Language: ENGLISH Original: FRENCH

AFRICAN DEVELOPMENT FUND PROJECT : BATSHAMBA-TSHIKAPA ROAD IMPROVEMENT PROJECT– LOANGE BRIDGE-LOVUA BRIDGE SECTION COUNTRY : DEMOCRATIC REPUBLIC OF CONGO PROJECT APPRAISAL REPORT Date: 5 April 2012

Peer Review

Mrs. Monia MOUMNI, Extension 2344, OWAS.2 Mr. Nigimbaye NDOUNDO, Extension 2725, ONEC.1, Mr. Khaled LAAJLI, Extension 2760, OSAN.3 Mr. Pierre Simon MORE NDONG, Extension 2284, OITC.2 Mr. Clément AHOSSI, Extension 6811, ORPF.1/CMFO Mr. Manuel BENARD, Extension 2302, OITC.1

Appraisal Team

Team Leader : A. KARANGA, Principal Transport Economist, OITC.1 Team Members : P. RUGUMIRE, Principal Transport Engineer, OITC.1 J. P. M. KALALA, Principal Socio-economist, OITC.1 A.D. BIZONGO, Senior Infrastructure Expert OITC.1/CDFO I. TOURINO SOTO, Environmental Expert, ONEC.3 D. P. MARINI, Procurement Expert, CDFO V. A. LOSSOMBOT, Financial Management Expert, CDFO Sector Director : Mr. Gilbert MBESHERUBUSA, Extension 2034, OITC Regional Director : Mrs. Marlène KANGA, Extension 2251, ORCE Division Manager : Mr. Jean Kizito KABANGUKA, Extension 2634, OITC.1

TABLE OF CONTENTS

I.  STRATEGIC THRUST AND RATIONALE .................................................................................. 1 

1.1.  Project Linkages with Country Strategy and Objectives ....................................................................... 1 1.2.  Rationale for Bank’s Involvement ......................................................................................................... 1 1.3.  Aid Coordination ................................................................................................................................... 2 

II.   PROJECT DESCRIPTION ......................................................................................................... 2 

2.1.  Project Components ............................................................................................................................... 2 2.2.  Technical Solutions Retained and Alternatives Explored ...................................................................... 3 2.3.  Project Type ........................................................................................................................................... 3 2.4.  Project Cost and Financing Arrangements............................................................................................. 4 2.5  Project Target Area and Beneficiaries ................................................................................................... 5 2.6.  Participatory Process for Project Identification, Design and Implementation ...................................... 6 2.7  Bank Group’s Experience and Lessons Reflected in Project Design ..................................................... 7 2.8.  Key Performance Indicators .................................................................................................................. 7 

III.  PROJECT FEASIBILITY ........................................................................................................... 7 

3.1.  Economic and Financial Performance ................................................................................................... 7 3.2.  Environmental and Social Impact .......................................................................................................... 8 

IV.  IMPLEMENTATION ................................................................................................................ 11 

4.1.  Implementation Arrangements ............................................................................................................ 11 4.2.  Monitoring/Evaluation ......................................................................................................................... 14 4.3.  Governance .......................................................................................................................................... 14 4.4.  Sustainability ....................................................................................................................................... 15 4.5.  Risk Management ................................................................................................................................ 16 4.6.  Knowledge Building ............................................................................................................................ 16 

V.  LEGAL FRAMEWORK ........................................................................................................... 16 

5.1.  Legal Instrument .................................................................................................................................. 16 5.2.  Conditions Associated with Bank’s Intervention ................................................................................. 16 5.3.  Compliance with Bank’s Policies ........................................................................................................ 17 

VI.  RECOMMENDATION ............................................................................................................. 17 

APPENDIX I. COUNTRY’S COMPARATIVE SOCIO-ECONOMIC INDICATORS ........................................  

APPENDIX II: TABLE OF ADB’S PORTFOLIO IN THE COUNTRY ...........................................................  

APPENDIX III: MAIN RELATED PROJECTS FINANCED BY THE BANK AND THE COUNTRY’S OTHER DEVELOPMENT PARTNERS ......................................................................................................................  

APPENDIX IV: MAP OF PROJECT AREA .................................................................................................  

i

Currency Equivalents [September 2011]

UA 1 = USD 1.60936 UA 1 = EUR 1.11374

Fiscal Year 1 January - 31 December

Weights and Measures 1 metric ton = 2204 pounds 1 kilogramme (kg) = 2.200 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inches 1 kilometre (Km) = 0.62 miles 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations ACF : Action Against Hunger AfDB : African Development Bank ADF : African Development Fund AFD : French Development Agency APA : Advance Procurement Action CDF : Congolese Franc COPIREP : Public Enterprises Reform Steering Committee CSP : Country Strategy Paper DFID : Department for International Development (UK) DRC : Democratic Republic of Congo DVDA : Agricultural Feeder Roads Department EA : Executing Agency ECCAS : Economic Community of Central African States EDF : European Development Fund ERR : Economic Rate of Return ESIS : Environmental and Social Impact Study ESMP : Environmental and Social Management Plan ETCD : Exclusive of All Taxes and Customs Duties EU : European Union EUR : Euro FONER : National Road Maintenance Fund GHG : Greenhouse Gases HDM 4 : Highway Development and Management Model HHS : Hygiene, Health and Safety HIPC : Heavily Indebted Poor Countries HIV-AIDS : Human Immunodeficiency Virus-Acquired Immune Deficiency Syndrome IU : Infrastructure Unit INS : National Institute of Statistics JICA : Japan International Cooperation Agency MITPR : Ministry of Infrastructure, Public Works and Reconstruction MTP : Multimodal Transport Plan NGO : Non-Governmental Organization NPV : Net Present Value

ii

NTMP : National Transport Master Plan OdR : Roads Authority OHADA : Organization for the Harmonization of Business Law in Africa PCR : Project Completion Report PIA : Project Impact Area PP : Procurement Plan PPP : Public-Private Partnership PRGSP : Poverty Reduction and Growth Strategy Paper PRSP : Poverty Reduction Strategy Paper

RAI : Rural Access Index (% of rural population in the PIA with direct access to an all-weather

road within a 2 km radius). RAP : Resettlement Action Plan REC : Regional Economic Community RISP : Regional Integration Strategy Paper RN 1 : National Highway 1 SADC : Southern African Development Community STD : Sexually Transmitted Diseases TFP : Technical and Financial Partners TI : Transparency International TITG : Transport Infrastructure Thematic Group UA : Unit of Account UAM : Million Units of Account USD : United States Dollar VOC : Vehicle Operating Costs USDM : Million United States Dollars WAEMU : West African Economic and Monetary Union WB : World Bank

iii

Project Information Sheet

Client Information

BORROWER: Democratic Republic of Congo EXECUTING AGENCY: Infrastructure Unit (IU) in the Ministry of Town and

Country Planning, Urban Planning, Housing, Infrastructure, Public Works and Reconstruction (MATUHITPR)

Financing Plan

Source Amount (UA) Instrument ADF Grant

53,550,000

Project Grant

TOTAL COST 53,550,000

ADB’s Key Financing Information

Grant Currency

Unit of Account

Interest Type Not applicable Interest Rate Spread Not applicable Other Charges Not applicable NPV (baseline scenario) EUR 79.19 million ERR (baseline scenario) 18.44%

Timeframe – Main Milestones (expected)

Concept Note Approval August 2011 Project Approval May 2012

Effectiveness June 2012 Completion March 2016 Last Disbursement December 2016

iv

Project Summary Project Overview 1. The Batshamba-Tshipkapa Road Improvement Project: Loange Bridge-Lovua Bridge Section forms part of the rehabilitation of National Highway 1 (RN1)-Banana-Matadi–Kinshasa-Lubumbashi-Kasumbalesa-Sakania (3,130 km). The road improvement works are organized into 2 lots: (i) Lot 1 ‘Batshamba- Loange Bridge’ (114 km), to be financed under EDF 10; and (ii) Lot 2 ‘Loange Bridge-Tshikapa’ (119 km). The Lot 2 improvement works are envisaged in two phases: (i) Phase 1 involving the improvement of the ‘Loange Bridge- Lovua Bridge’ section (63 km) and; (ii) Phase II involving the improvement of the ‘Lovua Bridge-Tshikapa’ section (56 km, including the construction of the bridge over the Kasai River). This project concerns Phase 1 of Lot 2. In time, implementation of Phase II will result in a fully paved road between Matadi and Tshikapa. The project will be implemented from June 2012 to May 2015, at a total estimated cost of UA 53.55 million (UAM) comprising UAM 42.65 in foreign exchange and UAM 10.90 in local currency. 2. The project will improve access to Bandundu and Western Kasai Provinces by linking them together, as well as with the Capital City/Province of Kinshasa, and facilitate the movement of goods and people on RN1 as well as the population’s access to markets and social and administrative services. The project’s direct beneficiaries will be transport users as well as people living in its impact area (Kinshasa City, Banduda, Eastern and Western Kasai Provinces). 3. In addition to improved access, the project’s expected economic benefits are related to a reduction in vehicle operating costs, increased road traffic on RN1, higher agricultural production and development of trading activities within the PIA. Needs Assessment 4. The project is located on RN1, which is the main access route to the Bandundu, Eastern and Western Kasai Regions. All three regions have significant agricultural potential, and are connected to the Capital City/Province of Kinshasa and Matadi Port. Improvement of RNI is in keeping with the Government’s gradual approach to the rehabilitation of this major highway. Bank’s Added-Value 5. The project is an immediate continuation of the works financed: (i) by the Bank on this highway between Nsele-Lufimi and Kwango-Kenge; (ii) by the EU between Lufimi and Kwango; and (iii) those carried out between Kenge and Batshamba on World Bank financing. The Bank’s involvement in this project will enable it to consolidate its partnership with the DRC for the reconstruction of its transport infrastructure in the context of a post-conflict fragile State. The Bank will draw on the recent experiences of previous or on-going multinational and national projects in Central Africa, in general, and DRC in particular, and which entail, in addition to physical construction or rehabilitation works, aspects concerning: (i) protection of road assets; (ii) transport sector institutional reforms; and (iii) facilitation and social as well as capacity building measures.

