector and improved functioning of related civil works markets; and (ii) better access to social and economic opportunities due to improved mobility for affected populations.

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Revised Project Development Objectives (as approved by original approving authority) The PDO was reformulated to the following: "to increase the mobility of the population in targeted areas and improve the planning and financing of the road sector". (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Roads in good and fair condition as a share of total classified roads (%) Value quantitative or Qualitative)

58 50 50

Date achieved 2000 06/30/2013 06/30/2013

Comments (incl. % achievement)

100% achieved. The 58% Baseline Value was an overly optimistic estimate from the year 2000 when a proper road condition inventory had not yet been undertaken. The Indicator was then assessed at 41% in 2010. This core indicator is somewhat redundant.

Indicator 2 : Economically justified roads: Reduction in vehicle operating costs, as reflected in ex-post project economic analysis.

Value quantitative or Qualitative)

Ex ante IRR > 12% as appraised and per PAD

Ex post IRR > 12% Ex post IRR< 12%

Date achieved 04/22/2005 06/30/2013 06/30/2013


The ex-post IRR for Ribeira Brava – Tarrafal and Praia – Cidade Velha are lower than the ex-ante IRR and below 12% (respectively 5 a 11 percent) Vehicle Operating Cost was not monitored, nonetheless, there was on average a decrease in transport costs of approximately 20 percent. .

Indicator 3 : Socially justified roads: Mobility ratio: an increase in the percentage of adult population in affected communities who made at least 5 trips during the previous month.


38.7 50 86

Date achieved 04/22/2005 12/30/2011 12/30/2011 Comments (incl. % achievement)

This indicator exceeds the target. Data collected in mid-2012 and included in the report "Análise dos impactes económicos e socias das estradas reabilitadas ou melhoradas através do RSSP", dated September 2012, final version, page 16.

Indicator 4 : Socially justified roads: Travel time ratio: a decrease in the percentage of the population in affected communities that take more than 30 minutes to reach the nearest market.


44.8 40 21


This indicator exceeds the target. Data collected in mid-2012 and included in the report "Análise dos impactes económicos e socias das estradas reabilitadas ou melhoradas através do RSSP", dated September 2012, final version, page 17.

Indicator 5 : Socially justified roads: Comparative travel cost ratio: a reduction in the percentage differential between the composite cost/km/kg on the Project's

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socially and economically justified roads. Value quantitative or Qualitative)

57 28 Dropped

Date achieved 04/22/2005 12/30/2011 Comments (incl. % achievement)

Dropped because it was difficult both to measure. Nonetheless, transport costs, which reflects the same notion as this indicator, dropped significantly (up to 63 percent) in the project affected area, objective has been reached.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Road Maintenance Fund (RMF). A Second Generation RMF is created. The RMF establishes and manages annual road maintenance budgets.

Value (quantitative or Qualitative)

No RMF in place RMF created and functioning

RMF budget of CVE 350 million (US$ 4.2 million equivalent)

RMF budget of CVE 450 million (US$ 5.4 million equivalent)

Date achieved 04/22/2005 08/31/2010 04/04/2011 06/30/2013


Over achieved. More specifically, decree 33/2005 of July 25, created the RMF. The Decree 16/2008 of July 2, establish the "Road Maintenance Levy". The RMF has been created and is functioning well with about 550 million CVE, US$ 6.6 million equivalent.

Indicator 2 : Road Agency: (a) completes National Road Plan; (b) submits to the RMF annual road network maintenance plans; (c) implements annual road network maintenance plans.


Road Agency not functioning

Road Agency not functioning Done since 2012


Successfully achieved. (a) National Road plan completed; (b) and (c) done annually in 100%.

Indicator 3 : Civil Engineering Laboratory (LEC) increases its professional staffing level by at least 2; and achieves financial self-sufficiency of at least 50% for its operational costs related to testing and training.


None 50% operational cost recovery achieved

Dropped At least 50% operational cost recovery achieved.

Date achieved 04/22/2005 06/30/2010 04/05/2011 06/30/2010 Comments (incl. % achievement)

Successfully achieved. Staffing increased by 2 end of 2007. Financial self-sufficiency of 50% of operational costs achieved in 2010. Goal was met and so no more needed after the approval of the second Additional Financing.

Indicator 4 : General Inspectorate of Public and Private Works (IGOPP): (a) increases its professional staffing level by at least 2; (b) Statutes and regulations and works standards are revised; (c) implements annual work plan.

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None Completed Dropped Completed

Date achieved 04/22/2005 06/30/2010 04/05/2011 06/30/2010


Achieved. (a) 2 additional staff hired; (b) statutes and regulations revision completed, and; (c) annually prepared. All completed in 2008. This target was met but it was no more needed because the IGOPP was not involved in project implementation.

Indicator 5 : General Directorate of Infrastructure and Basic Sanitation (DGISB) implements all contracts under its responsibility within 15% the planned execution period and within budget.


None Partially Completed Dropped Partially Completed

Date achieved 04/22/2005 06/30/2010 04/05/2011 06/30/2010


Dropped due to changes in the implementing arrangements and the DGISB was replaced by Road Institute as the implementation unit of the IDA-financed works. It's relevant to note that before the restructuring, costs overruns exceeded 15% but that the last three contracts did not have cost overruns.

Indicator 6 : Studies and Planning Unit (GEP): Quarterly and annual reports are produced by the various MIT services for use in ministerial planning based on a data base and associated management information system.



Date achieved 04/22/2005 06/30/2010 04/05/2011 06/30/2010


Successfully Achieved. This indicator was streamlined/reworded at restructuring and became "Quarterly and annual reports are produced" in the road sector. The IE in coordination with the PIU did produce quarterly and annual reports shared with the Bank.

Indicator 7 : Program Coordination Office (PCO) reports annually on the Road Sector; manages RSSP activities in conformance with legal and fiduciary requirements.




Dropped due to “this Indicator relates to project management and should not be part of the Result Framework.” It is worth noting that the PCO did comply with that obligation until the end of the project. Successfully Achieved.

Indicator 8 : Roads rehabilitated: Maio - no. 6 Alcatraz-Figueira (9 km); São Nicolau - no.7 Ribeira Brava-Tarrafal (26 km); São Vicente - no. 10 Salamansa Intersection-Baia do Norte (3 km).


None 41 km 53.4 53.4


Maio - no. 6 Alcatraz-Figueira (9 km), São Nicolau - no.7 Ribeira Brava-Tarrafal (26 km), São Vicente - no. 10 Salamansa Intersection-Baia do Norte (3 km): The 41 km road rehabilitation completed.

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G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 11/08/2005 2.45 2 05/16/2006 Satisfactory Satisfactory 3.99 3 12/22/2006 Satisfactory Satisfactory 5.37 4 06/27/2007 Satisfactory Moderately Satisfactory 9.56 5 12/13/2007 Satisfactory Satisfactory 11.43 6 05/23/2008 Satisfactory Satisfactory 13.19 7 12/17/2008 Satisfactory Satisfactory 17.02 8 06/06/2009 Satisfactory Satisfactory 19.56 9 06/29/2009 Satisfactory Satisfactory 19.56

10 12/07/2009 Satisfactory Satisfactory 19.71 11 06/10/2010 Satisfactory Satisfactory 19.76 12 04/12/2011 Satisfactory Satisfactory 19.81 13 12/21/2011 Satisfactory Satisfactory 19.89 14 06/12/2012 Satisfactory Satisfactory 21.88 15 12/15/2012 Satisfactory Satisfactory 23.49 16 05/27/2013 Satisfactory Satisfactory 29.21

H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made DO IP

06/26/2008 S S 13.19

First Additional Financing of US$ 5 million to support cost overrun of the original roads contracts arising due to deficient design, change on road design and standards as well as increase of cost of inputs.

04/05/2011 N S S 19.81

Second Additional Financing in the approximate amount of US$15 million to consolidate the achievements of the road sector reforms through additional support to the Road Institute and the FMR, and also to scale up the impacts of the road investment program in terms of accessibility coverage by incorporate another 12.4 km of roads to the project. Follow the recommendations of MTR,

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Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made DO IP

streamlining the monitoring and evaluation framework.

I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal 1. Economic situation at appraisal. At the time of appraisal in 2005 Cabo Verde had a population of 480,000 and a gross national income (GNI) per capita of US$1,690. In 2002 the overall poverty rate for the country was estimated at 37 percent, with a poverty rate of 51.3 percent in rural areas and 24.5 percent in urban areas. 2. Transport sector. The road network consisted of 1,350 km spread among the nine inhabited islands, out of the ten islands of the archipelago. These relatively small island networks were characterized by: (i) major roads (often a “ring road” around the island) which extended from each island’s principal port and/or airport to municipalities and served many small towns and rural communities; (ii) secondary roads which served smaller ports and fishing and agricultural communities farther off the main axes; and (iii) municipal town roads and tracks leading to very small communities or homesteads. Cabo Verde had three international airports (Praia, Boa Vista, and Sal), seven airfields and one national airline. Cabo Verde had two major ports: Mindelo and Praia. 3. Road sub-sector. At the time of appraisal, due to inadequate maintenance, certain sections of the road network in each island had deteriorated, while in other cases lack of investment had left the basic network incomplete. Furthermore, the absence of complete and reliable island road networks constituted a serious constraint to development for Cabo Verde. The road sub-sector was characterized by the absence of a dedicated road management agency, while responsibilities for managing various portions of the network were not clear. There was no systematic program for maintenance, which was frequently postponed in the face of competing priorities. All road works (investment and maintenance) were managed by the General Directorate of Infrastructures and Basic Sanitation (DGISB) in the Ministry of Infrastructure and Transport (MIT), who was responsible for all publicly funded civil works in the country. The official road classification system, which dated to the colonial period, had never been officially updated to account for administrative and physical changes in the country. 4. Sector policies and plans. Reducing the geographical gap and improving accessibility by means of an affordable and dependable transportation network connecting the rural areas to markets and urban centers, along with the improvement of inter-island transport, was crucial to Cabo Verdean growth and national integration strategic objectives. In the road sector, these objectives were to be achieved through a balanced approach to completing the rehabilitation of the core road network and increasing access for rural populations, accompanied by consolidation of institutional capacity for planning, implementation and management of road investments and maintenance. 5. The Government of Cabo Verde (GoCV), with the support of the donor community, undertook a comprehensive institutional reform and capacity building

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program1 to ensure rational planning, sustainable maintenance and delivery of transport services. This led to: (a) the establishment of a Road Agency (Instituto de Estrada – IE) in 2004; and (b) the creation of a second generation Road Maintenance Fund in 2005 to finance only programmed routine/periodic maintenance and annual emergency works. 6. The Project. The Road Sector Support Project (RSSP) was primarily designed to support the above-mentioned reforms by improving the management of the road sub-sector. It was also designed to support the GoCV in its attempt to remedy the absence of a complete and reliable island road networks. The total estimated cost of the project at appraisal was about US$17.48 million of which US$15.0 would be funded by IDA while the balance would be funded by GoCV. In support of the investment program of RSSP, the Millennium Challenge Corporation (MCC) was to provide about US$22.0 million in parallel financing to fund road works in the islands of Santiago and Santo Antão while the Organization of the Petroleum Exporting Countries (OPEC) fund was committed to finance about US$3.0 million of road works in the island of São Nicolau.

