AFRICAN DEVELOPMENT FUND

APPRAISAL REPORT

RURAL WATER SUPPLY AND SANITATION PROGRAM

TANZANIA

WATER DEPARTMENT MAY 2006

TABLE OF CONTENTS PROGRAM INFORMATION SHEET, CURRENCY AND MEASURES, COMPARATIVE SOCIO ECONOMIC INDICATORS, PROGRAM LOGICAL FRAMEWORK, EXECUTIVE SUMMARY 1 INTRODUCTION AND BACKGROUND 1 2 THE WATER SUPPLY AND SANITATION SECTOR 2 2.1 Water Resources 2 2.2 Sector Organization 2 2.3 Policies and Legal Framework 5 2.4 Sector Development 8 2.5 Gender and Socio-Economic Development 9 2.6 Donor Support 12 2.7 Sector Issues and Constraints 13 3 THE RURAL WATER SUPPLY SUB-SECTOR 15 3.1 RWSS Sub-sector 15 3.2 Issues and Constraints 16 4 THE RURAL WATER SUPPLY AND SANITATION PROGRAM 18 4.1 Concept and Rationale 18 4.2 Goal and Objectives 19 4.3 Strategic Context 19 4.4 Program Description 19 4.5 Benefits and Target Population 21 4.6 Environment and Social Impact 22 4.7 Cost Estimates and Financing 23 5 FIDUCIARY REVIEW AND BUDGET SUPPORT 24 6 PROGRAM IMPLEMENTATION 29 6.1 Executing Agency 29 6.2 Institutional and Implementation Arrangements 30 6.3 Supervision and Implementation Schedule 30 6.4 Procurement Arrangements 31 6.5 Disbursement Arrangements 32 6.6 Monitoring and Evaluation 32 6.7 Financial Reporting and Auditing 33 6.8 Aid-Coordination 34 6.9 Sustainability, Risks and Mitigating Measures 35 7 ECONOMIC EVALUATION 36 8 CONCLUSIONS AND RECOMMENDATIONS 39 8.1 Conclusions 39 8.2 Recommendations and Conditions for Loan Approval 34

0 This Appraisal Report was prepared by Messrs Egbert H.J. Schroten, Principal Sanitary Engineer (Ext 2249), D.T. Lekoetje, Senior Public Utilities Economist (Ext 2651), Ms J.W. Ngure, Principal Financial Analyst (Ext 2290), Ms Sunita Pitamber, Principal Socio-Economist (Etx.2310 ) and Mr. I. Samba, Principal Environmentalist (Ext 2657), following their mission to Tanzania in April/May 2006. All enquiries should be addressed to Mr. K. Bedoumra, Director, OWAS (Ext. 2055) or Mr. S. B. Jallow, Ag. Manager, OWAS.2 (Ext. 2191)

AFRICAN DEVELOPMENT FUND

BP 323 1002 Tunis Belvedere Tel: (216) 71 333 511 Fax: (216) 71 351 933

PROGRAM INFORMATION SHEET

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects/programs approved by Boards of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency of the Beneficiary.

1. COUNTRY : Tanzania 2. NAME OF PROGRAM: Rural Water Supply and Sanitation Program 3. LOCATION : Rural Areas in all Local Government Authorities 4. BENEFICIARY : United Republic of Tanzania 5. EXECUTING AGENCY: Ministry of Water

P.O. Box 9153 Dar es Salaam, Tanzania

Tel: (255) 22 245 20 35 Fax: (255) 22 245 20 37 6. PROGRAM DESCRIPTION:

The program will involve: i) District Management Support ii) Construction of Rural Water Supply & Sanitation facilities iii) Institutional Strengthening & Development

7. TOTAL COST : UA 223 million

8. ADF LOAN : UA 45 million ADF GRANT : UA 10 million 9. OTHER SOURCES OF FINANCE IDA : UA 51 million Netherlands : UA 27 million FRG : UA 16 million

Other Development Partners : UA 44 million Communities : UA 7 million Government of Tanzania : UA 23 million

10. DATE OF APPROVAL : September 2006

11. ESTIMATED STARTING DATE AND DURATION : January 2007, 4 years 12. PROCUREMENT : Procurement of goods, works and

services for this program shall follow the Country’s rules and procedures, using the relevant Central and Local Government’s Standard Bidding Documents.

13. ENVIRONMENTAL CATEGORY: II

EQUIVALENTS AND ABBREVIATIONS

CURRENCY EQUIVALENT

(May 2006) Currency Unit = Tanzania Shilling (TZS)

UA 1.00 = TZS 1763.34 UA 1.00 = USD 1.47106 US$ 1.00 = TZS 1198.69

FINANCIAL YEAR 1 July – 30 June MEASURES

km = kilometer km2 = square kilometer l/c/d = liters per capita per day l/s = liters per second m = meter m3/d = cubic meter per day

LIST OF TABLES

Table 2.1 External Support Agencies Table 3.1 Unit Costs for Different Technologies Table 3.2 Unit Costs for O&M of Water Supply Systems Table 4.1 Program Cost by Component Table 4.2 Expenditure Schedule Table 4.3 Identified Funding Sources for the NRWSSP

LIST OF ANNEXES 1 Map of the United Republic of Tanzania 2a List of Completed Bank Group Operations 2b List of Ongoing Bank Group Operations 3 Ongoing RWSS Projects: 2006/07-2009/10 4 Ministry of Water - Rural Water Supply Division 5 Institutional Framework for Water Supply and Sanitation 6 Detailed Program Costs 7 Financial Reporting Requirements 8 Country Procurement Assessment Report 9 Funds Flow Mechanism 10 Public Procurement Methods and Thresholds 11 Economic Analysis for Sub-projects 12 Program Implementation Schedule 13 Results Monitoring 14 Environmental and Social Management Plan Summary

15 Chronology of Program Activities

ACRONYMS AND ABBREVIATIONS ADB African Development Bank ADF African Development Fund AIDS Acquired Immunity Deficiency Syndrome AWF African Water Facility CAE Country Assistance Evaluation CBO Community Based Organization CDA Community Development Assistant CDO Community Development Officer CFAA Country Financial Accountability Assessment CIDA Canadian International Development Agency CPAR Country Procurement Assessment Report CSP Country Strategy Paper CSRP Civil Service Reform Program DANIDA Danish International Development Agency DAWASA Dar es Salaam Water and Sewerage Authority DBS Direct Budget Support DDP District Development Plan DC District Council DED District Executive Director DFID Department for International Development DP Development Partners DPG Development Partners’ Group DRA Demand Responsive Approach DWE District Water Engineer DWSF District Water and Sanitation Fund DWST District Water and Sanitation Team ESAs External Support Agencies EU European Union EMA Environmental Management Act EWURA Energy and Water Utilities Regulatory Authority FSP Facilitation Service Provider FY Fiscal Year GBS General Budget Support GOT Government of Tanzania HBS Household Budget Survey HDS Health and Demographic Survey HIPC Heavily Indebted Poor Country HIV Human Immunodeficiency Virus IAS International Accounting Standards IDA International Development Association IFMS Integrated Financial Management System IMF International Monetary Fund IMR Infant Mortality Rate ISA International Standards on Auditing IWRM Integrated Water Resources Management LGA Local Government Authority LGRP Local Government Reform Program MAFSC Ministry of Agriculture, Food Security and Cooperatives MCDGC Ministry of Community Development, Gender and Children MDAs Ministries, Departments and Agencies MDGs Millennium Development Goals MEM Ministry of Energy and Minerals MITM Ministry of Industries, Trade and Marketing MIS Management Information System

MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania MLHSUD Ministry of Lands, Human Settlement and Urban Development MOEVT Ministry of Education and Vocational Training MoF Ministry of Finance MOHSW Ministry of Health and Social Welfare MOW Ministry of Water MTEF Medium-Term Expenditure Framework NAO National Audit Office NAWAPO National Water Policy NEMC National Environmental Management Council NGO Non Governmental Organization NSGRP National Strategy for Growth and Reduction of Poverty NRWSSP National Rural Water Supply and Sanitation Programme NWSDS National Water Sector Development Strategy O&M Operation & Maintenance PAF Performance Assessment Framework PER Public Expenditure Review PEFAR Public Expenditure Financial and Accountability Review PFMRP Public Financial Management Reform Programme PHDR Poverty and Human Development Report PMS Poverty Monitoring System PMO-RALG Prime Minister’s Office Region Administration and Local Government PPRA Public Procurement Regulatory Authority PRBS Poverty Reduction Budget Support PRGF Poverty Reduction and Growth Facility PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PSRP Public Sector Reform Program RS Regional Secretariat RWSD Rural Water Supply Division RWSSI Rural Water Supply and Sanitation Initiative RWST Regional Water and Sanitation Team SDC Swiss Development Cooperation SIDA Swedish International Development Agency SRL Sector Rehabilitation Loan SWAP Sector Wide Approach TAS Tanzania Assistance Strategy TSP Technical Service Provider TZS Tanzania Shilling UA Units of Account UK United Kingdom UNDP United Nations Development Programme URT United Republic of Tanzania USD United States Dollar UWSA Urban Water and Sewerage Authority UWSD Urban Water and Sewerage Division UWSSP Urban Water Supply and Sewerage Program VPO Vice President’s Office WB World Bank WRDP Water Resource Development Program

*

Year Tanzania AfricaDevelo-

pingCountries

Develo-ped

CountriesBasic Indicators Area ( '000 Km²) 945 30 061 80 976 54 658Total Population (millions) 2003 37.0 849.5 5,024.6 1,200.3Urban Population (% of Total) 2003 35.3 39.2 43.1 78.0Population Density (per Km²) 2003 39.1 28.3 60.6 22.9GNI per Capita (US $) 2003 300 704 1 154 26 214Labor Force Participation - Total (%) 2003 51.2 43.3 45.6 54.6Labor Force Participation - Female (%) 2003 49.2 41.0 39.7 44.9Gender -Related Development Index Value 2002 0.401 0.476 0.655 0.905Human Develop. Index (Rank among 174 countries) 2002 162 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 1993 19.9 46.7 23.0 20.0

Demographic IndicatorsPopulation Growth Rate - Total (%) 2003 1.9 2.2 1.7 0.6Population Growth Rate - Urban (%) 2003 5.5 3.8 2.9 0.5Population < 15 years (%) 2003 45.7 42.0 32.4 18.0Population >= 65 years (%) 2003 2.4 3.3 5.1 14.3Dependency Ratio (%) 2003 90.0 86.1 61.1 48.3Sex Ratio (per 100 female) 2003 98.2 99.0 103.3 94.7Female Population 15-49 years (% of total population) 2003 23.5 24.0 26.9 25.4Life Expectancy at Birth - Total (years) 2003 43.4 50.7 62.0 78.0Life Expectancy at Birth - Female (years) 2003 44.2 51.7 66.3 79.3Crude Birth Rate (per 1,000) 2003 38.8 37.0 24.0 12.0Crude Death Rate (per 1,000) 2003 18.0 15.2 8.4 10.3Infant Mortality Rate (per 1,000) 2003 99.7 80.6 60.9 7.5Child Mortality Rate (per 1,000) 2003 161.2 133.3 79.8 10.2Maternal Mortality Rate (per 100,000) 1995 530 661 440 13Total Fertility Rate (per woman) 2003 5.0 4.9 2.8 1.7Women Using Contraception (%) 1999 25.4 40.0 59.0 74.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 1995 4.3 57.6 78.0 287.0Nurses (per 100,000 people) 1987 17.7 105.8 98.0 782.0Births attended by Trained Health Personnel (%) 1999 35.0 44.0 56.0 99.0Access to Safe Water (% of Population) 2002 51.0 64.4 78.0 100.0Access to Health Services (% of Population) 1991 93.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2000 90.0 42.6 52.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2003 9.3 6.4 1.3 0.3Incidence of Tuberculosis (per 100,000) 2000 155.0 109.7 144.0 11.0Child Immunization Against Tuberculosis (%) 2003 91.0 81.0 82.0 93.0Child Immunization Against Measles (%) 2003 72.0 71.7 73.0 90.0Underweight Children (% of children under 5 years) 1999 29.4 25.9 31.0 …Daily Calorie Supply per Capita 2002 1 975 2 444 2 675 3 285Public Expenditure on Health (as % of GDP) 1998 1.3 3.3 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2001 70.0 88.7 91.0 102.3 Primary School - Female 2001 69.0 80.3 105.0 102.0 Secondary School - Total 2000 36.0 42.9 88.0 99.5 Secondary School - Female 2000 4.9 41.3 45.8 100.8Primary School Female Teaching Staff (% of Total) 1997 43.7 46.3 51.0 82.0Adult Illiteracy Rate - Total (%) 2003 21.9 36.9 26.6 1.2Adult Illiteracy Rate - Male (%) 2002 14.8 28.4 19.0 0.8Adult Illiteracy Rate - Female (%) 2003 29.4 45.2 34.2 1.6Percentage of GDP Spent on Education 1998 5.8 5.7 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2003 4.2 6.2 9.9 11.6Annual Rate of Deforestation (%) 1995 1.0 0.7 0.4 -0.2Annual Rate of Reforestation (%) 1990 8.0 10.9 … …Per Capita CO2 Emissions (metric tons) 1998 0.1 1.2 1.9 12.3

Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.Notes: n.a. Not Applicable ; … Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORSTanzania

Infant Mortality Rate ( Per 1000 )

0

20

40

60

80

100

120

1995

1996

1997

1998

1999

2000

2001

2002

2003

tanzania Africa

GNI per capita US $

0100200300400500600700800

1995

1996

1997

1998

1999

2000

2001

2002

2003

tanzania Africa

Population Growth Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1995

1996

1997

1998

1999

2000

2001

2002

2003

tanzania Africa

111213141516171

1995

1996

1997

1998

1999

2000

2001

2002

2003

tanzania Africa

Life Expectancy at Birth (Years)

Tanzania - Rural Water Supply and Sanitation Program - Logical Framework HIERARCHY OF

OBJECTIVES EXPECTED RESULTS REACH PERFORMANCE INDICATORS INDICATIVE TARGET

AND TIME FRAME ASSUMPTIONS AND RISKS

Sector Goal Improved health and quality of life and reduced poverty of rural Tanzanians

Long Term Outcome Reduced incidence of diarrhea diseases and worm infestation in infants and children in rural communities. Increased social and economic development opportunities and improved poverty indicators in rural communities

Beneficiaries Rural Tanzanians

Rural population below poverty level Infant Mortality Rates Child Mortality Rates Diarrhea incidence

Reduced proportion of rural population below the basic needs poverty line from 38.6% in 2000/01 to 24% in 2010 Reduced infant mortality from 95 in 2002 to 50 in 2010 per 1,000 live births. Reduced child (under five) mortality from 154 to 79 in 2010 per 1000 live births. Reduce diarrhea incidence by half by 2010 Sources: Household Budget Survey; National Bureau of Statistics

Stable macroeconomic framework continued Government continues to be committed to poverty reduction and improved quality of life.

Program Objectives Improved district level capacity to implement demand-based RWSS projects Improved access of rural communities to water and sanitation services operated and maintained by capable women and men, and improved health & hygiene practices.

Medium Term Outcome DWSTs conducting community sub projects appraisals Community subprojects financed and implemented in whole or part from DWSF DWSTs monitoring & supporting communities in RWSS O&M, promotion of good sanitation, health and hygienic practices Increased number of rural communities with adequate management , operation and maintenance capabilities Improved knowledge, attitudes and practices in relation of health and hygiene and sanitation including increased use of latrines

All rural districts in the country PMO-RALG and MOW Staff involved in NRWSSP Rural Tanzanians

Percentage of rural communities with access to water supply Percentage of participating rural water supply schemes with improved drinking water quality Percentage of rural population practicing good health / hygiene / sanitation Percentage of districts implementing demand-driven RWSS Percentage of rural water points constructed in participating communities functioning proper Percentage of rural water committees with at least 50% female active membership

Increase of access to water supply from 53% in 2006 to 69% by 2010 Reduce walking distance to less than 500 meters. Increase of rural population practicing good health / hygiene / sanitation from 50% in 2006 to 90% by 2010 Increase of number of districts implementing demand-driven RWSS from 10% in 2006 to 100% by 2010 Increase of rural water committees with at least 50% female active membership from 40% in 2006 to 75% by 2010

Availability of resources Risk of losing staff to the private sector Availability of materials and staff for the program. Reforms related to decentralization policy pursued and sustained and relevant staff and systems available. Institutional framework of sector strengthened and implemented Community mobilized and continue to sustain the systems implemented Monitoring framework instituted and made operational and sustainable

HIERARCHY OF OBJECTIVES

EXPECTED RESULTS REACH PERFORMANCE INDICATORS INDICATIVE TARGET AND TIME FRAME

ASSUMPTIONS AND RISKS

Activities/Inputs Establish and capacitate DWSTs and RWSTs Rehabilitate offices and provide logistical support Conduct training and orientation seminars/workshops in all districts Install a MIS for the NRWSSP in all districts Collect and analyze data and information generated by NRWSSP operations Identify and package RWSS sub-projects Procure contractors/consultants for the RWSS sub-projects Sanitation marketing, promotion of environmental health and hygienic practices Provide TA to MOW to prepare corporate strategy, gender water and sanitation strategy, corporate charter and MIS Develop Gender Mainstreaming Strategy for water and sanitation with gender sensitive indicators Conduct Gender sensitization training for technical staff at LGAs Conduct HIV/ AIDS awareness raising for LGAs and target communities Rehabilitate MOW offices, provide logistical support and

Short-Term Outcomes All Districts and Regions active in the Program; equipped with adequate office staff (DWSTs and RWSTs) space, equipment, supplies and transport All DWSTs, RWSTs and RAs trained and sensitized on the NRWSSP. Districts and Regional staff have access to information and data for MIS program and information Communities, with the support of District Councils, identify suitable sub-projects for implementation under the NRWSSP. District Councils, with the support of PMO-RALG, plan, budget and implement the RWSS projects. Sanitation marketing and promotion of environmental health and hygienic practices Demonstration and latrines built in health clinics, schools and near the District Council buildings

Districts Rural communities

DWSTs trained District RWSS Plans completed DWSFs established Community projects completed Community organization and training

121 DWSTs trained by 2008 121 District RWSS Plans completed by 2008 121 DWSFs established by 2008 12,000 water supply facilities completed by 2010 3,000 Sanitation promotion projects executed by 2010 12,000 Water Committees trained, of which 50% are female members, by 2008 Gender Mainstreaming Strategy and gender sensitive indicators developed by 2008; 50 sessions of gender sensitization undertaken by 2010; 50 sessions of HIV/ AIDS sensitization undertaken by 2010;

Timely mobilization of beneficiaries’ contributions Early mobilization of contributions by communities External finances secured and ready for disbursement

HIERARCHY OF OBJECTIVES

EXPECTED RESULTS REACH PERFORMANCE INDICATORS INDICATIVE TARGET AND TIME FRAME

ASSUMPTIONS AND RISKS

program operating expenses Financial Resources UA (million) ADF: 55.00 IDA: 50.00 Netherlands: 27.00 FRG: 16.00 Others: 55.00 Communities: 7.40 GOT: 23.3 Total: 233.70

Source: Quarterly reports, field mission reports

EXECUTIVE SUMMARY About 80 % of the Tanzania population lives in rural areas where access to safe water is currently estimated at 53 %. The country has a high Infant Mortality Rate, with water borne diseases such as cholera and diarrhea having been identified as the main causes of infant mortality.

In 2005 the Government of Tanzania finalized its second generation poverty reduction strategy, the National Strategy for Growth and Reduction of Poverty (NSGRP) covering the period 2005-2010. Popularly known by its Kiswahili acronym MKUKUTA (Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania) the strategy focuses on three main clusters of outcomes and actions related to poverty reduction, namely (i) Growth and reduction of income poverty; (ii) Improvement of quality of life and social well-being and (iii) Good governance and accountability. For the first cluster the outcome target is broad based and equitable growth with a focus on reduction of basic needs poverty and food poverty, particularly in rural areas where poverty is most prevalent. The second cluster focuses on improving the quality of life and social-well being, improved nutrition and containing extreme vulnerability. The third cluster aims at sustained conducive development environment, encompassing macroeconomic stability and good governance. Within the context of its poverty reduction efforts the Government of Tanzania (GOT) has made commendable strides in developing the water and sanitation sector. In 2002 a National Water Policy (NAWAPO) was formulated with a mission of “integrated and sustainable management, development and use of water resources in Tanzania”. MKUKUTA has recognized that adequate water supply and improved sanitation are necessary ingredients in promoting economic growth and fighting poverty. In order to operationalize the NAWAPO and to achieve the Millennium Development Goals (MDGs) for water supply and sanitation, GOT formulated the National Rural Water Supply and Sanitation Program (NRWSSP). The NRWSSP aims at 69 % coverage for rural water supply and adequate sanitation by 2010 and 90% coverage by 2025. The Tanzania NRWSSP is a multi-donor funded Program whose implementation will adopt a harmonized approach in line with the tenets of the Joint Assistance Strategy (JAS). ADF funding will be provided in the form of a Development Budget Support Loan (DBSL) with the resources earmarked for the rural water supply and sanitation sub-sector. Participating donors have agreed to the use of the national procurement and financial management systems, which is in line with the alignment/harmonization agenda as well as the ADF guidelines on DBSL (ADF/BD/WP/2003/182/Rev.2) approved by the Board in April 2004.. In this respect the Program will use an already established fiscal transfer mechanism developed by the Government with support from donors that allows transfer of consolidated resources to districts on the basis formulae and specified qualification criteria. The Program will also use a flexible procurement approach in conformity with the DBSL guidelines, supported by procurement performance reviews during the annual Joint Sector Review of the Program. The Tanzania NRWSSP fits in to the Rural Water Supply and Sanitation Initiative (RWSSI) developed by the African Development Bank to address the challenge of providing basic water supply and sanitation services to the continent’s population

living in the rural areas. It also fits within the final draft of the Joint Assistance Strategy for Tanzania (JAST, 2006).

Purpose of the Loan and Grant

The ADF loan of UA 45 million and grant of UA 10 million will finance 23 % of the total cost of the NRWSSP costs during 2006/7 to 2009/10.

RWSS Program Objective

The objective of the program, during 2006/7 to 2009/10, is to provide sustainable safe water supply and sanitation facilities, based on management responsibility and ownership by the users, within easy reach of 69 % of the rural population by the year 2010. The program will cover rural areas in all districts of Tanzania. The program will ensure that an additional 6.5 million rural people have access to safe water by 2010 and that 90% of rural Tanzanians have sustained sanitation facilities.

Program Components

The program will have the following components 1. District Management Support; 2. Construction of Rural Water Supply & Sanitation facilities; and 3. Institutional Strengthening & Development.

RWSS Program Costs

The cost of the program during 2006/7 to 2009/10 is estimated UA 223 million. Sources of Finance The program will be financed by the beneficiary communities, GOT, and Development Partners including the ADF.

Program Implementation

The RWSS Program will use existing institutional arrangements and the decentralized structures, with communities playing the leading role in the identification, planning and implementation of the schemes. The MOW as an executing agency together with the other sector related ministries (PMO-RALG, MOF, MOHSW and MOE) will continue their supervisory role in monitoring the LGAs in the implementation of the program.

