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Implementation Completion Report (ICR) Review - Local Government Support Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Local Government Support Project
Project Costs(US $M)
 60.80  158.80
L/C Number:
Loan/Credit (US $M)
 52.0  150.0
Sector Board:
Urban Development
Cofinancing (US $M)
Board Approval Date
Closing Date
06/30/2008 06/30/2012
Sub-national government administration (85%), General water sanitation and flood protection sector (10%), Roads and highways (5%)
Decentralization (23% - P) Municipal governance and institution building (22% - P) Municipal finance (22% - P) Urban services and housing for the poor (22% - P) Rural services and infrastructure (11% - S)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Maha J. Armaly
Robert Mark Lacey Christopher David Nelson IEGPS1

2. Project Objectives and Components:

a. Objectives:
The project development objective in the Development Credit Agreement (DCA) is identical to that in the Project Appraisal Document (PAD): "to: (a) strengthen fiscal decentralization and improve accountability in the use of local government resources and in the management of inter-governmental transfer systems; and (b) increase access to infrastructure and services in the Unplanned Areas of Dar es Salaam and improve revenue performance for sustainable operation and maintenance."

On August 30, 2006, the Board approved Additional Financing of US$98 million in order to extend the scope of the project to all 132 Local Government Authorities (LGAs) in the country rather than the 41 LGAs originally supported. The project’s development objectives were not changed.

In a restructuring approved on June 24, 2009, the objectives were revised to allow for preparation of a future project. The revised objectives were "to: (a) strengthen fiscal decentralization and improve accountability in the use of local government resources and in the management of inter-governmental transfers and demand-driven urban investments; and (b) increase access to infrastructure and services in the Unplanned Areas of Dar es Salaam and improve revenue performance for sustainable operation and maintenance.”

The objectives were not substantially changed as a result of restructuring. Therefore this review will not conduct a split evaluation.

b. Were the project objectives/key associated outcome targets revised during implementation?

If yes, did the Board approve the revised objectives/key associated outcome targets? Yes

Date of Board Approval: 06/21/2009

c. Components:
Original Components
(A): Support for Local Government Capital Development Grant System (LGCDGS) (appraisal cost: US$35.0m, additional financing revised cost: US$131.0m, restructuring revised cost: US$93.17m, actual cost US$113.28m):
(1) Strengthening the delivery of infrastructure and services by Participating Local Government Authorities (LGAs), through the provision of Capital Development Grants (CDGs) to finance sub-projects.
(2) Strengthening the capacity of Participating LGAs, through the provision of capacity building grants targeted at the implementation of capacity building plans.

(B) Dar es Salaam Upgrading and Institutional Strengthening (appraisal cost and additional financing cost US$18.8m, restructuring revised cost: US$39.45m, actual cost US$17.3m) includes:
(1) Strengthening access to infrastructure and services to approximately 16 local communities living within the jurisdiction of the DLAs, through:
(a) the financing of investments in infrastructure including roads, footpaths, drains, street lighting, public toilets, roads, drains, bridges and culverts;
(b) implementation of a household sanitation program; and
(c) enhancing the capacity of DLA staff in the areas of infrastructure upgrading and service delivery by providing technical advisory services to assist in inter alia carrying out studies and monitoring and evaluation, training and equipment.
(2)Strengthening the capacity of the DLAs to increase own- source revenues through:
(a) the design of a revenue enhancement program and provision of support to implement the said program;
(b) carrying out tax base data collection and verification, and registration of taxpayers;
(c) design and implementation of property tax reforms and administration systems;
(d) implementation of an appropriate tax administration system for taxes other than property tax;
(e) provision of training to build local capacity in revenue enhancement mechanisms;
(f) monitoring and evaluation;
(g) dissemination of lessons learnt;
(h) preparation of the preliminary design of a demand driven revenue enhancement program for roll out to other urban local government authorities;
(i) provision of support to DLAs in upgrading their planning and budgeting functions, and implementing operations and maintenance systems; and
(j) provision of operational support to the Dar Support Team in the coordination, implementation and monitoring and evaluation of its part of the Project, including contract management, monitoring of performance indicators and carrying out of impact assessments.