1.2 Original Project Development Objectives (PDO) and Key Indicators 7. The PDO. The Project Development Objective as stated in the Project Appraisal Document (PAD) was to enhance the Borrower's road sector Management. This was to be achieved through: (i) institutional reform of the road sector and improved functioning of related civil works markets; and (ii) better access to social and economic opportunities due to improved mobility for affected populations. 8. The PDO was consistent with the Country Assistance Strategy (CAS) dated January, 20052, which identified improved and sustainable coverage of infrastructure and provision of social services as key priorities. 9. Key Indicators of Performance. The key performance indicators are summarized in the table below.

Table 1: Key Performance Indicators

Specific objective Key Indicators Original Restructured

Institutional reform of the road sector / To improve the planning and

Asset value of the national road network

Asset value of the national road network

1 This strategy had its origins in the Government’s Strategic Program for Infrastructure and Land Use, submitted to the Consultation Meeting with Development Partners in Praia April 2003, and adopted as part of the National Development Plan as issued by the Government in August 2003.

2 IDA/Report No. 30941-CV

2

financing of the road sector Roads in good and fair condition as a share of total classified roads

Better access to social and economic opportunities; improved mobility / To increase mobility

Mobility ratio Mobility ratio Travel time ratio Travel time ratio Travel cost ratio

Intermediate outcome indicators

Institutional reform of the road sector; Improved functioning of road related civil works markets / To improve the planning and financing of the road sector

A Second Generation RMF is created. The RMF establishes and manages annual road maintenance budgets.

A Second Generation RMF is created. The RMF establishes and manages annual road maintenance budgets.

Road Agency: (a) completes National Road Plan; (b) submits to the RMF annual road network maintenance plans; (c) implements annual road network maintenance plans

Road Agency: (a) completes National Road Plan; (b) submits to the RMF annual road network maintenance plans; (c) implements annual road network maintenance plans

Civil Engineering Laboratory (LEC) increases its professional staffing level by at least 2; and achieves financial self-sufficiency of at least 50% for its operational costs related to testing and training.

General Inspectorate of Public and Private Works (IGOPP): (a) increases its professional staffing level by at least 2; (b) Statutes and regulations and works standards are revised; (c) implements annual work plan

General Directorate of Infrastructure and Basic Sanitation (DGISB) implements all contracts under its responsibility within 15% the planned execution period and within budget.

Studies and Planning Unit (GEP): Quarterly and annual reports are produced by the various MIT services

Program Coordination Office (PCO) reports annually on the Road Sector; manages RSSP activities in conformance with legal and fiduciary requirements

Better access to social and economic opportunities; improved mobility / To increase mobility

Roads rehabilitated Roads rehabilitated

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 10. The wording of the PDO was streamlined as result of the project’s second additional financing approved in April 05, 2011 (see paragraph 17) to better emphasize the objectives pursued by the project in terms of institutional capacity and road investment. The streamlined PDO reads as follows: “to increase the mobility of the population in targeted areas and improve the planning and financing of the road sector”. Although the PDO was reworded, the design of the project was not modified, and all the initially planned activities were maintained.

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1.4 Main Beneficiaries 11. The Project Appraisal Document (PAD) did not explicitly identify project beneficiaries. However, it is clear that the populations of the islands of Maio, São Nicolau, and São Vicente, which have a combined population of about 95,000 inhabitants (about 20 percent of the country’s population), were to directly benefit from improved accessibility as a result of the project’s road rehabilitation program. Furthermore, the population at large was to benefit from the outcome of institutional activities supported by the project.

1.5 Original Components 12. The project consisted of two components: (a) Institutional Support; and (b) Rehabilitation of Road Infrastructure. IDA joined with other donors in financing a package of sector reforms, capacity building and civil works to enhance management and meet priority needs of the road network. IDA took the leading role in the institutional aspects, particularly road management, and under Component 2 of the project, financed selected road works to fill priority road rehabilitation gaps not covered by other donors or domestic resources. 13. Component 1: Institutional Support. Support to GoCV’s efforts in reforming management of the road sector through: (a) support to Road Sector Program Coordination Office (PCO), for the management of the project and overall road and transport sector coordination; (b) technical assistance and capacity building to the Road Agency (IE) and Road Maintenance Fund (CV-FMR), with a focus on establishing capacity, methods and procedures for road network management and securing adequate financing for road maintenance and annual emergency works; (c) assistance to Civil Engineering Laboratory of Cabo Verde (LEC), aimed at meeting the country’s growing need for construction testing facilities, related training and research; (d) assistance to the General Inspectorate of Public and Private Works (IGOPP), aimed at meeting the need to reinforce capacity to regulate civil works; (e) assistance to support project monitoring, evaluation and other sector management needs as they arise to the Ministry of Infrastructure and Transport in particular through the following Units: (i) General Directorate of Infrastructure & Basic Sanitation (DGISB), aimed at improving DGISB’s capacity to procure and manage road and other infrastructure projects, (ii) Studies and Planning Unit (GEP), focused on establishing a functioning information management system for the MIT, ; and (f) support for the implementation of pilot road maintenance and management contracts financed by the FMR. 14. Component 2: Road Infrastructure. Support to GoCV’s priority road network improvement program through: (a) rehabilitation of the Alcatraz - Figueira road (9 km) on the island of Maio; (b) rehabilitation of the Ribeira Brava – Tarrafal road (26 km) on the island of Santo Antão; and (c) rehabilitation of the Salamansa – Norte de Baia road (3 km) on the island of São Vicente.

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1.6 Revised Components 15. As a result of processing the Second Additional Financing (AF2) in 2011 (see paragraph 17), the following activities were added to Component 2 to scale up the project’s impact: (a) rehabilitation of about 6 km of the Praia - Cidade Velha road; (b) rehabilitation of about 6.4 km of rural roads on the island of Santiago using labor based techniques; and (c) design and supervision of works.

1.7 Other significant changes 16. First Additional Financing (Cr. 4488-CV). An Additional Financing (AF) (Cr. 4488-CV) in the amount of US$5.0 million was granted in June 26, 2008 to cover the cost overruns of the originally appraised activities (see paragraphs 25, 26, 27). The first AF became effective on September 15, 2008, and the total IDA credit amount was revised to US$20 million. The closing date was extended by 10 months, from September 1, 2010 to June 30, 2011 to allow for utilization of additional funds. 17. Second Additional Financing (Cr. 4904-CV). An AF2 in the amount of US$10.0 million was approved on April 5, 2011 to scale up the impacts of the project. The purpose of AF2 was to consolidate the achievements of the road sector reforms through additional support to the IE and the FMR, and also to scale up the impacts of the road investment program in terms of accessibility and coverage. The results framework was fine-tuned to better capture the essence of the streamlined PDO (see paragraph 38). The closing date was extended by 24 months, from July 1, 2011 to June 30, 2013 to accommodate the additional resources for the project. There were no changes to the financial management, procurement and implementation arrangements.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry 18. The project was fully consistent with the CAS and supported the CAS objectives of: (a) maintaining an efficient, effective and accountable public sector; (b) enhancing the competitiveness of infrastructure; and (c) improving the growth potential of the rural sector. The project design was based on the consultations/findings and recommendations with various stakeholders in the sectors initiated since the mid-1990s under the Infrastructure and Transport Program (ITP) 3 and strengthened through the GoCV’s participation in the Sub-Saharan Africa Transport Policy Program (SSATP). 19. The RSSP was prepared in a participatory manner and had strong ownership from GoCV. Consultations also took place with other donors involved in the transport sector in

3 Credit Nos. IDA-24660 and IDA-24661

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Cabo Verde to ensure a coherent approach in reforming land transport. The project design was sound and simple, and drew relevant lessons from past experiences in the road sector in Sub-Saharan Africa (SSA) . 20. The project design adopted a number of relevant lessons learned in Cabo Verde from implementing the ITP, from sector projects in similar countries and from the SSATP road policy work such as: (a) the application of purely economic investment criteria is not sufficient for securing minimum access requirements, in support of economic development and poverty reduction activities, particularly on small island networks and in remote areas; (b) the technical approach for road management reflected Cabo Verde’s successful and cost-effective approach for lower volume roads of using basalt cobblestones, which are in abundance throughout the country and are labor intensive in their application to road construction; (c) physical investment must be accompanied by viable maintenance management and sustainable finance arrangements to ensure the sustainability of such investments. In this regard, past experience in Cabo Verde had shown that without a dedicated agency for road management, the requisite standard of service needed to support economic development and poverty reduction objectives could not be achieved. 21. At project preparation, a risk analysis was carried out and the mitigation measures were correctly identified. The reversal in GoCV’s commitment to implement the reforms in the road sector was perceived as a risk and was adequately mitigated through close supervision and advocacy. However, the project did not adequately address the risk of poor quality engineering cost estimates that should have been based on realistic market prices. 22. The RSSP is rated as Moderately Unsatisfactory in terms of quality at entry due to the deficiencies recorded in the technical design (project preparation) of the road works as described in paragraphs 25 and 26 below. The poor quality of the designs was the primary cause of the cost overruns which necessitated the mobilization of more funds through the first additional financing.

