PROJECT INFORMATION DOCUMENT (PID)



PROJECT INFORMATION DOCUMENT (PID)

APPRAISAL STAGE

Report No.: AB1396

|Project Name |Lagos Metropolitan Development and Governance Project |

|Region |AFRICA |

|Sector |Sub-national government administration (4%); General water, sanitation and flood protection sector|

| |(96%) |

|Project ID |P071340 |

|Borrower(s) |FEDERAL GOVERNMENT OF NIGERIA |

|Implementing Agency |Government Coordinating Unit, Lagos State |

|Environment Category |[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) |

|Date PID Prepared |January 4, 2006 |

|Date of Appraisal Authorization |January 17, 2006 |

|Date of Board Approval |March 30, 2006 |

1. Country and Sector Background

1. Background: Nigeria is the most populous country and the second largest economy in Sub-Saharan Africa (SSA). Its estimated population of 132 million people is growing at an annual rate of 3 percent. Economic growth has been stunted over the last few decades, and its per capita GDP was US$390 in 2004. Significant improvement in non-oil, non-government, private economy will be essential, for Nigeria to realize its considerable potential for growth and poverty reduction for Sub-Saharan Africa. As outlined in Nigeria’s National Economic, Empowerment and Development Strategy (NEEDS), the Federal Government of Nigeria (FGN) has initiated significant economic and financial management reforms that include improving the budgetary planning process and better collaboration between the executive and the legislature; maintaining an oil-price based fiscal rule; adopting a Medium Term Expenditure Framework (MTEF); and procurement reforms.

2. Organization of Government and Revenue Sharing: There are thirty six states in the Federation of Nigeria, a Federal Capital Territory, and 774 Local Governments. Most of the powers accorded to the States in the constitution are exercised concurrently by the States with the FGN, and few powers are assigned exclusively to States. Local Government (LG) functions are specified in the Constitution, but are subject to varying degrees of control and oversight by the SG, depending on the enabling legislation passed by the State. Because of the overwhelming share of government revenues that come from oil (75 percent of government revenues, 95 percent of export earnings), major sources of revenues[1] accrue to the FGN’s Federation Account (FA) and are shared as follows: FGN 54.68 percent, SGs 24.70 percent, and LGs 20.62. Ineffective arrangements for inter-governmental collaboration have been, and continue to be, a major short-coming of Nigeria’s federal system.

3. Urbanization characteristics in Nigeria: Nigeria’s urbanization rate of 5 percent per annum is one of the highest in the world. Nigeria will cross the 50 percent urbanization mark by 2007, making its urban population the largest of any low income country, except India. By 2020, 53.9 percent of Nigeria’s poor (as defined by income poverty) will be city dwellers. Unlike most African countries dominated by one or two large cities, Nigeria has a broadly dispersed network of cities, except for Lagos.

4. Lagos is a mega city of dominant economic importance not just for Nigeria but West Africa as well: Lagos’ population is larger than that of thirty seven African countries and the largest in West Africa. With an estimated population of 11.13 million (World Urbanization Prospects, 2003 Revision) expected to grow to over 17 million by 2015, Lagos’ population growth rate of 4.8 percent per annum is a remarkably high growth rate for a mega city. It is the premier manufacturing and port city in West Africa, has the largest concentration of multinationals in addition to almost all the financial institutions of Nigeria, and is home to almost 60 percent of Nigeria’s non-oil economy.

5. Lagos’ investment needs far exceed available resources: Despite its dominant economic status in Nigeria’s non-oil economy, and despite its internally generated revenues (IGR) being the highest of all States in Nigeria, Lagos is a “poor city”. The per capita average State expenditure in 2004 was just US$2.68. Its annual budget of about US$650 million is small relative to its basic needs. By contrast, Delhi with a population of 13.8 million people has a budget of US$ 2.6 billion; and Jakarta with a population of 11 million, has a budget of US$1.0 billion. Furthermore, soil conditions of the coastal city make infrastructure expensive in Lagos[2].

