Malawi Unpaved Roads Programme – Stage 1 Business Case
STRATEGIC CASE
What support will the UK provide ?
Estimate of £12m over 2012–2015, as part of a multi-donor trust fund
managed by the World Bank (the overall size is to be determined, WB to
contribute £18.7m, and the EC potentially £9.2m). The contribution of the
GoM is not yet known, and other donors may come forward.
A. Context and Need for DFID Intervention
Effective means of transport – of people and goods - is crucial for growth and
poverty reduction in Africa. By raising productivity, increasing production and
reducing transaction costs, effective transport increases economic activity, so
contributing to job creation and growth. In addition, whilst growth rates across
Africa have improved in recent years, the lives of many Africans remain
unaffected by growth, and poverty remains widespread. With the right kind of
transport improvements, poor people can be connected to growth processes,
for example through jobs or mobility, leading to more inclusive growth.
As with most African countries, Malawi suffers from an infrastructure deficit.
The World Bank’s 2009 Country Economic Memorandum (CEM, 2009) found
that the paved trunk road network was not a major constraint, but did identify
Malawi’s infrastructure deficit as being particularly acute in the area of
unpaved rural roads. Freight transport on unpaved rural roads is up to 20
times more expensive in tonnes per km terms than that on international routes
(MK 10 per ton per km to transport goods linking the country to international
markets, and MK 230 per ton per km to transport goods from rural areas to
the country’s main cities). Yet, 80% of the population of Malawi depends on
small scale rural agricultural production for their livelihoods - unpaved roads in
rural areas should provide the access which is important to allow this
production to evolve from subsistence level to higher levels of income.
The CEM attributes the high costs of freight transport on unpaved rural roads
to i) the poor quality of feeder roads linking farms to main roads, ii) low traffic
volumes which reduced the competition for trucking services. The 2009
survey data from the Roads Authority Road Data Management System
indicated that only 10% of the 11,400 km unpaved network was in good
condition that year (with 53% and 37% in fair and poor condition respectively),
compared to 77% of the 4,000 km paved network being in good condition
(with 21% and 2% in fair and poor condition respectively). The condition of
unpaved roads is also subject to significant seasonal variation due to the high
level of deterioration that can occur during the rains. Inaccessibility of rural
roads has a direct impact on agricultural productivity, as set out in the 2006/7
Agriculture Inputs Subsidy Programme (AISP) Review. For example, once
the rains start, fertiliser cannot reach rural suppliers on time contributing to
low levels of stocks in remote selling points. Rural people are forced to travel
to more distant markets to access fertiliser. Also, harvest time for the maize
and tobacco crop is soon after the rains have finished, when the roads are at
their worst. In summary, access to markets and suppliers for rural people is
constrained by poor roads which are not all-weather.
The poor state of the unpaved road network can be put down to the current
reactive regime of road maintenance and rehabilitation, which is ineffective
and represents poor value for money. The frequent impassability suffered by
rural communities drives political pressure from the public for expensive
upgrading of earth roads to surfaced standard to deliver all year access. Yet
a more effective maintenance regime for earth roads would prevent the need
for this expensive upgrading. Analysis by a leading expert on technology and
management options for road maintenance concluded that the provision made
by the Government for earth road maintenance in the 2008/9 budget (£6.5m
was set aside to fix the worst earth roads) was enough to fully fund the
maintenance requirement of the whole unpaved network if the network was in
a maintainable condition and appropriate technologies and implementation
approach were used1. Instead, the backlog of unpaved road rehabilitation
means that the available financial and physical resources end up being
deployed in a ‘restorative’ maintenance using heavy equipment that is both
costly to run and difficult to maintain in remote locations. Furthermore, the
approach exacerbates the material loss from the road surface and causes
problematic ‘sunken’ road sections.
Without a significant change, the current regime will lead to continued
deterioration, with a significant negative impact on the rural economy,
services delivery, social development, and food security. The Malawi Growth
and Development Strategy (MGDS) acknowledges this and identifies the need
to improve the state and ongoing maintenance of the country’s unpaved rural
roads as part of its focus on improving the country’s overall infrastructure.
The MGDS has a goal of achieving 71% of the network in good condition and
the rural population living within 2km of an all-weather-road by 2011. The draft
MGDS II notes that ‘most feeder roads are still in a poor condition, especially
in rural areas’, and that ‘the enormous backlog (of) road maintenance… has
led to high transportation costs in most parts of the country’, and identifies
transport infrastructure as a key priority area, though specific targets have yet
to be released.