v

Knowledge Management 6. Knowledge management will be carried out through the project’s ‘monitoring and evaluation’ component by the National Institute of Statistics (INS) responsible in DRC for the production of national statistics. The INS will refine and update information on the key impact indicators to ensure efficient project impact assessment and the production of useful information on project outcomes and effects. This knowledge will be incorporated in the country’s road data base at the level of MATUHITPR, IU and OdR. It will be disseminated on the Bank’s Website, in the annual reports, the completion report and the ADF post-evaluation report. It will also be used to update the country strategy papers.

vi

Results-Based Logical Framework

DEMOCRATIC REPUBLIC OF CONGO: BATSHAMABA-TSHIKAPA ROAD IMPROVEMENT PROJECT /LOANGE BRIDGE-LOVUA BRIDGE SECTION

Project Goal: Improve access to Bandundu and Western Kasai provinces and their connection to the Capital City/Province of Kinshasa, and improve the living conditions of the population living in the project area.

RESULTS CHAIN PERFORMANCE INDICATORS

MEANS OF VERIFICATION

RISKS/ MITIGATION MEASURES Indicator

(including CSI) Baseline Situation Target

IMPA

CT

Rural areas opened up and inter-provincial trade facilitated

Percentage of the public interest road network in Bandundu and Western Kasai provinces in good condition Percentage of length of asphalt road sections on RN1

11% (Bandundu) and 7%, (Western Kasai ) in 2012 40% in 2012

12.5% (Bandundu) and 9% (Western Kasai) from 2016 46% from 2016

Statistical Reports of the MATUHITPR Project impact monitoring/evaluation reports MATUHITPR -Infrastructure Unit

EFF

EC

TS

Effect 1: Improved service level of transport logistics chain on Kinshasa-Tshikapa highway Effect 2: Improved living standards of population living in the PIA

Vehicle Operating Costs (VOC) Travel time Rural Access Index (RAI) in the PIA Overall average monthly income in PIA Women’s average monthly income in the PIA Number of jobs created in the PIA

VOC in 2012: USD 0.5 / km Batshamba - Tshikapa in 2011: 20 hours 0% in 2011 USD 54 in 2011 USD 20 in 2011 0 jobs in 2011

The VOC is USD 0.4 / km from 2016, i.e. a 20% reduction Batshamba - Tshikapa in 2016: 4 hours 15% from 2016 USD 100 from 2016 USD 45 from 2016 In 2016: 2400 direct jobs created during the construction phase, 50% of which are for women and youths; 100 permanent jobs created in the operational phase, 50% of which are for women and youths in the PIA

Project impact monitoring/evaluation reports Infrastructure Unit Monitoring/Evaluation Unit Ministry of Health Reports

Risks: Slippage on project implementation Mitigation Measures: Use of APA Capacity building of IU in technical monitoring of works and procurement Close monitoring carried out by CDFO

vii

RESULTS CHAIN PERFORMANCE INDICATORS

MEANS OF VERIFICATION

RISKS/ MITIGATION MEASURES Indicator

(including CSI) Baseline Situation Target O

UT

PUT

S

Output 1: Road works Construction of an asphalt road

Length of asphalt road

0 km

63 km of asphalt road on RN1 in 2016 between the Loange Bridge and the Lovua Bridge

Control mission reports Infrastructure Unit Monitoring/Evaluation Unit

Risk: Increase in works costs Mitigation Measures: - Project costs aligned on the costs of similar contracts executed in DRC in 2010-2011 - Inclusion of a special provision linked to the financial contingency rate to take into account exchange rate fluctuations and price increases of certain inputs - Open international competition for the selection of contractors and the control firm

Output 2 – Related improvements 2.1 Improvement of rural roads 2.2 Installation of a fixed weigh station and supply of 2 mobile stations 2.3 Rehabilitation of social infrastructure (school enclosures, health centres, latrines, construction of markets and parking areas)

Length of rural roads Number of fixed and mobile weigh stations Number of enclosed schools/health centres with latrines Number of markets and parking areas constructed

0 km 0 stations 5 schools and 5 health centres without enclosure and without latrines 0 markets

In 2016: 80 km of rural roads developed in the PIA 1 fixed weigh station and 2 mobile weigh stations installed on RN1; 10 schools and 10 health centres enclosed and equipped with latrines; 4 markets constructed.

Output 3: Conduct of studies Study reports produced Absence of a Transport Sector Intervention Master Plan

One (1) study conducted on the preparation of a National Transport Master Plan (PDNT)

Reports submitted to the Bank by the Government

Output 4: Institutional Support and Project Management

Reports produced Quarterly project implementation monitoring reports submitted between 2013 and 2016 1 annual audit report between 2012 and 2016

KEY

AC

TIV

ITIE

S COMPONENTS RESOURCES A : Road Works B : Related Improvements C : Institutional Study D : Institutional Support and Project Management E : Compensation for Project-Affected People (PAP).

UA 44.74 million UA 4.84 million UA 2.22 million UA 1.71 million UA 0.04 million Total Project Cost ETCD: UA 53.55 million

viii

Implementation Schedule of the Batshamba-Tshikapa Road Improvement Project – Loange Bridge-Lovua Bridge Section

ID Nom de la tâche

1 1- GENERAL ACTIVITIES2 Approval of APA3 Approval and launch of AGPM4 Project approval5 Signature6 2- ROAD WORKS INCLUDING TRACK7 2.1 - Procurement process up to notification 19 2.2 - Works implementation22 3- RELATED WORKS23 3.1 - Procurement process up to notification 35 3.2 - Works implementation40 4- WORKS CONTROL, SUPERVISION AND SENSITIZATION41 4.1 - Contract award process up to notification 57 4.2 - Provision of works supervision and sensitisation services64 5- IMPACT MONITORING/EVALUATION65 5.1 - Procurement process with the Nat. Instit. of Statistics (INS)73 5.2 - Provision of impact monitoring/evaluation services77 6- NATIONAL TRANSPORT MASTER PLAN STUDIES78 6.1 - Procurement process 94 6.2 - Studies implementation97 7- IND. CONSULTS. TO SUPPORT THE STEERING COMMITTEE98 7.1 - Procurement process with individual consultants106 7.2 - Provision of services by individual consultants110 8 - AUDIT111 8.1 - Procurement process 128 8.2 - Conduct of the audit133 9- SUPPLY OF GOODS134 9.1 - Procurement contract for the supply of goods (IT hardware, vehicles and weigh

stations)147 9.2 - Supply of goods (IT hardware, vehicles and weigh stations)150 10 - PROJECT IMPLEMENTATION MANAGEMENT AND MONITORING151 10.1 - Technical implementation monitoring152 10.2 - Financial and accounting implementation monitoring

ADFCI-MITPR/ADF

ADFGOV/ADF

CI-MITPRCI-MITPR

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 42012 2013 2014 2015 2016 2017

1

REPORT AND RECOMMENDATION OF THE AFRICAN DEVELOPMENT BANK GROUP’S MANAGEMENT CONCERNING A PROPOSED GRANT TO THE

DEMOCRATIC REPUBLIC OF CONGO TO FINANCE THE BATSHAMBA-TSHIKAPA ROAD IMPROVEMENT PROJECT – LOANGE BRIDGE-LOVUA BRIDGE SECTION