Conclusions and Recommendations The proposed program supports Government’s efforts to achieve the water and sanitation MKUKUTA targets and the MDGs, thus contributing to poverty eradication. The program will increase access to essential water and sanitation

facilities for the rural population. ADF’s financing in the form of sector earmarked budget support also contributes to the introduction of common arrangements for disbursement, accounting of funds, procurement, monitoring and reporting of sector performance. The program is consistent with the Bank’s strategy for Tanzania. It is recommended that an ADF Development Budget Support loan not exceeding UA 45 million and a DBS grant not exceeding UA 10million be granted to the Government of Tanzania in the form of sector earmarked budget support for the implementation of the program as described in this proposal.

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1 INTRODUCTION AND BACKGROUND 1.1 In 2005 the Government of Tanzania finalized its second generation poverty reduction strategy, the National Strategy for Growth and Reduction of Poverty (NSGRP) covering the period 2005-2010. Popularly known by its Kiswahili acronym MKUKUTA (Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania) the strategy focuses on three main clusters of outcomes and actions related to poverty reduction, namely (i) Growth and reduction of income poverty; (ii) Improvement of quality of life and social well-being and (iii) Good governance and accountability. 1.2 Within the context of the poverty reduction strategy the Government of Tanzania (GOT) has made considerable efforts in developing the water sector. The policies and strategies of the sector are clearly linked with the first PRSP and with MKUKUTA (2005) which is the current Tanzania PRSP. The National Water Policy (NAWAPO), introduced in 2002, incorporates the principles of the Government’s Development Vision, Poverty Reduction Strategy and Local Government Reform Program (LGRP), in recognition of the need to ensure the sustainability of facilities provided and to make those facilities more equitable. 1.3 The population of Tanzania is estimated at about 37 million of which 20 % live in urban areas and 80 % in rural areas. The water supply coverage is estimated at 73 % for urban areas and 53 % for rural areas and sustained sanitation coverage is estimated at around 50 %. The Infant Mortality Rate (IMR) was reported to be 99.8 per 1000 in 2003. 1.4 In 2005 the GOT finalised the National Rural Water Supply and Sanitation Program (NRWSSP) as part of a Water Sector Support Program. The main objective of the NRWSSP is to improve access to safe water and adequate sanitation in the rural areas. The NRWSSP is to increase access to water supply to 79 % and adequate qualitative acceptable sanitation facilities to 90 % by 2015. 1.5 The ADB’s Rural Water Supply and Sanitation Initiative (RWSSI) has strongly influenced the development of the Program. The RWSSI addresses the challenge of increasing water supply and sanitation services to the continent’s population living in the rural areas and is a major contribution to achievement of the Millennium Development Goals (MDGs) for water supply and sanitation within the context of the African Water Vision (AWV). RWSSI’s promotion and strong support for the program approach, use of national procedures for procurement and disbursement, use of demand responsive approach, and decentralised implementation by communities and local government structures have been important in developing the NRWSSP. 1.6 In November 2005 and April/May 2006, upon the request of the GOT, the Bank undertook joint missions with the World Bank to Tanzania to prepare and appraise the Program respectively. This report is the result of the joint ADB/WB appraisal mission.

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2 THE WATER & SANITATION SECTOR 2.1 Water Resources

2.1.1 One third of country receives less than 800 mm of rainfall and is thus arid or semi-arid. Only one-third of the rest of the country has precipitation of above 1,000 mm. The long dry season, normally occurring from June to October, has an effect on low river flows and thus on the water reservoirs. About 7 per cent of Tanzania (Annex 1) land surface is covered by lakes, which form the border of the country apart from other smaller inland lakes.

2.1.2 It is estimated that the annual surface runoff from Tanzania is about 74 billion m3. The Rufiji, which drains a 1770 thousand km2 area, contributes over 50% of the runoff. Typical annual runoffs are shown in the table below. The renewable resources are estimated at 2,700 m3 per person per year and assuming the currently projected population increase, the country will face a water stress situation within the next twenty years.

2.1.3 Groundwater potential in the country is highly variable. About 75% of the country is underlain by the Pre-Cambrian basement complex, which is hard, consolidated and occasionally metamorphosed. Secondarily developed features of the basement complex, such as weathered zones, joints, fractures, faults, and dykes allow borehole development and yield ranges up to 3 l/s. The remainder of the country is underlain by much younger sedimentary and volcanic formations such as Karro sediments, which include sandstones and conglomerates, and have yields ranging between 0.1-5 l/s, coastal sedimentary formations yielding between 1-6 l/s in limestone and up to 2.5 l/s in sandstone, volcano-pyroclastics yielding an average of 11 l/s and alluvial deposits yielding between 0.2-2 l/s. 2.2 Sector Organisation 2.2.1 The overall guidance of the water sector in Tanzania is the responsibility of the Ministry of Water (MOW). The MOW has the following objectives: (i) development of policy, legislation and regulations, (ii) initiation of major capital works, (iii) coordination and regulation of donor support, (iv) monitoring and evaluation of urban and rural water agencies, (v) facilitation of debt payment by rural and urban water utilities and services, (vi) water quality management, and (vii) water resources assessment, study, allocation and planning. 2.2.2 The MOW is organized into a number of divisions/units including the following: a) Water Resources, b) Urban Water Supply and Sewerage, (c) Rural Water Supply and Sanitation, (d) Policy and Planning, (e) Central Water Board, (f) Central Water laboratory, (g) Water Drilling and Dam Construction Agency. 2.2.3 The Water Resources Division is responsible for all water resources management, including surface water assessment and ground water inventory, mapping, and exploration. There are nine basin offices, each with its own board management, currently reporting to the Director of Water Resources in the MOW. The basin offices deal with water resources rights, allocation, planning, conservation and protection. This division currently focuses on water resources administration. 2.2.4 Urban Water and Sewerage Division (UWSD) is responsible for coordinating and guiding the development and management of urban water supplies and sewerage services.

3

The division provides support, facilitation, guidance and also initiates new projects. Operation and Maintenance (O&M), as well as minor improvements are handled by the respective authorities. The MOW has transformed the responsibility of UWSD from implementation of water supply and sanitation services deliveries in towns into a lean organisation focusing on coordination, support and guidance to the individual Urban Water Supply and Sewerage Authorities (UWSAs). 2.2.5 UWSAs are town based autonomous agencies responsible for the management, operation and maintenance of their respective water and sewerage services. Currently there are 19 such self-governing authorities including Dar es Salaam. 2.2.6 The Rural Water and Sanitation Division (RWSD) is responsible for rural water supply and is promoting Demand Responsive Approaches (DRA), Participatory Planning (PP), and decentralization for water service delivery. At the community level, it facilitates the establishment of water users’ associations, engages NGOs and others to support and facilitate project initiation and implementation. 2.2.7 The Central Water Board handles water rights administration and guides the Basin Offices. The Central Water Laboratory is responsible for overall water quality management across the country. It operates 14 regional laboratories responsible for routine and random monitoring, sampling and analysis of water quality at the town, district and community levels. It undertakes sampling, which is done weekly in towns, and biannually in most rural communities. 2.2.8 Water Drilling and Dam Construction Agency, initially a water drilling outfit within the MOW, has been transformed into a full autonomous agency and tasked with additional responsibilities. It however has old and dilapidated equipment and compounded with inadequate technical and systems capacity, have rendered the enterprise inefficient. Annually it sinks about 400 boreholes on average. It also constructs small earth dams. 2.2.9 MOW works through the Regional Secretariats (RSs), outfits answerable to the PMO-RALG. RSs are supported by a Regional Water and Sanitation Team (RWST), a focal entity with the responsibility of overseeing and coordinating water supply initiatives and water use planning and allocation. It provides the links between the MOW and the Prime Minister’s Office for Regional Administration and Local Government (PMO-RALG) at national level, and district councils. The RSs provide technical support to the district councils and assist the national Government in monitoring and evaluation of sector performance. It also coordinates sanitation and hygiene education with the Ministries of Health and Education, 2.2.10 PMO-RALG oversees 21 regions and 121 councils. Each council is divided into 4-5 divisions, which in turn are composed of 3-4 wards. About 5-7 villages form a ward. There are a total of about 10,045 villages. The local government authorities (LGAs) are thus ultimately accountable to the PMO-RALG. The Local Government Acts of 1982 gives the respective authorities (district, urban, and township), powers to establish, maintain, operate and control public water supplies, drainage and sewerage works. 2.2.11 Since 1972 the government administration was decentralized in order to promote people’s participation in the planning process as well as to facilitate local decision-making. Recently the government produced a policy on decentralization by devolution (D by D) of powers to locally elected councils and committees, and with an integration of the previously

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centralized or de-concentrated service sectors into a holistic local government system with local councils as the most important local political bodies. The (D by D) process is guided by the Local Government Reform Program (LGRP) under which PMO-RALG distributes resources based on a district formula for resource allocation for service delivery to key social services that includes rural and small town water supply and sanitation. District Councils (DCs), are responsible for ownership and management of rural water supply and sanitation. The relevant manuals have been developed to guide the operation of the D by D. 2.2.12 The DCs are responsible for providing all necessary technical support to communities in all publicly-funded Rural Water Supply and Sanitation (RWSS) projects. The district is thus a focal unit for RWSS development. The District Executive Director (DED), the District Water Engineer’s (DWE) office, with the support of the District Water and Sanitation Teams (DWST) provides overall input in planning, preparation of designs, studies, tender document preparation, supervision and advice to communities in areas where there are no private sector service providers. 2.2.13 In rural areas where water user associations or trusts have not been established under the auspices of MOW, responsibility for water supply rests with the district councils. The roles and responsibilities of the district councils are to (i) coordinate the planning, implementation, operation and maintenance of community water supply facilities in the district and, in particular, the provision of services to communities by local NGOs, private businesses, district departments, external support agencies (ESAs) and other sector actors; (ii) maintain an overview of the needs of the districts, and match services and resources to needs, trying to ensure that weaker communities are not marginalized; (iii) continue to provide services and resources to support communities in the planning, design, construction, operation and maintenance of their facilities; (iv) assist communities to obtain resources for projects; and (v) assist communities to contract the services of other sector actors as required.

The Communities 2.2.14 Participating communities provide a cash-contribution of at least 5% of sub-project capital cost and prepare facilities and management plan emphasizing financial and operational sustainability. Facilitation service providers (FSPs) facilitate and strengthen village water and sanitation committees (WATSAN), enabling them to plan their sub-project, including the selection of technologies and service levels, and the preparation of applications for district support. DWSTs appraise community applications against technical, social, management and environmental criteria. The district councils and successful communities enter into agreements, and technical designs and construction are carried out by the private sector technical service providers (TSPs) under contract to the districts. Supervision is the responsibility of the DWSTs and the WATSAN committees. Training is given to WATSAN committees by FSPs, and mechanisms are put in place to ensure continued operation, maintenance, repair and management of the facilities, including the collection of fees and the management of funds,. The DWST is trained in, and is responsible for, continued monitoring, and for providing technical advice to the community in order to help ensure sustainability in the long term.

The NGOs 2.2.15 The roles and responsibilities of the NGOs are to develop a range of services related to the water sector, so as to improve the services available to communities and other stakeholders; assist communities to plan, design, construct, operate and manage their facilities according to the community’s needs and wishes; assist communities to access services from other

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service providers as and when necessary; assist communities to access funds for projects; and collaborate with other sector actors at the national, regional and district level so as to ensure coordination of efforts.

The Private Sector 2.2.16 The roles and responsibilities of the private sector are to develop a range of commercially-viable services, including construction, operation, maintenance, materials and equipment manufacture and supply, planning, design, supervision, training and finance; contract with communities, local NGOs, local government and/or other partners to provide such services to the sector as may be necessary; and collaborate with other sector actors at the national, regional and district level so as to ensure coordination of efforts. Private sector suppliers supply spare parts, construction materials, pumping equipment, and other goods. Services, such as borehole drilling, surveying, designing, construction, and system operation, will be provided by small national contractors, and by artisans and operators at the district and village level. International consultants will provide technical assistance as required. The technical service providers (TSPs) will assist communities in participatory planning and sub-projects design, preparing detailed designs and cost estimates of the selected sub-projects, and assisting in the choice of technology, in collaboration with the facilitation service providers (FSPs).

The Central Government

2.2.17 The Ministry of Finance (MoF) is the main channel for intra-government funding and fiscal transfers. The MoF, through its External Finance Division is responsible for overall coordination of external assistance, including development banks and other donors. It has also set up a Technical Audit Unit responsible for overall and random inspection on the performance of projects. 2.2.18 The Ministry of Health and Social Welfare (MOHSW) is responsible for health, sanitation, and hygiene in general and the Ministry of Education and Vocational Training (MOEVT) for school sanitation and hygiene education. The Ministry of Community Development, Gender, and Children (MCDGC) for WSS in community development, and the National Environmental Management Council (NEMC) are responsible for environmental issues relating to WSS. 2.3 Policy and Legal Framework 2.3.1 Water sector legislation in Tanzania started with ordinance and guidelines enacted since the pre-independence period. The relevant Acts include a) Waterworks Ordinance, 1949, b) Urban Water Supply Act, 1981, c) Waterworks (Water Supply) Rules, 1997, d) Waterworks Regulations, 1997, e) Water Laws (Miscellaneous Amendments) Act No.8 of 1997, f) Operational Guidelines, 1998, g) Public Health (Sewerage and Drainage) Ordinance, 1955, h) Energy and Water Utilities Regulatory Act No 11 of 2001, i) Local Government (District Authorities) Act, 1982 as amended to 30th June 2000, j) Local Authorities (Urban Authorities) Act, 1982 as amended to 30th December 2000. 2.3.2 The Water Law (Act No. 8 of 1997) provides powers to the MOW to declare any area to be a water supply and sewerage board / authority and to transfer facilities and infrastructure to such a water supply and sewerage board / authority. This act also replaces the National Urban Water Authority with the Dar Es Salaam Water and Sewerage Authority

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(DAWASA). It is this act, which is ushered in the establishment of the urban water and sewerage authorities (UWSAs). 2.3.3 The National Water Policy (NAWAPO 2002) constitutes the environment for Integrated Water Resources Management (IWRM), incorporating development on the one hand, and conservation, protection, monitoring, and control on the other. This policy demonstrates the government’s major departure from the previous policy of free water towards cost recovery, economic efficiency, integrated water management, water conservation, and protection. 2.3.4 The main policy elements are a) the river basin is recognized as the fundamental planning unit for water resources development and management, b) water is considered as a social, economic, and environmental good, c) involvement of beneficiaries in all phases of the project cycle, d) management of operation to involve the private sector, e) full cost recovery for urban water supplies, f) at least full Operation and Maintenance (O&M) cost recovery and about 5% contribution on capital costs for rural areas. 2.3.5 For RWSS, the policy is centred around community ownership and management of WSS facilities, and demand driven approaches based on enhanced private sector participation in project implementation. The public sector will increasingly assume regulation, facilitation and coordination roles. The policy expressly promotes the integration of water supply, sanitation, and hygiene education. The ultimate policy goal is universal access to clean and safe water supply within a distance of 400 meters from dwelling places. The environmental guidelines have been developed for sanitation and hygiene education. 2.3.6 The basic level of service for domestic water supply in rural areas being a protected year-round supply of 25 litres of potable water per capita per day through water points located within 400 m of the furthest household and serving 250 persons per outlet; service delivery systems that ensure the efficient and equitable use of water. 2.3.7 The National Water Sector Development Strategy (NWSDS) provides the roadmap and defines implementation arrangements for the National Water Policy and the other national strategies. 2.3.8 The final draft of the NWSDS (2005), has gone through a series of discussions involving all stakeholders, including ESAs, NGOs, the public and private sector partners, and has been endorsed by the MOW. While the main base of the NWSDS is the National Water Policy, it is underpinned by and stems from a broader range and framework of policies and strategies in Tanzania. These include (i) Health Policy, (ii) Local Government Reform Policy (LGRP), (iii) Local Government Policy, (iv) Environmental Policy, (v) Rural Development Policy and Strategy (RDPS), and (vi) Land and Settlement Policy. 2.3.9 These guidelines include effective institutional linkages for integrated water supply, sanitation and hygiene at different levels, amongst central government, local government, ESAs, the private sector, NGOs and Community Based Organizations (CBOs and, Adoption of a Sector Wide Approach in Planning (SWAP). 2.3.10 The Energy and Water Utilities Regulatory Act, No 11 of 2001, provides for regulation of service providers by the Energy and Water Utilities Regulatory Authority (EWURA). The

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EWURA has been constituted and established with the appointment of chief executive officer and the Board of Directors. The recruitment of remaining staff is underway.

Health Policy 2.3.11 The Ministry of Health and Social Welfare’s goal is to provide quality health services that are effective and accessible to all, and delivered by an effective and sustainable national health care system. The health sector policy emphasizes the need for adequate supply of water and basic sanitation for minimizing water borne diseases, which are among the country’s major health problems, and recognizes that the health of the individual, the family, and the community at large is dependent on the availability of safe water and basic sanitation. The current estimated infant mortality and under five year mortality rates are 99 and 152 per 1,000 live births respectively. Maternal mortality is estimated at 529 deaths per 100,000 live births. Life expectancy at birth is 45 years. 2.3.12 The MOHSW and PMO-RALG are jointly responsible for the delivery of government health services. Consultant hospitals, zonal health training centers and vertical programs are directly supervised by the Ministry of Health. PMO-RALG manages district and regional health services. A dispensary serves a population of 6-10 thousand people, a health centre, 50-80 thousand and a district hospital 250 thousand. The regional hospital serves as a referral centre to 4-8 district hospitals and the four consultant hospitals serve several regional hospitals. 2.3.13 The objectives of the National Health Policy provide the framework for a MOHSW Medium Term Strategic Plan (MTSP) from which the Malaria Control Medium Term Strategic Plan, HIV/AIDS strategy and other related strategies have been developed. Health Sector Reform is coordinated and harmonized with Local Government Reforms and Civil Service Reforms.

Environment Policy 2.3.14 The environmental policy aspects related to water supply and sanitation are geared towards ensuring that the planning and implementation of initiatives related to water resources are carried out in an integrated manner, and in a way that protects water catchment areas and their vegetation. This is to be achieved by conducting relevant environment impact assessments (EIAs), by undertaking appropriate mitigation measures, by improving the management and conservation of wetlands, by promoting technology for effective and safe water use, particularly for water and waste water treatment and recycling and by instituting appropriate user-charges that reflect the full value of water resources. Sustainable technologies that discourage open-end effluent discharges will be promoted in close collaboration with the National Environmental Management Council (NEMC) and the Division of the Environment of the President’s Office.

Rural Development Policy and Strategy 2.3.15 The rural development policy and strategy (RDPS) acts as a platform sector ministries’ policies which are coordinated, harmonized, and integrated, to give the rural development process a holistic view. The objective of the Local Government Policy is to improve service delivery by making local authorities more democratic and autonomous within the framework established by the central government. The policy identifies the provision and facilitation of water and sanitation services as an important responsibility of local government. The policy not only confirms the legitimacy of local authorities, but also helps them generate more revenue, reduce costs, and operate water facilities more efficiently.

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Land and Settlement Policy

2.3.16 The National Human Settlement Policy and the National Land Policy are two different policies, but they both recognize the existence of unplanned settlements in most urban areas and in small towns. The former calls for the upgrading of those settlements through the provision of basic infrastructure services, such as roads, water supply and sanitation. The Forestry Policy recognizes that water sources are one of the key pre-requisites for local and international development. The policy advocates the establishment of new catchment forest reserves for watershed management and soil conservation in critical watershed areas. 2.4 Sector Development 2.4.1 The history of the Water Sector in Tanzania dates back to the 1930s when the policy of the Government was to enhance participation of beneficiaries through contributing 25% of water supply scheme capital investment costs while local governments contributed 75% of the costs. The urban bias in water supply service provision was addressed in 1971 when Government proclaimed a 20-year Rural Water Supply Programme (RWSP) that aimed at providing access to adequate, safe, dependable water supply within a walking distance of 400 m from each household by the year 1991. 2.4.2 The year 1971 was a turning point for the water sector in Tanzania, as it was followed by the introduction of the water legislation in 1974 through the Water Utilization Act No.42 of 1974 and its subsequent amendment by enactment of Amendment Act No.10 of 1981. The amendment ushered in the basin management system and pollution control aspects. As part of the economic adjustments and reforms that started around 1985, the Government produced and adopted the 1991 National Water Policy which placed emphasis on community participation, decentralized management, use of appropriate technologies, cost sharing for rural water supply, and cost-recovery for urban water supply. 2.4.3 In tandem with the changes in the water sector, similar centrally planned activities were initiated in health sector to expand sanitation facilities. In 1973 a campaign programme for household latrines aimed at ensuring each household has a latrine was introduced. The campaign was given added impetus following a cholera outbreak in 1977, which saw latrine coverage grow from 20% to 50% in 1980 and currently stand at 90%, although the hygiene and quality aspects are significantly below standard in most cases. 2.4.4 A number of other developments took place focusing the country on specific policies and institutional changes aimed at reducing poverty and improving living standards of people in the short, medium term and long term. These included the Poverty Reduction Strategy (PRS) that has been developed into the National Strategy for Growth and Reduction of Poverty (NSGRP)-MKUKUTA. The programme is undertaken in the context of the GOT’s macro economic policies that underpin its resource allocation policies. There are other important milestones such as (i) Development Vision 2025; (ii) National Poverty Eradication Strategy (NPES); 1998, (iii) Tanzania Assistance Strategy (TAS), 2001, and the Joint Assistance Strategy for Tanzania (JAST), 2006; (iv) Poverty Reduction Strategy Paper I (PRSP I), 2000; (v) The National Water Policy, 2002;(vi) Rural Development Policy, 2003; (vii) National Strategy for Growth and Reduction of Poverty (NSGRP), 2004; (viii) The Draft National Water Sector Development Strategy 2005-2015 (NWSDS), 2004; (ix) In addition the National Water Sector Development Strategy and (x) Water Resources Bill are currently

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being finalised with the view to supporting sector planning in order to achieve desired goal of improved quality of life and social well-being through access to safe and clean water and sanitation. The principles from these have been used in the preparation of the National Rural Water Supply and Sanitation Programme (NRWSSP). 2.4.5 The key driver of the country development path is the second Generation Poverty Reduction Strategy (NSGRP) 2005 called MKUKUTA in Swahili in which water issues feature prominently as one of the main areas of focus in the three clusters: (i) Growth and Reduction of Income Poverty, (ii) Quality of Life and Social well-being and (iii) Governance and Accountability. This new approach is underpinned by a new budgeting framework for Ministries, Department and Agencies (MDAs) under the National Strategy for Growth and Reduction of Poverty, Budget Allocation System (NSGRP-BAS) software that takes full consideration of specific priority interventions for each cluster strategy identified for realization of goals and operational outcomes. 2.4.6 The MOW is working on a new Water bill in which the roles of the emerging institutions and the various stakeholders, and especially the community ownership and management, decentralized service delivery along with the changing roles of government, will be clearly defined. Appropriate regulatory mechanisms including Constitution of a community owned organizations will be developed. 2.4.7 The future of the water sector is geared towards achieving specific targets that contribute to poverty reduction and improves quality of life and social well-being. The MKUKUTA has outlined operational targets (outcomes) to be achieved by the water supply and sanitation sector by the year 2010. These are summarized in Box1 below.