2.2 Implementation 23. Shortly after the signing of contracts, errors in the Bill of Quantity (BOQ)4 were discovered for the civil works in Maio Island and major errors and deficiencies in the conceptual designs for the road works in São Vicente and São Nicolau Islands. Furthermore, the initial cobblestone wearing course was upgraded to asphalt on the

4 After the start of the works, a review made by the Supervision Consultants and Contractors, and confirmed by the Independent Engineer, led to the conclusion that a major mistake occurred during the design’s calculations: the quantities of earth works were dramatically underestimated and design standards were not applied in some cases, leading to significant price increases.

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grounds of: (a) unavailability of trained manpower for the production of cobblestones; and (b) use by contractors of more modern construction technology. This issue has been observed in other roads rehabilitation financed by other financiers. 24. The above mentioned issues caused the adoption of higher design standards than initially appraised for the roads to be financed under the RSSP which led to a significant increase in the cost of the road component. More specifically: (a) all roads were upgraded to asphaltic pavement standards; (b) a 6 km (5 km at appraisal) long section of branch road of the Ribeira Brava-Tarrafal road (Fajã de Baixo to Cachaco) had to receive an additional protective layer of bituminous coarse graded aggregate base course 8 centimeters thick; and (c) all roads were eventually constructed with a carriageway width of 6 meters and 0.5 meter wide shoulders on both sides as per the existing national design standards5. 25. By 2008, unit costs of road construction in Cabo Verde had recorded a 60 percent increase since the time of appraisal in February 2005, due to a sharp increase in fuel prices following the increase in crude oil prices from an average of US$30 per barrel in 2004 to over US$100 per barrel in 2006/2007 and for other critical construction inputs such as cement, bitumen, diesel, etc. As a direct and indirect consequence of the increase in oil prices, the total cost of the road component went up by an average of 104 percent broken down as follows: (a) an about 66 percent increase in road works costs for the Figueira da Horta – Alcatraz road on Maio Island; (b) an about 80.0 percent increase in the costs of road works for the Ribeira Brava – Tarrafal road on São Nicolau Island; and (c) an about 167 percent increase in the road works cost for the Norte de Baia – Salamansa on São Vicente Island. The about 167 percent increase in the road rehabilitation in São Vicente is much influenced by the substantial changes in the conceptual design, which was not only on the pavement, from cobblestone to asphalt, but also in the road cross-section to meet the in use national standards. 26. Under the RSSP, a pilot program (first package) of 6 Performance Based Maintenance Contracts (PBC) was launched in September 2006 in three of the more mountainous islands of the archipelago (Santiago, Santo Antão and Fogo). The contracts together covered about 21 percent of Cabo Verde’s road network (285 km). The PBC contracts were for durations ranging from 36 months (four of the contracts) to 60 months (for the remaining two). In October 2010, five more PBC contracts which had duration of 27 months each covered a total of 547 kms of the Cabo Verde’s road network (38 percent) in the islands of Santiago, São Nicolau, Santo Antão and Fogo. All PBCs, which are currently covering 45 percent of the total road network, have been financed by the Road Maintenance Fund.

5 The roads that were selected for rehabilitation under the project were either earth road passable only by a bullock carts (in Maio and São Vicente islands) or roads with cobblestone pavement in poor conditions, with road width varying from 4 to 5 meters.

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27. The responsibility for roads works supervision and contract management still remained until 2008 with DGISB (within the Ministry of Infrastructure and Transport) which had critical technical capacity issues. Indeed, the poor quality of roads design which resulted in major costs overruns and extension of completion dates for the road works contracts flagged, were a clear indication of the institutional weaknesses of DGISB regarding the leadership, the coordination and the quality control of detailed engineering studies. Furthermore, the overlapping responsibilities between Instututo de Estradas IE (Road Agency) and DGISB created confusion and the road sector could not reach the necessary economies of scale without consolidation of capital investments and maintenance responsibilities under one single agency (IE). Also, the staffing level of the agencies in the road sector, especially IE and Laboratório de Engenharia Civil (LEC) was a key concern throughout the implementation of the project. Given the competition of the private sector and the scarcity of trained engineers in Cabo Verde, the road sector agencies encountered major challenges in recruiting and retaining qualified staff, especially road engineers and transport economists for the newly established IE. Transfer of staffs from the DGISB to IE did not materialize as DGISB’s staff remained within the Ministry to work on other infrastructure projects under DGISB’s responsibility. 28. Mid Term Review and processing of AF. The World Bank conducted a Mid Term Review (MTR) of the project in February 2008 during which the Bank team and the GoCV carried out an overall review of the road sector institutions. The MTR was a positive milestone as it adopted an action plan to resolve some of the key issues affecting project implementation. Furthermore, as a result of the MTR, an AF of US$ 5 million to the project was processed and approved in June 26, 2008 to support the completion of the three roads originally appraised in view of cost overruns arising from the major deficiencies in project design, change on technical specifications and the increase of unit costs of inputs. 29. Shortly after MTR, implementation of the fuel levy6 was delayed due to political opposition and the GoCV was under pressure to identify additional resources to close the maintenance funding gap. In January 2009, the fuel levy was re-introduced after a successful stakeholder consultative process. Since 2009, it has generated approximately ECV300 million (US$3.8 million equivalent) annually. The aggregated amount levied in 2013 is ECV 550 million, US$ 6.6 million equivalent. 30. In 2009 the Government was considering a legislation to convert all “institutes” to “public enterprises”. This would have implied a restructuring of the Road Fund as per the new public enterprise status. This change would have had implications for the institutional reforms agreed under the RSSP. The World Bank requested additional information on the planned changes in order to better understand the implications for the road sector institutions. At the end, the new legislation was not applied to the road sector.

6 The legislation establishing the fuel levy, a user charge, to finance maintenance of the road network was passed by Parliament in January 14, 2008 and a fuel levy of ECV 7 per liter (Decree 16/2008, of July 2) was instituted.

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31. Processing of AF2. An AF2 in the amount of US$10.0 million was approved by the Board on April 5, 2011, to consolidate the sector reforms and scale up the implementation of works which were expected to support the economic recovery process. As part of the AF2, the PDO for the project was streamlined to facilitate its attainment and some of the indicators adjusted to reflect the reality in the country. 32. The AF2 included the rehabilitation of the road from Praia do Cidade Velha. The contract for the rehabilitation of 6 km did not have cost overruns. However, a 14.9% variation order was approved to include additional works to improve the cobblestone access road to Cidade Velha. Asphalt could not be used since Cidade Velha is classified by UNESCO as world heritage and such rehabilitation was not part of the initial contract. 33. In 2011, the World Bank team was informed that the two rural roads to be rehabilitated under the AF2: Ribeira Principal, and Ribeira de São Miguel, were going to be impacted by the recent decision of the Ministry of Agriculture to construct agricultural dams in the project area. In replacement of the initially planned roads, the GoCV came up with the following alternative: (a) rehabilitation of the 2.4 km Ponta de Talho – Igreja road in the same municipality (São Miguel); and (b) rehabilitation of a 4 km stretch of Ribeira Principal Road not impacted by the construction of the dam. The Bank team assessed the relevance of the GoCV’s proposals and confirmed its consistency with the AF2’s objective in terms of rural accessibility. As a result of the lessons learned, the two substitute roads did not face any cost overruns.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 34. M&E Design and Implementation. The M&E design included twenty indicators most of which were relevant to capture the essence of the PDO. However, the description of some of them was unclear. Some indicators were more relevant for measuring the performance of project management than the attainment of the PDO. The MTR and the second Additional Financing included a simplification of the monitoring and evaluation framework. Some indicators were dropped and new ones added, and the targets for most of the dropped indicators had already been achieved so monitoring them was no longer needed. 35. In 2011, the results framework was updated to take into account the additional kilometers of inter-urban and rural roads to be rehabilitated under the AF2. A few of the project outcome indicators were reworded as well to better capture the logic and results of the proposed intervention.

36. M&E Utilization. Great efforts were made to measure and monitor the indicators, and data were collected for all indicators. Data collection was done in the field in the second half of 2012 and aggregated at the Project Coordination Office. The methodology used to collect the indicators was the same as in 2005. The households to be surveyed were randomly picked in the same villages which had been surveyed to establish the baseline. Young students were hired, trained and given forms to fill during the interview

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process with villagers, and supervised by coordinators. 505 households were surveyed, the same number as in 2005 7. The collected data on the indicators was fully and systematically utilized in the preparation of quarterly reports and served as a basis for the World Bank’s assessment of project implementation and achievement of project development objectives.

2.4 Safeguard and Fiduciary Compliance 37. Environment and Social issues. The project was rated as Environmental Category B. Before project appraisal, an Environmental Impact Study (EIS) was carried out and disclosed for all planned road works and the conclusion was that works would have limited negative impacts on the environment. This turned out to be accurate and the identified mitigation measures were correctly implemented. 38. The original project did not require any land acquisition. However, during project implementation, the alignment of the Alcatraz – Figueira road in Maio Island was slightly modified and required minor land acquisition of uncultivated agricultural land. Also, works of the Ponta de Talho – Igreja road financed under the second AF required partial acquisition of agricultural plots. An Abbreviated Resettlement Plan (ARAP) was prepared, disclosed and satisfactorily implemented. 39. Financial management. Financial management by the PCO was efficient. The quarterly Financial Monitoring Reports (FMRs) were received regularly and were fully compliant with the agreed format. Audits were done annually, on-time and were unqualified.

40. Procurement. Procurement under the project was satisfactory. All procurement activities and post-reviews were satisfactory. The Procurement Plan was updated regularly, at least once a year, and all procurement activities were executed efficiently and in a timely manner.

2.5 Post-completion Operation/Next Phase 41. Sustaining project’s outcomes. Consolidation of the project’s outcomes will be ensured through the recently approved Transport Sector Reform Project (TSRP, Cr 52660 - CV) one of the key objectives of which is to support the GoCV’s efforts to improve the efficiency and the management of the national road assets. The PBCs piloted under the RSSP have been redesigned to include the rehabilitation of roads to maintainable standards, and 4 years of maintenance. Their coverage is being expanded to gradually

7 More details on the methodology are available in the final report summarizing the results of this survey and entitled “análise dos impactes económicos e sociais das estradas reabilitadas ou melhoradas através do programa de apoio ao setor rodaviário”, September 2012.

