MINISTRY OF URBAN DEVELOPMENT AND

CONSTRUCTION

URBAN REVENUE ENHANCEMENT, FUND MOBILIZATION AND

FINANCE BUREAU

CLIMATE-SMART CAPITAL INVESTMENT PLANNING

(CS-CIP) MANUAL FOR ETHIOPIAN ULGs

REVISED 2021

(June 2021 Draft)

______________________________________ CITY ADMINISTRATION THREE-YEAR

ROLLING CAPITAL INVESTMENT PLAN FOR THE PERIOD EFY 20___ TO 20___

DATE:__________________
 TABLE OF CONTENTS

SECTION 1: INTRODUCTION…………………………………………………………………………3
1.1 Objective.......................................................................................................................................................3
1.2 Users..............................................................................................................................................................3
1.3 Structure........................................................................................................................................................3
1.4 Climate Change, Carbon Mitigation, and Resilience in Ethiopian Cities.....................................................3
1.5 Urban Institutional and Infrastructure Development Program (UIIDP).......................................................5
1.6 Ethiopian Cities Sustainable Prosperity Goals..............................................................................................6
1.7 Ten-Year Perspective Development Plan.....................................................................................................8
SECTION 2: THE CAPITAL INVESTMENT PLANNING PROCESS………………………….10
2.1 Key Planning Components Ethiopian Cities...............................................................................................10
2.2 Capital Investment Planning in Ethiopia.....................................................................................................10
2.3 Climate-Smart Capital Investment Planning...............................................................................................11
2.4 Connection to Asset Management Planning...............................................................................................11
2.5 Connection to Revenue Enhancement Planning.........................................................................................12
2.6 Organizational Team for Capital Investment Planning...............................................................................13
SECTION 3: CLIMATE-SMART CAPITAL INVESTMENT PLAN PREPARATION STEPS...15
Step 1. Front Matter.................................................................................................................................................15
Step 2. City Baseline Information...........................................................................................................................15
Step 3. CS-CIP Setup..............................................................................................................................................16
Step 4. Project Delineation......................................................................................................................................17
Step 5. Project Criteria, Weighting, Scoring, and Prioritization.............................................................................18
Step 6. Project Carbon Reduction...........................................................................................................................19
Step 7. Capital Budgeting........................................................................................................................................19
Step 8. Project Costing and Funding.......................................................................................................................20
Step 9. Rolling CIP, Funding, and Budget..............................................................................................................21
Step 10. Capacity Building, Staffing, and Jobs........................................................................................................21
Step 11. Checklist.....................................................................................................................................................22
Step 12. Appendixes.................................................................................................................................................22
SECTION 4: REGIONAL REVIEW AND APPROVAL OF ULG CS-CIPS...............................24
3.1 Context........................................................................................................................................................24
3.2 The CS-CIP Review and Approval Process................................................................................................24
PARTICIPATION AND PERFORMANCE AGREEMENT..........................................................25

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SECTION 1: INTRODUCTION
This climate-smart Capital Investment Planning (CS-CIP) Manual has been developed by the Ministry of
Urban Development and Construction (MUDC) for use by all Urban Local Governments (ULGs) in
Ethiopia and their respective Regions as well as by the federal Ministry.

The MUDC has also developed a separate climate smart CIP Template to be used by the ULGs in
preparing their Three-Year Rolling Climate-Smart Capital Investment Plans. The Template is available as
a Model in a separate spreadsheet document.

1.1 Objective
The objective of this climate-smart Capital Investment Planning Manualis to provide background and
guidance to Ethiopian citieson the preparation of climate-smart capital investment plans.

1.2 Users
This CS-CIP Manual is chiefly intended for use by:
 Urban Local Governments
 Regional bureaus and agencies
 The Ministry of Urban Development and Construction
 The Ministry of Finance & Economic Cooperation
 Consultants providing capacity building to ULGs
 Consultants carrying out ULG Annual Performance Assessments

1.3 Structure
This CS-CIP Manual is structured as 4 sections, including this first introductory section.

Section 2 describes the capital investment planning process, its links to the asset management plans
(AMPs) and revenue enhancement plans (REPs), and the organizational structure for preparing CS-CIPs.

Section 3 details the steps for preparing aCS-CIP.

Section 4 presents the CS-CIP review and approval process for ULGs’ respective Regions.

1.4 Climate Change, Carbon Mitigation, and Resilience in Ethiopian Cities

Climate change significantly impacts Ethiopia. The country is one of the world’s most drought-prone, and
both the frequency and intensity of droughts have increased at least since 1970. 1 With escalating climate
change, droughts are predicted to become even more severe. The mean annual temperature in Ethiopia
increased 1.3°C between 1960 and 2006, and is projected to rise a further 1.4°-2.9°C by 2050. 2 Between
1960 and 2003, the average annual number of hot days increased by 20%, while the average annual
number of hot nights increased by 37.5%.3 These extremes are expected to intensify; by 2060, between
15-29% of days will be considered “hot,” and the country will experience more warming in all seasons. 4
Ethiopia also experiences more intense precipitation during extreme weather events. While increases and
decreases in rainfall will vary throughout the country, mean annual rainfall, the proportion of heavy

1
Simane, Belay, et al., “Review of climate change and health in Ethiopia: status and gap analysis.”Ethiop J Health
Dev. 2016:30 (Spec Iss 1).
2
Ibid.
3
“Ethiopia: Climate Data: Historical.”World Bank Group Climate Change Knowledge
Portal.<https://climateknowledgeportal.worldbank.org/country/ethiopia/climate-data-historical>.
4
Wasley, Emily, et al., “Climate change risks and opportunities report.” USAID/Ethiopia. Dec 2016.

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precipitation events, and rainfall variability will all increase as well. With changing rainfall patterns,
extreme flooding in Ethiopia has also increased, and is projected to continue to rise. 5

Ethiopia is highly vulnerable to the impacts of this climate change. Droughts, for example – Ethiopia’s
most destructive climate hazard – have caused widespread famines, water shortages, malnutrition,
disease, conflict, and other effects. Rapid population growth, high poverty levels, reliance on rain-fed
agriculture, high environmental degradation, and food insecurity increase the country’s climate
vulnerability.6

Ethiopia’s urban population of 23.5 million peoplerepresents 21% of the country’s population, and is
growing at an annual rate of 4.8%.7But with increasing urbanization, Ethiopia is witnessing significantly
higher levels of greenhouse gas (GHG) emissions, specifically of carbon dioxide. 8Ethiopia’s GHG
emissions grew by 86% between 1993 and 2011. If trends hold, they will more than double by 2030.9The
single largest factor contributing to GHG emissions in Ethiopia is land use change, often related to
deforestation and urban development.10Typically, these emissions are driven by the greater use of
electricity, heating and fuel use, transportation, waste, and other factors that concentrate in cities. These
GHGs contribute to global warming and climate change, and locally create more pollution, heat, and
exposure to climate and disaster events. To counter these trends, Ethiopia has pledged to cut emissions to
below its 2010 levels; this commitment is considered to be exemplary, especially within Africa. 11To meet
this goal as Ethiopia’s cities grow and experience accelerating human- and climate-driven changes, basic
urban infrastructureand services will need to be designed and implemented in ways that both mitigate the
carbon emissions of the infrastructure itself and lowers greenhouse gas emissions for the wider cities
overall.

