InternatIonal Development assocIatIon - World...

InternatIonal Development assocIat Ion

HarnessInG UrBanIZatIon For GroWtH anD povertY allevIatIon

IDa

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Urban Development

september 2010sUstaInaBle Development netWorK

d | IDA at WORK: Urban Development

contents

Harnessing Urbanization for Growth and Poverty Alleviation 1

Benin: Improving Access to Urban Services 6

Uganda: Public Service Delivery Through Decentralized Government 8

Georgia: Developing Municipal Infrastructure, Improving Lives 10

Rwanda: Urban Infrastructure and City Management Tools 12

Yemen: Local Economic Development in Yemen Port Cities 14

Vietnam: Urban Upgrading Project 16

Urban Development

IDA at WORK: Urban Development | 1

HarnessInG UrBanIZatIon For GroWtH anD

povertY allevIatIon

Urban Development

Many developing countries are experiencing a profound population shift, from rural to urban areas with the result that their development challenges are increasingly related to rapid urbanization. The International Development Association (IDA) has responded by channeling assistance to priority areas of urban development and by dramatically increasing the number of projects and lending volume for urban development over the last decade.

CHALLENGE Over the next 20 years it is projected that over 95

percent of population growth in developing countries will take place in urban areas, with urban populations expected to increase from 2.6 billion in 2010 to 3.9 billion by 2030. In Africa and Asia alone, urban populations will increase by an average of 62 million people each year, and by 2030, 56% of the develop-ing world’s population will be living in urban areas.

This demographic transformation raises important questions about how to deliver development assistance in the decades ahead. While the shift to an urban world is a positive one, since no country has achieved middle-income status without urban-izing, urban growth if badly-managed can also bring large costs, for this generation and for future ones. Existing infrastructure is strained as populations increase, resulting in urban sprawl. Traffic clogs the streets and smog pollutes the air. Land and housing can become prohibitively expensive if land regula-

tions are too onerous and there is a lack of urban planning, resulting in the urban poor often living on hillsides and in flood plains, along railroad tracks, waste dumps and in densely packed slums. The challenge for urban development initiatives is to help national and local governments manage urban growth so it enables economic development and provides improved prospects for the poor.

APPROACHThe World Bank, as described in its new Urban

Strategy document, aims to respond to both sides of the challenge presented by urbanization: first, to assist governments in proactively preparing for new urban growth; and second, to help achieve better service delivery for urban poor populations. With an eye on both these objectives, IDA provides support on urban development is provided through five business lines: (i) City management, finance and governance; (ii) Urban poverty and slum upgrading; (iii) Cities and economic growth; (iv) Urban land, housing and planning; and (v) Urban environment, climate change, and disaster

management. These business lines focus particularly on decen-

tralization of governance (which devolves control over resources closer to the urban challenges them-selves); support for municipal contracts (which have substantially improved the performance of municipal

2 | IDA at WORK: Urban Development

governments with whom they have been implement-ed); formulation of City Development Strategies (which have helped cities leverage their economic assets and mobilize assistance); forecasting and preparing for urban growth (as the basis for providing more urban land and affordable housing and reform-ing regulations, to pre-empt slum formation); and helping cities adapt to climate change (the urban poor are more vulnerable to the impacts of climate change since they are the least equipped to deal with it). The business lines include several new initiatives, such as ‘Eco² Cities: Ecological Cities as Economic Cities’ and knowledge networks for sharing experi-ences among developing country governments. Such initiatives build on the results of prior evaluations that have found that World Bank projects are more efficient and effective when they are “wholesaled” to several cities at once rather than “retailed” to a particular city. For example, municipal development projects that serve many cities simultaneously have been successful because risk can be spread across municipalities, efficiency is encouraged through competition amongst municipalities for scarce resources, assistance is accessible to more munici-palities as long as they meet the eligibility criteria, and because economies of scale are created in capacity-building and institutional development amongst municipal staff.

