World Bank Document · Data for Dar es Salaam is as of 2/82 4threas data for Nxbya and Hmza is as of 8/81. Between 8/81 and 2/82, the nuber of units occupIed In Dar es Salaam increased

Document of

The World Bank

FOR OMCIAL USE ONLY

Report No. 4941

COMPLETION REPORT

TANZANIA - FIRST NATIONAL SITES AND SERVICES PROJECT

(CREDIT 495-TA)

February 15, 1984

Eastern Africa Regional Office

This document has a restricted distribution nd may be used by recipients only in the performace oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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FOR OMCIAL USE ONLY

TANZANIA: FIRST SITE AND SERVICES PROJECT

PROJECT COMPLETION REPORT

ABBREVIATIONS AND ACRONYMS

Ardhi Ministry of Lands, Housing and UrbanDevelopment

BRU Building Research Unit

CIDA Canadian International DevelopmentAgency

LRSC Land Rent and Service Charge

PMO Prime Minister's Office

ELDO Regional Land Development Office

RDD Regional Development Directors

TANESCO Tanzania Electric Supply Company

THEB Tanzania Housing Bank

UNDP United Nations Development Program

This document has a resaicted distibution and may be used by repients only in the performance oftheir offcial duties. Its cDntents may not otherwise be discosed without World Bank authorization.



TABLE OF CONTENTSPage No.

PREFACE ............................... (i)

BASIC DATA SHEET ....................... ....................... (ii)

HIGHLIGHTS (S-mary) ..................................... .................. (viii)

I. INTRODUCTION ................................ 1

A. Sector Background ..... ................. IB. The Project ........................................... 2

II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL ......... 4

A. Identification ....... 4B. Preparation ...... 4C. Appraisal ..... 4D. Conclusions ...... 5

III. IMPLEMENTATION .................... 6

A. Effectiveness and Start-Up ........ 6B. Progress of Physical Works ...... 6C. Progress of Non-Physical Program ..... ... 11D. Project Costs ........ 13E. Procurement ....... 15F-. Disbursements -o..................oooo. 15G. Unit Costs .... ................. 18H. Conclusions .. ..... 18

IV. OPERATING PERFORMANCE ....... 19

A. Role and Performance of Consultants .... ... 19B. Performance of Contractors ...................... * ... 19C. Performance of Standards Used ........ 20D. Compliance-with Covenants .. . .... 22E. Financial Performance and Project Replicability ....... 23F. Conclusions ... o.................................... o 25

V. PROJECT BENEFITS ..................... o ................. 26

A. Beneficiaries ........... .............. -. .. ..... .... 26B. Economic Reevaluation ................... oo.o .......... 27C. Conclusions .......................................... 28

Page No.

VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT ................... 29

A. The Ministry of Lands, Rousing and Urban Development..... 29B. The Tanzanian Housing Bank .............................. 30C. Coordination ........................................... 31D. Conclusions ............................................... 32

VII. ROLE AND PERFORMANCE OF TEE BANK ........................... 34

VIII. LESSONS LEARNED .................... ......................... 35

A. Civil Works ................................................ 35B. Cost Recovery ............................................ 35C. The Community Development Input .... ..oo..eo ....o35D. The Institutional Framework ..... ........................ 36E. Institution Building ........... ......................... 36F. The Macro-Economic Framework . .......................... 36

Annex: Borrower Comments ........................................ 37

Photographs ..................................................... 42

MAPS IBRD 12572 (PCR)

IBRD 12573 (PCR)

This report was prepared by Ms. Faye Johnson (EAPWU), with assistance fromMs. Donna Haldane.

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TANZANIA: FIRST NATIONAL SITES AND SERVICES PROJECT

(Credit 495-TA)

PREFACE

Credit 495-TA for the First National Sites and Services Projectwas signed in July, 1974. The Credit, for US$8.5 million, was fullydisbursed in October, 1981. During implementation, the project's contentwas revised and the closing date was postponed.

This Project Completion Report (PCR) was prepared by the Waterand Urban Division of the Eastern Africa Projects Department. It is basedon a review of files and documents, interviews with Bank and Borrower staffand a visit to Tanzania in September, 1981.

In accordance with the revised procedures for the projectperformance audit reporting, this Completion Report was read by theOperations Evaluation Department (OED) but the project was not audited byOED staff. The draft Completion Report was sent to the Borrower and itsagencies. Their comments have been reflected in the PCR and are reproducedas an annex.

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TANZANIA: First National Sites and Services Project

BASIC DATA SHEET

KEY PROJECT DATAActual as

Actual or % ofAppraisal Estimated AppraisalEstimate Actual Estimate

Project Costs (US$million) 14.5 1/ 15.2 106 2/

Credit Amount (US$ million) 8.5 8.5 100

Date Board Approval n.a. 7/2/74 n.a.

Date Effectiveness n.a. 10/03/74 n.a.

Date Physical Components Completed 6/30/77 9/30/80 3 yearsdelayed

Proportion then completed (%) - 98 98

Closing Date 12/31/78 12/31/80 2 yearsdelayed

Institutional Performance Satisfac- Less thantory satisfac-

tory.

Economic Rate of Return (%) 10.4% to 16% to 33% n.a.14.5%

Beneficiaries 194,000 231,180 119

1/ The total project cost in the Staff Appraisal Report (SAR) differedfrom the amount implied by the Credit amount and disbursementpercentages. The total project cost has therefore been reviseddownwards from 16.7 US$ million equivalent to 14.5 US$millionequivalent. The Tanzanian Housing Bank's (THB) home loan disbursementswere erroneously stated as being TSh.45,000,000 in the SAR. Accordingto thc Development Credit Agreement, US$ equivalent of 2,000,000 wasprovided for THB loans. The Association was to finance 50% of theamount disbursed, hence the TSh. amount that was to have been disbursedby the THB should have been TSh.28,560,000 (US$4,000,000 equivalent).

2, The project scope and content were changed during implementation.Although the total amount actually spent on the project increased byonly 6%, the cost per serviced s-te increased 15% (from TSh.3,020 toTSh.3,480). The number of units was therefore trimmed back from 10,600planned to 8,500 actual. Upgrading costs per unit, on the other hand,came in 15% below that expected (from TSh.1,810 per house to onlyTSH.1,550) due to there being more houses than expected in the upgradedareas. Fully 14,600 houses benefitted, compared to 8,800 estimated atappraisal.

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CUHMLATIVE DISBURSEKMTS

FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82

Appraisal Estimate (US$.illion) 1.6 4.1 7.3 8.5

Actual (US$million) .9 2.2 4.2 5.2 5.9 6.4 8.2 8.5

Actual as Z of estimate 57 54 57 61 69 76 96 100

Date of final disbursement 10/23/81

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BASIC DATA SHEET

OTHER PROJECT DATA

Borrower: Government of TanzaniaExecuting Agency: Ministry of Lands, Housing and

Urban DevelopmentFiscal Year: July 1 to June 30Name of Currency (abbreviation): Tanzanian Shillings (TSh)Currency Exchange Rate:

Appraisal Year Average: US$1 - 7.13Intervening Years Average: US$1 - 8.03Completion Year Average: US$1 - 8.29

Follow-on Project:

Name: Tanzania: The Second NationalSites and Services Project

Credit Number: 732TACredit Amount (US$million): 12.OmDate Board Approval: 12/3/77

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PiwEa m Ear

TANZANA First National Sites ad Service Project

MN IIDICAMRS

&tual as ZAppraisal of AppaisalEstimate Actual Estiate

I. EESIDENI TAL UNITS SEWICED

Newly-serviced sites (sites & services):ar es Sualam 7,450 6,338 1/ 85

nza 2,300 1528Z/ 66Mteya 85D 618 / 73

Subtotal 10,600 8,484 80

Upgraded Areas4Dar eS Salasm 7,600 12,225 4/ 161Thya 1,200 2:409 V/ 20D

Subtotal 8,800 14,634 166

Total no. of rsidential units serviced: 19,400 23,118 119

II. NEW RES 1DI UNllS ORE DJ 10,600 4,106 / 39

IaI. CMl4lY FACTT:mm CONl DC

Cmmity 9dtion CtersDar es Salam 9 7 6u 78MMa 1 1 100Mteya 1 1 100

Urban Health CetersDaresSalas 1 1 100

DispefsariesDar es SaLsm 5 4 6/ 80Mherza 1 1 100Ibeya 1 1 100

Large MarketsDar esSalami 2 2 100hernza 1 - 6/ 0

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Actual as ZAppraisal of AppisalEstimte Actual Estimte

MLoor MraketsDar esSalaa 6 5 6/ 83

amza I 1 100Mbeya 1 1 100

Total ruber of comai1ty facilities 30 25 83

IV. TAINI OF ECHNICAL PRSONNEL NS

V. WaJSE IOANS

Small Construction Loans 7,400 1,313 18Improvement Ynm 4,400 1,50D 34TnroL tLa,80 7/ 2,813 8/ 24

_/ Total as of 3/83. Eigrty-thwee plots in Sina and 20 plots in Kijitnyama were xtdeveloped due to the alignnt of a wter mn tely 150 plots in Sinza and 200plots In Kijitoyama were oDt developed because of unforeseen tecimical proble. Thedevelopment of 881 plots in M[koche was deferred in order to avoid cost overruns.

2/ The development of 498 plots ms deferred to accomondate cost overrus.S/ Seven plots found to be unsuitable for developmeat; secticx of 243 plots squatted upon and4 43 intermingled with squatters.4/ Population increased as a result of densification during the iuplemtation period.31 To habitable stage. Data for Dar es Salaam is as of 2/82 4threas data for Nxbya and Hmza

is as of 8/81. Between 8/81 and 2/82, the nuber of units occupIed In Dar es Salaamincreased by 38% hence figure for Nbeya and MEmnza (345) is Likely to be below the actual.The data Is being upiated by the Towa Cauncils.

6/ IS conmwnty education centers, one dispensary, one large maiket and one minor micketdeleted from comnmity facllities component to avoid coet overnmms.

7/ IHB's house loan disbursements were erroneously stated as being TSh.45,00O,000 ILn theStaff Appraisal Report. Accordlg to the Dyeopmmat Credit Agremaent, US$ equivaeLmt2,000,000 uss provided for THB house loans. The Aswciation was to finance 50Z of theam=unt disbursed, hence the TSh. amonit that ms to have bemi disbursed by the THB shouldhave been TSh.28,560,000 (US$4,000,000 equidvalet). The fwids provided for the THB in theproject therefore 'as only enaough to cover about 60% of the mwbier of loms indicated aboveas the appraisal estimate.

8, As of 12/31/81. T coatime to be granted frm funds from the second project to plotbeneficiaries uWder the first.



Mission DataDate Number Person days Specializations Performance Type of

Mission Mb/Yr/ Persons in field Representedl/ Rating2/ Trend3 / Problem 4 /Reconnaissance 2/71 3 6 agj - - -Preparation 11/72 2 4 bf - - -Preparation 2/73 1 18 bAppraisal 8/73 4 22 ebfjSubtotal 50

SPN 1 6/74 1 2 b t2 10/74 2 14 bc 2 1 fm3 2/75 2 14 bd 2 1 fm4 7/75 2 25 bd 1 1 m5* 10/75 1 19 bd 1 1 mf6* 3/76 1 17 d 1 1 mf7* 7/76 3 57 aad 2 2 pmf8* 9/76 2 36 da 2 1 pef9* 6177 1 5 d 2 1 uf10* 9/77 2 10 da 2 1 PM11* 1/78 2 12 ad 2 1 pf12* 5/78 3 14 di 2 2 pm13* 10/78 3 21 acd 2 2 PM14* 3/79 4 52 afcd 2 3 pfm15* 7/79 4 36 fcdj 2 3 pm16* 10/79 2 22 af 2 3 mpf17* 2/80 2 28 ff 2 2 pfm18* 6/80 3 42 fej 3 1 mf19* 11/80 1 16 fi 3 2 mf20* 3/81 2 54 fi 2 1 f21* 9/81 2 36 fe 2 1 mtf

Subtotal 532 :7 -77 person days in field p.a.TOTAL 582t/ a - Economics; b - Engineering; c - Hanagement; d - Architecture/planning; e - City and regional planning; f -

Urban affairs; g - Training; h - Legal; i - Finance; j - Departmental management.2/ 1 - Problem free or minor problems; 2 - Moderate problems; 3 - Major problems.