C) Support to the President's Office - Regional Administration and Local Government (PO-RALG) (appraisal cost US$7.0m, additional financing revised cost US$9.0 million, restructuring revised cost US$15.5m, actual cost US$8.4m): Strengthening the operational capacity of the PO-RALG Support Team to support the carrying out of the coordination, implementation and monitoring and evaluation of the Project including inter alia:
(a) annual performance assessments of the Participating LGAs;
(b) the administration and monitoring of CDGs and CBGs;
(c) operations and maintenance budgeting for purposes of local revenue generation;
(d) monitoring of service delivery and maintenance by Participating LGAs;
(e) local government capacity building and management programs;
(f) project monitoring and evaluation, and progress reporting; and
(g) information dissemination.

In June 2009, project costs by component were revised to (a) decrease funding in component A due to higher donor and government support to activities under this component (b) address increased costs due to inflation and rising construction costs in component B, and (c) include preparatory studies for a new project in component C. The project financed many small investments across the country based on demand. Detailed costs of these small sub-projects, of studies, training and technical assistance are not provided in the ICR.
During restructuring, a change was made to reflect "administrative change in name of the President's Office to the 'Prime Minister's Office'" (ICR footnote page 4), referred to as PMO-RALG.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

Project cost. The ICR (Annex 1, Table a) inappropriately incudes physical and price contingencies of US$0.80 million and US$1.3 million respectively in the actual project cost of US$158.8 million. The actual cost was US$92 million over the appraisal estimate of US$60.8 million, almost entirely due to the geographic extension of the project to all 132 municipalities in the country.

Financing. According to the project team, the project was initially designed as two separate operations: one at the national level, and the second for Dar es Salaam . However, due to limited IDA funds at the time of appraisal, the two projects were merged and original project scope was reduced. IDA funding at appraisal was US$52 million equivalent. When new IDA funds became available, Additional Financing of US$98 million was approved. The total Credit of US$150 million equivalent was fully disbursed. Overall, the Bank financed 92% of total project costs. There was no other external financing.

Borrower contribution. The Government’s contribution increased from the original US$6.5m to US$8.8m. Contributions from Dar es Salaam local government authorities and from other local communities increased from US$2.3m at appraisal to US$4.1m actual.

Dates. At the time of the approval of the Additional Financing (August, 2006), the closing date was extended by 3 years from June 30, 2008, to June 30, 2011, to accommodate the increased number of municipalities and sub-projects. A further one year extension was granted at the restructuring of June 2009. The project closed on June 30, 2012.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:
The objectives of the project are highly relevant to the Country Assistance Strategy (CAS) for Tanzania (Fiscal Years 2012-2015) which emphasizes the need to continue support to local governments responsible for service delivery. This support is considered essential to achieve the CAS's second objective to improve management and delivery of urban services. The CAS indicates that future Bank operations and Government investments are planned to improve urban services through a grant window within the Local Government Capital Grant System established under the project.

The objectives are also relevant to the Government's Development Vision to 2025 which aims to achieve the Millennium Development Goals and is the basis for the updated 2011-2015 five year plan.

b. Relevance of Design:
Design included both infrastructure work leading to service delivery, and design and testing of the Local Government Development Grant (LGDG) transfer system, thus addressing both the objectives outlined in the CAS and the project’s development objectives. Technical assistance was to be provided in the form of studies in revenue enhancement and training for national and local government agencies. There is a clear causal chain between these activities and the intended achievement of the project’s development objective. The demand driven physical investments under components A and B would be expected to improve service delivery and demonstrate to citizens and local governments that participation improves access to needed infrastructure. Transfers made through the LGDGS based on transparent performance criteria (including participation, audits), and as reviewed by the national government would be expected to improve and encourage accountability at the local government level. Training and technical assistance to LGAs and the national government would lead to improved performance and provide support for further strengthening of the transfer system.

4. Achievement of Objectives (Efficacy) :

The project development objectives are to: (a) strengthen fiscal decentralization and improve accountability in the use of local government resources and in the management of the intergovernmental transfer systems; and (b) increase access to infrastructure and services in the Unplanned Areas of Dar es Salaam and (c) improve revenue performance for sustainable operation and maintenance. Each objective is assessed separately below.