REsuLts ACHiEvEd witH idA suPPORt

Three short examples illustrate tangible results measured during the last fiscal year 2010:

• InRwanda, the Urban Infrastructure and City Management project (2005-2009) focused on delivering new roads, and social and economic infrastructure (such as schools, a healthcare center, youth center, and a district administrative building). This project, funded by a US$20-million IDA grant, increased the number of residents of Kigali with access to paved roads to 488,322 by the beginning of 2010 from 355,800 in 2005. Greater accessibility helped local vendors reduce costs, and pass on the savings to consumers in the form of prices of staple foods being reduced by 18 percent in several neighborhoods surveyed. One particularly successful element of the project was its focus on contracting local firms to carry out the construction works, wherever they had the capacity. By project completion, 48 percent of works had been executed by local contractors.

IDa at WorK: Urban Development

BEFORE AFTER

KARWASA HEALTH CENTER (MUSANZE, RWANDA)


• InHonduras, the Regional Development in the Copán Valley Project (2003-2009) utilized cultural heritage as a foundation for local economic development. The project, funded by an IDA credit of US$13.2 million plus contributions from the governments of Honduras and Japan, engaged with several parts of the population: (i) indigenous peoples and women, through the provision of grants and capacity development activities; (ii) the inhabitants of six municipalities proximate to archeological parks, by helping to foster local economic growth through seed grants programs and training; and (iii) with the public administration, through increasing revenues and improving institutional capacity for urban manage-ment and heritage preservation, and assisting with rehabilitating and developing the archeological sites themselves. The project helped facilitate: an increase in expenditures by tourists from US$117 per person in 2004 to US$697 per person in 2008 and spurred a six-fold increase in annual munici-pal tax revenues between 2004 and 2008. The project was one of the contributing factors in an 8 percent annual growth rate in per capita income (compared to the national rate of 4 percent).

• InLaos, the Second Land Titling Project (2003-2009) continued work on a long-term national land titling program aimed at extending secure land ownership, plus developing land administra-tion and valuation systems, including a cadastral mapping system. IDA contributed a credit of US$14.8 million to the project, for work in urban, peri-urban and rural areas. The project prioritized equal access of women to land office services and land titling activities, and managed to issue 148,152 titles to women and 92,653 to men, and the number of formal land transactions (sales and rentals) was more than doubled. The revenue to governmental land offices, accruing from land taxes and fees, increased by 86 percent in real terms between 2003 and 2009.


PARtNERsUrban development projects in IDA countries are

often implemented in collaboration with partner organizations. Many projects are co-financed by bilateral development agencies, such as Agence Française de Développement (AFD), Gesellschaft für Technische Zusammenarbeit (GTZ), or the Swedish International Development Cooperation Agency (SIDA), regional development banks (such as the African Development Bank), and other actors such as UN-HABITAT, the Islamic Development Bank, and local urban agencies. In some projects IDA has also collaborated with the local private sector. The Cities Alliance remains a key player in many of these projects, and the World Bank Institute’s urban program is also highly active in IDA countries.


BANk fiNANCiNG ANd OtHER suPPORtIDA commitments under the Urban Development

theme more than doubled from an average of US$487 million per year between FY2001 and FY2005, to an average of US$1,036 million per year between FY2006 and FY2010. They have also grown as a percentage of total IDA commitments, from 6.2 percent of the total value of new IDA commitments between FY2001 and FY2005, rising to 8.2 percent of new IDA commitments between FY2006 and FY2010. In the most recent fiscal year, 2010, Urban Development commitments accounted for 11.9 percent of the value of new IDA commit-ments.


MOviNG fORwARd There are several priorities for IDA in urban

development. Foremost is to encourage countries to focus on urban development policy at the national level, rather than leaving it as a matter for city governments. This is because national economic success depends on having a system of productive and efficient cities. And far from ‘competing’ for resources with rural development (as urban develop-ment is often characterized), urbanization will in fact spur demand for agricultural products and encour-age greater productivity in fields and farms. Thus, IDA will be continuing its support of the five business lines above, and will be supplementing this with a new diagnostic tool (the ‘Urbanization Review’), which helps national governments identify the key bottlenecks and strategic actions to spur economic growth and poverty reduction in their cities and to understand the rural urban transformation taking place. This diagnostic tool is currently being piloted in four countries—including two IDA countries—and will be rolled out for full use from 2011 onwards.

Benin: improving Access to urban services

ChallengeBenin is a small, poor country with a population of about 8.7 million and a per-person income of approximately US$550, which is below the average for Sub-Saharan Africa. Poverty remains widespread. Nearly half of Benin’s population lives in cities—and for many, the simple tasks of everyday life are demanding. As a consequence of continued rural-to-urban migration, large pockets of dense, poorly planned slums ring Benin’s cities. There, people suffer from poor access to basic services, limited infrastructure, and difficult living conditions.