1/ -' Improving; 2 - Stationary; 3 - Deteriorating.t/ f - Financial; m = Managerial; t - Technical; P - Political.

In addition to the supervision Inputs outlined above, the Bank sent out Housing, Land Financing, Economic andManAgement consultants to assist with the resolution of problems, to design and put various systems intooperation and to conduct training seminars.

* Joint with identification, preparation and supervision of second project.

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HIGHLIGHTS

The first National Sites and Services Project was one of thefirst such projects to be funded by the Association and represented thefirst demonstration phase of Tanzania's program to deliver housing andservices to the country's low-income majority. The project included thedevelopment of newly serviced plots in three urban centers; improvement tobasic infrastructure and additional services to existing squatter settle-ments in two of the three urban centers; community facilities; consultants'services for the design and detailed engineering of basic infrastructure,project supervision and the preparation of a follow-up project; expansionof physical facilities for a town planning training program; monitoring andevaluation; a pilot nutrition project; training for technical staff of theMinistry of Lands, Housing and Urban Development (Ardhi); financing forhouse construction and improvement loans; and equipment and vehicles.

The implementation period proved to be a very difficult one asthe economy deteriorated following the increase in international prices in1974, the collapse of the East African Community in early 1977 and the warwith Uganda in 1978-79. There were widespread shortages; delays in theimport of equipment and spare parts and rapid inflation. The environmentwas a very difficult one to operate within. The Government also changedthe institutional structure. Urban councils were recreated in 1978, afterhaving being abolished in 1972. The difficulties in the institutional andeconomic environment and the newness of the approach resulted in a two-yeardelay in completion. The project as completed was alro somewhat changed inscope and content.

It is perhaps noteworthy and not atypical of first generationurban projects that the civil works or physical component went more smooth-ly than the 'software' elements. Greater difficulties were encountered indeveloping an adequate community development support network, initiatingcost recovery, and in sustaining an adequate level of infrastructuremaintenance.

Cost recovery was perhaps the primary issue of project implemen-tation. The mid-stream shift after appriisal from one vehicle (direct plotcharges) to another (property taxes) inevitably involved a second round ofpolitical approvals. Once secured, it took much longer than expected tocomplete the subsequent mechanics of house registration, tax rollpreparation, and the hiring and training of collections staff. Thus athree year lag occurred between completion of services in upgraded areasand start-up of cost recovery.

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A principal objective of the project was the establishment of acadre of professionals capable of implementing a program based on modeststandards and a self-help approach to shelter and services. The projectachieved this. It did not, however, develop a functional shelter deliverysystem. Upgrading was successfuly done by one agency-Ardhi. Servicedsites, however, require the cooperative (-systemic") efforts of severalinstitutioas for completion and fragmented responsibilities made itdifficult to pinpoint and resolve bottlenecks.

Low civil service salaries and high staff turnover were alsoendemic problems in Tanzania. The resulting morale problems were exacer-bated by a rising general level of corruption which parallelled thecountry's economic deterioration. All this made the task of projectmanagement exceptionally difficult-even had the institutional structurebeen more workable from the start.

The Tanzania Housing Bank (THB) proved a particularly disap-pointing intermediary. The THEB suffered generaliy, like many Tanzanian in-stitutions, from too-rapid expansion and weak financial management. Staffturnover was unusually high, loan procedures remained cumbersome, outreachwas weak, reporting unsatisfactory, and financial performance poor.Interest rates were quite negative in real terms and discouraged lending tothe poor while contributing to the agency's decapitalization. THEB did,however, successfully initiate lending to lowest income groups. Fully 5OZof all loans made by 1978 were to families below the established TSh. 750monthly income ceiling. Upgrading of squatter dwellings was initiated forthe first time in the Housing Bank's history-no small accomplishment initself. Such policy breakthroughs are not easily achieved.

Treasury's performance in collecting charges for serviced plotsand particularly upgrading areas has been a bright spot of institutionalcompetency. The task has been successfully managed from its outset in 1980and the agexcy seems somehow to have overcome the pervasive headachescreated by overall country conditions. Collection administration startupcosts were about 10% of total collections .

In sum, an important start has been made on institutionaldevelopment. Greater accountability is needed in the shelter delivery sideand a longer time frame than one project is necessary to achievesignificant progress. Implementation capacity remains thinly stretched andlending operations must be carefully matched to this capacity. Greaterattention is needed in future project preparation and appraisal to theinstitutional aspect.

Over 200,000 people benefited from the project-a substantialincrease over that estimated at appraisal-85Z of whom lived in upgradedareas. Based on THB's figures, perhaps half the serviced site recipientswere within the targetted population of TShs.750 and below. Thus, whilethere was some poaching of plots by higher income groups, over 70X of proj-ect beneficiaries appear to be within the targetted population. The proj-ect did therefore reach the poor.

Health and educational levels in squatter areas certainlyimproved. Though this, of course, is hard to quantify. Rates of returnoffer more quantifiable benefits, and actually exceeded expectations atappraisal. Serviced sites show a return of between 16-20X--versus anestimated 10.4%, and upgrading fully 33Z-over double the expected 14.5%.These figures largely reflect the increasing scarcity value of shelter inTanzania.

It is our conclusion that the project achieved its basic demon-stration impact and successfully helped Tanzania translate policy intoaction. Upgrading was more successful than serviced plots. Weaknesses inthe institutional delivery system is the key problem in plot development,specifically in plot allocation, house loans, and community developmentfollowup. Cost recovery, though hard-won, has proven workable. It isperhaps surprising that achievement of the project's basic objectives didnot founder on the institutional weaknesses and increasing adversity ofcountry conditions. The changes made during implementation, however, didnot compromise the principal goals of demonstrating a workable approach toproviding houses and services to the urban poor and creating some capacityto undertake similar projects in the future.

The first project has made an important beginning. Perhaps oneof its major achievements has been as a diagnostic tool giving us apractical working knowledge of the Tanzanian urban environment, and helpingpinpoint some of the underlying problems needing attention in subsequentphases of urban lending.

Aspects of the project implementation experience that may be ofspecial interest are:

- the difficulties and time needed to have changes toregulations and established procedures effected (PCR,paras. 2.09, 3.10, 3.12, 3.13, 4.17, 4.19, 4.20, 4.24-4.27);

- the importance of a programmatic approach extending beyondthe project period (PCR, para. 3.19, 4.02, 4.19, 4.20, 6.16,8.03);

- the need for clear assignment of accountability (PCR, paras.6.12, 8.06).



I. INTRODUCTION

A. Sector Background

1.01 At the time of project identification in 1972 although theabsolute number of urban dwellers in Tanzania was relatively small, about900,000 or approximately 6.5Z of a total population of 14.0 million, therate of urbanization was steadily climbing. Between 1957 and 1967, the tenprincipal regional centers grew at an average annual rate of 6.5%, whichwas nearly two and one-half times the national rate. It was foreseen that,if the existing trends continued, Tanzania's urban population would doublein 11 years and that Dar es Salaam would reach 1.0 million by 1983. Aby-product of these high rates of urbanization was a severe nationwidehousing shortage, particularly among the nearly 80% of the urban householdsin Dar es Salaam then earning less than TSh.500 per month.

1.02 In 1969, over 40% of the housing containing an estimated 65Z ofDar es Salaam's population was located in squatter areas. Municipalservices were practically non existent due to insufficient funds andequipment and a shortage of trained manpower. Over 80% of the householdswere tenants, of which approximately 90% lived in single rooms. Only about25% of Dar es Salaam's households had piped water to their plots, another38% had access to water from kiosks and the rest (37%) had no access topiped water. Nearly 73% of the houses were without electricity. Thesituation in the other urban centers, although not as well quantified, wassimilar.

1.03 In order to cope with the abovementioned problems the Governmentof Tanzania had adopted a decentralization policy to divert growth awayfrom Dar es Salaam into the other urban centers and rural areas.The decentralization policy involved (a) the abolition of urban councils,(b) the relocation of the government machinery from Dar es Salaam toregional administrative centers-over 40% of the establishment had recentlybeen transferred; (c) the development of Ujamaa villages;l! and (d) thepromotion of alternative urban growth centers--Arusha, Moshi, Tanga,Dodoma, Tabora, Mwanza, Mtwara, Nbeya and Morogoro had been so designated.

1.04 As of 1972, it also adopted the sites and services and squatterupgrading approach to housing. A spec-'al parastatal of the Treasury, theTanzania Housing Bank (THB) had been established in the same year tosupport the Government's new housing initiatives. The THB was to mobilizesavings and external resources for housing development and to promotehousing development by making technical and financial assistance availablefor sites and services and squatter upgrading projects, housingcooperatives, Ujamaa villages, and other owner-occupied housing schemesunder the proposed program.

I/ Societal units consisting of groups of families who farm the landcollectively and share in the proceeds according to the amount of workcontributed.

1.05 The second five-year plan (1970-1975) called for 5,000 servicedplots to be provided, but in 1972 only 600 plots had been provided. Theinitial idea of low standards had become modified during implementation andthe focus had shifted from the original idea of services only to thedevelopment of completed housing units. Following a mid-plan review, theofficials in Tanzania felt that a good demonstration project was needed toestablish the approach and standards for the program. Tanzania lacked thefunds for their program and therefore approached IDA for assistance inOctober 1972.

B. The Project

1.06 The project was to be implemented over a three-year period, andwas to be the first phase in the Government's nationwide low-cost housingprogram. As appraised, it consisted of:

(a) Provision of about 10,600 serviced sites for low income housinglocated as follows: (i) nearly 7,450 plots in three sites inDar es Salaam, (ii) about 2,300 plots in Mwanza, and (iii) about850 plots in Mbeya. Criteria used for the selection of projectsites included the availability of a reasonably large parcel ofland in conformity with the master plan; a good location inrelation to job opportunities, transportation and off-siteinfrastructure; and, good natural drainage. Due to the magnitudeof the problem there, about 70% of the plots were to be in Dar esSalaam. The typical plot size was to be 288m2, which althoughlarge compared to previous Bank/IDA projects, was appropriate inthe Tanzania context where multi-family occupancy and gardeningare standard.

(b) Upgrading of existing squatter settlements accommodating nearly9,000 families in Dar es Salaam and Mbeya. Simple layouts wereemphasized for economic construction and servicing and minimizingcompensation payments. The size of the project and the number ofregional centers included were determined by the estimatedcapacity of Ardhi, THB and the regional administrative offices;

(c) Provision of eleven community education centers, one healthcenter, and eleven markets;

(d) Financing for low income housing loans through the THB;

(e) Consultant services for the design and detailed engineering ofbasic infrastructure and community facilities, preparation of afollow-up project and overall project supervision;

(f) A training program for technical staff of the Ministry of Lands,Housing and Urban Development (Ardhi), to be carried out byconsultants;

(g) Expansion of the physical facilities of Ardhi Institute for itstown planning program;

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(h) A pilot nutrition project to improve the nutritional awareness ofhouseholds in sites and services areas; and

(i) Equipment and vehicles.

1.07 Total costs were estimated to be approximately TSh.119.6m(USS16.7m equivalent). The IDA Credit of US$8.5 million was to finance theforeign exchange costs and 28% of local costs. The principal objectives ofthe project were to (i) introduce and demonstrate an approach to housingand servicing the urban poor; (ii) build up the institutional capacity forimplementing similar projects throughout the country; (iii) open up accessto credit for low income families to build low cost housing; and, (iv)increase the housing stock and service infrastructure for the low incomepopulation in project cities.

1.08 The project was set up for an implementation period of threeyears. The special unit, initially known as the Sites and ServicesDirectorate, which had been established in Ardhi for preparation of theproject, was also to be responsible for its implementation. It was headedby expatriate advisors who were funded by United Nations DevelopmentProgram (UNDP) and Canadian International Development Agency (CIDA). Otherstaff members were to be transferred from the Office of the Commissionerfor Housing and consultants were to be used to fill the remaining gaps,which were then mainly in the areas of engineering and design.

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II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL

A. Identification

2.01 The project idea arose from the visit of an economic mission toTanzania in September 1971. The mission's report highlighted Tanzania'sincreasing requirements for infrastructure and housing. This was followedby a reconnaissance mission in February 1972 which found Governmentpolicies regarding low-cost urban housing to be suitable forBaak-financing. The Government's official request for assistance which,was sent to the Bank in October 1972, was therefore favorably consideredand the formal process of project definition got underway.

