AFRICAN DEVELOPMENT FUND WATER SUPPLY AND SANITATION PROGRAMME PHASE II (WSSP II)

Transcription

1 AFRICAN DEVELOPMENT FUND Public Disclosure Authorized Public Disclosure Authorized WATER SUPPLY AND SANITATION PROGRAMME PHASE II (WSSP II) COUNTRY : UGANDA APPRAISAL REPORT OWAS DEPARTMENT January 216

2 Table of contents I STRATEGIC THRUST & RATIONALE Project linkages with country strategy and objectives Rationale for Bank s involvement Donors coordination... 3 II PROJECT DESCRIPTION Project components Technical solution retained and other alternatives explored Project type Project cost and financing arrangements Project s target area and population Participatory process for project identification, design and implementation Bank Group experience, lessons reflected in project design Key performance indicators... 9 III PROJECT FEASIBILITY Economic Performance Environmental and Social impacts... 1 Involuntary resettlement Gender Social IV IMPLEMENTATION Implementation arrangements Procurement Financial Reporting and Audit Monitoring Governance Sustainability Risk management Knowledge building V LEGAL INSTRUMENTS AND AUTHORITY Legal instrument Conditions associated with Bank s intervention Compliance with Bank Policies... 2 Appendix I : Country s comparative socio-economic indicators Appendix II : Table of ADB s portfolio in the country Appendix III : Key related projects financed by the Bank and other development partners in the country Appendix IV: Map of the Project Area

3 Currency Equivalents As of October 215 1UA = USD UA = EUR UA = UGX 5,187 1EUR = USD EUR = UGX 4, USD = UGX Fiscal Year 1st July- 3th June Weights and Measures 1 metric tonne = 224 pounds (lbs). 1 kilogram (kg) = 2.2 lbs. 1 meter (m) = 3.28 feet (ft) 1 millimeter (mm) =.3937 inch ( ) 1 kilometre (km) =.62 mile 1 square kilometre (km 2 ) =.386 square mile 1 hectare (ha) =.1 km 2 = acres i

4 ACRONYMS AND ABBREVIATIONS AfDB African Development Bank NCB National Competitive Bidding ADF African Development Fund NDP National Development Plan ARAP Abbreviated Resettlement Action Plan NEMA National Environmental Management Authority CBMS Community Based Management system NGOs Non-Governmental Organizations CIFA Country Integrated Fiduciary Assessment ODF Open Defecation Free CLTS Community let total Sanitation O&M Operation & Maintenance CPPR Country portfolio performance review PEAP Poverty Eradication Action Plan CSI Core Sector Indicator PDU Procurement Disposal Unit CSP Country Strategy Paper PEFA Public Expenditure Financial Assessment CSS Climate Safeguards System PEMCOM Public Expenditure Management Committee DPs Development Partners PFMA Public Finance Management Act DWD Directorate of water Development PFMDG Public Financial Management Donor Group EA Executing Agency PPDA Public Procurement and Disposal of Public Assets Authority EIRR Economic Internal rate of return PPP Public private Partnerships ESMF Environmental and Social Management RGCs Rural Growth Centers Framework ESMP Environmental and Social Management RBLF Results based logical Frame work Plan ENRSWG Environment and natural resource sector RBM Results Based Monitoring working group FINMAP Financial Management and Accountability RWSS Rural Water Supply and Sanitation Programme FM Financial Management SBL Sanitation Budget Line GFS Gravity flow schemes SDBs Sustainable Development Goals GoU Government of Uganda SESA Strategic Environmental And Social Assessment HW Hand washing SM ICB International Competitive Bidding SIP Sector Investment Plan IE SPS Sector Programme Support IFMIS Integrated Financial Management SPR Sector Performance Report Information System IPSAS Int. Public Sector Accounting Standards STWSS Small Towns Water Supply and Sanitation IWRM Integrated Water Resources Management SWAp Sector Wide Approach to Planning JFA Joint Financing Agreement TYS Ten Year Strategy JPF Joint Partnership Fund UA Units of Accounts JSR Joint Sector Review UNFCCC UN Framework Conversion on Climate Change JWESSP Joint Water and Environment Sector UOs Umbrella Organizations Support Programme LDPG Local Development Partners Group USD United States Dollars LGFS Large Gravity Flow Schemes VFM Value for Money NWP National Water Policy VIP Ventilated Improved latrine NWSC National water and sewerage Corporation WA Water Authority M&E Monitoring & Evaluation WATSUP The Water Atlas Up-Date Project MDGs Millennium Development Goals WESWG Water and Environment Sector Working Group MTS Medium Term Strategy WSSDPG Water and Sanitation Development Partner Group MVSPS Multi-village Solar Power Water Schemes WSSP II Water Supply and Sanitation Programme phase II MOFPED Ministry of Finance, Planning and Economic Development WSDF - C Water and Sanitation Development Facility Central Region MOH Ministry of Health WSP Water Service Provider MWE Ministry of Water and Environment WSPOs Water and Sanitation Private Operators NCCP National Climate Change Policy WSSB Water and Sanitation Service Board NWSC National Water and Sewerage Corporation WSSGS Water supply and sanitation Gender Strategy ii

