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         Infrastructure Project

The Malawi Infrastructure Project, supported by Credit 2069-MAI for SDR22.3 million equivalent, was approved in FY90. The Credit was fully disbursed and closed in FY95, as scheduled. The Implementation Completion Report (ICR) was prepared by the Africa Regional Office. The borrower did not submit a separate evaluation report.

The objectives of the project were: (i) to strengthen the Ministry of Works and Supplies (MOWS); (ii) to improve the condition of main and secondary roads and expand the system of district roads; (iii) to expand urban and rural water supplies; and (iv) to rehabilitate priority public buildings. The project was based on a four year program covering all construction and maintenance works for the road, water supply and public buildings sectors and involving II financing agencies. The IDA-financed components included extension of the District Road Improvement and Maintenance Program (DRIMP) to three districts, plus construction of 500 km of new district roads and 350 km of spot improvements on other roads, improvement of four urban water supply systems, rehabilitation of 1500 boreholes, rehabilitation of 21 public buildings, and technical assistance and training for MOWS.

Project implementation was delayed, mainly as the result of inadequate Government counterpart funding, problems with local contractors for construction of new roads under DRIMP, and some start-up delays on the water supply and borehole components. Government funding constraints were exacerbated by the country's prolonged drought during the first part of the project, the influx of refugees from Mozambique and the withdrawal of several donors from parallel MOWS programs, for governance reasons.

The project was revised after the mid-term review to give more priority to road maintenance and provision of safe water to communities affected by the drought. Financing of technical assistance and training was also included to fill the gap left by the withdrawal of donor financing. By the end of the project, DRIMP had been extended as planned, but only 40 percent of the new road program was completed. Two out of the four originally planned urban water supply systems were constructed and nearly all boreholes rehabilitated, but only about half of the village committees formed to operate and maintain the boreholes received training. Remaining funds from the urban water supply component were reallocated to construction of additional boreholes. Only eight out of the original 21 buildings were rehabilitated, mainly because of cost overruns. The ICR estimates that all physical project components had higher than projected economic rates of return.

Financial performance targets for the District Water Supply Fund were generally met, although problems remain with the collection of Government agency arrears. Throughout the project there were inadequate budgetary allocations for road maintenance, both for the main road network and district roads, even though the credit was already financing part of the recurrent budget for district roads (as had been the case in previous IDA projects). The Credit Agreement was amended in July 1994 to finance recurrent expenditures for the main road network on a declining scale over the last three years of the project.

Nevertheless, by the end of the project less than 40 percent of the main road network was being maintained to a minimum standard. The institutional development components of the project were almost fully implemented and a large number of MOWS staff received training. With assistance from the project and other financing agencies. Government has successfully implemented an accelerated localization program for MOWS and 27 positions formerly staffed by expatriates are now filled by local staff.

OED rates project outcome as marginally unsatisfactory because the objective to improve the condition of roads was not met and other objectives were only partially achieved. Sustainability is rated as uncertain because of doubts about the adequacies of future maintenance of physical components financed under the credit, although IDA and other financing agencies are providing assistance to address financing and maintenance issues in the road and water sectors. Institutional development impact is rated as substantial. Bank performance is rated as unsatisfactory because inadequate consideration was given during project preparation and appraisal to the capacity of Government, both institutionally and financially, to implement a very large and complex program of works financed by 11 financing agencies; supervision of the project was also inadequate. These ratings are the same as those in the ICR.

The project was part of a large multi-sector program representing more than a third of total public investment expenditure over a four year period. An important lesson to be drawn from the project is the need for a realistic evaluation at the outset of the availability of capital and future recurrent funding for such investment programs. Grouping projects by order of priority would help to tailor programs to available funding: such prioritization requires a good planning system and the cooperation of financing agencies to reallocate funds when necessary. Another important lesson is that where an IDA-financed project is an integral part of such a program, there must be a clearly defined policy for each sector, particularly with respect to financing of investment and recurrent costs.

While the ICR is quite complete in its coverage and objective in its rating of the project, OED notes the following major shortcomings. There is no separate evaluation of the project by the Borrower and no future plan of action or performance indicators are included.

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