World Bank Document · 2016. 7. 17. · Document of The World Bank Report No: 16310-BEL PROJECT APPRAISAL DOC'UMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$7.0 MILLION EQUIVALENT TO

Document ofThe World Bank

Report No: 16310-BEL

PROJECT APPRAISAL DOC'UMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$7.0 MILLION EQUIVALENT

TO

BELIZE

FORA

SOCIAL INVESTMENT FUJND PROJECT

February 25, 1997

Human and Social Development GroupCountry Department IIILatin America and the Caribbean Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective January 1997)

Currency Unit 13elizian DollarUS$1.00= $2.00

FISCAL YEARApril I to March 31

ABBREVIATIONS AND ACRONYMS

CAS - Country Assistance StrategyCBOs - Communlity Based OrganizationsCDB - Caribbean Development BankCDOs - Community Development OfficersCON - ConsultationiCOL - CollaborationESTAP - Environmental and Social Technical Assistance ProjectEU - European UnionFRR - Financial Rate of ReturnGNP - Gross National ProductGOB - Governmenit of BelizeHRD - 1luman Resources DevelopmentICB - International Competitive BiddingICDF - International Cooperation Development FundIDB - Inter-American Development BankIMR - Infant Mortalitv RatesIS - Informationi Sharing,KFAED - Kuwait Fund for Arab Economic DevelopmentLIB - I.imited International BiddingMHR - Mir-istrv of Human ResourcesNBF - Non-Banik FinancingNCB - National Compctitive BiddingNGOs - Non-Goverinmental OrganizationsNPV - Net Present ValueODA - Overseas Development AdministrationOPEC - Organization for Petroleum Exporting CountriesPPF - Project Preparation FacilityPRA - Participatory Rural AppraisalRRA - Rapid Rural AppraisalSFO - SIF Field OfficerSIF - Social Investmenit FundSOE - Statemnent of ExpendituresUNICEF - United Nations International Children's Emergency FundWASA - Water and Sewerage Authority

Vice President S. J. BurkiDirector P. IsenmanManager J. SchweitzerTask Manager H. Mori

BelizeSocial Investment Fund Project

Table of Contents

Project Financing DataBlock 1: Project Description

1. Project Development Objectives2. Project Components3. Benefits and Targets Population4. Institutional and Implementation Arrangements

Block 2: Project Rationale5. CAS Objectives Supported by the Project6. Main Sector Issues and Government Strategy7. Sector Issues to be Addressed by the Project and Strategic Choices8. Project Alternatives Considered and Reasons for Rejection9. Major Related Projects Financed by the Bank and/or Other Development Agencies

10. Lessons Learned and Reflected in the Project Design11. Indications of borrower Commitment and Ownership12. Value Added of Bank Support

Block 3: Summary Project Assessments13. Economic Assessment14. Financial Assessment15. Technical Assessment16. Institutional Assessment17. Social Assessment1 8. Environmental Assessment19. Participatory Approach20. Sustainability21. Critical Risks22. Possible Controversial Aspects

Block 4: Main Loan Conditions23. Negotiations Conditions24. Effectiveness Conditions25. Other

Block 5: Compliance with Bank Policies

List of AnnexesAnnex 1: Project Design SummaryAnnex 2: Detailed Project DescriptionAnnex 3: Estimated Project CostsAnnex 4: Cost Effectiveness Analysis SummlnarxAnnlex 5: Finanlcial SummaryAnnlex 6: Procurement and Disbursemncnt ArrangeilicntsAnnlex 7: Project Processing 13udget anid SchiedulcAnniex 8: Documllenits in the Proect l:ileAnnlex 9: Statcment of l oans and (rcditsAnniex 10( 13cliic at a Glance

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INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Latin America and the CaribbeanCountry Department III

Human and Social Development Group

Project Appraisal Document

BELIZESocial Investment Fund Project

Date: 2/25/97 EJ Draft 2 Final

Task Manager: Hideki Mori, LASHD Country Manager: Philippe Nouvel, LA3C2

Project ID: BZ-PA-39292 Sector: Social Assistance (SA)

Lending Instrument: Specific Investment Loan PTI: Z Yes E No

Project Financing Data 3 Loan [] Credit [1 Guarantee 2 Other [Specify]

Amount: US$ 7.0 millionroposed Terms: F Multicurrency Single currency

Grace period (years): 5 0 Standard Variable z Fixed 3 LIBOR-basedYears to maturity: 17Commitment fee: 0.75%

Service charge: 0.0%

Financing plan (USSm):Source Local Foreign Total

Government 1.60 1.60European Union (as part of Government Counterpart Fund) 1.26 0.74 2.00IBRD 4.41 2.59 7.00Community Contributions 1.06 1.06... .......... ... I..........................................................................................................................................................................................................................................................................................

Borrower: Government of BelizeResponsible agency(ies): Belize Social Investment Fund

Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001Annual 1.55 2.36 1.88 1.21

Cumulative 1.55 3.91 5.79 7.00...........................................................................................................................................................................................................................

Expected effectiveness date: July 1, 1997 Closing date: December 31, 2001

Project Appraisal Document Page 2BELIZE Social Investment Fund Project

Block 1: Project Description

1. Project development objectives (see Annex I for key performance indicators):

The overall objective of the project is to improve the access of the poor in relatively disadvantaged communities to basicsocial and economic infrastructure and services, largely by supporting small-scale projects, which are identified andimplemented with a high degree of community participation. Achieving this objective would contribute to the country'spoverty reduction goal. A Social Investment Fund (SIF) has been established to mobilize resources from the Bank, theGovernment of Belize (GOB) and other donors for the project. The project would support GOB in: (i) establishing anefficient, transparent, demand-driven participatory mechanism for financing basic services and infrastructure to targetedgroups; and (ii) channeling resources to community projects involving social assistance, baEic infrastructure and small-scale productive activities.

2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component Category Cost ncl. % ofContingencies (US$M) Total

COMMUNITY PROJECTS - would be * Physical 7.87 67%sponsored by public or private organizations * Institution Buildingable to design community projects to meetSIF's established criteria. Community projectgeneration would be demand-driven, butwould be combined with promotional effortsto develop institutional capacity as needed, totarget the poorest communities. Communitieswould make a 5-10% cash or in-kindcontribution, depending on the type ofcommunity projects.MICROENTERPRISE CREDIT (no Bank * Credit 1.20 10%financing) - would provide credits tocommunity-based microenterprises.Management of credits and training tocommunity groups would be sub-contracted toa NGO or a financial intermediary withdemonstrated experienceINSTITUTIONAL SUPPORT - to help * Institution-building 2.25 19%develop a viable, autonomous institution to * Project managementmanage the Fund and to finance theadministrative and operational costs of theorganization for a four year period.PPF Refinancing * Other 0.35 3%

Total 11.67 100%.................................................................................................................................................... ...................... ..................................... ............ ........................................... ....................................

3. Benefits and target population:

Overall expected project benefits include:* Reaching beneficiaries in the poorest regions, with particular emphasis on Toledo, Cayo and Corozal;* Increased access to basic social and economic infrastructure, social services and training; and* Greater community involvement in poverty alleviation activities.


The project is expected to fund over 500 community projects that would provide poor communities with basic social andeconomic infrastructure, access to social services and training. Given the demand-driven nature of the investments, it isnot possible to quantify ex-ante the number of community projects in each category, the number of beneficiaries or theactual benefits to be delivered.

Expected benefits from individual community projects, given the menu (wee Annex 2 Detailed Project Description) ofcommunity projects, include:* for water and sanitation community projects, increased access to water, less incidence of disease and overall

improved health;. for health community projects, increased access to health informnation, services and supplies, first-aid health care;* for economic infrastructure, improved drainage, feeder roads and pedestrian bridges;* for education community projects, increased access to primary education, improved quality of the learning

environment;* for social services community projects, improved facilities and training for disadvantaged youth;* for organizational strengthening community projects, improved capacity of NGOs, community-based organizations

(CBOs) and government agencies; and* for microenterprise community projects (under Microenterprise Credit Component), improved access to credit and

thus, sources of income for the poor.

Beneficiaries and Poverty Targeting - Beneficiaries would include both the urban and rural poor, as well as poorindigenous populations, and immigrants (including refugees). However, SIF's community project resource allocationwould be based on geographic poverty level and not ethnicity. See Annex 1-A for this project's indigenous peoples'strategy.

Geographical Targeting Strategy - SIF's geographical targeting strategy has: (i) produced an index for estimating therelative extent of poverty across districts and ranks districts and sub-district according to their respective levels of poverty;(ii) developed tools for distributing resources geographically, deriving specific district and sub-district allocations; and(iii) outlined a system for monitoring progress of poverty reduction efforts that incorporates a feedback mechanism foradjusting the relative level of targeted resources across regions and community projects.