Management hereby submits the following report and recommendation on a proposed grant of UA 53.55 million to the Democratic Republic of Congo to finance the Batshamba-Tshikapa Road Improvement Project – Loange Bridge-Lovua Bridge Section (63 km). I. Strategic Thrust and Rationale 1.1. Project Linkages with Country Strategy and Objectives 1.1.1 The project is in keeping with the thrusts of the Poverty Reduction and Growth Strategy Paper (PRGSP) for the 2011-2015 period, the main objectives of which include facilitation of access to basic social services. 1.1.2 It is consistent with the priorities set out in the 2002-2015 Transport Policy Framework Strategy focused on three pillars: (i) rehabilitation of old asphalt roads and construction of new asphalt roads; (ii) resumption of traffic by reopening the earth road network; and (iii) protection and maintenance of roads in good condition. The strategy’s accompanying action plan aims, among others, to ensure the long-term continuity of road traffic on National Highway 1 (RN1) between Banana Port, the Capital, Kinshasa and Sakania via Lubumbashi (over 3,130 km) and, consequently, the interconnection between Bandundu, Eastern and Western Kasai which have vast untapped agricultural potential mainly as a result of the poor state of transport, especially road infrastructure. 1.2. Rationale for Bank’s Involvement 1.2.1 The Country Strategy Paper (2008-2012 CSP) attaches priority to the Transport Sector through the CSP’s second pillar, which aims to ensure pro-poor growth. The CSP’s sector goal is to enhance the intermodal efficiency of the transport networks. The project under consideration is consistent with this strategy, which targets substantial and sustainable aid to fragile countries to restore critical services and basic infrastructure. 1.2.2 The project is a continuity of interventions by the Bank and other donors (European Union and World Bank) as part of the gradual improvement of RN1 and will enable it to extend its support to other key provinces (Bandundu, Eastern Kasai and Western Kasai). Therefore, improvement of the Batshamba-Lovua Bridge (177 km) sections, which are in very poor condition, will be financed concomitantly by the EU and the Bank. The main donors operating in the road sub-sector (EU, World Bank, DFID and JICA) have agreed to organize a roundtable by end-2012 on financing for the remaining sections on RN1 between Lovua Bridge and Tshikapa (56 km), and from Tshikapa towards Lubumbashi (1,521 km). It should be mentioned that the Bank has financed the detailed studies, now finalized, on the sections of this highway from Tshikapa to Mbuji Mayi (437 km). Apart from the paved section between Likasi and Lubumbashi (120 km), the earth sections between Tshikapa and Lubumbashi are in a more or less degraded condition. To date, only Sino-Congolese Cooperation has made it possible to obtain resources to rehabilitate part of the said sections between Kamina and Nguba (423 km).

2

1.2.3 The project is in line with the Bank’s Medium-Term Strategy (2008-2012), which recognizes that post–conflict fragile States require substantial, sustainable aid to restore essential institutions and rehabilitate critical services and basic infrastructure. 1.3. Aid Coordination

Sector or Sub-Sector*

Importance GDP Exports Labour Transport [10%] [10%] [70%]

Stakeholders – Annual Public Expenditure (2005-2010 averages) * Government (USD million) Donors Amount (USD million) [%] 1.52 ADF 6.08 1 DFID 50 12 European Union 17.13 11 BTA 20.31 5 WB 209.34 50

Chinese Cooperation 84.10 20 TOTAL 416.97 100 Level of Aid Coordination Existence of Thematic Working Groups Yes, the TITG was set up in 2010 Existence of an overall sector programme No AfDB’s role in aid coordination [M] L : Leader; M : Member (non-leader) : None: no role (*) Sources: Appraisal Report-Multimodal Transport Programme (MTP – World Bank – 2010); MITPR’s IU Activity Reports. List of Ministry of Planning projects; Annual Reports of the Congolese Major Works Agency (ACGT) and the EDF National Authorizing Officer Support Unit (NAO-EDF) July 2011 Joint WB/ADB Portfolio Review; BTA Reports.

1.3.1 The Bank participates actively in aid coordination in DRC through the different thematic groups (Energy, Statistics, Transport Infrastructure, Water and Sanitation, Education, Health, Economic Governance, Business Climate, Agriculture and Environment, etc.). It acts as joint secretary for the ‘Statistics’ and ‘Energy’ Thematic Groups. 1.3.2 There are currently two working groups within the Ministries in charge of Planning and Follow Up of the Implementation of the Revolution and Modernity, Transport and Communication Channels and the MATUHITPR: (i) the working group called “the Task Force”; and (ii) the Transport Infrastructure Thematic Group (TITG). The Task Force, comprising infrastructure experts, donors (World Bank, EU, AfDB, DFID, JICA) and other executing agencies and specialized organizations, was established in March 2010. Its aim is to obtain a global vision of transport sector operations and consolidate the Government’s investment strategy. II. Project Description 2.1. Project Components The project’s sector goal is to improve access to Bandudu and Western Kasai provinces and their connection to the Capital City/Province of Kinshasa, and to enhance the living conditions of the population in the project area. Its specific objective is to improve the service level of the transport logistics chain on the Kinshasa-Tshikapa highway. The project is focused on the components described in the following table.

3

Table 2.1 Summary of Project Components (Costs in UAM)

Components Estimated Cost -ETCD Component Description

A – Improvement of the Main Highway

44.74

a.1 Works on the main highway: improvement of the Loange Bridge-Lovua Bridge Section (63 km), including optical fibre cable rights-of-way); a.2 Works supervision and control (including related works); a.3 sensitization to HIV-AIDS/STI, road safety and environmental protection

B – Related Improvements 4.84

b.1 Improvement of 80 km of tracks; b.2 Construction and equipping of a fixed weigh station (including 2 mobile axle load scales); b.3 Rehabilitation of socio-economic infrastructure in the project area

C - Studies 2.22 Study on the preparation of a National Transport Master Plan (NTMP)

D – Institutional Support –Management and

Monitoring 1.71

d.1 Support to IU, the OdR and DVDA ; d.2 Monitoring/evaluation of project impact; and d.3 Financial audit

E – Expropriation 0.04 Compensation to project-affected people.

2.2. Technical Solutions Retained and Alternatives Explored 2.2.1 The road improvement standards retained for the Loange Bridge (PK 114) – Lovua Bridge (PK177) section require a 10 m platform with a 2 x 3.50 m paved carriageway and two 2.50 m shoulders. The characteristics of the carriageway structure retained are as follows: (i) a 20 cm thick sand-clay sub-base course; (ii) an 18 cm thick, untreated, crushed gravel base course; and (iii) a 4 cm thick surface course. 2.2.2 The solution retained and the most appropriate from the technical, economic and environmental standpoints is identical, in terms of surfacing, to that adopted for the Batshamba-Loange Bridge Section. The phased construction option, starting with a poorer quality carriageway to be strengthened later, was rejected after evaluation on the grounds of risks of subsequent construction costs and distance from the Project region. The bituminous sand option was not retained because of insufficient quantities of natural gravel and high quality rocks in the project area, and the technical limitations of this technique.

Table 2.2

Alternative Solutions Considered and Reasons for their Rejection Substitution Table Brief Description Reason for Rejection 1.Phased construction starting with a lower quality carriageway to be strengthened later

Start works with a lower quality carriageway to be strengthened later

High subsequent construction costs; distance from the project region.

2. Use of bituminous sand as surface course

Lack of natural gravel and high quality rocks in the region: non-existent technical capacity

2.3. Project Type The project is a stand-alone operation in the form of an ADF grant for an investment project. A grant is considered to be the appropriate instrument for the Bank’s intervention in the project. A specific secondary objective of the NTMP is to propose for the medium-term (over a period not exceeding 5 to 10 years), an action plan on public investments for the rehabilitation and improvement of priority transport infrastructure, which will be used to prepare a transport sector programme.

4

2.4. Project Cost and Financing Arrangements 2.4.1 The total project cost, ETCD, to be fully financed under the ADF 12 country allocation, is estimated at UA 53.55 million, including compensation. No Government contribution to the project’s financing is envisaged. Provisions for physical contingencies are maintained at 10%. The provisions for price escalation representing 8.21% of the total base cost and for physical contingencies have taken into account the inflation rate in DR Congo and the works implementation schedule. The following tables present the detailed project costs: (i) by component; (iii) by expenditure category; and (iii) the expenditure schedule by category.