Box 1: Operational targets for goal 3, cluster II A. Water Increased proportion of rural population with access to clean and safe water from 53% in 2003 to 65% 2009/10 Increased proportion of urban population with access to clean and safe water from 73% in 2003 to 90% 2009/10 Less time on collection of water B. Sanitation & Waste Management Increased access to improved sewerage facilities from 17% in 2003 to 30% in 2010 in respective urban areas Reduce households living in slums without adequate basic essential utilities 100% of schools to have adequate sanitary facilities by 2010 95% of people with access to basic sanitation by 2010 Cholera out-breaks cut by half by 2010 C. Pollution Reduced water related environmental pollution levels from 20% in 2003 to 10% in 2010 Reduction in harmful industrial and agricultural effluents

2.5 Gender and Socio-economic Development Gender and Poverty Reduction 2.5.1 Tanzania has a total population of about 37 million (2003) of which almost 51% are women and 49% men, and an annual population growth rate of 1.9%; the same statistics

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show that 52% of the population is between the age of 15–64, while 46% is between the age of 0–14 and 2% is 65 years and above, indicating a disproportionate burden on the economically active population. 2.5.2 Poverty in Tanzania is characterized by low income and expenditure, high mortality and morbidity, poor nutritional status, low educational attainment, vulnerability to external shocks, and exclusion from economic, social and political processes. Poverty is particularly widespread in the rural areas, but is not insignificant in urban areas. There are also important regional differences in the levels and specific dimensions of poverty. 2.5.3 About 36% of Tanzanians1 fall below the basic needs poverty line of which 39% are in rural areas; 19% fall below the food poverty line (defined as 2,200 kcal. per day) of which 20% are in rural areas. A quarter of adults have no education and about 41% of rural women are unable to read or write. The number of households headed by women (FHH) is estimated to have increased to 23% in 2000/ 01 from 6% in 1991/ 92. The monthly average income of a FHH is TZS 42,844 as opposed to the male headed households (MHH) which is TZS 68,866 in paid employment; FHH Tshs. 32,028 against MHH TZS 52,409 in self employment and FHH TZS 34,234 against MHH TZS 54,872 in agriculture respectively.

Gender Issues in Water Supply and Sanitation

2.5.4 Women and men often have different roles in community and household water supply and sanitation. Women collect water on foot for domestic use while men collect water for business purposes – often with some means of transport. Increases in water collection time has a multiplier effect on the poverty levels as it i) curtails the populations ability to earn incomes by engaging in income generating activities, ii) increases the care of family member suffering from major water related and faecal-oral diseases and iii) affects the ability of girl children in particular to attend school. 2.5.5 There is inadequate participation of women in decision making committees such as the Water User Committees (WUC), Water User Groups (WUG), which involves consideration of technical operations and maintenance of the water points as well as training in procuring of spare parts. The current policy of GOT is to ensure at least 30% female participation in WUGs/ WUCs. 2.5.6 With regards to sanitation, particularly the issue on household latrines, there is an aspect of cultural and traditional norms and values which affect men and women differently. Sanitation behaviour is based on ideas and taboos associated with defecation and on traditional habits originated in local environmental circumstances. Usually women are more motivated to have sanitation facilities for reasons of convenience and privacy, but also they are the ones who keep the facilities clean, who maintain them and who train their children to use them. In addition, intensive awareness raising and sensitisation is needed on sanitation and hygiene practices since there are a large number of communities who do not use the facilities even after having constructed them. Access to proper sanitation will mitigate major diseases, such as diarrhoea, worms, eye infections, cholera, typhoid, etc. especially in children. This will release more time for women to engage in economic activity as they are often the ones that bear the burden of looking after the sick.

1 Household Budget Survey 2000/ 2001. National Bureau of Statistics, Tanzania

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2.5.7 PMO-RALG is in charge of recruiting community development officers (CDOs) and assistants (CDAs) for placement at the ward and district levels. The CDAs are responsible for community mobilisation, implementation of participatory methods, guiding communities in developing and implementing their village development plans, training communities in the use of participatory methods, as well as coordinating between the communities and the district authorities. HIV/ AIDS and Malaria 2.5.8 In Tanzania HIV prevalence is estimated at 9.3% (2003) among the sexually active population (15–49 years old). HIV prevalence among pregnant women attending antenatal clinic ranges from 4.2% to 32.1% in selected sentinel sites. 2.5.9 As part of its strategy development process, the Ministry of Health has developed a health sector HIV/AIDS strategy. In the new Health Sector HIV/AIDS Strategy (2003-2005) HIV/AIDS will be integrated in activities of line departments within the structures of MOHSW and institutions in the health sector. As an integral function of MOHSW, HIV/AIDS will be planned and implemented in the framework of the Annual Budget of MOHSW and work plans of directorates/departments, and will be financed through the MTEF and other sources including TACAIDS. 2.5.10 Key achievements, constraints and future priorities identified in the strategy are summarized in the HIV/AIDS situational analysis under ten broad themes: epidemiological surveillance and social research; behavior change communications (Adolescents and other vulnerable populations); stigma and discrimination; STI prevention and control; blood safety; voluntary counseling and testing; PMTCT and other prevention programs; care and support for PLWA; home-based care and psychosocial support; and formulation of a Health Sector Strategy for HIV/AIDS/STI research coordination. 2.5.11 Thirty percent (30%) of the disease burden borne by the people of Tanzania is from acute febrile illness, predominantly caused by malaria. The groups most vulnerable to malaria are young children and pregnant women. Renewed concern about the impact of malaria in Tanzania encouraged the adoption in the mid 1990s of Tanzania as one of the target countries for the WHO Accelerated Plan of Action for Malaria Control. In 1997 a four-year Plan of Action was agreed followed by the 2000-2001 Roll Back Malaria Plan of Action. The Malaria Medium Term Strategic Plan (MMTSP) will build on the previous successes to further reduce malaria mortality and morbidity in all 21 regions by 25% by 2007 and by 50% by 2010. 2.5.12 HIV/AIDS malaria and other water related diseases are of importance to the water and sanitation sector because with the increase in these diseases extra burden is put on women and children for increased water supply at the household level, which increases time spent fetching water and waiting at the water point. Moreover, the disease will have an impact on the management, operations and maintenance of the water infrastructure where trained community members, affected by diseases, may increasingly take time-off, thereby affecting negatively the smooth running of the water supply infrastructure.

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2.6 Donor Support 2.6.1 The country is receiving considerable donor support for funding the development budget for most sectors including the rural water and sanitation sector. The main donors active in the water sector include Germany, Japan, EU, Finland, France, Norway, the People’s Republic of China, Netherlands, Denmark, Sweden, USA, Canada, Switzerland, Ireland, Belgium and the United Kingdom. International financing institutions include the World Bank, African Development Bank, Arab Bank for African Development, and OPEC. UN organizations and international NGOs include UNDP, UNICEF, WaterAid, and OXFAM. Religious organizations include the World Islamic League, Al Munadhanat Al Dawa Al Islamia, Christian Council of Tanzania, Catholic Relief Services, and the Lutheran Church. They have played a key role in funding national water and sanitation programs. 2.6.2 There are a number of projects that have just being completed and under implementation as follows; The Shinyanga Rural Water Supply and Sanitation Program (The Netherlands) programme is a continuation of the Domestic Water Supply Programme, which ended in 2002. The Mtwara/Lindi Water Supply and Sanitation Project (JICA) implement its activities in eight districts of Mtwara and Lindi regions. The three-year-project covers 31 villages in Mtwara and 33 villages in Lindi. The Hai District Water Supply Project (Germany) is presently in its third phase. The systems developed in Phases 1 and 2 are providing water to some 110,000 people. 2.6.3 The Small Towns Water Supply and Sanitation Project (AFD) is designed to bridge the gap resulting from water supply and sanitation interventions being focused on rural areas or regional headquarters, leaving district headquarters and other small towns. East Kilimanjaro Rural Water Supply Project (Germany) East Kilimanjaro Rural Water Supply is supported by KfW comprises a capacity building component for improving the technical capacity of the water company, including the coordination of the GTZ inputs. 2.6.4 The Rural Water Supply and Sanitation Project (World Bank) being implemented in 14 districts of Tanzania supports decentralized demand-responsive delivery within the NAWAPO framework, while helping build an institutional foundation for implementing the National Rural Water Supply and Sanitation Programme (NRWSSP). UNICEF, TASAF and a number of NGOs including Care, Caritas, Concern, Oxfam, Plan International, Water Aid, and World Vision are active in a number of districts as shown in the Table below. The design of NRWSSP has taken into account the relevant lessons and experiences from these operations. 2.6.5 The Bank has supported altogether 12 operations in the sector, these operations amount to a total of UA 88.5 million (Annex 2a). Out of the 12 operations 10 have been completed. The 10 operations consist of 5 studies for a total amount of UA 2.7 million, 4 urban projects for a total amount of UA 24.2 million and the Zanzibar Rural Water Supply Project that was cancelled for non-fulfillment of loan conditions. The two current water projects being implemented are the Dar es Salaam Water Supply and Sanitation Project and the Monduli District Water Supply Project (Annex 2b). These interventions learn that supply driven activities and partially involvement of communities does not lead to a sustainable operation of water and sanitation delivery services system. Hence the RWSSI philosophy of full community involvement and demand driven water supply and sanitation. 2.6.6 Other water projects in Tanzania over the last thirty years have contributed to increases in coverage in water services delivery. However services began to fall apart once project infrastructures were completed, because the projects were mostly supply and not

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demand driven. Community capacity constraints were not addressed systematically and the “free water” policy meant that there was no residual capacity for maintenance and operation as the sense of ownership by the community was not emphasized in project design and implementation. There are indications from elsewhere that the demand-driven approach can result in under-estimating the latent demand. Also leaving the technology choice to the community might result in too little capacity for near future needs. The use of a multiplicity of small contractors can be a management problem. These lessons have been taken into account in the development of the NRWSSP.

Table 2.1: External Support Agencies (ESAs), National and International NGOs

Description Region ESAs NGOs

1 Dar es Salaam IDA, ADB, EIB, AFD, BSF, JICA WATERAID

2 Arusha ADB, KfW, IDA, JICA, DANIDA Caritas Australia, WaterAid, Oxfam GB, World Vision

3 Kilimanjaro GTZ, KfW, IDA,, UNICEF

4 Tanga GTZ, KfW, IDA, Japan, UNHCR, Irish Aid World Vision

5 Morogoro EU, IDA, UNICEF, AFD

6 Iringa EU, IDA Concern, American Peace Corps, RC Church-Spain, Connect International Holland, Plan International

7 Mbeya KfW, IDA, UNDP, UNICEF, JICA

8 Tabora IDA WATERAID, World Vision

9 Shinyanga Netherlands Oxfam GB, Oxfam Ireland, World Vision

10 Mwanza EU, AFD, UNICEF, IDA, GEF, JICA Plan International

11 Mtwara Finland, UNICEF, JICA Concern Worldwide

12 Dodoma China, IDA, AFD World Vision, WATERAID, BSF, CMSR-Italy

13 Singida BADEA, IDA, DFID CDTF, SEMA, World Vision

14 Ruvuma KfW, IDA, GTZ, JAPAN, UNICEF SNV

15 Kigoma UNICEF, EU IFRC, TCRS

16 Rukwa The World of Bread

17 Mara AFD, SIDA, IFAD, JICA

18 Lindi Finland, IDA, JICA

19 Kagera AFD, SIDA, OPEC, BSF, IFAD World Vision

20 Coast IDA, China, UNDP, UNICEF, AFD, JICA, BADEA

Plan International, AMREF

21 Manyara IDA WATERAID

Source: MOW - Budget Speeches (2002 - 2005) 2.7 Sector issues and constraints 2.7.1 Water resources institutions are poorly resourced and poorly functioning. The concept of integrated water resources management adopted in the past decade has not been adequately understood, accepted, or supported even within the ministry charged with the responsibility for managing the nation’s water resources. 2.7.2 The sector has been centrally controlled and implemented, under NAWAPO, consultations and planning starts from the grass-roots; and implementation is at the most appropriate level, closest to the beneficiaries. User groups are not only responsible for operating, maintaining and sustaining the infrastructure they are also responsible for planning and managing it. Capacity gaps were anticipated and occurred at district and regional levels. A capacity building programme is underway which is strengthening Regional Secretariats as training and support focal points for district DWSTs. Greater capacity building efforts are needed to strengthen the community, the facilitation service providers (FSPs) and the

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technical service providers (TSPs) who also are unfamiliar with NAWAPO and community based implementation methods. 2.7.3 Household surveys suggest that sanitation coverage (as measured by access to latrines) is as high as 90%. However, most latrines do not meet MDG defined standards for sanitation. Sanitation has failed to attract the required level of resources. When resources are available they are commonly spent on technology and subsidies instead of on promotion, planning and skills development within the community. 2.7.4 Nineteen Urban Water Supply Authorities (UWSAs) were established as “autonomous” bodies. They are today functional but challenged by most of the usual deficiencies. The MOW has de-concentrated its authority instead of devolving it. UWSA Boards are made up of ex-civil servants who are naturally biased towards passive supervisory roles instead of providing strategic guidance. While blaming financial limitations for limited progress, the UWSAs are reluctant to raise tariffs to commercial levels in order to reach financial sustainability. 2.7.5 Few authorities are replacing worn out equipment, and most depend on donor aid or grants from MOW for major refurbishments. Likewise, no authority has rationalized its approach to maintaining and repairing its distribution network, many having been able to respond only to visible leaks. Estimates of unaccounted water range from 28% to 86%, although these remain as estimates as most consumption and nearly all production are not measured. Unaccounted water arises mostly from physical leakage and illegal connections or tampering with the meters. No authority has developed a systematic approach to reducing unaccounted for water. All authorities are actively moving towards universal consumer metering, which will increase the numbers of connections and provide for greater accountability. 2.7.6 Nearly all UWSAs face potential shortages of supply, all lack a full understanding of the importance of water resources to their operations and few are taking the necessary action to assess their own resources and take steps to secure optimum resources for future supplies. 2.7.7 The LGAs have been transformed into multi-sectoral units with legal status and responsibility for social development and public services provision, including water supplies, education, health, agriculture and roads. At the heart of the reform are decentralization and a change in central-local government relations. Line ministries are changing their roles and functions into being responsible for (i) making policy, (ii) building capacity, (iii) monitoring and quality assurance, and (iv) regulation. Decentralization involves de-linking local authority staff from their respective ministries and making them accountable to local councils. 2.7.8 The institutional framework for the management of water resources is being set up to ensure the full participation of stakeholders. It is designed to facilitate involvement of the responsible authorities and promote autonomy at the Basin level. NAWAPO aims at ensuring that beneficiaries participate fully in planning, construction, operation, maintenance and management of community based domestic water supply schemes. The decentralized autonomous entities are being put into place for management of water and sewerage services in urban areas and local water-user groups are being strengthened to support rural water supply project implementation and management.

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3 THE RURAL WATER SUPPLY AND SANITATION SUB-SECTOR 3.1 RWSS Sub-sector 3.1.1 The water sector in Tanzania is characterized by 49% (2003) of population still lacking access to clean & safe water. The coverage in rural areas is estimated at 53% and in urban areas at 73%. The water-borne & water-related diseases are widespread in areas where water is scarce. The average coverage figure2 hides that the distribution across districts is varying widely. There are 7 districts in which fewer than 10% and a total of 76 districts in which less than 50% of the rural households have access to improved water supply. These extremes are largely the result of investment patterns over the years, but they also reflect the relative technical difficulties of developing water supplies in different areas. Many districts with higher rates of access are places in which gravity schemes, which are easy to build and maintain, are possible. 3.1.2 Based upon preparatory surveys for the NRWSSP, it is estimated that of the large majority of the rural water supply schemes are handpump-based (shallow well/borehole) (84%), followed by single/multiple pumped piped systems (6%) and single/multiple gravity schemes (4%).

Table 3.1: Unit Costs for different technologies in rural water supply3 Technology Depth/ Dist Cost

USD Population

served Unit Cost/ Cap

USD Shallow well and hand pump 12m 2100 250 8.40 Borehole and hand pump 25-40m 6,150 250 24.6 Gravity fed and piped (small) <2 km supply line 76,300 1500 50.90 Gravity fed and piped (large) >2 km supply line 84,800 2500 33.90 Electric or diesel pumped and piped (small)

<100m depth and <2km supply line

64,000 1,500 42.70,

Electric or diesel pumped and piped (large)

>100m depth and >2km supply line

71,300 2,500 28.50,

Protected spring Simple with tap 900 250 3.60 Windmill 8,000 250 32.00 Rainwater harvesting 4,335 500 8.67 Charco Dam 15,600 1,500 10.40

Table 3.2: Unit Costs for O&M of Water Systems4 Technology Depth/Dist O&M Cost

(USD/year) Pop

Served Unit Cost/cap/year

(USD) Shallow well and Hand pump 12m 28 250 0.11 Borehole and Hand pump 25-50m 28 250 0.11 Gravity fed and Piped (small) <2 km supply line 92 1,500 0.06 Gravity fed and Piped (large) >2 km supply line 153 2,500 0.06 Electric or diesel pumped and piped (small)

<100m depth and <2 km supply line

1,470 1,500 0.98

Electric or diesel pumped and piped (large)

>100m depth and >2 km supply line

2,450 2,500 0.98

Protected spring 5 250 0.02 Windmill 30 250 0.12 Rainwater harvesting 45 500 0.09 Charco Dam 150 1,500 0.10

2 Source: Water and Sanitation in Tanzania, An update on the 2002 Population and Housing Census, WaterAid, July 2005 3 For more details see the PID 4 For more details see the PID

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3.1.3 The 2002 Census reports a very high percentage, 87%, of households as having pit latrines, and only 9% of households with no sanitation facility at all, the majority of households without sanitation facilities are in rural areas. The district data shows that there are four districts in which more than 50% of rural households had no sanitation facilities. These are all districts in which the majority of people are pastoralists, where many see little point in constructing of permanent sanitation facilities.

3.1.4 The rural water supply and sanitation sub-sector sector is undergoing institutional reform. The roles and responsibilities of regulatory organizations are being separated from responsibilities for the provision of water supply and sanitation services. Implementation is being decentralized, in line with the Government’s on-going drive for decentralization to district and community levels, under the Local Government Reform Program (LGRP). In future, implementation will predominantly be community-based, in accordance with the NAWAPO. The local private and informal sector service providers are engaged in mobilization, advocacy, consultancy, construction, supply, and in O&M services.

3.1.5 The Rural Water Supply Division (RWSD) under the MOW is being transformed from being responsible for project implementation activities into an institution responsible for provision of support for decentralized implementation and service delivery (Annex 4). In this role, the RWSD will share some of its current responsibilities with local governments, user-communities, and the private sector.

3.1.6 The specific roles of the RWSSD will be to: assist the development of sector policy; assist national level planning including investment planning for the NRWSSP; support the process of community development, management and ownership of RWSS facilities; support LGAs in capacity development and training; promote sanitation, hygiene and support HIV/AIDS mitigation; develop and maintain the NRWSSP MIS; assure technical and construction quality through the formulation of standards and guidelines; assure quality of operation and maintenance, including the proper functioning of the NRWSSP supply chain; assist in mobilizing and administering internal and external funding, and in coordinating ESA inputs; and monitoring and evaluation (Annex 5). 3.2 Issues and Constraints 3.2.1 The RWSS sub-sector faces a number of issues, namely: a) weak financial and human capacity especially at district level; b) lack of a balanced approach between rural water supply and rural sanitation; c) weak implementation of gender mainstreaming and other cross cutting issues; and d) need for strengthening of the framework for monitoring & evaluation including clear performance indicators. 3.2.2 Under the Local Government Reform Programme (LGRP) District Councils have been assigned the responsibility for managing government services at the district level, including water supply and sanitation. However, District Councils have still a limited financial and human resource base, and at the same time growing administrative costs and increasing demands for services by communities. 3.2.3 Moreover NAWAPO introduces an entirely new approach to implementing water supply and sanitation and water resources management. Traditionally, the sector has been centrally controlled and implemented. Under NAWAPO, consultations and planning starts from the grass-roots; and implementation is at the most appropriate level, closest to the

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beneficiaries. User groups are not only responsible for operating, maintaining and sustaining the infrastructure they are also responsible for planning and managing it. 3.2.4 Under NAWAPO, the Rural Water and Sanitation Project has successfully developed an implementation model in 14 districts. Capacity gaps were anticipated and occurred at district and regional levels. A capacity building programme (CAPSTART) is underway which is strengthening Regional Secretariats as training and support foci for district DWSTs. Greater capacity building efforts are needed to strengthen the community, the facilitation service providers (FSPs) and the technical service providers (TSPs) who also are unfamiliar with NAWAPO and community based implementation methods. 3.2.5 The NRWSSP is addressing sanitation and hygiene in a two pronged approach, rural household sanitation implementation (marketing, demonstration stage, construction stage, and monitoring and support stage) and school sanitation implementation. The NRWSSP should define what is meant by adequate sanitation within the context of the MDGs. A detailed Sanitation Action Plan for moving towards the MDG targets will be developed during the first year of the program. The Plan will include intensive social marketing campaigns with appropriate quantifiable indicators as well as the construction of sanitation facilities in schools, health centers and market places. It is envisaged that rural population practicing good health, hygiene and using improved sanitation will increase from 50% in 2006 to 90% in 2010. 3.2.6 The National Water Policy encompasses mainstreaming of gender and addresses women specific issues in all aspects related to water and sets out clearly the way forward to mainstreaming gender in the water sector. However, the implementation of these commitments is constrained by the weak institutional structure related to mainstreaming gender and other cross cutting issues. The MOW gender focal person needs further support in terms of gender mainstreaming tools and guidelines, as well as a well designed plan to train the technical officers at the national and district level. Moreover, there is also a need to strengthen coordination mechanisms between the MOW gender focal person, the District Gender Officer and the Ministry of Community Development, Gender and Child Services (MCDGCS). 3.2.7 The NAWAPO and the Local Government Act stress the need to involve communities in all sectors at all levels. Due to insufficient staffing of water technicians, community development assistants, community mobilization and participation has been weak and achieved only through support from NGOs and Facilitation Service Providers. 3.2.8 The NRWSSP has identified M&E as one of the central roles for the water sector at the national level. There is need to develop the framework for M&E, including clear performance indicators; the process of generation, transmission, collection, analysis, storage and dissemination of M&E along with the parallel needs for process and achievement monitoring. A MIS to collect information on the NRWSSP is being implemented as part of the Program.

