CEMAC Transport and Transit Facilitation Project Second Additional Financing Region

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB6442 (The report # is automatically generated by IDU and should not be changed) CEMAC Transport and Transit Facilitation Project Second Additional Financing Region Africa Country Cameroon Sector Transport Lending Instrument Specific Investment Loan (SIL) Project ID P Parent Project ID P Borrower(s) Republic of Cameroon Implementing Agency Ministry of Public Works cellule BM-BAD Environmental Screening { }A { }B { }C { }FI Category Date PID Prepared March 2 nd, 2011 Estimated Date of Appraisal March 31 st, 2011 Completion Estimated Date of Board Approval June 23 rd, 2011 I. Country Context 1. Country Context. The project is part of the CEMAC Trade and Transport Facilitation Program adopted by CEMAC on March 11, This program aims at promoting a greater trade integration within the CEMAC sub-region through contributing to releasing physical and non-physical transit bottlenecks along two key corridors: Douala N Djamena and Douala Bangui. With inter-regional trade of only 0.5 to 1 percent of the total trade of its member states, the CEMAC sub-region is the least integrated sub-region in sub-saharian Africa, far behind the COMESA (5 percent), the SADC (10 percent), the ECOWAS (10 percent), and the UEMOA (15 percent). 2. High transport costs and transit logistics inefficiencies have been identified as one of the main barriers to trade in the CEMAC sub-region. In 2010, Cameroon ranked 105 and Chad 115 out of the 155 world countries assessed by the World Bank Logistics Performance Index (LPI). This low ranking was particularly due to poor infrastructure (ranking of 115 for Cameroon and 126 for Chad) and customs (123 rd rank for Cameroon). In 2010, it has been estimated that transporting a 18-ton, 40-foot container between Douala and N Djamena was taking between four weeks and two months and was costing about US$8, Transport costs remain in fact among the highest in sub-saharan Africa at US$0.11 to 0.26 per ton km, compared to 0.06 to 1 Source: Survey and evaluation of the program s social and economic impacts. Mission d enquêtes et suivi Evaluation des impacts socio-économique du programme. CEMAC (2011).

2 0.08 in West Africa (corridors Lomé Ouagadougou and Cotonou Niamey) and in East Africa (corridors Moubassa Kigali and Mombassa Kampala), far above the costs observed in Southern Africa (0.05 to 0.06 for the corridors Durban Lusaka and Durban Ndola) Major transit bottlenecks in the CEMAC region lays with poor physical infrastructure but also non-physical barriers and transit logistics inefficiencies. Transit systems are indispensible for the landlocked countries in the region (CAR and Chad) whose main business centers are at least 1500 km away from the nearest port in Douala-Cameroon. Previous trade and transportation work by the World Bank and other donors have identified soft bottlenecks to transit as one of the most urgent trade facilitation issues in the region. There is a need for reforms on the policies on bonds for shipped goods, issues of delays of goods in transit (data shows that containers spend on average 19 days at the port terminal before processing), lengthy transit procedures, lack of transparency and accountability on the road load control system (abuse from agents is frequent), and excessive amount of check-points. For CAR there can be up to seven different transit documents issued by different agencies 3. Likewise, two 2009 surveys of corridors operations reported between 70 and 150 check points (legal and illegal) between Douala and N Djamena and 45 between Douala and Bangui. Each control generally lasts less than an hour and on a return trip between Douala and N Djamena, transporters have to pay on average 270,000 AF (US$580 equivalent) in legal charges and illegal bribes. Another major hindrance to trade facilitation in the CEMAC region deals with the lack of institutional capacity at regional level and to some extent at national level. 4. Despite all these constraints, trade exchanges between Cameroon, Chad and CAR are slowly increasing: between 2005 and 2008, the annual flows of freight have increased from 1.31 to 1.43 million tons (+10 percent), resulting in 57,000 heavy vehicles movements in The bulk of trade flows are from Cameroon towards Chad (452,000 tons of which 76,000 tons for gasoline and 64,000 tons for containers) and from CAR towards Cameroon (252,000 tons of which 237,000 tons for wood). Flows from Cameroon to CAR amount to 126,000 tons (of which 21,000 tons for gasoline and 20,000 tons for containers) while flows from Chad to Cameroon (57,000 tons) mostly involve cotton exports (49,000 tons). 4 II. Sectoral and Institutional Context 5. Sector Policy and Strategy. The effectiveness or transport policies in the CEMAC region is reduced by poor planning and dispersion of resources but also by poor asset management practices. Although the three countries have set up road maintenance funds financed by earmarked gasoline charges, maintenance activities are poorly planned and ineffective in optimizing the life cycle of road assets. In Cameroon, the National Road Maintenance fund has an annual budget of AF55 billion - or US$117 million equivalent, financed from the proceeds of an earmarked gasoline charge. However, a recent EU-financed audit 5 of the maintenance 2 Source: Transport prices and costs in Africa: study of the main corridors. Teravaninthorn, S. and Raballand, G. World Bank (2009). 3 Source: Central African Republic Trade and Transport Facilitation Audit, Source: Study on the establishment of a transit regime in CEMAC zone. Etude sur la mise en place d un régime de transit et d un mécanisme de cautionnement communautaire en zone CEMAC. Essomba Nguele, S., Source: Overview of Maier audits on firms and supervision firms. Récapitulatif des appréciations Maier sur les enterprises et les missions de contrôle; EU, January 2011.