5 Client s information Loan Information BORROWER: EXECUTING AGENCY: Republic of Uganda Ministry of Water and Environment Financing plan Source Amount (UA million) Instrument ADF 65.8 Loan Government of Uganda 7.31 TOTAL COST ADB s key financing information Loan Interest type* Interest rate spread* Service Charge Commitment Fee Tenor Grace period EIRR, ENPV(base case) UA N/A N/A.75% per annum on amount disbursed and outstanding.5% per annum on the un-disbursed loan amount 4 years 1 years (19.63%) UGX Bn Timeframe - Main Milestones (expected) Concept Note approval June 215 Project approval January 216 Effectiveness March 216 First Disbursement June 216 Completion December 22 Last repayment December 256 iii

6 Project Summary Programme overview: The Government of Uganda s second National Development Plan (NDP-II) (215-22) identifies the provision of adequate water supply and improved sanitation as one of the key priority areas for promoting sustainable wealth creation and inclusive growth. The objective of the Water Supply and Sanitation Programme II (WSSP II), aligned to the NDP II, is to contribute to improved health and productivity of the population through provision of safe water and sanitation services to a target population of 1.43m people (51.4 % women). The programme to be implemented across the country over four years, will focus on rural gravity flow schemes and solar mini schemes targeting rural beneficiaries in all regions; and will also provide urban water systems in small towns under the WSDF-central region. Programme Beneficiaries and Impact: The envisaged direct impacts include; reduction in the average walking distance to the nearest water point; and, reduction in time spent fetching water at congested water points. The water infrastructure designed for the identified small towns is a direct response to Uganda s rate of urbanization currently at 5.74%. Sanitation interventions in schools, institutions and urban setting and the accompanying faecal sludge plants with desludging units will have tremendous impacts on the existing challenge of emptying toilets and septic tanks in schools and informal settlements. The improved access to water and sanitation services will have positive social and gender payoffs and will enable a more conducive business environment in the towns and rural growth centres. The programme will also provide employment opportunities during construction and economically empower women and youths through support groups and skills development. Catchment and river embankment restoration through tree planting will be integral aspects of the intervention. Programme Rationale: The WSSP II, aligned to the NDP-II, will contribute to Uganda s 24 vision of having a transformed Ugandan society from a peasant to a modern and prosperous country within 3 years. It addresses the Sector Wide Approach (SWAp) programme of the water sector JWESSP ( ) whose objective is to support the water and environment sector to achieve its targets and improve its efficiency through a consistent, harmonised sector programme that is aligned to government objectives, policies and delivery modalities. The WSSP-II is anchored on the CSP , which focuses on the two main pillars (i) Infrastructure development and (ii) Human capacity improvement and skills development for poverty reduction. This is in line with the Bank s TYS ( ), which prioritizes water security as a driver of change in Africa and the need for investments in integrated water development and management as central to sustainable water, food and energy security for green and inclusive growth. The intervention in in line with the Banks high 5s with particular emphasis of improving the quality of life for the African people. It is also consistent with the Bank s Integrated Water Resources Management Policy (2) and Gender Strategy ( ). Programme Need: Access to potable water and improved sanitation is central in Uganda s development agenda owing to its strong links to all MDGs, the NDP II and the SDGs. The country has made substantial progress in increasing water coverage in 214 to 64% and sanitation access to 74.6%. The water coverage, however, appears to be stagnating. The WSSP II has been identified as one of the programmes under NDP-II that will contribute to the attainment of Uganda s national objectives to reach water and sanitation coverage for all, increase access to quality social services to enable a more conducive business environment in the towns and RGC and also make a difference in improved enrolment of the girl child. Bank Value Addition: The Bank s experience in Uganda s water sector dates back to The Bank is among the largest DPs involved in the sector and the proposed WSSP II is a follow up of the ongoing WSSP I with similar activities, giving the Bank comparative advantage and rationale for continued involvement in the Sector. The new support will further strengthen and consolidate gains achieved from similar previous and on-going support in the sector. The additional investment by the Bank Group comes timely when the country needs to implement the sector iv

7 strategies agreed upon in the 214 joint sector review. The Bank is now deemed to be a partner of choice in the water sector in Uganda. Knowledge Management: Knowledge gathered and generated from implementation of the WSSP-II will be documented for use in improving future interventions financed by the Bank and partners. A comprehensive program monitoring, aligned to the sector M&E framework will be the medium for dissemination and sharing of knowledge generated. The WSDF monitoring will be guided by the Results Based Monitoring Manual with monthly monitoring reports consolidated into JPF quarterly reports and ultimately into the Annual Sector Performance Reports to be discussed at the Joint Sector Reviews (JSR) and disseminated to all stakeholders. The government and development partners will use the generated lessons learnt to update the next Water Atlas and the sector indicators. This will also be captured in the Bank s bi-annual Implementation Performance Results (IPR) report. v