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increase over the TRSP implementation period from 44% (baseline) of the national network to 56% one year after project effectiveness (out of which 24% are rehabilitated with TRSP funding), and eventually to 80% percent at project closing. 42. The institutional reforms that created the road fund and the Roads Agency (IE) have been enacted by law and are likely to be sustained. Furthermore, the TSRP is expected to enhance the impact of RSSP’s support to these institutions with modern tools, such as a Road Database Management System, and additional technical assistance geared towards improving the efficiency and the functioning of the national road asset management framework.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation 43. The initial PDO and the reworded PDO remain highly relevant. The overall objective of improving the efficiency of the road sector remains a key priority for the GoCV. More specifically, the GoCV in its 2011-2016 Third Growth and Poverty Reduction Strategy Paper (GPRSP-3) emphasizes the need to improve public sector capacity, especially in the transport sector in order to foster economic growth and poverty reduction. The GoCV is highly committed to the improvement of transport services and the reduction of transport costs and time, especially for the inhabitants of isolated rural communities. Furthermore, the project’s design and implementation, which were kept unchanged during the course of the project despite the PDO reformulation in 2011, are still highly relevant. The recently approved TSRP features a US$22 million Road component which builds on the achievements of the RSSP in view of sustaining the national road assets. The fact that the TSRP road component builds on the same design as the RSSP demonstrates that the design of the project remains relevant not only during its implementation but also for the follow on project. Finally, the first specific objective of the TSRP which is to improve efficiency and management of the national road assets is consistent with the first specific objective of the RSSP which is to improve the planning and financing of the road sector. This is further evidence that the PDO of the RSSP remains highly relevant.

3.2 Achievement of Project Development Objectives 44. The PDO rating is Satisfactory for the following reasons. 45. The project supported the putting in place of an adequate institutional framework for more rational and efficient management of the road subsector. This has been achieved through the creation of a Roads Agency-IE tasked with the management of the national road network and the establishment of an autonomous road maintenance fund, Fundo de Manutenção Rodoviária endowed with increasing funds generated through user fees. The efficiency of the IE has improved over time and has led to a stop in the deteriorating of the condition of the road network. Half of the road network is in a good and fair condition

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at project closing. Furthermore, the IE has adopted the PBC concept to maintain the road network, as illustrated by their decision to extend the concept country-wide. 46. The project has strengthened the newly established agencies with state of the art tools in network planning and management. Furthermore, it has successfully introduced innovative approaches to road rehabilitation and maintenance contracting such as PBCs. 47. Underfunding of road maintenance has been reduced, and should be further reduced in the near future. The initial package of PBCs, in 2006, covered 21 percent of road network, increased to 38 percent in the second package and currently covers 46 percent of the entire road network. The more predictable funding stream available for maintenance has resulted in a more rational approach to road asset management, moving away from earlier firefighting interventions to address pressing backlog maintenance needs. 48. Upstream engineering studies (in particular engineer estimates) are now much more reliable and accurate and contract monitoring by the IE is more efficient than it used to be in the earlier years of the project. For example, there were no cost overruns under the last contracts financed by the RSSP (Praia-Cidade Velha and rural roads in the island of Santiago). 49. Finally, the investment program of RSSP has brought more cohesion to the national network which featured many gaps which compromised its efficiency. Also, RSSP has significantly improved accessibility in rural areas through the rehabilitation of 9.4 kilometers of rural roads and 41 kilometers of interurban network. 50. What follows is a detailed assessment of the project’s achievements against its two specific objectives. (i) Specific objective #1: Institutional reform of the road sector and improvement of the functioning of the related civil works market (initial PDO) / Improvement of the planning and the financing of the road sector (reworded PDO) 51. The initial and the reworded specific objective #1 have the same scope. The rating for both of them is satisfactory for the following reasons. 52. Enhancements in the management of the national road network have been achieved. The project succeeded in consolidating the road asset planning, investment, and maintenance within the IE. Furthermore, IE’s capacity was developed and strengthened with assistance from the project to give it the essential planning and technical tools for the effective management of the road network.

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53. With the establishment of the Road Information and Management System8 the Ministry of Transport and the IE now have a good knowledge of the road network under their responsibility. The system is continuously updated and provides real-time information on the physical condition of the network. It is also a platform where other socio-economic data (such as traffic, accessibility, etc.) are centralized in view of facilitating investment decisions and maintenance strategies. 54. The project has significantly improved the capacity of the Civil Engineering Laboratory (LEC). LEC was able, thanks to the technical assistance provided by RSSP, to review and update the legislation related to its activities. LEC’s building was rehabilitated and new laboratory equipment acquired. Also, LEC was able to hire additional staff. 55. The financial situation of LEC has significantly improved thanks to the project. Between 2005 and 2011, the commercial revenue of LEC has nearly doubled from ECV7 million to ECV13.8 million. Cost recovery of LEC has improved from 41 percent in 2005 to about 55 percent in 2012. 56. The mandate and legal framework of the General Inspectorate of Public and Private Works (IGOPP) were updated thanks to the project. IGOPP is now able to play its role of regulator of the civil works industry in Cabo Verde. Its staffing level was increased to include 2 additional technical staffs and the civil works standards have been revised. 57. MIT’s planning and decision making capacity was substantially improved. Thanks to support from the project, the MIT was able to prepare and endorse a Transport Sector Strategy (TSS) in February of 2008. 58. With support from the project, the GoCV published the Decree 26/2006 of March 6, 2006, that defines the technical characteristics of National and Municipal Roads based on service levels. Later, in 2008, a new road classification (Estatuto das Estradas Nacionais9) gave full responsibility to the IE for planning and management of the entire national road network. 59. Financing of road maintenance on the path to sustainability. A major outcome of the project is the creation of the road maintenance fund – Fundo de Manutenção Rodoviária (RMF)10. The main source of income of the RMF is a fuel levy (Taxa de Serviço de Manutenção Rodoviária – TSMR) currently set at ECV7 per liter (US$0.0875 equivalent – 8.75 US dollar cents) 11. The RMF generated ECV550 million (US$6.6

8 The system is GIS enabled and includes the following modules: (a) road administration, (b) asset management information, (c) contracts management, and (d) economic evaluation.

9 Decree 22/2008, of July 30 2008 10 Decree No. 33/2005 of July 25, 2005 11 Decree No. 16/2008 of July 02, 2008

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million equivalent) in 2013. The GoCV is considering an increase of the fuel levy from ECV7 to ECV9 per liter in 2014. This is expected to increase the annual revenue of the fund with additional ECV120 million per year, a 26 percent increase from its current level. Such increase in resources will allow the fund to cover about 55 percent of the national network. In addition, 20 percent of car insurance fees (seguro obrigatório) will be allocated to the RMF. This is waiting for the approval of proper legislation which is expected for 2014. (ii) Specific objective #2: Better access to social and economic opportunities (initial PDO) / Mobility increase of the population in targeted areas (initial and reworded PDO) 60. Although the “better access to social and economic opportunities” part was removed during the reformulation of the PDO, the scope of the initial and the adjusted specific objective #2 remains the same. In fact, an improved/increased mobility leads automatically to a better accessibility. The rating is satisfactory for both the initial and the reworded specific objective for the following reasons. 61. All civil works activities have been satisfactorily completed. The impacts of these works can be measured against a 2005 baseline, and based on data adjusted for inflation. Transport costs in some of the concerned areas went down significantly: up to 63% per passenger-km by public transport, and for goods, between 50% and close to insignificant depending on the type of products transported. Travel times also went down in some communities: out of the surveyed sample, the percentage of people living less than 30 minutes away from the nearest market increased from 52 to 79%. In the most isolated village attended by the project, the proportion of people for whom accessibility was the major concern (Orgãos – Pedro Badejo) went down from 40% to about zero. 62. The mobility of the population increased beyond what were the targets in the project. More specifically, the percentage of adult population in affected communities who made at least 5 trips per month increased from 39 to 86 percent for a 50 percent target. The percentage of affected communities who take more than 30 minutes to reach the nearest market has decreased from 49 percent to 21 percent for a 40 percent target.

3.3 Efficiency 63. Although there was some initial costs overrun on the original project that warranted the AF1, the last batch of works contracts, financed under the AF2, was completed without any significant cost overrun. This speaks favorably in relation to the performance of the IE. 64. The final quality of all rehabilitation works is good. In some islands, like São Nicolau and Santo Antão, were the roads run through difficult mountainous/hilly terrain with heavy rainfall, the protection walls, drainage infrastructure and road pavement funded under the project are holding up well. The errors and deficiencies detected at initial stages of the road rehabilitation works were well addressed. The table below

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presents a summary of project costs for civil works from appraisal stage to the implementation.

Table 3 – Project Cost for civil works during the life of the project

Road Section Traffic (vehicles per day) Estimate cost

during project Appraisal (*)

Initial Cost Additional Cost Final Cost % cost

increase Forecast 2014 Real 2014

Salamansa - Norte Baia (São Vicente) 620,000 280,125.79 467,210.13 747,335.91 166.8 Figueira - Alcatraz (Maio) 32 3,620,000 2,516,846.61 1,668,506.44 4,185,353.04 66.3 Ribeira Brava - Tarrafal (São Nicolau)

620 231 8,130,000 6,699,649.52 5,361,418.68 12,061,068.20 80.0 Praia - Cidade Velha (Santiago) 1718 1179 3,750,542.38 560,011.47 4,310,553.85 14.9 Ribeira Principal Ponta do Atalho – Igreja (Santiago)

1,602,694.76 193,475.52 1,796,170.28 12.1

(*) Including supervision (5%) and contingencies (8%) 65. At the project appraisal stage, the economic analysis was done only for roads with significant initial traffic levels, for which a cost-benefit analysis was conducted based on Vehicle Operating Cost (VOC) savings. Based on that, only the 27 km road in São Nicolau island (Ribeira Brava – Tarrafal) was analyzed. However, no post rehabilitations surveys on traffic count, mobility/accessibility and public transport costs, included any of the roads financed by the Project, mainly due to the fact that the surveys follow the plans for improving the data base. Additional data collection was carried out in January 2014 to allow comparison between ex-ante and ex-post economic analysis. Although there is no information on VOCs, the inquiry made in 2012 indicates a decrease in transport costs by about 20 percent which is very likely to reflect the reduction in vehicle operation costs. 66. The ex-post ERR evaluation of Brava – Tarrafal is negative (dropped from initial estimate of 14 percent to 5 percent), due to issues mentioned earlier which affected basically all RSSP works: flawed designs, poor monitoring and project management, changes in the design after appraisal, cost overruns compared to the initial contract value, and unreliable traffic counts that were used as the baseline for traffic forecasts. All these factors obviously impacted negatively the ERR of the RSSP works (the average cost overrun of the RSSP is 83%, and the average overrun for IDA-funded roads is 54%,. However, most of these issues are being solved: the last two contracts financed by IDA (Praia – Cidade Velha, and two rural roads in Santiago island) did not suffer cost overruns, project design and contract management have been substantially and gradually improved with the Road Institute over the life of the project, and traffic counts are now automatized, which should make large errors unlikely. This is reflected by the ex-post evaluation of the Praia-Cidade Velha works, which were completed on schedule, with a minor cost increase due to additional works that were not considered initially but which are definitely justified. In Annex 3, a more detailed Economic and Financial Analysis is presented.