ApproachThe IDA-financed Second Decentralized City Man-agement Project (PGUD-II) was launched in 2005 to improve access to infrastructure and basic services in Benin’s primary cities of Cotonou, Porto Novo, Parakou, and the selected secondary cities of Abomey-Calavi, Kandi, and Lokossa. The primary beneficiaries were the poorest of Benin’s urban poor, who live in select slums. Specifically, about one-half of project funds aimed to provide better access to water and sanitation services, as well as shore up flood protection—thereby protecting the poorest neighborhoods from devastating seasonal flooding; an additional one-third targeted transport infrastruc-ture, namely improving road maintenance. Building on lessons from the previous IDA-funded PGUD-I that ran from 2000 to 2004, it integrated well with Benin’s national poverty-reduction strategy—which had identified urban development as essential to promoting economic growth and improving the quality of life for many of its poorest citizens.

ResultsAs of June 2009, the project rehabilitated the paving and drainage for 19 kilometers of dense urban roads, thereby providing 180,000 resi-dents better access to economic assets located in city centers (78 percent of end-of-project target); and constructed 4.5 kilometers of new, primary drainage network, protecting

Highlights• Job creation. The project supported the Govern-

ment’s efforts to create jobs by hiring community members to do the work where appropriate.

• Community participation. Community Initiative Support Units were created in all six cities for outreach. Neighborhood Development Commit-tees were established in all 14 poor neighbor-hoods that the project targeted. Local community members helped plan and implement the work.

• Stronger city finances. The project instituted better tools for service delivery, infrastructure maintenance, and fiscal management in the selected main cities. As a result, by the end of 2007 (just two years into the five-year project term), five out of six cities had already exceeded the target of raising their own revenue by 30 percent. More specifically, as of June 2009, Lokossa had exceeded its target by 275 percent, Abomey-Calavi by 55 percent, Porto Novo by 40 percent, and Cotonou by 10 percent.

• Solid waste management in Porto Novo. The project is in the process of completing the construction of a new landfill site in Benin’s second-largest city, Porto Novo. A new Solid Waste Management Department opened at the Municipality of Porto Novo and currently oversees solid-waste collection systems.



idA ContributionThe Second Decentralized City Management Project was launched in March 2005. The total project cost—including an additional credit approved in 2008—is $75 million, which IDA provided in its entirety. Given the success achieved under PGUD-I & -II, an additional financing of US$40 million was prepared rapidly to scale up the gains to serve more people and communities.

PartnersGovernment partners include: the Ministry of Labor, Social Affairs and Equal Opportunity, the Ministry of Education, the Department of Strategy and Donor Coordination and the Albanian Institute of Statistics. The United Nations Development Programme (UNDP) and the UK’s Department for International Development (DFID) provided multi-year financial support.

As of June 2009, the project rehabilitated

the paving and drainage for 19 kilometers

of dense urban roads, thereby providing

180,000 residents better access to

economic assets located in city centers.


uganda: Public service delivery through decentralized Government

ChallengeDespite almost two decades of macroeconomic stability, Uganda remains in the lower tier of low-income developing countries and carries substantial debt. Local service delivery lags as central and local governments face capacity constraints. In the mid-1990s the Government of Uganda devised a strategy for economic reform, the cornerstone of which was implementation of a decentralized system of governance with improved service delivery. Accountability at the local level, transparent and participatory decision-making, and monitoring of implementation were vital to the implementation of this strategy.

ApproachIDA funded two projects in Uganda, the Local Government Development Program and the Second Local Government Development Project (LGDP II), to support local governments and communities in better managing economic and social development. LGDP I was designed to support decentralization through a sustainable, timely, and value-conscious system of transferring development funds from the central to local governments. The second project continued this support, with additional attention to building local government capacity.

ResultsBy 2007, all major local governments had a three-year rolling development plan and almost all submitted final accounts on time to the Ugandan Office of the Auditor General. Many of these local governments registered an increase in their revenue base of 20 percent or more.