Targeting by type of community projects - The types of community projects eligible for SIF financing, by their nature,tend to be oriented to the needs of the poor. Proposals for certain types of community projects, thought to meet the needsof the poorest of the poor, would receive preference for financing by SIF........................................................................................... ........................................... II... ............................... .................................. ............. . ................ I..........................................................

4. Institutional and implementation arrangements:

Implementation period:Four years (1997-2001).Executing agencies:* SIF: legally established as an autonomous public statutory body in May 1996, would be responsible for overall project

coordination as well as the promotion, appraisal, financing and supervision of community projects;* District Community Development Officers (CDOs) of the Ministry of Human Resources (MHR): through a

Memorandum of Understanding with SIF, CDOs would assist SIF Field Officers (SFOs), and support promotionactivities, identification, environmental training, and social and institutional appraisals of community projects; and

* Community projects would be sponsored by local governments, NGOs and community-based organizations (CBOs)and executed by qualified NGOs, CBOs and private sector contractors.

Project coordination:Many of SIF's activities will complement those of other government agencies. For each type of community project, SIFwould form a framework agreement (i.e. a memorandum of understanding) with the corresponding agency to ensure theconsistency of SIF financing with broad sectoral policy as well as to avoid duplication in financing. Furthermore, the


agency's endorsement would be required before a community project is presented to the SIF Board to ensure theavailability of recurrent costs (personnel, supplies and maintenance) implied by community projects.

The Operational Manual comprises several guides which set out in detail arrangements for project implementation,including: the overall SIF Guide (i.e. Main Guide), the Administrative and Financial Guide, Appraisal Guide andSupervision Guide for each type of community project, Unit Cost Database, the Guide for presenting projects to SIF, theSocial and Institutional Appraisal Guide, Environmental Guide, Procurement Guide and the MIS Guide. The OperationalManual was appraised by the Bank and found satisfactory.Project oversight:The Board of Directors, comprising nine members from the public, NGO and private sectors would: (i) approve and adoptpolicies and procedures governing SIF operations; (ii) appoint an Executive Director; (iii) supervise the overall operationof the Fund; and (iv) approve, or delegate the approval of, community projects for SIF financing. Board members areappointed by the Minister of Economic Development.Accounting, financial reporting and auditing arrangements:SIF would submit to the Bank financial reports at the end of each semester. External audit reports, prepared by anindependent auditor acceptable to the Bank, would be submitted annually in accordance with Bank standards. Theproject's chart of accounts, which was developed with the assistance of a Bank expert, was reviewed during the appraisaland found acceptable.Monitoring and evaluation arrangements:Along with the financial reports, SIF would submit to the Bank indicators for monitoring and evaluation (see Annex 1)semiannually. SIF and the Bank would jointly conduct annual reviews and a Mid-Term Review of SIF by February 2000to evaluate the progress in project implementation, to make necessary adjustments and to review the management of SIF.At that stage, the optimal duration of SIF would be determined. Other donors would be invited to participate in the reviewas appropriate.

Monitoring and evaluation of project benefits would be conducted through a set of studies, including: (a) ongoing externalsupervision of the technical quality of community projects; (b) Beneficiary Assessments/Ex-post evaluations (questionsdesigned to specifically address cultural appropriateness of community projects would be incorporated into the surveys);and (c) benefits assessments (which look at whether or not the qualitative and quantitative benefits anticipated at the timeof appraisal have materialized). Results from the first two evaluations would be available by the mid-term review.


Block 2: Project Rationale

5. CAS objective(s) supported by the project Document number and date of latest CAS discussion: #P-5. GA objetives) suporte by he prject6120-BZ 11/1/93Increased emphasis on human resources development and poverty alleviation and donor coordination.............................................................. I..............I............................................................................................................. ..................................................................................................................

6. Main sector issues and Government strategy:

Belize's population (about 220,000) comprises five major ethnic/language groups (see Annex 1-A: Indigenous Peoples'Strategy). The small size of the country combined with a high degree of ethnic diversity presents a unique challenge fordesigning effective poverty reduction programs.

The level of poverty in Belize is estimated at 35% of the total population with the highest incidence in rural areas, at 40%,as compared to 26% in urban areas. The largest numbers are located in Belize City, Cayo rural and Toledo rural. Themore easily identifiable groups below the poverty line are: the young and young-adult unemployed or underemployed,young drop-outs with low levels of education, women with more than three children and no education, workers in thebanana and citrus plantations and small farmers, including Indigenous communities. The social problems presented by alarge group of youngsters out of school, unemployed and often facing the pressures of a breakdown of family structuresare of immediate concern to the Government. Street crime, gang violence, drug abuse and trafficking are widespread andon the rise. There is a high imbalance in coverage of social services between rural and urban areas, especially healthservices, water, sanitation and other infrastructure. Despite gains over the last 20 years in reducing infant mortality rates(IMR) and lessening the burden of vaccine-preventable diseases, marked geographical and socioeconomic differentials inhealth remain. While the overall mortality of children currently stands at 35 deaths per 1,000 live births, in rural areas, itreaches 54. Additionally, children in rural areas are at higher risk of diarrheal diseases and malnutrition. Incidence ofmalaria and dengue is also on the rise in rural areas.

The GOB's National Development Strategy 1996-2000 seeks to promote human development and reduce poverty, andidentifies the following six components of the social sector strategy: (i) delivery of education and generation ofknowledge; (iv) improvement in the delivery of health service and the general health of the Belizian people; (iii) tangiblepoverty reduction activities; (iv) community and advocacy skills development; (v) improvement in the quality anddistribution of ownership of the housing stock; and (vi) prevention and control of crime. The main challenge for GOBwould be to implement its social sector strategy while undergoing fiscal adjustment. GOB's fiscal position has beenexacerbated by ambitious capital spending in the early 1 990s, and the overall public sector deficit expanded substantially,reaching an average of 8 percent of GDP during the period 1991-93. While GOB has introduced a serious of restrictivemeasures in recent years, fiscal adjustment continues to be one of the most critical tasks (see "Belize: Fiscal Policies forStabilization and Growth - Public Expenditure Review"; May 30, 1996; Report No. 1 5337-BEL).

7. Sector issues to be addressed by the project and strategic choices:

The National Development Strategy 1996-2000 specifically identifies SIF as one of the instruments for implementingtangible poverty reduction activities, or Component (iii) of the overall social sector strategy (see Section 6 above). Theidentified priority actions include the following:

* Provision of potable water supplies to the rural communities;* Provision of health education services to the poor;* Rehabilitation/construction of health posts;* Distribution of training materials for community health workers;* Improvement of the feeder road systems, including drainage and small pedestrian bridges;* Promotion of the use of Ventilated Improved Pit (VIP) latrines where flushable sewage disposal systems are not

practical;* Provision of community training in the management of solid waste; and* Provision of credit and training for microenterprises.


SIF would also contribute to community and advocacy skills development, or Component (iv) of the social sector strategy,through the promotion of community participation.

Other components of the social sector strategy are being implemented with the support of the Bank and other donors (seeSection 9 below).

8. Project alternatives considered and reasons for rejection:

Separate stand-alone projects in water and sanitation, education, health, infrastructure, industry.

This was rejected due to:* The existence of major ongoing and planned projects in the related sectors (see Section 9 below);* Difficulties in coordinating projects managed by separate line ministries;* High administrative overhead in administering several projects separately;. Difficulties in reaching poor communities through traditional supply-driven investment projects

9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing andplanned).

Sector Issue Project Latest Form 590Ratings

(Bank-financedprojects only)IP DO

Bank FinancedBelize City's traffic congestion; lack of/deteriorated drainage Belize City Infrastructure Project HS Ssystem; weak coastal line management; weak management (Ongoing; ID 6104; Loan #3667,of city infrastructure and delivery of urban services US$20 million; closing date 12/31/97)

Low qualification of teachers; overcrowded classrooms; Primary Education Development S Saccess to learning materials; weak sector management Project (Ongoing; ID 6101; Loan

#3422, US$7.1 million; closing date06/30/99)

Inefficiency in education financing/limited access to Secondary Education Project (Plannedsecondary education for FY99)

Non-Bank FinancedWeak health sector planning/management; health financing Design and Implementation of Healthinefficiency Policy Reforms (Ongoing; IDB

Financing US$1.8 million)

Lack of major transportation network; weak Southern Highway Rehabilitationenvironmental/social planning Project (Planned; IDB Financing

US$28.2 million; US$33.1 millioncofinancing by ICDF, Kuwait, OPEC,ODA and CDB), including theEnvironmental and Social TechnicalAssistance Project (ESTAP), whichwould develop regional developmentplan for mitigating social andenvironmental impacts.


10. Lessons learned and reflected in the project design:

The project design fully incorporates the following lessons learnt from the Bank's experience in financing SIFs in LAC aswell as other regions, and from the Bank's previous operations in Belize.