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3.4 Justification of Overall Outcome Rating Overall rating is Satisfactory 67. The reforms introduced in Road Sector create conditions for a timely availability of funds for road maintenance through the FMR, and the consolidation of sector responsibilities. The IE has created a sustainable institutional structure for the planning and management of the road network. The introduction of PBCs, financed by FMR, is notably improving road maintenance management and network coverage, from 21 percent, at beginning in 2006, to 46 percent at the end of the project. 68. The Ministry of Infrastructure and Transport and other key stakeholders in the road sector are now fully aware of the actual benefits of commercial road management practices. Such practices have improved and the share of the national road network under performance-based contracts is overall in good condition and increasing. 69. Lastly, due to the fact that the project was restructured in April 2011, a split evaluation has been done. More specifically, the Satisfactory PDO rating was assessed both before and after the restructuring against both against Efficacy and Efficiency criteria. Furthermore, the disbursement percentage was split to reflect the both and after restructuring of the project. See Table 4 below for more details.

Table 4 – Split evaluation

Against original PDO

(68% disbursement)

Against adjusted PDO

(32% disbursement)

Overall Comments

Relevance of design High High High The design was not changed during the course of the project even though the PDO was adjusted. See also paragraph 43.

Efficacy S S S

PDO indicators which were maintained throughout the project life: The increase in mobility and the reduction in travel time have been more than achieved. Target values for the ex-post IRR were not reached. PDO indicator which was added after the PDO change: This is a core indicator; target in the percentage of roads in good and fair condition has been reached. PDO indicators which were dropped during the PDO change. The reduction in travel cost has been achieved but the increase in the road asset value was not reached. Intermediate outcome indicators which were maintained throughout the project life: The establishment of the RMF and the Road Agency as along with the planned road rehabilitation, have been realized. Intermediate outcome indicators which were dropped during the PDO change: The planned improvements of the LEC, IGOPP, GEP, and PCO have been realized. Only the performance target of the DGISBSB to implement the contracts within 15 percent of the planned budget was not achieved.

Efficiency Modest Moderate Modest

3 roads were initially planned to be rehabilitated at approval. The final costs of these 3 roads were 37 percent higher than appraised. 2 roads were added during the PDO change. Efficiency has improved after the PDO change since the final costs of these 2 roads were only 14 percent higher than planned. The final costs of the 5 roads were about 30 percent higher than planned (see Table 1)

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Rating S S S The overall rating is satisfactory given the combination of a high relevance, a satisfactory efficacy, and a modest efficiency.

Rating value12 5 5 5 Weight (% disbursed before/after PDO change)

67 33 100

Weighted value 3.35 1.65 5 The final rating is 5 (satisfactory)

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 70. The project has contributed to additional outcomes and impacts, as follows. 71. Poverty impacts. Although no specific study was carried out to measure its impact on poverty, the project contributed to reducing poverty by generating employment opportunities, lowering transportation costs, and reducing travel time. There was a study carried out in 2005 to assess the mobility and accessibility in the project area as well as the cost of public transport. The collected information was then compared with the results of the survey done in 2012/2013 in the same area. The main survey conclusions are: (a) the mobility patterns have changed and mobility has increased: in the project areas, the percentage of the population that travel five times or more per month, increased from 61 percent to 86 percent; (b) significant reductions in travel times in the project area - the percentage of population living within 30 minutes of markets increased from 52 percent to 79 percent; (c) overall, public transport costs decreased, in average, by 20 percent. 72. Gender aspects. The project contributed to promoting employment opportunities for women in road maintenance PBC and rehabilitation. It is estimated that 65 percent of temporary jobs created went to women over the life of the project. (b) Institutional Change/Strengthening 73. In terms of institutional strengthening, the project has helped advance key institutional reforms in the road sector such as: (a) establishment of the RF and fuel levy at 7 ECV per liter; (b) institutional strengthening of IE; (c) major improvements in the capacity of the LEC to fulfill its mandate; and (d) update of the legal mandate of the General Inspectorate of Public and Private Works (IGOPP). (c) Other Unintended Outcomes and Impacts (positive or negative) 74. The RMFis contributing to the development of the road construction industry in the country by offering a steady stream of road maintenance packages which will create conditions for local contractors to develop by investing in equipment and personal.

12 Highly Satisfactory=6, Satisfactory=5, Moderately Satisfactory=4, Moderately Unsatisfactory=3, Unsatisfactory=2, and Highly Unsatisfactory=1

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75. The fact that reforms in the road subsector were successful has encouraged the GoCV to move ahead with reform efforts in the other transport subsectors (sea and air transport) to modernize their management.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 76. This is a core ICR which does not require a beneficiary survey/stakeholder workshop.

4. Assessment of Risk to Development Outcome Rating: Moderate 77. Notwithstanding the progress achieved in road maintenance management notably with the introduction of PBCs, there are still challenges that could hamper sustainability of road asset value, mainly: (a) limited resources of the road fund which at present covers only 44 percent of the road network maintenance needs; (b) backlog of road rehabilitation works for aging roads to bring them to maintainable standards; and (c) significant emergency works backlog caused by more frequent severe storms events. 78. According to a 2009 estimate, about US$200 million would be needed over the next twenty years to cover all needs in terms of rehabilitation, current and periodic maintenance and emergency works, with some level of frontloading to bring existing degraded roads to a maintainable condition. Taking into account the emergency works backlog, this means that about US$12 to US$15 million per year would be needed over the next three years. This represents about 0.7 to 0.9 percent of GDP. 79. In view of sustaining the financing mechanism of the RF, there must be on one hand, an automatic mechanism for the continuous update of the fuel levy in light of the needs of the network and to account for inflation, and on the other hand, alternate sources of funds to close the financing gap (see paragraph 59). Furthermore, a major risk to the financing of road maintenance is the dependence of oil prices ruled by international marked which could block further increases in the fuel levy and could have a negative impact on fuel sales. 80. The financing risk is also compounded by the substantial increase, in terms of percentage, of the share of the road network with asphalt pavement, rising from 3 percent in 2000 to 44 percent in 2013, while cobblestone decreased from 66 percent to 28 percent in the same period. Because of that, and also because the fuel levy is not indexed to inflation, in September 2005 the Quality at Entry Assessment panel had considered that the project risks had been underestimated. 81. The financing of emergency repair works is also a risk to the project’s outcome. Cabo Verde is regularly hit by heavy rains between July and October which often damage bridges and roads, cutting vital links to areas for prolonged periods of time. Since GoCV does not have the resources to intervene rapidly, weather related damages to the road network are not repaired quickly. The TSRP has set up a US$1 million emergency fund

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to help the GoCV address such events. However, this is insufficient to cover the annual emergency needs of the network and it also not sustainable since it is provided under a World Bank funded project. Thus, unless GoCV allocates adequate annual emergency road rehabilitation funding, parts of the road network will be cut off due to weather related events.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 82. The World Bank’s performance at entry is assessed as “Moderately Unsatisfactory.” The World Bank’s staff worked closely with the staff of the Ministry of Infrastructure Transport and Sea in a diagnostic evaluation of the transport sector issues faced by Cabo Verde and provided support in the preparation of the project financed by World Bank, GoCV and other donors. The World Bank mission gave extensive comments on the preliminary report on the Road Management Study and on feasibility and design studies, which were discussed with the GoCV. The World Bank team provided advisory support in preparation of the final EIA report. But, however, the World Bank did not carry out the necessary engineering reviews of the detailed project designs of civil works funded under the project which led to a major cost overruns and the need for a first AF (see Table 1). 83. Soon after the civil works contracts were signed and the road rehabilitation started, the implementation of the contracts showed deficiencies in the engineering designs. The concepts were reviewed and the designs accordingly revised and, in some cases, the technical specifications were substantially modified. Errors in the BOQ were detected and corrected. In addition to that, there was an increase of unit cost of inputs ruled by the market environment. Consequently, contract costs increased substantially. To allow continuation of civil works and achievement of PDOs the first additional finance to the project was requested and processed. The conclusion is that the Project Team did not ensure, through an adequate assessment, that detailed engineering designs and the associated cost estimate were satisfactory for good implementation of the project. However, this shortcoming could not be picked during the QAG review which was a desk review done shortly after the approval of the project. In addition, the QAG review did not go deeply into the technical design of road works but focused on the preparation/design of the project as a whole.

(b) Quality of Supervision Rating: Satisfactory 84. The skill mix of the Bank supervision team was well balanced and the Bank team provided guidance to the Project Coordination Office in meeting the effectiveness

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conditions. To strengthen policy and institutional reforms, the Bank facilitated provision of the necessary Technical Assistance to all involved institutions. 85. The World Bank was effective in addressing the key problem of cost overruns that arose due to low quality detailed engineering studies and designs. It was able to relatively quickly process a 1st AF to the project. It also was able to mobilize funds for a 2nd AF to better support the institutional agenda and to scale up the road works activities of the original project. The World Bank drew a lesson from the weakness of the first road design and undertook a more thorough review of the following designs, which made it possible to avoid further cost overruns. 86. Throughout implementation, the team provided timely advice and support on procurement, financial management, and environmental aspects of the project. The project had four different Task Team Leaders during project its life, and despite this, there was good continuity in the key messages and support from the World Bank. The MTR mission was effective in resolving pending project implementation issues, and the team used the opportunity to refocus the GoCV on the project objectives. The supervision team also effectively monitored the implementation of the policy measures proposed. Field supervision of civil works contracts was adequate with detailed field visit reports written and attached in Aide Memoires. 87. World Bank relations with other Development Partners (DPs) were collaborative. The project was financed by the World Bank and other donors. For the MTR donors and stakeholders were invited and actively participated. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 88. The World Bank has played a key role in supporting the GoCV’s Road Sector Support Program through the project. The project provided major support with sector reforms and capacity building while other donor funding was exclusively for physical investments. 89. The World Bank’s overall performance is also rated as “moderately satisfactory”, mainly due to the issues related to project preparation for the implementation of the Component 2. The World Bank team was efficient in quickly understanding the deficiencies of project design, working with the Client and all those involved, and in finding adequate technical and financial solutions for successful completion of the rehabilitation works. This exercise included the first additional financing and strengthening of technical management capacity of IE. Direct impact of these efforts was the scaled up support to the project through second additional financing to finance not only the rehabilitation of new roads added to the project but also capacity strengthening of IE and FR. The design and implementation of new roads activities were done without any cost overrun.