6. The productivity potential of the agglomeration is compromised due to insufficient infrastructure poor information systems, and inadequate cost recovery for O&M: Service delivery from existing limited infrastructure stock is depleted as a result of the neglect of its systematic and routine maintenance over the past three decades. Under-investment in new municipal assets due to a lack of resources has depleted further, basic service delivery to a large and growing population. Reliable data for informed planning and decision-making to credibly prioritize and target expenditures from limited resources does not exist. The absence of locally relevant information and pertinent analytic tools makes it difficult for Lagos to credibly identify, evaluate, and prioritize interventions and measure their results. The breakdown in basic systems of taxation and user charges during the military years, has entrenched a culture of non-payment for services. Establishing basic systems for the collection of user charges and local taxation in Lagos is a substantial challenge that will need to be addressed to link cost recovery to sustainable service delivery in the years to come, particularly for public goods not tied to like drainage, that will require allocations from general revenues, of which property taxes should form a substantial part. In 2000, collections from tenement rates in were only 1 percent of IGR (US$2.3 million), instead of 13% (US$30.0 potential). In Rio de Janerio, for example, property taxes are the second largest source of revenue and constitute 29 percent of IGR; in US cities, property taxes account for as much as 75% of internally generated revenues.

7. Livability is poor and there is growing inequality in Lagos: It is estimated that almost seventy percent of Lagos’ population lives in slums[3] characterized by extremely poor environmental conditions, including knee deep flooding inside homes that sweeps in raw sewage and refuse. While the average residential density for Lagos as a whole is about 260 people per hectare, the population density in poor urban neighborhoods is between 790 to 1240 people per hectare, leading to severe over-crowding. Land delivery mechanisms to deliver affordable plots of land even for the middle class, let alone the poor, do not exist. Slum upgrading is the only realistic option for improving the lives of the poor in Lagos, coupled with policies for the prevention of slums in the future.

8. Flooding affects livability beyond the poor neighborhoods: Regular flooding of large parts of the city, including at higher elevations last year, is the single most important infrastructure problem for the city, as they cause enormous damage to property and infrastructure. 43 percent of households experienced flooding in their streets last year, 16 percent experienced flooding inside their homes, and more than a third of the households undertook repairs to their property due to damage from floods. Tackling flooding problems has seemed an overwhelmingly complex task for Lagos, partly because of the large volume of resources needed, but also because of poor institutional capacity to develop and apply modern planning tools for the management of a complex drainage system. Consequently, there is no technical basis to develop a rational sequence of activities for management of the drainage sector, or to guide institutional arrangements to maximize the impact of limited resources available. Ad hoc interventions have become the norm.

9. Institutional and financial issues: While affordable solutions to reduce flooding can be found, ensuring sustained benefits from investments will require substantial institutional coordination.[4] A long-term down-stream solution to the 118 kilometers of primary and secondary drains must be developed and implemented by the ODS, so that investments by other agencies yield sustained benefits. However, in the absence of adequate, predictable and reliable funds from general revenues for the systematic and routine operation and maintenance (O&M) of the system by the ODS, any reduction in flooding through capital investments will be hard to sustain.

10. Flooding is compounded by inadequate solid waste management: Benefits from improvements in the drainage system will also require concurrent improvements in the solid waste management system, as a substantial amount of solid waste finds its way into the drains. Currently, Lagos generates about 6,000 tons of waste per day, of which 3000 tons is collected and deposited at the three official dumpsites in Lagos. Of what is collected, 42 percent is collected by the private operators appointed by the Government, and 39 percent by truck pushers or informal collectors employed by individual households, and 11 percent is dumped in unauthorized areas. The amount to be collected within 10 years will likely triple if collection efforts continue to improve. To address the service level needs projected for 10 years from today, total costs of the sector is expected to reach about US$100 million annually.