Objective (a): Strengthen Fiscal Decentralization, improve accountability and management of the intergovernmental transfer systems. Modest
- The project helped to replace the pre-existing governmental finance system with the Local Government Development Grant (LDGD). The pre-existing system is described by the ICR (page 14) as “ad-hoc, fragmented, and unpredictable.” The LDGD system is “more transparent, results-based, and equitable.”
- By project completion, the performance based fiscal transfer had become a “permanent feature of Tanzania’s fiscal architecture” (ICR, pages 11-12).
- The Government’s share of the LGDG core disbursement in FY2005/06 was 7% (US$ 1.5 million out of US$ 22.4 million disbursed). It had increased to 22% in FY2010/11 (US$ 15 million out of US$ 68.4 million disbursed) and to 40% in FY2011/12.
- The number of participating Local Government Authorities (LGAs) was 132, increased from an appraisal estimate of 41 thanks to the support provided by the Additional Financing.
- The indicator for improved accountability in the use of local resources was the percentage of participating LGAs receiving unqualified audit opinions. Although this increased from a base of 20% to 54% by closure, it fell short of the target (revised at restructuring) of 80%.
- The indicator for strengthened fiscal decentralization was the percentage of participating LGAs meeting the minimum conditions (financial management, planning and budgeting, LGA Council’s functional process, auditing, reporting and accountability). This percentage increased from a base of 53% in 2004/05 to 97% in 2010/11, exceeding the target of 80%.
- Improved management of the intergovernmental transfer process was measured by the time taken to affect the transfers from Central Government to the LGAs. The percentage of transfers made within the first 30 days of each quarter had reached 44% from a baseline of zero by project closure, as against the revised target of 100%. However, the ICR (page 16) states that the predictability of transfers improved, that there was less bunching in the fourth quarter, which was a feature of the system prior to the project, and that the local government performance assessments, which determined the amounts to be transferred to each authority, were generally completed on time.

Objective (b): Increase access to infrastructure and services in the Unplanned Areas of Dar es Salaam. Substantial.
Through the Community Infrastructure Upgrading Program, infrastructure was upgraded in three pilot municipalities in Dar es Salaam. Outputs included 40 kilometers (km) of two-way roads, 58 km of one-way roads, 26 km of footpaths, 548 culverts, 8.6 km of trunk drains, 3,153 pedestrian crossings, 83 solid waste containers, and 2,780 streetlights. Approximately 300,000 people in priority unplanned settlements benefited. The investments were demand driven and selected using a participatory approach.
Assessment of outcomes relied on the results of an Impact Evaluation which was conducted first in 2006 to establish a base line, and again in 2012, The ICR reports (footnote, page 15) that the baseline survey covered 1,860 households in 31 sub-wards benefiting from the project and in a control group of 12 sub-wards not benefiting from the project. In most cases, there were no targets against which to measure the achievements. The results were as follows:
- Streets in the surveyed area reachable by paved access roads rose from a base of 32% to 97%, exceeding the revised target of 80%.
- The probability that a household would be connected to a gravel or paved road increased from 4.7% to 27.9%.
- The probability that a household would have been flooded during the previous 12 months was reduced slightly from 24.5% to 21.6% (a 1 in 100 year flood occurred during the period measured by the survey).
- The Impact Evaluation showed no improvement in employment creation or business entrepreneurship.
- The average time required to reach facilities in areas where project investments had taken place compared to the control group time (in parentheses) were as follows: (a) water supply 1.5 minutes (3 minutes); (b) toilets 4 minutes (13 minutes); and (c) lighted streets 3 minutes (15.5 minutes).
- Children in the beneficiary areas demonstrated better health and education indicators than those in the control areas: (a) Incidence of diarrhea was 12% (22% in control areas); (b) incidence of acute respiratory disease was 18% (27% in control areas); and (c) girls over the age of 13 had a school enrollment of 93% (79% in the control areas).