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5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 90. The GoCV performance has been rated as “Satisfactory” taking into account the following: 91. The GoCV was able to implement the needed reforms in the Road Sector which included the creation of the Road Maintenance Fund (Fundo de Manutenção Rodoviária) and the establishment of a dedicated road agency (Instituto de Estradas). The reforms have improved the capacity in the Ministry of Infrastructure and Transport to support planning and decision making as well as the capacity of Civil Engineering Laboratory. To support the sustainability of FMR, a fuel levy has been introduced. To cover the maintenance needs of the entire road network, the GoCV is considering increasing the fuel levy in the near future and is also looking for other source of funding. The GoCV has also demonstrated is adherence to the principle of sustainable maintenance as illustrated by the decision to continue increasing the share of the national road network covered by performance-based maintenance contracts. The progresses achieved in terms of road policy maintenance are illustrated by the determination of the GoCV to also develop a Road Management Database and to enforce axle load control legislation, with the support of the ongoing Transport Sector Reform Project.

(b) Implementing Agency or Agencies Performance Rating: Satisfactory 92. The Implementing Agency overcame all challenges related to the implementation of agreed institutional reforms liaising with different Government entities to that end. Also, they managed well the coordination with different entities (Road Institute, Road maintenance Fund, Contractors, Supervision Consultants) resolving the issue of cost overruns and clearly and timely expressing the need for additional financing to complete the road rehabilitation woks. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 93. The Borrower’s overall performance is rated as “satisfactory”, taking into account the performance of the government and implementing agency (MIEM- Ministry Maritime Economy and Infrastructure) as explained above. 94. Although there were initial delays in the implementation of the institutional strengthening and reform component, the GoCV has been committed to completing the reforms and further strengthening sector institutions. However, preparation of Component 2 (civil works) was not adequately revised to correct deficiencies that led to major cost overruns and need for the first AF.

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95. Both PCO and Government agencies provided the necessary ownership and commitment for this project and performed well during its implementation.

6. Lessons Learned 96. Project readiness is essential for smooth implementation. It was observed that it is a current practice to launch tenders for road rehabilitation and maintenance supported only by preliminary designs or concept designs. One reasons for this is the relatively small road network in the country, spread in nine islands that do not make it feasible to contract a consultant to prepare a single road engineering design which sometimes is less than 10 km long. Also, the preliminary designs are prepared on an ad-hoc basis depending on the funds availability for road rehabilitation. In some past cases of road rehabilitation and maintenance, project designs were not seen as a big issue because most of the roads were built simply, using labor based and local construction techniques (cobblestones). By introducing concrete asphalt roads, it has become necessary to dedicate more time and efforts to better planning, design and increased cost estimates. It is clear that previous practices have led to significant cost overruns that impacted not only International Development Association-Funded (IDA) projects but basically all road contracts. The GoCV needs to find sufficient funds to finance engineering design by a renowned consulting firm, which, due to the nature of the road network, would prepare, in one contract, robust engineering designs for several road rehabilitation contracts to be financed soon after these designs are completed. 97. Particularly, for IDA financed projects, it is key to make sure that the proposed projects are based on solid engineering designs and reliable sources of information regarding unit costs, final cost of previous road contracts that are comparable to those envisaged, etc. 98. Deficient engineering design in civil works often leads to major cost overruns. Major cost overruns in the road rehabilitation works funded under the original project were essentially due to deficient engineering designs. Therefore, it is critical for the IE to continue strengthen its technical planning and management capacity through recruitment of technical staff with the desired skills, and to define a good training program for its staff in order to help them prepare good engineering designs.

99. The cost overruns and extension of time for completion of works is a key issue as it generated doubts regarding the planning and management capacity of the entities in charge of the road sector, but also contributed to increase the country's debt, which is high by international standards due to large infrastructure investments over the past decade. 100. For isolated small islands, it is necessary to explore first the soundness of using the locally available construction materials in order to have better efficiency. Cabo Verde is a volcanic archipelago of islands with good basalt stone used as a road building material. This is a natural resource that is well used by the population in all construction industry (road pavement and housing), with special focus on road pavement. It is applied

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as a pavement material for entire villages and most of the roads in Cabo Verde, until 2000, were cobblestone paved. This construction technique was nationally well developed and has been used for years. However, in most recent cases, the use of cobblestones as a road building material is no longer adequate with modern roads construction techniques which are not based on labor intensive methods. In some cases, taking into account the location of the road and associated traffic volume, the use of asphalt pavement may not be economically justified, even socially. This is the case of the 11 km road in Maio Island that was initially planned to be laid with cobblestones and was then, probably wrongly, changed to asphalt. In addition, maintenance of asphalt road requires more sophisticated equipment and also impacts maintenance costs. Thus, it is imperative to tailor construction techniques to different roads types, location, and traffic volumes.

101. From 2000 to 2013, cobblestone roads mileage decreased from 66 percent to 28 percent of the national road network, while asphalt roads increased from 3 percent to 44 percent. Most of the roads that are part of the RSSP were rehabilitated using concrete asphalt. All roads that were initially designed to be cobblestone paved were then changed into asphalt. In many cases, the traffic volumes and road location do not economically justify asphalt pavement. At the time that changes were made, which was after contract signing, the decision to go for asphalt was mostly based on local contractors’ capacity to execute the works, and on the equipment available. A serious risk of “killing” the historically well-developed local construction technics has been created. Moreover, the sustainability of the road maintenance is also at risk given that the construction inputs are not locally available; there will be difficulties to mobilize equipment and materials for maintenance in some islands and funds generation for road maintenance will not be sufficient to cover the necessary maintenance needs.

102. It had been observed that there is more and more often a lack of qualified local people with knowledge and relevant experience in building cobblestone road pavements. The lack of specialized workers is one of the reasons why it was gradually decided to move away from cobblestone to asphalt. Developing a maintenance program for roads laid with cobblestones, both for interurban and urban roads, in a coordinated manner with Municipalities, could be a way to save resources and make sure that specialized works and maintenance for this type of construction technologies can be sustained.

103. Whenever possible, combining Development Lending Operations with sector specific projects creates useful synergies: some of the prior actions under the budget support operations were related to transport, and more specifically to the road sector. This made it possible for the World Bank as a whole to carry out a consistent policy dialogue in the road sector, promoting reforms from two ends, through a portfolio whereby investment lending and policy lending were reinforcing each other, the latter offering additional incentives to carry out the desired reforms, while the former was instrumental in providing technical and financial assistance needed to meet the prior actions of the latter.

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104. There is a need to support the decision-making process for the development and rehabilitation of low-volume rural roads with customized economic evaluation tool: the usual Highway Design and Maintenance Standards Model (HDM) present a good framework for the economic evaluation of road investments but are not particularly customized for low-volume roads (traffic less than 200 vehicles per day), such as the roads of Cabo Verde. There is a need to capture all the benefits associated with low-volume road investments that require a series of inputs which are impractical to collect for low traffic levels. Hence, the need for a simplified economic evaluation model to fulfill the planning and programming needs of road agencies such as the IE. For future similar projects, it will be important to rely on models tailored for low volume roads, such as the Roads Economic Decision Model (RED) that performs an economic evaluation of road investments and maintenance options customized to the characteristics of low-volume roads such as: high uncertainty of the assessment of traffic, road condition, and future maintenance of unpaved roads; periods during a year with obstructed carriageways; levels of service and corresponding road user costs defined not only through roughness; high potential to influence economic development; and beneficiaries other than motorized road users.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 105. Comments received from the implementing agency have been incorporated in this report. The Borrower’s contribution is attached unedited in Annex 5 (b) Cofinanciers Not Applicable (c) Other partners and stakeholders Not Applicable

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

Component 1: 5.0 5.0 100% Component 2: 10.0 25.00 250%

Total Baseline Cost 0.00 0.00

Physical Contingencies 0.00

0.00

0.00

Price Contingencies 0.00

0.00

0.00

Total Project Costs 15.00 30.00 200 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00

Total Financing Required 15.00 30.00 200

(b) Financing

Source of Funds Type of Co-financing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 2.48 0.00 0.00 International Development Association (IDA) 15.00 30.00 200

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Annex 2. Outputs by Component

Component 1: Institutional Support Outputs (i) Support to Road Sector Program Coordination Office (PCO), for the management of the project and overall road and transport sector coordination.

(i) Project Coordination Office was installed, equipped, staffed and was fully operational.

(ii) Technical assistance and capacity building to the Road Agency (IE) and Road Maintenance Fund (CV-FMR), with a focus on establishing capacity, methods and procedures for road network management and securing adequate financing for road maintenance and annual emergency works. IDA funds have not been used to finance the Fund itself.

(ii) two contracts for Technical Assistance were signed and the Consultants successfully performed their duties that included on job training of the technical staff of IE, develop its activities under the national road sector strategy and road management. Specific activities including; a) Concept and development of Road Information and Management System; b)Traffic count and development of tools for future similar exercises; c) Studies on public transport costs mobility; d) Elaboration of norms to support the implementation of National Road Plan

(iii) Assistance to Civil Engineering Laboratory of Cabo Verde (LEC), aimed at meeting the country’s growing need for construction testing facilities, related training and research

(iii) For Technical assistance, the LEC celebrated a TA contract with the Instituto Superior de Engenharia do Porto from Portugal. Under this TA several proposals of legislations were prepared: a) Regulation of reinforced concrete; b)Norms on safety, hygiene and health in constructions areas; c) Norms for laboratory tests; e) Water supply network and drainage of wastewater in buildings; f) Rigid foundations and supporting structures; g) Fire safety in buildings. The LEC building was rehabilitated and equipped. Two new technicians were recruited. Training program was developed in Portugal and Cabo Verde. The operation capacity of LEC improved and increased and allows then to support with 50 percent of its activity through its own revenues.

