World Bank Approves $46 Million For Low-Income Urban Upgrading In Northeast Brazil

WASHINGTON, April 24, 2003―The World Bank today approved a US$46 million loan to the State of Pernambuco, in Northeastern Brazil, to improve the quality of life of the urban poor in the Recife Metropolitan Region.  The Recife Urban Upgrading Project will improve living conditions for more than 1.2 million poor slum-dwellers by expanding their access to water, sanitation, housing, transport and drainage systems and services.

The Recife Metropolitan Region is home to about 3.1 million people, and is the most important commercial and service center in the northeast of Brazil.  The living conditions in the favelas and informal settlements, however, are among the worst of any major metropolitan region in Brazil.  Almost 40 percent of the Recife Metro Region’s urban population lives in slums lacking most basic services.  The makeshift and irregular tenure housing is often located in high-risk or environmentally sensitive areas, exposed to disastrous flooding.  Currently, only 24 percent of residents of poor areas receive water daily, and only seven percent have sanitation services.

The urban upgrading project involves a high level of community participation, and seeks to improve buildings and infrastructure in low-income settlements of the Beberibe River Basin in the Recife Metropolitan Region.  It will finance basic infrastructure works in water, sanitation and resettlement housing, and will also test proposed land subdivision systems.  Complementary investments are also planned in water treatment, landfill management, rehabilitation and recreation areas.  At the same time, the project will seek to increase local and State institutional capacity to manage, operate and plan decentralized infrastructure services.

“By focusing not only on physical investments, but also on ways to prevent slum formation, to rationalize land markets and legalize land tenure in low-income areas, this project goes a step further in ensuring sustainability,” said Vinod Thomas, Director of the World Bank’s program in Brazil.  “By 2015, the population of the Recife Metro Region is expected to increase by an additional 350,000.  This project will help ensure that current and future inhabitants live in safe conditions, with access to basic urban services.”

The total project cost is $84 million, of which the Bank will finance $46 million.  The State Government of Pernambuco, together with the municipalities of Recife and Olinda, will provide counterpart funding of $38 million.

This single-currency, LIBOR-based IBRD Specific Investment Loan has a repayment period of 15 years, including five years of grace.

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