11. Public Finance and Cost Recovery: In 1997 and 1998 LASG’s IGR represented over 80 percent of Lagos’ total recurrent revenue. By 2004, the IGR[5] was about 59 percent of the total recurrent revenue, while Federal transfers accounted for the balance of 41%. Lagos’s dependence on Federal transfers and therefore increased vulnerability to oil prices is of concern. Given IDA’s on-going support for the road and water sectors, recurrent cost implications of the additional proposed investments, especially for those that are public goods and do not lend themselves to user charges, is an issue that must be addressed. LASG recognizes that increasing the volume of spending for new investments, is as necessary as adequate resources for operation and maintenance (O&M). Advancing the governance reform agenda in Lagos for integrated metropolitan development is essential for sustainable service delivery. Since Lagos has no municipal administration, and the Governor is de-facto like the mayor of a large city, Lagos is managed through the State budget, civil service, and parastatals. Policy and institutional reforms, therefore, have to be implemented at the State level with appropriate accompanying measures in the LGs.

12. The current administration has made impressive progress in fundamental areas essential for improving urban management and service delivery. Initial steps have been taken to improve the preparation of the budget through the introduction of the MTEF. Three other reforms implemented are: (i) The introduction of an Electronic Banking System of revenue collection and monitoring (EBS-RCM) leading to a near 65 fold increase in IGR in 2004[6] since 1999. (ii) The introduction of a computerized integrated financial management system (IFMIS) which has enabled the clearing of backlog in the production of State accounts, the elimination of fictitious names from the payroll, and the timely preparation of the budget since 2003. And (iii) The modernization of the land registry and record system, a key element for proper land management and further improvements in revenue mobilization, particularly from land and property taxes. Realizing the potential benefits from this however, will be elusive, unless the impasse since 2004 between the LASG, the organized private sector (OPS), and LGs over property related charges is resolved (described below).

13. To increase its IGR, simplify the existing complex regime of what are essentially property taxes, and move the process of this taxation outside the influence of Government personnel, LASG in 2001 passed the Land Use Charge (LUC) Law[7] to consolidate all Property and Land Based Rates and Charges. The State promised LGs that they would receive from the LUC, five times the tenement rates collected by the LGs in 1999. LUC collections, however, did not materialize, in part due to the inadequate integration of the lessons of tax reform into the design and administration of the LUC. Only 4% of the ratable properties, or 10,000 of the 250,000 ratable properties were covered by the LUC. Protracted negotiations with commercial property owners, led to LASG agreeing that the LUC would not be reviewed for 7 years, i.e. till 2008. This has affected the IGR of LGs as well. So LASG has focused attention on revaluation of properties for which tenement rates are levied by LGs, and LGs could levy rates in consonance with the rates being applied under the LUC (0.375 in the Naira for commercial properties and 0.125 in the Naira for other properties). During implementation, there will be a need to facilitate informed dialogue between the private sector, LASG and LGs, to seek resolution to the seeming impasse on land related charges for cost recovery issues to be adequately addressed.

14. Despite LASG’s impressive efforts to realize its vision for the management and transformation of Lagos as a “center of excellence”, much remains to be done to ensure that the management of available financial resources meets the requirements of fiscal stability, adequate planning and resource allocation for the metropolitan area.

2. Objectives

The project’s objective is to increase sustainable access to basic urban services through investments in critical infrastructure. Progress towards the objectives of the project will be measured through (i) Increase in the percentage of population with access to safe water in selected slums. (ii) Reduction in the percentage of households reporting flooding in the LGs where the selected drainage basins lie. (iii) Increase in the percentage of generated garbage in Lagos that arrives for disposal at the landfill.