3 contracts financed by the Road Maintenance Fund found that only about 45 percent of the civil works technical quality was good or fair. To address this issue, a policy dialogue has been engaged with the Cameroon Ministry of Public Works by all key donors active in the road sector to launch a pilot on the two selected corridors so that larger-scale, more effective maintenance contracts can be launched. Maintenance is critical so that rehabilitated sections of the corridors can reach a normal life expectancy and can therefore generate the desired benefits. 6. Road safety is another important policy issue so that for safe transport conditions on the corridors can be ensured. A 2008 EU-financed study 6 evidenced that between 2004 and 2007, the accident rate on the Douala Yaoundé road was 35 times higher than on a similar road in Europe, with 60 deaths per 10,000 vehicles. While human behavior is responsible of three quarters of the accidents, some infrastructure back spots were also identified. Car crashes do not only cost lives and injuries; they also have an economic cost that adds up to the high transport and transit costs along the corridor. It has been estimated that the direct and indirect impact of deteriorated safety conditions in Cameroon has a cost of 1.5 percent of gross domestic product. III. Project Development Objectives 7. The Project Development Objective (PDO) remains unchanged, as streamlined when the first additional financing was approved. The PDO is to facilitate regional trade among the CEMAC member states and improve the Central African Republic, the Republic of Cameroon's and the Republic of Chad's access to world markets. IV. Project Description 8. A description of the activities to be supported under the proposed AF is provided below, based on the conclusions of the pre-identification/identification mission. These activities are grouped under the following two components: First component: Roads and Bridge Infrastructure Improvement and Road Safety. This component will contribute to finance the rehabilitation of the road Magada - Maroua (about 60 km) whose design study has already been completed (financed by the EC). A possible separate financing on part of that section is envisaged with the EC, subject to confirmation of additional financing from that donor. If confirmed, the EC financing would focus in priority on furthering the proposed works (urban sections in Maroua and Magada). Secondly, this component will finance the reconstruction of the Tilde bridge, a major bottleneck for transit in Northern Cameroon. Thirdly, this component will finance road safety investments on the targeted corridors (such as the repair or replacement of crash/traffic barriers), using the conclusions from a road safety audit financed by the EC on the Douala - Yaounde section. It is envisaged to finance under this component a similar road safety assessment on the rest of the corridors. All road safety activities would be closely coordinated with the other donors and with the WB - TOTAL road safety initiative recently launched in the CEMAC sub-region. Finally, depending on the 6 Source: Road safety assessment and definition of priority intervention area on the Yaounde Douala road (etude diagnostique pour décrire l accidentalité et définir les priorités d intervention sur l axe Yaounde Douala).

4 residual resources (such as the ones that could potentially be freed from the separate financing arrangement with the EC on Magada - Maroua), this component may finance additional spot interventions or rehabilitation/maintenance activities on other sections of the targeted corridors (particularly on the Maroua - Dabanga section in Northern Cameroon). Second component: Transport Sector Institutional Strengthening and Operating Costs. This component will finance the project operating costs as well as capacity building and institutional strengthening activities in the transport and public work sectors. A particular attention will be granted to institutional strengthening activities that could result in faster and more agile procurement processes and to road safety. Financing Source: Borrower/Recipient IBRD IDA ($m.) Others (specify) 0.00 Total V. Implementation 9. Implementation schedule. Considering the status of preparation of the design studies for the proposed road and bridge works, it is expected that the proposed AF could be implemented in a period of four years. The closing date of the proposed AF would therefore be January 31, 2016 (i.e. one year later than the closing date of the original project and the first AF which has been set as January 31, 2015). 10. Implementation arrangements. Institutional and fiduciary arrangements will remain the same as for the initial project and the first AF. In Cameroon, road improvement activities are being implemented by the "cellule BM-BAD", a shared WB-AfDB implementing agency hosted in the Ministry of Public Works (MINTP). This unit has proved effective in managing project activities, even though some delays in management procurement activities have been observed (in large part due to factors that are external to the unit). In order to be able to absorb the additional workload and improve the timing of procurement processes, a few additional staff will be hired and additional capacity building and training activities will be financed under the second component of the proposed additional financing. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04)

5 Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37) Projects in Disputed Areas (OP/BP 7.60) * Projects on International Waterways (OP/BP 7.50) VII. Contact point at World Bank and Borrower World Bank Contact: Nicolas Peltier-Thiberge Title: Senior Infrastructure Economist Tel: npeltier@worldbank.org Borrower/Client/Recipient Contact: Louis-Paul Motaze Title: Minister of Economy, Planning and Territorial Development Tel: Implementing Agencies Contact: Jean-Michel Mbella Title: Project Coordinator Tel: (237) michelmbella2009@yahoo.fr VIII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: * 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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