B. Preparation

2.02 Preparation was carried out by the newly established Sites andServices Directorate in Ardhi with the help of an engineering consultingfirm. In the period between the first mission in February 1972 andappraisal in August 1973 there were only two preparation missions.

2.03 Before the visit of the appraisal mission the consultantsprepared preliminary engineering designs and cost estimates for thephysical components. Preparation of the rest of the project, includingTEB's lending program, institutional and financial aspects, as well astechnical assistance was far less advanced. These components were beinghandled by two expatriates funded by UNDP and CIDA, in the Sites andServices Directorate of Ardhi. Most of the work on these components wasdone during the appraisal mission with the assistance of the Bank staff.

C. Appraisal

2.04 Prior to the Appraisal mission's departure, concern centered onfour issues: (a) the political acceptability of the site and service andupgrading concepts, (b) the unsuitability of the existing building code andneed to revise it, (c) the buildup of Ardhi's staff to manage the project,and (d) the ground rent structure for recovering project costs. Theseissues were discussed in the Bank prior to the mission's departure anddepartmental positions agreed. With the benefit of hindsight these stillappear to have been the right issues. In addition we should probably havedirected greater energies to reviewing the institutional framework formanaging the project and to the probable availability of buildingmaterials. It should be noted that since this was one of the Bank's firsturban projects, considerable effort was devoted to working out the basicphysical details and design-matters which are now fairly standard,particularly in second and third generation projects.

2.05 Appraisal took place from August 9 to September 10, 1973. Themission consisted of three Bank staff and one consultant who collectivelyspent 16 staff weeks on the task. The appraisal concentrated on workingout a suitable physical composition of the project and obtaining governmentagreement on the preceding four issues. The original proposal which calledfor the development of 19,000 new plots and infrastructural improvements to

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5,000 existing squatter plots over a four year period was also scaled downto what was thought to be a more manageable size as the Bank felt that theproposed target was too high from the point of view of demand and implemen-tation capacity.

2.06 Three of the four pre-appraisal issues subsequently became thesubject of covenants in the legal documents. These concerned house stan-dards, project unit staffing and cost recovery. The fourth (politicalacceptability of the serviced site approach) was resolved by the Govern-ment's willingness to proceed with processing of the project.

2.07 Negotiations were completed in April 1974 without any majorchanges to the project.

D. Conclusions

2.08 Since there was no prior experience with this type of project inTanzania anti it was also a new area of lending for the Bank, preparationwas based on the state of the art at the time and on the best estimate ofGovernment implementation capabilities. The preparation process thereforedid not adequately address all aspects of the project. The principalshortcomings were (i) the insufficient attention paid to the preparation ofinstitutional and management aspects of the project; and (ii) the failureto recognize the need for technical and advisory assistance to plot benefi-ciaries. The serious deterioration in Tanzania's overall economy,following the global recession in 1974 was also not anticipated but wouldhave been hard to predict. This led to widespread shortages, priceescalations and increased uncertainty which made the environment a verydifficult one to work in. The measures taken to address these constraintswere therefore less adequate than originally anticipated. The shortage ofstaff in Ardhi also proved to be more difficult to redress than anticipatedat appraisal and this compounded the problems outlined above.

2.09 Although the Government agreed to the initially modest physicalstandards, changes in staff and the institutional framework resulted indifficulties in maintaining these standards. Further steps might have beentaken to amend the building regulations during preparation, or theamendments might have been made part and parcel of the implementationprocess. This, however, would have been quite time-consuming and wouldhave delayed appraisal by at least a year.

2.10 In general, the preparation process might have been a more deli-berative one, given the newness of the concepts and weaknesses in theinstitutional structure.

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III. IMPLEMENTATION

A. Effectiveness and Start-Up

3.01 The consultants for preliminary design for the infrastructuralelement of the project were appointed from February 1973 and prequalifica-tion of contractors started in May. As part of the preparatory work a pro-curement workshop, sponsored by CIDA, but with participation by the Bank,was held in August and September 1973. By the time of loan approval there-fore the unit established in Ardhi was ready to engage contractors. Therewere no special conditions set for effectiveness, which took place inOctober 1974. Nevertheless, a two to three month delay occurred because ofdifficulties in procurement, as is discussed in futher detail below.(Section IIIE).

B. Progress of Physical Works

3.02 The physical components of the project can be divided into threemain categories: infrastructure works; commiunity facilities; and, houseimprovement and construction. Progress with each category is outlinedbelow:

3.03 Infrastructure. Infrastructure contracts covering roadworks,drainage and the installation of the water distribution network had to bescaled down to avoid cost overruns and because of unforeseen technical pro-blems. Changes made to avoid cost overruns were: (i) the deferral of thedevelopment of 881 plots in Mikocheni, Dar es Salaam and the reduction ofNyakato in Mwanza by 498 plots; and, (ii) the lowering of the standards ofsome project roads. The scale of sites and services development was alsoreduced by 350 plots, all of which were in Dar es Salaam,because of adversesoil conditions; 103 other plots could not be developed due to the align-ment of a water main in Dar es Salaam; and, 286 plots in Mbeya weresquatted upon before they could be developed. Altogether, 20% fewer plotsthan planned were actually serviced. These changes resulted in 3 to 6months delay in contract completions as the quantities in some contractshad to be reduced, and some others had to be retendered.

3.04 Work in upgraded areas proved to be more difficult than anticipa-ted and this resulted in approximately six months delay (Chart 1).

3.05 The electrification contract was to have been implemented byTanzania Electric Supply Company Limited (TANESCO), a parastatal body.Work was delayed initially by insufficient progress with other infrastruc-ture work which had to be done first; and later, by closure of the borderwith Kenya, in 1977, which increased the difficulty of procuring poles.Finally, TANESCO diverted light fixtures ordered for this project whenthere was felt to be a greater need elsewhere since occupancy levels in thesites and services areas was still low. When Ardhi finally insisted thatTANESCO reorder and install the fixtures, a dispute over responsibility for

TANZANIAFIRST NATIONAL SITES AND SERVICES PROJECT

Implementation of Infrastructure and Community Facilities

1974 1975 1976 1977 1978 1979 1980 1981SITE -.- - - - --- - - - -SITE ~~~~1 |2 |3 |4 1 | 2 | 3 |4 11 2 3 4 1 12 |3 |4 1 |2 |3 |4 1 |2 |3 |4 1 |2 |3 |4 1 |2 |3 |4

INFRASTRUCTURE/ICOMMUNITY FACILITIES

SINZADar Es Salaam

Infrastructure , _ _, .

Community Facilities Wn =- . 0 -- . 0d e S 101 e- ss -M

KIJITONYAMADar Es Salaam

Infrastructure 1 f = - - 1

MArtinEzZ¢rEasiallE:inellrFtoalsle %lt m u : : -t ast t stt ett,

Community Facilities _ s .._. - W -t N -l -. . N

MI KOCH ENIDar Es Salaam

Infrastructureio/lpemnato

Community Facilities . Fei . _ _ Cs,om m lexu maintenanee peno-

MANZESEDar Es Salaam

Infrastructure I'U mol gm ei - - iom ila -

Community Facilities we re -d. -s a -wh -th I No W lmt MEMO aNYAKATOMwanza

Infrastructure -. auml,rnso len -als MM a

Community Facilities U..

MWANJELWAMbeys

Infrastructure g- Iol., its.as. 11Community Facilities **u l

Legend:

Appraisal estimate ... own Design Tendering Construction/implementation

Actual ... Design mu'.'.'.n Tendering No- Construction/Implementation (excludes maintenance period)

Footnotes: The different types of community facilities were designed separately within the general time limits Indicated above.World Bank-24129

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covering the cost overruns due to the delays led to a suspension of thework in December 1980. Only the lighting for the community facilitiesportion of the contract has been completed. The dispute has been referredfor arbitration.

3.06 Community Facilities. Whereas 30 community facility structureswere to have been provided under the project, only 25 were built, as thescope of the project had to be reduced to avoid cost overruns. Consider-able delays were encountered with construction of the community facilitiesdue to institutional factors; incomplete formulation of the design conceptfor the educational facilities; and, difficulties in procuring buildingmaterials. Once built, however, the facilities particularly in squatterareas have been very well utilized. The main institutional problem wasthat of split responsibilities and a consequent lack of accountability.The sectoral ministries were responsible for the eventual staffing andoperations and therefore had to approve the designs, whereas the Ministryof Works had statutory responsibility for their construction. Ardhi, ashost Ministry was responsible for coordination, but it had no real powersfor fulfilling its responsibilities. Work on the design of the communityfacilities was also neglected during the early implementation period asArdhi had been unable to hire the full staff complement needed for theproject. Initial efforts of the staff it did have were focussed on theinfrastructure works. By the time the design work got underway, economicconditions had deteriorated and there were acute shortages of essentialmaterials and a great deal of uncertainty which delayed the finalization ofthe designs as well as construction. The Community Education Centers wereto incorporate new concepts then being developed by the Ministry ofEducation and this also contributed to the delays in the finalization ofthe design.

3.07 The procurement of building materials became extremely difficultas the economy deteriorated following the world price increases in 1973/74the collapse of the East African Community in 1977 and the 1977/78 war withUganda. Building material industries operated well below their installedproduction capacity and imports were inadequate to meet the shortfall. In1977, for example, the total demand for cement in the country was estimatedto be 800,000 tons, whereas only 246,500 tons were produced locally andanother 200,000 tons were imported. The supply was therefore adequate tomeet only 56% of the demand. Similarly in 1978, supply was estimated to beonly 36% of demand.2/ The shortages were much more acute in theup-country towns as a result of the system of pan-territorial pricingwhereby differential pricing according to location and transport costs wasnot allowed. Furthermore, even when materials were available, they wereoften sold on the unofficial market at highly inflated prices. Rapidly

2/ Kulaba, S.M. Housing, Socialism and National Development in Tanzania:A Policy Framework. 1981. Center for Housing Studies, Dar es Salaam,Tanzania.

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increasing prices (Table 1) also delayed progress as costs had to be fre-quently revised.

3.08 House Improvement and Construction. At appraisal it was antici-pated that some 10,600 new homes, would have been constructed in newlydeveloped sites and that the provision of services to 8,800 units insquatter areas would stimulate home improvement by residents in theseareas. Due to mid-project changes and unanticipated growth, however, onlyabout 8,500 new sites were serviced while over 14,600 housing units wereprovided with services in upgraded areas. There was a protracted lag inconsolidation of newly serviced sites (Table 2) whereas the construction ofnew inf ill units took place at an average annual rate of over 6% in up-graded areas. As expected, the residents of the upgraded areas haveimproved and expanded their homes.

3.09 The most critical factor retarding house construction, however,appears to have been the shortage of building materials referred to above.As house construction in sites and services areas had to await completionof infrastructure work, its timing coincided with the period of increaseddifficulties. In the latter part of 1981, following the opening of a newcement factory in Tanga, the rate of construction in Dar es Salaamincreased dramatically, as the supply of cement improved. Construction inthe upcountry towns continues to take place very slowly (Table 2). Someimprovement can, however, be expected shortly, following the withdrawal ofpan-territorial pricing as of June 1982. The delay of house constructionin sites and services areas however is also attributable to the inadequateattention given to the house loan program and housing delivery system andthe failure to include advisory and technical assistance services toproject beneficiaries during preparation and appraisal. The second projectincludes a cadre of community development workers for this task.

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Table 1

CONSTRUCTION COSTS 1977 - 1982

Selected Indices March 1977 January 1982

Sand 100 282.5Cement 100 376Concrete Blocks 100 374Wood Products 100 352Hardware and windows 100 403Roofing Materials 100 221All materials 100 328

LaborSkilled 100 168.5Unskilled 100 139.9

Total Cost 100 292.4

Standard House Types/SizeSS-3 (55m2) Tsh.31,004 Tsh.70,956SS-1 (53.3W) Tsh.28,500 Tsh 70,956

Source: THB 1982

Table 2

CONSOLIDATION OF SITES AND SERVICES PLOTS(February 1982)

Status of ConsolidationSome Development

Town/ Area No Development Not yet Occupied OccupiedDar es Salaam L/

Sinza 309 (8%) 1,090 (29X) 2,366 (63%)Kijitonyama 270 (17%) 307 (19%) 1,036 (64%)Mikocheni 200 (28Z) 160 (22%) 359 (50%)Subtotal 779 (13%) 1,557 (25%) 3,761 (62%)

Mbeya 2/Mwanjelwa 242 (39Z) 242 (39%) 134 (22%)

Mwanza 2/Nyakato 1,239 (81%) 78 (5%) 211 (14%)

TOTAL PROGRAM 3/ 2,260 (27%) 1,877 (23%) 4,106 (50%)

I/ As of 2/82. Housing units are generally occupied before they arecompleted. As of 3/83, just over 2,000 units were completed (seeAnnex).