Table 2.3 Summary of Estimated Project Cost by Component

COMPONENTS USD million UA million F.E. L.C. Total F.E. L.C. Total

A ROAD WORKS 48.38 12.10 60.48 30.07 7.51 37.58B RELATED IMPROVEMENTS 5.24 1.31 6.55 3.26 0.81 4.07C STUDIES 2.40 0.60 3.00 1.49 0.37 1.86

D INSTITUTIONAL SUPPORT AND MANAGEMENT 1.64 0.67 2.31 1.02 0.42 1.44

E EXPROPRIATION 0 0.05 0.05 0 0.03 0.03 BASE COST 57.66 14.73 72.39 35.84 9.14 44.98 Physical contingencies 5.77 1.47 7.24 3.58 0.92 4.50 Financial contingencies 5.21 1.34 6.55 3.24 0.83 4.07 TOTAL 68.64 17.54 86.18 42.66 10.89 53.55

Table 2.4

Project Cost by Expenditure Category EXPENDITURE CATEGORIES USD Million UA Million

F.E. L.C. Total F.E. L.C. Total 1 – GOODS 1.57 0.39 1.96 0.96 0.24 1.202 – WORKS 49.82 12.45 62.27 30.97 7.74 38.713 - SERVICES 5.92 1.75 7.67 3.69 1.08 4.774 – OTHER 0.35 0.14 0.49 0.22 0.08 0.30Base Cost 57.66 14.73 72.39 35.84 9.14 44.98Physical contingencies 5.77 1.47 7.24 3.58 0.92 4.50Financial contingencies 5.21 1.34 6.55 3.24 0.83 4.07TOTAL 68.64 17.54 86.18 42.66 10.89 53.55

Table 2.5

Expenditure Schedule by Expenditure Category (in UA Million) CATEGORIES 2013 2014 2015 2016 Total 1 – GOODS 1.20 1.20

2 - WORKS 14.71 19.36 4.65 38.71 3 – CONSULTING SERVICES 1.67 2.00 0.95 0.14 4.77 4 – OTHER 0.09 0.09 0.09 0.03 0.30 BASE COST 17.67 21.45 5.69 0.17 44.98 Physical contingencies 1.77 2.14 0.57 0.02 4.50 Financial contingencies 1.60 1.96 0.47 0.04 4.07 TOTAL 21.04 25.55 6.73 0.23 53.55 Total in % 39.28% 47.72% 12.56% 0.43% 100.00%

2.4.2 ADF will cover 100% of the project cost. DRC’s eligibility for 100% financing from ADF resources is justified because of its status as a fragile and post-conflict country, and the project’s compliance with the Policy on Expenditure Eligible for Bank Group Financing, in relation to the three key criteria set out below (paragraph 4.2.2 of the Policy on Expenditure Eligible for Bank Group Financing: ADB/BD/2007/106/Rev.1, 19 March 2008, Revised Version).

5

(i) The country’s commitment to implement its overall development programme 2.4.3 DRC is committed to the implementation of its development programme, in light of the satisfactory execution of its Extended Credit Facility-Supported Programme to which it has adhered since July 2009. The main objective of this programme, backed by the Poverty Reduction Strategy Paper (2006-2008 PRGSP extended to 2011), is to consolidate macroeconomic stability and growth. Thus, the country was able to reach the HIPCI completion point in July 2010, thereby receiving significant external debt relief (USD 12.3 billion). The programme’s fourth review in September 2011, underscores that the country is on the right track to achieve its core economic objectives. Lastly, in November 2011, DRC adopted its second generation PRGSP for the 2012-2015 period, the strategic thrusts of which were used to prepare the 2012 Budget (in the process of being approved). (ii) The level of financing and capacity building in the sector 2.4.4 Over the past five years, the DRC Government has paid special attention to the rehabilitation and reconstruction of roads as part of its public investment policy. Public investments for that purpose (rehabilitation, construction and maintenance) on the main highways of the national network rose from USDM 33 in 2008 to USDM 126 in 2009. This trend is continuing in the face of the immense needs estimated at USDM 4,500 under the 2003-2015 Action Plan. The 2011 reduction in cement imports will also help to cushion the impact of inflation on construction materials. (iii) The country’s budget situation and debt level 2.4.5 Following a surplus of about 2.4 per cent of GDP in 2010 linked to debt relief, DRC’s budget balance deteriorated in 2011 to -6.3 per cent of GDP due to low revenue levels (27.8 % of GDP) and rising expenditure (34.0% of GDP). In the context of the economy’s vulnerability to exogenous shocks (global food and energy product prices), the decline in revenue is partly justified by the use of tax adjustments to ease inflationary pressure. DRC has also experienced a gradual decline in external aid (9% of GDP in 2011 compared to 14.1% in 2010), with a public deficit which could reach 7.8% of GDP in 2012. Under the combined effect of the restoration of macroeconomic stability and the reaching of the HIPC-I completion point, the country’s overall external debt level (in percentage of GDP) fell from 123% in 2009 to 35% in 2011. Debt service, which represented 6.4% of public revenue in 2010, dropped to 2.6% in 2011. A sensitivity analysis shows that DRC would remain vulnerable to a fall in exports and an increase in borrowing costs. Therefore, the Government has undertaken to pursue the structural reforms aimed at promoting long-term export growth and limiting external borrowing to highly concessional resources. 2.5 Project Target Area and Beneficiaries 2.5.1 RN1 links up West and East DRC. It connects Matadi to Lubumbashi in Katanga via Kinshasa, Bandundu (Bandundu Province), Tshikapa, Kananga (Western Kasai Province) and Mbuji-Mayi (Eastern Kasai Province). At Mbuji-Mayi, there is also a road junction with the RN2 which runs to the towns of Bukavu (South Kivu) and Goma (North Kivu). Therefore, it is DRC’s main road link. The section concerned by the EU-financed study (Batshamba–Tshikapa) is 233.435 Km long and crosses two districts (Kwilu and Kasai) in two administrative provinces (Bandundu and Western Kasai). There are three types of natural vegetation in the Project Impact Area (PIA) located in Western Kasai: (i) the tropical rainforest (equatorial); (ii) the semi-deciduous (sub-equatorial) forest alternating with the savannah area; and (iii) the savannah area

6

interspersed with gallery forests with an afforestation rate of between 60% and 75%. This flora is inhabited by various types of wildlife. Soils are subjected to high pressure and water erosion. The PIA is also characterized by the existence of several perennial water courses. 2.5.2 The PIA comprises about 25 villages and the urban area of Tshikapa, to which should be added four large villages (Loange Bridge, Mukedi, Kayala and Katanga) for which the road is the closest national highway to which they can be connected. The Bank-financed section runs from Loange Bridge village to Lovua Bridge, i.e. a distance of 63 km. This entire section is located in Western Kasai, and more specifically in Kasai District, Kamonia Territory and the Bapende and Kamonia Sectors. The main activities are agriculture and artisanal diamond mining. The area has significant potential for the production of crops such as soya, rice, maize and cotton. The PIA population is estimated at 1,750,000 inhabitants, including 892,000 women, i.e. almost 51% of its population. The Kamonia health zone contains 25 health areas, 7 of which are managed by the State and 18 by the private sector but integrated into the primary healthcare system. According to the recent study (ACF, February 2011), 92 health facilities provide care for the population living in this area, comprising 84 centres and posts, most of which have no equipment or drugs. 2.5.3 In the extended impact area, there are 19 health centres, 5 dispensaries and 5 hospitals which are geographically unevenly distributed. Three (3) hospitals, 15 hotels, 6 regional institutes, 1 court, 1 town hall, and 1 central bank agency are concentrated in Tshikapa. Diamond trading is Tshikapa’s main activity (250 trading outlets). There are six (6) weekly roadside markets (with a strong women’s presence), none of which have commercial facilities (products are laid on the ground or on makeshift stands). Lastly, drinking water supply remains a problem as there is no drinking water distribution network in the immediate PIA. Thus of 369 springs identified in the Kamonia health zone (ACF, 2011), only 68 are developed. Most of the health facilities use rainwater and only a few wells are available. 2.6. Participatory Process for Project Identification, Design and Implementation 2.6.1 Different stakeholders have been involved in each project stage, from studies to preparation and appraisal. Thus, group discussions and participatory sessions were organized during the different field trips, especially in Mukedi, Lukaka, Katanga and Tshikapa. The discussions with representatives of the administration, decentralized technical services, women’s and youth associations reviewed all the project actions and agreement was reached on related improvements and specific actions to be carried out. More specifically, these exchanges revealed a series of concerns that have been taken into account in the project design through: (i) identification of affected people and the amounts of compensation to be paid; (i) payment of costs related to the displacement and resettlement of the affected population by the country; (ii) priority employment of local labour during the works; (iii) construction/rehabilitation of related rural roads; (iv) rehabilitation of socio-economic infrastructure (schools, health centres, water points and latrines); and (vi) road safety, HIV/AIDS/STI and environmental protection awareness-raising. 2.6.2 As part of the cooperation with the other institutions, in addition to periodic meetings in the country, meetings were held with the development partners operating in the transport sector, in particular with the European Union and the World Bank, with a view to improving project design and raising their interest in Phase II. Other donors, including JICA and DFID, have been approached to contribute to this second phase. This participatory process will be maintained throughout the project implementation phase through supervision and mid-term review missions as well as during the monitoring/evaluation studies on this project’s socio-economic impact.