Resilience to the climate changes brought about by greenhouse gas emissions is also key for cities in
Ethiopia. Urban expansionreduces surrounding water catchment areas and agricultural lands, stretching
urban resources beyond what they can cope with, raising the risk of drought, and lowering natural disaster
defenses. Increased sealing of the soil and construction of impervious surfaces, along with inadequate
drainage, intensifies water flows and increases urban flood risk. Meanwhile, the densification of urban
structures without adequate planning, and encroachment of urban development on green spaces and water
features increases temperatures and urban heat islands. Inadequate planning and standards as cities
burgeon increases the concentration of air pollutants from vehicles, industry, and houses, leading to health
problems and rising costs. A full 64% of the urban population lives in slums.12Building resilience to
climate change and disasters in Ethiopian cities is therefore an urgent undertaking, for improving the lives
of urban residents and for attracting jobs and investment.

Ethiopia’s cities experience climate effects substantially. Droughts, floods, rainfall variation, torrential
rains, and heatwaves, as well as air pollution, all impact food consumption, nutrition, health, livelihoods,
living conditions, mobility, and other basic aspects of urban life. Many Ethiopian cities are also exposed

5
Ibid.
6
Simane, et al.
7
“World Bank Open Data.” World Bank Group. <https://data.worldbank.org/>.
8
Nkam Taka, Gideon, et al. “Determinants of energy-based CO2 emissions in Ethiopia: a decomposition analysis
from 1990 to 2017.” Sustainability. 2020:12.
9
Gebre, Tewelde and Fekadu Nigussa. “Greenhouse gas emission reduction measures in the urban road transport
sector of Ethiopia.” Environmental Progress & Sustainable Energy. 2019:38, no. 5.
10
Engdaw, Besfat D. “Assessment of the trends of greenhouse gas emission in Ethiopia.” Geography, Environment,
Sustainability. 2020:13, no. 2.
11
Cusick, Daniel. “Ethiopia aims for a bright, green climate future.” Scientific American. 13 Oct 2015.
12
“World Bank Open Data.”

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to earthquakes and volcanos.13These phenomena are increasing in both frequency and intensity.
Altogether, these forces threaten urban economies, the capacity for local economic development, and the
ability to adapt sustainably to a changing climatic future. Ethiopian cities often lack infrastructure that is
resilient to these collective effects, as well as basic emergency response resources. In many cities, poor
land management, deficient housing, low construction quality, and inadequate infrastructure such as
urban drainage and flood control systems, solid waste management facilities, energy supply, water
supply, and others increase cities’ risks.14

Ethiopian cities thus need to devote budget and staff to plan, mainstream, and implement climate and
disaster risk management, lower their carbon emissions, and strengthen their resilience to climate and
disaster effects. Boosting the resilience of urban infrastructure is one of the most impactful ways ULGs in
Ethiopia can improve their long-term sustainability in the face of climate and economic uncertainty, and
is indeed essential for lowering greenhouse gas emissions and urban asset and population exposure and
vulnerability to shocks and stresses from climate change and disasters. 15A capital investment planning
process that enhances the climate resilience and reduces the carbon emissions of the urban infrastructure
investments it considers and indeed Ethiopian ULGs overall is a fundamental pathway for cities in
Ethiopia to achieve the resilience to climate effects and disasters and low-carbon growth that they will
need to sustain economic growth and positive wellbeing outcomes as their populations continue to rise
and the climate around them continues to fluctuate and intensify.

1.5 Urban Institutional and Infrastructure Development Program (UIIDP)

The Ministry of Urban Development and Construction, with support from the World Bank and the AFD,
is implementing the Urban Institutional and Infrastructure Development Program (UIIDP) from March
2018 to July 2023.16

The UIIDP provides Performance Grants (PGs) for investments in infrastructure, services, and capacity
building for 117 urban local governments (ULGs), and capacity building in nine Regional Governments
(RGs), the MUDC, and other federal Ministries and Agencies. The UIIDP builds on the previous Urban
Local Government Development Program II (ULGDP II). Among its components, the Program includes
the revision of the ULG Capital Investment Planning process, in particular to incorporate climate
mitigation and resilience in it.

The UIIDP is financed through a World Bank & AFD Program-for-Results (PforR) financing instrument
at the ULG and regional levels, and an Investment Project Financing (IPF) instrument at the federal level.
Funding available to ULGs and RGs under the UIIDP will depend on their performance, assessed
annually against verifiable results described in the UIIDP Program Operations Manual (POM) and in the
Annual Performance Assessment Guideline (APAG, a standalone Annex of the POM). The ULGs and
RGs are expected to provide matching funds (counterpart contributions) as per the percentages agreed
between MUDC and the World Bank, stated in the POM.

1.5.1 Program Development Objective

The Program Development Objective (PDO) of the UIIDP is to enhance the institutional performance of
participating ULGs to develop and sustain urban infrastructure, services, and local economic
development.

13
“Disaster risk profile: Ethiopia.”World Bank Group, Africa Disaster Risk Financing Initiative.
<https://documents1.worldbank.org/curated/pt/258841574230954974/pdf/Disaster-Risk-Profile-Ethiopia.pdf>.
14
Tiwari, Alok. “Urban infrastructure research: a review of Ethiopian cities.”Springer. 2016.
15
Wasley, et al.
16
“Ethiopia urban institutional and infrastructure development program.” World Bank Group.
<https://projects.worldbank.org/en/projects-operations/project-detail/P163452>.

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1.5.2 Program Key Results Areas
Through the UIIDP, the institutional performance improvements and the infrastructure delivered by cities
are expected to result in:
a) enhanced citizen participation and engagement in ULG planning and budgeting
b) increased own-source revenue at the ULG level
c) improved infrastructure, service delivery, and operations and maintenance systems
d) improved efficiency and effectiveness in local fiduciary management
e) improved local economic development
f) improved environmental and social management and safeguards
g) strengthened ULG resilience to climate change and disasters
h) strengthened accountability and oversight systems
i) enhanced gender equity in ULG operations

1.5.3 Program Coverage

The UIIDP includes the ULGDP II’s 44 cities and 73 additional ones, totaling 117 ULGs. The list of
these 117 cities was approved by the MUDC on September 12, 2017. This scale-up increases the Program
beneficiaries from 4.36 million to 6.62 million, leverages economies of scale for program management
and implementation, and strengthens the overall programmatic and performance-based approach for
supporting sustainable, climate-smart urban development. In these rapidly growing cities, timely support
for improving institutional performance in ULGs’ planning, delivery, and sustained provision of resilient
urban services and infrastructure is critical.

Figure 1. Regional Distribution of 117 UIIDP ULGs

1.6 Ethiopian Cities Sustainable Prosperity Goals

The Ministry of Urban Development and Construction has prepared the Ethiopian Cities Sustainable
Prosperity Goals (ECSPG) to support the development of Ethiopia’s cities to establish them as green,
resilient, and well-governed and to support the attainment of middle-income country status by 2025.
ECSPG’s key objectives are:
 Develop urban infrastructure, services, and systems to achieve national Growth and
Transformation Plan standards and targets

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  Build the capacity of all implementing agencies and all government levels to deliver effective
public services
 Mobilize resources to support the implementation of the nine ECSPG urban development and
housing pillars
ECSPG’s vision for urban development is to “create economically productive, socially inclusive, and
environmentally sustainable cities by 2025.” Its mission for urban development is to “capacitate our cities
and urban centers so that they can become centers of innovation and economic production by creating the
necessary growth supporting conditions, and to provide standardized services and raise the quality of life
for urban residents.”