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(iv) Assistance to the General Inspectorate of Public and Private Works (IGOPP), aimed at meeting the need to reinforce capacity to regulate civil works

(iv) Prepared a detailed analyze of legal and regulatory framework of Cabo Verde that made possible the elaboration and approval of the Legal Framework for Procurement in Cabo Verde in 2007 (Lei 17/07/2007 ). Under the training program of the Inspectors, study visits were organized to Portugal and Brazil in 2008

(v) Assistance to the Ministry of Infrastructure and Transport through the following Units:

a) Assistance to General Directorate of

Infrastructure & Basic Sanitation (DGISB), aimed at improving DGISB’s capacity to procure and manage road and other infrastructure projects.

b) Assistance to the Studies and Planning

Unit (GEP), focused on establishing a functioning information management system for the MIT

(v) a) Not done. This assistance was to be given in relation to road infrastructure management, the responsibility of which was transferred to the IE. (v) b) A data base system and a network communication system were installed. The existent information and communication system was renewed with the installation of new equipment. In 2008, the Transport Sector Strategy was prepared and approved. New furniture was acquired for the General Directorate of Infrastructure. Technicians from MIT participated in international conferences and attended for training.

(vi) Other Studies and Technical Assistance, to support project monitoring and evaluation and other sector management needs as they arise

(vi) IE has monitored and supported the preparation of engineering designs for the rehabilitation of two additional roads financed by the Bank. Internal brainstorming in preparation of introduction of performance-based maintenance road contracts. Development of Technical Norms that helps the IE to establish working regulations; examples are the definition of some road terminology, identification of road pathologies that could appear in specific type of roads, all associated with the development of Road Management and Information System.

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(vii) Support for the implementation of pilot road maintenance and management contracts, which will be financed with Cabo Verde funds through the Road Maintenance Fund

(vii) Two packages of roads contracts under performance-based maintenance were successfully implemented. The first package, comprising six contracts which included 285 km of road network (21% of road network), for duration of 36 months each contract, was implemented from 2006 to 2009. The second package, comprising five contracts, with a total duration of 27 months, and covering 517 km of roads (38 percent of road network), was implemented from October 2010 to September 2012. All contracts were funded by FR.

Component 2: Road Infrastructure Outputs Rehabilitation of the following roads (i) Maio Island Road # 6: Alcatraz-Figueira (11 km) (ii) São Nicolau Island Road # 7: Ribiera Brava-Tarrafal (27 km) (iii) São Vicente Island Road # 10: Salamansa-Norte de Baia (3 km) Additional Works Under the second Additional Finance two new roads were added to the project: (iv) Santiago Island Praia-Cidade Vela (6 km) (v) Santiago Island Ribeira Principal road (4 km) and Ponta do Talho-Igreja (2,4 km)

(i) The road was rehabilitated. Civil works started in January 2006 and completed in March 2008. The road was initially designed to be with cobblestone but was then changed to asphalt pavement. (ii)The road was rehabilitated. Civil works started in December 2005 and were completed in June 2009. There were changes in project design. (iii) The road was rehabilitated. Civil works started in December 2005 and was completed in April 2007. (iv) The road was rehabilitated. Civil works contract started on April 2012 and at the project closing date the works were substantially completed. (v) The road was rehabilitated. Civil works contract started on January 2013 and at the project closing date the works were substantially completed

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Annex 3. Economic and Financial Analysis 1. This ex-post economic analysis relates to the roads rehabilitated under IDA Credit 4064-CV and supplemental credits (4488-CV and 4904-CV):

Island Road São Niccolau Ribeira Brava - Tarrafal

São Vicente Salamansa - N. Baio Maio Alcatrás - Figueira Santiago Praia - Cidade Velha*

2. In the case of São Nicolau and Santiago, the ex-ante economic evaluation of the road works followed a Cost-Benefit approach. The two other roads were evaluated according to a Cost-Effectiveness methodology, as the expected traffic was low. São Nicolau / Ribeira Brava - Tarrafal Road: 3. Ex-ante economic evaluation: Three scenarios had been evaluated and compared with the “without project” situation: (i) cobblestone pavement, (ii) double bituminous surface dressing, and (iii) concrete asphalt. Local authorities eventually chose (iii) whose estimated cost (net of taxes) was 598 million Escudos (about 7 million US$). The estimated ERR for this option was initially estimated at 14%. 4. Ex-post economic evaluation: the IE was requested collect up-to-date traffic data in early 2014 to feed the ex-post analysis counts. Data collected in 2012 and 2013 showed that actual traffic is only 54% of the estimated traffic factored into the ex-ante economic evaluation, which has impacted the magnitude of the economic benefits associated with the IDA-financed works. The ex-post evaluation was based on the same methodological approach and used the same unit VOC’s, current maintenance costs, and other minor assumptions. In addition, the final investment cost was 912 million Escudos, net of taxes, i.e. 52% more expensive than expected. The effect of the lower-than-expected traffic volumes combined with the above-mentioned cost overruns made the economic rate of return (ERR) decrease from 14% to 5%. Santiago / Praia – Cidade Velha Road: 5. Ex-ante economic evaluation: It is worth mentioning that the consultant in charge of the ex-ante economic evaluation worked under the assumption that a greenfield Cidade Velha ring road would be constructed in 2015, which would consequently divert traffic from the Praia – Cidade Velha road, and more specifically from the section between the intersection with the planned ring road and Cidade Velha, which explains why the initial ex-ante evaluation had to split Praia-Cidade Velha in two sections: (i) one from Praia to the intersection with the Ring Road, which is 3.2 km long; and (ii) from that intersection to Cidade Velha, 2.8 km long.

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6. As of now, the ring road construction is not built and not expected to be built in the near future. Consequently, the ex-ante evaluation had to be corrected accordingly in order to obtain comparable conclusions: the traffic that was expected to be diverted has been “reallocated” to the Praia-Cidade Velha road for both the ex-ante and ex-post analysis, and as a result, the traffic forecast used for the ex-ante evaluation has been increased and the evaluation re-done. 7. The ex-ante evaluation compared 4 alternative scenarios. Scenarios A, B and C are based on the same solution for Section 1: 7 meters wide concrete asphalt pavement, 1 meter shoulder both sides also in concrete asphalt, project speed 70 km/hour and Internal Roughness Index 2. As for section 2:

• Scenario A considers a 5 meters wide concrete asphalt pavement, 1 meter wide cobblestone shoulders;

• Scenario B as A but double bituminous surface dressing shoulders; • Scenario C considers a 7 meters wide cobblestone pavement and cobblestone 1

meter wide shoulders. • Scenario D considers a 6 meters wide concrete asphalt pavement, 4 centimeters

thick, 0.5 meters wide concrete asphalt shoulders the entire 6 km road (the same in both sections). Although the ERR for Scenario D was lowest, it was decided to opt for this option.

8. The “traffic corrected” ex-ante ERR is 14% instead of the 12% that came out of the initial “with ring road” ex-ante evaluation. 9. Ex-post economic evaluation: the actual traffic measured in 2013 and 2014 is 10% lower (1490 VPD instead of 1655 in 2013) than the initial “without ring road” traffic forecasts. On the other hand, the investment net of taxes proved to be marginally lower than assumed in the ex-ante evaluation (CVE 322 million and CVE 330 million in the ex-ante study). The final result is slightly lower ERR (11% ex-post). 10. It is important to clarify that the final cost of the works includes additional works that were not in the original scope of the contract. These works include (i) embankment and excavation slope stabilization along on a length of 200 meters, which will definitely have a positive impact on the sustainability of the investments and the resilience of this road segment to heavy rains; and (ii) rehabilitation of the access road to the São Filipe fortress; Cidade Velha is classified as a World Heritage site and the fortress is one of the most visited places in the country. There is no denying that the above-mentioned extra works will have positive economic impacts but they have not been quantified, As a result, he ex-post 11% ERR is underestimated. Maio / Alcatraz - Figueira 11. The ex-ante evaluation assessed 3 scenarios for the rehabilitation of this 9-km section. The differences among the scenarios only relates to the paving options:

• SC1: cobblestone,

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• SC2: double bituminous surface dressing, • SC3: concrete asphalt.

12. The least costly solution was recommended, namely SC1, the estimated cost of which was CVE 271 million. However, it was decided to opt for SC3, the final cost of which was CVE 330 million. 13. Maio Island has a huge touristic potential, which is not developed as of now, even though various projects are being considered. With no further indication on the type of tourism projects that may materialize and on their implementation schedule, it is delicate to quantify the future economic benefits linked to this road, but it is likely to play an important role in the attractiveness of the island for tourists. It is also worth noting that this section is part of the network that will be maintained under 4-year performance-based contracts through the recently approved Transport Sector Reform Project, which will ensure the sustainability of the investment. S. Vicente – Salamansa – N. Baia 14. IDA financed Project is a small section (3 km) of longer road (Salamansa – São Pedro), and connects Salamansa, a touristic village, to a hamlet in the north of S. Vicente Island. The larger section of that road was financed by the Portuguese Cooperation; the ex-ante economic assessment made before the works encompassed the whole road, and the IDA-financed section was not evaluated separately, and rightly so as that small section cannot be evaluated independently of the rest. As a result, it was neither possible nor relevant to carry out a stand-alone ex-post evaluation for this 3-km section. Conclusions 15. A real and meaningful comparison between ex-ante and ex-post economic assessments could be made only for Praia – Cidade Velha and Brava – Tarrafal. 16. The ex-post ERR evaluation of Brava – Tarrafal is impacted by issues mentioned elsewhere in this ICR and which affected most RSSP works, except the last ones; faulty designs, insufficient monitoring and project management, changes in the design after appraisal, cost overruns compared to the initial contract values (the average cost overrun of the RSSP is 83%, and the average overrun for IDA-funded roads is 54%), and unreliable traffic counts that were used as the baseline for traffic forecasts. All these factors obviously impacted negatively the ERR of the RSSP works. However, most of not all these issues are being solved: the last two contracts financed by IDA (Praia – Cidade Velha, and two rural roads in Santiago island) did not suffer cost overruns, project design and contract management has been substantially and gradually improved with the Road Institute over the life of the project, and traffic counts are now automatized, which should make large errors unlikely. This is reflected by the ex-post evaluation of the Praia-Cidade Velha works, which were completed on schedule, with a minor cost increase due to additional works that were not considered initially but which are definitely justified.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Laurent Mehdi Brito Consultant AFTPW Bourama Diaite Senior Procurement Specialist AFTPW Carlos Fonseca Consultant AFTCS Serigne Omar Fye Consultant CICAF Linda Carole Glassiognon Tiemoko Senior Program Assistant AFCCD