2/ As of 8/81.-/ Total = 8,243 plots.

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C. Progress of Non-Physical Program

3.10 Construction Loan Program. The project design provided for con-struction loans for 7,400 households on new plots and 4,400 households insquatter areas.3/ As of December 1981, THB had met 18Z and 34% of itstarget, in terms of number of loans approved in site and services and up-grading areas respectively. THB's inability to meet its target can beattributed to a number of factors, notably: (i) Ardhi was on its criticalpath in both site and service and upgraded areas; (ii) Urban Councils werereluctant to approve construction in materials other than sand-cement;4/(iii) THB had problems in the staffing of its sites and services loansection, its internal procedures were complex, and its requirements strin-gent; and, (iv) there were building material shortages.

3.11 In sites and services areas, THB could only approve loans afterinfrastructure works had been completed and plots allocated. Althoughinitially it also disbursed loan funds prior to title issuance, the prac-tice was discontinued in 1980 and a title deed is now required for dis-bursement. Ardhi's lands department takes up to three years to issue indi-vidual titles, hence the delay is a protracted one. Although the title re-quirement is not an unreasonable one, the cumbersome land registration andtitle issuance system in Tanzania makes it unworkable. In upgrading areasrural lending procedures, which are less stringent, are applied. THB isable to approve and disburse against loans in upgraded areas once house re-gistration has taken place as it uses its rural loan procedures in theseareas.

3.12 THB, jointly with Ardhi's Building Research Unit, produced stand-ard plans for houses constructed of soil cement and mud and poles. The useof THB financing to construct such houses, however, has not occurred todate. Possible reasons for this lack of popularity include the reluctanceof the recreated Urban Councils to approve of such construction 5/ and,possibly, THB's own qualified acceptance of these alternatives.

3/ Funds were provided for only about 60% of these units in the project.THB's house loans were erroneously stated as being TSh.45,000,000 inthe Staff Appraisal Report. According to the Development CreditAgreement US$ equivalent 2,000,000 was provided for THB loans. TheAssociation was to finance 50% of the amount disbursed, hence the TShamount that was to have been disbursed by the THB should have beenTSh.28,560,000 (US$4,000,000 equivalent). THB spent all of the fundsprovided for it under the project and fully utilized its share of thecredit.

4/ 5/ In its comment on the draft PCR (Annex) the Dar es Salaam CityCouncil (DCC) states that 'Urban Councils were unable to approveconstruction in material other than sand-cement because the letterof plot offer, a legal instrument of the Government of Tanzania,stipulates that the construction should be with permanent buildingmaterials...". During negotiations, however, the Government hadagreed to waive these requirements (see Section 3.06 (ii) of theDevelopment Credit Agreement dated July 12, 1984).

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3.13 Changes in senior level staff within the sites and servicessection of the THB also reduced their ability to develop a strong program.As personnel changes occurred, the new staff had to develop their ownunderstanding of the program before they could build upon the achievementsof their successors. The post of unlt manager, for example, which is avery critical one was occupied by four different persons between 1980 and1982.

3.14 Alt'hough the financial loan program was changed to a materialloan one in 19;, the new program has not been well-established because ofthe building mat:erial shortages (Section III B) and the consequent extremedifficulty in controlling inventory. The up-country towns were moreadversely affee.ted as THB constructed only one go down, which was locatedin Dar es Salaam. Therefore, when materials were available THB was unableto take more than they could dispose of immediately in the up-countrytowns.

3.15 On average, between 1976 and 1981, THB approved approximately 260loans per year in sites and services areas and 300 per year In upgradingareas. There has not, however, been a pattern of steady growth. Thenumber of loans approved increased from 170 in 1976 to 506 in 1977 and 529in 1978 but fell to 174 in 1979 and rose to only 237 In 1980. In order todevelop a strong program THB would have to come up with a workable alterna-tive to a title as collateral or improve the title issuance system. Itwould also have to continue to promote less costly alternative materials,improve its management and reconsider Its procedures and requirements.Support for these types of changes under a third project is being consi-dered. Although THB's achievements have fallen short of its targets, theimportance of its initiatlon of the granting of constructlon loans to theurban poor should not be discounted.

3.16 Pilot Nutrition Program. The pilot nutrition program was tomotivate and assist low income urban households to Improve their nutrltionthrough producing nutritious food at home. It was spearheaded by a Danishvolunteer horticulturalist. Two nutrition and garden centers and ten smalldemonstration gardens were established in Manzese and Tandale in Dar esSalaam. In order to encourage fruit tree and vegetable cultivation andpoultry keeping, extension services, nutrition education and cookingclasses were established. Essential inputs, such as seedlings, insecti-cides and to.ls were sold In the centers established. The program was verypopular and the centers continue to operate on a self-supporting basis.

3.17 Training. The training component was intended to address theshortage of technical personnel .dentified during the preparation throughthe training of 12 civil/sanitary technical assistants. The program was tohave been implemented in three phases: (i) inventory and evaluation oflocal manpower and other resources, and the preparation of a training pro-gram; (ii) implementation of the program; and (iII) evaluation of the pro-gram and institution of any required changes. The project was also to con-tribute to the general development of manpower within the sector throughthe construction of training facilities for planners at Ardhi Institute.

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3.18 The program was implemented as planned, and two sets of technicalschool graduates were trained. As provided for at appraisal, six workedwith the consulting engineers on the preparation of the second project;three others worked as engineering assistants on project implementation;and one worked with the project unit in Ardhi. Another went on to furtherstudies and the other left the sector altogether.

3.19 Whereas at appraisal it was anticipated that the embrionic train-ing unit would eventually have been transferred to Ardhi Institute, whichwas just starting to provide training in Physical Planning and Housing,this did not take place. The trainees also eventually became dissatisfiedand restless as the program did not qualify them for promotion along a de-fined career path. They are therefore unlikely to remain with the program.Hence, although the short-term benefits were achieved the long-term bene-fits are not likely to be realized. This limited success is largely attri-butable to the short time horizon used during preparation--the project pre-paration team, while focusing on the more immediate tasks failed to examinethe scheme of service in the public sector. They therefore did not getwhat appears to have been a technically sound program officially recognizedby the responsible authorities.

3.20 Ardhi Institute's training facilities were completed with onlyminor delays. The program benefited from its operation as several of thegraduates have since joined the unit or filled complementary positions atthe local level.

3.21 Monitoring and Evaluation. A system for monitoring and evalua-tion (M&E) of the project was developed by a consultant appointed for thatpurpose in 1975. Some useful work was done but the results were not fullyutilized and the component was finally dropped because of limited counter-part funding and unclear responsibilities. This was largely due to anunderlying conflict between the management and evaluation staff. Althoughthe consultant depended on the support of the project unit staff, hereported directly to the principal secretary rather than the projectmanager. This created an atmosphere of mistrust and conflict. Under thesecond project, M&E has been made a part of the management informationsystem, with the person responsible for its implementation reporting to theproject manager.

D. Project Costs

3.22 Throughout implementation, costs were carefully monitored and thescope of works and construction standards were adjusted to retain priorityitems while keeping within the budget. The value of the shilling, how-ever, fluctuated. As of October 1975, it was tied to the Standard DrawingRights (SDR) of the IMF and was therefore subject to the changing exchangerates in relation to the US dollar and other currencies. The shilling wasalso devalued by 13X in October 1975 and by 10% in February 1979. Theseadjustments and exchange rate changes resulted in the project beingcompleted with a 6% overrun in terms of the US dollar equivalent amount(Table 3).


TANZANLA: First National Sites and Services Project

TABLE 3: PROJECT COST AND FINANCING

Appraisal ActualEstimate Cost Cost IDA Financing

Total Cost" Total Costt/ Overrun/ Amount AllocatedDisbursement Total Cost US$ Equiv. Total Cost US$ Equiv. Underrun in Credit Agreement AmountCategory Component's Tsh'OOO '000 Tsh. '000 '000 (Z) US$ US$ tooo Disbursed Difference (%2

0 Land Acquisition - Compensation 4,530 634 7,490 942 +49L Roads and Storm water drainage 21,980 3,075 20,946 2,634 -14

Water Supply 11,305 1,582 14,137 1,778 +12Sewage Disposal 4,395 615 2,199 277 -55Power Distribution 7,331 1,026 3,878 488 -52Community Education Centers 8,820 1,243 7,931 998 -20Health Facilities 3,873 542 5,124 645 +19Markets 2,090 292 3,604 453 +55Ardhi Institute Building 2,501 350 2,692 339 -3Total - Category 1 62 295 8,725 60 511 7,611 -13 3,900 5,047 +29

II Equipment and Vehicles 1:070 150 5,201 654Total - Category II 1 070 150 5 201 654 +336 150 479 +329

III Consultant Services and Training 3,i90 530 10,600 1,333 +152Second Project Preparation 1,180 165 1,012 127 -23Total - Category III 4 970 69 11 612 1 461 +110

IV THB House Loans D 28W560 4,00 35!534 4 469Total - Category IV 28,560 4,000 35,534 4,469 +12 2,000 2,009 1

V Monitoring and Evaluation 715 'T100 110 14 -86Pilot Nutrition Project 1,070 150 1,070 135 -15Total - Category V 1 785 250 1,180 148 -41 50 59 +18

Contingencies -- 7 8,500 - -

PROJECT TOTAL 103,210 14,451 121,528 15,287 t 6/ Based on the rate of US$1TSh7.14 as at appraisal.

7/ The Shilling was pegged to the SDR of the IhF throughout most of the implementation period (as of 10/75) and was therefore subject to the changing exchangerates in relation to the US$ and other currencies. The Shilling was also devalued by 132 in Oct. 1975 and by 102 in Feb. 1979. The total cost figure isbased on the TSh.equiv. of the expenditures converted to the US$ equiv. on the basis of US$i1TSh7.95 which represents the average for the perlod.

3/ THB's house loan disbursements were erroneously stated as being TSh.45,000,000 in the Staff Appraisal Report. According to the Development Credit Agreement, gUS$ equivalent 2,000,000 was provided for THB loans. The Association was to finance 502 of the amount disbursed, hence the TSh. amount that was to havebeen disbursed by the THE should have beer TSh.28,560,000 (US$4,000,000 equivalent).

4/ Applied to components as per Appraisal Report foruala.

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3.23 The overrun on equipment and vehicles is due to their having beenpurchased during the latter part of the extended implementation period whenprices were significantly higher than those anticipated at appraisal. Costoverruns on consultancy services are attributable to the over assessment oflocal capabilities during preparation and the consequent need to utilizemore consultants than originally anticipated. These overruns were offsetby reductions in the costs of the civil works component which was cutthrough the reduction in the size of some sites and the downgrading of someproject roads.

E. Procurement

3.24 Civil works on each site were divided into several small con-tracts with local contractors being allowed a 7 1/2Z preferences in orderto stimulate participation. The contracts were tendered in groups toallow for the participation of large as well as small contractors. Con-tractors found it difficult to operate in the Tanzanian environment whichwas characterized by periodic material scarcities; delays in the import ofequipment and spare parts; rapid inflation; unavailability of finance and ahigh level of taxation. Those few that bid therefore internalized theserisks in their prices.

3.25 An order to assist and encourage more contractors to bid, prequa-lification requirements were reduced. The contract documents were alsomodified to allow for mobilization advances to compensate for the contrac-tors' lack of finance. However, the project unit still found it difficultto obtain realistic bids and had to modify the scope of works. Where sub-stantial changes had to be made on project sites to avoid cost overruns,rebidding was necessary; less substantial reductions in the scope of workwere negotiated with the lowest bidder on each such contract.

F. Disbursements

3.26 Chart 2 compares the actual disbursement schedule with that anti-cipated at appraisal. Delays in disbursement reflected delays in implemen-tation and in submissions of requests for reimbursement. The project, how-ever, compares favorably with other projects in the sector and with otherprojects in Tanzania as indicated in Table 4.