The ECSPG recognizes the importance of urbanization, democratization at the local level, local economic
growth and job opportunities, urban industry and manufacturing, local trade, and their accompanying
societal changes to transform Ethiopian cities into growth engines and efficient and effective deliverers of
services, including appropriate policies and regulations, good governance and public organizations, public
infrastructure and facilities, environmental controls, and the mobilization of financial and human
resources to solve problems. In effect, the ECSPG calls for a threefold increase in revenue and
expenditures in cities and similar increases in urban infrastructure and service provision by 2025,
Ethiopia’s target year for achieving middle-income country status.

The ECSPG contains nine pillars under the Ministry of Urban Development and Construction and one
pillar collectively under the Ministry of Health and the Ministry of Education. The pillars include 16
programs and 43 projects.

Table 1. ECSPG Pillars, Programs, and Projects

Urban Transformational Leadership
Urban Transformational Leadership Development Program
Urban Leadership Centre of Excellence Project
ECSPG Management Information System Project
ICT Infrastructure Project
Communication and Public Participation Project
Digital (Smart) Cities Development Project
Micro and Small Enterprise and Urban Productivity
Micro and Small Enterprise Development Program
Entrepreneurship Capacity Building Program
Micro and Small Enterprise Support and Facilitation Project
Micro and Small Enterprise Extension Services Project
Micro and Small Enterprise Management Information Systems Project
One Stop Shop Service Centre Project
Urban Food Security and Job Creation Program
Job Creation through Public Works Project
Livelihood Development Project
Cash Transfer Project
Urban Developmental Good Governance and Services
Urban Good Governance and Capacity Building Program
Urban Services Provision Project
Urban Skills Development and Capacity Building Project
Deepening Decentralization and Benchmarking Project
Community Leadership and Neighborhood Management Project
Urban Planning, Land Development, and Management
Urban Plan Preparation and Implementation Program
Urban Planning Institutions and Systems Project

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 Regional Spatial Plan and City Clusters Project
Urban Geocoding and Parcel Addressing Project
Urban Land Development and Administration Program
Urban Land Administration Project
Urban Renewal and Redevelopment Project
Urban Expansion and New Township Project
Livelihood of Farmers Project
Urban Mapping, Survey, and Land Use Rights Registration Program
Surveying and Mapping Project
Urban Legal Cadastre Project
Urban Property Valuation and Registration Project
Housing Development, Shelter Provision, and Administration
Urban and Rural Housing Program
Urban Housing Capacity Building Project
Rural Development Centers Project
Housing Administration Project
Integrated Urban Infrastructure
Urban Infrastructure Facilitation and Management Program
Integrated Urban Infrastructure Management Project
Urban Infrastructure Asset Inventory and Management Project
Urban Mobility Planning and Management
Integrated Urban Infrastructure Development Program
Urban Telecom Development Project
Urban Energy Supply Project
Urban Water Supply and Sanitation Project
Wastewater Treatment Project
Environmental, Green Services, and Recreation
Environmental, Green Services, and Recreation Program
Environmental, Green Services, and Recreation Project
Solid Waste Management Project
Urban Watershed Management Project
Urban Energy Efficiency Project
Resilient, Inclusive, and Safer Cities
Resilient, Inclusive, and Safer Cities Program
Fire and Emergency Response Capacity Building Project
Youth, Women, and Vulnerable Groups Project
Urban Code Enforcement and Safer Assuranec Project
Urban Finance
Urban Finance Program
Urban Finance Project
Cities’ Creditworthiness Project
Urban Property Taxation Project
Addis Ababa Integrated Development Program
Urban Social Development
Urban Health Development Program
Urban Education Development Program

1.7 Ten-Year Perspective Development Plan

Through 2020, all public investment in Ethiopia were required to be aligned with Ethiopia’s two
successive five-year Growth and Transformation Plans (GTP). Following their conclusion, in 2020 the
country’s Planning and Development Commission transitioned to a ten-year development cycle based on

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the new Ten-Year Perspective Development Plan (TYPDP). The TYPDP builds on the country’s
experiences from the GTPs and is intended to position Ethiopia for high growth and prosperity. 17

Related to urban development, the TYPDP includes six strategic pillars to help guide investment planning
overall: ensure quality growth, improve productivity and competitiveness, undertake institutional
transformation, ensure the private sector’s leadership in the economy, ensure equitable participation of
women and children, and build a climate resilient green economy. Within this last pillar, actions include
reducing greenhouse gas emissions and focusing on energy saving technologies.

The TYPDP also has nine priority sectors, one of which is urban development, with its own dedicated 10-
Year Perspective Development Plan. This sectoral plan’s objectives include: expanding micro- and small-
scale enterprises to reduce urban unemployment; developing and availing urban land based on demand,
equity, and cost-effectiveness; making quality housing accessible; developing quality and integrated
infrastructure and service provision; and improving urban financial management and resource utilization.
Its focus areas include: prioritizing productive sectors in job creation and enterprise development plans,
rapid development and equity goals in land provision systems, the participation of indigenous people in
land redevelopment and expansion, developing urban land registration and cadastre and modern property
valuation systems, greenery and public space development, waste disposal and waste management,
housing development and improved financing to reduce housing shortages, and emphasizing the private
sector in infrastructure development and service provision. All of these objectives and focus areas may be
better achieved with improved urban capital investment planning processes.

17
“Ethiopia 2030: the pathway to prosperity: ten years perspective development plan (2021 –
2030).”<https://europa.eu/capacity4dev/file/109230/download?token=rxippQKh>.

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SECTION 2: THE CAPITAL INVESTMENT PLANNING PROCESS

1.8 Key Planning Components Ethiopian Cities

All cities in Ethiopia have development plans, which consist of strategic development objectives and
structural plans. City development plans encompass both physical and spatial objectives.

Cities develop yearly municipal sector line office Action Plans, which feed into cities’ Asset Management
Plans (AMPs) and Revenue Enhancement Plans (REPs). These two Plans form the foundation of the
Capital Investment Plan (CIP).

Figure 2. Key ULG Planning Components

1.9 Capital Investment Planning in Ethiopia

Capital Investment Planning is aprocess that links investment needs and available resources with the
priorities of stakeholders to enhance a city’s capacity to deliver increased and improved infrastructure and
services to citizens.It represents the point at which development planning links to funding. When the CIP
process is climate-smart, it effectively assesses the climate enhancements of different investments and
includes this in its prioritization, delivering climate-resilient infrastructure that improves urban resilience
outcomes. At the city level, a good CIP may help cities get lower rates on debt. 18

In order to assess and respond to urban residents’ infrastructure and services needs, and select the most
appropriate capital projects that incorporate and enhance climate resilience, a comprehensive decision-
making process is needed. At the ULG level in Ethiopia, the resulting CIP is a legally binding record
adopted by the city council.

As the CIP is a city administration’s most important instrument for steering and realizing a city’s strategic
objectives, its development and implementation is the responsibility of the mayor, through a capital
investment planning team.

18
Whittington, Jan and Catherine Lynch. “Climate-informed decisions: the capital investment plan as a mechanism
for lowering carbon emissions.” World Bank Group. Jul 2015: Policy Research Working Paper 7381.

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The CIP is also a flexible tool that cities can use to plan long-term infrastructure projects. Capital
investments do not include recurrent expenditures like salaries, but can encompass physical and
socioeconomic infrastructure (e.g., roads and schools), equipment (e.g., vehicles), and consultancy work
(e.g., project design).