Why a DFID intervention is justified
The World Bank and the European Union provided an Advisory Report to the
Ministry of Finance2 which led the GoM to request DFID to support the
initiative to bring the whole of the unpaved road network to a good condition
and establish an effective and sustainable maintenance regime.
DFID worked with the GoM to prepare a proposal for a Malawi Unpaved
Roads Programme (MURP). A considerable amount of design work was
carried out, including the preparation of a Project Memorandum, and drafts of
1
2
DFID concept note, prepared during early design work for MURP, 2009
The Malawi Transport Sector Multimodal Development and Potential Public Private Partnership Study, 2010
an economic appraisal, fiduciary risk assessment, and environmental, social
and gender, and institutional assessments. This initial proposal was put on
hold as DFID re-assessed its strategy in Malawi as part of the Bilateral Aid
Review and Operational Plan process, and the Millennium Challenge
Corporation decided to focus its activities in Malawi on energy rather than
transport, but DFID continued its investment in the design of this programme
through the contracting of a transport expert in the World Bank office in
Lilongwe. DFID therefore has a considerable sunk cost investment in this
programme.
The World Bank has now agreed to lead a re-organised version of this project,
as part of its major focus on supporting agriculture in Malawi. The World
Bank aims to build on the existing preparatory work conducted by DFID to
complete the design phase of the programme. The World Bank will initially
incorporate this rural roads programme into its existing Agriculture
Development Programme – Support Project programme, soon to be re-named
the Agriculture SWAp Support Programme. This will be Phase 1 of the
programme. In Phase 2 a follow-on project will be developed as part of the
Agricultural Commercialisation and Rural Growth Project to be developed
under the Bank’s new (and yet to be released) Country Assistance Strategy
(CAS). This Business Case purely relates to Phase 1. This approach
ensures:




The programme can move ahead as quickly as possible thanks to the
phased approach since it does not need to wait for the Bank’s new
CAS to be implemented. This avoids delay leading to a further
deterioration of roads, increasing the cost of rehabilitation and
maintenance, and making the existing analysis carried out by DFID
redundant.
the considerable experience and expertise of the World Bank in
implementing major infrastructure programmes can be applied to the
challenge of improving Malawi’s rural road network.
Donors, including DFID, will be aligned through a World Bank Multidonor Trust Fund to support rural road improvements. This will enable
us to help deliver results in a sector crucial for removing a barrier to
growth and export diversification, whilst taking advantage of the Bank’s
expertise and leadership in this area.
Coherence with a broader package of World Bank support to the
Agriculture Sector involving agricultural diversification and market
access, creating employment in rural areas, supporting SMEs in the
construction sector through an increased workload, building capacity to
implement infrastructure works at local level.
More generally, this programme is consistent with DFID’s high level ambition
as set out in its Business Plan 2011-2015, with its strong focus on boosting
economic growth and wealth creation. DFID support to this programme is
also consistent with an intensified focus on value for money – this is
suggested by the high Benefit to Cost Ratios estimated in the existing design
work (see Table 1 below) and the emphasis of the programme on ongoing
maintenance of rural roads once they have been rehabilitated. According to
the World Bank3, every £1 spent on preventative maintenance on roads will
save £4 on rehabilitation. The programme is also expected to ‘crowd in’
private investment – public spending on roads expands investment
opportunities and raises the return to private investment.
Finally, the programme will also attempt to address the issue of poor
competition for trucking services. Whilst it is hoped that improved road
conditions will enhance competition for trucking services, the role of
intermediate means of transport (IMTs) in reducing transport costs will be
further explored. Support for the purchase of IMTs for farmers will be piloted
in Phase 1 of the programme, and included in Phase 2 of the programme
should such support found to be required.
Table 1: Appraisal Results
Km
Net Present Value [$ m]
Benefit to Cost ratio
Rehabilitated
Sections
8302
55.54
6.6
Sections
in Good
Condition
2986
6.28
11.6
Unpaved
Network
11288
61.82
6.9
Finally, the proposed programme contains important elements supporting
DFID’s Business Plan’s ambition to benefit women and to be ‘climate smart’.
Improved roads should increase visits to health care services and provide
more timely access to emergency services (helping to reduce Malawi’s high
rate of maternal mortality), improve access to education and provide greater
access to urban markets (girls are under-represented in school and women
often depend on trade for their livelihoods, purchasing perishable and nonperishable goods in villages to sell in urban areas).
The programme is intended to allow continued accessibility during Malawi’s
rainy season through appropriate measures to control storm water and its
erosive effects. The activities of upgrading and maintaining rural unpaved
roads may cause some environmental impacts that may be reversible
depending on their magnitude. The programme will integrate the principles of
Malawi’s National Environmental Policy (2004) so that works are carried out in
an environmentally responsible manner.