7

2.7 Bank Group’s Experience and Lessons Reflected in Project Design This project has taken into account the constraints of, and lessons learned from the Bank’s experience in DRC, as highlighted by the portfolio review carried out jointly with the World Bank in July 2011. The main findings of the review were: (i) the lack of project ownership by the Government reflected, among others, by recurrent delays in the replenishment of accounts opened for the payment of counterpart funds; and (ii) the need to build the capacity of the executing agencies in order to mitigate the fiduciary risk. Since the country is eligible for 100% financing from ADF resources, no counterpart contribution is envisaged. Capacity building of the EA, especially in the areas of procurement and financial management, aims to ensure effective project implementation. 2.8. Key Performance Indicators 2.8.1 The main expected outputs of this project are as follows: (i) 63 km of asphalt roads on RN1; (ii) 80 km of tracks rehabilitated; (iii) socio-economic infrastructure rehabilitated (schools, health centres and water points); (iv) a National Transport Master Plan prepared; (v) institutional support to IU, the Roads Authority and DVDA for project management; and (vi) a monitoring/evaluation mechanism established to assess the project’s socio-economic impact. Monitoring of the socio-economic impact will concern a limited number of indicators, in particular: (i) the rural access indicator; (ii) vehicle maintenance costs; (iii) travel time; (iv) income by household and by gender; (v) the level of direct and permanent jobs created; and (vi) behavioural changes regarding HIV/AIDS, environmental protection and road safety. 2.8.2 To monitor these impact indicators, the INS will establish the baseline situation prior to works start-up and, on project completion, will carry out an impact assessment using the same methodological approach. The IU will monitor the project activities and produce half-yearly reports. III. Project Feasibility 3.1. Economic and Financial Performance 3.1.1 The economic analysis was carried out using the HDM.4 model on the PK 0+00 to PK 177 section, including the PK 0+00 to PK 114 section (from Batshamba to Loange Bridge on EU financing) and the PK 114 to PK 177 section (from Loange Bridge to Lovua Bridge), the subject of this project. A discount rate of 12% and residual value equivalent to about 37% of the works cost were used for the economic calculation. For the purpose of the economic analysis, the quantifiable benefits were determined on the basis of “project” and “no-project” programme scenarios over a 20-year period for the main highway. The costs taken into account are the economic investment costs, current and periodic maintenance costs as well as vehicle operating costs. The project economic benefits will take the form of: (i) direct benefits to transport activities (reduction in vehicle operating costs and travel times); and (ii) indirect benefits to the different social and economic activities. 3.1.2 The analysis carried out under the above conditions gives an economic rate of return (ERR) of 18.44%, which is higher than the opportunity cost of capital (12%). A summary of the analysis is presented in the following table.

8

Table 3.1 Main Economic and Financial Data

ERR (baseline scenario); NPV 18.44%; EUR 79.19 million ERR/scenario of a 10% increase in investment and recurrent costs; NPV 17.17%; EUR 67.62 million ERR/scenario of a 10% reduction in net benefits; NPV 17.04%; EUR 59.70 million ERR/scenario of a 10% increase in investment costs and a 10% reduction in exogenous benefits; NPV

15.81%; EUR 48.12 million

3.2. Environmental and Social Impact Environment 3.2.1 The project is classified in environmental and social category 1. Therefore, it has been the subject of a full Environmental and Social Impact Assessment (ESIA) as well as a full Displaced Persons’ Resettlement Plan submitted to ORQR for review and public dissemination at least 120 days prior to project approval. A comprehensive list of potential occupants and entitled beneficiaries has been drawn up and duly communicated to the interested parties. The ESIA was conducted in accordance with the provisions of DRC’s Environmental Code. The required procedures for the validation of the environmental and social documents were followed by the Ministry of Environment, Nature Conservation and Tourism which subsequently issued the ESIA Environmental and Social Compliance Certificate. The ESIA summary and RAP were posted on the Bank’s PIC website on 26 October 2011. Negative Impacts 3.2.2 By their very nature, road works are likely to create a risk of accidents during the transportation of materials and due to traffic deviations. There is also a risk of river pollution due to accidental spillage of used oil and stored material seepage. Possible fuel storage areas also present some soil and water pollution risks due to accidental spillage of oil, fuel or lubricants as well as fire risks in some woodland areas. In steeply sloping areas (the banks of the Bondo and Lovua Rivers), there could be risks of erosion when adjusting rights of way (mudslides, landslides). Positive Impacts 3.2.3 During the works phase, the project will develop socio-economic activities due to the installation of construction site workers in the area (increased demand for low, medium and high-cost housing leading to an increase in rental income). The project will create 2400 temporary jobs, i.e. almost 800 per year throughout the construction phase and 100 permanent jobs in the operational phase. The temporary influx of workers to the construction areas will lead to an increase in the consumption of several basic products such as fuel, foodstuffs, etc. This will, in turn, create an increase in the turnover of those engaged in the corresponding activities. 3.2.4 In the operational phase, all the positive impacts of the road on the physical environment will relate to the improvements financed by the project and the establishment of a maintenance system to ensure its sustainability (waste dumping and crossing structures, drainage outlets and channels, etc.). On-going maintenance by the Roads Authority will considerably mitigate the risk of degradation. 3.2.5 The project’s main positive impacts on users and the population as a result of improved access to the PIA are: (i) improved road conditions and cleanliness of social amenities; (ii) faster travel times that will speed up access to health and education facilities; and (iii) improved evacuation of agricultural products and supply of village communities in the PIA with manufactured goods, with a direct impact on living conditions and poverty reduction among

9

disadvantaged households. They will also lead to: (i) the emergence of investment opportunities and the establishment of agro-pastoral product processing micro-enterprises and induced accommodation and catering-related activities, thus broadening the range of socio-economic activities in the PIA; and (ii) an improvement in conditions for deploying administrative personnel (teachers, medical, civil protection, forestry personnel, etc.). Negative Impact Reduction and Mitigation Programme 3.2.6 During the works phase, mitigation measures will mainly concern the integration of environmental good practices in the contractors’ specifications as well as technical measures with regard to civil works (personnel management, conditions of installation and hygiene of site living quarters, organization and management of fuel storage areas, traffic regulation, solid and liquid waste management, site restoration, dismantling of temporary installations on works completion, re-vegetation of rights-of-way, erosion control mechanisms, etc.). In the operational phase, measures will concern the safety of residents, personnel and users as well as maintenance of the rehabilitated road. The ESMP includes: (i) impact mitigation by the works contractor (EUR 620 000); (ii) works supervision (EUR 35,000); and (iii) the control mission monitoring plan (EUR 40,000). Therefore, the ESMP is estimated at EUR 695,000, i.e. 1.17% of project cost, excluding taxes. 3.2.7 In compliance with Congolese institutional arrangements, project implementation monitoring will be organized and presided over by MATUHITPR, in close collaboration with the Ministry of Environment, Nature Conservation and Tourism (MECNT) and the Congo Environmental Assessment Group (GEEC), responsible for evaluating reports and issuing the Environmental Compliance Certificate. Through the Roads Authority’s Environmental Unit and assisted by the Control Mission (MDC), the MATUHITPR will ensure regular monitoring of the ESMP implementation until works acceptance. Gender 3.2.8 As is the case everywhere else in DRC, women are the main development drivers. They account for over 70% of food crop production and carry out most activities. Moreover, rural women are occupied by other income-generating activities to meet household needs such as children’s education, medical costs, clothing and contributions to family costs. All these tasks are factors that prevent rural and urban women from seizing development opportunities. The provincial authority has launched a sensitization campaign aimed at mainstreaming gender in all aspects of life. To that end, the NGOs, cooperatives, churches, charitable and development associations pay special attention to women’s activities and are seeking ways and means of easing women’s chores. 3.2.9 It was noted that this project’s area of intervention is characterized by the widespread deterioration of basic infrastructure (tracks, roads, schools, health centre, etc.) and the scarcity of means of transport, which tends to make women’s situation even more precarious and increases their daily chores (water fetching, transporting farm produce, etc.). In the project area, especially in Western Kasai, the maternal mortality rate, according to the 2007 DHS, has remained very high (549 deaths per 100,000 live births). This situation is due, among others, to the fact that 20% of births take place outside healthcare facilities. The improvement of 80 km of rural tracks in the PIA, connected to the road, will help to improve access of the population, especially women, to health centres. This will lead to a reduction in maternal mortality. The expected positive impact for women will also result in shorter travel times and higher income.

10

Social 3.2.10 The estimated poverty rate in Western Kasai is 55.4%. The estimates made on the basis of the DHS (2007) and the 2010 MICS Survey show that monetary poverty fell by 8.1 points between 2005 and 2010 from 55% to 47% (compared to the 71% national rate). Rural poverty, which is widespread in the PIA, is largely due to the state of access to, and inaccessibility of, these zones. Indeed, entire areas are inaccessible due to the systematic destruction of structures and deterioration of roads as a result of poor maintenance. Such a situation leads to an excessive increase in costs not only of transport but of all categories of goods, deterioration of the means of transport and a fall in production activities. Implementing this project will help to improve the zone’s accessibility and consequently, the living conditions of its population. 3.2.11 Analysis of trade flows and availability of the main food products reveals significant production and trading potential for maize, beans, cassava and groundnuts between the two Kasais, Bandundu and Kinshasa. Indeed, the two Kasais have vast uncultivated agricultural areas. For instance, Western Kasai, which is directly concerned by the project, has about 32 million hectares of unfarmed agricultural land, less than 10% of which has been developed. By improving access to these areas, the project will also help to improve the evacuation of agricultural produce (soya, coffee, rice, maize and cotton) and consequently producers’ income. 3.2.12 On the downside, the project could further raise the risk of HIV/AIDS/STI propagation following the increased flow of people on the project highway, as well as of road insecurity. Consequently, plans have been made to conduct sensitization campaigns on HIV/AIDS and road safety as well as on environmental protection. The ESMP contains a series of measures to mitigate the negative impact of this project. Climate Change  3.2.13  The road will improve traffic fluidity at a nominal speed of 80 km/h. However, by limiting speed at critical points and setting urban speed limits at 50 km/h, CO2 gas emissions will be reduced. The standard speed of 80 km/h will help to ensure that vehicles operate efficiently at optimum energy consumption levels with minimum emissions for the journey compared to the ‘no-project’ situation characterized by a concentration of emissions at points of congestion - a situation exacerbated by numerous stops/starts. This will lead to a reduction in greenhouse gas emissions. The planting of trees along the project road will contribute significantly to CO2 absorption.    