1.10 Climate-Smart Capital Investment Planning

Capital investment plans allocate resources to capital project-specific expenditures via capital budgets,
typically over a period of several years. CIPs help local governments prioritize their projects and plan for
the future. A “climate-smart” CIP includes criteria for prioritizing projects that involve or emphasize
climate-smart actions, such as carbon capture, carbon emissions reduction, climate change adaptation,
disaster prevention, disaster and climate change resilience, and climate emergency services. 19

As part of the capital investment planning process, cities can evaluate proposed investments upstream
through a climate-smart lens (as well as other factors) to better understand their carbon impacts and other
climate implications. Climate goals are much easier to build into projects at inception rather than
retroactively. Considering climate change and its impact on cities early on also helps avoid costly
redesigns, retrofits, resitings, and abandonments. Often, projects that lower carbon emissions or enhance
resilience have lower operations and maintenance costs, making them more financially viable as well.
They are also more likely to have co-benefits, such as health or safety improvements. 20

Most infrastructure investments aim to address urban needs other than climate change, such as public
services, economic growth, or health. Therefore, including climate-specific criteria in the capital
investment planning process represents just one dimension alongside other prioritization criteria. A CS-
CIP prioritizes low-carbon, resilience-enhancing investments over high-carbon, resilience-weakening
alternatives to similar purposes – not over investments that are more important overall to the city. As
such, a key early step is to prioritize projects according to multiple criteria, including climate-related
criteria as well as others that are important to the city. A next step is to then consider carbon-reducing
alternatives to each prioritized investment, based on redesigning scale, density, fuel sources, technologies,
and construction materials and processes. Incorporating climate considerations into a CIP is thus a crucial
component of setting municipal investments on a low-carbon and climate resilience-enhancing path. To
improve ease of adoption, it is critical to make such changes to CIPs incrementally and incorporated with
pre-existing processes and standards.

The updated Climate-Smart Capital Investment Planning process for Ethiopian ULGs incorporates these
climate-smart priorities as part of the overall capital investment planning to ensure that the entire project
portfolio is more informed and counter to the climate change and disasters described above in Section 1.4
and incorporates carbon emissions lowering aspects to the greatest extent possible. The new process
includes descriptive, contextual, and cost data regarding proposed projects and city conditions to
determine a final list of projects screened for climate and disaster components, prioritized along climate
and disaster criteria, and enhanced with carbon emissions-lowering measures. Further detail is provided in
Section 3 below.

1.11 Connection to Asset Management Planning

Good municipal asset management links project-based capital investment planning with long-term,
climate-smart operation and maintenance needs in a sustainable management system. The asset
management process addresses several key questions about existing and new urban infrastructure,
including:

19
Ibid.
20
Ibid.

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  What infrastructure does the city have?
 Where is it?
 What is its condition?
 What is it worth?
 How much money must be spent to maintain it?
 How could it become more climate-resilient? How could it help improve the city’s climate
resilience?
 How does the city maintain this information so that it is easily accessible in the future?
 What planned investments does the Capital Investment Plan define, and where are they located?
 What maintenance investments are most effective at keeping assets in good condition?
 What maintenance investments are most effective at upgrading climate resilience?
 What is the total investment budget, and when will investments in assets take place?
 How are new assets and maintenance and improvements of existing assets integrated with the
existing asset base?

Answering these questions as part of developing an Asset Management Plan builds municipal
understanding of both the current urban infrastructure and services base and future infrastructure and
services needs, informed by climate considerations. AMPs empower city leaders with detailed knowledge
of their asset base, enabling them to make more effective strategic and climate-enhanced investment
decisions. They inform residents by showing where existing infrastructure is located and where new
infrastructure may be provided. An AMP is thus a fundamental building block of green urban
development.

This strategic approach to asset management, applied in Ethiopian cities, adds value to the CS-CIP
process by yielding more detailed information and improving CS-CIP decision making. The updated asset
management process newly integrates the AMP into a GIS-based operating environment, allowing the
CS-CIP to capitalize on resulting insights. It is an essential source of information used in capital
investment planning for new assets and their costs. And it incorporates a system for tracking asset
deterioration, allowing maintenance planning and activities to be recorded from the first conditions
assessment through budgeting and planning to implementation.

The Asset Management Plan outlines the system ULGs use to manage their infrastructure assets and the
procedures and templates for preparing AMPs.

1.12 Connection to Revenue Enhancement Planning

The Revenue Enhancement Plan shows what funds are being sourced and made available for the CS-CIP
(for both investments in new infrastructure and for the rehabilitation and maintenance of existing
infrastructure assets), and how.

Revenue enhancement refers to a municipality optimizing the revenue sources that are legally and
administratively available to it. Each source of revenue should be maximized according to its highest and
best use within the wider goals and priorities of the region and country, including climate enhancement
and sustainable green growth. Revenue enhancement includes investigating opportunities to diversify
revenue sources when existing revenues are inadequate to meet the demands of residents. It also demands
establishing a wide range of improvements, including greening, to revenue-related policies, procedures,
staffing, and organizational structure.

An REP analyzes past revenue performance, shows what financial resources are needed in the upcoming
three years, and indicates how a ULG will attain those funds. It requires a clear strategy, detailing from
which sources ULGs can generate their own revenues and cover their expenses.

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Both capital investments and maintenance expenditures require financial resources, the generation of
which must be planned in an REP. The amount of available revenues should be indicated; by subtracting
recurrent expenditures, a city can calculate its operating surplus, i.e. its own resources available for
capital investments. External resources from the federal government or donors may also be available for
capital investment planning. Capital revenues are indicated by the following formula:

(Recurrent Revenues–Recurrent Expenditures=Operating Surplus) +Other

Resources=Capital Revenues
(The Revenue Enhancement Plan Guideline (a standalone Annex of the POM) details guidelines and
procedures for developing revenue enhancing strategies and preparing an REP. Accordingly, tables in the
CS-CIP Template that show how the CS-CIP is financed are taken directly from the REP.)

Figure 3. The AMP and REP’s Links to the CS-CIP

1.13 Organizational Team for Capital Investment Planning

In Ethiopian ULGs, the capital investment planning team consists of twelve members and is responsible
for gathering all data inputs required for the CS-CIP and for preparing it. The team members are:
 CS-CIP Focal Person for Planning, Budgeting, and Participation (Team Leader/Chair)
 AMP Focal Person

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  REP Focal Person
 Local Economic Development Focal Person
 Urban Planning Focal Person
 Financial Management Focal Person
 Accountant (based at the Ministry of Finance and Economic Development)
 Climate Resilience Focal Person
 Procurement Management Focal Person
 Capacity Building Focal Person
 Gender Focal Person
 Project Engineer

The team reports to the Mayor through the City Manager. Contributors from other departments may be
absorbed into the CS-CIP team as and when required. In preparing the CS-CIP on an annual basis, the
CS-CIP team should follow the procedures described in this Manual and use the accompanying Template.

Per the AMP Manual, the CIP team is also responsible for building the databases of new investments and
of maintenance activities, from planning through implementation. The team then translates the budget for
new investments and maintenance activities into a three-year rolling CS-CIP program.

Typically, the development of the AMP, REP, and CS-CIP take place simultaneously and iteratively, with
frequent interaction between the AMP, REP, and CS-CIP teams. The AMP Focal Person is prescribed in
the AMP Manual to support the CS-CIP Team in prioritizing projects and building and maintaining the
database for all new projects. The AMP Focal Person represents the AMP’s strategic activity areas in
project prioritization.

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SECTION 3: CLIMATE-SMART CAPITAL INVESTMENT PLAN
PREPARATION STEPS

This section details the specific climate-smart capital investment plan preparation steps and processes.
They are also displayed visually at the end of the section in Figure 4. This section should be reviewed
with close reference to the accompanying CS-CIP Template. The preparation proceeds along twelve
overarching steps, detailed here and denoted in the Template’s color shade-coded Table of Contents and
worksheet tabs.Steps specifically related to climate and disasters are included in Table 9, Table 13, Table
14, Table 15, Table 16, Table 19, and Table 20. Within the Template, gray cells are automatically
populated and do not require entry. Only white cells necessitate input. In order to avoid mistakes, all other
cells are locked for editing.