8 Results Based Logical Framework (RBLF) Country and Programme name: Uganda Water Supply and Sanitation Programme Phase II (WSSP II) Purpose of the Programme: To contribute to improved health and welfare of the population through provision of safe water and sanitation services. RESULTS CHAIN PERFORMANCE INDICATORS Indicators 1 Baseline Target MEANS OF VERIFICATION RISKS/MITIGATI ON MEASURES IMPACT OUTCOMES OUTPUTS Contribute to improved health and welfare of the population through use of safe water and sanitation services 1. Improved access to a sustainable safe water supply and sanitation facilities. 2.Improved hygienic practices and awareness 3. Improved management and functionality of water supply and sanitation services 1.1 Per capita income of Ugandan 1.2 incidence of diarrhoea morbidity among children under five 1.3 % of incidence of infant mortality among children under five year 1.4 Primary school Net Enrolment Ratio 1.1 % population with access to safe drinking water 1.2 % population with access to improved sanitation 2.1 % population with access to (and using) hand washing facilities (households) 2.2 % of students with access to (and using) hand washing facilities 3.1 Functionality rate of water supplies systems 3.2 water boards with women in executive positions Component (1) Rural Water Supply and Sanitation (ADF contribution) 3.3 Water points with actively functioning water and sanitation committees 1.1 Gravity flow schemes constructed New/rehabilitated large gravity flow schemes constructed New connections installed 1.2 Solar Powered Systems motorized deep boreholes 1.3 Sanitation facilities constructed in public places 1.4 Improved sanitation services and hygiene promotion USD788 (214) 4.5% in % in % in % (rural) 65.4% (small towns) 74.6 %(rural) 84% (small towns) 32.7% 38% 85% (rural) 89% (small towns) 85 %(rural) 95% (small towns) 71% (rural) 76% (small town) USD1,33 by % in 22 1.% in 22 98% in 22 77% (rural) 72% (small towns) 77% (rural) 9% (small towns) 5% 5% 9% (rural) 95% (small towns) 1 % 1% 95% 95% New Solar Powered Systems constructed and functioning New Sanitation facilities constructed ( gender-segregated & disabledfriendly) masonry /mechanic artisans trained (3% women) hygiene promotion campaigns conducted (5 % women) Community Led Total Sanitation (CLTS) campaign conducted 1 11, Health sector performance Report Education & Sports sector performance report UBOS Report (Uganda National Household Survey Report) Annual Water & Environment Performance Report Signed minutes of Joint Sector Review JPF quarterly progress report Quarterly and annual component progress reporting Risk 1) GOU discontinuing its urban conditional grants to some towns which pays part of new connection fees 2) Local political leadership derailing of Programme support, cooperation and embracing. 3)depreciation of the Uganda shilling 4) election relatedviolence, Mitigation measures 1. Use of the National Utility to manage and operate new town systems and strong sensitization for increased demand for water supply services 2) effective Programme advocacy, transparency, inculcating trust and involvement of local vi

9 1.5 Water and Sanitation Committees formed / trained with at least one woman on the executive body Water User committees established & trained with at least one women on the executive body (CSI) Component (2): Small Towns Water Supply and Sanitation (WSDF Central region) 2.1 Water schemes completed / rehabilitated New /rehabilitated town water schemes constructed New connections installed 2.2 Back up support for O&M New Water Service Boards established (with at least one woman at the executive level)/ 2.3 Sanitation facilities constructed 2.3.1New Regional faecal sludge treatment facilities (36m 3 /day) constructed Cesspool emptiers/vacutags procured for faecal sludge haulage New Sanitation facilities constructed ( gender-segregated & disabledfriendly) including schools / institutions Masonry /mechanic artisans / trained (3% women) 2.4 Improved sanitation services and hygiene promotion Component 3 Sector Program Support SPS Communities trained on hygiene promotion (5 % women) Gender sensitive sanitation surveys conducted (baseline /post) 3.1 Climate Change Resilience Water sources catchments protected Tree nurseries established 3.2 Skills development for women and youth for economic empowerment. 3.3 Mainstreaming HIV/AIDS and Awareness creation on lifestyle Diseases.(LSDs) Women and youth trained in skills development Gender mainstreaming guidelines for MWE developed and disseminated Communities covered by awareness creation campaigns Voluntary Counselling and Testing/ Circumcision sessions conducted 75 leadership in various Programme activities and commitments to Programme 25 1, deliverables, including adoption of appropriate feasible technological options 3) Central Bank inflation targeting light monetary policy regime is intended to avert exchange rate volatilities on a monthly basis. The contract to the extent possible will be in local currencies and benefit from the exchange gains on the committed UA in the procurement plan. 4) The project commencements is scheduled months after the elections ACTIVITIES 3.4 Sector Coordination and Programme Monitoring 3.5 Capacity development program for private sector, Local Government and Ministry staff in drilling and solar energy JSRs/ JTRs conducted Annual Sector Performance Reports compiled ESMP implementation monitoring reports prepared Capacity development trainings conducted. 4 COMPONENTS Component 1: Rural Water Supply and Sanitation: (i) implementation of rural water supply infrastructure, including Large Gravity Flow Schemes (LGFS) and solar powered water schemes (ii) promotion and implementation of sanitation and hygiene development. Component 2: Small Towns Water Supply and Sanitation: implementation of water supply and sanitation infrastructure for small towns and rural growth centers, water resources management and catchment protection; Component 3: Sector Program Support: capacity building, support annual technical and financial audits, cross-cutting issue and environmental and social Management and sector studies INPUTS Component 1 ADF Component 2 ADF Component 3 ADF Total ADF Total incl. GOU UA 37.11million UA 33.4 million UA million UA 3.4 million UA 2.22 million UA 2. million UA 65.8 million UA million vii

10 Project Timeframe UGANDA - WATER SUPPLY AND SANITATION PROGRAM PHASE II 216/17 TO 219/2 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 PROGRAM IMPLEMENTATION SCHEDULE Q3 217 Q4 217 Q1 218 Q2 218 Q3 218 Q4 218 Q1 219 Q2 219 Q3 219 Q4 219 Q1 22 Q2 22 Q3 22 Q4 22 Project Grant Negotiations Loan Approval Sign Loan Protocol Agreements Launching Mission Community planning, mobilsation & baselines Hygiene promotiion & Construction of Sanitation infrastructure Design/design review of WATSAN infrastructure Construction of GFS, Solar Schemes, Town water supply facilities Procurement of desludging, WQ and IT equipment, Climate change resilience measures, HIV mainstreaming and awareness creation on lifestyle diseases Skills Development fo women and youth for ecomonic empowerment Development of manuals( supervision of solar scheme & drilling, mgt of WSS Tailored training( mgt of facilities &driiling Supervion) First Disbursement Second Disbursement Third Disbursement Fourth Disbursement Program mgt, M&E Supervision Mission Mid Term Review JSR and JTR(Joint Sector Reviews) Program Completion Report viii