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Table 4

OMPlAUAVE CaAIVE DSMMERMENS

Qmulative Z Disbursed of OrIginal Amumtby Year from Dite of Board A4nyoval

Yr.1 Yr.2 Yr.3 Yr.4 Yr.5 Yr.6 Yr.7 Yr.8 Yr.9Tanzania First

Naticnal Sites &Services Project 10.6 26.9 49.4 61.2 69.4 75.3 96.5 100 -

Urban ProjectsBank-Wide 1/ 1.7 9.7 24.2 42.2 60.6 75.3 87.7 96.7 100

Tanzani DCA 2/ 1.4 16.3 31.9 49.2 65.5 79.1 89.8 97.3 100

, 2, The profiles wei constructed using bistorical data fron operatioas covering theperiod FY71-81, and they bave been accelerated to eliminate the 'lnog tails and Ineffect, to creste a 5% tageting elemnt. The profiles should be cossidered"tLjgcal" rather than "stsndard".

Table 5

.000)

_ ~~Site & SService grdn

Appcasa^l Estimate- off-site Infrastructure 400 536- On-Site Irfrastructure 18,544 9,407- Contingeocies 9,326 5,303- Land Ca.eu1ation 700

Cost Total 32,101 15,946NDb. h 10,620 8,800Unit Cost Tsh. 3,0Q20 Tsh. 1,810

US$ at 7.14 423 253

Actual- Off- and On- Site Infrastructure 25,838 18,921- Comp52sation 3.745 3,745

Cost total 29,583 22,666No. hh 8,500 14,634Unit Cost Tsh. 3,480 Tsh. 1,500

US$ at 9 386 167Change In TShs. +15% -15%Change in US$ -9Z -34%

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TANZANIAFIRST NATIONAL SITES AND SERVICES PROJECT

Project Completion ReportSchedule of Disbursements

(Estimated and Actual)

99 ESTIMATED ACTUAL

B 5

L /.7 6

4~~~~~

6 ,,'f /

E4

0

74 75 76 77 78 79 so 81

Yea

World Bank-24130

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G. Unit Costs

3.27 Unit costs in Tanzania shillings for serviced plots were about15% over those anticipated at appraisal and for upgraded areas, about 15%below those estimated as shown in Table 5. Because of subsequentdevaluations in the Tanzania shillings however, the actual dollarequivalent in unit costs was below that estimated at appraisal in bothcases: 9% below for serviced sites and 34% below for upgrading.

H. Conclusions

3.28 The project as implemented differed from that appraised in that:ti) there were 20% fewer sites and services plots; (ii) there was a 66% in-crease in the number of households provided with services in the upgradedareas; (iii) 12% instead of 83% of plot beneficiaries received house con-struction or improvement loans; (iv) 25 instead of 30 community facilitieswere constructed; and (v) cost recovery mechanisms were significantlyaltered (see Chapter IV, Section D). The project unit had also been up-graded to divisional status and urban councils had been recreated (seeChapter VI).

3.29 Implementation also took longer than anticipated, and can bedivided into two distinct phases: first, an early phase during whichthings went well; and secondly, a later phase during which intractable pro-blems were encountered. The difference between the two phases is mainlydue to the changes in the institutional and economic environment whichcould not have been foreseen at appraisal. Some of the early successes,however, were at least in part at the expense of later phases of the proj-ect as work on a number of issues and tasks had been delayed becauseArdhi's capacity was inadequate to deal with them promptly. When they wereeventually given the attention needed the environment was a much moredifficult one to work in and the delays were therefore compounded.

3.30 The Closing Date of the project was extended by two years from12/31/78 to 12/31/80 in June 1978. This was to allow for the completion ofcommunity facilities and to enable the THB to improve its lending programand the draw-down of project funds, utilizing the innovations and incen-tives introduced under the second project.

3.31 These modifications did not compromise the principal projectobjectives of introducing and demonstrating an approach to housing and pro-viding services for the urban poor. The 20X reduction in the number ofsite and services plots was offset by a 66% increase in the number ofhouseholds provided with services in the upgraded areas. These changesresulted in a net increase of almost 20% in the number of residential unitsserved. The population served in the upgraded areas is poorer than that inthe sites and services areas and therefore the poverty impact of theproject was greater than anticipated at appraisal. Although a functionalshelter delivery system was not developed, a small cadre of professionalscapable of extending the program was established.

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IV. OPERATING PERFORMANCE

A. Role and Performance of Consultants

4.01 Consultants were involved in virtually all aspects of the projectfrom the policy stage through design and supervision of contractimplementation. Furthermore, because the capacity of the available staffwas initially overestimated the project unit found that it had to hireconsultants to perform more implementation tasks than initiallyaniticipated. As the local staff gained experience they questioned the useof consultants and there was generally a great deal of discussion before aconsensus could be reached regarding the limits of the local capacity andthe need for outside assistance. Some officials also expressed a strongpreference for consultants from lower-cost countries because of the moremodest cost involved. In addition to the budgetary considerations, theyfelt that the discrepancies between consultants' salaries and those oftheir co-workers might have a demoralizing effect on the local staff.

4.02 The consultants generally worked diligently and producedsatisfactory work. A retrospective evaluation of the design work, however,suggests that some of the road reserves were too wide and that the road anddrainage standards might have been more closely related to maintenancecapabilities. The flaws in the work of the consultants can be attributedto oversights during preparation and appraisal. Had the administrativearrangements for the M&E consultant been more appropriate, for example, theoutcome of his work would have been more useful. Similarly, the input ofthe training consultant would have achieved the long-term benefitsanticipated if accreditation had been arranged and the career paths of thetrainees been worked out with the appropriate Ministry. The lack of priorexperience in the sector at the time made it very difficult to avoid suchoversights.

4.03 The mistakes, however, did not provide the only lessons. Throughworking with the consultants, the local staff developed practical skills tocomplement the academic training that they joined the unit with. The con-sultants also established useful procedures which the local staff are nowusing for implementing similar projects. The demonstration phase beingover, existing capacity is having to be addressed more directly and thishas changed the nature of the role to be played by consultants. Consul-tants are now being used to complement rather than expand capacity; theyare also being used to initiate the implementation of new techniques ratherthan to introduce new concepts.

B. Performance of Contractors

4.04 Contractors generally did a good job and completed the infra-structure works in sites and services areas with only minor time overruns.Upgrading contracts took longer to be completed because working in alreadysettled areas proved to be more difficult than originally envisaged. Thedelays in completion of the community facilities contract, which weresupervised by the Ministry of Works were exacerbated by the institutionalproblems described in Section IIIB and the building material shortages.More careful prequalifiation of these contractors, however, would havehelped avoid some of these problems.

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4.05 In general, wherever possible the borrower preferred to use othergovernment agencies or parastatals as contractors. Where these publicsector agencies had to compete with private firms for jobs, their contrac-tual obligations were clearly spelled out from the start and their perfor-mance was satisfactory. Where they had sole responsibility for work withinthe sector, as was the case with TANESCO, contractual obligations tended tobe less clearly defined and full payment was required in advance. Thisresulted in considerable difficulties being encountered in the resolutionof conflicts.

4.06 Similarly, the project unit found it difficult to establish arms-length contractual relationships and manage consultancy contracts withArdhi Institute, which falls wlthin the same Ministerial portfolio.

4.07 If the public sector is going to continue to play an active rolein implementation, the rules and procedures for establishing contractualobligations between government agencies will need to be more preciselydefined. Procedures for the timely resolution of conflicts should be moreclearly defined also, and lOOX advance payments should be avoided.

C. Performance of Standards Used

4.08 Infrastructure. The modest infrastructure standards used werebased on the assumptions that a reasonable level of maintenance would takeplace and on specific types and volumes of traffic expected. However,almost no maintenance whatsoever took place following the maintenanceperiod of the contractors and this presented a serious threat to theinvestment, especially the roads. Furthermore, traffic volumes on projectroads were higher than originally anticipated and this has accelerated thedeterioration of the roads.

4.09 Steps are now being taken, under the second project, to tacklethe problem of maintenance. In Dar es Salaam, where the bulk ofinvestments took place, road maintenance equipment is being purchased forthe newly-created City Council. Training for the city's maintenance staffis also being provided, with the assistance of Kreditanstalt fUrWiederaufbau (XfW).

4.10 In 1979, the Bank hired the firm of consultants which had donethe initial designs, but who were no longer involved with the project, toreview and evaluate the standards used and their implications for mainte-nance. Their report highlighted the trade-offs between the level of stan-dards and the amount of maintenance required. They recommended that: ti)in the future either much higher road standards, requiring less maintenanceshould be used. Or, if the capital is not available for that, initialstandards should be even lower; (ii) where more modest road standards areto be used the standard of the complementary drainage system should beupgraded to protect the investment; (iii) site selection criteria should bemore stringent in respect of characteristics facilitating natural drainageand; (iv) that, more erosion-resistant materials should be used for theroad-base. They concluded that the standards used for the water andelectrical systems were well suited to the incremental approach.

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4.11 Community Facilities: The design of the community facilities wasbased on the patterns of service delivery and standards in use at the timeof appraisal. The national standards have since been revised downwards asa result of fiscal stringency.

4.12 House Construction. The issue of standards for house construc-tion was a source of controversy from preparation and throughout negotia-tions and implementation. The standards at the time of appraisal werebared on the colonial experience and were judged by the Bank's appraisalteam to be unaffordable to the majority of Tanzanians. The Bank felt thataffordability to the low-income majority should be taken into account andthat this could be done by starting with modest standards. These could begradually improved as individual household budgets allowed families toimprove their houses and to pay for higher standards of services; and, asincreased revenues allowed the government to upgrade the infrastructure.The government agreed to revise its standards, but since the drafting ofnew legislation would take time, the existing regulations would be waivedfor project implementation.

4.13 Initial doubts about the acceptability of the initialinfrastructure standards have proven to be unfounded as the sites andservices plots were very popular and attracted applicants from a widecross-section of society. Some plots in the sites and services areaseventually went to more affluent households than those within the targetgroup (see Section VI). This has resulted in the construction of houses ofa higher standard and earlier applications for individual water connectionsthan originally envisaged. Households have tended to install soak-awaysanitation systems but, although they function satisfactorily, the smalllot-size precludes that the system may be used satisfactorily for all lotsin the area. Had it been envisaged that high income dwellings were to beconstructed, the construction of a conventional sewerage system at anearlier stage might have been a more cost-effective alternative.

4.14 Under the second project, the THB, in cooperation with the Build-ing Research Unit (BRU), a parastatal of Ardhi, produced type plans forbuilding in traditional materials as well as sand-cement. Model houseswere also constructed in project sites. However, TEB has financed nosoil-cement or mud and pole units whatsoever. It appears that some townand housing bank officials did not fully understand the project concept andhave discouraged rather than encouraged the initially low standards.Furthermore, the letters of offer sent to plot recipients requireconstruction in permanent' materials. Although Ardhi is not enforcingthis clause, some town officials appear to be doing so. It might also bediscouraging some plot recipients from investing in "non-perr-anent'materials on their plots.

4.15 In keeping with the progressive development model, a number ofparticipants have built small houses at the back of their plots from tradi-tional materials using their own funds. Many have subsequently built a'front" house more gradually from permanent materials. Similarly, manyproject participants, notably those in upgraded areas, have rendered theirmud and pole houses with cement, thus greatly improving the units' durabi-lity and value. Most, however, have chosen to build in sand-cement.

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D. Compliance with Covenants

4.16 The covenants were to ensure the timely institution of measureswhich were considered to be critical for project implementation and theachievement of its ultimate goals. Some covenants proved to be more diffi-cult to comply with than originally envisaged because of: The chronicshortage of skilled manpower in Tanzania; the Government's reluctance tohire outside experts; cumbersome bureaucratic procedures; and, the lack oflocal counterpart funds. Others needed significant resource inputs whichmight more appropriately have been tied to complementary projectcomponents.

4.17 Building Standards. Ardhi has prepared a revised draft of thebuilding regulations in accordance with the covenant. The bureaucraticprocedures necessary to have the draft regulations officially accepted are,however, apparently cumbersome and the officials concerned are reluctant totackle the problem. The reestablishment of urban authorities complicatesthe matter by passing responsibility to individual town councils. However,acceptance of modest semi-permanent building materials and standards hasassumed increasing importance for success of the national sites andservices and upgrading program. It has been endorsed in the housing policypaper and recently accepted by Cabinet as the only practical way to housethe majority of Tanzanians under present circumstances.