Step 1. Front Matter

- Cover - Add the city name, the EFY for the CIP, and the date to the Cover Page.
- ToC - Review the Table of Contents and its steps.
- PPA - Review and complete the Participation and Performance Agreement, with
witnesses. The PPA is also provided at the end of this Manual for reference.

Step 2. City Baseline Information

- Table 1 - Add City Background Information.
- This information may be obtained from the city and region’s long-term Strategic
Development Plan, to the extent that they are available.
- The background information includes: Locational Information, Environmental
Information, Demographic Data, History, Social Services Information, Economic
Services Information, Fiscal Policies, Basic Information and Contact Details of the
CS-CIP Team and Other Responsible Officials, and Other Relevant Information.
- Table 2 - Add City Vision, Objectives, Achievements, and Plans.
- This information may be obtained from the city’s Structural Plan, Local
Development Plan, and the city and region’s long-term Strategic Development
Plan, to the extent that they are available.
- This information will include Vision, Mission, Goals, and Objectives, Past
Achievements, and Sectoral Plans.
- Receive the first drafts of the Asset Management Plan and the Revenue
Enhancement Plan. The AMP and REP form key baselines for preparing the CS-
CIP. They must be completed per the budgeting calendar by February 8. The
UIIDP final allocations are provided to regions and ULGs by the end of February.
The CS-CIP is submitted to the Council and must be approved by no later than
July 15. Once approved, it is submitted to the region for review and approval.
- The CS-CIP focal person will continue to liaise with the AMP focal person after
February 8.
- The REP will indicate the total resources available from different funding sources
to fund the CS-CIP for its three-year planning period, which helps guide public
consultations and prioritize projects.
- Table 3 - Add Performance Indicators for the Achievement of City Goals and

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 Objectives, referring to the Structural Plan, Local Development Plans, the REP,
and the AMP.
- Table 4 - Add Key City Financial Performance and Sustainability Indicators, referring
to the Structural Plan, Local Development Plan, the REP, and the AMP.
- This Table will provide summary budget calculations.
Step 3. CS-CIP Setup
- Table 5 - Add the names of the community groups that are participating in the first
participatory project prioritization round and the breakdown of their gender to
Community Groups and Participants in the First Round of Participatory
Processes.
- This Table will provide the gender-disaggregated participant totals and
percentages.
- This first round of the public participatory processes consists of consultations and
identification of projects with all community stakeholders at the kebele level, from
December to February. Each kebele has its own meeting. The community
stakeholders comprise various groups, including women, youth, the elderly,
persons with disabilities, religious persons, business community members,
teachers, students, community associations, kebele officials, NGOs, etc. In
addition to these groups, kebele leaders should ensure that every locality of the
kebele is represented. Add any relevant information to Appendix 1.
- According to the gender mainstreaming process under the UIIDP, women and men
first meet separately and then come together in one meeting. The two separate
meetings may be held on the same day and at the same venue or alternatively on
different days and at different venues. This setup provides more opportunities for
women’s voices to be heard and considered.
- Stakeholders will also have an opportunity at these meetings to be briefed on the
performance of the current CIP and to raise areas of concern or needs affecting
their kebele that may be addressed through the coming CIP, including
proposingsolutions and projects.
- Table 6 - Each kebele can use the Kebele-Level Project Wish List Worksheet to add the
kebele name and the kebele-level projects and groups proposing the projects
- Each kebele leader will forward the meetings’ deliberations and recommendations
and the prioritized wish list of kebele projects from this Tableto the City Manager
so that city officials may review them and prepare for the subsequent second round
meeting at the city level.
- This table should not be completed at the city level, and should be kept blank in
the final compiled CS-CIP. It is provided as a worksheet for each kebele to use
separately, outside the Template.
- The budget call is then made as per the standard official letter or memo and
format on Megabit 1 (March 10). The budget defenseis held between Megabit 1-15
(March 10-24).
- The mandate to “call for budget” lies with the Office of Finance and Economic
Development (OFED). The OFED prepares worksheets to assist the heads of office
and sector offices (cabinet members) in preparing department budget estimates.
This should be done using the capital budget formats. Only after budget requests
have been prepared and approved and a notification issues using these standard
formats can the request be integrated into the IBEX computerized accounting

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 system of the OFED.
- Table 7 - Add the names of the community groups that are participating in the second
participatory project prioritization round and the breakdown of their gender to
Community Groups and Participants in the Second Round of Participatory
Processes.
- This Table will provide the gender-disaggregated participant totals and
percentages. Add any relevant information to Appendix 1.
- Table 8 - Add the names of the CIP team members to CIP Team Members. This table
assigns each CIP Team Member with a number, which will facilitate the scoring of
projects in future steps. No hierarchy is implied by the numbering.
- Table 9 - CIP Team Members meet to discuss the climate and disaster hazards facing the
city, based on their local knowledge, the information shared in Table 1, their
consultations with stakeholders, and the evident concerns arising from kebele-
proposed projects. Complete theCity Climate and Disaster Risks; an approximate
severity rating is needed for each climate or disaster hazard, as well as contextual
details about how the hazard affects the city and how it may be expected to change
in the future and affect the city differently.
- The purpose is not to establish a definitive ranking and results of detailed hazard
exposure, but rather to help CIP team members agree generally on the most severe
threats the city faces, toforefront climate change and disasters in subsequent capital
investment planning decisions, and to serve as a reference for forthcoming CIP
steps.

Step 4. Project Delineation

- Table 10 - The CIP team reviews and consolidates the kebele-prioritized wish lists and the
sector office priorities, taking into account the draft AMP requirements and the
revenue projections from the draft REP. The team also considers the projects that
were prioritized in the last two CIPs.
- Compile the initial list of kebele-proposed projects for presentation to the city
cabinet in the Initial List of Proposed Projects by Kebele and Community
Group / City Officials.
- This draft project proposals list is presented to the city cabinet. The cabinet
reviews the list and provides suggestions for revisions. The CIP team incorporates
revisions and prepares an updated draft, submitted to the City Mayor or City
Manager for the second-round participatory meeting.
- The second set of consultations and initial prioritization of projects is performed at
the city level, chaired by the City Mayor or City Manager, in April-June. Kebele
representatives – the kebele leader and one representative from each of the
community groups who attended the first meeting – attend. At this point Table 7
may be updated as needed. Add any relevant information to Appendix 1.
- The meeting discusses priorities for the 3 years of the CIP. It highlights climate
and disaster hazards in order to encourage a focus on climate mitigation,
adaptation, and resilience, and can refer to Table 9.
- Table 11 - Based on these discussions, the city cabinet approves the updated list of project
proposals based on their prior feedback. This is memorialized in the Approved
List of Proposed Projects by Kebele and Community Group / City Officials.
- The list of projects in this Table is key, as it represents the list of projects that will

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 be used for the detailed prioritization and selection of projects through the rest of
the CS-CIP preparation process. No ranking or prioritization of projects is implied
by the ordered numbering.
- Table 12 - Participants use the List of Proposed Projects with Estimated Detailsto discuss
the projects further, learn more about them, and register specific details about each
one.
- Projects are categorized according to the EPSCG Pillars, Categories, and Types.
More descriptive information regarding the project’s key objective, connection to
climate (if there is one), estimated quantities, and initial estimated costs are
entered.
- The Table provides an initial estimate of the total project cost before major
maintenance.
- Table 13 - At this stage, before detailed project prioritization, it is important to build on the
city climate hazards described in Table 9 to gain a deeper understanding of both
how the proposed project might impact climate and disasters and how they might
impact the project.
- Accordingly, the List of Proposed Projects with Climate and Disaster Risk
Screening is completed. This Table provides an opportunity to consider climate
change and disasters further in project analysis and to screen projects out for their
potential risks. This information can be used as inputs for the subsequent
prioritization.
- This Table is not intended to be an exhaustive project filtering and selection tool,
and should not require additional detailed analysis or studies. Rather, it should be
based off of the information available to CIP Team Members and their judgment.
The Table in and of itself does not make any determinations regarding project
screening, but helps flesh out climate and disaster dynamics around projects that
might otherwise have gone unconsidered.