3.2.14 The most common climate risks in DRC are related to intense rains, prolonged droughts, floods, heat waves and coastal erosion. The project will also include technical provisions for adaptation to climate change through: (i) the establishment of holding basins for slopes of more than 2%; (ii) the scaling of structures on the basis of 50-year flood peaks; and (iii) the planting of roadside and shade trees in the villages crossed. Hence, the project will contribute to climate change mitigation (carbon sequestration and reduction in greenhouse gas emissions in the atmosphere) in accordance with the strategic options of the National Adaptation Plan of Action to Climate Change adopted with assistance from the Global Environment Facility (GEF). Resettlement 3.2.15 The project will not result in the expropriation of any buildings or commercial premises. Only the loss of agricultural assets related to nomadic farming is expected. A total global amount equivalent to USD 50,000 has been earmarked for compensation for loss of agricultural incomes. The cost of this compensation will be covered by the ADF grant.

11

IV. Implementation 4.1. Implementation Arrangements Executing Agency 4.1.1 The project executing agency will be the Ministry of Town and Country Planning, Urban Planning, Housing, Infrastructure, Public Works and Reconstruction (MATUHITPR) through the Infrastructure Unit (IU). Established in 2004, it acts as Contracting Authority Delegate for road infrastructure projects financed by donors (AfDB, World Bank, JICA, EU, ABEDA and the Kuwait Fund). The IU provides MITPR with support for: (i) sector coordination; (ii) mobilization of external funds; and (iii) management of donor-financed operations in the public works infrastructure sector. It manages and ensures the monitoring of a portfolio of projects totalling approximately USDM 800. It comprises a nucleus of experts in the following areas, in addition to coordination: (i) civil works; (ii) finance; (iii) administration; (iv) procurement; (v) communication; and (vi) environmental and social monitoring. The administrative, financial and accounting procedures manual, prepared for IU under the Bank-financed Nsele-Lufimi and Kwango road projects, will be updated for the purpose of this project. 4.1.2 Under the ‘Pro-Routes’ Programme, the Government and Technical and Financial Partners (TFP) undertook to fully finance the Infrastructure Unit’s key personnel and, consequently, to subsidize operations outside the framework of the said Programme. On that basis, it was agreed that any new project would provide support staff and a contribution towards the IU’s additional operating costs from its own resources. 4.1.3 Pursuant to this provision, it was agreed to establish a Project Management Unit at the IU comprising: (i) a project manager (road engineer); (ii) a procurement expert; and (iii) an accountant. The road engineer, already identified within the IU, has been recruited under the World Bank-financed ‘Pro-Routes’ project in accordance with open competition procedures. Moreover, he has had to perform coordination and monitoring duties for the Nsele-Lufimi and Kwango-Kenge Road Projects in DRC financed by the Bank. An evaluation of his performance as transmitted to the World Bank shows that the expert has the necessary qualifications and experience to manage the project. Therefore, he will be recruited by single-source selection. The recruitment of the two other experts will follow the Bank’s procedures. The monthly fees of these three experts will be paid under this project from ADF resources. The Project Management Unit will work closely with: (i) the Environmental Unit of the Ministry in charge of the Environment regarding the monitoring of environmental and social issues; and (ii) with DVDA for the monitoring of rural track works. It was also agreed to include in the project financing, the strengthening of logistic resources comprising: (i) one 4x4 vehicle, including operating and maintenance costs; and (ii) one lot of computer and office automation equipment, including consumables. The monthly allowances of the driver assigned to the 4x4 vehicle for the project duration will be covered by the project. Institutional Arrangements 4.1.4 A qualified consulting firm will be recruited to carry out works supervision and control. Under the oversight of IU, it will conduct field monitoring of works implementation, control of technical quality, certification of the accounts on the basis of the documentation provided by the contractor and will prepare monthly works status reports.

12

4.1.5 The Roads Authority (OdR) will supervise project implementation. It will be provided with the following logistic support from ADF resources: (i) one 4x4 vehicle (including operating and maintenance costs); and (ii) a batch of computer and office automation equipment (including consumables). The monthly allowances of the driver assigned to the 4x4 vehicle for the project duration will be covered by the project. 4.1.6 The OdR offices will be partially rehabilitated under the project. Three (3) counterparts (2 OdR road engineers and 1 DVDA rural engineer) will work directly and permanently with the works control and monitoring mission in order to benefit from the transfer of knowledge and additional training in project management as well as engineering techniques for rural road and track works. These counterparts will receive monthly allowances and per diem for field missions paid by the project. 4.1.7 The Government has accepted the principle of establishing a Steering Committee for the NTMP comprising experts with cross-cutting skills (gender, environment, social) representing every mode of transport (road, rail, river and air). The Committee’s responsibilities will include: (i) validation of the study’s terms of reference; (ii) study monitoring and guidance; (iii) monitoring the consistency of the priority actions in relation to the sector and national development strategies; (iv) dissemination of information to stakeholders; (v) dialogue for synergy among the different donors; (vi) monitoring and validation of reports to be produced; and (v) presentation of the study report to the Government for adoption. Owing to the study’s complexity and scope, plans have been made to establish an ad hoc panel of high level experts (road engineering, railway, air and maritime transport, institutional set-up, environment, socio-economic and transport economics specialists) who will assist the Committee to fulfil its mission. The fees and other costs (travel and per-diem) of short-term individual experts will be factored into the project cost. Procurement Arrangements 4.1.8 All procurements of goods, works and services financed by the Bank will be made in compliance with the Bank’s Rules of Procedure for the Procurement of Goods and Services and the Bank’s Rules of Procedure for the Use of Consultants, using appropriate Bank standard bidding documents. The Government has requested and obtained from the Bank approval for Advance Procurement Action (APA) for the following contracts: the civil works contract comprising: (i) improvement of the Loange Bridge–Lovua Bridge road section, i.e. 63 km including the optical fibre cable rights-of-way; (ii) improvement of 80 km of rural tracks; (iii) rehabilitation of related infrastructure, including school and health centre enclosures at village level in the project area; and (ii) provision of supervision and control services for civil works and related contracts. Furthermore, prior to the negotiations, the country will submit to the Bank for approval the draft Procurement Plan (PP) prepared during the project appraisal mission in order to ensure its compliance with the Grant Agreement as well as with the appropriate Rules. This PP will cover an initial period of at least 18 months. The national procurement bodies established pursuant to adoption of the Procurement Code on 27 April 2010 will be involved in reviewing bidding documents and contract award decisions before submission to the Bank for its no-objection opinion. A detailed description of this project’s procurement arrangements is presented in Technical Annex 2. Disbursement 4.1.9 Two disbursement methods are proposed: (i) the special account method for the project management team’s operating expenditure and for the payment of contracts equal to or below UA 20,000; and (ii) the method of direct payment to service providers for amounts

13

exceeding the equivalent of UA 20,000. With regard to the special account, the funds will be disbursed in the form of advance payments into the account opened for that purpose. Replenishments will be made following justification of the use of at least 50% of the latest disbursement and the totality of previous disbursements, as required. 4.1.10 A special account to be maintained by the EA will be opened for the payment of ADF resources intended for operating expenses concerning support to the IU, the Roads Authority and DVDA, mobilization of experts to upgrade the capacities of the IU as well as of ad hoc experts to support the NTMP Steering Committee and compensation to be paid to people deprived of their nomadic farmlands in the PIA. Evidence of the opening of the Special Account in a bank acceptable to AfDB is a condition precedent to first Grant disbursement. Evidence of payment of full compensation to project–affected people no later than 31 December 2012, is another grant condition. Financial management and Audit 4.1.11 The assessment of the fiduciary risk surrounding the project, as carried out by the Bank, shows that financial governance, precisely public finance management is under reforms. It is therefore recommended to be cautious in the use of national systems and to put in place appropriate mechanisms for the management and control of the accounts of the project. IU will be responsible for the administrative, financial and accounting management of all project activities. To that end, it will ensure that financial management mechanisms are established, in particular: (i) staffing; (ii) updating the procedures manual and strengthening the internal control process; (iii) configuring existing software on the basis of specific project data; (iv) opening the special account; (iv) inclusion of the project activities in the work programme of the internal auditor; (v) training of the financial staff in the field on Bank’s rules and procedures governing financial management and (iii) recruitment of the auditor. 4.1.12 The project accounts and financial statements will be closed each year on 31 December in accordance with the principles of the OHADA accounting system. The project’s annual financial statements, special account and certified expenditure statements will be audited annually by independent external auditors deemed acceptable by the Bank. The audit costs will be financed from the grant resources throughout the duration of the project. In view of the probable date of first disbursement by the Bank, the first accounting period to be audited could cover 18 months. The overall financial management-related risk remains moderate in light of the measures proposed in the financial management action plan. The financial management mechanism proposed on the basis of information provided will be reviewed at the time of project launching. Implementation and Supervision Schedule 4.1.13 In accordance with the implementation schedule summary at the beginning of this report, the project will be implemented from May 2012 to June 2016. During the implementation phase, the Bank will field joint supervision missions with the IU, OdR and DVDA, as well as any other DRC agency concerned. The estimated schedule and indicative composition of the supervision team is presented below:

14

Table 4.1

Estimated Supervision Programme Period Activity Team Composition

08/2012 Launching Mission Task Managers (1 Transport Economist 1 Road Engineer, 1 Disbursement Officer, 1 Procurement Officer) + CDFO

06/2013 – 11/2013 – 06/2014 – 11/2014 – 11/2013 -

Supervision Task Managers + CDFO

03/2015 Mid-Term Review Task Managers; Socio-economist; Environmentalist; Financial Management Officer; CDFO

06/2015 – 11/2015 – 03/2016 – 06/2016

Supervision Task Managers + CDFO

10/2016 Completion Report Task Managers + 1 Socio-economist + CDFO 4.2. Monitoring/Evaluation 4.2.1 Monitoring/evaluation will comprise internal and external monitoring, the Bank’s supervision missions, a mid-term review and a socio-economic impact assessment as well as the production of completion reports by the country and the Bank. The project’s implementation will be monitored through monthly and quarterly reports prepared by the consultant in charge of works supervision and control, and the task manager at the IU. These reports will be submitted to the Bank no later than fifteen days following the end of the quarter concerned and in accordance with the existing format. To assess the level of achievement of this project’s development objectives, the conduct of socio-economic impact monitoring/evaluation studies will be entrusted to the INS. Quantitative elements will be provided for the ex post evaluation reviews. 4.2.2 The consultant in charge of works supervision and control will prepare works wrap-up reports for submission to the IU in its capacity as EA, with a view to the preparation of the Borrower’s completion report in accordance with the existing format within six months of project completion. The control mission will provide the IU with assistance for provisional works acceptance. In its capacity as EA, the IU will produce quarterly status reports for submission to the Bank. In order to estimate the project’s contribution to youth employment, the control mission will submit in annex to its reports, tables presenting details of the situation in terms of the use of labour, especially by specifying the category of tasks performed over the target period, the number of people used by gender and age, and the amount of salaries paid. These tables will be compiled by the INS to estimate the number of jobs created for men/youths. 4.3. Governance 4.3.1 Under the aegis of the Public Enterprises Reform Steering Committee (COPIREP), there are plans to establish the Transport Regulatory Authority (ATR) as an autonomous and independent structure to ensure compliance with rules of competition and guarantee the interests of all partners in the sector (operators, consumers and the State). A bill was drafted to that end in 2005 but has not yet been adopted. Preparation of the NTMP will provide an opportunity to determine the Authority’s operating modalities and assess the corresponding capacity building requirements. COPIREP will also pursue the reform of the sector’s public enterprises which, following an organizational, technical, operational and financial diagnosis phase culminated in satisfactory results in terms of management stabilization and consolidation of the Civil Aviation Authority, the National Transport Authority (ONATRA) and the National Railway Company (SNCC), among others. This momentum should be further consolidated to ensure the viability and sustainability of these entities.

15

4.3.2 On the decentralization front, the provincial governments (established since 2007) will help to improve local governance in the country by playing a pivotal role in the planning process at regional level through the transfer of different competencies to the provinces and decentralized territorial entities. Effective implementation of the new Public Procurement Code in force since October 2010 will ensure the introduction of greater transparency and equity in procurement procedures The country has also taken note of the Construction Sector Transparency (COST) Initiative, launched under the aegis of DFID and the World Bank, but has indicated that its accession to the Initiative would only be considered after a comprehensive review of the procedures envisaged within that framework. 4.3.3 The risks of bad governance in the context of this project mainly lie in the contract award and execution process. These risks will be mitigated by: (i) financing a procurement expert; (ii) updating the administrative, financial and accounting procedures manual; (ii) the Bank’s control at different stages of the procurement process through the issuance of no-objection opinion; and (iii) project supervision and project financial audits. Moreover, CDFO will provide on-the-spot support to the EA with regard to contract award/management and financial management. 4.4. Sustainability 4.4.1 The project’s recurrent costs concern current and periodic maintenance, taking into account the existence of an asphalt concrete pavement which has a long life span (20 years). From a financing standpoint, these costs will be covered by the National Road Maintenance Fund (FONER), which has been operational since August 2009 as a second generation road fund (97% of the funds come from the excise tax on petroleum products). The main responsibility for road maintenance lies with the Roads Authority in charge of public interest roads (based on a three-year maintenance programme). The existing three-year programme for the 2010-2012 period at a cost of USDM 34, is mainly implemented on force account by provincial brigades. Rural track maintenance, which falls within the remit of DVDA, is carried out through the Local Road Maintenance Committees (CLER), which are strongly motivated by the fact that the project has a proven impact on their main production activities (especially agriculture). The original level of funds leveraged by FONER averaged UAM 5 per month from August to December 2009. The Fund is consolidating its collection efforts by stepping up its presence in the main provinces and an increasingly widespread use of withholding taxes on petroleum product importers. The Fund’s estimated revenue in 2011 was USDM 55, of which 60% was earmarked for the maintenance of the public interest network and 40% for rural roads. The public interest roads (RIG) are among the Fund’s top intervention priorities. A FONER operations manual, financed by the World Bank, was prepared and validated in August 2011. Its implementation will enhance the programming, implementation and monitoring effectiveness of FONER operations. 4.4.2 Rural track maintenance falls within the remit of DVDA, organized around a National Directorate and Provincial Coordination based at each province’s headquarters. DVDA’s estimated 2011 budget, mainly financed by FONER, amounts to USDM 24 earmarked for provincial and national road maintenance. DVDA provides USD 7.6 million (13% of FONER’s budget) for the maintenance of 3,000 km of tracks. Between September 2009 and May 2010, FONER financed the maintenance of about 3,284 km of public interest roads and 47 km of municipal roads. The total amount contracted for that purpose stands at USDM 27.2 million for a total disbursed amount of nearly USDM 14 (52%). FONER’s objectives by 2013 are as follows: (a) maintain 5,994 km of public interest roads (10.3%), 576 km of urban roads (7.8%) and 13,870 km of rural tracks (16%); and (b) install 50 toll booths and 5 weigh stations on the priority network.

16

4.4.3 The following points have been agreed upon under this project: (i) similar to the paved sections of RN1 from Kinshasa, the maintenance of the paved section between Batshamba and Lovua Bridge will be the subject of strict programming as part of the Roads Authority’s interventions on FONER resources as from the end of the works guarantee period; and (ii) appropriate measures will be taken to enable OdR to guarantee all-weather road standards on the earth road section between Lovua Bridge and Tshikapa (58 km) in order to ensure the continuity of traffic between Batshamba and Tshikapa on RN1, pending the mobilization of funds to pave the said section. Maintenance of the paved sections upstream, between Nsele and Batshamba on RN1, is one of FONER’s top priorities. In addition, the project includes provision to install a fixed weigh station equipped with a modern axle load scale as well as the supply of two (2) mobile axle load scales for random controls. This innovative project on this highway will help to reduce the impact of overloading (premature deterioration of the carriageway) and to sensitize transporters and consignors on the negative impact of this practice. 4.5. Risk Management The direct risks affecting the project are related to: (i) an increase in the cost of works; and (ii) slippage on project implementation. The risks related to an increase in the cost of works will be mitigated by: (a) the fact that the project appraisal was based on the costs of similar contracts executed in DRC in 2011-2012; (b) inclusion of a specific provision attached to the financial contingency rate to take into account exchange rate fluctuations and increases in the prices of certain inputs; and (c) opening up the process for the selection of contractors and control firms to international competition. The risk related to slippage on project implementation will be mitigated by the use of APA, the building of IU’s technical monitoring capacity and close monitoring by CDFO. 4.6. Knowledge Building Knowledge will be built through monitoring/evaluation. The establishment of key indicators prior to project start-up (baseline scenario) and assessment of the impact on project completion will provide useful information on the project outcomes and effects. This knowledge will be managed on the basis of an operational database at the monitoring/evaluation services of the IU, OdR and DVDA, and will be disseminated in the annual reports and posted on the Bank’s website. V. Legal Framework 5.1. Legal Instrument To finance this project, the Bank will award a project grant to the Democratic Republic of Congo from the ADF country allocation.

5.2. Conditions Associated with Bank’s Intervention 5.2.1 Effectiveness of Grant Agreement: Effectiveness of the Grant Agreement shall be subject to its signature by the Donee and the Fund.