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4 THE RURAL WATER SUPPLY AND SANITATION PROGRAM 4.1 Concept and Rationale 4.1.1 The Government recognizes the importance of universal access to improved water supply and sanitation and access to improved water supply and sanitation is a pillar of the National Growth and Poverty Reduction Strategy (MKUKUTA). The Government also recognizes the need to develop institutions and methods capable of rapid expansion of services across the country and is operationalizing the NAWAPO to improve sector management and to reach the MDGs. The NAWAPO embodies the principles of decentralization and subsidiarity of water supply management, which also conforms to the public sector reforms being undertaken by Government. The National Water Sector Development Strategy (NWSDS) sets out how the NAWAPO will be implemented and describes the institutional and legislative changes necessary so that the specific actions contained in the NWSDS can be implemented. 4.1.2 As part of the NWSDS, the Government formulated the National Rural Water Supply and Sanitation Program (NRWSSP) in 2005. This was formulated through a participatory approach involving stakeholders (communities, NGOs, private sector, ESAs and Government Agencies) and using the experience gained from the Rural Water Supply and Sanitation Project (RWSSP) executed in 14 districts, other operations in other districts including Monduli District Water Project. RWSSI’s promotion and strong support for the program approach, use of national procedures for procurement and disbursement, use of demand responsive approach, and decentralised implementation by communities and local government structures have been important in developing the NRWSSP that is the GOT’s framework for interventions in the rural water and sanitation sub-sector. 4.1.3 The strategies for achieving the NRWSSP targets are: a) integrated approach of sanitation, hygiene education and environmental management; b) demand responsive approach (DRA), with beneficiaries contributing investment and O &M costs; c) decentralized approach, with funds channelled to Districts through conditional grants; d) an overall SWAP; e) system sustainability, based on the community’s responsibility; f) financial viability, through sound financial practices; g) co-ordination and collaboration of the major actors, covering national and local stakeholders; h) private sector participation, mainly consultants and contractors; and i) monitoring and evaluation. 4.1.4 The NRWSSP covers the period 2006-2025 and is a long term plan for the development of the sub-sector to meet the MDG targets. The total estimated cost to reach the 90% coverage by 2025 is approximately USD1.9 bn. The Program that is the subject of this report represents the initial four-year phase running from 2006/07 to 2009/2010. This initial phase aims to provide water to an additional 6.5m people and rehabilitate supply schemes covering 1.2m people. This would result in RWS coverage of 69% by 2010 in line with both the MKUKUTA and the ADB’s RWSSI targets. Based on the NRWSSP Program for 2006-2025, subsequent phases of the NRWSSP will be formulated and necessary funds mobilised in order to reach the MDG target of 79% by 2015 and the Tanzania Development Vision target of 90% by 2025. There is thus an opportunity for the ADF to continue with its RWSSI initiative in Tanzania during the ADF-XI cycle.

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4.2 Program Goal and Objectives 4.2.1 The sector goal is improved health and quality of life and reduced poverty of rural Tanzanians by providing adequate sustainable safe water supply and sanitation facilities. 4.2.2 The objectives are a) improved district level capacity to implement demand based RWSS projects, b) improved access of rural communities to water and sanitation services operated and maintained by capable women and men (through 50% female membership in all water committees), and improved health and hygiene practices, and c) improved capacity of MOW to provide and administer policy and act as facilitator of overall water sector development and investment, and improved capacity of the private sector / NGOs to provide goods and services to the RWSS sector. 4.3 Strategic Context 4.3.1 The importance of the sector to the economy and poverty alleviation is demonstrated by the prioritization of the WSS sector in the NSGRP. The program in addition to contributing to the MDG of halving the number of people with out access to safe water by 2015, fits within NSGRP targets of providing 90 % of rural population with access to water and sanitation by 2025. 4.3.2 The program conforms to the national sector goal of improving the quality of life and enhancing national economic development by ensuring sustainable management of the country’s water resources and provision of adequate water to all users. The program is in line with the Bank Group Vision and strategic plan, the Millennium Development Goals, and the targets set at the World Summit on Sustainable Development. The program falls within the Bank’s development objectives stated in the Country Strategy Paper, concerning support for development of basic infrastructure in the rural areas, including water supply and sanitation services. It also falls within PRSP objective for water supply and sanitation sector, which is to ensure that the water resources are effectively developed to contribute to poverty eradication through increased access to safe water supply and sanitation. 4.3.3 The program the Integrated Water Resources Management (IWRM) Policy of the ADB that promotes cost recovery for water supply and sanitation services, while taking into account social equity and capacity of the poor to pay. The program is fits in the Bank's Strategic Plan, which recognizes that in order to ensure sustainability the poor must be fully involved in the process of delivery and management of services. 4.4 Program Description 4.4.1 The program includes a) access to water supply and sanitation in all districts; b) increased water supply coverage and reduced distance between home and water points; c) reduced water borne and hygiene related diseases; d) community mobilization with gender equality; and f) appropriate water supply technologies whose maintenance can be done locally. 4.4.2 The NRWSSP components are the following: 1. Construction of Rural Water Supply & Sanitation facilities, 2. District Management Support, and 3. Institutional Strengthening & Development

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Construction of Rural Water Supply & Sanitation facilities 4.4.3 The program component includes the rehabilitation of existing schemes and constructing of new ones to increase the percentage of rural population served to 69% by 2010, 79% by 2015 and 90% by 2025, and to increase the percentage of rural population with access to sustained sanitation to 90% by 2010. 4.4.4 The following activities are included under this component (i) construction of shallow wells, boreholes with hand pumps, piped systems using pumped water from boreholes or gravity fed water from springs, and latrines in villages; (ii) employment of local NGOs and firms as Facilitation Services Providers (FSPs) and consultant engineers as Technical Services Providers (TSPs) for design and construction supervision; and (iii) expansion of existing supply chain of private retail outlets for wholesaling, installation of pumps and provision of spare parts and after-sale services for hand pumps and mechanised pumps. 4.4.5 The component includes provision of sanitation facilities in public places and for school and health centres along with hygiene promotion to increase the percentage of rural population covered to 95% by 2010. 4.4.6 The program component finances hygiene promotion activities for domestic sanitation aimed at changing hygienic habits and promoting households to construct sanitation facilities.

District Management Support 4.4.7 This component includes (i) the establishment and strengthening of DWSTs within local government to enable them prepare district RWSS plans and appraise RWSS sub-projects proposed by communities, construction and rehabilitation of offices; logistical support-vehicles, computers and office equipment; short term recruitment of skilled personnel or technical assistance; MIS; training; (ii) establishment of a district RWSS funding mechanism to finance new and rehabilitated RWSS facilities – accounting software and, TA and training; (iii) promotion of hygiene education, sanitation and HIV/AIDS mitigation and prevention. All water committees established under the programme will include 50% female members who will be trained in all aspects of water management and infrastructure maintenance. 4.4.8 The component will support the construction of new offices in 44 districts and rehabilitation of existing offices in 65 districts for use by DWSTs and related entities for Program implementation. New vehicles and computing equipment will be bought for 109 districts and a total of 164 motor cycles will be procured for use during Program implementation. The MIS will be installed in all districts and DWSTs trained on its use. In addition the Program will support the setting up of a RWSS fund at the district level. This fund will be used to mobilise internal as well as external funds for construction and rehabilitation of RWSS schemes. The fund will be set up in all districts and training on the use of the software provided through TA. 4.4.9 Specifically for sanitation interventions, the programme will facilitate discussions and consultations with men and women of the community to ensure that appropriate issues related to hygiene and sanitation are adequately mainstreamed and addressed. These meetings will specifically address any cultural or traditional barriers/ myths that may hinder the use of

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public latrines by any member of the community. Furthermore, awareness raising campaigns on hygiene and sanitation will be undertaken at the community level and in schools. 4.4.10 With respect to hygiene education and HIV/AIDS prevention the component will support preparation of training materials through TA. The programme will also support HIV/AIDS and awareness raising campaigns and workshops, training of voluntary counsellors from amongst peers and the stakeholders such as within the communities, women focal persons, the contractors, as well as other stakeholders who may be later identified. These activities will be planned and implemented by specialised service providers such as NGOs in collaboration with the MCDGC and in coordination with the HIV/AIDS focal person in the MOW. The programme will also support awareness raising on protection from malaria and promote the use of Insecticide Treated Bed-nets.

Institutional Strengthening & Development 4.4.11 This component provides support for improved monitoring and coordination of RWSS activities by the GOT. It provides support to RWSS related Ministries (MOW, MOHSW, PMO-RALG, MOE and MCDGC) to enable them to play the role of policy setting, mentoring of local governments, setting of standards, monitoring, reporting and auditing of the program. This is achieved through general capacity building as well as facilitation of stakeholder consultations during Program implementation. 4.4.12 The component includes (i) stakeholder consultation (ii) technical assistance for Program management (iii) General capacity building and gender awareness raising campaigns (iv)support to the private sector (iv) rehabilitation of RWSSD offices(v) logistical support for RWSSD and Regional secretariats(computers and accessories, office equipment, vehicles, communication and networking equipment, installation of MIS); (vi) financing of operating expenses (vehicles, office running and supplies, field supervision costs, etc) (vii) Technical and financial audits 4.4.13 This component will support developing the Gender Water and Sanitation Strategy in coordination with the Gender Focal Person of the MOW. Furthermore the MOW will be supported in developing gender mainstreaming guidelines, gender sensitisation and training in the water sector module, as well as develop gender sensitive M&E strategies and indicators. 4.4.14 The Gender Focal Person at the MOW will be responsible for the implementation and monitoring the effective implementation of the proposed gender specific activities. The gender expert will ensure that all reporting formats, operations guidelines and technical training modules are gender responsive. 4.5 Benefits and Target Population Tanzania has a rural population of 24 million. About 12.7 (53%) of these people have access to safe drinking water. The National Strategy for Growth and Reduction of Poverty (MKUKUTA) will target the remaining 11.3 million in addition the projected growth in the rural population in order to reach the MDG targets by 2015.

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4.6 Environmental and Social Impact 4.6.1 The program is classified in the ADB environmental category 2 as its nature responds to the ADB Environmental and Social Guidelines criteria defining category 2 projects. Country wide environmental and social assessments were completed in March 2006. However, the conclusions were broad and could not capture the detailed impacts. The results were used for the design of the program. 4.6.2 Although the program activities will vary in size, location, scope and approach, most of these activities will involve civil engineering and construction works, hence the generic and typical environmental impacts would most likely affect: forest resources; soil; ecosystems; surface and ground water resources. Wherever water is available it has a social impact. The water availability might change the environmental and social dynamics and the possible negative impact should be mitigated. 4.6.3 An EIA checklist was prepared for environmental and social assessment and management at the village and local government level to be used for project appraisal, design and management. The EIA checklist will be applied to all village projects under the program starting at the screening stage. It includes appraisal phase assessment, mitigation and monitoring. Once it is completed, the form will be forwarded to the DWST (which will in the future include a District Environmental Officer - DEO), with the project request, for review and finalization. Then the project file (including the environmental form) will proceed to the District Council for processing. This includes determining projects that need to be further scrutinized by NEMC for approval, decision making and ultimately, licensing. Projects that do not need to register with NEMC (i.e. do not require an EIA) can then proceed to the Mitigation Planning stage. 4.6.4 Village projects requiring an environmental impact assessment are expected to be very few. However, in case an ESIA is required an Environmental Management Plan for the area affected by the project will be prepared. Environmental and social streamlining in the program will be overseen by District Environmental Officers that are recruited and deployed. Interim officers such as the District Water Officers will be designated and trained to insure the transition. 4.6.5 Considering the key role the NEMC is going to play in the review and implementation of the village and district level projects, they will designate one of its staff members to be: a) a full member of the consolidation of the environmental and social assessment/review template, b) a full member of the program joint review exercise, and c) a full member of the supervision of the implementation of the program. 4.6.6 NEMC is not yet fully decentralized and operational at the district level to play its role in the program implementation. District Environmental Officers (DEO) will be designated and trained. NEMC lacks currently capacity to review all the projects under the program, in the interim the DEO will have to ensure that this is done using the resources available locally. 4.6.7 Training at the district and community levels, specifically for EIA and environmental awareness is included in the NRWSSP capacity building and training plan. Three levels of training are foreseen: for the proposed DEOs, DWSTs and for contracted FSPs, training in environmental and water resource policy and regulations, land degradation and water

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pollution processes, environmental health and sanitary surveying, and groundwater development and monitoring; for community water and sanitation committees, training in land degradation and water pollution processes, environmental health and monitoring; and for communities-at-large, public environmental awareness campaigns. 4.6.8 Environmental and social review and assessment of village projects will be carried out and environmental and social safeguards streamlined in individual village requests as they are prepared and designed. Implementation of mitigation measures will follow the same path. LGAs will report on the implementation of the mitigation measures as well a on the evolution of the environment. 4.7 Cost Estimates and Financing 4.7.1 The total cost of the NRWSSP for the 2006/7-2009/10 four-year period is estimated to be UA 223.28 million (USD 328.5m). The cost estimates have been based on ongoing rural water supply and sanitation projects in Tanzania (especially the ADF-funded Monduli District WSS Project and the WB-funded 14 Districts WSS Project) as well as by making reference to market prices for various activities included in the overall Program. A physical contingency of 5% has been added to the base costs and price escalation is set at 3% per annum. The Program costs by component are shown in Table 4.1 below.

Table 4.1: Program Costs by Component: 2006/7-2009/10 USD M UA M District Management Support 19.47 13.24 RWSS Schemes 253.37 172.23 Institutional Strengthening and Development 15.4 10.47 Sub-total 288.24 195.94 Physical Contingencies (5%) 14.41 9.80 Price Contingencies (3%) 25.80 17.54 TOTAL 328.46 223.28

4.7.2 The expenditure schedule is as shown in Table 4.2 below.

Table 4.2: Expenditure Schedule 2005 to 2010 (UA M)

06/07 07/08 08/09 09/10 Total District Management Support 5.45 4.70 2.28 2.35 14.78 RWSS Schemes 21.40 44.02 64.96 66.55 196.93 Institutional Strengthening and Development 5.75 4.08 0.84 0.90 11.57 TOTAL 32.60 52.80 68.08 69.80 223.28

4.7.3 The NRWSSP will be funded by the GOT, user communities, ADF, IDA, the Netherlands Government and the German Government. The ADF grant will be used to finance part of the District Management Support and the Institutional Strengthening and Development components. The GOT will contribute 10% of the Program costs while user communities contribute 5% of the RWSS infrastructure investment costs. The financing plan is shown in Table 4.3 below.

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Table 4.3: Identified Funding Sources for the NRWSSP: 2006/07-2009/10

UA M Source of Funds 2006/07 2007/08 2008/09 2009/2010 Total ADF 13.7 13.8 13.8 13.7 55.0 IDA 10.2 13.6 13.6 13.6 50.0 Netherlands 6.8 6.8 6.8 6.8 27.2 Germany 3.4 3.7 4.1 4.6 15.8 Communities 0.9 1.7 2.4 2.4 7.4 GoT 3.6 5.5 7.0 7.2 23.3 Sub-Total 38.5 44.9 47.4 48.2 179.1 Ongoing Projects** 21.0 18.1 9.8 5.6 54.5 Total 59.5 63.0 57.2 53.8 233.5 NB. These UA 54.5m ongoing project (approximately USD 80m) are listed in detail in Annex 3. The projects are funded by the ADF, IDA, JICA, BADEA, France and NGOs

4.7.4 Although according to Table 4.3 there is no funding gap for the four years covered by the Program, the full NRWSSP extends to 2025 and requires about USD 1.9 bn to reach the 90% target set in the Tanzania Development Vision. Additional funding will thus need to be mobilized from donors for subsequent phases of the NRWSSP. The DFID and the Japanese Government have also indicated willingness to finance the water and sanitation sub-sector although their funding may not be directly tied to RWSS. 5 FIDUCIARY REVIEW AND BUDGET SUPPORT

5.1 The Bank guidelines require that DBS lending should be underpinned by a fiduciary review comprising of primarily (1) a Public Expenditure Review (PER) (2) a country Financial Accountability Assessment CFAA) and (3) a Country Procurement Assessment Review (CPAR)5. For Tanzania the most recent fiduciary reviews consist of the 2004/05 Public Expenditure and Financial Accountability Review (PEFAR6), the 2003 Country Procurement Assessment Review (CPAR) done by the World Bank, a complete CFAA carried out in 2001and the IMF’s Report on the Observance of Standards and Codes (ROSC) issued in 2002, The PEFAR/CFAA was done jointly by the Government and various donors, including the ADB. The PEFAR is an annual exercise and the aim of the Government is to ensure that it is completed in time to provide input into the budget formulation process, thereby aligning resource allocation with Government priorities as contained in the NSGRP. 5.2 The 2003/2004 PEFAR noted that the Government has made commendable improvements in a number of areas related to Government revenue and expenditure. It notes that Tanzania scores quite well in terms of the low level of fiscal deficit relative to comparator countries and the country continues to register improvements in its tax administration systems accounts. A greater share of donor funding is also now captured in the Government and there has been an improvement on controls over non-tax revenues 5 The guidelines specify the pre-requisites for using a DBSL operation as (1) a well designed PRSP/NDP, (2) a viable macroeconomic and financial framework, (3) a strong and genuine partnership among the beneficiary Government, the donor community and other development stakeholders, (4) strong implementation and monitoring mechanisms, and (5) availability of resources over the medium term period. For Tanzania, all these issues are analyzed in detail in the Appraisal Report for the UA 50m Poverty Reduction Support Loan approved by the Board in June 2006 (PRSL II – ADF/BD/WP/2006/52). 6 Since 2004 the annual PER and the diagnostic work usually carried out under the CFAA are now undertaken together as the PEFAR.

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collected and retained by MDAs. Priority sectors are generally protected from expenditure cuts. 5.3 The PEFAR however noted that Tanzania needs to further scale up in terms of domestic revenue effort and capital spending as these lag behind some comparator countries like Ghana and Uganda. It also recommends that there should be improved alignment between public expenditure and the growth focus of the NSGRP, to focus primarily on an increase in quality of expenditure in infrastructure (transport, power, communications, and irrigation) and on agricultural productivity. There is also need to improve budget formulation and management to decrease intra-year budget reallocations and increase parliamentary scrutiny of the reallocations and enforcement of expenditure controls, as well as better regional targeting of public expenditure to address geographical disparities. 5.4 In general reviews undertaken note that the Government has in recent years implemented important measures aimed at minimizing fiduciary risks by aligning budgetary processes and allocations with the growth and poverty reduction policies and strengthening public financial management and procurement systems. These measures include the approval and application of the new Public Finance Act (2001), adoption of formula and performance based resource allocation, the enactment of the Public Procurement Act (2005), the introduction of an Integrated Financial Management System for use by all Government MDAs, and the strengthening of the National Audit Office. Ongoing reforms are being undertaken under the Public Financial Management Reform Program (PFMRP). At the Local Government Level the donor-funded Local Government Support Program (LGSP) has enhanced financial management capacity over the last two years by providing performance-based discretionary grants to the LGAs. 5.5 It is expected that the measures taken or being taken will address weaknesses in government’s financial management systems and reduce fiduciary risks considerably. It is also worth noting that the Bank Group is co-financing the PFMRP through an Institutional Support Project approved in 2004. This Project specifically supports the Procurement Reform activities of the PFMRP. With these changes there is a good foundation upon which to build greater harmonization through utilization of the National procurement and financial management systems to implement the RWSS Program. An overview of the CFAA and CPAR reviews, their recommendations, and actions taken to date are briefly described in the sections below. Public Financial Management and Accountability 5.6 The CFAA (2001) report concluded that in general Tanzania has a sound system of formal rules for financial management and many of these rules have been recently updated and strengthened. With respect to the public sector, the CFAA noted that there have been significant advances in the recent past, especially in terms of accounting and expenditure control. It lauded the Government for progress in some areas such as the introduction of MTEF, noting that Tanzania is well ahead of some of its neighbours. However, it also noted that the financial management framework is still characterized by: (i) inadequate macroeconomic forecasts (ii) weak resource mobilization, allocation and monitoring (iii) inadequate strategy for debt management (iv) expenditure base which is too broad relative to funding prospective (v) low levels of public service capacity and performance (vi) inadequate financial accountability and discipline (vii) weak cash planning and management, and (viii) ineffective scrutiny and oversight. The report concluded that the country’s financial

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accountability framework, and therefore financial management, would be considerably more effective and the associated fiduciary risk mitigated if these areas were strengthened. 5.7 The recommendations contained in the CFAA report were subsequently incorporated into the Public Financial Management Reform Program (PFMRP) initiated in 1998 and revised in 2003. In an effort to assess progress made in improving the PMF system, the Government and Development Partners commissioned follow up work on financial accountability issues during the first quarter of 2005. In view of the improved harmonization and co-ordination agenda, the work was carried out as part of a broader Public Expenditure and Financial Accountability Review (PEFAR) for Tanzania. The overall purpose of the PEFAR is to provide GOT and Development Partners with a comprehensive, integrated and candid assessment of Tanzania’s key fiduciary risks as reflected in GOT’s resource allocation, resource management and control, resource utilization and accountability processes, and to make recommendations for improving the public finance management framework, institutional performance and capacity building. 5.8 The 2004/5 PEFAR notes that generally Tanzania now has a sound system of formal rules for financial management and extensive training has taken place on the application of the financial rules and regulations. Most of the recommendations contained in the 2001 CFAA have been implemented or are already included in the Public Financial Management Reform Program (PFMRP). There has been an improvement on controls over non-tax revenues collected and retained by ministries, departments and agencies (MDAs) that provide services, for example, secondary school and training college fees, hospital user fees, and water facility charges. Inbuilt controls in the Integrated Financial Management System (IFMS) being implemented also provide a greater degree of assurance about the accuracy of transactions. 5.9 The government of Tanzania has clearly taken significant steps in improving public financial management. However, as the PFMRP is still ongoing there is need to ensure that the use of National PFMS to implement the proposed Program is underpinned by appropriate safeguards. Most of these safeguards exist in the form Minimum Conditions for Financial Management to be fulfilled by each LGA before qualifying for funding. There are seven Minimum Conditions for financial management and three Performance Measures. Minimum Conditions relate to the existence of a Council Director and Treasurer, timely production of financial reports for audit, no adverse audit report, no confirmed financial management irregularity in the previous period, prompt preparation of Bank reconciliation statements, existence of an internal audit unit and regular production of quarterly financial reports. The quarterly financial progress reports are standard and have to be prepared by each LGA each quarter in order to receive funding for the next quarter (see description of the reporting system in Annex 7). The capacity building component of the Program will also continuously address identified weaknesses in the financial management system. 5.10 The performance Measures relate to receipt of a clean audit report, evidence that external audit queries have been acted upon and evidence that queries raised by the internal auditors have been acted upon. There are also several MCs related to Planning & Budgeting and Transparency & Accountability that enhance financial management under the Program. Public Procurement 5.11 The last Country Procurement Assessment Report (CPAR) for Tanzania was done in 2003. The assessment undertook a diagnostic review of all areas of public procurement systems in Tanzania, including the legislative framework, the performance of regulatory