Critical success factors for SIF:(i) Well-paid, qualified staff, with a director with proven managerial experience;(ii) Political and institutional autonomy;(iii) Targeting mechanisms to ensure poorest groups are reached;(iv) Promotion and support for community based projects generation;(v) Technically simple community project designs;(vi) Strong local participation during all stages of the community project cycle;(vii) Well-defined appraisal criteria and transparent appraisal procedures;(viii) Execution of community projects by private contractors, NGOs and communities;(ix) Regular and frequent financial and operational audits;(x) Rigorous community project supervision;(xi) Collaboration with line ministries to ensure complementary objectives; and(xii) Political support and commitment to the goals and integrity of the Fund.

Critical success factors for operations in Belize:(i) Sufficient project preparation time, especially for projects requiring policy decisions;(ii) Substantial technical assistance to supplement limited administrative and technical manpower available for

project implementation;(iii) Community participation through information sharing and close collaboration to promote "ownership" and

ensure sustainability;(iv) Adequate GOB counterpart funding and recurrent budgetary support for key programs after project

completion......... ........ ............................................................................... ........................................... ........... ............................. ............ ............. ........................................................ .............................

11. Indications of borrower commitment and ownership:

* Broad participation of stakeholders in project preparation and implementation design (see Section 19 below).* Social Sector Strategy included as Section 3.2 of the National Development Strategy 1996-2000.* The GOB has hired highly qualified technical staff to SIF and has appointed a qualified Director.* Prior to the negotiations, the borrower submitted the following documents for the Bank's review:

) the draft Operational Manual;0 Draft memorandum of understanding between SIF and Ministries of Human Resources, Health and Education;

> Draft financing agreement with European Union and the Government of Belize; and> Draft subsidiary agreement between the Government of Belize and SIF............................................................................................................................................. ............. ............................. ...................................................... .......................................... ...............

12. Value added of Bank support:

* The Bank assisted the GOB in preparing its mid-term Economic Strategy and in assessing its urban poverty problems;* The Bank has much experience in assisting in the preparation of and financing of SIFs, and has drawn on this

experience in assisting the design of the Project; and* The Bank's involvement in the project is expected to help mobilize other sources of financing.


Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)

13. Economic Assessment (see Annex 4): aI Cost-Benefit Analysis NPV=US$ 3 Cost L Othermillion; ERR= % Effectiveness [Specify]

Analysis:The SIF is the first of its kind in Belize, assisting community level investment initiatives in multiple sectors, includingeducation, health, water & sanitation, infrastructure and industry. The most likely alternative would be separate stand-alone projects in those sectors (see Section 8). This would be less cost-effective than the proposed project. Under thisalternative scenario, the administrative overhead to manage and coordinate the same level and scope of activities would behigher by $1 .1 million. Annex 4 compares the project with its alternative....................................... .................... ........................................................................................................................................................................ ............... ....................... I................

14. Financial Assessment (see Annex 5)

Given the current menu of community projects to be financed by SIF, it is expected that with the project, governmentexpenditures would rise only marginally, about 0.06% of GNP during the implementation period, and less than 0.02%during the operational period. For community projects that entail an increase in the GOB's expenditures on recurrentcosts, prior to community project approval, the applicable line agency's endorsement would be required. Communityproject beneficiaries would contribute 5-10% of the total cost of each community project, depending on the type ofproject. Where relevant, cost recovery mechanisms for different types of community projects would be established.................................................................................................................... ...................................................................................................................................................................................

15. Technical Assessment:

Technical standards have been developed for each community project type based on existing norms available from therespective public agencies to ensure sectoral coherence and compatibility. These norms have been incorporated into SIF'sappraisal guides. The technical appraisal of community projects would confirm that infrastructure, equipment and otherinputs are consistent in scale, quality and content with the norms established and that implementation is technicallyfeasible. In addition, SIF would maintain qualified technical staff as agreed to by the Bank.

..................... .................... ........................................................................... ........................ I........................................I................................................ .................................................16. Institutional Assessment:

As summarized below, the level of existing institutional capacity is acceptable for project implementation. However,ample technical assistance and close supervision would be needed to further strengthen the capacity, especially during theinitial phase of implementation.

a. Executing agencies:As mentioned above, community projects would be sponsored by local governments, NGOs and community-basedorganizations (CBOs) and executed by qualified NGOs, CBOs and private sector contractors. Community-basedorganizations may be eligible for the reimbursement of the preparation cost incurred for necessary technical assistanceduring community project preparation depending on the type of projects. Eligible technical assistance related expenseswould be reimbursed only if the proposed community projects are approved by SIF, thus providing an incentive forproducing well-prepared community projects. The Bank's experience with this type of arrangement indicates that itwould lead to better prepared community projects and thus to a decrease in time that SIF staff must dedicate toreformulate community projects.

During the community project appraisal process, SIF would conduct an institutional analysis of community projectsponsoring and/or executing agencies to assess the capacity of the entity or identify training needs in order to ensuresuccessful implementation and sustainability of community projects.

Local Governments - Despite its centralized government budget control and culture of dependency, Belize has anextensive structure of decentralized institutions at the district level: first, the presence of key government ministries suchas health, education, human resources and; second, "representative" community level institutions. In towns, Town


Boards are representative bodies with certain functions and an associated budget. In rural areas, elected Village Councils,although not as yet with legal status or budget, are important social institutions with a number of defined functions. Bothwere initiated, developed and controlled by government, and have had cyclical periods of activity and decline relating topolitical and economic factors. SIF will work closely with local government institutions and build on the existing socialcapital. In rural areas, it would take advantage of the experience of Village Councils in petitioning the government forinfrastructure community projects and in organizing community labor.

The NGO sector - Although currently the sector comprises in excess of 1 00 organizations (formal and informal) servinga wide spectrum of social and economic needs, for the most part, the financial basis of these institutions is weak andhighly dependent on external finance, which has decreased in recent years. Support from the Government has alsodiminished due to the needs to reduce public expenditure, and has led to the decline of services provided by NGOs.However, despite current operational and financial constraints, the NGO sector still offers SIF a mechanism for reachingout to poor community groups through its network of programs, personnel and local contacts that reach into poorcommunities.

Community Based Organizations - The growth of CBOs, such as cooperatives, community action groups etc. in Belizein recent years has been encouraging in both urban and rural areas. In rural areas, Village Councils are also considered tobe CBOs although historically, they were developed by government. CBOs have been useful in sustaining localinvolvement in the development of communities, and as a way of ensuring greater control over resources and decision-making. However, CBOs often have limited capacity and high dependence on voluntary effort and consequent loss ofconsistency in management and operations.! Given that CBOs would be the main bodies that would represent SIF'sbeneficiaries, SIF has been designed with a strong institutional capacity development component, to help strengthen theirparticipation and capacity in all stages of the community project cycle, and provide them with training in communityproject operations and management where necessary. Thus, an identified training component would be integrated intomany community project types.

b. Project management:

Monitoring and coordination of project activities to be carried out by many executing entities requires experiencedindividuals with proven management skills. The Government has agreed to recruit staffs who meet these requirements.Periodic reports, such as semiannual financial reports, performance indicators, annual institutional reports and externalaudit reports and assessments conducted during supervision missions would help indicate the effectiveness of projectmanagement.

.......... ......................................... ...............................................I........................................................ ................................................................................. ........................................ ..............

17. Social Assessment:

Adequate measures have been taken, and incorporated in the project design as summarized below.

Community Groups: Community level formal and informal consultations were conducted by SIF during field visits toboth rural and urban areas, some of which took place during the Bank's missions, Information, concerns and ideasgathered during the discussions held were incorporated into the design of the SIF community project cycle and in themenu of community projects offered by SIF. Among other concerns, two seasonal constraints to community participationin the project cycle (including implementation), were identified: availability of local labor and weather conditions. Also,training and institutional development were identified as priority needs. Information from community surveys carried outin conjunction with the National Poverty Assessment (1995) and the National Development Plan (1994) was also takeninto consideration.

' For a detailed analysis of the NGO and CBO sectors, see "Belize: Social Investment Fund: Analysis of Existing Poverty Programmes." John Harrison and WayneVroman, August 1995.


Indigenous Groups: In the above referenced meetings, given the multiethnic composition of Belize, particular attentionwas given to ensuring that meetings covered all five different ethnic groups. Where appropriate, separate meetings wereheld with women's groups. In addition, the SIF Preparation Team held meetings with several indigenous organizationsincluding the Garifuna Council and the Toledo Maya Cultural Council. Furthermore, SIF office has employed multi-lingual staff, capable of assisting communities in all major languages. SIF's indigenous peoples' strategies aresummarized in Annex 1-A.

Women: CDOs and SFOs would ensure women's participation throughout the community project cycle, particularlyamong certain indigenous groups.