4.18 Staffing. Ardhi was unable to comply with the covenant requiringthem to fill existing vacancies, as their recruitment efforts met withlittle success and they were unwilling to hire expatriates for these posts.Some government officials have also found it difficult to reconcile thestaffing establishment required to implement this, and other Bank projects,because of the contrast with the smaller establishment for internally-financed projects of a comparable or larger size. Compliance with theaudit covenants was also delayed by staff shortages as the project wasunable to keep its accounts up-to-date. The project unit now has adequatefinancial staff in place and performance in this area is much improved.Subsequent projects have been supporting changes to the system which enableimplementation to take place with fewer professional personnel. Trainingis also being given greater emphasis. IDA and the Government are also dis-cussing ways in which the shortage of financial and auditing skills can beaddressed within a comprehensive framework across all sectors.

4.19 Cost Recovery Covenants. Attempts to implement the cost recoverycovenants met with little initial success, as: (i) No mechanism for directcost recovery existed at the time of project preparation and the appraisalteam therefore developed a formula to introduce such a charge in projectareas; and, (ii) the legislative framework changed soon after the creditbecame effective. The new Act, the Land Rent and Service Charge (LRSC) Actintroduced a new land tax. The level of charges derived from the projectformula was much higher than in comparably serviced adjacent areas assessedunder the new act. This resulted in inequity and political controversy, asallatteek refused to pay the fees required to obtain title to their plots.

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4.20 The Government therefore requested an amendment of the CreditAgreement in order to bring charges for project areas within the purview ofthe new LRSC Act. The proposed amendment was approved by IDA in February1977. Further difficulties were encountered because the wording of the newAct inadvertently did not provide for charges to be levied in squatterareas. Because of the political sensitivity of this issue, a Cabinet deci-sion was ultimately required to reintroduce the charge in squatter areas.The administrative framework to effect collection also proved to be inade-quate for widespread implementation. These problems are being addressedunder the second project.

4.21 In general, compliance with covenants was unsatisfactory duringmuch of the implementation period for the reasons indicated above. Signi-ficant improvement occurred when preparation of the third project was halt-ed pending improvements in compliance. Good progress is now being made.

E. Financial Performance and Project Replicability

4.22 Pricing. Individuals were expected to make monthly payments forground rent, repayment of construction loans, and utility bills, if any.The ground rent was to consist of the statutory ground rent and the servicecharge. The statutory rent was to be a charge levied by the Treasury forthe privilege of using land, calculated at 4% of its capital value whereasthe service charge was to be based on the cost of the infrastructure pro-vided.

4.23 Cost Recovery Performance. Plot occupants employed by theGovernment, parastatals and businesses with ten or more employees were ex-pected to make monthly payment through a salary deduction system. Benefi-ciaries without a salary deduction option were expected to pay throughArdhi's regional offices.

4.24 In order to implement the provisions of the new legislation theeconomic value of the land had to be determined, houses had to be regis-tered and demand notices sent out before actual collections could takeplace. There was therefore an extended period when very little progresswas made during which the Association repeatedly expressed its concern. InOctober 1976, during negotiations for the second project, the Governmentagreed to launch a nationwide program of house registration, starting inManzese, and to review the provision of the LRSC Act with a view to expe-diting the start-up of collections. The study was completed in August1977.

4.25 By April 1978, however, only six of the 42 blocks in Manzese hadbeen registered. Collectioas of land revenues nationwide continued to bepoor as demand notices were being sent through the mail to plot-recipientsat their post office boxes and it was virtually impossible to personallycontact defaultors. Furthermore, the Treasury, which was responsible forcollections had very little incentive to collect these charges, as they re-presented a very small percentage of their total revenues.

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4.26 In June 1980 a paper recommending an interim charge of TSh.100was approved by the Economic Committee of Cabinet to facilitate theinitiation of collections pending the development of an appropriate systemfor plot valuation. Simultaneously, the Association and the agenciesinvolved in the implementation of the project undertook a review of theexperience with the Treasury, financed from the proceeds of the secondproject. By December 1980 the registration of Manzese had been completedby Ardhi and handed over to the new collections unit.

4.27 Cost recovery was finally initiated in Manzese in March 1981 whenpreliminary demand notices were issued to the residents. By April 1982, 80Zof the expected amount had been collected.

4.28 Ardhi has subsequently registered all the sites upgraded underthe first project and the unit in the Treasury is proceeding with collec-tions.6/ Proposals for the third project include provisions for houseregistrations covering the total built-up areas of project towns. TheGovernment has raised the interim charge from TSh.100 to TSh.125 and iscurrently looking at ways of devising a simple valuation system which iscapable of being implemented with its existing manpower. The findings andrecommendations of the study financed from the proceeds of the secondproject are being used in this process.

4.29 The redelegation of responsibility for collections to urbanauthorities as of June 1982 is an encouraging move in a direction supportedby IDA. The incentive to collect these charges at the local level islikely to be much greater than that at the central level as the amount in-volved represents a significant portion of the local budget but only an in-significant share of general revenues.

4.30 Proceeds of the credit made available to THB by the Treasury at3% interest for 25 years were to be onlent to beneficiaries at 6Z. Fundsaccruing to the THB as a result of the difference between its borrowing andrelending rates were to be used for future loans, after covering adminis-trative costs and any defaults in repayment. In 1979, however, as indi-cated below, as part of an overall revision of its interest rate structure,the rate chargeable on these low income urban housing loans was reduced to4% thus reducing the spread and therefore the potential for the creation ofa revolving fund. No information is available on THB's collections, how-ever, due to equipment failures. The data available, however, suggeststhat the te~,_ent record is satisfactory.

4.?l This was a new area of operations for the Association and for THBand only a limited analysis of the financial status of the Housing Bank,the main financial intermediary was done. The following observations canbe made on the basis of THB's audited financial statements for the years1976 to 1979 and the unaudited accounts for 1980; (i) Although the bank hasgrown rapidly since its inception its continued viability is threatened bya decline in its debt equity ratio from 1.53 at the end of 1976 to an

6/ In its comments on the draft PCR (Annex) DCC has indicated thatTreasury's collection efforts are directed at only approximately 57Z ofthe plots due to the incomplete nature of the data passed on to them.The improvement in record keeping being effected by the ConsolidationUnit of DCC is addressing the ommissions in the registers.

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unsatisfactory 5.26 at the end of 1980; (ii) Disbursement of loans up to88% of resources generated through equity, loan capital and deposits leavesan inadequate margin of resources in liquid investments; and, (iii) It hasbecome over-dependent on a single source of funds-- the Workers and FarmersHousing Development Fund which accounted for 91% of its loan capital at theend of 1980. Although THB has initiated lending for low incomebeneficiaries, it has not done so within a replicable framework and itspotential future role is therefore very limited.

F. Conclusions

4.32 The major conclusions on general operating performance are asfollows:

(a) It is debatable whether the extensive use of consultants has en-hanced local capacity, or delayed its development. Obviously itwould be preferable to utilize consultants with proven trainingcapacities, but these are hard to find. There was some transferof skills and the consultants produced satisfactory work;

(b) More careful review of prequalification of community facilitiescontractors might have avoided some consequent implementationproblems. Civil works contractors were generally satisfactory.Contracts with government agencies such as TANESCO proved leastsatisfactory, because of their monopoly on a particular serviceand the consequent loss of leverage over performance;

(c) Maintenance of infrastructure was a persistent problem, exacer-bated by design flaws but essentially due to inadequate recurrentbudgets;

(d) Compliance with legal covenants was not impressive but wasobstructed by country wide staffing shortages, lack of recurrentbudgets, Government's reluctance to hire external consultants,and Tanzania's bureaucratic structure;

(e) Cost recovery proved a major and fundamental issue--perhaps theprimary issue of project implementation. The mid-stream shiftfrom one vehicle (direct plot charges) to another (LRSC or pro-perty tax) inevitably involved securing political approvals anew--a long, drawn-out process requiring two years. Once approved,the sheer mechanics of house registration, tax roll preparation,and the hiring, training and equipping of staff took another yearor more. Thus a three year lag occurred between completion ofservices and startup of cost recovery. The suspension ofprocessing on the third project underscored the importance of theissue and probably helped expedite progress;

(f) Interesc rates on house loans have persistently been well below"real rates ranging from 4% to 5% in the face of inflation ratesof 15% to 36%. This violated no covenants but has obviously con-tributed to the decapitalization of the Housing Bank.

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V. PROJECT BENEFITS

A. Beneficiaries

5.01 The project has provided services for over 200,000 persons innewly serviced and upgraded areas. Eighty-five percent of these benefi-ciaries are in upgraded areas where the majority of residents are withinthe target group, which was defined as those earning between TSh.200(US$28) and TSh.600 (US$84) per month. According to a 1976/77 Bureau ofStatistics Survey only 15Z of the households in Manzese earned over TSh.400(US$48) per month.

5.02 The quality and size of the units built in site and servicesareas, however, suggest that many of the occupants earn far more than thetarget group. Although the plots were originally allocated on the basis ofpoints which gave priority to lower-Income earners and the land tenuresystem does not allow for private transfers of land between individuals, itis believed that many of the plots have been unofficially transferred tomore affluent indivlduals. Some plots also may have been allocated topersons outside of the target group due to: (i) corruption, (ii) a lack ofawareness of the criteria established at appraisal on the part of theofficials, especially those in the newly recreated councils; (iti)pressures from the other groups due to the general shortage of servicedplots; and (iv) Tanzania's national policy and philosophy which explicitlydiscourages the creation of separate residential areas for particulargroups. Plot holders who qualified on the basis of their official lowIncomes may also have more substantial unofficial sources of lncomes. Inother cases, dwelling units have been constructed using pooled resourcesrather than the incomes of the single beneficiaries.

5.03 The 71B's records also provide a useful indicator of the incomesof plot beneficiaries who have been able to build. As of June 1978, twelvepercent of plot recipients had obtained loans from the bank; fifteen per-cent of these recipients earned less than TSh.466 per month; another 46%earned between TSh.467 and TSh.l,O00 per month and 39Z earned overTSh.l,000. Approximately 50Z of the TIB loan recipients therefore appearto be within the target income range of TShs.750 per month.

5.04 The slow rate of house construction may also be largely due todifficulties in mobilizing funds. The plots which have not yet been builtupon may therefore belong to lower Income earners than those whlch alreadyhave buildings on them.

5.05 Receipt of some plots by higher-income earners, however, is notaltogether negative. Although the poverty reL:essal goal of our urbanprojects is not met when this occurs, it does provide a needed basicservice to a group which, in the Tanzanian context, have very modest In-comes anyway. These plots were the only ones available during the projectimplementation period and therefore had to cater for a wider cross-sectionthan originally anticipated.

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5.06 Project investments in infrastructure and services were matchedby over TSh.300m (US$35m) in additional investment in house constructionwhich would not have taken place without the project. Although projectbeneficiaries did much of the construction work themselves (see photo-graph), they also hired craftsmen to assist them, thus also providingadditional emplovment. As labor represents approximatly 20% of house con-struction costs in Tanzania, the value of employment generated by the proj-ect was about TSh.60Qm (US$7m). About 80% of the houses built are also

Swahili" type houses which provide additional income for plot beneficia-ries through the rental of rooms.

5.07 The high level of usage of community facilities and nutritioncenters suggests that the project has also generated the expected less-tangible external benefits such as improved health, lower infant mortalityand a higher level of education.

B. Economic Reevaluation

5.08 The internal economic rate.of return was recalculated on thebasis of a comparison of the cost and rental value of newly constructedunits in sites and services areas; and, on the basis of changes in therental value in upgraded areas. At appraisal project sites showed a rateof return ranging from 10.4% in Mikocheni tow.4.5% in Manzese. Reestimateswere done for Dar es Salaam sites only as 80% of the residential sitesserviced were in that city and enough plots had been built upon to justifya reanalysis. Reestimates (Table 6) assuming that all serviced sites arefully developed by 1985 showed rates of return ranging from 20% inMikocheni to 33% in Manzese. Due to the delay in consolidation, estimateswere also done for the Dar es Salaam sites and services areas with incom-plete development as of February 1982 (Table 2). Only minor changes in therate of return were noted in Sinza and Kijitonyama where over 60Z of theplots were occupied. In Mikocheni, however, where infrastructure costswere higher and only 50% of the plots were occupied, the rate fell from 20%to 16%.