Step 5. Project Criteria, Weighting, Scoring, and Prioritization

- Table 14 - In this Table the CIP Team develops the Project Prioritization Criteria. The
criteria developed here are what will be referred to for the subsequent scoring of
projects.
- Collaboratively, the Team considers and discussed each of the ten overall Criteria
Categories, and produces lists of “sub-criteria” for each Category. In so doing, the
CIP Team considers what factors are important to the city and the city’s projects
during this particular year and in the future. Table 3, the city’s performance
indicators, may be referred to.
- The sub-criteria are not given weights. They help the participants detail with more
specificity what matters to the city and how projects will be prioritized.
- Sample sub-criteria are provided for each Criterion Category. These are intended
solely as examples; the Team may certainly use some of them for their specific
city’s selectee sub-criteria if they are applicable. However the Team should also
think creatively and critically to determine the key sub-criteria for each Category
in their city.
- Table 15 - The next step is to weight the criteria, in the Project Prioritization Criteria
Weighting. In this section, each CIP Team Member allocates 100 hypothetical
points to the ten Criteria Categories. This Table will determine the overall
weighting for the subsequent prioritization of the proposed projects.

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 - Team Members’ points allocation should be based on their discussion-informed
judgment of the relative importance of each of the Criteria for the city. Criteria
may be given an allocation of 0 points if the Team Member chooses to do so.
- Rather than going Criterion by Criterion, it is strongly recommended that the
Criteria weighting proceeds Team Member by Team Member. In this way, Team
Member #1 first allocates their 100 points across the ten Criteria Categories,
followed by Team Member #2, etc. This procedure will significantly reduce the
chances of error.
- The final weighting for each Criterion is averaged from the points allocation of
each individual team member. It is updated automatically for each individual entry.
The Criteria weights should add up to 100. If so, the red bar on the top of the
Template will change to green. If the bar stays red, there is a points allocation error
that must be reviewed and addressed.
- The red bar should change to green after each individual Team Member completes
their project prioritization criteria weighting, in turn. If after any one Team
Member’s weighting the bar is red, review and correct that Team Member’s points
allocation.
- Table 16 - The final prioritization step is part of the List of Proposed Projects with
Individual Criteria Scoring. Here, each Team Member rates each project from 0
to 5 on the project’s adjudged “success” at meeting the respective criteria. Each
Team Member provides a simple score for each of the ten Criteria for each project.
Projects may be given a score of 0 for particular Criteria if the Team Member
chooses to do so.
- The Criteria weighting from the previous steps are not needed to be considered
here.
- Like with the Criteria weighting, it is recommended that the project scoring
proceed Team Member by Team Member.
- The Table provides each Team Member’s weighted score for each project, out of
5.
- Table 17 - The output of the preceding Criteria weighting and project scoring exercises is a
List of Proposed Projects with Aggregated Criteria Scoring. No entry is needed
in this table. It shows the same list of proposed projects in the same unprioritized
order, with the total weighted average score, our of 5, across all Team Members’
scores.
- Table 18 - The preceding Table is used to create the List of Proposed Projects Prioritized
by Weighted Criteria. No entry is needed in this Table.
- This Table shows the same list of proposed projects, now in prioritized order based
on their collective scoring and ranking. This is the first list of proposed projects in
the Template that displays the projects in priority order.

Step 6. Project Carbon Reduction

- Table 19 - Complete the List of Prioritized Projects with Carbon-Lowering Review. Now
that the project list has been prioritized, it is important to go beyond Criterion
Category #7 and examine each project further to see if it can be enhanced to
mitigate its potential carbon emissions. This entails exploring how the original
conceptions of each project may be reconsidered such that they incorporate aspects
that lower the carbon emissions entailed by their design and implementation.

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 - There are not necessarily definite answers to the questions asked in this Table for
each of the projects. They should be discussed at length among the Team Members
and any relevant stakeholders to align the participants on overall possibilities.
Responses should be entered as descriptive options for pursuing the given carbon-
lowering pathways.
- This involves understanding the original designed scale, construction materials,
fuel sources, and technologies, as well as other possibilities. “Carbon sink”
technologies refers to those that absorb carbon dioxide from the atmosphere.
Energy efficient technologies are those that make more efficient use of the
project’s energy consumption, such as changes in construction design, alternative
materials, and more.
- Table 20 - Following this descriptive exercise, the List of Prioritized Projects with Carbon-
Lowering Revisions summarizes the proposed changes made to the prioritized
projects based on lower carbon dioxide consumption and emission.
- The Team should summarize the changes to each project’s design and operation, if
any, based on lowering its carbon dioxide as developed in the previous table. The
Team also needs to provide an initial rough estimate of the total project cost that
may be reduced by adopting the new carbon-lowering-related changes.
- It is not expected that every project will necessarily have available carbon
lowering possibilities. In such cases, the cost savings should be entered as 0.

Step 7. Capital Budgeting

- Table 21 - This Step determines the available budget for the prioritized projects. Start by
completing the Past Three Years of Capital Investments, filling in the cost
amounts for each investment expenditure item type for the past three years. The
Table will calculate summary three-year and category type investment figures.
- This information may be found in the CIPs for the three previous years.
- If actual figures from the year immediately preceding the current one are not yet
available, insert budget figures instead and indicate this decision in the Table.
- Table 22 - Next, turn to the investment budget forecasts. Start by entering the Summary of
Multi-Year Budget Forecast for the coming three years (including this year)
according to the different sources of funding. The Table provides three-year
budget summary figures.
- This information may be found in the REP and the AMP.
- Table 23 - Then, complete the more detailed Multi-Year Budget Forecast. Use the same
three years. The Table provides detailed three-year budget summary figures.
- This information may also be found in the REP and the AMP. The AMP provides
detailed information from the final public consultations, refined by city officials, to
incorporate various AMP-specific processes and the availability of funds as
indicated in the REP.