11 REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO UGANDA FOR THE WATER SUPPLY AND SANITATION PROGRAMME PHASE II (WSSP II) Management submits the following Report and Recommendation for a proposed ADF loan of UA 65.8 million to the Government of Uganda to finance the second phase of the Water Supply and Sanitation Programme (WSSP-II). The proposed Bank group financing to the WSSP II is the Bank s response to a formal request by the GoU to support its efforts aimed at achieving sustainable provision of safe water and hygienic sanitation facilities within easy reach to all Ugandans. This programme is also a continuation of Bank s support to the sector after the successfully implemented phase one of the WSSP. I STRATEGIC THRUST & RATIONALE 1.1 Project linkages with country strategy and objectives Uganda s 24 vision is to have a transformed Ugandan society from a peasant to a modern and prosperous Country within 3 years. The country, in April 215, concluded the preparation of its second National Development Plan (NDP-II) for the five years (215-22). The NDP-II builds on the key lessons learnt from NDP-I, and aims to propel Uganda towards a middle income status of attaining a per capita income of USD 1,33 by 22 from USD 788 in 214. The NDP s strategic focus is Strengthening Uganda s Competitiveness for Sustainable Wealth Creation, Inclusive Growth and Employment. This is through four objectives; Increasing sustainable production, productivity and value addition in key growth opportunities; Increasing the stock and quality of strategic infrastructure to accelerate the country s competitiveness; enhancing human capital development; and strengthening mechanisms for quality, effective and efficient service delivery. The NDP II identifies the provision of adequate water supply and improved sanitation as one of the key priority areas for promoting sustainable wealth creation and inclusive growth. Besides alignment to the water policy and climate change policy, the program is anchored in Strategic Sector Investment Plan (29-235) whose objective is to have water and sanitation access coverage for all by 235 and with 95% functionality. Furthermore, to address the unequal power relations and the different roles, capabilities and needs of women, men, girls, boys and other vulnerable groups the program is aligned to the sector Gender Strategy The long term impacts of the proposed operations will not only result in a healthy workforce but also improve opportunities of meaningful education enrolment for the mothers of the nation The Bank s revised Country Strategy Paper (CSP) for Uganda for , focuses on two pillars: (i) infrastructure development and (ii) skills and technology development. The areas of emphasis in the CSP are aligned to the country s Vision 24 and the NDP I & II. Pillar one of the CSP proposes to contribute to the development and rehabilitation of critical economic and social infrastructure. Water supply and sanitation is among the interventions identified under the Bank s Assistance Program for the Extended CSP Period The proposed programme is in line with the Bank s Ten Year Strategy (TYS) and the Banks high 5 with particular emphasis on improving the quality of life for the African people. Component 3 activities have been designed to address inclusiveness and skills 1

12 enhancement for women and youth. The use of solar power and activities for catchment restoration too, will promote the transition to green growth. The programme also conforms to the Bank's Integrated Water Resources Management (IWRM) Policy emphasising water development and management based on participatory approaches, and women playing crucial roles in the provision, management and safeguarding of water. 1.2 Rationale for Bank s involvement Access to potable water and improved sanitation has always been central to Uganda s development agenda. It has featured strongly in the Poverty Eradication Action Plans (PEAP) and its successor, the NDP I & II. The country has made substantial progress in increasing coverage to safe drinking water from 42% in 1991 to 64% in 214, while access to sanitation has raised from 51% in 21 to 74.6% in 214. There are however still funding limitations for the water sub-sector to accelerate coverage in the water stressed areas due to high investment requirements. The sector, during its 214 annual review, committed to rollout large gravity flow schemes (GFS) to cover wider water stressed areas, bringing piped water closer to the rural populations and progressively reduce the common sight of women carrying water on their heads for long distances from wells. The annual review further committed to work towards reducing congestion at rural water point sources to minimise the waiting time and improve service levels. The strategic option to address the challenges, while taking on board climate change considerations, was to progressively invest in solar powered mini-piped water schemes on high yielding existing and new boreholes to improve on the service levels and reduce congestion on overcrowded water supplies. Likewise, the current urban coverage of water supply and sanitation in Uganda s Central Region (WSDF-C) remains low and is constrained by the rapid population growth and increased urbanization (estimated at 5.74%) linked to proximity to the capital city. The WSDF-C has over 28 towns in 25 districts with water coverage of about 69%. Limited funding has been highlighted as the major obstacle to improving service delivery. The situation in some of these small towns has been worsened by effects of climate change like prolonged droughts, leading to decrease in ground water levels and lower yields in the production wells. The proposed intervention will address SDG 5, 6, 13 and 15 with activities geared towards gender equality and empowerment; availability of sustainable water and sanitation; combating climate change and restoration of the ecosystems Uganda s Ministry of Health (MOH) shows that 75% of the country s disease burden is preventable through improved hygiene and sanitation, vaccination, and good nutrition. Strategic interventions through water and sanitation programs are therefore necessary to ensure a heathy labour force which is key for poverty alleviation in the country The Bank has accumulated a wealth of experience in the water sector in the East African region and Africa as a whole. Its experience in Uganda s water sector date back to The Bank is among the largest DPs involved in the sector and the proposed WSSP II is a follow up of the ongoing WSSP I with similar activities, giving the Bank comparative advantage and rationale for continued involvement in the Sector. The new support will further strengthen and consolidate gains achieved from similar previous and on-going support in the sector. The additional investment by the Bank Group comes timely when the country needs to implement the sector strategies agreed upon in the 214 joint sector review (214 SPR -5.11& 6,2). 2

