Shanxi province in northern People’s Republic of China (PRC) is a national base for coal, coke, and industrial equipment and machinery manufacturing. At project appraisal, economic growth in this province’s small cities and towns had substantially progressed. However, as such growth outstripped infrastructure provision and urban management capacity, degradation of the environment and living conditions was remarkable.
To help address the situation, the Asian Development Bank (ADB) approved a $100 million loan for the Shanxi Small Cities and Towns Development Demonstration Sector Project in December 2009. The project aimed to help promote balanced and environmentally sustainable urbanization; narrow the urban–rural gap; and improve production, employment, and living conditions in Shanxi’s small cities and towns. It was based on the Shanxi and PRC governments’ shared policy to develop small cities and towns as growth centers that can absorb migrants from surrounding rural areas and relieve the population pressure on large cities.
The project’s envisaged impact was improved environmental quality and increased employment generation in small cities and towns in Shanxi. Its expected outcome was improved urban infrastructure and municipal services in 8 small cities and towns in the province. It was the first ADB multisector loan for municipal infrastructure and services in Shanxi’s small cities and towns. It was processed as a sector loan to allow the provincial government to respond to the changing needs of the targeted small cities and towns. A grant of $0.25 million from the ADB-administered Multi-Donor Trust Fund under the Water Financing Partnership Facility (WFPF), to support capacity building of water and wastewater utilities, accompanied the ADB loan.
At completion, the project achieved or overachieved most of its output and outcome targets. Three core subprojects and five noncore subsequent subprojects expanded and/or improved the heating services; water supply, wastewater collection, and stormwater drainage systems; roads; and education facilities in eight small towns and cities. Education facilities constructed under the project included a multi-functional vocational training center, a junior high school, eight nursery schools, and a nursery teachers training center.
In addition to the physical outputs, the project strengthened the capacities of the executing and implementing agencies through in-house, out-of-province, and international trainings in project management, financial management, procurement, environmental and social safeguards, monitoring and evaluation, and more. The education subproject in one county included teacher training, while the WFPF grant financed the strengthening of financial management and corporate governance of water and wastewater agencies and companies.
Public satisfaction with the subprojects, which directly benefited 410,981 residents, 48.4% of whom were female and 3% were poor, reached more than 80% at completion. Job opportunities during both construction and operation period prioritized the employment of poor laborers and women. Tourism development of the subproject small cities and towns was promoted through improved environment, public facilities, and services.
The project had the Shanxi provincial government as executing agency. A provincial project management office (PMO) in the Shanxi Housing and Urban-Rural Development Department oversaw overall implementation. In each subproject city, county, and town, a PMO was set up to liaise with the provincial PMO and oversee subproject implementation.