Objective (c): Improve revenue performance for sustainable operation and maintenance [in Dar es Salaam]. Substantial
The Project facilitated the identification and valuation of all taxable properties across the three participating Dar es Salaam Local Authorities (DLAs).
- Compared to an original target of 100,000 properties, 425,610 properties were inspected and valued. This led to a considerable expansion of the tax base. The tax rate was not raised: “this was a political issue outside the direct influence of the project” (ICR page 19). Increasing the tax rate was not intended to be an explicit output of this component.
- The primary tool to ensure adequate operation and maintenance (O&M) of Development Grant-funded infrastructure at the local level was the LGAs’ integrated planning and budgeting process (ICR, page 42). This process among others was strengthened through the Capacity Building Grant (CBG). The project supported the establishment of the overall framework for CBG delivery. This included the development of ten standardized training modules for LGAs, which included three directly relevant to this objective – budgeting and budget management, revenue mobilization and O&M budgeting, and development planning and strategic management.
- Own-source revenue in Dar es Salaam increased by 154% between 2005 and 2011, well above the target of 50%.
- Unrestricted transfers of revenues as a percentage of total revenues in Dar es Salaam increased from 6.6% to 11.9% during the project period – above the target of 8%.
- According to the ICR (page 17), the unrestricted transfers of own source revenues are allocated for O&M. This would indicate that O&M expenditures are higher than targeted. Nevertheless, the ICR indicates that the project relied on existing O&M procedures in Dar es Salaam, rather than putting in place specific O&M arrangements for the project-supported program. The ICR also states as one of the risks to development outcome that O&M is not adequately funded, though the basis for this statement is not specified. There are some signs of O&M inadequacy: 29% of households flagged poorly functioning drainage; 48% reported streetlights were not working. On the other hand, 94% reported improvements in garbage collection, and 98% were satisfied with community roads (ICR page 15).

5. Efficiency:

The economic analysis in the ICR uses an approach similar to that at appraisal. The efficiency of components A (the Capital Development Grant system) and B (upgrading of infrastructure in Dar-es Salaam) are evaluated separately.

There are no quantitative estimates of the efficiency of the Capital Development Grant system, which accounted for about 60% of actual project cost. Potential benefits were considered at appraisal to be threefold: (i) reduced transaction costs -- transaction costs of central government agencies and development partners involved in the administration of sector-specific or area-specific grants would be eliminated; (ii) improved allocation of scarce resources by individual LGAs; and (iii) improved allocation of resources across LGAs. The ICR (page 27) considers that (i) is not likely to materialize significantly since the system's management and administration requires more involvement from LGA officers, and because the transaction costs at central government level are not eliminated entirely. (iii) would be much more limited than thought at appraisal since over 90% of LGAs qualified for the performance-based grants, thereby virtually eradicating the distinction between poor-performing and well-performing LGAs. The weight of any efficiency gain from the Capital Development Grant system, therefore, rests on (ii). As the ICR acknowledges, "to estimate the net economic benefits of improved allocation of capital grants at the LGA level, it would be necessary to estimate the net economic benefits of investments projects financed before and after the introduction of the LGCDG system" (page 27). This was not done due to time and resource constraints. The Grant system is, however, assumed to be more efficient because (a) LGAs are better suited to more effectively allocate and use resources across sectors than directives from the central government; and (b) performance-based grants shifted the sectoral composition of LGA capital budgets to sectors with higher benefit/cost ratios.

For component B, benefits from investments in Dar es Salaam -- which accounted for 20% of actual project costs -- were based on a 2013 impact evaluation study, and include (a) reduction of cleaning costs per household after a flood; (b) reduction of income loss per household due to waterborne disease; and (c) increased economic growth based on assumed number of businesses and the incremental income they generate. Overall, the ICR finds that benefits from reduced flood damage and increased economic growth were lower than those estimated at appraisal, while benefits from reduced health costs were higher. The economic rate of return (ERR) was estimated to be 15% compared to 20% at appraisal.

The project closed four years later than scheduled. This was mainly to accommodate the larger number of sub-projects financed than originally planned. However, there were also implementation issues caused by operational and administrative inefficiencies. The Ministry of Finance was often slow in releasing the funds to the LGAs; the civil works were frequently held up by lack of counterpart funding; and, as noted in Section 4, the Revenue Enhancement Program was delayed by about a year.