3. Rationale for Bank Involvement

The project rationale derives from the IDA's substantial experience with integrated metropolitan development in large cities in China, India, Indonesia, Brazil, and Pakistan. This experience highlights that cities need not just infrastructure capital, but a sustained flow of services to contribute to growth. Sustainable services require substantial institutional reforms, including the facilitation of private sector participation - these reforms take time. IDA’s ability to provide sizable investment resources over a long period, gives IDA the comparative advantage to facilitate and sustain reform processes during the transition. IDA also has substantial experience in Lagos through sector work and infrastructure lending. To support implementation of the Bank’s 1982 Urban Sector Review of Lagos, IDA supported US$304.2 million of infrastructure investments[8] through three operations. This knowledge has been further enhanced through cross-sectoral analytic work and policy dialogue since 2003 under the Lagos Strategy, making IDA well poised to provide cohesive, multi-sectoral support for integrated metropolitan development, and importantly to continue to facilitate dialogue with diverse stakeholders on key issues like the role of property taxes in IGRs. The ongoing support for transport under the Lagos Urban Transport project (LUTP) and for water under the Second National Urban Water Sector Reform Project (SNUWSRP), were deliberatively conceived along with LMDGP, to upgrade Lagos across sub-sectors.

4. Description

The Project has the following components:

A: Infrastructure: US$ 160.89 million

A(i): Upgrading (US$39.77m); A(ii): Drainage (US$62.64m); A(iii): Solid Waste (US$58.48m)

B: Public Governance and Capacity Building: US$ 7.9 million

B (i) Public Finance Management Reforms (US$5.0 million) - (a): Updating Public Finance Legislation; (b): Consolidating the MTEF Approach; (c): Improving Budget Execution and Treasury Management; (d): Consolidating the IFMIS;

B (ii): Leadership and Policy Dialogue (US$1.6 million);

B (iii): Economic Intelligence and Service Delivery Monitoring (US$1.3 million).

C: M&E; Urban Policy Dialogue; Communications and Coordination: US$3.75 million

A. Infrastructure: US$160.89 million

A (i) Urban Upgrading: US$39.77 million : This component will build the capacity of the Lagos State Urban Renewal Authority (LASURA) to assess, develop, plan and coordinate the execution of a city-wide upgrading program, through the execution of the upgrading subprojects in nine of the largest slums identified in 1995: Agege, Ajegunle, Amukoko, Badia , Iwaya, Makoko, Ilaje, Bariga, Ijeshatedo/Itire. These slums cover 760 hectares and are estimated to be home to over 1 million people. The component will also (i) support LGs develop O&M systems and activities to strengthen maintenance of tertiary infrastructure; (ii) technical assistance (TA) for LASURA to support development of a city-wide upgrading program; (iii) TA for Ministry of Physical Planning to develop policies for the prevention of future slums; (iv) support to LGs to deliver a HIV/AIDS awareness campaign; and (v) Conflict Resolution.

A (ii) Drainage: US$62.64 million: The drainage component will develop a long-term technical solution to flooding. It will support: (i) the highest priority civil works investments to mitigate flooding; (ii) the establishment of an efficient GIS database management system using satellite imagery with relevant GIS software; (iii) a rational reassessment of drain designs to develop a prioritized construction program; (iv) a deferred maintenance program to clear the large volumes of solid waste, silt, and vegetation which has built up over the years in the absence of adequately funded drainage maintenance programs; (v) the development of a routine maintenance program to mitigate the extensive flooding that annually plagues the city; (vi) technical assistance and training to the ODS; and (vii) Conflict Resolution.

A (iii) Solid Waste Management: US$58.46 million: Solid waste activities will be unbundled to segregate collection, transfer, and disposal activities, and initiate private sector participation in transfer and disposal activities. The project will finance (i) civil works for the upgrading of six transfer stations, and two landfill sites; (ii) communal depots; (iii) technical assistance to LAWMA develop appropriate solid waste collection routes, contract instruments for private sector collection, and contract instruments for the management of transfer stations and landfills with contracts for disposal and transfer being financed by IDA; (iv) an Information, Education and Communication to raise awareness on solid waste issues in the city; (v) a HIV/AIDS awareness campaign on project sites; (vi) technical assistance to support LASEPA and MoE to enable them to better discharge their functions; and (vii) evaluations of the overall functioning of the solid waste management system in Lagos thrice during implementation.

