National Railways of Zimbabwe -- final close-out : regional transport development II, project number 690-0248 -- project assistance completion report

The PACR focuses on the period after 1994, with emphasis on the 2/95 addition of a Commodity Import-Like Program (CILP) to finance procurement of locomotive spare parts and financial support for the Voluntary Early Retirement Scheme for NRZ. Results were mixed. On the negative side, the project was not implemented as designed and the approved inputs such as assistance to the road transport sector were not provided. Also, the impact of the project was adversely affected by the curtailment of the CILP's inter-modal transport operations component and the deobligation of $1.4 million in project funds. Finally, the repeated changes in USAID project managers did not allow for consistency of project implementation, follow-ups, monitoring of project impacts, and assessment of the project's needs. On the positive side, the project reduced the NRZ's locomotive maintenance backlog and improved the locomotive availability rates of the DE 10As and DE 11As mainline locomotives. It also achieved significant, though only limited, success, in reducing NRZ's workforce because the average payout exceeded estimates by a factor of almost 3, though it was unsuccessful in reducing the wage-revenue ratio to 35%. The financial and operational performance of the NRZ, particularly in rail freight transported and in operating revenues generated, improved significantly during the project. Prospects for sustainability of project achievements for the 1994-97 period are promising. Under a proposed World Bank-financed restructuring plan, the NRZ will be separated into three entities (infrastructure, equipment and operations) that will be either concessioned or privatized. Project assistance provided under the CILP to improve NRZ's operational and financial performance supports future concessioning or privatization of the railway by reducing the labor force and improving the locomotive availability. The new World Bank project adds to the sustainability of the project achievements by concessioning the locomotives previously maintained with USAID project assistance and taking advantage of the workforce reductions financed by USAID. The following lessons were learned: (1) For maximum impact, new or amended project elements should be closely aligned with the project's original framework. (2) Project elements should be sized to available resources, in terms of both cost of inputs and of administration and management. (3) Administrative procedures should be designed such that their cost-effectiveness considers the project's expected development impact. (4) Implementing a CILP in an open foreign exchange market environment undermines the rationale for such a program. In such an environment, private firms have unlimited access to foreign exchange and are able to import the equipment and spare parts they require. (5) The CILP was over-designed, given its stated objective, the amount of resources available for implementation, and the mode of implementation. The project could have made and sustained its achievements with far fewer management resources and in a more cost-effective manner.