13 1.3 Donors coordination Table 1: WSS Donor Coordination Players - Public Annual Expenditure (average)** Government Donors France 24.6% UA 56 m UA 48 m AfDB 22.58% 54% 46% World Bank 19.63% Germany 18.37% Denmark 1.8% Eurpean Union 5.54% Austria 2.59% UNICEF.55% Level of Donor Coordination Others Existence of Thematic Working Groups 3.83% Y Existence of SWAPs or Integrated Sector Approaches Y Chair (28/9 and ADB's Involvement in donors coordination in 211/12) Uganda s donor coordination mechanism is composed at the highest level by the Local Development Partner Group (LDPG), which brings together all heads of development agencies and over 25 diverse macro and thematic sector working groups that meet regularly on a broad spectrum of national issues. The Bank is an active member of the WSSDPG at sector level which meets monthly and collaborates with over 1 other agencies including Denmark, WB, EU, UNICEF, USAID, Austria, France, Water Aid, Germany (KfW, GIZ), IRC and JICA on sector issues and water and sanitation related projects, within the framework of the JWESSP In an effort to harmonize DPs intervention, and to strengthen sector ownership, the Bank has partnered with DPs under the JWESSP of the water and environment sector to undertake development interventions in a programmatic approach. In this respect the WSSP II is part of a wider sector programme with other DPs supporting other components, or other regions of similar components The WSSDPG is currently chaired by World Bank and co-chaired by Austria and Danida. The Bank chaired the WSSDPG during 28/9 and 211/12. The DP Group is well informed about the proposed WSSP II through consultations with Bank Teams at preparation/appraisal missions The DPs are also members of the Water and Environment Sector Working Group (WESWG) which is the formal decision-making body on all water supply & sanitation and environment related issues. The working group meets at least four times a year and is supported by two sub sector working groups: (i) the Water and Sanitation Sub-Sector Working Group (WSSWG) and (ii) the Environment and Natural Resources Sub-Sector Working Group (ENRSWG). The sub-sector working groups meet quarterly. As demonstrated in table 1 above, the Bank is among the most active donors in the sector. Appendix III presents details of DP contributions. 3

14 2.1 Project components no. Component name 1 Rural Water Supply and Sanitation (RWSS) 2 Small Towns Water Supply and Sanitation (STWSS) 3 Sector Program Support (SPS) Est. cost (UA) 37.11m (33.4m) 33.77m (3.4m) 2.22m (2.m) II PROJECT DESCRIPTION Table 2.1: Project components Component description ( ) Amount in brackets depicts the Bank s contribution implementation of rural water supply infrastructure, focussing on 1 Large Gravity Flow Schemes (LGFS) and 7 solar powered water mini schemes Support sanitation implementation through, construction of 5 public sanitation facilities in schools, institutions, RGCs in form of waterborne toilet facilities. Support sanitation and hygiene awareness including Community Led Total Sanitation (CLTS), handwashing campaigns promotional training workshops, production of IEC materials, sanitation baseline surveys, setting up and training of WASH structures for the public facilities constructed, gender awareness and triggering and follow up of triggered communities to ensure attainment of Open Defecation Free (ODF) status. Implementation of 25 new and rehabilitation/expansion of Town water supply systems. Support construction of 2 faecal sludge plants including supply of 2 cesspool empties and 4 Vacutugs. Construction of 1 public water-borne toilets, implement sanitation and hygiene development through, community-based planning, baseline surveys, sanitation and hygiene education, CLTS, physical constructions and installations. The engagements with beneficiaries will address crosscutting elements of gender, HIV-AIDs, environmental restoration, M&E, training and capacity building Support Sanitation and hygiene promotion, training of masons, women and youth groups in construction and management of appropriate sanitation measures. The Sector Programme Support (SPS) component will address both urban and rural facilities supporting Climate Change Resilience for protection of 9 water source catchments, training of 2 women and youth in different skills to support ecosystem restoration and improve their livelihood, Mainstreaming HIV/AIDS and awareness creation on lifestyle diseases, support sector coordination and programme monitoring; and support capacity development program for private sector, Local Government and Ministry staff in drilling and design of solar powered piped water systems. 2.2 Technical solution retained and other alternatives explored The retained technical solutions are based on the experiences in previous and ongoing interventions and in line with the sector strategies agreed upon during the joint annual sector review for 214. The constructions of GFS has been practiced by the sector for over two decades but on a smaller scale owing to financial constraints. The larger inter district GFS have been one of the technologies successfully implemented in WSSP I with Bank support and has demonstrated a clear reduction in walking distance. Solar powered schemes too have been implemented under WSSPI. The designs conform to international standards and will promote use of renewable solar energy in line with the Banks ten year strategy. The extensive LGFS whose water supply is gravitated to the beneficiaries, provides low maintenance solutions with no requirement for pumping and a reduction in the carbon footprint of the water supply industry. Interventions for the urban water supply will continue to promote viable and cost effective options with preference for ground water sources in most of the small town water supply systems or extension from existing water supply systems with excess capacity. Only two water systems with no viable ground water option are to use surface water options. The sanitation infrastructure will also be constructed in accordance with the mandate of the water sector. Provision of regional faecal sludge facilities with desludging mechanisms are becoming increasingly important for recycled use of facilities in institutions, public and private place in view of the increased school enrolment and the urban migration and shall be promoted. VIP 4