B. Public Governance and Capacity Building: US$7.9 million

This component will support public finance and budget reforms, and the institutionalization of information systems and consultative mechanisms to achieve the following: the establishment of credible priorities and targets for State interventions; to make the State budget an effective management tool that ensures adequate allocation of resources to meet targets; and to develop and institutionalize the use of performance indicators.

B (i) Public Finance Management reforms (US$5.0 Million). To support budget preparation and expenditure management reform, the Project will finance: (i) An update of the Public Finance Legislation; (ii) Consolidation of the MTEF; (iii) Improve Budget execution and Treasury Management; (iv) Consolidation of the IFMIS for implementation by ministries responsible for the provision of economic infrastructure and social services.

B (ii) Leadership and Policy Dialogue (US$1.6 million): The Project will support additional institutional reforms and capacity building initiatives some of which are already identified, including records management, public expenditure tracking in specific sectors, leadership training, city-wide consultative forums around specific metropolitan growth and poverty related issues, and enhancement of LG performance.

B (iii) Economic Intelligence and Service Delivery Monitoring (US$1.3 million). The project will support the Office of Statistics to undertake data collection and analysis growth and poverty reduction in support of MEPB’s role for M&E. The data will help agencies plan and prioritize expenditures, monitor outcomes, and measure their performance.

C. M&E; Urban Policy Dialogue; Communications and Coordination: US$ 3.75million

This component will finance systematic monitoring of processes and intermediate results of LMDGP; knowledge management to strengthen metropolitan policy dialogue, and communications to inform and educate all stakeholders on the potential benefits of LMDGP; and operating costs.

5. Financing

|Source: |($m.) |

|BORROWER/RECIPIENT |5.69 |

|INTERNATIONAL DEVELOPMENT ASSOCIATION |150.00 |

|Financing Gap |34.10 |

| Total |189.79 |

6. Implementation

Project Steering Committee: The project will be overseen by a PSC chaired by the Governor of Lagos (or his/her representative) in his/her capacity as the chief executive of Lagos. The PSC will consist of a balanced representation from the public and private sectors. Members from the public sector would include Commissioners of principal ministries associated with the Project, one LG chairman to represent the six LGs involved in LMDGP, CEOs of the utilities and any a member from the media. The PSC will be responsible for ensuring ensure quality and timely implementation of project activities by its secretariat, the Government Coordination Unit (GCU). The PSC will convene every quarter to: (i) review progress reports prepared by the project unit, and clear the forwarding of these reports to IDA with the comments from the PSC; (ii) approve annual work programs, budgets, and procurement plans; (iii) ensure that agreed performance targets and time lines for activities under the different components are met; (iv) proactively address critical issues that could hinder the implementation of the project; (v) shield the GCU from undue political interference to ensure the GCU is empowered to perform; and (vi) ensure rapid remedial actions in the event of poor performance by GCU staff.

The Government Coordination Unit (GCU): A GCU headed by a competitively recruited, qualified director from the private sector will be established under the Office of the Executive Governor of Lagos. Other full time staff will include a procurement specialist, an engineer, a monitoring and evaluation specialist, and support staff with proficiency in IT, all drawn from LASG’s civil service or the private sector as necessary. In addition to ensuring the effective implementation of the PSC’s decisions, overall responsibility for: (i) procurement and financial management; (ii) monitoring, evaluation and reporting on progress; and (iii) coordination with component executing agencies (CEAs).