Needs Assessment Mini-Guide: The Operational Manual includes the Needs Assessment Mini-Guide that has beenprepared by the Bank's anthropologist, and incorporates techniques in line with participatory rural appraisal (PRA) andrapid rural appraisal (RRA) to adequately address concerns regarding communities and indigenous groups.

18. Environmental Assessment: Environmental Category F A E B. C

Because of their small size and characteristics as described in the Menu of Community Projects (see Annex 2), nocommunity project financed by SIF is expected to generate significant negative environmental effects. Therefore,environmental guidelines would be prepared only for the types of community projects that may generate some degree ofimpact, mainly those under water & sanitation and health in the present menu of projects. Environmental guidelineswould specify the following:

* Environmental criteria for preparing, appraising and supervising community projects;* Appropriate mitigation measures to be incorporated into SIF's community project cycle and procedures for

conducting a environmental assessment;* Key environmental concerns/information to be dealt with would be included in operations and maintenance

training;* Performance indicators to monitor compliance with environmental guidelines at all stages of the community

projects cycle.

The draft Operational Manual including the environmental guidelines was submitted to the Bank prior to negotiations.SIF's adoption of the Operational Manual acceptable to the Bank is a condition of effectiveness.

Strategies to address the issues pertaining to indigenous populations is described in Section 17: Social Assessment (above)and Annex l-A, Indigenous Peoples' Strategy.

..................................... I................ ........................................................................................................................................................................................ ....................................................

19. Participatory Approach: "m

Beneficiaries / community IS, CON: IS, CON, COL: COL:

groups / indigenous groups See Section 17 Social Assessment In all stages of the Where they arecommunity project cycle. responsible for

managing completedcommunity projects

Intermediary NGOs / IS, CON: IS, CON, COL: COL:

Academic Institutions A seminar was held with the NGO In community projects Where they arecommunity and government these institutions sponsor responsible foragencies on February 26, 1996. or execute. managing completedOut of 18 NGOs invited, 11 community projectsattended. In this seminar, the


preparation team outlined theproposed structure and activities ofSIF and its menu of projects. Manyof the issues, concerns andrecommendations aired during thisseminar have been incorporatedinto SIF project

Line Ministries and Agencies IS, CON, COL: IS, CON, COL: COL:

Out of the 17 government agencies See Section 4 on Project Where they areinvited, 14 attended the above- Coordination responsible formentioned seminar. Further, SIF is managing completedworking closely with corresponding community projects,line ministries on its technical providing additionalguides for appraising and personnel needed andsupervising different types of for covering recurrentcommunity projects. costs entailed by the

financing of communityproject

Local Governments Same as line ministries and IS, CON, COL: COL:agencies In community projects Where they are

these institutions sponsor. responsible formanaging completedcommunity projects

Other Donors IS, CON, COL: IS, CON - EU, ODA, N/A

ODA has financed SIF project UNICEF, IDBpreparation; ODA and UNICEF COL - EU (cofinancing)would finance pilot communityprojects; IDB would shareinformation through theEnvironmental and SocialTechnical Assistance Project.

........... ..................... .............................. ... ................. ............ ........ ............................................................................................................................[Note: information sharing (IS); consultation (CON); and collaboration(COL).]

20. Sustainability:

Sustainability of community projects would be ensured through:

* High degree of participation in community project identification, preparation, appraisal, contracting and supervision.* Ownership by the beneficiaries, as evidenced through 5-10% community group cash or in-kind contributions.* Appraisal criteria that require presentation of an operation and maintenance plan.* Coordinating agreements with government agencies to assure coverage of recurrent costs for those community

projects that generate such costs.* Carrying out of a social analysis to assess the degree of participation by the beneficiaries in the preparation of the

proposed community project.* Execution of an institutional evaluation of the capacity of sponsoring agencies to sustain services after SIF financing

ends or of implementing agencies in cases where NGOs or community groups propose to implement projects.


Regarding the sustainability of SIF as an institution, it was agreed that, based on evaluation of the efficiency and impact ofSIF and within the context of the GOB's evolving social sector policy and strategy, this would be looked at during theMid-term Review, planned for February 2000.

21. Critical Risks (see fourth column of Annex 1):

Risk Risk Risk Minimization MeasureRating

Project outputs to development objectives

Political interference Moderate Adoption of transparent and efficient operating procedures

Unsustainability of community projects Moderate Emphasis on beneficiary participation, cost sharing withcommunities and training in operations and maintenance

Project components to outputs

Difficulties in maintaining qualified staff High Competitive salaries to SIF staffat SIF

Low quality of community projects Moderate Limited range of community projects and thus technicalexperience needed at the SIF office; good supervisionprocedures; independent quality reviews, ex-post evaluations,beneficiary as well as benefits assessments

Weak coordination with line ministries / Moderate Agreements with line ministries on project appraisal criteriaduplication of activities

Inefficiency of SIF operation Moderate Limited types of eligible projects; efficient operationalprocedures

Overall project risk rating: Moderate

...... __ ......- ..............-............................................. ............. ..................................................-.................... ...................... ...........-.............................................................

22. Possible Controversial Aspects:

* Targeting of Indigenous Populations: Because indigenous populations constitute a large percentage of the poor,SIF's geographic and menu-based targeting strategy is de-facto biased towards the indigenous populations. However,the project does not explicitly target an indigenous population or any particular ethnic group. Attempting to do so inthe small multi-ethnic society of only 220,000 people divided into five major ethnic groups would be difficult. Thedebate concerning indigenous populations is likely to continue.

* Political Influence on SIF Operations: Under the existing fiscal constraints, politicians tend to see SIF as analternative tool to respond to their constituencies. Although SIF instruments are established in a very clear andtransparent manner, it is also possible that some politicians may attempt to exercise their influence on SIF operations.


Block 4: Main Loan Conditions

23. Effectiveness Conditions

Special effectiveness conditions include:* Adoption of the Operational Manual acceptable to the Bank; and* Signing of the Subsidiary Agreement, acceptable to the Bank, between SIF and the Government of Belize.............................................................................................................................................................................................................................................................................................................

24. Other

Flow and utilization of project funds* Special Event of Default: The Bank would be authorized to suspend disbursement if the Financing Agreement between

the Government of Belize and the EU fails to become effective by December 31, 1997 or a later date on which theBank may agree (Section 6.01 (e) of the Loan Agreement).

* The Bank will not disburse against contracts under any education community project financed by EU (Schedule 1,Para. 3 (b)).

Monitoring, review and reporting* SIF will carry out yearly project implementation reviews with financing agencies including the Bank, and update the

implementation plan no later than February 28 of each year starting in 1998 (Section 3.04 (c)).* SIF will submit semi-annual reports to the Bank (Section 3.04 (b)).

Management aspects of the executing agency* SIF will maintain its staffing and the Operational Manual as agreed with the Bank (Sections 5.01 (b) and 6.01 (c)).

Block 5: Compliance with Bank Policies

F] [The following exceptions to Bank policies are recommended for approval. The project complies with all otherapplicable Bank policies.]

[signature] [signature]

Task kan er: Mori, LASHD Country Manager: Philippe Nouvel, LA3C2

Annex 1

Project Design Summary

h'tKhll P| lrfP Mbt M 21fM Ob A_R lim ll |CAS Objective (CAS Objective to Bank

Mission)Increased emphasis on HRD indicators; poverty Review of statistics Overall economic stabilityhuman resources indicators; externaldevelopment (HRD), financing figurespoverty alleviation anddonor coordination.

Project Developmental (Development Objectives toObjective CAS Objectives)* Improved access by the * Number of direct * Beneficiary * The Government and

poor in relatively beneficiaries and their Assessments the donors maintain ordisadvantaged level of satisfaction * Benefits Assessments increase overallcommunities to: water under each type of * SIF MIS resource allocation& sanitation; community project by through non-SIFrudimentary health district, age group, channels to povertyservices, small-scale poverty quintile, and reduction.economic infrastructure; ethnic groupbasic education * Percentage of resourcesservices; social services; invested by povertyorganizational quintile.strengthening; andmicro-credit.

* Greater community * Number / percentage of * SIF MIS * Same as aboveparticipation approved projects

applied for bycommunityassociations;Sponsor / beneficiarycontribution as apercentage of totalproject cost;

Project Outputs (Output to DevelopmentObjectives)

* Financing! * Number of completed * SIF MIS * SIF and its operationsImplementation of contracts by type of are free of politicalcommunity projects contract (civil works, interference;

goods, training); * Benefits of community* Percentage of resources projects financed by SIF

invested by type of are sustainablecontract;

2 SIF Operational Manual specifies over 100 indicators to be constantly monitored for SIF's management purposes. Thesupplemental letter to the Loan Agreement includes the project's monitoring indicators with benchmarks.