Highlights:• Severalinnovationscontinuebeyondthelifetimeof

the project. The Local Development Grants are now funded by the Government of Uganda, and the Capacity Building Grants have become institutionalized.

• Policyreformsunderthisprojectwereacceptedand implemented by government because there was a high level of ownership. Government played an important role in the preparation of analytical work, including identifying issues, preparing terms of reference, and recruiting and supervising consultants. IDA supported this process through advice and technical assistance.

• Theprojecthasalsobeeninstrumentalincreatinga national ‘market’ for training. Local governments procure training services from a list of accredited private and public providers in a competitive bidding process.

• LGDP-financedprojectshavegeneratedsignifi-cant employment growth at the local level and increased opportunities for female workers.

• Theprojecthasprovideddiscretionarydevelop-ment budget for local governments to deliver basic social services (primary education, primary health care, water & sanitation, roads, and agriculture extension) based on local needs and demands – services previously provided by sector ministries.




idA Contribution• IDAcontributedUS$80.9milliontofundLGDPI

with an additional US$9 million funded by both the Government of Uganda and participating local governments.

• UnderLGDP1,IDAassistedwiththedevelop-ment of the software necessary for systematic input and output monitoring.

• IDA’supportforLGDPIIcameintwobundles:aUS$50 million credit and a US$75 million grant (for debt vulnerable countries).

• IDA’sresourceswereprovidedincreasinglyasbudget support when Uganda developed a systematic budget-performance monitoring tool that reports on resource utilization.

PartnersThe success of LGDP I attracted four development partners who joined IDA in funding LGDP II: Danish International Assistance contributed US$2.40 million, the Government of Austria contributed US$0.30 million, the Government of Ireland contributed US$7.50 million and the Government of the Nether-lands provided US$15 million.

Next stepsIn parallel with LGDP I and II, IDA financed the Second Economic and Financial Management Project (EFMP II) to improve the effectiveness of public expenditure management. In response to EFMP II and LGDP II, the government requested a follow-up operation. IDA is currently supporting the Local Government Management and Services Delivery Adaptable Program Loan with a US$170 million credit.

By 2007, all major local governments had

a three-year rolling development plan and

almost all submitted final accounts on time

to the Ugandan Office of the Auditor

General.

Georgia: developing Municipal infrastructure, improving Lives

ChallengeFollowing the break-up of the Soviet Union, Georgia’s transition to independence was a rocky path. During the 1990s, the country experienced a precipitous economic slump. Basic urban services, especially water, wastewater, roads, and solid-waste suffered a decline in quality, coverage, and maintenance.

ApproachIDA financed a series of projects to improve Geor-gia’s basic urban services. The IDA-financed Munici-pal Development and Decentralization Project (MDDPI) was launched in 1997 to restore infrastruc-ture services and support the decentralization process. The MDDPI established the Municipal Development Fund (MDF) to help finance infrastruc-ture and manage capacity-building activities. The Second Municipal Development and Decentralization Project (MDDPII) followed in 2003 to further develop the legal framework of decentralization and municipal development. In 2008, IDA approved financing for a third project, the Regional & Municipal Infrastructure Development Project (RMIDP), to help improve the efficiency and reliability of select municipal infrastruc-ture and assist conflict-affected people by restoring infrastructure, services, and housing conditions.

ResultsThe first and second MDDP completed 129 investment projects in 20 Georgian cities. Measurable improvements were seen in roads infrastructure (paving 40 kilometers), water supply systems (improving delivery for 200,000 housing units), street lighting, education ser-vices (fixing roofs and installing heating sys-tems in schools), urban transport (maintaining the electrical supply of Tbilisi’s metro system), and solid waste management (purchasing

garbage-collection vehicles). The closed MD-DPII project (2003-07) helped improve living conditions of citizens in 9 cities where almost 50 percent of Georgia’s total population and up to 80 percent of the country’s urban population lives.

Highlights:• Water access increased. In Gori, Ozurgeti, and

Tbilisi, 100,000 inhabitants have improved access to water. Safe water supply was restored to 130,000 inhabitants in Tbilisi after the flood of 2005.

• Roads improved. Roads were improved and their capacity was increased, resulting in reduced travel time and reduced travel costs. Street lighting made conditions safer for pedestrians and traffic.