5.09 The higher overall rate of return in site and services areas,despite the delays, is attributable to the rise in rental values of theunits constructed being greater than anticipated at appraisal and well inexcess of the rise in costs. In other words, housing is scarcer than itused to be, and commands a distinct premium. The higher rate in theManzese area is due to the increase in density which took place duringimplementation.

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Table 6

INTERNAL ECONOMIC RATES OF RETURN(percentages)

ReestimatesAppraisal Complete Incomplete DevelopmentEstimate Development as of 2/82 (DSM only)

Dar es SalaamMikocheni 10.4 19.9 16Sinza 12.1 22.0 21Kijitonyama 11.4 22.0 21Manzese 14.5 33.0 n.a.

MwanzaNyakato 11.0 -

MbeyaMwanjelwa 12.6

C. Conclusions

5.10 The main differences between the expected beneficiaries atappraisal and the actual beneficiaries has been the inclusion of higher in-come earners in the serviced site areas, a decrease in the number of sitesand services beneficiaries and an increase in the number of beneficiariesin the upgraded areas. The rate of return in serviced site areas wasgenerally higher in the areas with more modest standards of services andlower for Mikocheni, where standards and infrastructure costs were signifi-cantly higher. The upgrading subproject showed the highest rate of return,largely because of the modest standards and the early materialization ofthe benefit stream.

5.11 In subsequent phases, the poverty-redresssal goal is being giveneven greater emphasis. Upgrading is being continued and newly servicedareas are being provided with much lower levels of services as surveyedplots are being provided instead of serviced sites. In surveyed plotareas, beneficiaries are being provided with demarcated sites in plannedlayouts within which initial services are limited to graded access, stormwater drainage and shared standpipes.

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VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT

6.01 One of the principal objectives of the project was thestrengthening of the Government's institutional capacity to plan and imple-ment an ongoing national sites and services program. Officials in Tanzaniaas well as at the Bank felt that a good demonstration project was needed toestablish the policy. The most immediate constraint affecting the achieve-ment of this goal was seen as the shortage of qualified staff. This con-straint was to be addressed in the project through the use of expatriatetechnical assistance personnel already working with Ardhi, who were fundedby multi- and bilateral aid agencies; the filling of vacancies within theMinistry through inter-agency transfers and the hiring of consultants. Thelonger term need was to be addressed through the training program for civiland sanitary assistants and the expansion of Ardhi Institute's facilities.

6.02 Ardhi was to be the executing agency with overall responsibilityfor the project. The newly established sites and services section withinit was responsible for planning, designing, and constructing the infra-structure and community facilities in consultation with concerned minis-tries. As implementation progressed beyond the design and installation ofinfrastructure, however, unforeseen weaknesses within Ardhi itself and theinstitutional system as a whole became apparent. The urban councils, whichused to play an important coordinative role had been abolished and thesystem had become fragmented. Although it was technically responsible forcoordination of project implementation, Ardhi had no authority to assumethis role. Furthermore, the system had never been designed to cope with aprogram of this magnitude and its fragmented nature made it difficult toaddress capacity constraints, and to secure accountability.

A. The Ministry of Lands, Housing and Urban Development (Ardhi)

6.03 At the time of appraisal there were serious staff shortages inpractically all specialist cadres within the Ministry. It was 30% belowits establishment of professional staff for lands, surveying, town planningand valuation and many senior positions were filled by underqualifiedofficers. In order to ensure timely and satisfactory implementation of theproject, Ardhi was required to fill the vacancies within the newly-createdsite and services section by June 1975. However, not only was the Ministryunable to hire the new staff required, it was also unable to retain thestaff it already had. The post of project accountant, for example, wasfilled by four different persons within the first two years of implementa-tion. The Ministry also found that positions which they did not succeed infilling one year were likely to be cancelled in subsequent fiscal years.

6.04 As the program progressed Ardhi was found to be ill-equipped todeal with the comfmnity-oriented outreach needs that are critical to thistype of project, as it had no established positions for sociologists orsocial workers. The problem was particularly difficult to solve as projectunit costs were not financed as part of the project. The Association hadonly an agreement that the Government would adequately staff' the unit.The definition of adequacy remained a point of debate between the Associa-tion and the Government.

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6.05 The project unit was also an integral part of the Ministry andshared administrative services with other divisions and departments. Itwas therefore affected by the unmet needs within the environment as awhole. Vehicles and equipment purchased from the proceeds of the credit,for example, were administered as part of the general pool. Although theproject unit staff had "priority" for their use, they often had no trans-portation available to visit project sites or other Ministries. As overalleconomic conditions deteriorated also, fuel was rationed. Each vehiclegets only 50 litrev. per week and the vehicles are periodically immobilized.

6.06 Despite the fact that the project unit did not have the capacityfor adequately implementing all aspects of the project, the Ministry wasextremely reluctant to hire consultants and often tried to undertake taskswhich it could not manage. The capacity constraints in the project unitaggravated other problems such as that of coordination, as there weregenerally not enough staff available to visit the sites or Ministries whosework they were coordinating. Similarly the design of the community facili-ties was significantly delayed as the staff was unable to keep the wholeprogram moving at once, and all initial efforts were focused on the instal-lation of infrastructure.

6.07 As part of the second project, the unit has been reorganized, ithas been upgraded to divisional status and additional staff has been hiredto handle the previously neglected social inputs. Staff positions werespecified in the project proposal and salary and overhead costs are includ-ed in the budget. These changes have led to some improvements, but theframework is still limited. The recreation of urban authorities has, how-ever, established the basis for more significant changes. Several projectunit staff members recently undertook a study tour of other urban projectsin the region and have developed detailed proposals for further restructur-ing. Their recommendations include: strengthening of the cadre ofcommunity development workers; provision of assistance to projectbeneficiaries on the sites; and, increasing the involvement of thecommunity in project formulation and implementation under the thirdproject.

B. Tanzania Housing Bank

6.08 As indicated in'Section III C, THB's active participation was de-layed by external factors beyond its control. Its performance, however,was also affected by internal factors, notably a rapid turnover of staffwithin the sites and services unit and its continued use of criteria, pro-cedures and requirements which are cumbersome, and unsuitable for thetarget group and inappropriate for Tanzanian conditions.

6.09 Staffing of the THB project unit in Dar es Salaam, the regionaloffices and coordination of their act'.vities proved to be major problemsduring implementation. There were also frequent staff changes within theunit. Between 1979 and 1982, for example, the unit's coordinator waschanged four times. Up until 1980, applications in the regional centerswere all sent to Dar es Salaam for approval. Repayment records were alsocentralized and the staff of the regional offices were therefore not madeaware of delinquencies early enough for them to take advantage of theirproximity to the beneficiaires to follow-up in a timely manner. it also

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appears that Regional Staff were often unaware of the goals and conceptsunderlying the program and were therefore unable to apply the special pro-cedures developed for project beneficiaries or to actively promote theprogram. The THB has been delinquent in submission of audited accounts,and the site and service unit's management was not responsible formonitoring repayment by project beneficiaries. Reporting on cost recoverywas initially weak and then stopped altogether. The program's coordinatortherefore never maintained a comprehensive overview of the program. Ingeneral, the management system did not lend itself to the experimentationand innovation needed by the program.

6.10 THB's procedures and requirements have remained stringent andconservative. For example, THB still requires a title for a site and ser-vices urban house loan, although it has established less stringent criteriafor rural areas and upgraded urban squatter areas. This is despite thefact that obtaining a title can easily take up to three years' effort.Even when an applicant already has a title, THB's own procedures then takeanother year to be completed. Without fundamental changes in either theland title system or in THB's procedures the THB is unlikely to make asignificant impact on the provision of low-income housing.

C. Coordination

6.11 Responsibility for local administrative tasks were shared betweenregional offices of the sectoral Ministries. The Regional DevelopmentDirectors (RDD) were under the RDDs, but for land matters they reported toArdhi. The RLDO's prepared the documents for registration and issue oftitles in the regions. Occupancy rights were registered and titles issuedfrom Ardhi's headquarters in Dar es Salaam. The Treasury was responsiblefor collection of service charge payments. With the reinstatement of theurban councils in 1978, the duality of reporting-to the City Director (inplace of the RDD) and Ardhi has continued. Plot allocation authority hasnot been clearly delineated.

6.12 Ardhi's Regional Land Development Offices in the regions did notinclude any individual with specific operational responsibility for sucha program in urban areas nor any formal mechanism for the consideration ofmulti-faceted programs. Once the site and services unit had completed theinfrastructure work, which was within its sphere of authority, thesub-projects virtually came to a halt. Follow-up within the program wasnot high on the list of priorities of other departments and divisions ofArdhi or other Government agencies involved in implementation.

6.13 THB and Ardhi's inability to come up with a workable alternativeto registered titles as collateral for urban house loans, or improvement inthe title issuance system, meant that Ardhi's Lands department remained onTHEB's critical path. This created a delay of up to three years for projectbeneficiaries.

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6.14 Monitoring of the program and identification of bottlenecks werealso difficult as there was no system for recording the progress of appli-cations as they went through a series of Government offices for relativelysimple tasks to be performed. Follow-up by the Government agencies in-volved was also made difficult by the lack of a house registrationsystem. It was generally difficult to ensure that correspondence would getto the right person through the post office box system, or to be able tocontact an individual personally. These problems are being addressed bythe consolidation unit established in the Dar es Salaam city council andthrough the house registration program being undertaken with proceeds fromthe second credit.

6.15 The recreation of urban authorities has reestablished a basisfor coordinating program elements and monitoring progress. So far, how-ever, only the enabling legislation has been passed. The regulations forits implementation still have to be developed, published and interpreted.It will take some time for appropriate administrative systems and proce-dures to be reestablished in the newly-recreated councils--the centralGovernment agencies will also have to reorient themselves towards playinga supportive rather than a direct role. The Housing Directorate withinArdhi, for example, has started to actively consider ways in which itstechnical staff might act as trainers of and consultants to local autho-rities' staff. There are a number of alternatives to be compared and con-sidered and the process could greatly benefit from external support.

D. Conclusions

6.16 The means of achieving the long-term institutional developmentgoals were not as well developed during project preparation as they mighthave been had we been more experienced at the time, or, if the Governmentalready had a clear policy for which it was seeking efficient or effectiveways of implementation. Yet, despite the shortcomings of the prerarationprocess and the difficult period within which implementation took place,the project has successfuly supported two important areas of institutionbuilding: (i) the establishment of a cadre of experienced professionals;and (ii) the development of appropriate sectoral policies.

6.17 The project unit, which has now been given divisional statuswithin the Ministry, is now capable of developing an ongoing program forthe provision of housing for the nation's population, particularly theurban poor. They have developed problem-solving and programming skillsthrough their hands-on experience, working initially with consultants, butlater on, on their own. Although they still need the assistance ofconsultants, the need is greatly reduced in the policy sphere and morerestricted to technical areas. They have been playing an increasinglyimportant role in the development of proposals for subsequent projects,such as the ongoing second project and proposals for a third.

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6.18 The Housing Development Department, under which the Sites andServices Division now falls, is headed by the previous project manager.The department has updated the National Urban Development Strategy anddeveloped a Housing Policy, both of which have been accepted by Cabinet.

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VII. ROLE AND PERFORMANCE OF THE BANK

7.01 IDA's involvement in the Housing and Urban Development sector inTanzania was propitiously timed. The Government had already made housingfor the low income majority a priority within its development plan, butlittle progress had been made. The Association's main contribution was itsintroduction of the concept of affordability as the guiding principle fordeveloping the program.

7.02 In retrospect, however, we might have placed more emphasis on thecommunity development components; used a longer time frame in the design ofthe project; and, been more conservative in estimating implementation capa-city. These short comings can be attributed to this having been a new areaof lending for the Association, and a new area of operation for theMinistry. During implementation, however, the supervision teams were ableto bring the benefit of their exposure to a wide range of projects to bearon the problems being encountered.