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functions, the enforcement regime, the capacity of public sector institutions to conduct procurement and the effects of corruption on procurement. The CPA Report made several recommendations as contained in Annex 8. Among others, these recommendations were aimed at decentralising public procurement, enhancing public procurement regulation and complaints review mechanisms, institutionalising procurement planning and ensuring that the Government gets value for money. These recommendations were subsequently incorporated into the donor-funded Public Financial Management Reform Program (PFMRP). As noted earlier the ADB is funding the ongoing public procurement component of the PFMRP. 5.12 To date substantial progress has been made in the implementation of the CPAR recommendations. The Public Procurement Act was enacted on 1st May 2005 together with the associated Procurement Regulations (for Central Government and the Local Governments). The Act abolished the Central Tender Board and replaced it with the Public Procurement Regulatory Authority (PPRA) as the public procurement oversight body. The Government has appointed the Board of Directors of PPRA and its Chief Executive Officer and the full organisation structure has been set-up. The Act also fully decentralized the procurement function to Ministries/Departments/Authorities (MDAs) and detailed out the roles, responsibilities and relationships of the various Tender Boards, the Procurement Management Units and the procuring entities in each MDA. In addition, the Act established the Public Procurement Appeals Authority which has now been fully operationalized. The Public Procurement Appeals Rules have also been issued, setting up the procedure to be used by the Appeals Authority in handling complaints. 5.13 The most important function of PPRA is to monitor and ensure that MDAs comply with the Public Procurement Act. PPRA will monitor compliance through regular procurement audits as mandated by the Act in collaboration with the National Audit Office (NAO). 5.14 The PPRA is also responsible for developing and updating as necessary the standard bidding documents to be used by PMUs. Standard bidding documents already exist for ICB, NCB, National Shopping, etc. and these have been largely based on the bidding documents of donor agencies (the ADF, WB, and others). The Act also establishes Procurement thresholds for the various procurement modes as indicated in Annex 5. The thresholds for procurement are in line with those of the Bank. Since its establishment the PPRA has put priority on the dissemination of the new Act and the associated Regulations through several workshops and seminars. 5.15 Although there are currently public procurement officers (supplies officers) working with the MDA Tender Boards the CPAR recommended enhancement of procurement skills through establishment of a procurement cadre in the public service. The PPRA puts this responsibility on the PPRA as well as the responsibility for developing organization structures and staffing levels of Procurement Management Units (PMUs) for each MDA. An interministerial task force is now expected to submit its recommendations to PSM by March 2006. Review and approval of the recommendations is expected to take another three months. Therefore by June 2006, procurement cadre, organization structures/staffing levels of PMUs will have been approved. 5.16 At the local government level, the district tender boards have already been restructured and politicians are no longer involved in the procurement process. The influence

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of local politicians in the award of contracts has therefore been severely curtailed as a result of the ongoing procurement reforms. 5.17 With the above taken into account, the major challenge in public procurement in Tanzania remains the weak human capacity due to lack of a procurement cadre across all LGAs that can effectively implement the provisions of the PPA. As noted above the PPRA is addressing this as part of its wider mandate. As this exercise will continuing simultaneously with implementation of the Program, it is important to build some controls over the procurement activities to ensure that the provisions of the PPRA are complied with. 5.18 Some of these controls already exist in the form part of the Minimum Conditions that must be fulfilled by each LGA in order to qualify for funding each year. The Minimum conditions related to Procurement include the requirement that (1) each LGA must have a legally constituted Tender Board and Procurement Management Unit (2) Each LGA must not have received an adverse audit opinion during the previous period, and (3) the existence of National Procurement guidelines and manuals at the LGA. In addition most of the other Minimum conditions indirectly provide safeguards that funds will only be released to LGAs that have capacity to undertake procurement activities effectively. 5.19 In addition to the Minimum Conditions there are a number of Performance Measures related to procurement. These measures are used to determine which LGAs qualify for funding bonuses in each year based on attainment of a minimum Performance score of 70%. The performance measures related to procurement relate to (1) adherence to procurement thresholds in using various procurement modes (2) preparation of annual and quarterly procurement plans (3) publication of tender awards on public notice boards (4) maintenance of adequate, relevant and auditable records on procurement process (5) existence of a Technical Evaluation committee and (6) consideration of the TEC recommendations by the DTB. Rationale and Justification for Budget Support 5.20 The proposed financing mechanism for the Program is sector-earmarked Budget Support, making use of the National systems without creating parallel structures for implementation, procurement and financial management. The rationale behind the use of National systems stems from the fact that Tanzania, with the support of donors, has successfully developed and piloted a mechanism for channeling funds directly to Districts. The mechanism, known as the Local Government Capital Development Grant (LGCDG) was developed by the Government (PMO-RALG) with the objective of making it the mechanism through which all development funds will be transferred to LGAs. The funds are transferred to LGAs through Capital Development Grants (CDG) and Capacity Building Grants (CBGs). Under the LGCDG system funds are distributed to participating LGAs on formula-based criteria. 5.21 All LGAs are eligible to receive capital development funds but in order to qualify, each LGA has to pass an annual assessment exercise by fulfilling Minimum Conditions (MCs). The MCs are derived from laws, regulations and guidelines, including among others the Local Government Acts 1982, Local Authority Financial Memorandum 1997, and the Procurement Regulations 2005. The MCs are designed so as to ensure sufficient safeguards for the utilization of the grant funds, as well as to promote compliance with the basic statutory and regulatory requirements for Local Government operations. In addition to the

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MCs there is a set of Performance indicators elaborated as a means for introducing incentives for performance improvement by providing for adjustment in the yearly size of the grants received as a reward for good performance and sanction for poor performance. LGAs that do not qualify to receive capital development funds receive capacity building grants to help them meet the Minimum conditions. Only in very exceptional circumstances would an LGA not receive capacity building funds. 5.22 The LGCDG system was operationalized in 2005 through the World Bank funded Local Government Support Project (LGSP). Under the LGSP an initial assessment was done in August/September 2004 for 41 Districts and the LGCDG system was introduced in these Districts through WB funding. The first full assessment was done in 2005 and the system was extended to all the Districts. Under the LGSP qualifying LGAs have been receiving discretionary development Grants. In addition to qualifying criteria for accessing the grants, a condition placed on the discretionary grants is that LGAs must use at least 80% in the priority areas as identified in the MKUKUTA. 5.23 There is an established implementation mechanism for the LGCDG system characterized by a multi-sector Steering Committee that approves LGA assessments and formula-based funding allocations each year, Technical Committees and Sub-Committees, quarterly financial management and physical progress reports that trigger quarterly releases of funds, among others. The LGCDG is coordinated by the PMO-RALG. 5.24 The financing of the RWSS Program through Budget support will provide further support to the Government’s effort to streamline fiscal transfer to LGAs and is in line with the harmonization agenda. The LGCDG system has now been successfully piloted for one year and has proved to be a useful mechanism through which capacity and performance of LGAs can be improved. The funds to be provided under the Program will however not be discretionary but will be specifically earmarked for RWSS as Conditional Grants. Using the LGCDG system to implement the current Program will also set a good foundation for the sustainability of rural water supply and sanitation services. The LGCDG system is complemented by the annual sector reviews, the annual PEFAR, as well as the activities of the Donor-Partners Working Group. There is therefore an adequate framework within which to provide Budget Support and monitor the efficacy of this financing mechanism during Program implementation. 6 PROGRAM IMPLEMENTATION 6.1 Executing Agency

6.1.1 The Executing Agency (EA) will be the MOW and the Implementing Agencies will be the Local Government Authorities (LGAs) all over the country. The EA will monitor the progress of the program, the flow of funds and report on the achievements. The MOF mobilizes and channels the funds to the LGAs for the implementation activities. It manages the program resources and monitors disbursements. The MOW together with PMO-RALG review and advise MOF on the financing needs of the LGAs development budget in support of RWSS activities. The LGAs are in charge of planning, managing, coordinating and implementing the RWSS activities.

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6.2 Institutional and Implementation Arrangements 6.2.1 Following the national policies, objectives and strategies, the LGAs will implement the program activities throughout the country. The MOW coordinates the program activities to ensure synergies among the program activities and reinforce participatory approach during implementation of the program. 6.2.2 The implementation of the program will use existing institutions as MOF, MOW, MOHSW, PMO-RALG, LGAs and communities playing a leading role in identification, planning and implementation of the schemes. The implementation of the program is designed to strengthen the decentralization process by supporting the LGAs in planning, managing and coordinating the RWSS services. 6.2.3 The LGAs have the responsibility for the provision of RWSS services. The District Water Office, under the district water engineer, together with the other sector related departments are responsible for all water supply and sanitation related activities. The districts and communities will play different roles in the identification, planning, and implementation of schemes. After sensitization, the communities will decide on the type of facility, and pay their share of the construction costs. They fulfil their responsibilities through water and sanitation user committees, which are formed through elections. The water and sanitation groups are responsible for the planning, and implementation of new and rehabilitation of existing RWSS facilities, submitting plans and budgets, mobilizing funds as contribution to the construction costs of facilities, ensure recovery of O&M costs, and monitor and report on RWSS facilities. 6.2.4 The MOW together with the other related sector ministries will continue their supervisory role in monitoring the implementation of the program by the LGAs. In the implementation of the RWSS program, the MOW advises MOF on release of conditional grants based on district development plans and budgets, and to undertake an annual assessment of the LGAs to see if they meet the conditions to continue receiving conditional grants and to what extent the grant allocation should be adjusted. 6.2.5 The LGAs will recruit the private sector, Facilitation Service Providers (FSP) and Technical Service Providers (TSP), for the implementation of the program. Also NGO’s and CBOs will supplement the public sector efforts in the development process. 6.3 Supervision and Implementation Schedule 6.3.1 The activities under the program will be implemented over 5 years, 2006 to 2010. The Bank will monitor its implementation through the Tanzanian Country office by actively participating in the monthly Development Partners Group Water (DPG-W) meetings, quarterly meetings and the annual joint government/development partner review meetings. This will be supplemented by half yearly supervision missions from the Bank’s head office. The implementation schedule is presented in Annex 6 and the key milestones are presented below:

Loan Approval September 2006 Signing of Loan Agreement October 2006 First Disbursement of Funds January 2007 Mid-Term Review December 2008 Completion of the phase December 2010

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6.4 Procurement Arrangements 6.4.1 Procurement of works and goods under the Program will be carried out in accordance with the Bank’s guidelines for Development Budget Support Lending (Section 3.5.6 of the Guidelines on DBSL – ADF/BD/WP/2003/182/Rev.2 of April 2004). Accordingly, based on the fiduciary assessment as explained earlier in Chapter 5, most participating donors have agreed to use the National system of procurement. The National procurement system is guided by the Public Procurement Act (2004) and the associated Procurement Regulations provide for use of ICB, NCB, National Shopping and other procurement modes. Annex 10 shows the various procurement modes and relevant thresholds as defined in the National Procurement Regulations. According to the Act, all contracts above the equivalent of UA 454,000 for goods and UA 1.7m for works will be subjected to ICB. All consultancy contact above the equivalent of UA 567,000 will be subject to International competitive selection, through short listing. These thresholds are broadly in line with those of the Bank. A review of the country’s procurement rules and regulations shows that they are in line with the Bank’s and follow international standards and norms. 6.4.2 Procurement will be done using National Standard Bidding Documents and tender evaluation guidelines that have been prepared in close consultation with donors and therefore conform to those used by the donor community. For small works contracts, other simpler versions of acceptable documents will be used and these versions will be included in the Program Operational Manual (POM). 6.4.3 As explained in Chapter 5, most of the recommendations made in the 2003 CPAR have already implemented or are being implemented as part of the ongoing public procurement reforms being undertaken through the multi-donor funded Public Financial Management Reform Program (PFMRP). The enactment of the Public Procurement Act in May 2005 created the Public Procurement Regulatory Authority (PPRA) and the Public Procurement Appeals Authority. In addition, the Public Procurement Appeals rules have been issued, and procurement fully decentralised to Ministries/Departments/Authorities (MDAs). To safeguard against potential weaknesses still remaining during Program implementation, especially with respect to human resource capacity, the Minimum Conditions for a district to qualify for funding will include the existence of a Tender Board at the LGA level, backed by proper procurement planning, regular procurement reporting, and acceptable annual audit reports. The Joint Sector Review of the Program involving all the donors including the ADB Country Office, to be undertaken each year, supported by the Program financial and technical audits, will provide a mechanism through which performance of the National procurement system will be regularly reviewed.

Procurement Notices

6.4.4 The General Procurement Notice (GPN) will be discussed during negotiations and published in the UN Development Business and in daily national newspapers of wide circulation after Board Approval. The GPN will be updated annually for outstanding ICB and large consultancy services. Specific Procurement Notices (SPNs) will be required for goods and works contracts to be procured under ICB and NCB and for consultant contracts. SPNs will be published in a daily national newspaper of wide circulation. Specific notices will also be posted at the district and community levels, for sub-projects.

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6.4.5 The MOW will also publish annually in national and local newspapers a “Promotional Procurement Notice (PPN)” to promote business opportunities to local contractors and suppliers. The PPN will indicate the likely dates at which bid documents will be available. 6.5 Disbursement Arrangements 6.5.1 Disbursement of the ADF loan and grant will be done in annual tranches. Each year, at the Joint Sector Review, the Government and DPs will review the sub-sector needs and agree on how much money will be needed for the Program for the following year. The expected contribution from each funding source will then be agreed upon and on the basis of this the MOF will submit disbursement requests to participating donors. The disbursement application submitted to the Bank should be accompanied by (i) the Program Annual Work Plan, (ii) the list of qualifying LGAs, (iii) a copy of the latest Special Account bank statement, and (iv) a copy of the approved Joint Sector Review Report for the preceding year. Upon receipt of the disbursement request, ADF funds will be disbursed into Special Accounts to be opened by the Ministry of Finance at the Bank of Tanzania for purposes of receiving the ADF loan and grant funds. After the first tranche has been released, release of subsequent tranches will be conditional on satisfactory achievement of the Program targets as detailed in Annex 13 or any revision to the targets agreed subsequently by the annual Joint Sector Reviews. 6.5.2 Disbursement of funds to the LGAs under the Program will follow the LGCDG system already operated by the Government. Under this system funds will be allocated to qualifying LGAs on the basis of an agreed formula at the beginning of each year. Each quarter the MOF will transfer funds out of the Special Accounts into the Exchequer Account for release directly to LGAs/MOW. The total amount so transferred will be based on requests from PMO-RALG/MOW. The release from the Exchequer Account to the LGAs will comprise money from DPs as well as the Government’s counterpart contribution towards the Program. Each LGA will be required to open a TZS Program account in a Bank acceptable to the Fund. The proposed funds flow mechanism is shown in Annex 9. 6.5.3 At the end of each year a reconciliation statement will be prepared showing how much money has been received from the Government and donors for the Program during the year, how much money has been spent by LGAs and the MOW and the funds remaining unspent. The funds remaining unspent at the end of the year will be carried forward to finance Program activities during the next fiscal year and will be taken into account in the determination of the financing gap for that particular year. This reconciliation statement will be submitted to the Bank for review. 6.5.4 Opening of the Loan and Grant Special Accounts will be a condition precedent to first disbursement. Opening of the LGA TZS account will be required before funds can be released to the particular LGA. 6.6 Monitoring and Evaluation 6.6.1 The NRWSSP will use a comprehensive MIS for monitoring program results and or outcomes as stipulated under the MKUKUTA Results Monitoring Framework. The MOW through the oversight of the Sector Working Group, in which the ADB will participate through the Tanzania Country Office, will produce an Annual State of the Water Sector Report covering all aspects of the program. This report will, together with dedicated

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Resources Tracking Studies and Technical and Financial Audits, form the basis of Joint Sector Reviews and input into the Annual MKUKUTA performance reviews. The MIS will rely on a series of monthly and/or quarterly reports by MOW and the LGAs. 6.6.2 MOW will receive from LGAs monthly/quarterly reports covering, (a) funds flows, (b) sub-projects under construction, (c) coverage level in water supply and sanitation by village and district, and (d) status of capacity building. MOW will prepare monthly management reports on activities of the Ministry and in particular cover (a) status of sector coverage, (b) status of capacity building, (c) status of sector coordination, (d) status of budget performance. 6.6.3 The M&E system is designed to serve as a tool for sector stakeholders, to enable them to assess program implementation and undertake modifications on a timely basis so that the project development objective and intermediate results can be achieved. Information on intermediate results, indicators, and arrangements for results monitoring can be found in Annex 13. Data for the project’s outcome and results indicators will come from a variety of sources and be collected using a mixture of methodologies. 6.6.4 MOW will report on a quarterly basis to the Sector Working Group and ADB on implementation of the construction programs and the various studies and TA supported by the program, in particular: (a) implementation schedules updated by component and financing agency; (b) commitment and disbursement by component and financing agency; (c) findings, recommendations, agreement reached, main issues and decisions sought; and (d) environmental performance. A mid-term review of the program performance will be carried out together with all financing agencies about three years after effectiveness. A Program Completion Report will be prepared within six months of the program closing. 6.6.5 These monitoring instruments will be formalized and financed by the program. The results will be published and reported annually. To evaluate the important issues identified through program monitoring, follow-up studies should be conducted whose findings and recommendations should be an input in the sector performance report. 6.7 Financial Reporting and Auditing

Financial Reporting 6.7.1 In line with the LGCDG system, the quarterly release of funds to LGAs under the Program will be tied to the preparation of three reports, namely:

1. Quarterly Progress Report 2. Cumulative Progress Report and 3. Quarterly Budget Request Form.

6.7.2 These reports are to be prepared by the LGA and submitted to the PMO-RALG on or before the last working day of the first month after the close of each quarter. The reports will be reviewed by the Water & Sanitation Sub-Committee of the Technical Committee and approved before release of funds to the LGA. Late submission of reports can lead to non-release of Program funds for the subsequent quarter. 6.7.3 After the close of the financial year, the quarterly and cumulative progress reports for the fourth quarter will be prepared and submitted by the last working day of July. In

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addition, a copy of the final bank statement for the LGA local currency Program account, which must be reconciled with the cashbook and be consistent with the LGMTEF cumulative progress report, will be submitted by the same date. If this is not complied with, no further releases will be made. The consolidated fourth quarter cumulative Progress Report will be submitted to the Bank and other participating financiers. Program Audit Internal Audit 6.7.4 One of the minimum conditions under the LGCDG system is that each LGA must have an Internal Audit Unit (IAU) with appropriate staffing and that the Unit prepares Quarterly reports in accordance with the Local Government Financial Memorandum (LGFM) 1997. The work of the Unit is governed by the Local Government Authorities Internal Audit Manual (2005). The Program activities will be subject to Internal Audit review as part of the routine activities of the IAU. Follow-up of internal audit recommendations forms part of the LGCDG Performance Measures. External Audit 6.7.5 The Program will be audited annually by the National Audit Office (NAO) or a qualified auditor appointed by the NAO, following International Standards on Auditing (ISA). The Program costs include a budget for supporting the NAO in the performance of the annual financial audit, in particular where the NAO requires the services of a private auditor to complement existing capacity. The Program audit report will be submitted to the ADF and participating donors six months after the close of the financial year and will be reviewed at the next JSR. Program Technical/VFM Audit 6.7.6 An annual technical/VFM audit of the Program will be undertaken by a private firm whose services will be procured by the MOW in collaboration with the NAO. A budget for the technical audits has also been included in the Program Cost. The technical audit report will be reviewed by the Water and Sanitation Technical Committee and the participating donors and the Government during the annual JSR. 6.8 Partnership and Aid Coordination 6.8.1 The Ministry of Finance (MOF) at the national level is the main channel for Government and donor funding. The MOF, through External Finance Department is responsible for overall coordination of external assistance. It has also set up a Technical Audit Unit responsible for overall and random inspection on the performance of projects. 6.8.2 The Development Partners Group for Water (DPG-W) has been established to bring together all the interested donors in the water sector. In line with the Tanzania JAS the roles and responsibilities of the development partners are to 1) collaborate with other sector actors at the national, regional and district level so as to ensure coordination of efforts; 2) support the development of RWSS-related NGOs at all levels; 3) support the development of private sector suppliers of goods and services at all levels; 4) support the district councils and DWSTs by providing advice, expertise, training and other capacity building measures as appropriate; and 5) provide funding to support various RWSS-related initiatives.

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6.8.3 Other coordinating forums instituted by the government include the Public Expenditure Review Working Group (PERWG), the Poverty Reduction Strategy Technical Committee (PRSTC) and Donor Government Consultative Group (DGCG). The PERWG under the chairmanship of the Ministry of Finance with the World Bank as the Secretariat, meets weekly to review and track progress in financial flow and expenditure. The PRSTC meets regularly under the leadership of the Ministry of Finance, with the World Bank also as the Secretariat. Donors and NGOs are also represented. In these meetings, more detailed follow-up and monitoring of issues on impact of various interventions in the Poverty Reduction Strategy are conducted. The DGCG meets twice a year (October and April). In October, the group discusses about priority areas for financial assistance, while in April it ensures that financial assistance granted has been allocated according to the planned priority areas, in the annual government budget. The group works under the chairmanship of the President of The United Republic of Tanzania 6.8.4 Water Sector Committee (WSC) provides a forum for the promotion of collaborative approaches to sector planning and implementation, and for sharing experiences, information on evolving strategies, and analyzing sector guidelines based on the provisions of the National Water Policy. While the MOW guides overall Water Sector Development, the WSC provides general advice and serves as a valuable platform for exchange of experiences and sharing of information. 6.8.5 The WSC includes representatives of MOW, PMO-RALG, the Ministry of Health and Social Welfare (MOHSW), the Ministry of Community Development, Gender and Children (MCDGC), the Ministry of Energy and Minerals (MEM), the Ministry of Agriculture, Food Security and Cooperatives (MAFSC), the Ministry of Industries, Trade and Marketing (MITM), the Ministry of Lands, Human Settlements and Urban Development (MLHSUD) and the Ministry of Finance (MoF), the private sector and NGOs including Technical Service Providers (TSP) and Facilitation Service Providers (FSP), and External Support Agencies (ESAs). It meets quarterly in ordinary sessions. The MOW is the Secretariat of the WSC and its Director of the MOW’s Rural Water Supply Division is its Secretary. 6.8.6 The Bank and the Government have agreed on measures to improve the performance of Bank Group portfolio, which will benefit water sector projects. The measures include continuous and intensive capacity building in areas such as procurement as well as regular follow-up and supervision missions. The Tanzania Country Office will reinforce the on-going efforts to improve portfolio management and the implementation of the project and will closely follow the developments in sector. 6.9 Sustainability, Risks and Mitigating Measures 6.9.1 The implementation of the program is based on a demand responsive approach, thus all stakeholders will be involved to ensure a sense of ownership. Also the integrated approach used in the program, which combines the provision of water and sanitation, and sensitization of communities, strengthens the sustainability of the facilities implemented under the program. 6.9.2 The program supports decentralization and promotes communities to be the owners of the facilities provided. The communities are involved in the planning, selection and implementation of the facilities. They contribute towards the capital costs of their schemes. The water user committees manage and cover their operating and maintenance costs. Operation and maintenance costs are estimated to range from USD 0.02 to USD 0.98 per