• Energy saved and costs decreased. Energy-efficient water supply and street lighting resulted in cost savings for local utilities. Energy savings were attained by shifting to gravity-based systems in water supply and using energy efficient fixtures, bulbs, and cables for street lighting.

idA ContributionUnder MDDPI (1997-2002), IDA financed US$20.9 million, of a total US$28.1 million. The MDDPII cost was US$30.9 million, of which IDA financed US$19.4 million. The current RMIDP (2008-12) has a total cost of US$65.4, of which IDA finances US$40 million The RMIDP includes the implementation of 43 infrastruc-ture subprojects throughout the country, especially in secondary cities and towns, and the construction of durable houses and infrastructure for internally displaced peoples in conflict-affected areas.




PartnersThe World Bank and the U.S Millennium Challenge Corporation (MCC) entered into an innovative partnership around the Municipal Development Fund. Under this partnership the Millennium Challenge Corporation provides US$60 million for municipal infrastructure development over the period 2006 to 2010, and the World Bank provides technical, safeguards and procurement quality assurance and supervises implementation under a fee-for-service arrangement. Other parallel financing, most notably from the European Bank for Reconstruction and Development, German Cooperation (KfW), Asian Development Bank, and Government of Japan, also targets improving municipal services and infrastruc-ture through the Municipal Development Fund.

Next stepsGeorgia appears to be on target to achieve the Millennium Development Goals pertaining to water and sanitation by 2015. However, significant invest-ment is still needed to rehabilitate poor water, wastewater, solid-waste management, and road infrastructure, as well as to continue institutional capacity building. Meantime, the Municipal Develop-ment Fund, which helps finance infrastructure and capacity building, has grown steadily as viable financial intermediary with a loan portfolio increasing from US$2.3 million in 2001 to US$18.6 million at the end of 2006. The Municipal Development Fund is expected to continue to grow and leverage additional financing for municipal infrastructure. It also aims to strengthen the capacity of local governments by supporting reforms in the legal and administrative framework of decentralization, and improve financial management procedures.

BEFORE

AFTER

Rwanda: urban infrastructure and City Management tools

ChallengeThe urban sector in Rwanda faces multiple chal-lenges stemming from a mismatch between infra-structure development/service delivery and high levels and growth rates of the urban population. The urbanization rate had reached 20 percent in 2004, up from 6 percent in 1991, with a particularly high population growth rate in Kigali, representing a threefold increase in population between 1994 and 2002. The level of infrastructure in Kigali was intend-ed to accommodate about 450,000 people, whereas the population had reached over 800,000 inhabit-ants. Secondary cities registered a twofold increase in population over the same period. Rapid urbaniza-tion had resulted in unplanned and squalid settle-ments, urban sprawl, and increasing urban poverty. More than 80 percent of the population of Kigali and 85 to 90 percent of the population of secondary cities lived in informal neighborhoods, often in areas considered precarious or unsafe.

ApproachThe Rwanda Urban Infrastructure and City Manage-ment Project (RUICMP), was designed to improve the provision of priority infrastructure and services in the cities of Kigali (about 800,000 inhabitants in 2006), Huye (about 100,000 inhabitants) and Musanze (about 100,000 inhabitants). This project built on the idea of the City Contract, a document signed between the city and the central government, detailing performance targets and commitments on both sides. The targets were based on audits (urban, financial, and organizational) carried out during the project preparation phase to identify physical and institutional priorities. The audits built on existing local development plans, and involved the participation of the local government and communities, ensuring ownership of the process and continuity of the approach. In addition, in a context where the government is keen to keep both central and local

government departments lean with a minimum of permanent staff, the use of a delegated contract management agency for civil works (Association d’exécution des travaux d’intéret public, or ASSETIP) was introduced to deliver timely and quality invest-ments.

ResultsApproximately 535,580 people in Kigali and Huye, and 70,258 people in Musanze are ben-efitting from the following improvements completed by project closing in December 2009: • Constructionof22.6kilometersofasphaltand

stone paved roads in Kigali and Huye ensuring access in slums and poor neighborhoods, better circulation, and inter-connection of districts (leading to a reduction in transport costs by up to 60 percent, and reduction in prices of staple foods by 18 percent in neighborhoods surveyed due to improved accessibility of vendors).