Nv,lnvmiry KIV ffui Mharin Mhitw -__wb DUN ANNm Us* Average contract size

by type of contract;* Number of people

trained;* Number of completed

projects by menu-type* SIF, established as an * Number of community

efficient, transparent, projects: (1) meetingdemand-driven and preliminary screeningparticipatory criteria at registration;mechanism for (2) re-appraised; (3)financing basic services completed; (4)and infrastructure to completed on time;targeted group * Average elapsed time

between: (1) registrationand appraisal; (2)appraisal and approval;(3) approval andcontract signing; (4)contract signing to firstdisbursement; (5) firstdisbursement andproject completion;

* Percentage of SIFadministrative expensesper total amountdisbursed.

Project Component Components to OutputsSupport of Community * Number and amount of * SIF MIS * SIF maintains qualifiedProjects project requests staff

received; * Quality of community* Number of projects: (1) projects (technical

appraised; (2) approved; design, implementation(3) contracted; (4) arrangements, etc.) issupervised; adequate

Provision of Micro-credits * Number and amount of * Coordination with linecredits approved; ministries are adequate

Institutional Strengthening * Amount of financing * SIF operates at anof SIF committed by financing acceptable level of

source; efficiency* Number of SIF staff for

promotion, appraisal,contracting andsupervision;

Annex 1-A: Indigenous Peoples' Strategy

Ethnic Profile of Belize

Belize presents a unique situation regarding ethnic issues. For a country of a very small population, it is highlyethnically diverse, comprising five major ethnic groups as well as smaller sub-groups. Under conventional definitions,only Maya (including two sub-groups called Mopan and Ketchi) would be considered as an indigenous group. However,practically all the ethnic groups consider themselves as indigenous ethnic minorities.

Belize is generally considered English speaking, and indeed English is the official language of the country. Onthe other hand, it is practically no one's native language. Like other countries in the Caribbean, those who are consideredas English speakers often happen to speak Creole at home and in non-official situations. In fact, there is a citizen'smovement in support of providing education in Creole, like in the cases of other major languages including Spanish,Mopan and Ketchi.

Another critical dimension is the existence of immigrants who have left their home countries in Central Americafor political and economic reasons. They are about 11.7% of total population in Belize, and 40.5% of the immigrants(representing about 13.8% of the poor in the country) are estimated to be under the poverty line. Ethnically, mostconsider themselves as Mestizos, and a small minority would be considered as Mayans.

The following table shows poverty3 in Belize by ethnicity.

Ethnic group % in the total % of the poor The groups share inpopulation within the group the total poor by the

_______ _______ _______ _______grou p

Garifuna 5.1 14.2 2.1East Indian 2.0 39.8 2.3Creole 27.1 26.3 20.7Maya 11.0 68.1 21.7Mestizo4 47.6 36.3 50.0Other* 7.2 15.1 3.3Belize Total 100.0 34.1 100.0

Immigrants 11.7 40.5 13.8Source: National Survey of Living Conditions, Belize*Other includes Asian, White and Other Groups

Indigenous Peoples Strategy

General Principle. Because of its ethnic diversity among its very small population, the Government has been exercising aconsiderable care with respect to the handling of indigenous populations. In fact, all ethnic groups consider themselves asindigenous; therefore, indigenous strategy must include all ethnic groups. Because of the sensitivity involved, providingpreferential treatment to a particular ethnic group - indigenous (as defined by the donors) or not - would be politicallyunacceptable.

Legal and land tenure issues are not within the scope of this project.

3Those that fall below the national poverty line of BZ$109.43 per capita, per month..4 The Mestizo population includes the majority of Belize's immigrant population as most consider themselves Mestizo.A minority consider themselves Maya.5 "Poverty Assessment and Training in Belize, Volume I, Main Report (Draft)" Caribbean Development Bank Report,December 1995.

Targeting Strategy. SIF employs a two-fold targeting strategy: geographic and menu-based. First, SIF would earmarkresources geographically to each district, based on the poverty index produced using economic and social indicators. Thefollowing table shows proposed relative resource allocations to each district in Belize. The least populated Toledodistrict, where the presence of Mayan and Ketchi populations is the highest, would receive the largest share of resources.Second, SIF's menu of eligible project (see Annex I) includes types of projects in which only the poor would beinterested, in terms of range of options, choice of technology and size of project (i.e. US$250,000 / project cap).Incidentally, a majority of indigenous (as defined by non-Belizians) populations would be part of SIF's target populationunder this geographic targeting because of their level of poverty under this two-fold targeting strategy.

District RelativeResource Share Share I

District Total Population (%/6) CapitaToledo 18,725 26.4 1.000Cayo 43,950 22.6 0.365Corozal 31,720 14.6 0.326Stan Creek 20,565 8.7 0.300Orange Walk 35,290 14.4 0.289Belize 66,250 13.3 0.142Total 216,500 100.0

SIF Staff Composition. Terms of Reference of SIF staff favor multi-lingual candidates over monolingual candidates. SIFhas already employed several multi-lingual staff, and is capable of answering the need of all major language groups inBelize. Furthermore, Community Development Officers (CDOs), who are employed by the Ministry of HumanResources and reside in districts, would be an integral part of SIF operations. CDOs maintain close ties with all localethnic groups, and their knowledge and role would be particularly critical in answering to the need of remotecommunities. Furthermore, all SIF staff and CDOs would receive training in handling ethnic and gender concerns.

Communications Strategy. English and Spanish are the most widely used languages in Belize. Except among theimmigrant population, most Mestizos are literate in English. Other languages, including Creole, Mopan and Ketchi aretypically spoken but not written languages. Therefore, production of written promotional materials (brochures, posters,etc.) would be carried out first in English, and then in Spanish.

Radio will be used to promote SIF on a national basis as well as in remote communities. Radio spots will be aired onBelizean stations that feature programs in English, Spanish, Mopan and Ketchi. In addition, audiotapes will be producedfor dissemination to some communities along with tape players. These tapes can also be played in transportation vehiclessuch as minibuses. Audiotapes can be produced at a low cost in a number of different languages and can be left incommunities where the effectiveness of written materials may be limited.

SIF would also organize information programs for NGOs through workshops inviting representatives from a variety ofNGOs to explain the objectives of the Fund, and to discuss opportunities for collaborations at various stages of the projectcycle. As many NGOs in Belize work closely with indigenous communities, collaborations with these NGOs will helpSIF better address the needs of indigenous communities.

Community Needs Assessment. To ensure that community projects properly incorporate ethnic and gender concerns, SIFproject cycle begins with needs assessment undertaken by CDOs, SFOs or NGOs to assist communities in identifying andprioritizing their needs. This would also ensure "informed participation" of indigenous groups. Furthermore, training inParticipatory Rural Appraisal (PRA) would be made available to CDOs as well as interested NGOs, and village / townchairpersons as appropriate. Needs assessment comprises two components: (a) community profile, includingidentification of ethnic composition of the village / town, stored in SIF's MIS; and (b) participatory consultation usingPRA techniques, focus group meetings, ranking and listing to ensure that subgroups are included in the consultationprocess. Community profiling would supplement existing data on indigenous groups from the 1991 Census in the morerecent National Poverty Assessment (1995).

Annex 2

Detailed Project Description

Project Component 1 - Community Projects: US$ 7.87 million (total cost of component)

Community projects would be sponsored by public, private or voluntary organizations and would be financed on agrant-basis. Community project generation would be demand-driven, but would be combined with promotionalefforts to develop institutional capacity as needed, so as to target the poorest communities. Communities wouldmake a 5-10% cash or in-kind contribution to community projects.

Community projects are expected to average US$20,000 with an execution period limited to one year or less. Nocommunity projects would exceed US$250,000.

Community Projects IS$ niillion PercentageWater and Sanitation 2.36 30%Health 1.57 20%Economic Infrastructure 1.57 200/oEducation 1.18 15%Social Services 0.79 100/%Organizational Strengthening 0.39 5%

Total 7.87 100%

The table below illustrates the types of eligible projects and special conditions.

Project Type Special ConditionsWATER & SANITATION

i) Projects that provide and/or rehabilitate basic Standards to conform to Public Health Bureauspotable water systems including hand pumps, and WASA norms. Support conditional onwells, vats, elevated tanks and catchment guarantee of funds to meet recurrent costs,systems and which provide training to the including maintenance.community in the operation and maintenanceof these systems and also basic health andhygiene education.ii) Projects that provide basic sanitation Standards to conform to Public Health Bureaufacilities including training in the use and norms. Support conditional on guarantee ofmaintenance of the sanitation facilities funds to meet recurrent costs, includingprovided, and also basic health and hygiene maintenance.education.iii) Projects that provide basic solid waste Standards to conform to the Department of thedisposal sites including training in the use and Environment, Ministry of Tourism and themaintenance of the disposal sites provided, and Environment, and guarantee monitoring of sitesalso basic health and hygiene education. by the Department of the Environment.

