Towards an Effective Partnership:Development aid to the NBC surrounding areas

Sateh Chafic El-Arnaout, PhDChief Technical Advisor

Director of NBC Recovery and Reconstruction CellPresidency of the Council of Ministers

sarnaout@gmail.com

Presidency of the Council of Ministers Recovery and Reconstruction Cell

Outline

Background & Context

Supply of Development Aid

The Development Partnership

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Background & Context

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Development of NBC Surrounding Areas

Key pillar of both: o government strategy at the

Vienna donor conference;o government policy of

addressing under-served areas in Lebanon

An influence area of 25 municipalities around the NBC was identified based on:

o impact of conflict;o economic linkages;o road network;o topography

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Geographic EndowmentTrade Corridor: Located on current land and maritime and

future rail trade corridors to Iraq and Gulf countries

Energy Corridor: Located along land fuel supply line to the

future Beddawi oil refinery

Located along the future land gas supply line to the Deir Ammar power plant

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Economic Endowment

1- Public Investments2- Domestic Direct Investments3- Labor4- Tripoli service sector5- Foreign Direct Investments

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3

2

1

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Tripoli

North Lebanon

Syria, Iraq & Arab Gulf

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Beirut

Local economy that depends on commerce, agriculture and fishing

Important source of labor to regional economy in Tripoli and North Lebanon

Economic and Social Vulnerability

Economic :

Area heavily penalized due to direct and indirect losses from three major events: (i) closure of Syrian border and major access road during July 2006 war, (ii) 2007 NBC conflict and; (iii) 2008 conflicts in Tripoli

Area generates modest economic activities (lowest ratio of loans to and lowest per capita consumption in Lebanon)

Social: High poverty rate (38%) as well as high

illiteracy & school drop-out rates

Highest inter-governorate inequality in Lebanon (gap between rich and poor) & 2.3% of children are underweight

Poor quality of social spending (teaching quality and absence of vocational training)

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Growth PillarsKnowledge Economy:

o Expected to benefit from proximity to higher education services (Lebanese University)

o Benefits from proximity to medical services in Tripoli

Traditional Services:o Commerceo Agricultureo Fishing

Manufacturing:o Expected to better integrate in

the regional economy and to benefit from Tripoli’s special economic zone

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Tripoli Special Economic Zone

Agriculture

Tripoli’s Special Economic ZoneLaw enacted on September 5, 2008

Fiscal and Tax Incentives for companies registered within TSEZ:

Custom duty and VAT waived for goods destined to companies registered within TSEZ.

Income tax waived for companies registered within TSEZ.

Construction permit fee and property tax waived for companies registered within TSEZ.

Tax waiver for equity and bonds issued by companies registered within TSEZ.

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Supply of Development Aid

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Targeted sector allocation (US$57.0million)

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Good Implementation Progress (US$57.0million)

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Spatial allocation of development aid

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Generous Donor Contribution

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Balanced Allocation of Development Aid

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Burden Sharing of Implementation

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Project Impact

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The Development Partnership

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Going Forward

Projects to be aligned with the National Land Use Masterplan to be approved in December 2008

Projects to complement thearea’s Public Investment Program to be approved mid-January 2009

Projects to be sustainable and to have limited O&M fiscal burden on beneficiaries

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NBC SURROUNDING MUNICIPALITIES

MUNICIPALITIES

SECTOR MINISTRIES

AFESD ESFD

CDR

KUWAIT FUND

GERMANYKFWGOV.

IMPLEMENTATION

NGOs

DIRECT FUNDS

INDIRECT FUNDS

ITALYUN

GROUP

ECHO

USAID

CHF RI

IBRD

MDTF

MOI

LRF

DIRECT IMPLEMENTATION

Implementation Issues

• Sub-sector overlap:o Local Economic Developmento Municipal Capacity Buildingo Microfinanceo Etc.

Varied methodological approaches

Absorptive capacity of municipalities & recipient’s fatigue

Sustainability of projects and fiscal burden on beneficiaries

Abortive efforts by donors in project preparation

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Role of Recovery and Reconstruction Cell

Coordinates with Municipalities, Sector Ministries and CDR to identify demand

Coordinates on a regular basis with Gate Keepers” and provides quarterly updates on development aid on a GIS platform

Facilitates project cycle implementation by donors (Identification - Design & Implementation)

Work closely with CDR and MoF to gradually hand-over monitoring mandate

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Mapping of development projects

Data analysis will report at the following levels:

Donor Sector Beneficiary population (Lebanese vs. Palestinian) Municipality Financial Implementation progress Major implementation constrains Lessons learned Impact

Mapping of development projectsGeneral Information Commitments, disbursements and expenditures

Access serial number Donor Commitment % Date

Project title

Description 1st level implementer Disbursement Date Balance

Program Agreement

Project Funding 1st level implementer expenditure Date Balance

Funds Originated from Pre-Vienna, Vienna, Post Vienna Distribution of Funds by Type & Category

Window of funding MDTF, GoL budget support, UNRWA budget support, DDI

Type of assistance Amount %

Project Duration Recovery

Reconstruction

Planned

(start date, end date)

Actual

(start date, end date) Type of Funding Amount %

Implementation Status In cash

Progress In kind

Donors, Implementing agencies Contractors

Donor Category of Funding Amount %

1st level implementer Works

2nd level implementer Goods

Contractor Technical Assistance

Financial Information

Project Cost Total (US$) Distribution of Funds across Sectors and Municipalities

Y1 Sector/Municipality %

Y2 Distribution across sectors

Distribution across municipalities

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