• Improvedsocialinfrastructureincludingtheconstruction of: (a) three primary schools (two in Kigali and one in Musanze), resulting in a decrease in the number of children per class from 60 to 46, and an increase in the pass rate from 28 to 93 percent in the schools surveyed; (b) a health care center in Musanze, resulting in a tenfold increase in family planning consultations, an increase in assisted births in health care units from 466 in 2008 to 5,130 in 2009, and a reduction by 50 percent in the number of non-assisted home births; and (c) a youth center in a poor neighbor-hood benefitting 500 youths on a daily basis.

• Improvedeconomicinfrastructurethroughtheconstruction in Kigali of the Kimironko and Kicukiro bus terminals, which have facilitated inter-district movement within the city and im-proved linkages with the neighboring areas. The Kimironko terminal is currently generating about US$40,000 in revenue per year.




idA ContributionOut of a total project cost of US$ 30 million, IDA provided a US$20.7 million grant in 2006.

PartnersThe project was designed jointly and co-funded by IDA (US$20.7 million), government of Rwanda (US$2.64 million) and the Nordic Development Fund or NDF (US$7.13 million). The NDF credit was earmarked for storm water drainage and erosion control improvements. In addition, Cities Alliance funded about US$243,000 for the Financial Manage-ment Modernization and Development Strategy for Kigali and its districts.

Next stepsAn action plan was developed prior to the closing of the project to transfer capacities and institutionalize the use of project tools by the involved parties. The project acted as a catalyst, bringing together multiple actors in the sector and facilitating the establishment, by the Ministry of Infrastructure (MININFRA), of the Rwanda Urban and Housing Authority (RHA) as a single organizational unit to implement the govern-ment’s policies in the sector. Most of the urban management tools developed under the project have been mainstreamed into national programs by MININFRA (to be implemented by RHA) and by districts. These include urban audits and City Contracts, street addressing, and slum upgrading. Financial management tools have been transferred to the Ministry of Local Administration. Anticipated support from other donors for road investments and urban management in Kigali will carry forward some elements of the urban development strategy, while some of the policy reform elements will be addressed in the Poverty Reduction Support Grant series supported by IDA.

BEFORE

AFTER

BIBARE - BAVINE

Yemen: Local Economic development in Yemen Port Cities

ChallengeYemen is facing the economic challenge of reducing its dependence on rapidly-depleting oil reserves, while developing other promising sectors by attract-ing private investment. The cities of Aden and Sana’a are experiencing rapid population growth, as well as high levels of poverty and unemployment, limited capacity at the local level, and low foreign invest-ment. Ninety-eight percent of the manufacturing and service sectors are made up of micro- and small-enterprises, indicating constraints limiting growth into larger enterprises.

Adequate infrastructure and service delivery is integral to attracting private investment, as poor qual-ity infrastructure can reduce business efficiency and productivity. In Yemen’s major cities, low revenue collection and low expenditures on service provision have compromised efficient delivery of critical services, such as road transport, solid waste management, water and waste water, and power, which have not kept pace with urban growth.

ApproachYemen’s Port Cities Development Program (PCDP) aims to improve the investment climate and encour-age growth and the creation of employment opportu-nities in three port cities: Aden, Hodeidah, and Mukalla. The 12-year program began with small-scale infrastructure investments and led to the drafting of city development strategies for each port city.

ResultsCity Development Strategies (CDS) have been developed for all three cities, laying the founda-tion for economic competitiveness.

Highlights:• Thestrategiesintroducedaparticipatoryapproach

to urban planning—including workshops and consultations with key stakeholders– which departed from previous centralized practices. These strategies actively engaged civil society and private sector stakeholders for the first time in strategy formulation and updating of the city master plans and are now being implemented by the newly established Local Economic Develop-ment Departments at the government level.

• InAden,theCDShasintroducedpoliciestodevelop the Port, Airport and Free Zone (the ‘Core’); to multiply economic value from the Core to the city economy through supply chain linkages; to create an enabling business environment for new and existing investment (by streamlining regulatory procedures, and providing efficient private sector support institutions); and to create livable and well-serviced urban environments.

• Fishingboatsthatdockatthemarkethaveincreased from 60 boats at project inception in 2003 to 200 boats in 2009. The number of fish sellers in the market has gone from 50 to 230, and the number of fish restaurants in the area has more than doubled.