HEALTHi) Projects to rehabilitate existing or construct Standards to conform to the Ministry of Healthnew health posts along with the provision of an norms. Support conditional on guarantee ofinitial tranche of basic First Aid supplies and funds to meet recurrent costs, includingpharmaceuticals to isolated communities in maintenance.targeted areas, and also basic health andhygiene education.

Project Type Special Conditionsii) Projects to assist in the provisions of health Strong linkage with beneficiary groups must beand hygiene education on: demonstrated.- the prevention of waterborne diseases,- proper disposal of waste- the control of vectors and pests- proper nutrition, breast feeding and use oflocal foods

ECONOMIC INFRASTRUCTUREi) Projects that provide small-scale drainage Standards to conform to the Ministry of Workssystems. norms. Support conditional on guarantee of

funds to meet recurrent costs, includingmaintenance.

ii) Projects that rehabilitate or establish small Standards to conform to the Ministry of Workspedestrian bridges or walkways. norms. Support conditional on guarantee of

funds to meet recurrent costs, includingmaintenance.

iii) Projects that construct rudimentary access Standards to conform to the Ministry of Worksor feeder roads and/or bridges. norms. Support conditional on guarantee of

funds to meet recuffent costs, includingjj ~~~~~~~~~~~maintenance.

existing primary school buildings (excluding Education norms. Support conditional onprivate owned schools). guarantee of funds to meet recurrent costs,

including maintenance.ii) Projects that develop community -based Guarantee that this program will remain in theschool programs, linked to the establishment of school curriculum.school gardens.iii) Projects that establish or rehabilitate day Standards to conform to the Ministry ofcare/pre-school centers for children of working Education and Ministry of Human Resourcesmothers in targeted areas (excluding private norms. Support conditional on guarantee ofowned centers). funds to meet recurrent costs, including

maintenance.iv) Projects that rehabilitate or provide Standards to conform to the Ministry ofteachers' housing in isolated rural communities Education norms. Support conditional onutilizing existing buildings (excluding private guarantee of funds to meet recurrent costs,owned buildings). including maintenance.

SOCIAL SERVICESi) Projects that rehabilitate different types of Support conditional on guarantee of funds tocenters that provide facilities for disadvantaged meet recurrent costs, including maintenance.youths.ii) Projects that provide skilled training to Strong linkage with beneficiary groups must beproductive sectors, programs in career demonstrated.guidance and counseling guidance.

ORGANIZATIONAL STRENGTHENINGi) Technical assistance and training to Strong linkage with beneficiary groups must begovernment and non-governmental institutions demonstrated. Support to be linked to specificin participatory project identification and to projects financed by SIF.subproject applicants and executing agencies toupgrade skills in preparation, implementationand management of small-scale community-based projects.

Project Component 2 - Microenterprise Credit: US$ 1.20 million (total cost of component)

This component would support community-based microenterprises for community-based microenterprises.Management of credits and training to community groups would be sub-contracted to a NGO or a financialintermediary with demonstrated experience. There will be no Bank-financing of this component.

Project Component 3 - SIF Institutional Support: US$ 2.25 million (total cost of component)

This component would help develop a viable, autonomous institution to manage the Fund and to finance theadministrative and operational costs of the organization for a four-year period. The component would also financetechnical assistance, studies and training activities, designed to establish SIF's operational capacity and provide feedbackon the effectiveness of SIF's activities, including the following:

* TechnicalAssistance in: organizational management of SIF; review and revision of community project menu;review and revision of the operational manual; external technical audit; technical supervision of communityprojects; production of promotional materials and conducting of workshops for various stakeholders, includingindigenous groups, NGOs and private sector;

* Studies: monitoring evaluation studies including beneficiary and benefits assessments;

* Training in: use of office technology, needs assessments, appraisal methods (social, technical, institutional,economic, financial, environmental, etc.), supervision techniques, environmental training, data collection andrecording.

Annex 3

BELIZE: Social Investment Fund Project

Estimated Project Costs

Project Component Local Foreign TotalUS $ million

Community Projects 5.51 2.36 7.87Microenterprise Credit 1.10 0.10 1.20

SIF Institutional Support 1.17 0.63 1.80Total 7.78 3.09 10.87

Total Baseline Cost 7.78 3.09 10.87Physical Contingencies(*) 0.09 0.04 0.14Price Contingencies (*) 0.22 0.09 0.32

PPF Refinancing 0.25 0.10 0.35

Total Project Cost 8.34 3.32 11.67

(*) Contingencies applicable only to the SIF Institutional Support component.

Annex 4


Cost Effectiveness Analysis Summary

Belize: SIF is the first of its kind in Belize, assisting community level investment initiatives in multiple sectors,including education, health, water & sanitation, infrastructure and industry. The most likely alternative would be separatestand-alone projects in those sectors.

Summary and Main Assumptions

Because of GOB's fiscal constraints, a combined total of alternative stand-alone projects would be similar to thesize of the proposed project (US$11.7 million). Consequently, each stand-alone project would be less than $2.4 million(assuming five separate projects) a project. However, the administrative overhead would not be reduced proportionally,because each project would still have to respond to the need of six major ethnic groups in six remote districts, and hiretechnical specialists, financial manager, lawyer, etc. At present, the total staff composition of SIF is about 25 (includingsupport staff, clerical staff and a driver), and the administrative overhead is about $1.8 million or 15% of the total projectcost. If each stand alone project required a total of eight staff (a very conservative estimate) and basic facilities in order toobtain the level of community responsiveness similar to the proposed project, the administrative overhead would increaseto $2.8 million or 24%, reducing the amount of resources available to comnmunity projects by $1.1 million. Table A4.1shows a comparison between the proposed scenario and the alternative scenario.

Table A4.1: Cost Comparison between Proposed and the Alternative ScenariosProposed Alternative SavingsScenario Scenario

Combined Total Cost of Project ($ million) 11.7 11.7 l

Total Number of Projects 1 5 N/AAverage size of project 11.7 2.3 N/A

# of Staff Required per Project 25 8 N/ATotal # of Staff required per Scenario 25 40 15Administrative cost per staff for the life of project ($ million) 0.07 0.07 -

Total administrative overhead (US$ million) 1.8 2.8 1.1

Investment in community projects ($ million) 9.95 8.89 (1.1)

Administrative cost per $1 investment ($) 0.18 0.32 0.14Administrative cost as % of Total Cost per Scenario 15.0 24.0 9.0

Additional Cost-effectiveness indicators

Further analysis is handicapped by the project's demand-driven and pilot nature. Furthermore, due to the lack ofprior experience in similar operations in the country, unit costs (see Table A4.2 below) under SIF financed communityprojects have been estimated using corresponding figures used by applicable line ministries and externally financedprojects. Consequently, further cost comparison would not be a very meaningful exercise. However, these figures will becontinuously updated as the project progresses.

Table A4.2: Unit Cost EstimatesItem Unit cost Unit

(BZ$)A. Water

Hand dug well 25 per footDrilled well

4" bore, Percussion 55 per foot4" bore, Rotary 65 perfoot

Hand Pumps 13,000 per unitElevated Reinforced Concrete Water Tank

Capacity - 20,000 gallons 117,250 per tankCapacity - 13,500 gallons 80,500 per tank

Ground Level Reinforced Concrete Water TankCapacity - 20,000 gallons 46,000 per tank

Galvanized Water Tanks250 gallons 220 per tank330 gallons 230 per tank500 gallons 300 per tank735 gallons 400 per tank1,090 gallons 500 per tank1,490 gallons 600 per tank1,970 gallons 700 per tank2.475 gallons 860 per tank

B. SanitationVIP Latrine 800 per unitSanitary landfill 4,500 per unitHealth & hygiene training 4,000 per program

C. EducationBuilding rehabilitation 200 per squire metersFurniture

Student chairs 30 per unitTeachers' chairs 40 per unitStudent desk 125 per unitTeachers' desk 450 per unitBlackboard 125 per unit

D. Health Centers and Health PostsHealth Posts with 2 rooms with furniture 20,000 per post

E. Economic InfrastructureDrainage System

Concrete drains 175 per cubic yardsEarth drains: manual excavation 30 per cubic yards

Feeder RoadsConstruction 65,000 per mileRehabilitation 25,000 per mile

Pedestrian BridgesComposite and slab bridges 2,000 per squire yardsWooden bridges 390 per foot

Construction MaterialsSand & Gravel I per cubic yardsBulldozer 200 per dayLoader 65 per hourRoller/compactor 90 per hour

Annex 5


Financial Summary

Bank Fiscal Years Ending June 30(Indicate currency, units and base year)

Implementation Period Operational Period1998 1999 2000 2001 2002 2003 2004 2005

Project Costs (US$ million)Investment Costs 2.15 3.20 2.84 1.94Recurrent Costs - 0.37 0.38 0.39 0.40 0.39 0.41 0.43 0.46

Total 2.52 3.58 3.23 2.34 0.39 0.41 0.43 0.46

Financing Sources (% of total annual project costs) 0%_ __ ___0%IBRD 62% 63 61 % 52% 0% 0% 0% 0%European Union 16% 17% 15% 21% 0% 0% 0% 0%Gomernment 14% 10% 14% 18% 30% 30% 30% 30%User Fees/Beneficiaries 8% 10% 9% 9% 70% 70% 70% 70%

Total 100% 100% 100%/ 100%/ 100% 100% 100% 100%

1998 1999 2000 2001 2002 2003 2004 2005Financing by Sources (US$ million)

IBRD 1.55 2.26 1.98 1.21 - - - -

European Union 0.40 0.60 0.50 0.50 - - - -

Government 0.36 0.37 0.45 0.42 0.12 0.12 0.13 0.14User Fees/Beneficiaries 0.21 0.35 0.30 0.20 0.28 0.29 0.30 0.32

Total 2.52 3.58 3.23 2.34 0.39 0.41 0.43 0.46

Annex 6


Procurement and Disbursement Arrangements

Procurement ArrangementsSIF would be centrally managing all procurement actions under the Project. Proposed procurement arrangements aresummarized in Table A.