15 latrines have been noted to fill up soon after completion of the programme. Sewerage systems owing to very high unit costs will not be retained. Based on sanitation survey findings and house-to-house visits, the programme will continue to support, public water borne toilets in the Towns for public amenities like markets, and educational institutions while household Eco-san will feature more under the rural component. CLTS, Sanitation Marketing (SM), Hand Washing (HW) and Impact Evaluation (IE) and such other promotional mechanisms will be retained. CLTS has been more successful in the rural component focusing on the communitybased approach like (stopping of open defecation; use of peer pressure; collective action to assist the poor people and support public facilities). The SM focuses on the household-centered change. The components will conduct a gender baseline survey to estimate the causal impact of the CLTS/SM and closely monitor the outcome. Table 2.2: project alternatives considered and reasons for rejection Alternative Brief description Reasons for rejection Sewerage systems Ecological sanitation Sector Budget Support Construction of sewerage systems in the towns. Ecological sanitation demo facilities in towns to entice town occupants to upscale using own resources construction of rural point water sources Very high unit costs Low willingness to connect to sewers networks. (Community preference is for emptiable onsite sanitation which does not require month tariff payments) Has not generated the anticipated replication within towns. Preference is for more public facilities and the ordinary on site facilities. Congestion at water points and walking distance. Opt for New sector thinking to support piped and gravitated water to rural communities and use of solar power mini schemes with multiple outlets to reduce congestion at point sources 2.3 Project type The proposed programme (WSSPII) is not a stand-alone operation; it is a public sector programme aligned to Uganda s water sector strategic approach outlined in the JWESSP under the SWAp framework and is to support 3 out of the 8 JWESSP components. It will use the existing GoU and DPs agreed funding modalities channelling funds through the Joint Partnership Fund (JPF). The assessments of the overall governance of the water and sanitation sector and the country s fiduciary and financial management environment concluded that country conditions are conducive for the use of national rules and regulations, hence justifying a programme approach instead of a standalone project. The WSSP II is a continuation of the programmatic support the Bank has provided to the WSSPI. 2.4 Project cost and financing arrangements The Bank loan of UA 65.8m for the WSSP II is part of the allocation under ADF 13 requested for by Government to support the water supply and sanitation intervention. The total cost of the project including government 1 % is estimated at UA 73.11million, net of taxes, 5

16 comprising UA million (58%) in local costs and UA 3.63 million or (42%) of the total cost in foreign cost. The Government shall provide budget allocation for all applicable taxes in each financial year in addition to the 1% Government contribution. A summary of project cost estimates by components, expenditure categories, and schedule are presented in Tables 2.3, 2.4 and 2.5 below, while details are provided in the Technical Annexes B2 of the appraisal report. Table 2.3: Project cost estimates by component [amounts in UA equivalents] Components Foreign Local currency Total Costs % foreign currency costs costs Rural water supply and sanitation 16,595, 2,516,111 37,111, % Small towns water supply and sanitation 13,78, 19,997,778 33,777, % Sector program Support 25, 1,972,222 2,222, % Total project cost ( incl. of Contingencies) 3,625, 42,486,111 73,111, % Financing Arrangement: The ADF loan will finance 1% of the sanitation infrastructure and 91%-1% of the water infrastructure in component 1; 1% of the town water supply infrastructure and related services and 7% of the sanitation infrastructure and services in component 2; 83.3% of the subcomponent for climate change resilience and 85.3% of the subcomponent for Training of women and youth in different skills and 1% of subcomponent 3.3, 3.4, and 3.5. The GoU is providing 1% of the planned costs to address some of the recurrent costs, software and some top up for the infrastructure and will address all applicable taxes as well. The details are outlined in the financial tables of the technical annex B2. Table 2.4: Sources of financing [amounts in million UA equivalents] Sources of financing Foreign currency costs Local currency costs Total Costs % total ADF % GOU % Total project cost % Table 2.5: Project cost by category of expenditure [amounts in UA equivalents] Categories of expenditure Foreign currency costs Local currency costs Total Costs % foreign Works 26,653,95 32,577,5 59,231, 45.% Services 1,547,34 5,955,73 7,53,7 2.6% Goods 2,423,71 5, 2,473,71 98.% Operational Cost 3,93,331 3,93,331.% Total project cost 3,625, 42,486,111 73,111, % Annual disbursements Table 2.6: Expenditure schedule by component [amounts in UA equivalents] Components 216/ / / /22 Rural water supply and sanitation 6,43,328 12,375,978 11,481,278 6,823,528 Small towns water supply and sanitation 8,818,75 9,193,75 8,953,75 6,811,528 Sector program Support 535, ,556 56,556 56,556 Total base cost 15,784,633 22,135,283 2,995,583 14,195, Project s target area and population The programme is spread across the country with rural gravity flow schemes and solar mini schemes targeting beneficiaries in the east, northeast, north, central and western regions. The allocation is predominantly targeting sub-counties that are considered water stressed. The 6