7.03 The design of the physical components, which received a lot ofattention, has become more routine. During the preparation of the secondproject, the staff was able to concentrate more on the community develop-ment elements and to devise appropriate changes in the institutional rela-tionships to address the weakness in the original design. Our ability tomake this on-going contribution was greatly facilitated by the good rela-tionship we had established with the staff of Ardhi, especially the projectunit.

7.04 During impl#mentation, approximatly 77 person-days of Bank stafftime was spent in the field each year and no mission failed to include atleast one participant who had been on the previous mission. The Associa-tion's principal contribution during this stage was the provision of tech-nical assistance, and advice for the resolution of critical problems, thedevelopment of terms of reference for consultants, procurement issues andcontract monitoring. Where the specific skills needed were unavailable in-house, the Association used consultants to assist in supervision and toadvise the government (Mission Data Table).

7.05 Although the Association's involvement has generally been posi-tive, its image created some difficulties for the project unit in Ardhi--when the urban councils were recreated, the council officials had somedifficulty in reconciling the modest standards with IDA funding.

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VIII. LESSONS LEARNED

8.01 The project, which was one of the first generation of urban proj-ects funded by the Bank Group, has provided a number of useful generallessons which are applicable to similar projects and which are worth high-lighting here:

A. Civil Works

8.02 It is perhaps noteworthy and not atypical of first generationurban projects that the civil works or physical components went moresmoothly than the 'software' elements. Consultants and contractors'performance while not trouble-free, was generally satisfactory. Greaterdifficulties were encountered in developing an adequate communitydevelopment support network, initiating cost recovery, and in sustaining anadequate level of infrastructure maintenance.

B. Cost Recovery

8.03 The practice in the Bank at the time of project preparation wasto avoid subsidies via general revenue, especially for urban projects.This was because the subsidy would ultimately come from the rural areas inagriculturally-based economies. In Tanzania user charges were the excep-tion rather than the rule and the technical solution developed was there-fore an enclave one. This created an inequitable situation, was difficultto administer and, in any case, could only have a limited impact. The timeframe for implementation also proved to be unrealistic as it did not takeinto account the time needed to allow for the necessary politicalapprovals, and development of approFriate house registration systems,collection procedures and staff establisl=ent.

8.04 The project experience suggests that in similar situations, thecurrent and proposed fiscal context needs to be taken into considerationexplicitly. Where the current system diverges significantly from theAssociation's requirements and the Association and the borrower feel that achange would be appropriate, a longer time-frame should be used to allowfor its development. This may mean delayed appraisal or a period oftechnical assistance (in various forms) preceeding it. Performance targetscan then be established for the project implementation period.

C. The Community Development Input

8.05 The need to provide advisory services and technical assistance toproject beneficiaries was a new concept in Tanzania and was not initiallyrecognized as being important. As implementation has taken place, however,the need has become increasingly apparent. As the program progresses inTanzania, this aspect will have to be given closer attention. This isalready being done in similar projects elsewhere.

- 36 -

D. The Institutional Framework

8.06 The problems of accountability and coordination encounteredduring project implementation emphasize the importance of clear definitionsof responsibilities compatible with institutional mandates. Accountabilityfor delivering a plot through the various stages of development, allocationand registration was never assigned to any agency. These fragmentedresponsibilities made it difficult to pinpoint and resolve bottlenecks inthe delivery system. Where different agencies are responsible for thevarious steps in a service delivery system, such as housing, thepossibility of reallocating or delegating responsibilities ought to beexplored further in future projects.

8.07 The difficulties encountered in having the agreed modifiedbuilding standards accepted by all parties involved suggest that moreshould be done during implementation. This is especially important whenthe branches of government involved in negotiations differ from those to beinvolved in implementation; where staff changes take place frequentlywithin the system or, where--as in this case-new branches of governmentare created after &ppraisal. Amendments to specifications and legislationshould, ideally, be done prior to negotiations; or, at a minimum, made partand parcel of the implementation process. This is always easier said thandone.

8.08 The project experience, and the institutional changes which tookplace during implementation, have also provided some useful insights con-cerning the division of responsibilities between central and local govern-ment agencies. Policy development and technical advice appear to be appro-priate for a centralized unit, whereas day-to-day tasks such as comotnitydevelopment, supervision of contractors and project monitoring might bebetter accomplished by the agency closest to the beneficiaries and theproject sites.

E. Institution Building

8.09 The project was unavoidably expert-intensive, especially duringthe initial period, and this is likely to be true of most first projects inany sector. When this situation occurs, it might be appropriate to placemore emphasis on complementary institution-building components.

F. The Macro-Economic Framework

8.10 In keeping with the general practice, it was assumed at appraisalthat the macro-economic framework would hold constant throughout implemen-tation. However, dramatic changes occurred and these had significantimpacts on the project. We might usefully try to develop approaches whichare more compatible with fluctuating economic conditions since these arelikely to continue in the region for some time.

8.11 Steps have already been taken to put the lessons gained from thefirst project into practice. No panacea has been found, but we haveexpanded our repertoire of basic principles for guiding the progress ofsuch programs.

- 37 -ANNEXPage 1

CITY COUNCIL OF DAR ES SALAAMALL COMMUNI1CATIONS TO 3E ADDRESSD TO THE CTY DIUMCIOR

P. 0. Box 90U84 CIY HALL,TEL. 23551J5 DAR ES SALAAM.TANZANIA

REFERENCE: CL.20/8 Val. nf/6 34 lWe3bUI!1983

Ifro Shiv S. rapmr,Dfrecotaz,Opratis zvaluati Dntfte WorlA lank,183B 11. 3*0tt Jr.T.9lasbiat., D.C. 2a33.

u SA.

12e1 IDA 495-ftA IM3h I1 13 RWrCY CanUILC(N RPMXY

Boo0e1d Pleae find the Da s Saaam 0'-y Cmii's ±a-,s gk'inolusion in the fro3eot falmp1til Report lrlt amKt by yat

If thee are azy qwstims pleas lot us jau.

Tours faithftfly,

G.city Pafar CIT! DIxRCT

ols as d

- 38 -

ANNEXPage 2

IDA 495-TA. RECOMMENDED ADDITIONS/CHANGES IN PCR DRAFT

1. Page (i), last para, last but one line to read:

Development (Ardhi), Tanzania Housing Bank (THB), and Dar esSalaam City Council (DCC); DCC reports; consultants.....(continued as inthe draft)

2. Page (v), item I, be changed as follows:

Z ofAppraisal AppraisalEstimate Actual Estimate

Newly Serviced Sites(Sites and Services)

Dar es Salaam 7,450 6,338 1/ 85

Mwanza same as in PCR draft

Mbeya same as in PCR draft

10,600 8,758 85m -

'/ March 1983

3. Page (ix), last para, to read:

Treasury's performance in collecting charges from upgrading areashas been a bright spot of institutional competency. For serviced plots thecollection has been efficient on those plots about whose allocation theTreasury knew. ... (continued as in the draft)

(Note for Mr. Shiv Kapur: As per data of September 1983,Treasury's collection efforts are directed towards less than 57% of total6,338 plots)

4. Page 10, Table 2:

Please see next page which gives actual data on Consolidation ofSites and Services Plots as of March 1983.

- 39 -

Page 3

MDA 495-TA. URBAN I PR 0JEC 0 1X41LETlIM REORF

TAN.L 2 (Page 10 of PCR - DRAFT)

NSOLILATICII OF SIES AND SERVICE PLOTS(Irch 1983)

Status of QxwsolidationBuildable No Construction Under Construction House Complete

Dar es Salaa1/ Plots No. No. Z

Sinra 3,834 1,400 36.5 1,363 35.5 1,062 28Kijitonyama 1,774 413 23.2 571 32.2 779 44MiLkocheni 730 319 43.7 226 31 171 23.4TOTAL 6,338 '/ 2,132 33.6 2,160 34 2,012 31.8

1/ As of Harch 1983--/ Consolidation status of 34 plots to be re-hedced.

5. Page 11, para. 3.10, iten (ii), to read:

Urban Councils were unable to approve construction in materialsother than sand - ceneet because the letter of plot offer, a legalinstrument of the GovernnEnt of Tanzania, stipulates that the constructioashould be with pernanent building material; ... (contiriued as in thedraft).

6. Page 11, para. 3.12, line 4, to read:

Possible reasons for this ladk of popularity include theinability (para. 3.10) of the recreated Urban Councils to approve suchconstructions, and possibly ... (aontinrued as in the draft).

7. Page 18, para. 3.28, item (i):

17% not 2C%.

8. Page 18, para. 3.31, line 3:

17% not 2Qz.

- 40 -

ANNEXPage 4

9. Page 26, para. 5.02, item (ii) to be re-written as follows:

A lack of dissemination of information about criteria establishedat appraisal, first to the Regional Land Development Officers (during theperiod the town councils were abolished), and officials concerned at Ardhi;and later to the officials concerned at Ardhi and to the newly created towncouncils; ... (continued as in the draft).

10. Page 27, para. 5.08, line 12 to the end of para. to read:

incomplete development as of March 1983 (Table 2). Only ...?changes in the rate of return were noted in Sinza and Kijitonyama whereover 32% of the plots had houses completed. In Mikocheni however, whereinfrastructure costs were higher and only 23% of the plots had housescompleted the rate fell from ...?

11. Page 27, Table 6:

(Would re-estimates be different?)

12. Page 31:

An additional para. as follows:

C. Urban Councils

6.11. Although the urban councils were re-instated in 1978 theywere not brought into the Project main stream by way of participation indecision making and/or implementation. Infrastructure, where completed,was handed over to these councils for maintenance. This situation ispartially rectified in Dar es Salaam since the creation of the Consolida-tion Unit within the Dar es Salaam City Council (DCC) under Urban II.

13. Page 31, original para 6.11 will be para 6.12 and to read asfollows:

6.12 Responsibility for local administrative tasks were sharedbetween Regional Offices of the sectoral ministries. The RegionalDevelopment Directors (RDD) were under the Prime Minister's Office. TheRegional Land Development Officers (RLD) were under RDD, but for landmatters they were under Ardhi. With the reinstatement of town councils In1978, the duality in 'reporting' to the city director by the planning andland officers, and also to Ardhi has continued. The plot allottmentauthority was not dileneated, and functioned at several levels. The landofficers prepared the documents for registration and issue of titles.Occupancy rights were registered and titles issued from Ardhi'sheadquarters in Dar es Salaam. The Treasury was responsible for collectionof service charge payment.

Para. 6.13 same as para. 6.12 in PCR draft.

Para. 6.14 same as para. 6.13 in PCR draft.

- 41 --41- ~~~~~ANNEX

Page 5

.JAAGUMU YA MUUNGANO WA TAlaAN1

WEZARA YA ARDHI, NYUMBA NA MAENDELEO BIWN

Anwai ya gm: "MASTADU.e_ IARA Y. NYUMBA.Nambari ya Smu: 21241. -COPNFIDENTIAL sY.N 9y34.Unapojibu mafadhi teja: DA Es SuAAm.

r-W=--* W" § SSCj'C.80/4/SF.25/74 27th. 0tober, 1983

Mr. Shiv S. Kapur,Director,Operations Evaluation Department,1818 H Street [.W.,Washington D28O204339,USA.

PROJECT COTIPLFLETION RETORT OAT~ TANZAIIIA& FIRSTNA.IOI;AL 3I2S3 Aiss SERVICES PROJECT

(Credit 495-TA)

I have carefull rend the draft report of the firstNational Sites and Services Project and found that thebasic inform<-tion that we supplied to the supervisionmissions of the World Bank has been appropriatelyincorporated,

The report is therefore a reflection of a generalconsensus between the two parties and I would be gladto obtain a copy of the final report after it has beendistributed to the Executive Directors.

Yours sincerelys

B. B. K. kajaniPROJECT MLNAGER

NIATICI:AL SITES Ai;D :SRVICES PROJECT

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C T O R l.jA hitK E N Y A NATIONAL SITES' Musomo .- ari me- AND SERVICES PROJECT

/-N LOCATION OF PROJECT AREAS

- ,4?ukim7 \)>} '\ X g A Ist Project Locations MAlin roads'5. : - (Credit 495-TA) - +-- RailwaysN ar:_iO-~ - LAKE * 2nd Project Locations +++ TAN-ZAM railway

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Documents

World Bank Document · Data for Dar es Salaam is as of 2/82 4threas data for Nxbya and Hmza is as of 8/81. Between 8/81 and 2/82, the nuber of units occupIed In Dar es Salaam increased