• Promisingresultstodateincludeamajorupgrad-ing of a small-scale industrial area, inner city road and mobility improvements, and restoration of two facilities that now serve as a city visitor center and investor services office. Involvement of the local community and tangible improvements to the city have inspired local businessmen to contribute funds to the newly-established Private-Public Partnership Fund, including over US$350,000 to build a training center and initiate training pro-grams in Aden.




• Citydevelopmentstrategiesandupdatedmasterplans have been completed for the other port cities of Mukalla and Hodeidah and investment project design is underway to promote

idA ContributionThe project cost is estimated at US$96 million in three phases over 12 years. IDA has committed US$23.4 million in the form of an adaptable program loan for phase one. IDA technical assistance has also been mobilized in parallel, to advise on the develop-ment of a new port sector strategy, and in collabora-tion with the IFC in developing the city level invest-ment promotion capacity. IDA also organized a study tour and learning exchange with the city of Rotter-dam to provide Yemen’s port city officials with a best practice example of port city rehabilitation and measures to integrate port activity with the city economy.

Partners• TheArabFundforSocialandEconomicDevelop-

ment is providing over US$44 million equivalent in co-financing to support the expansion of a major causeway linking two commercial districts of the city.

• TheCityDevelopmentStrategiesweredevelopedwith support from Cities Alliance, including funding to carry out competitiveness analysis for each city, support for participatory workshops, and develop-ment of capital investment plans.

Next stepsThe second phase of the Program, planned to begin in 2011, is expected to focus more investments on Hodeidah and Mukalla; investigate the creation of a value chain that could deliver local economic growth within four to five years; and improve the manage-ment capacity of the three port cities, Aden, Hodeidah, and Mukalla.

BEFORE

AFTER

vietnam: urban upgrading Project



ChallengeVietnam is rapidly urbanizing, with an estimated one million new urban residents added each year. By 2020, 40 percent of Vietnam’s population of 100 million will live in urban areas/cities. As urbanization rapidly increases, the number of urban poor is also expected to increase, with major problems of access to infrastructure and basic services. Low-income urban areas are facing the challenges of low quality housing, high densities, poorly maintained infrastruc-ture, health and environmental hazards, frequent flooding due to poor drainage, and inadequate social services.

ApproachThe Vietnam Urban Upgrading Project, launched in 2004, is intended to alleviate poverty in urban areas by improving the living and environmental conditions of the urban poor using participatory planning methods, and influencing planning processes so they become more inclusive and pro-poor. These objec-tives are reflected in components of the project, including use of partnerships between communities and local governments to upgrade basic tertiary infrastructure and other services in low-income areas, providing affordable housing to low-income families that have to be resettled as a result of upgrading, establishing a housing improvement loan program for low-income households in upgraded areas, and providing technical assistance to improve land administration processes in the project cities.

ResultsMid-way through project implementation, over 200,000 low-income people have already benefited directly from improved infrastructure, such as health centers, kindergartens, community centers and primary schools.

Highlights:• Majordrainageandwastewaterworkshavebeen

completed in several cities benefiting over 400,000 additional people.

• Over36,000housingimprovementloanshavebeen made to low-income households in targeted communities with 95 percent repayment rates.

• Householdswithvalidland-usecertificateshaveincreased from about 50 percent before the project to over 80 percent in targeted communities.

• Propertyvaluesinupgradedlow-incomecommu-nities have increased 2 to 4 times.

• Participatoryplanningandcommunitysupervisionof works has been introduced in all targeted cities.

• TheNationalUrbanUpgradingStrategywasapproved by the Prime Minister in 2009.

idA ContributionIDA contributed US$222.47 million to the Vietnam Urban Upgrading Project. In July 2009 an additional US$160 million of IDA funding was approved to complete the Tan Hoa – Lo Gom canal improvement project in Ho Chi Minh City which will benefit about 1 million people.

PartnersLocal community groups contributed US$4.15 million, the Japan Ministry of Finance contributed US$4.84 million, and the Social Republic of Vietnam allocated over US$150 million of their budget to the program. Cities Alliance funded much of the original policy work leading to the program.

Next stepsThis project has paved the way for future planning by providing government capacity building, technical support for land and housing management, and the preparation of the National Urban Upgrading Pro-gram.

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