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capita per year. For an average household of five people, this translates to USD 1.00 to USD 4.9 per annum. This compares favourably with the average household income levels indicated in Section 2.5.3. The O&M costs should therefore not present an additional financial burden, especially taking into account the time that will be released for economic activity through reduction of water collection time and disease burden. Currently communities with recently installed facilities in Tanzania are selling water for about 1TZS per litre and through this have been able to maintain their facilities without additional subsidy. Further, communities have already demonstrated that they are capable of making arrangements that cater for the very poor, the sick and the elderly through provision of free water to these groups of people. The crucial thing is therefore to ensure adequate community mobilisation and training as early as possible. The PID contains details of financial status of some water points installed under the World Bank 12 Districts RWSS Program. These details confirm the ability of communities to contribute to investment costs as well as well as cover O&M costs associated with their water points. 6.9.3 The sustainability is further strengthened by adopting a demand driven approach to technology choice which will ensure that communities select those technologies they are most able to operate and maintain financially. The Program will also ensure that water users committees, with at least 30% female participation, are in place and trained, O&M funds are kept safely, and communities are sensitized. The water users are mobilizing and managing the funds to cover the operations and maintenance of the facilities. The skills of communities and staff at the community and district level will be strengthened through capacity building in management, and operation and maintenance. 6.9.4 There are risks that there may be delays in the transfer of funds to the LGAs to implement the program activities. However, on the basis of the results of the LGSP, these risks are expected to reduce over time as LGA build more capacity to implement the Program. 6.9.5 The risks associated with the weak implementation capacity at district and national levels are also of some concern but it is expected that the Capacity building Grant provided under the Program will progressively enhance Program implementation capacity. The annual LGA assessment exercise also mitigates these risks by ensuring that capital development funds are only available to LGAs with enough capacity to utilise the funds effectively. 6.9.6 The slippage in the financial contributions by the communities is also identified as a potential risk to the sustainability of the Program. However, evidence from ongoing RWSS projects suggests that with appropriate community sensitization, mobilization, and training, user communities are ready to contribute financially to RWSS facilities and capable of maintaining facilities. There will thus be special emphasis place of these activities within the Program. 7 ECONOMIC EVALUATION

Social Economic Impact Analysis 7.1 The program design enables a meaningful bottom-up and demand driven approach in improving access to rural water supply and sanitation. Both men and women will benefit from clean and easily accessible water both for domestic use and small production activities. The prime beneficiaries of this program will be women and children who are the ones

37

responsible for fetching water. They are expected to enjoy reduced drudgery due to reduced time spent on fetching water and improved security for the girls while fetching water; improved health and nutrition due to clean water and access to sanitation and use of other hygiene practices. 7.2 For the economic viability of a project both the benefits and costs were identified and quantified to calculate the ‘EIRR’ (Economic Internal Rate of Return) based on representative districts using the available technologies open to the expected beneficiaries. In the NRWSSP analysis, the primary benefits were time savings in collecting water and increased water available as a result of the project. Difficulty in estimating the monetary value of improvements in health, capacity building, and social and gender effects resulted in their omission. The three representative districts were selected for economic analysis for the technology choices available for communities. The areas provide a fair representation of a wide range of conditions existing in Tanzania to test the application of different technological mixes available to communities. 7.3 The result of the analysis shows that all the technologies are generally viable. Also increases in investment cost of 10% for hand-drilled shallow well, shallow borehole, village kiosk from deep borehole with piped scheme and the deep borehole mechanised options are viable. The overall effect is still viable at 20.8% EIRR, NPV of US$ 117,142. When time saved was reduced by 20%, the projects are still viable with the overall EIRR of 19.5%. The monetary implication of the decline in time saved for the shallow borehole is a change from US$ 0.01348 to US$ 0.01078. For the deep borehole scheme the savings shift from US$ 0.00796 to US$ 0.00636. This implies that the benefits still outweigh the costs despite the reduction in the time saved which is expected to be used for other productive activities. If the vendor reduces his prices by 30% because of stiff competition from the new sources of water, the consumers will have more consumer surplus and the projects are still viable with overall EIRR of 23.3% as indicated in Annex 11... It is not anticipated that there will be any delays on major investments, because the government and some donors have already committed some resources for the project start during the financial year beginning July 2006. Cross Cutting issues impact 7.4 There are a number of underlying themes within the NRWSSP which come with the improvements in infrastructure, and affect day-to-day life such as gender, health, poverty and governance. Gender 7.5 The programme design enables a meaningful bottom-up and demand driven approach in improving access to rural water supply and sanitation. Both men and women will benefit from clean and easily accessible water both for domestic use and small production activities. The prime beneficiaries of this programme will be women and children who are the ones responsible for fetching water. In particular, the extensive involvement and participation of women in the community level water committees and their respective training in planning and leadership as well as operations and maintenance of the infrastructure will have a positive impact on sustainability of the infrastructure. The increased access to safe water will be enabled by reduced waiting time at water points and reduced walking distances. This will allow women to engage in other income generation activities for increased disposable income at the household level as well as enhance their participation in other activities such as agriculture extension training which will further contribute to the general well being of the

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household. Children will have more time to pursue their education and will be less exposed to health complications resulting from the frequent walking to the water points and carrying of the heavy water loads.

Health

7.6 The program focus on HIV/ AIDS awareness will contribute to sustainability of the programme through behavioural changes of individuals of local government and in the communities. Statistically, HIV/AIDS targets women more than men. Having water sources nearer to the village can mean that women are less exposed to the possibility of rape - and subsequent exposure to AIDS, while journeying to fetch water. This project includes awareness raising of AIDS by training community leaders, collecting data on prevalence, and encouraging the communities to plan and take their own action against the pandemic. 7.7 The program will address the general constraints arising from lack of reliable water supply. Water supply and sanitation provision in a rural setting has important benefits to health that are sometimes regarded as being more important than time savings. Rural communities without adequate and safe drinking water and improved sanitation are easily exposed to endemic diarrhea, dysentery, periodic typhoid and cholera. The prevalence of waterborne diseases and water-based diseases such as bilharzia, and water-washed diseases such as scabies and trachoma in areas where sanitation is poor is a common occurrence in rural Tanzania. 7.8 Health effects of improved water supply and sanitation are significant, underlining the fact that the economic viabilities of improved water supplies as stated above are understated. Likewise, the subprojects will include sanitation improvements both at the households and in schools and it is known to have substantial convenience, privacy and health benefits. Thus the provision of improved water supply and sanitation services will go a long way towards addressing the water borne and water related diseases and as result ensure improved livelihoods of affected communities

Poverty 7.9 The NRWSSP targets the poorest of the poor, living on subsistence agriculture and having only unreliable and contaminated water sources. It does so by prioritizing communities in areas with least coverage, particularly in the drought prone areas by bringing reliable water closer to the home in such areas dramatically improves everyone’s quality of life. Water use, can improve from a low level of 5 liters per capita per day (l/c/d), rising to 20 to 25 (l/c/d) when families use more water maintain a clean kitchen, wash food and improve personal hygiene. 7.10 It is expected that the improved health and living conditions will directly impact on economic security for the community by enabling men and women to undertake income generation activities, because of increased time availability and improved health. Furthermore, it is expected that other sectors of the rural economy will be rejuvenated such as livestock, small holder agriculture, micro-finance, formal and informal entrepreneurship, and tourism. As well it is envisaged that the programme will directly contribute to community empowerment through the various trainings and will enable them to manage the infrastructure and design other sub-projects related to community development as well. Women in particular will benefit from improved participation in decision-making as well as technical training related to the infrastructure.

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Good Governance

7.11 Participation by both men and women is a cornerstone of good governance. The NAWAPO incorporates grass roots planning by calling for participation of the whole community, both men and women in the execution of the program. The Program will allow the community to make important decision on service levels and technology choice decisions, and thus ensure sustainability of the facilities. 7.12 Decentralization and particularly fiscal decentralization through the Local Government Reform Programme, coupled with the users being directly involved in overseeing construction and later monitoring the system’s operation, reinforces transparency. The program contributes to participation of communities in development planning and providing solutions, ownership and effective and sustainable management of the water and sanitation facilities by communities, and improved coordination at LGAs level. 7.13 Through beneficiary participation in the decision making and by strengthening the capacity of the communities and water users, the program will play a role in building capacity of the community. The program supports the decentralization process by using and strengthening the LGAs and by using the participatory approach. Implementation of the sub projects will be done by the private sector. NGOs and CBOs who will participate in the implementation, operation and maintenance of the facilities chosen by the communities. The program will thus support the participation and development of the private sector. The planning of sub projects involves mediation between different interests in a community and the need for consensus building on a final system design 8 CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The proposed program supports Government’s efforts to achieve the water and sanitation MKUKUTA targets and MDGs. The program will increase access to basic water and sanitation facilities for the rural population. ADF’s financing in the form of sector earmarked budget support, contributes to the introduction of common arrangements for disbursement, accounting of funds, procurement, monitoring and reporting of sector performance. The proposed Bank financing will complement the support of other development partners in the provision of water supply and sanitation, environmental and social streamlining, capacity building, and support to the monitoring and evaluation as well as auditing and financial control mechanisms of the program. 8.1.2 The program is consistent with the Bank’s operational strategy for Tanzania (JAST), which focuses on poverty reduction. The strategy seeks to better satisfy the water and sanitation needs of the rural population in terms of quantity and quality, by involving the local communities and water users, encouraging private sector participation in the water sector and supporting the decentralization process, thus ensuring effective transfer of authority to the LGAs. It contributes to the attainment of the country’s MKUKUTA, and the millennium development goals by satisfying community demands for water supply and sanitation.

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8.2 Recommendations and Conditions 8.2.1 GOT is implementing the NRWSS Program, as part of its efforts to attain the millennium development goal/poverty eradication action plan (MKUKUTA), in conformity with the modalities defined in this report. 8.2.2 It is recommended that an ADF loan not exceeding UA 45 million and a grant of UA 10 million be granted to the Government of Tanzania in the form of sector earmarked budget support for the implementation of the NRWSS Program during 2006/7 to 2009/10 as described in this proposal, subject to the following conditions: A. Conditions Precedent to Entry into Force of the Loan Agreement The Loan Agreement shall enter into force subject to the fulfillment by the Borrower of the provisions of section 5.1 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the African Development Fund. B. Conditions Precedent to First Disbursement of the Loan

i) Provide evidence of opening a Special Account (in Foreign Currency) with the Bank of Tanzania, into which the proceeds of the Loan shall be deposited (para. 6.5.2).

C. Provide Undertakings to:

i) Submit to the Fund within three months of the end of each relevant reporting period (six months), the Semi-annual Monitoring Report for Program activities (para 6.6);

ii) Submit to the Fund within four months of the end of each relevant reporting period (the first six months of each year), the Intermediate Budget Performance Report, which shall include the consolidated statement of sources and use of funds earmarked for rural water supply and sanitation activities (para 6.6); and,

iii) Submit to the Fund within four months of the end of each relevant reporting period (one year), the Annual Budget Performance Report, which shall include the consolidated statement of sources and use of funds earmarked for rural water supply and sanitation activities (para 6.6).

D. Conditions precedent to further disbursement: The release of the second and subsequent disbursements of the Loan shall be conditional upon the Borrower submitting evidence satisfactory to the Fund of:

i) Satisfactory achievement of the Program Performance Targets (PPTs) for the preceding year; it being understood that the PPTs may be amended from time to time by the Annual Joint Sector Review (para 6.5.1); and,

ii) Having complied with the Undertakings under C, for the preceding year.

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A. Conditions Precedent to Entry into Force of the Grant Protocol of Agreement

The Grant Protocol of Agreement shall enter into force upon signature. B. Conditions Precedent to First Disbursement of the Grant

i. Provide evidence of opening a Special Account (in Foreign Currency) with the Bank of Tanzania, into which the proceeds of the Grant shall be deposited (para. 6.5.2).

C. Provide Undertakings to:

i. Submit to the Fund within three months of the end of each relevant reporting period (six months), the Semi-annual Monitoring Report for Program activities (para 6.6);

ii. Submit to the Fund within four months of the end of each relevant reporting period (the first six months of each year), the Intermediate Budget Performance Report, which shall include the consolidated statement of sources and use of funds earmarked for rural water supply and sanitation activities (para 6.6); and,

iii. Submit to the Fund within four months of the end of each relevant reporting period (one year), the Annual Budget Performance Report, which shall include the consolidated statement of sources and use of funds earmarked for rural water supply and sanitation activities (para 6.6).

D. Conditions precedent to further disbursement:

The release of the second and subsequent disbursements of the Grant shall be conditional upon the Borrower submitting evidence satisfactory to the Fund of:

i. Satisfactory achievement of the Program Performance Targets (PPTs) for the preceding year; it being understood that the PPTs may be amended from time to time by the Annual Joint Sector Review (para 6.5.1); and,

ii. Having complied with the Undertakings under C, for the preceding year.

ANNEX 1

MAP OF THE UNITED REPUBLIC OF TANZANIA

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

ANNEX 2a TANZANIA: LIST OF COMPLETED BANK GROUP OPERATIONS AS AT 31 MARCH 2006

FUNDS DATE AMNT DATE DATE AMNT UNDISB. DEADLINE SECTOR/PROJECT TITLE SOURCES APPROVED (UA Mill.) SIGNED EFFECTIVE DISB. AMNT FINAL DISB STATUS

AGRICULTURE 1 Dakawa Rice ADF 28 Feb. 1978 4.79 04 Apr. 1979 22 May 1979 4.79 0.00 31.12.94 Completed 2 Dakawa Rice (Suppl.1.1) ADB 28 Nov. 1980 4.50 10 Mar. 1981 30 June 1981 3.89 0.61 31.12.95 Comp. Bal. cancelled

Dakawa Rice (Suppl.1.1) ADF 28 Nov. 1980 3.13 10 Mar. 1981 30 June 1981 3.13 0.00 31.12.96 Completed 3 Zanzibar Rainfed Rice Development ADF 18 Dec. 1980 7.37 10 Mar. 1981 24 Apr. 1982 7.28 0.09 31.12.97 Comp. Bal. cancelled 4 Kapunga & Madibira Rice Study NTF 10 Nov. 1981 1.20 08 Jan. 1982 03 Dec. 1983 0.98 0.22 31.12.94 Comp. Bal. cancelled 5 Morogoro Village Irrigation Study ADF 08 Apr. 1982 0.49 04 Feb. 1983 00 May 1984 0.23 0.26 31.12.95 Comp. Bal. cancelled 6 Small holder Rice Irrigation ADF 08 Apr. 1982 7.37 04 Feb. 1983 25 June 1984 6.18 1.19 31.12.97 Comp. Bal. cancelled 7 Dakawa Rice (Supp.1I) ADF 14 Apr. 1983 4.64 11 May 1983 11 Dec. 1984 3.46 1.18 30.06.94 Comp. Bal. cancelled 8 Dodoma Livestock Development Study TAF 12 Dec. 1985 0.51 07 May 1986 23 Dec. 1986 0.40 0.11 31.12.94 Comp. Bal. cancelled 9 Kapunga Rice Irrigation ADF 23 Dec. 1987 40.84 07 May 1988 13 Sep. 1988 40.84 0.00 31.12.97 Completed

Kapunga Rice Irrigation NTF 14 Dec. 1987 6.44 07 May 1982 13 Sep. 1988 6.44 0.00 31.12.98 Completed 10 National Agric . & Livestock Exten. Rehab. ADF 23 Aug. 1988 6.52 05 July 1989 03 Apr. 1990 5.88 0.64 31.12.99 Comp. Bal. cancelled National Agric . & Livestock Research Project. ADF 23 Aug. 1988 6.17 05 July 1989 11 Jan.1990 6.01 0.17 31.12.01 Comp. Bal. cancelled 11 Dakawa Integrated Irr. (Phase II) (Study ) TAF 11 June 1990 0.49 04 Feb. 1991 01 Sep. 1994 0.46 0.03 31.12.97 Comp. Bal. cancelled 12 Kagera Sugar Estate Study TAF 10 July 1993 0.61 24 Nov. 1993 14 Feb. 1994 0.43 0.18 30.06.97 Completed 13 Madibira Irrigation ADF 03 Sep. 1993 21.92 24 Nov. 1993 08 May 1995 21.55 0.37 31.07.98 Comp. Bal. cancelled 14 Livestock Marketing ADF 27 Jan 1992 9.21 01 Dec. 1992 12 July 1994 8.40 0.81 31.12.05 Compl. Bal. To be Cancelled 15 Special Programme for Food Security TAF 17 May 2000 0.77 30 Jan. 2001 11-May-2001 0.77 0.00 31.08.03 Completed 16 Selous Game Reserve ADF 27 Nov. 1997 5.91 8-May-98 16 Nov. 1998 5.54 0.37 31.12.05 Completed SUB-TOTAL 132.88 126.66 6.23 TRANSPORT 17 Mogoyo-Masasi Road Construction ADB 21 Nov. 1974 4.00 15 Jan. 1975 16 May. 1975 4.00 0.00 31.12.97 Completed 18 Ten Bridges ADF 25 Mar. 1975 4.61 20 June 1975 01 Oct. 1975 4.61 0.00 30.06.83 Completed 19 Rusumo-Lusahunga Road Construction ADF 21 Feb. 1977 7.37 28 Mar. 1977 21 Jan. 1979 7.37 0.00 31.12.85 Completed 20 Ten Bridges (Supp.1.1) ADF 14 Apr. 1983 3.64 11 May 1983 18 Jul. 1983 3.51 0.13 31.12.90 Compl. Bal. Cancelled 21 Rusumo-Lusahunga Road Construction (Supp II) ADF 14 Apr. 1983 9.99 11 May 1983 22 Jun. 1983 9.99 0 31.12.85 Completed 22 TANZAM Highway Rehab. ADF 15 Feb. 1987 17.68 30 Nov. 1987 03 Mar. 1989 17.67 0.01 31.12.95 Compl. Bal. Cancelled 23 Road Rehabilitation Project Study TAF 11 June 1990 2.39 04 Feb. 1991 30 Jul. 1992 1.20 1.19 30.06.97 Compl. Bal. Cancelled 23 Road Rehabilitation Project ADF 11 June 1990 32.88 04 Feb. 1991 17 June 1993 20.30 12.58 31.12.97 Compl. Bal. Cancelled 24 Three Road Studies TAF 29 Oct. 1992 3.68 01 Dec. 1992 30 Jul. 1994 2.19 1.49 31.12.97 Compl. Bal. Cancelled 25 Tanzania Railway Corporation Rehab. ADF 21 June 1992 21.18 26 Feb. 1993 16 June 1994 14.95 6.23 31.12.99 Compl. Bal. Cancelled 26 Airport Studies TAF 31 Sep. 1993 1.47 24 Nov. 1993 14 Sep. 1994 1.05 0.42 31.12.97 Compl. Bal. Cancelled 27 Zanzibar Road Studies ADF 09 Sep. 1998 1.06 20 Nov.1998 19 Sep. 2000 0.30 0.76 31.03.03 Compl. Bal. Cancelled 28 Mutukula-Muhutwe Road Project ADF 08 Oct. 1997 20.00 17 Nov. 1997 27-Jan-1999 14.90 5.1 31.03.05 Compl. Bal. To be Cancelled 29 El Nino Road Rehabilitation ADF 16 Dec 1998 9.75 5-Jan-1999 1-Oct-2000 4.26 5.49 30.06.05 Compl. Bal. To be Cancelled 30 Shelui-Nzega Road Project ADF 17 June 1999 24.00 19 Nov. 1999 7-Mar-2000 13.75 10.25 29.11.05 Compl. Bal. To be Cancelled SUB-TOTAL 163.70 120.05 43.65 INDUSTRY 31 Oil pipeline and Tankage Facilities ADB 25 May 1971 3.00 25 May 1972 30 May. 1972 2.66 0.34 31.10.77 Compl. Bal. Cancelled 32 First Line of Credit to TIB ADB 15 May 1973 1.50 21 June 1973 23 Oct. 1973 1.50 0.00 30.06.77 Completed

FUNDS DATE AMNT DATE DATE AMNT UNDISB. DEADLINE SECTOR/PROJECT TITLE SOURCES APPROVED (UA Mill.) SIGNED EFFECTIVE DISB. AMNT FINAL DISB STATUS

33 Second Line of Credit to TIB ADB 23 Feb. 1977 3.00 24 June 1977 30 Sep. 1978 2.88 0.12 31.12.88 Compl. Bal. Cancelled 34 Third Line of Credit to TIB ADF 09 June 1981 5.00 06 Nov. 1981 17 Aug. 1982 4.82 0.18 30.06.94 Compl. Bal. Cancelled 35 Caustic Soda Study TAF 20 Nov. 1990 0.70 04 Feb. 1991 30 Jul. 1992 0.60 0.10 31.12.96 Compl. Bal. Cancelled 36 EPZ Study TAF 26 Feb. 1992 0.74 14 May 1992 13 Dec. 1993 0.48 0.26 31.12.97 Compl. Bal. Cancelled SUB-TOTAL 13.94 12.94 1.00 PUBLIC UTILITIES 37 Shinyanga-Lindi Water Supply ADF 24 Aug. 1976 4.61 25 Nov. 1976 15 Dec. 1978 4.61 0.00 31.12.84 Completed 38 Kidatu-Mufindi Power Transmission ADB 27 Nov. 1979 8.00 01 Feb. 1980 13 Dec. 1980 7.94 0.06 30.06.94 Compl. Bal. Cancelled 39 Dodoma-Water Drainage-Sewerage 1 ADB 18 Dec. 1979 7.00 01 Feb. 1980 21 Feb. 1980 7.00 0.00 31.12.84 Completed 40 Dodoma-Water Drainage-Sewerage 11 ADB 27 Aug. 1980 10.00 10 Mar. 1981 30 Sep.1981 9.30 0.70 30.06.94 Compl. Bal. Cancelled 41 Rural Electrification Newala-Massisi ADF 24 June 1982 11.97 04 Feb. 1983 01 Oct. 1984 11.77 0.20 30.06.94 Compl. Bal. Cancelled 42 Shinyanga-Lindi Water Supply (Supp.1.1) ADF 14 Apr. 1983 2.64 11 May 1983 16 Mar. 1984 2.64 0.00 30.06.84 Completed 43 Mwamapuli-Bulenya Water Sup. Study ADF 27 Nov. 1986 0.55 11 Dec. 1986 06 Nov. 1989 0.55 0.00 31.12.91 Completed 44 Zanzibar-Pemba Water Supply Study ADF 27 Nov. 1986 0.64 11 Dec. 1986 11 May 1988 0.64 0.00 31.12.94 Completed 45 Kagera Basin Telecoms ADF 22 Dec. 1986 4.19 03 May 1987 13 Sep. 1988 3.45 0.74 31.03.99 Compl. Bal. Cancelled 46 Pangani Falls Hydro-Electrc. Study TAF 17 Sep. 1987 1.50 30 Nov. 1987 21 Feb. 1990 0.00 1.50 31.12.90 Loan cancelled 47 Zanzibar-Pemba Power System ADF 19 Jan. 1989 13.22 06 Jul. 1989 12 Jun. 1990 11.91 1.31 30.06.00 Completed 48 Zanzibar Rural Water Supply ADF 16 Dec. 1991 7.83 01 Dec. 1992 22 Mar. 1994 3.29 4.54 31.12.97 Loan cancelled 49 Telecommunications II ADF 24 June 1992 18.42 01 Dc. 1992 13 Oct. 1993 18.39 0.03 31.12.97 Compl. Bal. Cancelled Telecommunications II ADB 24 June 1992 10.00 01 Dec. 1992 13 Oct. 1993 9.73 0.27 31.12.97 Compl. Bal. Cancelled 50 Dar es Salaam Water Supply Study TAF 21 June 1993 0.69 23 July 1993 16 June 1994 0.52 0.17 30.06.97 Compl. Bal. Cancelled 51 Mchuchuma Colliery Thermal Power Study TAF 21 Oct. 1993 2.50 13 June 1994 13 June 1994 1.75 0.75 31.12.97 Compl. Bal. Cancelled 52 Electricity IV ADF 16 Dec. 1991 23.03 01 Dec. 1992 17 Aug. 1994 21.01 2.02 31.12.04 Completed Electricity IV NTF 16 Dec. 1991 6.00 01 Dec. 1992 17 Aug. 1994 4.5 1.5 31.12.04 Completed 53 Monduli Rural District Water Supply Study TAF 16 July 1997 0.78 17 Nov. 1997 13 Jun. 2000 0.75 0.03 30.09.02 Completed 54 Rural Electrification Master Plan ADF- G 28 June 2001 1.87 28 Sep. 2001 21 Oct. 2003 1.53 81.82 31.12.05 Completed SUB-TOTAL 135.44 121.28 95.64 SOCIAL 55 Technical and Vocational Training ADF 19 Dec. 1978 6.45 16 May 1979 28 July 80 5.37 1.08 31.12.96 Compl. Bal. Cancelled 56 Muhimbili Teaching Hospital Study TAF 23 Mar. 1989 0.59 30 May 1989 23 May 1980 0.47 0.12 31.12.97 Compl. Bal. Cancelled 57 Employment & Technical Education Studies TAF 23 June 1993 0.65 23 July 1993 16 May 1995 0.63 0.02 31.03.97 Compl. Bal. Cancelled 58 Zanzibar Health Dev. Requirement Studies TAF 03 Dec. 1997 0.91 08-May-98 24 Sep. 1999 0.90 0.01 30.06.04 Completed SUB-TOTAL 8.60 7.37 1.23 MULTI-SECTOR (POLICY BASED) 59 Sector Rehabilitation (Ag and Tr) ADF 26 Oct. 1987 28.55 29 Dec. 1987 29 Dec. 1987 26.42 2.13 30.06.94 Compl. Bal. Cancelled 60 Industrial Sector Adjustment ADF 17 Sep. 1990 27.63 01 July 1991 06 Aug. 1991 27.63 0.00 30.06.94 Completed 61 Financial Sector Adjustment Programme ADF 25 May 1992 27.63 01 Dec. 1992 16 May 1993 27.63 0.17 31.12.95 Compl. Bal. Cancelled 62 Structural Adjustment Loan ADF 05 Nov. 1997 45.00 17 Nov. 1997 24 Dec. 1997 45.00 0.00 31.12.99 Completed 63 SFM Loan I ADF 04 Dec. 1999 0.62 05 Jan. 1999 27 Aug. 1999 0.62 0.00 30.06.01 Completed 64 SFM Loan II ADF 14 July 1999 0.55 19 Nov. 1999 27 Aug. 1999 0.55 0.00 30.06.00 Completed 65 Structural Adjustment Loan II ADF 03 Sep. 2001 40.00 28 Sep.2001 08 Dec. . . .2001 40.00 0.00 30.06.04 Completed 66 Poverty Reduction Support Loan ADF 27 Oct. 2004 50.00 09 Dec. 2004 50.00 0.00 Completed SUB-TOTAL 219.98 217.85 2.30 GRAND TOTAL 674.54 606.15 150.05