Abdelghani Inal Consultant MNSSD Carine Megueulle Temporary AFTTR Fily Sissoko Manager, Financial Management SARSQ

Supervision/ICR Francesco Addis Senior Resource Management Off EXTEU Akindele G. Beckley Consultant AFTTR Laurent Mehdi Brito Consultant AFTPW Bourama Diaite Senior Procurement Specialist AFTPW Sidy Diop Senior Procurement Specialist AFTPW Ibou Diouf Sr Transport. Spec. AFTTR Papa Mamadou Fall Transport Specialist AFTTR Carlos Fonseca Consultant AFTCS Serigne Omar Fye Consultant CICAF Linda Carole Glassiognon Tiemoko Senior Program Assistant AFCCD

Farida Khan Operations Analyst AFTTR Medou Lo Consultant AFTN2 Gylfi Palsson Lead Transport Specialist LCSTR John D. Riverson Consultant IEGPS Robert A. Robelus Consultant AFTN2 Osval Rocha Andrade Romao Financial Management Specialist AFTMW Youssouf Sakho Consultant IEGPS Kavita Sethi Senior Transport Economist AFTTR

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(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

USD Thousands (including travel and consultant costs)

Lending FY04 78.48 FY05 147.07

Total: 225.55 Supervision/ICR

FY06 79.08 FY07 62.72 FY08 158.71 FY09 97.244 FY10 21.5 FY11 107.478 FY12 76.389 FY13 77.404 FY14 31.213

Total: 711.738

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Annex 5. Beneficiary Survey Results

A beneficiary survey was not required for this project.

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Annex 6. Stakeholder Workshop Report and Results No stakeholder workshop was undertaken.

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Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

1. O ICR do Banco (ICR/BM), elaborado pelo Senhor José Chembeze, foi enviado recentemente à UCP para parecer. Para além de fazer uma exposição das atividades desenvolvidas, ele atribui classificações ao desempenho dos diferentes intervenientes. A síntese classificativa é apresentada no quadro seguinte:

BANCO CLASSIFICAÇÃO MUTUÁRIO CLASSIFICAÇÃO Qualidade inicial Moderadamente

Insatisfatório Governo Moderadamente

Insatisfatório Qualidade da supervisão

Satisfatório Agência de implementação (UCP)

Satisfatório

Desempenho global do Banco

Moderadamente Satisfatório

Desempenho global do Mutuário

Moderadamente Satisfatório

2. Nos §§ 82 a 87 o autor do ICR justifica a razão pela qual o desempenho do Banco Mundial no início do projeto é classificado como Moderadamente Insatisfatório. Considera o analista que o Banco tem responsabilidades em relação às derrapagens financeiras motivadas por anteprojetos deficientes, já que o Banco deveria ter procedido à sua análise cuidada, detetado e alertado para os erros ou insuficiências. Na fase de desenvolvimento do projeto o desempenho do Banco é considerado Moderadamente Satisfatório. No §82 pode ler-se: “(…) the World Bank did not do the necessary engineering reviews of the detailed project designs of civil works funded under the project which lead to a major cost overruns and the need for a first AF”.

3. No § 90 o desempenho do Mutuário (Governo de Cabo Verde) é classificado como Moderadamente Insatisfatório, tanto à entrada como no desenrolar do projeto:

“ The GoCV performance has been rated as “Moderately Unsatisfactory” both at project entry and project implementation”

4. O desempenho da Unidade de Coordenação foi considerado Satisfatório.

5. Não podemos concordar com a classificação de Moderadamente Insatisfatório dada ao Mutuário (Governo) na fase de implementação.

6. É verdade que no início ocorreram falhas nos processos de contratação e de coordenação de obras, como é claramente exposto no ICR elaborado a pedido de Cabo Verde (ICR/CV): (i) anteprojetos com fraca qualidade; (ii) mudanças de orientação com exigência de trabalhos diferentes dos que estavam programados e mesmo contratualizados (reabilitação de pavimentos em pedra que passaram a pavimentos em betão betuminoso); (iii) fraca gestão e coordenação das obras, que se traduziu pela

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aceitação de obras com defeitos. Estes factos poderão, no limite, justificar a classificação de Moderadamente Insatisfatório no início, à semelhança do Banco.

7. Acresce que o Relatório deixa alguma dúvida sobre qual é a classificação realmente atribuída à parte Cabo-verdiana. Se, por um lado, o já referido §90 classifica a performance como globalmente moderadamente insatisfatória tanto à partida como na implementação, o §96 vem reconhecer que a performance global do Mutuário é globalmente moderadamente satisfatória. Parece estar em contradição com o §90.

8. Com efeito, e tal como o próprio ICR/BM reconhece e frisa, o Governo tomou em tempo oportuno medidas que vieram permitir que o resultado final do projeto fosse muito positivo. Com efeito:

a. Foi criado o Instituto de Estradas (IE) conforme previsto no Projeto RSSP e a partir do momento em que o IE foi plenamente responsabilizado pela gestão das obras as derrapagens financeiras deixaram de existir e a qualidade dos projetos e das obras foi significativamente aumentada;

b. Foi criado o FAMR, um Fundo Autónomo de 2.ª geração, plenamente operacional e que vem financiando os trabalhos de manutenção corrente e obras de emergência;

c. A qualidade global das estradas melhorou significativamente, como é aliás reconhecido pelo ICR;

d. Foram adquiridos contadores automáticos de tráfego que, através de contagens periódicas, vêm disponibilizando informação essencial para uma boa gestão rodoviária;

e. A base de dados rodoviária instalada no IE permite o conhecimento do estado de conservação dos diferentes órgãos das estradas e o planeamento das intervenções corretivas;

f. Os contratos REMADOR, (Reabilitação e Manutenção com base no Desempenho e Obrigação de Resultados) iniciados pelo IE, constituem uma evolução muito importante e que deverá prevenir a ocorrência de situações como as descritas em relação ao início do projeto. Com efeito, o empreiteiro que ganha um concurso para uma reabilitação, será responsável, durante os 4 anos seguintes ao fim da obra, pela Manutenção Corrente, sendo de sua responsabilidade deteriorações das estradas que sejam devidas a defeitos construtivos. Com este novo quadro consegue-se maior responsabilização das firmas construtoras e uma melhoria da qualidade da construção.

9. De realçar ainda que os indicadores que permitiram a quantificação das metas do RSSP mostraram fortes melhorias: as populações estão menos isoladas (melhor

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acessibilidade) viajam mais para os mercados, centros de saúde, etc., e por preços, em termos reais, mais baixos.

10. Em suma, os principais objetivos do RSSP foram atingidos, o que é o resultado de um forte empenho do Governo, das instituições e de toda a estrutura técnica de Cabo Verde.

11. Acresce que, como o ICR/BM mostra no Quadro G, realizaram-se 16 missões de Supervisão pelo Banco Mundial e em 15 a classificação atribuída pelo Task Team Leader (recorde-se que houve quatro TTL’s) foi Satisfatória e apenas numa Moderadamente Satisfatória. É o próprio Banco que sempre reconheceu a qualidade do desempenho do projeto.

12. Nestes termos o desempenho do Mutuário ao longo do projeto só pode ser classificado como Satisfatório ou mesmo Altamente Satisfatório.

38

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders

Not Available

39

Annex 9. List of Supporting Documents 1. Road Sector Support Project Appraisal Document for Republic of Cabo Verde,

Report No. xxx. World Bank, April 22, 2005

2. Aide Memoires: Implementation Supervision mission RSSP

3. Complete copies of ISRs: November, 2005-May, 2013

4. RSSP Mid-term Review Report, Praia January 2008

5. Contagem de Tráfego. Apuramento e Conclusões, Instituto de estradas de Cabo Verde, 2012

6. Relatórios Trimestrais – Gabinete de Coordenação do Projecto, Praia, Cabo Verde

40

MAP- São Vicente

41

MAP- São Nicolau

42

MAP- São Tiago

43

MAP- Maio

44

Morrinho

Cascabulho

Pedro Vaz

Santo António

Pedro Vaz

Alcatraz

PilãoCão

João

Ribeira Dom João

Lagoa

Barreiro

Morro

Figueira da Horta

Vila do Maio(Porto Inglêz)

Monte Branco

PraiaGoncalo

Porto Cais

Calheta

15˚10’

15˚10’

15˚20’

15˚20’

23˚10’

23˚10’

SãoVicente

São Nicolau

MaioSão

TiagoFor detail seemain map

For detail see IBRD 40982

For detail seeIBRD 40984

For detail seeIBRD 40985

CABO VERDE

WINDWARD ISLANDS

Boa Vista

Brava

LEEWARD ISLANDS

Fogo

Santo Antão

SalSanta Luzia

Praia15N

16N

17N

23W24W

WESTERNSAHARA

CABOVERDE

MAURITANIA

SIERRA LEONE

LIBERIA

THE GAMBIA

GUINEA

BURKINAFASO

GH

AN

A

ATLANTIC

OCEAN

SENEGAL

MALI

TOGO

CÔTED´IVOIRE

GUINEA-BISSAUELEVATIONS IN METERS:

4002000

0 1 2 3 4 5

KILOMETERS

IBRD 40983

MAY 2014

CABO VERDE

ROAD SECTOR SUPPORT PROJECTMAIO

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

GSDPMMap Design Unit

PROJECT ROAD

MAIN ROADS

SIDE-ROAD/BEATEN TRACK

ROUGH TRACK

PATH/TRAIL

RIVERS

MAIN CITIES

NATIONAL CAPITAL