Efficiency is rated Modest.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:

Rate Available?
Point Value
ICR estimate:

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

The objectives are highly relevant to both the Bank's and the Government's priorities for Tanzania. Relevance of design is rated Substantial. The efficacy of the first objective – to strengthen fiscal decentralization and improve accountability and management of inter-governmental transfers is rated as Modest, while that of the second and third objectives – to increase access to infrastructure services in the Unplanned Areas of Dar es Salaam, and to improve revenue performance for sustainable operation and maintenance -- is rated Substantial. Efficiency is rated modest. Overall outcome is assessed as Moderately Satisfactory.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

- Although the Government remains committed to decentralization, there is a significant risk that past levels of efforts to maintain the commitment beyond the project may not be sustained. The Local Government Capital Development Grant system relies more than originally intended on donor funding which, the ICR (page 20) indicates, may be tapering off. The Government has not yet compensated for this by assuming funding commitments that had been envisaged earlier.
- There are significant risks to the development outcome of the works undertaken under the Community Infrastructure Upgrading Program. Operation and maintenance may not be adequately funded. Access gains will be lost if the upgrading work is not continued. The agreed Bank-Government strategy to continue involvement and follow up in this area mitigates these risks.
- There is a moderate risk to the outcomes of the Revenue Enhancement Program. Although the tax base has been considerably widened and the tools are in place to continue increasing revenues, the next key steps, including increasing tax rates, remain politically challenging.

a. Risk to Development Outcome Rating: Moderate

8. Assessment of Bank Performance:

a. Quality at entry:
- The PAD sets out the background of Bank and Government strategies for supporting fiscal decentralization and local government development area in Tanzania. Several research and feasibility studies were prepared for the project. Lessons from the Africa Urban Sector Strategy (November 2001), Fiscal Decentralization and Subnational Finance in Africa (2000) and from Bank experience in Tanzania were incorporated into the design of the project.
- The results framework was clear and generally convincing.
- Design utilized practical experiences in the selection of sub-projects based on performance of local government authorities, community participation in the selection of projects and final project implementation. Capacity building was also included to improve the skills of local government officials.
- According to the Government, the Bank devoted appropriate skills and resources to meet the requirements of the project.
- The implementation arrangements involved central and local government entities, and were coordinated through the Prime Minister’s Office for Regional Administration and Local Government, thus gaining the attention of high levels of government.
- Safeguard issues were identified at appraisal. For component A, where investments were demand-driven, and hence unidentified at appraisal, an Environmental and Social Management Framework was established. For Dar es Salaam, a Community Environmental Management Plan and Resettlement Action Plan were prepared. Fiduciary issues were identified and addressed prior to the start of the project. Risks were identified and focused on the potential for change in policies and political maneuvering. Mitigation measures, including access to higher levels of Government were put in place.
- Design of the M&E framework included indicators with ambitious targets some of which were difficult to monitor, and a baseline was not established at appraisal (see Section 10 below).

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:

- According to the ICR, the Bank team provided quality implementation support for the reform aspects of the project through staff with appropriate expertise. The ICR references important studies on local government reform that took place during project implementation.
- Supervision followed up on project progress and devoted efforts to correct the deficiencies of the M&E framework, including readjusting indicators to reflect knowledge acquired during implementation. However, the M&E framework was not revised sufficiently to facilitate monitoring and measurement, and end of project assessment of outcome relied almost exclusively on the impact evaluation studies of 2006 and 2012. These studies could not always measure impact adequately. For example, reduction of flooding and increase in enterprises were not monitored during implementation, and the impact evaluation found it difficult to attribute results to the Project.
- Independent consultants carried out the mid-term review analysis and validated the Bank team's findings and recommendations.
- The project team reported that (a) fiduciary and safeguard staff from the local office participated in implementation support; (b) annual audits were received and reviewed; and (c) an environmental specialist and the Task Team Leader visited sites often to inspect progress.