Civil Works contracts cost US$ 100,000 or more6 will be awarded following National Competitive Bidding Procedures(NCB), which must not discriminate against overseas bidders and are acceptable to the Bank. Smaller works, estimated tocost less than US$100,000, would be procured under lump-sum, fixed price contracts awarded on the basis of quotationsobtained from three qualified contractors in response to a written invitation up to an aggregate contract value of US$1.3million.

Goods would be procured using Limited International Bidding (LIB) among manufacturers with established servicefacilities in Belize or neighboring countries. Contracts estimated to cost less than US$100,000 but US$25,000 or morewould be procured in accordance with the NCB procedures up to an aggregate amount of US$0.9 million. For smallerpurchases, National Shopping procedures may be used up to an aggregate amount of US$0.7 million for contracts valuedat less than US$25,000.

Consultants' Services will be contracted in accordance with the provisions of the Guideline for the Use of Consultants byWorld Bank Borrowers and by the World Bank as Executing Agency, dated August 1981.

Prior Review. Prior Bank review would be required before bids are invited, and before final decisions on contract awardsare made for the following procurement actions: (a) LIB procurement; (b) the first two NCB procurement in each of civilworks and goods; (c) all consultants' services estimated to cost US$50,000 or more if provided by a firm, and US$15,000or more if provided by an individual; (d) all consultants' services contracted using the direct contracting (single-source)procedure; (e) any amendment of contracts resulting in the increase of the contract value beyond the review limits set in(a) through (c) above; and (f) assignment of a critical nature as reasonably determined by the Bank. Random ex-postreview of all other contracts will be carried out by Bank supervision missions. Table B. summarizes applicableprocurement procedures and review requirements.

Disbursement

Required Documentation. Disbursement against the following expenditures would require the submission of completedocumentation: (a) all expenditures LIB procurement; (b) the first two expenditure requiring NCB procurement in each ofcivil works and goods; (c) all consultants' services contracts valued at US$50,000 or more if performed by a firm, and atUS$15,000 or more if performed by an individual. Disbursement against expenditures other than those specified in (a)through (c) in the above, and those against activities not undertaken by contracts will be made on the basis of Statement ofExpenditures (SOE). Documentation would be retained by SIF and would be made available for Bank staff review andthe auditors. Applicable documentation requirements by contract value are summarized in Table B.

Disbursement Percentages. Disbursement percentages of Bank loan against eligible expenditures would be: (a) underthe Community Projects Component, for consultant services and training, 100%; for goods, 100% of foreign expenditures,100% of local expenditures (ex-factory cost) and 85% of local expenditures for other items procured locally; for works,

6 Because of the limit in the size of a community project, no contract would exceed US$250,000.

85%; (b) under the SIF Institutional Support Component, for consultant services, 85% of local expenditures, and 100% offoreign expenditures; (e) for operating expenditures, 90% for salaries of SIF's support staff, and 00% for otherincremental operating cost. No expenditure under the Microenterprise credit component would be eligible for Bankdisbursement. The proposed allocation of loan proceeds by disbursement category is presented in Table C.

Special Account

In order to facilitate disbursements, a special account in an amount of $600,000 will be opened in the Central Bank ofBelize, to be operated by SIF under terms and conditions satisfactory to the Bank. The Bank would make an initialdeposit of US$300,000 in the Special Account. Once total withdrawals from the loan have reached US$2.0 million, theauthorized allocation for the Special Account would be increased to US$600,000. SIF will submit replenishmentapplications for the Special Account on a monthly basis, or when 20% the authorized allocation has been used, whicheveroccurs first. The replenishment applications will be supported by the necessary documentation: a bank statement of theSpecial Account and a reconciliation bank statement of the Special Account against the Bank's records. Replenishment ofthe Special Account would follow Bank procedures. The Special Account would be audited annually by independentauditors acceptable to the Bank. The audit report would be submitted to the Bank for review and approval within sixmonths of the end of each fiscal year.

Table A: Project Costs by Procurement Arrangements

Procurement Category Procurement MethodsICB NCB Other N.B.F Total

1. Works - 0.83 1.24 0.99 3.07- (0.83) (1.24) - (2.07)

2. Goods - 0.90 1.10 0.96 2.95- (0.90) (1.10) - (2.00)

3. Technical Assistance and Training - - 2.40 0.80 3.20- - (2.40) - (2.40)

4. Operating Expenditure - - 0.18 0.92 1.10- - (0.18) - (0.18)

5. Microenterprise Credit - - - 1.00 1.00

PPF Refinancing - - 0.35 0.35- - (0.35) - (0.35)

Total - 1.73 5.27 4.67 11.67(1.73) (5.27) - (7.00)

Notes: Figures in parentheses are the respectiw amounts to be financed by the Bank. N.B.F. = NotBank-financed, including all co-financing

Table B: Thresholds for Procurement Methods and Prior Review

Bank Review Bank DisbursementExpenditure Category Procurement Method Requirement Documentation

Community Projects (-1)

Civil Works

< US$ 100,000 (*2) Three quotations Ex-post review of SOEs

samnples

>=US$100,000 NCB Prior review for the first SOEs/fuill

two contracts docurnentation for the

ftrst two contractsGoods

< US$25,000 (*2) Shopping ex-post review SOEs

>= US$25,000 and < US$100,000 NCB Prior review for the first SOEs/full

two contracts documentation for the

first two contracts>= US$100,000 LIB Prior review Full Documentation

Technical Assistance and TrainingFirms WB guidelines on consultants Prior review for SOEs/fuill

US$50,000 or more docunentation for

US$50,000 or rnoreIndividuals WBguidelines on consultants Prior review for SOEs/full

US$15,000 or mnore documentation for

US$15,000 or more

Microenterprise Credit Program (*3) N/A N/A N/A

SIF Institutional Support

Consultants' ServicesFirms WB guidelines on consultants Prior review for SOEs/fuill

US$50,000 or rnore documentation for

US$50,000 or moreIndividuals (*4) WB guidelines on consultants Prior review for SOEs/full

US$15,000 or mnore docurnentation for

US$15,000 or more

Incremental Operating Expenses (*5) Guidelines not applicable Audit SOEs

(*1) Because ofthe conmnunity project cap, no contract would exceed US$250,000.

(*2) In exceptional circumnstances outlined in the Operational Manual (e.g. remote rural area), direct contract may be applied.

(*3) lincluding the professional staff of SIF Office and SIF Field Officers.

(*4) Component not financed by the Bank(*5) Include SIF support staff, travel, commnunications, and supplies.