Step 8. Project Costing and Funding

- Table 24 - In order to match the investment budget to prioritized, carbon-informed projects
and their costs, it is crucial to break down projects’ costs. Start in Proposal Costs
by first updating the estimated project deliverable quantity, based on any carbon-
lowering revision to the project or any other relevant changes that have emerged
since the first project proposal. If there are no quantity changes, re-enter the same

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 quantity.
- Next, based on available information, add the project’s year-by-year total
estimated costs for the subsequent 15 years, again considering how projects may
have changed since their original proposals, especially based on carbon-lowering
criteria and design.
- Prior to the yearly costs, the Table provides the new estimated project cost based
on the carbon-lowered estimated savings from Table 20. This serves as a reference
for entering the yearly cost breakdown. After doing so, the Table provides the final
revised project cost based on the more detailed yearly breakdown, as well as the
final savings. It then estimates the total savings achieved across the current project
portfolio.
- Table 25 - The next project cost breakdown is by project funding source, rather than year.
This is entered in Year 1 Project Funding. The Team starts by making a final
selection as to whether or not to include each project in the finalized CS-CIP for
this year. There may be many reasons for excluding prioritized projects at this
point, such as a change in need, emergent unacceptable project risks, uncertainty
around costs, and many others. By this point, sufficient information regarding the
proposed project should be available to make this determination. All projects that
have been decided as “Yes” will be part of the CIP for this year.
- For all projects that are determined to be included, next provide the budget to be
dedicated to each project from each specific funding source for Year 1 of the
project only. Refer to Appendix 2 for project types eligible for UIIDP funding. As
the source-based project-specific budgets are added in order of project priority, the
funding source balance is dynamically updated in the Table. This system can help
with funding source decisions for subsequent prioritized projects.
- In addition to the dynamically updating Year 1 funding source budgets, this Table
provides several results. These include the dynamic total funding being drawn
down for Year 1 as each project’s funding sources are entered, a check to make
sure that the funding source breakdown for Year 1 matches the Year 1 budget from
Table 24, the per-project amount that may be unfunded for Year 1 after all the
funding sources have been used, whether or not the project is fully funded for Year
1 and whether it is in the Year 1 portfolio budget, and what the total cost for all
subsequent years is. It also provides an updated total portfolio estimate of cost
savings achieved by the carbon-lowering review for the projects being included in
the CS-CIP.
- If the Year 1 funding does not match the project’s budget, either the funding
amount breakdown across the different funding sources or the total Year 1 cost in
Table 24 should be revised so that these figures match.
- If the project is not within the Year 1 portfolio budget, either the project should be
excluded from this year’s CS-CIP by changing the “inclusion” decision earlier in
this table to “No,” or its total cost and funding allocation, or that of previous
projects, should be re-examined and revised.

Step 9. Rolling CIP, Funding, and Budget

- Table 26 - This Table completes the final Project-Level Three-Year Rolling CIP. For Year
1, add the quarter-by-quarter quantity and cost breakdowns expected for each
project, as well as the quantities for Years 2 and 3.
- In addition to providing summary calculations for the three initial years, this Table

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 provides a quarterly quantity and cost check for Year 1, comparing the quarterly
breakdowns with the quantity and cost totals provided in Table 25. If the
quantities or costs do not match, revise the quarterly breakdowns so that they
accord with the given totals.
- This Table constitutes the final project-level rolling CIP to be used by the city.
- Table 27 - The Type-Level Three-Year Rolling CIP does not require any input except to
add in units of measure for some specific expenditure types. This Table uses
information entered in previous Tables to compile a Rolling CIP for the coming
three years for categories and costs based on project category types. It also
provides summary calculations for these project types.
- Table 28 - Similarly, the Type-Level Year 1 Funding Sources requires no inputs. It
compiles information entered in previous Tables to compile a project category
type-level summary of costs and quantities for Year 1 according to the different
project funding sources. It also provides summary calculations for these project
funding sources.
- Table 29 - Add costs and quantities for the first three years – and for the quarters of Year 1 –
for themaintenance budget to Three-Year Maintenance Budget and Year 1
Plan. The yearly operations and maintenance budget information may be found in
the AMP. This Table provides a check to ensure that Year 1’s quarterly costs and
quantities equal the total for the year, as well as summary calculations for the
maintenance budget by project category type.

Step 10. Capacity Building, Staffing, and Jobs

- Table 30 - Within the ESCPG Pillars, complete the Capacity Building Plan. Add capacity
building activities for each Pillar, including the identified gap they address, the
modality of the capacity building activity, the performance indicator for the
activity and its target, as well as the name of the lead responsible person and other
executing team members. Next, break down the capacity building activity into its
implementation steps by Year 1 quarters and the total costs for capacity building
for the first three years. Refer to Appendix 3 for capacity building activities
eligible for UIIDP funding.
- This Table provides summary cost calculations for the capacity building activities.
- Table 31 - Add the Staffing for Delivery and Management of the CIP details. For each
broad expenditure item category, name the department responsible and the number
of staff needed for its delivery and management. Then add the number of staff that
are actually available for such activities. The Table provides the number of staff
still needed according to the provided information.
- Table 32 - Add Temporary Job Creation Targets, broken down by male and female, and
age 30 and below and above, for each of the prioritized projects in the CIP.
- Temporary jobs are jobs that are created by the building, rehabilitation, or
replacement of an infrastructure asset, irrespective of duration of the job.
Commonly, these jobs may be in labor, administration, supply, and similar support
activities to construction works. These temporary job creation targets should be
estimated.
- The Table provides summary job creation target calculations.

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 age 30 and below and above, for each of the prioritized projects in the CIP.
- Long-term jobs are those that are created by the ongoing operation of an
infrastructure asset. For example, long-term employment driven by the
implementation of markets, health clinics, schools, park maintenance, and more
are all considered long-term jobs. These long-term job creation targets should be
estimated.
- The Table provides summary job creation target calculations.

Step 11. Checklist

- Table 34 - Use the Capital Investment Plan Checklist to confirm that all key steps of the
CS-CIP have been implemented and completed. The Checklist may also be
referred to during and throughout the process of completing the CS-CIP Template.
Add any relevant comments to each key task as needed.
- Sign the CIP following the final check, and attain the CIP final approval signature.

Step 12. Appendixes

- Appendi - Elaborate on the Details of the Participatory Process. This Appendix can refer to
x1 all aspects and steps of the participatory process and meetings throughout the CS-
CIP preparation process. Rather than being completed at the conclusion of the CS-
CIP, it should be updated periodically throughout the CS-CIP preparation
following participatory activities. This Appendix can serve as a reference for
participatory techniques and results and help make ongoing improvements in
participatory CS-CIP processes in future years.
- Appendi - The Eligible Investment Areas for Infrastructure and Services under the
x2 UIIDP details the project categories and specific types that are eligible to receive
UIIDP funding. It also contains project type-specific notes and general notes
regarding eligible funding. This Appendix may be referred to especially when
completing Table 25.
- Appendi - The Eligible Capacity Building Areas under the UIIDP details the categories
x3 and specific types of capacity building activities that are eligible to receive UIIDP
funding. It also contains activity-specific notes regarding eligible funding. This
Appendix may be referred to especially when completing Table 30.

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Figure 4. CS-CIP Preparation Steps

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SECTION 4: REGIONAL REVIEW AND APPROVAL OF ULG CS-CIPS

1.14 Context
Considering the increase in the number of ULGs participating in the UIIDP compared to the ULGDP II,
from 44 to 117, the Ministry of Urban Development and Construction delegated the responsibility of
reviewing and approving ULG CS-CIPs to their respective Regions. This decentralization places greater
authority in the Regions and improves the quality of CS-CIPs by bringing them closer to more localized
priorities. Regions employ Regional Mobile Teams (RMTs) to support CS-CIP capacity building in
ULGs.