Quality of Supervision Rating: Moderately Satisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:

The ICR reports that the Government was committed to the project. The project’s objectives are included in the government’s 5 year plan. The project team emphasized that discussions with the Government and the latter’s actions on reform (strengthening of fiscal transfers and local governments) were productive and the Government showed awareness of the issues and challenges. The Government commitment was demonstrated by the involvement of high level entities (Prime Minister’s Office of Regional Administration and Local Government – PMO-RALG), in the implementation of the nationwide components and the effective coordination with the Dar es Salaam local government authorities on the implementation of the Dar es Salaam component.

However, the Government's decision to move property tax collection from the local governments to a central agency undermined the efforts to enhance revenue collection by local authorities, which was one of the objectives of the project. The decision was reversed once the Government believed that there was clarity on institutional mechanisms. Delays in transferring government contributions and occasional transfer of funds to non-qualifying councils (ICR p. 22) undermined the project’s objectives.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:

The Prime Minister’s Office – Regional Administration and Local Government (PMO-RALG) -- was responsible for overseeing the local government system and decentralization process, and was assigned the responsibility to coordinate project implementation. Participating local governments (including in Dar es Salaam), recipients of grant funds, were responsible for the implementation of sub-projects including procurement. PMO-RALG established two project support teams, one in the Prime Minister Office, which was responsible for the coordination of implementation of the nationwide programs under the first component, and the other for project activities in Dar es Salaam. The implementing agencies demonstrated commitment to the project and its development objectives. Overall procurement proceeded satisfactorily. Financial management was more problematic and required efforts to reconcile records and reimburse IDA funds due to ineligible expenditures. The M&E framework proved to be difficult for the PMO-RALG team to manage and report on consistently.

Implementing Agency Performance Rating: Moderately Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
The M&E framework was designed to track (a) reform in the fiscal decentralization system; (b) reform at the level of the Local Government Authorities; and (c) improved access to services. The selection of indicators for this ambitious range of goals proved difficult especially as the framework attempted to measure both soft targets (reform) and access.
- Fiscal decentralization reform was to be measured by timely transfers to participating local governments – within 30 days.
- Local Government reform was to be measured by accountability (a) meeting eligibility requirements; and (b) receiving clean audits (80%)
- Improved access to urban services (in Dar es Salaam) was to be measured by (a) reductions in travel time; (b) reduction in incidence of flooding; (c) improvements in waste collection, and (d) reduction in plots with no sanitation facilities (dropped at restructuring).
- Specific local government reform measures in Dar es Salaam were: (a) own source revenues increased by 50%; and (b) adequate funds for O&M.
- Access to services was to be measured in impact evaluation surveys.
Baselines for the indicators proved difficult to establish. Responsibility for managing and coordinating the M&E framework was not specified.

b. M&E Implementation:
M&E implementation proved to be difficult. Indicators were revised at the mid-term review to reflect the expanded scope of the project (with Additional Financing) and progress to date. Target indicators were revised for easier measurement and assessment, but remained difficult to measure or achieve. According to the ICR (page 14), although monitoring of the first and third objectives (to strengthen fiscal decentralization, and to improve revenue performance) improved during implementation, M&E did not fully capture the results of the project. With regard to the second objective (to increase access to infrastructure services), there was no direct monitoring, and results had to be gauged through an impact evaluation study at the end of the project. As the impact evaluation could not capture all of the key indicators using household surveys, M&E for this objective fwas incomplete.

a. M&E Utilization:
The impact evaluation was used to verify outcomes in health, flood reduction, economic development and entrepreneurship. The Borrower’s ICR indicates that the Government used the results of monitoring and evaluation (indicators, reports, studies) to identify challenges for its reform program as well as to manage the completed investments (O&M). The experience of the project and its results are used by the Bank and the donor community in future interventions (ICR p. 22). According to the ICR, however, the overall M&E data was not well utilized to inform decision making.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:
The project was assigned category B for Environmental Assessment, and triggered the Environment and Involuntary Resettlement safeguards (OP 4.01 and OP 4.12). According to the PAD, an Environmental and Social Management Framework was established for component A where demand-driven investments could not be identified at appraisal. For Dar es Salaam, a Community Environmental Management Plan and Resettlement Action Plan were prepared.