For procurement, the GCU has identified a Procurement Officer with relevant experience, familiar now with the new procurement procedures, and the generic procurement manual that is being updated by him. Procurement support will be provided by the engineering consultant firms that are recruited for the preparation of detailed engineering designs - their TOR shall include building the capacity of the Procurement Officer as well as the capacity of specific staff in the Component Executing Agencies. As per the Procurement assessment of the GCU in March 2005, the GCU will be equipped with “Client Connection: software and accessibility to allow for streamlined procurement and disbursement procedures. With respect to financial management (FM), to ensure expedited implementation and better coordination of activities between the roads, drainage and solid waste sectors in Lagos, it is proposed that FM services to the GCU be provided by the Lagos Metropolitan Area Transport Authority (LAMATA) that is implementing the IDA supported Lagos Urban Transport Project. LAMATA has an appropriately staffed Finance Department headed by a Director of Finance supported by adequately qualified accountants, as well and an Internal Audit Unit headed by a relevantly qualified internal auditor that reports to the Head of LAMATA. Staffing of these units will be enhanced to manage additional transactions as a result of an additional project. LAMATA has demonstrated its capacity to manage large infrastructure contracts, having recently received IDA’s clearance for seven contracts totaling US$40 million, each in the range of US$5 million to US$7 million. A decision on the provision of FM services to the GCU will be taken during Appraisal, after an assessment of LAMATA to provide additional services, as well as an assessment of the State Project Financial Management Unit (PFMU) in the Office of the State Accountant General.

Component Executing Agencies (CEAs): The CEAs will have the primary responsibility for the execution of the Project components falling in their respective institutional mandates including carrying out day-to-day activities in line with LASG policies and work plans approved by the PSC. All CEAs are existing agencies: LASURA (Urban Upgrading) to coordinate execution with LG Units (LG community development officer and engineer), LAWMA (Solid Waste Management), Office of Drainage Services (Drainage), and MEPB (Public Governance and Capacity Building). The head of each CEA will deploy appropriate officers from existing departments and divisions who will be entrusted with the implementation of Project activities. The strengthening of the institutional capacity of the CEAs will be supported in the context of Project execution through the provision of technical assistance, consultancy services and staff training, as necessary.

7. Sustainability

The commitment and interest that the Executive Governor of Lagos State has demonstrated for this project, is the best evidence of the Borrower’s commitment and ownership to this project. Since IDA’s engagement with Lagos in 2000, dynamic leadership from the State Government has maintained an impressive pace of weekly communication to sustain an intense policy dialogue on various issues that affect the development of Lagos with IDA. Quick decisions have been taken by LASG on key issues during preparation of the project[9], and sector policy notes for drainage, solid waste, and upgrading have been prepared by LASG.

Sustainability remains critically dependant on the availability of adequate resources and their appropriate deployment for O&M of municipal assets. Recognizing this, LASG requested the inclusion of a public finance reform component under LMDGP. To further enhance its IGRs, LASG has created a semi-autonomous body for revenue collection, after the passage of a law by FGN supporting the establishment of such units. Currently staffing in the BIRR is being rationalized, and professionals are being recruited in keeping with functional down sizing. Lessons from this will inform further rationalization and functional re-organization of LASG. To support further organizational rationalization, IDA’s Public Sector Management Unit will undertake sector work in FY07 to advise the incoming administration in 2007 on other potential areas to increase the availability of productive expenditures from available revenues.

• By the time contracts for large civil works for drainage and solid waste under LMDGP would be ready for implementation, the new administration would have to have completed re-negotiations of the LUC, as this will be a dated covenant in the Development Credit Agreement (DCA).

• Upon successful completion of rehabilitation and reconstruction of the two drainage basins included in LMDGP, as per the dated covenant in the DCA, the new administration would have to agree on betterment levies to be charged from the property owners in Ajeromi-Ifelodun and Mainland LGs, so these annually collected levies accrue towards implementation of a once every three-year maintenance cycle, as well as towards payment to management contracts for transfer stations and landfill site.