ANNEX 2b LIST OF ONGOING BANK GROUP OPERATIONS

FUNDS DATE AMNT DATE DATE AMNT PER CENT DEADLINE SECTOR/PROJECT TITLE SOURCES APPROVED (UA Mill.) SIGNED EFFECTIVE DISB. DISB FINAL DISB AGRICULTURE Agric. Marketing Systems Dev. Programme ADF 18-Sep-2002 15.90 12 May. 2003 15 Dec. 2003 2.50 15.72 31.12.2008 ADF- G 18-Sep-2002 1.00 12 May. 2003 15 Dec. 2003 0.42 42.00 31.12.2008 District Agricultural Sector Investment Project ADF 24-Nov-2004 36.00 11-Feb-2005 20-Jul-2005 0.09 0.25 30.06.2012 ADF- G 24-Nov-2004 7.00 11-Feb-2005 20-Jul-2005 0.04 0.57 30.06.2012 SUB-TOTAL 59.90 3.05 5.09 TRANSPORT Road Rehabilitation / Upg. Project ADF 03 Sep. 2001 38.65 28 Sep. 2001 6-Jun-2003 10.74 27.79 31.03.07 Zanzibar Roads Upgrading Project ADF 24-Jun-2004 16.22 24-Jun-2004 5-Oct-2004 0.00 0.00 31.12.07 ADF- G 24-Jun-2004 0.71 24-Jun-2004 0.00 0.00 31.12.07 SUB-TOTAL 55.58 10.74 19.32 INDUSTRY SUB-TOTAL 0.00 0.00 PUBLIC UTILITIES Dar es Salaam Water Supply ADF 17 Dec 2001 36.94 29 May 2002 19 Nov. 2003 5.89 14.13 31.12.07 ADF- G 17 Dec 2001 1.31 29 May 2002 19 Nov. 2003 0.57 12.21 31.12.07 Monduli Rural District Water Project ADF- G 27 Nov 2003 15.51 10 Feb 2004 14Jul y 2004 3.45 16.96 31.12.08 SUB-TOTAL 53.76 9.91 18.43 SOCIAL First Health Rehabilitation Project ADF 03 Dec. 1997 15.00 08 May 1998 10 Sep. 1999 8.93 59.53 30.06.07 Education II Project ADF 10 Dec. 1997 20.00 08 May 1998 06 Jan. 1999 16.81 84.05 30.06.06 Small Enterprises Loan Facility ADF 11 Nov. 1998 8.00 12 Apr. 1998 29 July 1999 7.31 91.38 31.01.07 Three Regions Health Studies ADF- G 14 July 1999 1.75 19 Nov. 1999 6-Apr-2001 0.98 56.00 31.01.06 Alternative Learning & Skills Dev. Project ADF 31 Oct 2000 5.56 30-Jan-2001 24-Dec-2001 1.11 19.96 30.06.07 ADF- G 31 Oct 2000 1.01 30-Jan-2001 24-Dec-2001 0.61 60.40 30.06.07 SAP for Vocational Ed & Training ADF 09 July 2003 14.22 15-Sep-2003 16-Feb-2004 0.11 0.77 31.12.08 ADF- G 09 July 2003 1.60 15-Sep-2003 16-Feb-2004 0.00 0.00 31.12.08 SUB-TOTAL 67.14 35.86 53.41 MULTI-SECTOR Institutional Support for Good Governance ADF-G 13 Dec 2004 4.8 11-Feb-2005 11-Feb-2005 0.00 0.00 31.12.08 SUB-TOTAL 4.80 GRAND TOTAL 236.38 59.56 25.20

ANNEX 3

Ongoing RWSS Projects: 2006/07-2009/10 (USD million)

Source of Funding

2006/07 2007/08 2008/09 2009/10 Total Remarks

ADB 7.0 10.0 5.0 22.0 Covering 18 villages and 2 small urban centers in Monduli district

IDA 11.0 3.0 14.0 Rwssp covering several communities and 4 small towns in 12districts

Japan (JICA)

5.0 5.0 5.0 5.0 20.0 Covering some villages in: Mtwara and Lindi; Mwanza and Mara; and Dar-es-Salaam peri-urban and coast regions.

BADEA 4.0 4.0 - - 8.0 Chalinze W.S. Phase II

France (AFD)

1.5 1.9 1.5 - 4.9 6-9 Small towns

International NGOs (WaterAid & others)

2.4 2.7 2.9 3.2 11.2 Wide spread. Estimates based on trend

Total 30.9 26.6 14.4 8.2 80.1

ANNEX 4 Ministry of Water - Rural Water Supply Division

RWSD Director

Technical Support Services Section

Operational Planning Support Services Section

Community Building Support Service Section

Design & Construction Q/A Unit

O & M Q/A Unit Sanitation & Hygiene Promotion Unit

Capacity Building Training Unit

Operational Planning

MIS

IEC Sub Unit Head

Finance/Accounts Sub Unit Head

Procurement Head

ANNEX 5 Institutional Framework for Water Supply and Sanitation

District Councils

Water Supply and Sanitation Authorities (inc. DAWASA)

CONSUMERS

Community Owned Water Supply Organisations

Minister Responsible for Water

Ministry Responsible for Water

Energy and Water Utilities Regulatory

Authority

MOHSW

Ministry Responsible for Finance

Major Capital Works

Regulation and Monitoring Regulation and

Monitoring

Contracts

Service Providers (public, private, NGOs,

CBOs WCAs)

Municipal Councils

Village Councils

Contracts

Service Providers (public, private, NGOs,

CBOs, WCAs)

Prime Minister’s Office Regional Administration and Local Government

Regional Secretariat

Detailed NRWSSP Costs for the first four years (USD '000) ANNEX 6

Total Cost (USD M) Total Cost (UA M)

PROJECT COMPONENT 06/07 07/08 08/09 09/10 TOTAL 06/07 07/08 08/09 09/10 TOTAL

1.0 District Management Support

1.1 Establish DWSTs New Offices 924 924 0 0 1,848 628 628 0 0 1,256 Rehabilitation of offices 630 53 0 0 683 428 36 0 0 464 Capacity Support 441 441 0 0 882 300 300 0 0 600 New Vehicles 1,722 567 0 0 2,289 1,171 385 0 0 1,556 New Motor Cycles 0 517 0 0 517 0 351 0 0 351 Office equipment 0 572 0 0 572 0 389 0 0 389 MIS 635 635 635 635 2,541 432 432 432 432 1,727 Vehicle Operations ($400/month) 610 610 610 610 2,439 415 415 415 415 1,658 Supervision Expenses (2 staff @ $500/m ea) 1,525 1,525 1,525 1,525 6,098 1,036 1,036 1,036 1,036 4,146 Office Management ($200/month) 305 305 305 305 1,220 207 207 207 207 829 Training Workshops (outside CAPSTART) 16 11 0 0 26 11 7 0 0 18 Subtotal 6,807 6,158 3,075 3,075 19,115 4,628 4,186 2,090 2,090 12,994

1.2 Establishment of LGA-RWSS Fund for Projects TA for Facilitator & Inst. of accounting software 861 284 0 0 1,145 585 193 0 0 778 TOT Workshops 16 11 0 0 26 11 7 0 0 18 Subtotal 877 294 0 0 1,171 596 200 0 0 796

1.3 Hygiene Education and HIV/AIDS Prevention TA for Training Material Preparation 79 53 0 0 131 54 36 0 0 89 TOT Workshops 16 11 0 0 26 11 7 0 0 18 Subtotal 95 63 0 0 158 64 43 0 0 107 SUBTOTAL - DISTRICT & MANAGEMENT SUPPORT 7,779 6,515 3,075 3,075 20,443 5,288 4,429 2,090 2,090 13,897

2.0 RWSS Schemes Construction of New Services

Shallow Well with Handpump 1,554 3,038 6,100 6,100 16,792 1,056 2,066 4,146 4,146 11,415 Borehole with Handpump 3,275 6,341 9,311 9,311 28,238 2,226 4,311 6,329 6,329 19,196 Single Community Gravity Fed 3,196 6,809 10,134 10,134 30,272 2,173 4,629 6,889 6,889 20,579 Multiple Community Gravity Fed 2,125 4,490 7,021 7,021 20,657 1,445 3,052 4,773 4,773 14,042 Single Community Pumped / Piped 4,324 7,954 11,331 11,331 34,941 2,940 5,407 7,703 7,703 23,752 Multiple Community Pumped / Piped 4,139 9,022 11,361 11,361 35,884 2,813 6,133 7,723 7,723 24,393 Protected Springs 29 54 58 58 199 20 37 39 39 135 Windmills 558 890 393 393 2,235 379 605 267 267 1,519 Rainwater Catchment 129 259 499 499 1,385 88 176 339 339 942 Charco Dam 124 243 316 316 999 84 165 215 215 679 Subtotal 3 19,453 39,101 56,524 56,524 171,602 13,224 26,580 38,424 38,424 116,652 Rehabilitation of Existing Services Shallow Well with Handpump 133 261 423 423 1,241 91 177 288 288 843 Borehole with Handpump 241 479 490 490 1,700 164 326 333 333 1,156 Single Community Gravity Fed 408 889 857 857 3,012 277 604 583 583 2,047 Multiple Community Gravity Fed 272 591 591 591 2,045 185 402 402 402 1,390 Single Community Pumped / Piped 286 530 587 587 1,990 195 361 399 399 1,353 Multiple Community Pumped / Piped 754 2,053 2,094 2,094 6,995 512 1,396 1,423 1,423 4,755 Protected Springs 3 6 5 5 19 2 4 3 3 13 Windmills 93 150 71 71 385 63 102 48 48 262 Rainwater Catchment 11 24 38 38 111 8 16 26 26 75 Charco Dam 13 25 25 25 89 9 17 17 17 61 Subtotal 2,215 5,009 5,181 5,181 17,586 1,506 3,405 3,522 3,522 11,954

2.1 Construction & Rehabilitation of Services Shallow Well with Handpump Borehole with Handpump 3,516 6,821 9,801 9,801 29,938 2,390 4,637 6,662 6,662 20,351 Single Community Gravity Fed 3,604 7,698 10,991 10,991 33,284 2,450 5,233 7,471 7,471 22,626 Multiple Community Gravity Fed 2,397 5,081 7,612 7,612 22,702 1,629 3,454 5,174 5,174 15,432 Single Community Pumped / Piped 4,611 8,484 11,918 11,918 36,930 3,134 5,767 8,102 8,102 25,105 Multiple Community Pumped / Piped 4,893 11,075 13,455 13,455 42,878 3,326 7,529 9,147 9,147 29,148 Protected Springs 32 60 63 63 218 21 41 43 43 148 Windmills 651 1,040 464 464 2,620 443 707 316 316 1,781 Rainwater Catchment 141 283 536 536 1,496 96 192 364 364 1,017 Charco Dam 137 268 342 342 1,089 93 182 232 232 740 Subtotal 3 21,668 44,110 61,704 61,704 189,187 14,730 29,985 41,945 41,945 128,606

2.2 Sanitation Support Sanitation Support - New WSS 742 1,485 2,291 2,291 6,809 505 1,009 1,557 1,557 4,629

Sanitation Support - Rehab WSS 150 341 376 376 1,244 102 232 256 256 846 Sub-total 892 1,826 2,667 2,667 8,053 607 1,241 1,813 1,813 5,474

2.3 Handpump Supply and Maintenance Services Spare Parts and After Sales Services 255 496 884 884 2,518 173 337 601 601 1,711

2.4 Planning, Support and Construction Supervision Facilitation Service Providers (NGOs) 3,234 6,287 9,653 9,653 28,827 2,198 4,273 6,562 6,562 19,596 Technical Service Providers (Local Firms) 4,042 7,858 12,067 12,067 36,034 2,748 5,342 8,203 8,203 24,495 Subtotal 7,276 14,145 21,720 21,720 64,861 4,946 9,615 14,765 14,765 44,092

2.5 Support to Innovation Window Program Innovation Grants 473 473 473 0 1,418 321 321 321 0 964 SUBTOTAL - RWSS SCHEMES 31,481 64,767 95,557 97,892 289,697 21,400 44,027 64,958 66,545 196,930

3.0 Institutional Strengthening and Development

3.1 Stakeholder Consultation Annual Review Workshops 21 21 21 21 84 14 14 14 14 57 Donor Consultations 2 2 2 2 8 1 1 1 1 6 Sector coordination meetings 11 11 11 11 42 7 7 7 7 29 Subtotal 34 34 34 34 134 23 23 23 23 91

3.2 TA for Management Consultancies 184 184 184 184 735 125 125 125 125 500

3.3 General Capacity Building Introductory Course 232 0 0 0 232 158 0 0 0 158 Refresher Course 438 0 0 0 438 298 0 0 0 298 Full Course 1,134 953 0 0 2,087 771 648 0 0 1,418 TOT 25 0 0 0 25 17 0 0 0 17 Coaching in field 0 254 254 254 762 0 173 173 173 518 Subtotal 1,830 1,207 254 254 3,544 1,244 820 173 173 2,409

3.4 Support to Private Sector Startup loans to FSPs and TSPs 735 536 0 0 1,271 500 364 0 0 864 Sanitation Marketing 525 746 0 0 1,271 357 507 0 0 864 Subtotal 1,260 1,281 0 0 2,541 857 871 0 0 1,727

3.5 RWSD Head Office Miscellaneous Short-term Tech. Assistance 21 21 21 21 84 14 14 14 14 57 Office Construction 0 2,100 0 0 2,100 0 1,428 0 0 1,428 Vehicles and office equipment 1,281 0 0 0 1,281 871 0 0 0 871 Vehicle Operations ($1000/month) 126 126 126 126 504 86 86 86 86 343 MIS 420 0 0 0 420 286 0 0 0 286 Field Supervision (12 staff @ $12,000/yr) 302 302 151 151 907 206 206 103 103 617 Office Management ($2000/month) 25 25 25 25 101 17 17 17 17 69 Bi-Annual/Final Evaluations 0 53 0 53 105 0 36 0 36 71 Technical Audits 32 32 32 32 126 21 21 21 21 86 Financial Audits 26 26 26 26 105 18 18 18 18 71 Subtotal 2,233 2,685 381 434 5,733 1,518 1,825 259 295 3,897

3.6 Regional Secretariats Vehicles and office equipment 2,010 0 0 0 2,010 1,366 0 0 0 1,366 Establish and develop MIS 454 0 0 0 454 309 0 0 0 309 Planning and Technical Oversight to Districts 227 234 241 248 950 154 159 164 169 646 Vehicle Operations ($200/month) 55 56 58 60 228 37 38 39 40 155 Subtotal 2,746 290 299 308 3,642 1,867 197 203 209 2,476 SUBTOTAL - INST. STRENGTH & DEV. 8,452 6,008 1,230 1,326 17,017 5,746 4,084 836 902 11,568 TOTAL ESTIMATED COST (USD) 47,945 77,687 100,147 102,679 328,458 32,592 52,810 68,078 69,799 223,280

ANNEX 7 Internal Financial Reporting Requirements under the NRWSSP

The reports to be submitted under the program are closely linked to the disbursement of funds as shown in the following table. Time, Amount and Requirements for Releases

QUARTER 1 Amount Released Requirements for Release of Funds July 1/12 Annual Budget • Funds Released for Q4 of previous FY

• Agreed Annual Investment Plan & Signed MoU

August * Release Request minus 1/12 Budget

• 2 Progress Reports for Q4 of previous FY • Copy of the final Bank Statement • Cheque returning unspent balances to the Treasury

(If any) • Budget Request for Q1

September *

--- ---

QUARTER 2 Amount Released Requirements for Release of Funds October 1/12 Annual Budget • Funds released for Q1 November Release Request minus

1/12 Budget • 2 Progress Reports from Q1 • Budget Request for Q2

December --- --- QUARTER 3 Amount Released Requirements for Release of Funds

January 1/12 Annual Budget • Funds released in Q2 February Release Request minus

1/12 Budget • 2 Progress Reports from Q2 • Budget Request for Q3 of current FY

March --- --- QUARTER 4 Amount Released Requirements for Release of Funds

April 1/12 Annual Budget • Funds released in Q3 May Release Request minus

1/12 Budget • 2 Progress Reports from Q2 • Budget Request for Q3 of current FY

June --- --- Source: RWSD *In the first quarter, due to Vote on Account no more than ¼ of the Annual Budget should be requested and will be released.

ANNEX 8

The Tanzania Country Procurement Assessment Report (CPAR) - 2003 Diagnosis: The 2003 Tanzania CPAR identified a number of weaknesses relating to the legislative framework, the performance of regulatory functions, the enforcement regime, and the capacity of public sector institutions to conduct procurement. With regard to the legal framework, the CPAR noted that while public procurement is governed by the Public Procurement Act (PPA) of 2001, the Act set out the broad structure, principles and rules of the system but left the detailed rules to be established by Regulations. The study found that the legal and regulatory framework for central government was largely adequate, with the exception of an administrative review system. Concerning the organizational set up of the procurement function, the study observed that there was inefficiency and lack of accountability stemming mainly from the current centralized system. The Central Tender Board (CTB) held both executive and regulatory powers, which meant that the Board participated in the procurement procedure and also enforced the same procedures. Other shortcomings that were noted included (i) shortage of properly trained specialist procurement staff; (ii) inclusion of politicians (councillors) in the District Tender Boards; (iii) lack of procurement planning in Government financed procurements; (iv) weaknesses in the advertisement of tenders; (v) non compliance of contract award procedures and criteria; and (vi) weak complaints and administrative review process. Recommendations: The CPAR proposed the following recommendations: (i) separating the operational and regulatory functions of the Central Tender Board and transforming the Central Tender Board to a Regulatory Authority responsible for Procurement Policy and Monitoring of public procurement; (ii) fully decentralising procurement operations to Ministries, Departments and Agencies (MDAs); (iii) establishing a new cadre of procurement specialists and a system of certification for the same; and (d) restructuring the composition of the District Tender Boards to exclude councillors. Source: “Tanzania: Country Procurement Assessment Report”, World Bank 2003 NB: as indicated in the report, most of these recommendations have been acted upon and the remaining ones are being implemented.

ANNEX 9

Proposed RWSS Program Funds Flow Mechanism

ADF Other Donors/ GoT

ADF Loan/Grant Special Accounts

Exchequer Account

LGAs MOW

Special Accounts/ SWAp Account

LGAs = Local Government Authorities MOW = Ministry of Water

ANNEX 10

Public Procurement Methods and Thresholds According to the Public Procurement Regulations (2005), the following methods of selection are applicable, considering the limit of their application. Goods and Works

Goods

Works

Method of Tendering Maximum - TZS Maximum - UA ADB Maximum UA Maximum TZS Maximum UA ADB Maximum UA

International competitive tendering

No limit No limit >500,000 No limit No limit >1.5m

National competitive tendering 800,000,000 453,684 <100,000 3,000,000,000 1,701,317 <300,000 Restricted tendering 400,000,000 226,842 <100,000 1,500,000,000 850,658 <300,000 Competitive quotations 80,000,000 45,368 <100,000 100,000,000 56,711 <300,000 Single source procurement 500,000,000 283,553 <100,000 800,000,000 453,684 <300,000 Minor value procurement 10,000,000 5,671 <100,000 20,000,000 11,342 <300,000

NB: For the Bank rules, the mode of procurement for goods between UA100,000 and UA500,000, and for works between UA 300,000 and UA 1.5m, is a matter of judgement depending on the individual case. Consulting Services

Method of Tendering Maximum (TZS) Maximum - UA ADB Maximum - UA International Competitive Selection No Limit No limit Standard Method of Shortlisting National Competitive Selection 1,000,000,000 567,106Restricted Competitive Selection 500,000,000 283,553Single-Source Selection 300,000,000 170,132Individual Selection 150,000,000 85,066Minor Value Procurement 7,500,000 4,253

Not used except in special cases

Source: Public Procurement Regulations (2005)

ANNEX 11

Page 1 Economic Analysis for Sub-Projects (US$)

S/N Technological Option Total Investment Annual Operational and Maintenance Costs

1. Hand-drilled Shallow Well with Handpump 5,703.89 246.11 2. Shallow Borehole with Handpump 7,675 600 3. Village Kiosk Deep Borehole Mechanized and

Piped Scheme 64,500 35,250

4. Village Kiosk Deep Borehole Mechanized 52,250 23,000 Benefits with new Project Scenario SN. Option Average Time Saved

(US$/m3) Consumer Surplus on Increase of Water Used

Incremental Net Benefits

1. Hand-drilled Shallow Well + HP 0.00135 0.0015 0.0136 2. Shallow Borehole + HP 0.001348 0.0015 0.0136 3. Deep Borehole Mechanized 0.00796 0.0010 0.011

Cost-benefit results for Rufiji District SN. Investment option NPV (US$) EIRR 1. Hand-drilled Shallow Well with Handpump 20,320 21.8% 2. Shallow Borehole with Handpump 33,536 34.9% 3. Village Kiosk Deep Borehole Mechanized and Piped Scheme 25,041 18.5% 4. Village Kiosk Deep Borehole Mechanized 55,618 32.0%

Sensitivity on Investment Cost Increase by 10% S/N Investment Option NPV (US$) EIRR 1. Hand-drilled Shallow Well with Handpump 15,831 19.0% 2. Shallow Borehole with Handpump 30,368 30.6% 3. Village Kiosk Deep Borehole Mechanized and Piped Scheme 17,515 16.2% 4. Village Kiosk Deep Borehole Mechanized 50,360 28.2%

Sensitivity on Time Saved Decrease by 20% SN.