According to the ICR (page 1a), no substantial issues were reported during implementation. However, the mid-term review was followed by an environmental and social safeguards mission, and numerous areas for improvement were identified. The ICR reports that post-review aide memoires and supervision reports did not sufficiently justify the satisfactory ratings contained in those reports. The ICR itself contains little information on safeguards compliance and no clear statement that safeguards policies were complied with. The project team reported that environmental aspects of the project were handled by a local environmental specialist and by the Task Team Leader who visited several sub-projects throughout implementation. The team also noted that 16,000 households received compensation due to resettlement under the Project and that no complaints were received.

b. Fiduciary Compliance:
Procurement was rated as satisfactory in supervision reports. There were early delays due to additional works, addendums and extension of contract completion period. According to the ICR, these issues were identified and addressed appropriately. An Independent Procurement Review and Value for Money audits were carried out in 2007 and 2009. The findings of the audits were discussed between the Bank and the client. According to the ICR, necessary improvements were implemented.

Financial Management (FM). The ICR indicates that the consistent satisfactory rating for financial management in the supervision reports was not justified. The most significant FM problems identified were: (a) in December 2006, the government was in breach of a legal covenant on its obligations to provide counterpart funding; (b) in February 2008, the mid-term review detected that an amount of US$1.71 million was unaccounted for; and (c) at the end of the project, the Bank became aware that the Dar es Salaam Authority paid contracts using 100% IDA funding. These issues were resolved, although this took time and effort. The ICR does not report on external audits. The project team confirmed annual audit reports were received, were unqualified, and that Bank financial management specialists reviewed them.

c. Unintended Impacts (positive or negative):
According to the ICR, the project galvanized the support of other donors who channeled their programs through the LGCDG system and leveraged an estimated US$ 181.5 million (ICR page 8)

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Moderately Satisfactory
Moderately Satisfactory
Risk to Development Outcome:
Bank Performance:
Moderately Satisfactory
Moderately Satisfactory
Borrower Performance:
Moderately Satisfactory
Moderately Satisfactory
Quality of ICR:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
IEG draws the following three lessons from the experience of preparing and implementing this project:

Reliance on counterpart contributions from poor communities may lead to implementation problems unless adequate and transparent arrangements are made for their assessment and collection, and once collected, they are properly accounted for and used for the purpose for which they were paid. In this case, there were frequent delays in payment. The system may also have led to elite capture since wealthier members of the community, who paid their contributions, may have played a bigger role in the planning process than poorer members who did not.
Monitoring and evaluation of projects involving not only reforms and procedural changes at several levels of government, but also the construction or rehabilitation of community infrastructure over a wide geographical area, is particularly challenging. Coordination and management responsibilities for the M&E framework need to reflect the magnitude of the challenge. Independent impact evaluations may be a useful source of information on project outcomes, but they cannot substitute for a robust M&E framework.
Adequate provision for operation and maintenance (O&M) of project-financed infrastructure requires an assessment of maintenance needs for each beneficiary community and appropriate institutional and financial provision for meeting O&M expenditures.

14. Assessment Recommended?


15. Comments on Quality of ICR:

The ICR provides a clear assessment of the project’s accomplishments. It analyzes well the difficulties of designing and maintaining an M&E framework for projects covering both institutional reform and enhanced service access. The annex detailing the results of the impact assessment provided additional useful evidence of the outcomes. The Borrower’s ICR is well written and informative. However, there were a number of shortcomings. The discussion of Achievement of Objectives is component-oriented rather than objectives-oriented. A fuller consideration of the revenue enhancing measures proposed in the PAD would have been useful, as would a discussion of the nature and impact of the training provided to central and local government officials. The discussion of Quality at Entry does not cover provision for safeguards and fiduciary compliance. Annex 2 (“Outputs by Component”) discusses outcomes rather than outputs. In the Results Framework table, Revised Target Values were listed as Original Target Values. In Table 2 (page 5), the restructured loan amount (US$152.7m) does not match the final amount (US$ 150m). There are errors of addition in Annex 1 (cost tables) and the table is incomplete (percentages of appraisal are missing). Annex 4 does not show staff working during preparation.

a. Quality of ICR Rating: Satisfactory

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