To facilitate metropolitan communication and high level negotiations on both the elements above critical for cost recovery, IDA will sustain engagement with Lagos on metropolitan management issues that affect LMDGP indirectly, in addition to traditional project supervision. Prior to project preparation, IDA participated in the annual Economic Summits that were the hallmark of the first term of the current administration, bringing together the OPS and CSOs to engage in dialogue on development issues facing Lagos. This dialogue strengthened city-wide partnerships and influenced LASG budget priorities. Participation in these summits enabled IDA to both gain and share knowledge on local taxation, economic development, and urban management issues with diverse stakeholders, broadened IDA’s client interlocutor group, and established a foundation for longer-term, sustained and strategic engagement with Lagos. LMDGP’s support for the revival of such forums, and IDA’s participation in them will be critical not just to support progress on necessary reforms, but importantly, to build a dialogue with the new administration in 2008 and mitigate against the political risks associated with the elections that could lead to multiple parties in power at State and LGs.

8. Lessons Learned from Past Operations in the Country/Sector

The World Bank’s Operations Evaluation Department’s report “Improving the Lives of the Poor through Investment in Cities: Update on the Performance of the Urban Portfolio” (2003) highlights the following key factors at the project level, that can help determine good outcomes; (i) build on past operations, and involve beneficiaries; (ii) ensure unequivocal borrower ownership; (iii) maintain explicit focus on scaling up urban poverty interventions, avoid straining the borrower’s resources and implementation capacity; and (iv) ensure systematic M&E and reporting on results of poverty alleviation.

Policy Dialogue: The lessons above, informed the crafting of the multisectoral analytic work and policy dialogue, under the “Lagos Strategy”, IDA’s ESW supported by Cities Alliance and other donors. Stocktaking of existing knowledge, followed by structured consultations with MDAs, LGs, private sector and civil society organizations, helped establish priorities to be addressed by LMDGP. This dialogue with a diverse group of stakeholders has ensured broad and unequivocal ownership of LMDGP. As a result LMDGP is a multisectoral project that includes governance and public finance components, not traditionally included in infrastructure operations. This dialogue will be sustained by IDA beyond the scope of project supervision.

Building on past operations and scaling up urban poverty interventions with unequivocal ownership: Building on past operations, LMDGP has also integrated lessons from three IDA-supported projects in Lagos. Community participation, therefore, is central to the design of the upgrading interventions proposed. Scaling up slum upgrading as a focused poverty intervention, has been informed by the lessons from a demonstration upgrading intervention supported by IDA in 1999. Furthermore, since 2000, scaling up upgrading has been central to IDA’s dialogue with LASG. The granting of autonomy to the solid waste authority (LAWMA), a lesson from the last intervention in the sector, has been agreed to by LASG, and is a core element of the sector policy adopted by LASG for the sector. Unequivocal ownership of LMDGP interventions built over the years, through the policy dialogue, has been reinforced, as LMDGP is overseen by a coalition from government and the private sector.

Implementation arrangements to enable coordination of metropolitan functions: Since the Office of the Executive Governor bears ultimate responsibility for the coordination of metropolitan functions, the Government’s Coordination Unit (GCU) for the project will report directly to the Executive Governor, as do the heads of the water, transport, and solid waste agencies. The GCU will coordinate execution of the project by existing institutions and MDAs in keeping with their mandates and responsibilities.

M&E and reporting on results of poverty alleviation, especially from the city to the sector/strategic levels: Recent surveys of firms and households managed by MEPB’s Office of Statistics, have filled strategic knowledge gaps at the metropolitan level, and established a baseline for MEPB’s monitoring system to provide measurable, location specific results of growth (employment) and poverty (service delivery) outcomes. This data and analysis will be repeated under LMDGP, and shared with citizens through feedback mechanisms, to allow them to track changes in growth and poverty alleviation outcomes over time.