17

5.2.2 Condition Precedent to Grant Disbursement In addition to effectiveness, the Fund shall only proceed with disbursement of the grant resources if the Donee has fulfilled the following condition to the Fund’s satisfaction:

(i) Provide evidence of opening the Special Account in a bank acceptable to the Fund (refer to paragraph 4.1.10); and

5.2.3 Other Grant Condition

(ii) Provide ADF with evidence of the payment of compensation to people affected by expropriations no later than 31 December 2012 (refer to paragraph 4.1.10).

5.3. Compliance with Bank’s Policies The project is compliant with all applicable Bank policies. VI. Recommendation In light of the foregoing, Bank Management recommends that the Board of Directors approve the proposal to award an ADF grant not exceeding UA 53.55 million to the Government of the Democratic Republic of Congo. The grant will be used to implement the project as designed and described in this report, and will be subject to the conditions specified in the Grant Agreement.

Appendix I. Country’s Comparative Socio-Economic Indicators

1990 2011 *Area ( '000 Km²) 30,323 80,976Total Population (millions) 36.4 67.8 1,044.3 5,732.2Population growth (annual %) 3.6 2.7 2.3 1.3Life expectancy at birth, total (years) 47.8 48.0 56.0 67.1Mortality rate, infant (per 1,000 live births) 114.4 113.9 78.6 46.9Physicians per 100,000 People 6.9 … 58.3 109.5Births attended by skilled health staff (% of total) … 74.0 50.2 64.1Immunization, measles (% of children ages 12-23 months) 38.0 68.0 77.9 80.7School enrollment, primary (% gross) 57.6 93.2 100.4 107.2Ratio of girls to boys in primary education (%) 70.8 85.5 90.9 100.0Literacy rate, adult total (% of people ages 15 and above) … 66.8 65.1 80.3Access to Safe Water (% of Population) 43.0 46.0 64.5 84.3Access to Sanitation (% of Population) 15.0 23.0 41.0 53.6Human Develop. (HDI) Rank (Over 187 Countries) … 187 n.a n.aHuman Poverty Index (% of Population) … 24.3 34.7 …

Economy 2000 2009 2010 2011GNI per capita, Atlas method (current US$) 92 175 185 …GDP (current Million US$) 4,335 11,204 16,585 20,107GDP growth (annual %) -6.2 2.8 7.3 6.7Per capita GDP growth (annual %) -8.4 0.1 4.4 3.9Gross Domestic Investment (% of GDP) 3.4 19.4 22.1 21.4Inflation (annual %) 550.0 46.2 22.9 13.5Budget surplus/deficit (% of GDP) -6.0 -4.1 -0.5 -7.1

Trade, External Debt & Financial Flows 2000 2009 2010 2011Export Growth, volume (%) -6.1 -6.2 53.1 5.3Import Growth, volume (%) 32.5 -12.5 38.1 0.2Terms of Trade (% change from previous year) -9.0 -16.1 -5.9 -8.3Trade Balance ( mn US$) 242 -579 -730 -1,327Trade balance (% of GDP) 5.6 -5.2 -4.4 -6.6Current Account ( mn US$) -173 369 -50 -1,558Current Account (% of GDP) -4.0 3.3 -0.3 -7.7Debt Service (% of Exports) 83.6 3.7 2.0 0.8External Debt (% of GDP) 290.9 123.2 26.7 35.5Net Total Inflows ( mn US$) 191.8 2,152.3 … …Net Total Official Development Assistance (mn US$) 177.1 2,353.6 … …Foreign Direct Investment Inflows (mn US$) 0.1 9.1 9.4 …

External reserves (in month of imports) … 1.8 1.4 …

Private Sector Development & Infrastructure 2000 2005 2010 2011Time required to start a business (days) … 133 84 65Investor Protection Index (0-10) … 3.3 3.3 3.3Main Telephone Lines (per 1000 people) 0.2 0.2 0.6 …Mobile Cellular Subscribers (per 1000 people) 0.3 47.8 172.1 …Internet users (000) 0.1 2.4 7.4 …Roads, paved (% of total roads) … … … …Railways, goods transported (million ton-km) 513 444 … …

* Most recent year Last Update: October 2011

Congo (DRC) - Development IndicatorsDeveloping countries

Source: ADB Statistics Department, based on various national and international sources

Congo (DRC)AfricaSocial Indicators

2,345

Congo (DRC)

Appendix II: Table of ADB’s Portfolio in the Country

Project/Sector Amount (USDM) %

Disbursed Key Dates

Age (year) Commitment Disbursement Approval Signature Closure

Energy

Study on Inga Hydro-Power Site Development and Related Interconnections 9.51 - 10/03/2008 07/08/2008 12/12/2012 3.8

Project to Rehabilitate and Strengthen the INGA Hydro-Power Plants and the Kinshasa Grid (PMEDE) 35.7 - 0 18/12/2007 10/04/2008 31/12/2014 3.6

Project to Rehabilitate and Strengthen the Electric Power Grids of the Equatorial and Nile Countries (NELSAP Nile Equatorial Lakes Subsidiary Action Programme)

27.62 - 27/11/2008 28/05/2010 31/12/2014 3.1

Rural and Peri-Urban Electrification Project (PEPUR) 69.69 - 0 15/12/2010 10/03/11 31/12/2015 0.5 Agriculture Agricultural Rehabilitation Support Project in Bas Congo and Bandundu Provinces (PARSAR) 25 19.94 80 19/05/2004 25/05/2004 31/03/2012 7

Agricultural and Rural Sector Rehabilitation Project in Katanga and the 2 Kasai Provinces (PRESAR) 35 27.71 79.18 12/12/2005 02/02/2006 31/01/2013 5.5

Agricultural Sector Study (ASS) 1.85 1.5 81.23 28/06/2006 11/10/2006 30/06/2011 5 Transport Rehabilitation of Nselé-Lufimi and Kwango-Kenge Roads 52.45 34.02 68.67 19/12/2005 29/12/2005 31/12/2011 6 Priority Air Safety Project (PPSA) 88.6 10.29 11.62 27/09/2010 02/11/2010 31/12/2015 0.7 Water/Sanitation Drinking Water Supply and Sanitation Project in Semi-Urban Areas (PEASU) 70 20.88 29.83 06/06/2027 09/08/2007 31/12/2012 4 Health Eastern Province Health Care Development Master Plan Support (PAPDDS) 25 8.27 33.08 17/03/2004 25/05/2004 31/03/2012 7 Social Socio-Economic Re-Integration Support (PARSEC) 15 2.31 15.41 24/07/2007 09/08/2007 30/06/2013 4 Capacity Building Institutional Capacity Building Assistance Project to Mobilize and Revitalize Human Resources in Public Departments (PRM-RH) 20 - 0 19/01/2011 4/05/11 31/12/2015 0.5

Total 402.59 124.92 31.03

Appendix III: Main Related Projects Financed by the Bank and the Country’s Other Development Partners

ROADS LENGTH (km) TYPE OF WORKS AMOUNT FINANCING USD EUR

Nsele-Lufimi (RN1) 93 Rehabilitation AP 37 997 454.13 AfDB/DRC

Nsele Bridge Rehabilitation 850 lm Raising of apron and abutment protection 239 588.05 AfDB/DRC

Lufimi-Kwango 57 Reconstruction 33 950 384.41 EU Mayidombe Bridge(60 lm) 5 130 327.22 EU

Kwango-Kenge (RN1) 70+340 Reconstruction 44 782 541.71 AfDB/DRC Rural Tracks 140 3 882 092.74 AfDB/DRC 86 901 676.63 39 080 711.63 54 712 996,28 SINO-CONGOLESE Programme Beni-Luna (RN4) 60 Asphalting 60 920 000.00 SINO-CONGOLESE Lubumbashi-Kasumbalesa(RN1) 96 Modernization SINO-CONGOLESE Lot 1 Rehabilitation 135 960 000.00 BOT Lot 2 Construction BOT Lubumbashi-Kasomeno(RN5) 137 Asphalting 162 420 000.00 SINO-CONGOLESE Bukavu-Kavumu (RN2) 33 Rehabilitation AP SINO-CONGOLESE Lot 1 12 8 057 048.00 BI Lot 2 21 14 882 353.00 Chinese Grant 382 239 401.00 PMURR Matadi-Kinshasa Highway (RN1) Mpozo-Pont Kwilu Bridge 110 Rehabilitation AP 8 159 825.69 IDA Kwilu-Mbanza Ngungu Bridge 83 Rehabilitation AP 8 424 289.13 IDA Mbanza Ngungu-Sonabata 68 Rehabilitation AP 10 904 754.70 IDA Kinshasa-Kenge-Kikwit-Batshamba Highway (RN1) 112 Rehabilitation AP 27 017 880.71 IDA Masimanimba-Kikwit 124 Rehabilitation AP 25 656 516.00 IDA Kikwit-Batshamba 98 Rehabilitation AP 13 826 420.65 IDA Lubumbashi-Likasi-Nguba Highway (RN1) Lubumbashi-Likasi Highway 119 Rehabilitation AP 28 015 211.17 IDA 122 004 898.05

Appendix IV: Map of Project Area