1.15 The CS-CIP Review and Approval Process

The newly decentralized process for Regional review and approval of ULG CS-CIPs proceeds as follows:
1. MUDC signs participation agreement with Regions
2. Regions sign subsidiary participation agreements with ULGs
3. Regions establish the UIIDP POM in ULGs for use in reviewing and approving AMPs, REPs,
CS-CIPs, and Capacity Building Plans (CBPs), as well as the CS-CIP Manual and Template
4. ULGs prepare and finalize their CS-CIPs, with assistance from the RMTs
5. Regions hold workshops in Regional capitals attended by ULG representatives covering training,
preparation, and review of AMPs, REPs, CBPs, and CS-CIPs
6. Regions conduct post-workshop review of all ULG AMPs, REPs, CBPs, and CS-CIPs
a. If any elements are found to contradict legal agreements or the POM, Regions prioritize
their return to the ULG for revision
b. If any elements are found to have other questions or issues, Regions return them as well
to the ULG for revision
7. Where necessary, ULGs revise their Plans(s)
8. Regions approve revised AMPs, REPs, CBPs, and CS-CIPs
9. MUDC certifies Regional approvals

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PARTICIPATION AND PERFORMANCE AGREEMENT

URBAN INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT PROGRAM

(UIIDP)

PARTICIPATION AND PERFORMANCE AGREEMENT

BETWEEN

________________________________________________ NATIONAL REGIONAL STATE

AND

_______________________________________________ URBAN LOCAL GOVERNMENT

1. Whereas the Ministry of Finance and Economic Development (MoFED) has entered into an
agreement with the International Development Association (IDA) to be known as the Financing
Agreement of the Urban Institutional and Infrastructure Development Program (UIIDP Financing
Agreement), and whereas MoFED has agreed to make finances available through the Ministry of
Urban Development and Construction (MUDC) and the Regional Government (RG) to the Urban
Local Government (ULG) to enhance its institutional and organizational performance in
developing and sustaining climate-resilient urban infrastructure and services.
2. Whereas the MUDC has entered into and signed an Agreement with the RG pursuant to the
above.
3. Now therefore the RG and the ULG agree as follows:
a. That the RG make available to the ULG the funding (Performance Grant) for the three-
year period covering Ethiopian Fiscal Years EFY 201_ through EFY 201_ inclusive to
carry out activities agreed with the MUDC and the RG as per the UIIDP Financing
Agreement and procedures set out in the UIIDP Program Operations Manual (POM). The
POM provides details of allowable Performance Grant Activities within the UIIDP
Investment Menus for capital investment and capacity building activities. The
Performance Grant shall be provided in the form of two semi-annual cash transfers as per
the procedures set out in the POM;
b. That the ULG shall carry out Performance Grant Activities in accordance with UIIDP’s
manuals and guidelines described in the POM, the Procurement Plan (including, where
capacity building activities are to be funded, a Capacity Building Plan), and the
Environmental and Social Management System, with due diligence and efficiency and in
accordance with sound technical, economic, financial, managerial, environmental, and
social standards and practices;
c. That the ULG shall maintain adequate records to reflect, in accordance with sound
accounting practices, the operations, resources, and expenditures in respect of the
Performance Grant Activities;
d. That the goods, works, and services to be financed from the proceeds of the UIIDP
Performance Grant shall be procured in accordance with Government of Ethiopia
procedures as set forth in the POM and the Procurement Plan; and such goods, works and
services shall be used exclusively in carrying out the Performance Grant Activities;

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e. That the MoFED, the MUDC and/or the RG shall have the right to inspect by itself, or
jointly with the World Bank (WB) if it so requests, the goods, works, sites, or plans
included in the Performance Grant Activities, the operations thereof, and any relevant
records and documents;
f. That the MoFED, the MUDC and/or the RG shall have the right to obtain all information
as they or the WB shall reasonably request regarding the administration, operation, and
financial management of the Performance Grant Activities;
g. That the MUDC and/or the RG shall have the right to suspend or terminate the right of
the ULG to use or benefit from the use of the proceeds of the Performance Grant upon
failure by the ULG to perform its obligations under this Agreement;
h. That the ULG shall budget its financial contribution to the Performance Grant as per the
POM in the amount of ___% of the Performance Grant amount allocated in advance of
each EFY by the MUDC and the RG, and in each EFY throughout the execution of the
UIIDP, it shall take all necessary measures to contribute in a timely fashion the expected
level of counterpart contribution as provided for in the POM during the EFY; The RG
shall also provide counterpart funding in the amount of ___% of the Performance Grant
amount allocated by the MUDC and the RG to the ULG in advance of each EFY;
i. That the ULG shall not carry out any Performance Grant Activity which is likely to have
a detrimental environmental or social impact or expropriation of property or physical
cultural resources, in accordance with the appropriate action plans prepared pursuant to
the provisions of the Environmental and Social Management System;
j. That the ULG’s Urban Liaison Committee shall submit any complaints or evidence of
fraud involving UIIDP Performance Grant expenditures to the Regional Ethics and Anti-
Corruption Commission for investigation; The WB has the independent right to
investigate allegations of fraud or corruption involving UIIDP expenditures;
k. That the RG shall circulate to all participating ULGs a list of firms and individuals that
are ineligible for invitation or award of contract for Performance Grant Activities; The
list may be found on the World Bank website: http://web.worldbank.org › Projects ›
Products and Services › Procurement for Projects and Programs › Debarred Firms and
Individuals;
l. That the RG shall provide guidance, through the Regional Public Procurement and
Property Administration Agency, on domestic preferences and procurement of
government-owned enterprises to be applied in the procurement of works, goods, and
services:
i. Each Regional Public Procurement and Property Administration Agency shall
monitor the proper applications of their respective procurement legal procedures
including availing the ULGs of legal documents; compliance with legal
procedures and the use of appropriate procedures will be monitored through
annual procurement audits;
ii. Each ULG mayor shall issue instructions to their program implementation units
to strictly comply with the RG’s public procurement procedures;
iii. Each ULG shall justify to the Regional Bureaus of Finance and Economic
Development (BoFEDs), in advance of contracting, the use of government-
owned enterprises where private sector suppliers exist;
iv. Each ULG shall exclude award to World Bank debarred firms;
m. That the RG, through its Regional Bureau of Urban Development & Construction and in
conjunction with the MUDC through its Urban Revenue Enhancement, Fund
Mobilization, and Finance Bureau, will provide capacity building support to ULGs for
UIIDP implementation and achievement of performance measures; however, full
responsibility for UIIDP implementation and achievement of or inability to achieve
performance measures lies with the ULG;

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 4. The ULG further agrees to achieve fully, to the best of its ability, the entry level condition,
minimum conditions, disbursement linked indicators, and performance measures as described
more fully, including the methodology for the measurement of attributable indicators, weightings,
and points, in the UIIDP Program Operations Manual and in the UIIDP Annual Performance
Assessment Guideline (APAG).
5. The ULG will enter into a Participatory Performance Agreement (PPA) with the RG as an entry
level condition and prior to the release of funds for each year.
6. The RG and the ULG agree that they shall not assign, amend, abrogate or waive any provision of
this Agreement, which may materially and adversely affect the terms of the Performance Grants
and the implementation of Performance Grant Activities.
In witness of whereof the parties hereto, acting through their duly authorized representatives, have caused
this Participation and Performance Agreement to be signed in their respective names as of the day and
year first below written.

ON BEHALF OF THE REGIONAL STATE

Name:_______________________________________________________________________________
Title:________________________________________________________________________________
Signature:____________________________________________________________________________
Date:________________________________________________________________________________
Witness 1 (RG) Witness 2 (RG)
Name:_________________________________ Name:_________________________________
Title:__________________________________ Title:__________________________________
Signature:_______________________________ Signature:_______________________________
Date:__________________________________ Date:__________________________________

ON BEHALF OF THE URBAN LOCAL GOVERNMENT

Name:_______________________________________________________________________________
Title:________________________________________________________________________________
Signature:____________________________________________________________________________
Date:________________________________________________________________________________
Witness 1 (RG) Witness 2 (RG)
Name:_________________________________ Name:_________________________________
Title:__________________________________ Title:__________________________________
Signature:_______________________________ Signature:_______________________________
Date:__________________________________ Date:__________________________________

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