17 supported urban WSDF- central has mandate over 473 towns and RGC of which 64 are town councils in 25 districts covering central, mid-southern, mid-western and western regions. These extend from river Nile in the east up to the districts of Masindi, Hoima and Kibale on the western boarder along Lake Albert.73 towns/rgc in the WSDF-C so far have piped water. The intervention is to target another 25 town water facilities, some of which will be extended to cover clusters of towns. The programme is contributing to a water and sanitation sector target of 77% by 22. The programme is to provide additional access to 1.43 million in the projected design period and.753 million by 22. The proposed rural interventions are moving away from the traditional point water source, to delivering the water into villages and decongested solar powered schemes which will have positive outcomes on reduced walking distance and utilisation of time earlier spent on collecting water for other income generating activities as well as improved school enrolment and retention for the girls. The programme will train artisans (3% women) and empower women and youth groups for possible business along the water and sanitation value chain and catchment management. Skilled and unskilled employment will be generated during the construction and the operations of the systems 2.6 Participatory process for project identification, design and implementation The formulation and preparation of the programme was very participatory involving sector staff and detailed sensitisation and consultations of local government leaders, members of parliament and the targeted beneficiaries. During the preparation and appraisal phases, the Bank team visited 8 of the 1 proposed GFS sources in the East, North East, Northern and Western regions of the Country, and a sample of the towns for urban water infrastructure and held consultative meetings with the senior districts and regional authorities, subcounty officials, parliamentarians, town councils, water management committees and targeted beneficiaries on issues of inclusiveness, access and land acquisition. It was noted that the selection of sites and infrastructure was in agreement with the desires of the beneficiaries who also pledged full commitment and participation during implementation. Beneficiaries expressed their preference of piped gravity water to the point water sources and the use of solar systems to decongest point water sources was welcomed with enthusiasm as this had potential of transmitting water closer to the communities through multiple taps. At central level the teams met the senior staff of Ministry Water and Environment; Health; Finance and further held technical discussions with the directorate of water Resources, the departments for rural water and sanitation; urban water and sanitation; water and environment liaison. Ideas were solicited on the relevance and implementation arrangements of the various programme components, target groups and geographical locations. Efforts were made to ensure gender and social inclusiveness, women and youth empowerment and sustainability mechanisms in these consultations. The proposed intervention would continue to use indigenous Public Private Partnerships (PPP) in the management of the water supply and sanitation services in small towns however viable new town water systems would be handed over to the national utility (NWSC) for management. The mission later met and presented the sector preferred interventions under the Programme to the Development Partners group supporting the water and environment sector in the country. 7

18 2.6.2 The Programme s rural components were anchored in strategies agreed upon by stakeholders at the 214 Joint sector review drawn from central and local governments, town councils, civil society and private sector. The urban interventions preferred where aligned to the JWESSP developed with the full participation of all sector stakeholders including development partners. 2.7 Bank Group experience, lessons reflected in project design The Bank has accumulated a wealth of experience in the water sector in the East African region and Africa as a whole. The Bank has been supporting the water sector in Uganda since 1968 with interventions both in urban and rural water supply and sanitation and is regarded in the sector as the partner of choice. CPPR reviews have highlighted a number of lessons, including: (i) absence of feasibility studies and designs at project start-up which were noted to cause implementation and disbursement delay; (ii) inadequate consultation with stakeholders resulting in land wrangles, stoppage of works and lack of ownership and (iii) inadequate M&E system affecting the quality of databases. The EA has ensured that feasibility studies and most of the designs for the intervention have been carried out prior to programme approval. Land issues were discussed during the feasibility studies and resources have been committed by GOU for land acquisition. The sector has also developed a comprehensive Results Based Monitoring (RBM) Manual to guide WSDF monitoring and M&E experts have been earmarked under the components. At sector level recent and ongoing interventions supported by the bank which include the Rural Water and Sanitation Programme and Small Towns Water Supply and Sanitation Project, which were successfully completed in 29. The Water Supply and Sanitation Programme, the Lake Victoria Water and Sanitation program and the Kampala Sanitation Program too, which have generated best practices and lessons learned. These include: a) the use of existing institutional arrangements as key in avoiding duplication and creation of a stronger sense of ownership, institutional memory and sustainability after project implementation; b) promotion and mainstreaming of gender, environmental and social safeguards has a positive impact on the outcomes of the operation; c) use of local private operators to manage and operate the water supply and sanitation facilities was noted to be an effective way of improving service delivery and job creation; d) delegated procurement and financial management functions for deconcentrated sector organs provided full-time engagement on Program activities as is the case with the regional WSDF-C and produced timely procurement and achievements of targets; e) establishment and sensitisation of community management structures such as the water and sanitation committees and boards eases penetration of project staff into the targeted communities; f) applying CLTS in urban settings has been a challenge. The approach requires a homogenous community setting unlike the transient populations typical in urban settings. The CLTS approach is best suited for rural settings; g) emptying of the Ecosan toilets too is a challenge upcountry. h) Sanitation facilities constructed in phase I were noted to be filling up before the end of the program. Designing of phase II will therefore include faecal sludge plants and desludging mechanisms and these will be in all future urban water and sanitation programmes including water borne toilets; i) demand responsive interventions promote a sense of ownership and commitment from beneficiaries; and j) for any partnering or co-financing, the Bank should not only take up downstream infrastructure activities as these were noted to holds back disbursement The lessons have been incorporated in the design of the proposed operation which is also aligned to the broader JWESSP, adopting use of common country systems co-ordinated with a common objective of improved sustainable water and sanitation provision. The 8