9. Safeguard Policies (including public consultation)

|Safeguard Policies Triggered by the Project |Yes |No |

|Environmental Assessment (OP/BP/GP 4.01) |[(] |[ ] |

|Natural Habitats (OP/BP 4.04) |[ ] |[(] |

|Pest Management (OP 4.09) |[ ] |[(] |

|Cultural Property (OPN 11.03, being revised as OP 4.11) |[ ] |[(] |

|Involuntary Resettlement (OP/BP 4.12) |[(] |[ ] |

|Indigenous Peoples (OD 4.20, being revised as OP 4.10) |[ ] |[(] |

|Forests (OP/BP 4.36) |[ ] |[(] |

|Safety of Dams (OP/BP 4.37) |[ ] |[(] |

|Projects in Disputed Areas (OP/BP/GP 7.60)* |[ ] |[(] |

|Projects on International Waterways (OP/BP/GP 7.50) |[ ] |[(] |

10. List of Factual Technical Documents

1. Study of Nine Slums by Stoveland Consultant in 2002, updating data from 1995 by Lavalin.

11. Contact point

Contact: Deepali Tewari

Title: Senior Municipal Development Specialist

Tel: (202) 473-0866

Fax: (202) 473-8249

Email: Dtewari@

12. For more information contact:

The Info Shop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-5454

Fax: (202) 522-1500

Web:

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[1] The most important taxes collected include taxes on the income of companies, petroleum profits and value added taxes, import and excise duties, crude oil sales, liquefied natural gas sales, and tax on petroleum products. There are two other sources of revenue: the Education Tax, which is derived from a 2 percent tax on corporate profits, and is given to Federally selected educational institutions for specific projects; and the Value Added Tax (VAT) collected by the FGN, and shared amongst the three tiers of Government: FGN 35 percent, SGs 50 percent based on derivation, and LGs 15 percent.

[2] It is estimated that a functioning immediate funding needs for drains and roads is about US$ 260-270 million, with medium term needs estimated to be about US$520 million. A functioning well managed drainage network is expected to require between US$80-90 million over the next five years, while the road network will require over US$715 million over the next five years. For water supply, expansion according to master plans is expected to cost US$2 billion over 20 years.

[3] Community Infrastructure Upgrading Program, SNC-Lavalin International, 1995

[4] Office of Drainage Services (ODS) under the Ministry of Environment (MoE), the Public Works Bureau that reports through a Permanent Secretary to the Ministry of Works (MoW), the newly created agency called the Drain Ducks that reports directly to the Commissioner for MoW with funds allocated through the Public Works Bureau, and with the twenty LGs, sixteen of which are within the metropolitan area.

[5] IGRs were about US$ 250 million, using an exchange rate 1US$ equal to Naira 130.

[6] IGR stood at about US$233 million in 2004, using an exchange rate of Naira 140 to the US$.

[7] The LUC Law (#11) consolidated all property and land based rates and Charges payable under the land Rates Law, the neighborhood Improvement Charge law, and the Tenement rates law in the state into a Land Based Charge, called property land Use Charge (LUC). States in Nigeria are entitled to Ground Rents or Neighborhood Improvement Charges. LGs are entitled to collect Tenement Rates. In 1997, Lagos collected less than 5% of land related revenues, LGs less than 25%. By 2000 the LGs were collecting less than 8%, with much lost through “leakage”.

[8] Lagos Solid Waste and Storm Drainage Project (LN 2620 1985-1993), the Lagos State Water Supply Project (LN2985 1989-1997), and the Lagos Drainage and Sanitation Project (CR2517 1992-1999).

[9] For example, for drainage, LASG created the Office of Drainage, reporting to the Executive Council through a Permanent Secretary. For solid waste, LASG appointed a dynamic new team to manage LAWMA. Measurable results from improved sector management became evident within months of making the changes. For upgrading, Also, LASG has passed a law designating all slums as “special districts” for scaling-up upgrading to all its designated slums, and giving LASURA the mandate to coordinate all investments in slums with other agencies. The passage of this law is a manifestation of the Executive Governor’s commitment to a city-wide slum upgrading program.

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

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