Investment Option NPV (US$) EIRR

1. Hand-drilled Shallow Well with Handpump 10,766 17.2% 2. Shallow Borehole with Handpump 23,982 28.1% 3. Village Kiosk Deep Borehole Mechanized and Piped Scheme 12,807 15.4% 4. Village Kiosk Deep Borehole Mechanized 41,031 26.5% Sensitivity on vendor price decline by 30% SN

Investment Option NPV (US$) EIRR

1. Hand-drilled Shallow Well with Handpump 19,392 21.4% 2. Shallow Borehole with Handpump 32,608 34.2% 3. Village Kiosk Deep Borehole Mechanized and Piped Scheme 23,604 18.2% 4. Village Kiosk Deep Borehole Mechanized 54,700 31.6%

ANNEX 11 Page 2

Basic Assumptions The economic analysis of water supply sub-projects is based on experience and evidence from other studies.

Time saving Time used in fetching water is the most significant in rural areas. It is the largest potential benefit in the rehabilitated and new water supply project which reduces walking time, waiting (queuing) and filling time.

• Unit of Measurement of Water Containers

The unit of measurement mostly used is the 20 liter plastic bucket. • Cost of Water per bucket

The higher the price charged the more severe the water situation. In the survey data it is indicated that Mpwapwa has the highest prices of water per 20-litre bucket than the other two districts (between Tshs. 50-300). Kilosa follows especially in Kiegea, which shares borders with Dodoma region (between Tshs 50-150). Rufiji vendors charge less compared to Mpwapwa and Kilosa. It charges between Tshs 50-100.

• Conversion Factor for Labour

This largely depends on the opportunity cost of that labor time, which is used for fetching water. In this study a factor of 0.3 has been assumed. Using the rural minimum wage rate of US $ 30 per month, the value of time saved is thus calculated.

• Average Income per Person/Month

The minimum rural wage has been adopted to be the average income per person/month. • Average Households Size

In this study, different average household sizes have been used for each district. The numbers have been obtained from the field survey data. Kilosa household size is 5 people on average, while Rufiji is 6 and Mpwapwa is 6 persons on average.

• Average Population Growth

The lack of reliable information in the villages in some districts, the growth rates were obtained from the 1988 census document for Kilosa district and the Social Assessment studies for the other districts.

• Average Population using new Source

Based on findings from the willingness to pay survey, those who supported new projects were taken to be the ones who will use these new sources of water supply options. The proportion differed with each option. However, a great number of people showed their intention to use the new sources. So, an 80% rate was adopted to represent the users of new sources of water supply.

• Average Population using existing Sources

These proportions also came from the survey data where respondents provided the information pertaining to sources of water.

• Proportion of Investment Cost to Supervision This is an assumption based on experience obtained from consultations with bore-hole drilling agency and RWSSP staff. The rate used is 15% of investment costs (construction machinery and piping).

• Pump replacement

Pump replacement has been put after 10 years

ANNEX 12

A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

1 Bank Dialogue with GOT and DPs X

2 Loan Negotiations X

3 Board Approval X

4 Signing Loan Agreement X

5 Launching Mission X

6 First Disbursement X

7 Second Disbursement X

8 Mid Term Review

9 Third Disbursement X

10 Fourth Disbursement X

11 Completion of phase 2006-2010

12 Supervision Mission X X X X X X X X

13 Annual Joint Sector Review

14 Program Completion Report

2Q 2006 3Q 2006 4Q 2006 1Q 2007 4Q 2008 1Q 20092Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2010 3Q 2010 4Q 20102Q 2009 3Q 2009 4Q 2009 1Q 20102Q 2008 3Q 2008

ANNEX 13 Tanzania – Rural Water Supply and Sanitation Program - Results Monitoring Matrix

Data Collection and Reporting

Outcome Indicators Baseline* ‘07 ‘08 ‘09 ‘10 Frequency and Reports Data Collection

Instruments Responsibility for Data Collection

Increased proportion of rural population with access to clean and safe water from 53% in 2003 to 65% in 2010 and less than 30 minutes spent each on collection of water

54 %

56%

60%

63%

65%

Annually, Annual State of Water Sector Report by MoW

Various

Various

% of people with access to basic sanitation and % of schools to have adequate sanitary facilities

45% / Tbd

48% 51% 54% 57% / 100%

Annually, Annual State of Water Sector Report by MoW

Various Various

Results Indicators Baseline* ‘07 ‘08 ‘09 ‘10 Frequency and Reports Data Collection Instruments

Responsibility for Data Collection

% of rural communities with access to at least 25 liters/capita/day of drinking water accessible within 30 minutes collection time

54% 56% 60% 63% 65 % Quarterly, Status Reports Review of official records, field visits, MIS system

Local governments

% of participating rural WSS systems with improved drinking water quality

0 % 90 % Quarterly, Status Reports Review of official records, field visits, water quality testing reports

Local governments

% of rural population practicing good health/hygiene/sanitation

40 % 65 % Quarterly, Status Reports Interviews, surveys, rapid participatory assessments

Local governments, water committees

% of districts effectively implementing demand-driven RWSS using private sector and/or NGO facilitation services

12 % 100% Semi-Annual, Status Reports

Field visits, focus groups

Local governments

% of rural water users paying tariff required to cover water system recurrent costs

Tbd 65 % Quarterly, Status Reports Review of official records, review of financial reports, MIS system

Local governments, water committees, FSPs

Results Indicators Baseline* ‘07 ‘08 ‘09 ‘10 Frequency and Reports Data Collection Instruments

Responsibility for Data Collection

% of rural water points constructed in participating communities functioning properly

70% 73% 75% 78% 80% Quarterly, Status Reports Field visits, TSP reports

Water committees, TSPs

% of rural water committees with at least 50 % female active membership

50% 63% 75% 88% 100% Semi-Annual, Status Reports

Official records, , rapid participatory assessments

Water committees

MoW fulfilling its redefined role and mandate as: (a) facilitator and coordinator of sector policies and investment programs (b) a support agency for local governments and communities; and (c) enabling agency for NGOs and private sector

No Yes Semi-Annual, Status Reports

Interviews, focus groups, official records

MoW

# of strengthened regional secretariats providing support to districts and local governments at district level actively involved in managing programs in accordance with NAWAPO

Tbd Tbd Semi-Annual, Status Reports

Interviews, focus groups, official records

MoW, District authorities

# of strengthened private sector companies, NGOs, CBOs and training institutions actively involved in supplying WSS goods and services

Tbd Tbd Semi-Annual, Status Reports

Interviews, focus groups, official records

MoW

Legal and institutional framework harmonized with NAWAPO

No Yes Semi-Annual, Status Reports

Official documents, regulatory records

MoW

* Tbd – to be determined during project inception period.

ANNEX 14

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY Project Title: National Rural Water Supply and Sanitation Program NRWSSP Project Number: P-TZ-EA0-009 Country: TANZANIA Department: ONIN Division: ONIN.2

a) Brief description of the project and key environmental and social components The National Rural Water Supply and Sanitation Program components are the following: 1. Construction and rehabilitation of Rural Water Supply & Sanitation facilities, 2. District Management Support, and 3. Institutional Strengthening & Development. The NRWSSP is an overall program aiming at: a) sustainable access to water supply and sanitation in all districts; b) increased water supply coverage and reduced distance between home and water points; c) reduced water borne and hygiene related diseases; d) community mobilization with gender equality; and f) appropriate water supply technologies whose maintenance can be done locally. The program is classified in the environmental category 2 according to the ADB environmental and social safeguards as it aims at supplying safe water and sanitation to rural population and improving health. It complies with national environmental and social safeguards as all projects financed under the program are planned to be scrutinized according to country environmental and social safeguards under the supervision of national administrative and environmental institutions. Based on the national environmental Acts, the ESMP ensures that mitigating/enhancing, monitoring, consultative and institutional measures required to prevent, minimise, mitigate or compensate for adverse environmental and social impacts, or to enhance the project beneficial impacts are adequately streamlined in the projects. It identifies and determines ways of addressing capacity building requirements to strengthen the Borrower’s environmental and social capacities if necessary. b) Major potential environmental and social impacts POSITIVE IMPACTS The program is implemented through hundreds of village level small water and sanitation facilities. The village projects, that can be of various types and sizes will be generally small and are not expected to have significant negative impacts on human and natural environment. Generally village projects are expected to induce positive impacts such as: a) increased income of local food vendors especially to construction workforce; b) improved health condition to the rural community due to accessibility to clean and safe water supply and proper sanitary conditions, hence decreased incidence of water related diseases; c) temporary employment opportunities to local people, especially youth and women during construction; d) improved sanitary conditions; d) improved skills in operation and maintenance of water supply and sanitation schemes, as well as in financial managerial and administrative skills to the community leaders due to training; e) improved environmental conditions in the rural community due to created awareness and training in environmental conservation activities; f) enhance participation of communities, private sector and the civil society organizations, which are identified by the National Water Policy (NAWAPO) as the key water sector partners; g) address needs of all social and economic groups such as women, men, the marginalized, livestock keepers and crop farmers, peri-urban and rural populations; h) solve potential conflicts of interest between crop and livestock farmers by supplying water for both domestic use and for livestock; i) reduce the distances to access water for both domestic and livestock use, which will substantially increase the opportunities for both men and women to engage in other socio-economic occupations; j) Empower women and other marginalized groups by involving them in the management of the water resources ; k) Offer opportunity for both men and women to discuss social issues such gender inequalities, outdated traditions and customs, inequitable distribution of family resources, etc. that will gradually introduce a more equitable distribution of power and resources among men and women and the marginalized groups in the community; l) Increase awareness on HIV/AIDS and consequently planning at individual, household and community levels on how to prevent and control it.

In addition, broadly speaking, the program is expected to: a) Contribute towards the National Strategy for Growth and Reduction of Poverty (NSGRP) initiatives of reducing poverty and improving the health conditions of the targeted communities; b) Support the decentralization policy of the Government of Tanzania by strengthening the capacity of the LGAs to manage water and sanitation development initiatives. NEGATIVE IMPACTS Although the program activities will vary in size, location, scope and the approach in implementation, most of these activities will involve civil engineering and construction works. Hence the generic and typical environmental impacts for the WSDP could include: a) loss of vegetation cover resources; b) limited soil erosion; c) loss of fragile ecosystems; d) dust emissions; and e) possible silting of water courses Main potential environmental concerns that are likely to arise from the projects are related to water sources use, community activities and construction activities. As the number of project is high there may be cumulative and synergic noticeable impacts on groundwater and surface water. The environment may also impact the projects. Impacts related to construction activities are likely to be vegetation clearing and destruction during transportation of drilling rigs and installation of water pipelines. There should be no significant air pollution. Pollution of groundwater may result from improper location of water points in relation to pollutant sources such as pit latrines, burial sites, and animal fecal contamination. Adverse impacts may be cause by crossing farmland and/or taking small pieces of land from owners (compensation is required). Impacts to communities may result from: pollution from poor disposal of human excreta or construction of pit latrines located too close to water sources; encroachment of human settlement towards well sites may result in contamination from pit latrines. Cultivation and vegetation destruction around stream banks generates silt and cause flood hazards. Destruction of vegetation cover in mountainous areas may result in drying up of natural springs. Damages on water pipes may be caused by cultivation and construction activities along the pipeline route. Pollution of surface water resources is common due to human activities and trampling by livestock. WATER RESOURCE USE IMPACTS One of the possible impacts of multiplication of boreholes is groundwater over-extraction hence leading to disruption of hydrological balance. As well multiplication of surface water abstraction can affect downstream users. Accumulation of waste water around well sites and standpipes can create mosquito breeding sites. Besides the potential impacts described above, studies have shown that the current conditions of the environment may affect rural water resources use and management. The main findings of the RWSSP Environmental Assessment included: Land degradation is common in the districts, due to a combination of over-grazing, deforestation and firewood harvesting, and improper cultivation practices. Vegetation destruction adjacent to water sources will negatively impact water availability; b) Surface water pollution by humans and animals, combined with land degradation, negatively impacts water quality; c) Saline groundwater and high-fluoride groundwater occurs in certain areas, as determined by the chemical content of the geologic formation; d) Encroachment by human settlements on well sites and the general absence of improved latrines and wastewater disposal facilities negatively effects groundwater bacteriological quality; e) There is no specific legislation or guidelines in the rural water sub-sector to support EA of sub-projects, and the National Water Policy (NAWAPO) does not include environmental awareness and education among its objectives; f) Regarding water resources and environmental management, there are various actors at different levels performing some functions, but no effective coordination and collaboration exists among them; g)

Environmental quality monitoring, at central, river basin and regional levels, should be strengthened; h) National capacity for management and implementation of EA is limited, and EA requirements are not necessarily supported by legislation (although some sector ministries have included EA in sectoral laws and regulations); i) Institutional and private sector capacity to conduct EA is constrained; and j) The RWSSP was not expected to have significant negative impact on the human and natural environment, and was expected to have significant positive impact (health, employment and income, and conservation benefits among others). c) Enhancement and mitigation program Mitigation during construction: a) Vegetation clearing can be minimized by confining construction activities on-site and along the designated pipeline routes; b) Groundwater pollution by non compatible activities can by minimized by proper location of the water point; monitoring is required if the risk is suspected. Pollution by latrines and excreta can be avoided by training communities on properly locating the facilities, and respecting appropriate distances between them; and, c) Land take and crossing people’ land can be minimized by diverting the pipeline routes and by selecting optimal sites for water points. Mitigation of community impacts: a) Encroachment by human settlement and cultivation towards the water point can be minimized by properly demarcating the boundaries of the water point and by enacting bylaws; b) Cultivation should be restricted at least at 200 meters from stream banks through bylaws; and, d) Destruction of vegetation upstream springs can be minimized through bylaws also and through awareness building. To avoid destruction of pipeline, clear rights of way should be demarcated along the pipelines. Pollution due to human activities and livestock trampling can be avoided through environmental awareness building, hygiene education, and water sources protection and management. Water resources use impacts: a) Avoiding over extraction of groundwater resources suppose proper monitoring of the fluctuation of the water level and immediate action should be taken whenever necessary; and, b) Proper design of the water point and drainage of wastewater is required to avoid creation of mosquitoes breeding sites around water points. Activities causing water stagnation such as bathing and washing around the water points should be prohibited. The RWSSP EA proposed a series of recommendations encompassing policy, legislative, and environmental standards, some related specifically to the RWSSP but most of an over-arching nature. For the RWSSP in particular, the following recommendations were made: a) Incorporation of EA requirements into the NAWAPO; b) Mandatory EA of large-scale water supply sub-projects, and sub-projects in sensitive areas; c) Development of EA guidelines specifically for rural water supply sub-projects; d) Capacity building for EA within the MoW and its RWSD, accompanied by training at national, regional and district levels; e) Village Governments and water committees should be strengthened through training on all aspects of water supply and sanitation development and management; f) Building the capacity of regional laboratories for water quality monitoring; and, g) Establishment of Environmental Liaison Units at the district level and in the RWSD to ensure effective implementation of environmental management plans at the local level. A checklist for the environmental assessment of community water supply sub-projects and monitoring indicators was developed. This environment and social management checklist has been prepared as a guide for the initial screening of the proposed Water Sector Development Program at the village level sites, and for negative environmental and social impacts which would require attention prior to project implementation. The framework outlines a number of strategies in undertaking the exercise. These include: a) an outline of a comprehensive checklist for the potential environmental and social impacts and their sources; b) systematic procedures for participatory screening processes for project sites and project activities for environmental and social considerations; c) a step-by-step procedure for forecasting the main potential environmental and social impacts of the planned project activities; d) a typical environmental management plan for addressing negative externalities in the course of project

implementation and operations within environs; e) a step-by-step monitoring and evaluation system for implementation of mitigation measures; and f) an outline of recommended capacity-building measures for environmental planning and monitoring of the project activities. Also Environmental Guidelines for Contractors undertaking construction work in the WSDP was developed. All of these working tools to streamline environmental and social issues in projects will insure quality and sustainability. d) Monitoring program and complementary initiatives Monitoring objectives are (i) to alert project authorities and to provide timely information about the success or otherwise of the EIA and public consultation processes as outlined in this ESMF so that changes can be made, if required, and (ii) to make a final evaluations determining whether the mitigation measures designed into projects have been successful. Key indicators will be designed used to determine the status of affected people and their environment. Project EIAs will each set three goals by which their success or otherwise can be evaluated: a) affected individuals, households, and communities are able to maintain or improve upon their pre-project standard of living; b) the pre-project environmental state of natural resources, bio-diversity and flora and fauna, been maintained or improved upon; and c) local communities remain supportive of the project. In order to assess whether these are met, projects will indicate parameters to be monitored, institute monitoring milestones and provide resources necessary to carry out the monitoring activities. e) Institutional arrangements and capacity building requirements The actual streamlining of environmental and social safeguards will be done through an EIA checklist prepared for environmental and social assessment and management at the village and local government level to be used for project appraisal, design and management. The EIA checklist will be applied to all village projects under the program starting at the screening stage. It includes appraisal phase assessment, mitigation and monitoring. Once it is completed, the form will be forwarded to the DWST (which will in the future include a District Environmental Officer - DEO), with the project request, for review and finalization. Then the project file (including the environmental form) will proceed to the District Council for processing. This includes determining projects that need to be further scrutinized by NEMC for approval, decision making and ultimately, licensing. Projects that do not need to register with NEMC (i.e. do not require an EIA) can then proceed to the Mitigation Planning stage. Village projects requiring an environmental impact assessment are to be very few. However, in case an ESIA is required an Environmental Management Plan for the area affected by the project will be prepared. Environmental and social streamlining in the program will be overseen by District Environmental Officers that are recruited and deployed. Interim officers such as the District Water Officers will be designated and trained to insure the transition. The ESMP will be implemented through the use of existing local government, regional and national structures. However, these institutions need strengthening through training to build their capacities. Successful implementation of the ESMP will require dynamic and multi-disciplinary professionals that have general knowledge in environment management and specific skills in the use of the ESMP and the screening process. PMO-RALG has a Capacity Building Program intended to provide local authorities with resources to invest in capacity building for the management of infrastructure projects under the Capital Grants Program and other investments. For the purpose of this EMSP, capacity building should be targeted at the planners, implementers and reviewers of the projects under the WSDP. The first steps should focus on assessing the capacity building needs.

At ministry level the relevant staff of the Ministry will need training to enhance their skills and their awareness levels, to enable them to appreciate the environmental and social problems associated with infrastructure development. It has become imperative that the Regional Secretariats and Water Basin Offices ensure that water resources are used in an environmentally sustainable manner. Hence, the Regional Secretariats and Water Basin Offices have to become more environmentally conscious and capable. For the WSDP, their officers need to be trained in the implementation of the ESMP, and particularly in the screening process. The higher local governments have the basic knowledge and capacity to undergo training in the environmental screening and EIA process so that they are able to support the lower local governments. Training in this context will be to (i) enhance their ability to mainstream environmental and social aspects in project planning, design and implementation and (ii) enable them to undertake environmental screening and oversee/support the consultative and monitoring processes described above. At this level, those involved in the planning and implementation of projects will be trained in how to screen projects, how to implement and monitor their EMP’s, and how to manage the EIA process as outlined in this ESMF. Subsequently, they will then train members of Environmental Management Committees, members of WUEs and WATSANs, and community representatives. This level of training will be provided by the trained Environmental Management Officers. f) Public consultations and disclosure requirements Public consultations are critical in preparing an effective and sustainable project. This requirement supports the participatory planning process that exists within water sector policy (National Water Policy of 2002, NAWAPO) in Tanzania during the identification and planning of water and sanitation projects as part of the development and implementation of local development plans for the area. The WSDP being a participatory program, beneficiaries are expected to be directly involved in the whole project cycle right from the design, to implementation and monitoring. The National Environment Act (2005) provides for the right of the public to participate during the decisions concerning the design of environmental policies, strategies, plans and programmes and to participate in the preparation of laws and regulations relating to the environment (NEMC 178-(2)). It calls for early and accessible notification of intentions, access to related information and opportunities for the public to make oral and written presentations on the matter and decisions (178-(4)). g) Estimated costs As The Environmental activities are not known yet, the amount of funds to be dedicated can only be estimated. Based on experience, an informed estimate of streamlining environmental and social issues (assessments, and implements the mitigation and monitoring measures) in sub-projects can be set at about 3% of the investment cost. At the sub-project design level the cost of environmental and social streamlining will be accurately estimated. The budget estimate will include: 1) the cost of environmental and social assessment, 2) the cost of processing of the assessment report for large sub-projects, 3) the cost of implementing the mitigation measures and 4) the cost of monitoring. h) Implementation schedule and reporting

Environmental and social review and assessment of village project will be carried out and environmental and social safeguards streamlined in individual village request as they are prepared and designed. As well implementation of mitigation measures will follow the same path. Local governments will report on the implementation of the mitigation measures as well a on the evolution of the environment.

ANNEX 15

TANZANIA – RURAL WATER SUPPLY AND SANITATION PROGRAM

Chronology of Program Activities Date Activity Agencies Met Mission Team Jun. 2005 Identification

MOF, MOW, GTZ, KfW, JICA, Netherlands, Water-Aid, WB

Water Engineer Pub. Util. Economist

Nov. 2005 Preparation Joint ADB-WB

MOF, MOW,PMO-RALG, MOHSW, EU, DPG-Water (GTZ, KfW, JICA, UNICEF, Water-Aid)

Water Engineer Pub. Util. Economist Fin. Analyst Socio-Economist Consultant Wat.Eng.

Feb. 2006 IWG Preparation Report

Apr. 2006 IDWG Preparation Report

Apr. 2006 Appraisal Joint ADB-WB

MOF, MOW, PMO-RALG, MOHSW, DPG-Water (GTZ, KfW, JICA, UNICEF, DFID, MCC, Netherlands, USAID, Water-Aid)

Water Engineer Pub. Util. Economist Fin. Analyst Environmentalist

01 Jun 2006 IWG Appraisal Report

15 Jun 2006 IDWG Appraisal Report

13 Jul 2006 SMC Appraisal Report

27 Jul 2006 Loan Negotiations

13 Sep 2006 Board Presentation