19 Programme has had extensive consultations and buy in of the beneficiaries and will also continue to promote locally constituted water users committees with gender balanced representation in rural areas as well as use of indigenous Public Private Partnerships (PPP) in the management of the water supply and sanitation services in small towns. The national utility (NWSC) with a proven record of superior O&M is also to take up management of viable new town water systems. The Programme will also contribute to the on-going efforts by the sector to mainstream environmental, social and gender issues through continuous capacity building and affirmative action The introduction of the programme is fully in line with the current policy of the GOU whose aim is to achieve: (i) harmonized strategy and common approaches for a given sector at the national level, (ii) a participatory approach to planning and follow-up of activities, (iii) improvement of cost-effectiveness and sustainability of services provided, and (iv) the improvement of monitoring, transparency and reporting. This approach will further strengthen and consolidate gains achieved from previous and active interventions in the sector, whilst reinforcing the sector from within. 2.8 Key performance indicators The Results Based Logical Framework (RBLF) has captured indicators for impact, outcomes and outputs of the program. The WSSP II will be implemented as part of the broader sector programme using the sector Golden output indicators which are consistent with the Bank s Core Sector Indicators (CSI) and these include: access; functionality; per capita investment cost; sanitation; water quality; water for production; equity; hand-washing; management structures; gender (no. of women in water and sanitation committees / service boards), and water resources management compliance. During the implementation of the programme, the experienced M&E experts assigned by the components will verify and analyse programme data for the RBLF but also submit it for central amalgamation together with data from the district, regional and central structures monitoring and evaluating outputs, The pooled quarterly data will be collected into the central data base for analysis and computation of outcomes both at national and district level. The outputs and outcomes will feed into the annual sector performance report to be discussed in the Annual Joint Sector Review for strategic decisions and sector direction in the forthcoming year. Additional monitoring of physical infrastructure will be conducted annually during the Joint Technical Reviews with full field participation of supporting DPs, civil; society and local governments. Value for Money studies too will be conducted at sector and ministry of Finance level. The sector has mainstreamed gender and a lot of emphasis is placed on disaggregation of data to capture benefits from the programmes to gender and youth. Baseline data was collected as part of the feasibility study and used in the RBLF. The baseline data will be further strengthened and gaps filled including collection of gender disaggregated data. Various supervision missions and periodic progress reports will reflect the level of achievement under the indicators and will be captured in the IPR which will guide managers in decision making The impact and outcome indicators include: (i) people with access to safe drinking water and sanitation services (ii) incidence of diarrhoea morbidity among children under five (iii) percentage access to safe drinking water (iv) access to improved sanitation at household (v) access to (and using) hand washing facilities (vi) students with access to (and using) hand washing facilities (vii) Functionality rate of water supplies systems (viii) water boards with women in executive positions (ix) Water points with actively functioning water and sanitation committees. 9

20 2.8.3 The sector publishes the Uganda Water Atlas every 5 years providing updated baseline data on water supply, functionality, and distribution as captured in the water atlas up-date project (WATSUP) database. The previous atlas was completed in 21 and another is expected in 215. The programme will contribute to the 22 atlas. The M& E expert attached to WSDF-C will make use of the fully developed MIS system at the facility for data collection and analysis. The revised ESMF developed and approved by NEMA in August 215 and the accruing ESMPs will be used to monitor compliance in mainstreaming environment and climate change resilience (Tech. Annex B8). 3.1 Economic Performance III PROJECT FEASIBILITY EIRR (base case) 19.63% ENPV (base case) UGX billion The economic analysis assesses the beneficial effects of the proposed interventions and highlights the broader impacts associated with the program interventions in terms of employment generation, public health, time savings and the incidence of waterborne and water-related diseases. The following broad parameters constitute the variables that were used for the economic viability assessment: (i) averted costs of healthcare; (ii) averted productivity losses while sick or accessing health care (including welfare gained by women due to less child illness); (iii) improved earnings due to training and skills upgrading; (iv) travel and waiting time averted for collecting water for female beneficiaries; and (v) travel and waiting time averted for access to sanitation for all beneficiaries. Detailed assumptions are contained in Annex B The Economic Internal Rate of Return (EIRR) at 19.63% is higher that the discount rate of 1% making the project economically viable Sensitivity analysis (reflected in Annex B7) indicates that, both the 2% increase in capital costs and 2% decline in benefits will not result in the EIRR of the program declining to below the 1% which is reflective of the significant economic benefits accruing from an improvement in water supply and sanitation services in the country. 3.2 Environmental and Social impacts Environment WSSP II was on 14 th May 215 validated by ORQR as Category 2. The ISS compliant ESMF was approved by the NEMA on 7 th August 215 and the summary thereof approved by ORQR on 9 th November 215 for disclosure on the AFDB website. The programme will have significant strategic benefits in reducing the burden on health care services for the people who can then switch their restricted resources to other developmental aspects of life other than spending heavily on medical services. The introduction of a complementary health and hygiene awareness programme targeted at women and children and including components on malaria, HIV-AIDS, and other Diarrhoeal diseases will considerably enhance the benefits of the programme. Use of appropriate labour intensive methods for some of the construction programme (e.g. excavation for pipelines) will present employment opportunities to local people (including women) and generate direct income benefits to local households. The programme will contribute to alleviation of poverty and improving the socio-economic and 1