B. Impact and Outcome
The programme will involve substantially reducing the costs of rehabilitation
and maintenance of the unpaved road network through:
1. Rehabilitating currently ‘un-maintainable’ unpaved roads – this make
use of proven labour-based and appropriate equipment technology to
3
World Bank (2009) Africa’s Infrastructure: A Time for Transformation, Africa Infrastructure
Country Diagnostic. Washington, DC: World Bank.
rehabilitate roads that are not currently ‘maintainable’ using low cost
methods;
2. Preventative maintenance of unpaved roads that have been
rehabilitated or already in a satisfactory condition – this regime will use
simple equipment and methods that have successfully maintained rural
roads to a high standard in Zimbabwe and Mozambique.
3. Spot improvements of sections of earth roads - mainstreaming
technologies to deal with problem sections, such as watercourse
crossings, sunken, and problem soil sections. Whilst these sections
probably constitute less than 10% of the entire network, they can often
result in a greater share of the network becoming difficult or impossible
to pass.
4. Selective upgrading of high traffic earth roads to a low cost paved
standard
All four approaches above are tried and tested in the region and elsewhere
and none rely on expensive contracting methodologies, techniques or
equipment. They generally involve tractor-based technologies complemented
by labour-based methods. The programme will also prioritise feeder roads in
areas of high agronomic potential where farmers’ costs are significantly
affected by the poor quality of feeder roads.
The impact of this programme will be to reduce rural poverty by raising
household incomes and agricultural productivity
The outcome of this programme will be to increase rural connectivity and
reduce rural transport costs by rehabilitating the earth road network to bring it
to a condition where cost effective maintenance methods will work, and
introduce a sustainable maintenance regime.
The following outputs are expected:
 Improved condition of the unpaved road network
 Increased coverage of term maintenance contracts
 Reduction in transport costs between primary long haul routes and
rural access routes
 Increased adoption of labour based and intermediate equipment in
rural road construction, rehabilitation and maintenance
 Stronger awareness and mainstreaming of cross cutting issues and
measures of gender, HIV/AIDS, environment and road safety among
the rural roads actors including communities, contractors, Roads
Authority and Local Authority Staff
The rehabilitation of some 8,700 km of earth roads which are in fair and poor
condition, spot improvements of 1,140 km of problematic sections of road and
the subsequent maintenance of 10,000 km of unpaved roads are proposed as
the physical outputs of the project.
Sustainability
A major focus of this programme is to ensure sustainability through making
on-going maintenance of the earth road network affordable within the existing
Government budget. The programme will be implemented by the National
Roads Authority (a parastatal reporting to the Ministry of Transport), which will
receive programme funded technical assistance to ensure efficient and
effective procurement. The programme will be administered using national
financial management and procurement systems, with funds accounted for
through normal GoM accounting and audit systems. District Administrations,
which work with RA staff in the implementation of rural road contracts, will
play an increasing role in the maintenance of unpaved contracts, and private
contractors will undertake much of the work. Capacity building support to
local authorities and the private sector is also expected to ensure the
programme leads to a sustainable, affordable maintenance regime for
unpaved roads in Malawi.
APPRAISAL CASE
A. Determining Critical Success Criteria (CSC)
The full Appraisal Case will be completed as part of the design work.
However, an initial indicative set of Critical Success Criteria is included below.
CSC
1
2
3
4
5
6
Description
Project likely to deliver sustainable change,
so that roads are maintained by GoM once
the project is complete.
Procurement of construction services is
managed so that optimal value for money is
secured.
Road network is upgraded in such a way as
to optimise benefits for economic growth and
rural development.
Project
aligned
with
and
part
of
Government’s overall transport strategy.
Capacity of National Roads Authority (and as
appropriate other bodies such as Local
Authorities involved in roads maintenance)
built to deliver longer-term benefits and
assist sustainability.
Project harmonised with other donor activity
in the sector.
Weighting (1-5)
5
5
4
3
3
3
B. Feasible Options
Feasible options will be developed in more detail as part of the detailed
design work. But an indicative set of options are:
Option 1 -
‘Do nothing’ – DFID does not have a programme in the
roads sector
Option 2 -
‘World Bank led project’ – DFID provides funds to the
unpaved roads component of the World Bank-led
Agriculture Development Programme.
Option 3 -
‘DFID roads project’ – DFID develops its own unpaved
rural roads project targeting priority areas.