Table C: Allocation of Loan Proceeds

Category Amount (US$) Disbursement Percentage

1 Community Projects(a) Consultants' services and training 1,020,000 100%(b) Goods 2,100,000 100% of foreign expenditures; 100% of local expenditures

(ex-factory cost); 85% of other local expenditures(c) Works 2,200,000 85%

2 Other Consultants' Services (*1) 900,000 85% of local expenditures for services of consultantsdomiciled within the territory of the Borrower, and 100% offoreign expenditures for services of other consultants

3 Incremental Operating Costs(a) Salaries of SIF's support staff 60,000 90%(b) Other incremental operating cost 100,000 100%

4 PPF Refinancing 365,000 100%

5 Unallocated 255,000

Total 7,000,000

(* 1) Including SIF Professional Staffand SIF Field Officers, but excluding the managemnent fee of microenterprise credits

Annex 7Belize SIF

Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

334.8 177.0

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 24 mo 24 moFirst Bank mission (identification) 11/28/94 11/28/94Appraisal mission departure 10/07/96 10/07/96Negotiations 1/21/97 1/21/1997Planned Date of Effectiveness 7/01/97 7 /19

Prepared by: Ministry of Economic Development / Belize Social Investment Fund

Preparation assistance: PHRD, PPF, ODA

Bank staff who worked on the project included:

Cynthia Lopez (TM, until June, 1996), Hideki Mori (TM, since July, 1996), Sarah Adam, DanielBoyce, Pilar Maisterra, Caroline Moser, Michael Potashnick, Ginger Reich, George Russel,Carmen Scoseria, Ilona Szemzo, Charles Szymanski, Larua Arias, Que Bui, Agda Colbert, Marie-Christine Theodore, Rosalia Sanchez-Rushton

Annex 8BELIZE: Social Investment Fund Project

Documents in the Project File*

A. Project Implementation PlanMain Instructional GuideCommunity Needs Assessment GuideProject Preparation Guide & Application FormCommunity Project Appraisal GuideCommunity Project Supervision GuideFinance and Administration GuideProcurement Guide

B. Bank Staff AssessmentsBelize: Environmental Report, May 30, 1996 (Report No. 15543-BEL)Excel worksheets for economic / financial assessments

C. OtherNational Development Strategy 1996-2000Belize: Social Investment Fund: Analysis of Existing Poverty Programmes; John Harrison and Wayne

Vroman, August 1995Belize: Fiscal Policies for Stabilization and Growth - Public Expenditure Review, May 30, 1996 (Report

No. 15337-BEL)Draft Report--Poverty Assessment and Training in Belize, vol. 1, December 1995Sector Assessment Water and Sanitation, Belize, August 1995Report for the Village Level Consultations for the National Development Plan (Draft), November 1994NGO Workshop on the National Development Plan (Report), November 1994Planning Unit Guide, Ministry of Economic DevelopmentInternational Conference on Refugees and Displaced Persons in Central America (CIREFCA), Post-

Meeting Report, June 1994Integration for Development--A Resource Guide for Belize 1991Youth in Belize: Problems, Policy and Response, September 1991Proposal for Financing and Technical Cooperation for: The National Development Foundation of Belize

(NDFB) & Belize Enterprise for Sustained Technology (BEST) (IDB Document, July 1994)Terms of Reference, Belize Southern Highway: Environmental and Social Technical Assistance (IDB

Document)

*Including electronic files.

Annex 9Statement of Loans and Credits

BELIZEStatement of Bank Loans and IDA Credits

As of January 31, 1997(in Millions of US Dollars)

Amount in US$ million (less cancellations)Loan/Credit Fiscal Year Purpose Bank IDA Undisbursed Closing Date

Credits 0 Credit(s) closedTotal Number of Credits = 0 -

Loans 4 Loan(s)closed 22.94 1.16

34220 1992 PRIIMARYEDU DEV 7.10 2.85 6/30/99

36670 1993 BELIZE CITY INFRASTRUCTURE 20.00 5.71 12/31/97

37760 1994 POWER DEV 11.50 9.59 12/31/97

Total Number of Loans 3 38.60 18.15

Total*** 61.54 -of which repaid 10.76 -

Total held by Bank & IDA 50.78 -

Amount soldof -which repaidTotal Undisbursed 19.32

BELIZEStatement of IFC lnwstments

Committed and Disbursed PortfolioAs of 12/31/96

(In US Dollar Millions)

Committed Disbursed

IFC I l IFC

FYApproval Company Loan Equity Quasi Parnic Loan Equity Quasi Partic

1993 BECOL 9.00 0.00 5.00 0.00 9.00 0.00 5.00 0.00

Total Portfolio: 9.00 0.00 5.00 0.00 9.00 0.00 5.00 0.00

Approvals Pending Cominitment

Loan Equity Quasi Partic

There are no approvals pending commitment for this country.

Annex 10BELIZE: Social Investment Fund Project

Country at a Glance

Belize at a glanceLatin Lower-

POVERTY and SOCIAL America middle-Belize & Carib. Income Development dlamond'

Population mid-1995 (millions) 0.22 480 1,154GNP per capita 1995 (USS) 2,630 3,300 1,700 Life expectancyGNP 1995 (billions USS) 0.57 1,584 1,962 T

Average annual growth, 1990-95

Population (%) 2.7 1.8 1.4 GNP / GrossLabor force (%) 3.7 2.4 1.8 per primary

Most recent estimate (latest year available since 1989) capita enrollment

Poverty: headcount index (% of population) 35Urban population (% of total population) 47 74 56Life expectancy at birth (years) 70 68 67Infant mortality (per 1,000 live births) 36 41 36 Access to safe waterChild malnutrition (% of children under 5)Access to safe water (% of population) 73 81 78Illiteracy (% of population age 15+) 9 13Gross prmary enrollment (% of school-age population) 107 110 104 -Belize

Male 111 .. 105 Lower-middle-income groupFemale 107 .. 101

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1975 1985 1994 1995Economic ratos*

GDP (millions US$) 118.2 209.2 552.3 592.0Gross domestic investment/GDP .. 21.6 24.6 23.2 Openness of economyExports of goods and non-factor services/GDP .. 48.5 52.1 49.7Gross domestic savings/GDP .. 8.8 19.0 18.7Gross national savings/GDP .. 9.7 20.3 20.9

Current account balance/GDP .. -6.1 -4.3 -2.3Interest paymentslGDP 0.3 2.8 1.3 1.2 Savings H < InvestmentTotal debt/GDP 4.1 56.5 32.1 30.9Total debt service/exports .. 13.9 10.6Present value of debt/GDP .. .. 24.4Present value of debt/exports .. .. 49.3 .. Indebtedness

1975-84 1985-95 1994 1995 1996-04(average annual growth) -BelizeGDP 4.9 7.9 1.7 1.6 3.8GNP per capita 2.6 5.0 1.4 -0.7 Lower-middle-income groupExports of goods and nfs .. 7.8 0.7 4.4

STRUCTURE of the ECONOMY1975 1985 1994 1995 r o a

(% of GOP) Growth rates of output and InvestmentAgriculture 20.4 19.4 19.9 4OT

Industry .. 25.0 26.7 26.6 20

Manufacturing .. 16.7 17.0 17.1 oServices 54.7 53.9 53.5 *5 9t 92 92 N9 9

Private consumption .. 70.1 65.1 66.3 .40 lGeneral governmentconsumption .. 21.1 15.9 15.0 GDI 0-GDPImports of goods and non-factor services .. 61.3 57.6 54.3

1975-84 1985-95 1994 1995 (average annual growth) rGroth rates of exports and ImportsAgriculture 3.8 6.9 5.3 -1.3 20

Industry 9.3 8.1 -0.5 2.9Manufacturing 11.1 5.6 4.1 4.1 t0

Services 2.9 8.0 1.3 2.3 .

Private consumption .. 6.0 1.7 91 92 9 9 9

General government consumption .. 55 7.4 .. IvGross domestic investment .. 13.1 -19.3 -201

Imports of goods and non-factor services .. 9.2 -11.8 2.6 Exports o ImportsGross national product 5.3 7.8 4.3 1.7 p

Note: 1995 data are preliminary estimates. Figures in italics are for years other than those specified.The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe incomplete.

PRICES and GOVERNMENT FINANCE1975 1985 1994 1995 FInfIatIonl%)

Domestic prices(% change) 10 TConsumer prices .. 4.2 2.5 2.9Implicit GDP deflator 16.9 -1.9 2.7 3.7

Government finance(% of GDP) oCurrent revenue .. 28.8 28.0 27.2 90 91 92 93 94 95

Current budget balance .. 5.1 6.0 4.4 GDPdef. -- O--CPIOverall surplusideficit .. -3.8 -6.5 -5.1 L-

TRADE

(millions US$) 11975 1985 1994 1995 F Export and Import levels (mill. US$)

Total exports (fob) 64 149 164 300o

Sugar .. 23 40Otherfood . 24 55Manufactures . .. 20 200

Total imports (cif) .. 128 259 263Food .. 31 38 100 uiIi{IFuel and energy .. 22 29Capital goods .. 23 67 lo"

Export price index (1987=100) .8. .. g 0 90 91 92 93 94 95

Import price index (1987=100) .. .. L Exports a ImportsTerns of trade (1987=100)

BALANCEofPAYMENTS11975 1985 11994 11995 ___________

(millions US$1 Current account balance to GDP ratio (%)Exports of goods and non-factor services 106 264 294 0 I I -r

Imports of goods and non-factor services 126 294 321 |9 90 VrS 9 2D 4D

Resource balance -20 -31 -27

Net factor income -11 -22 -21 -5 J

Net current transfers 19 29 35

Current account balance, I-

before official transfers -13 -24 -14

Financing items (net) 19 20 18Changes in net reserves -6 4 -4 -15

Memo:Reserves including gold (mill. US$) 15 35Conversion rate (local/US$) 1.8 2.0 2.0 2.0

EXTERNAL DEBT and RESOURCE FLOWS11975 '1985 11994 1995 - -6~ ~

(millions US$) 1 Compositlon of total debt, 1995 (mill. USS)Total debt outstanding and disbursed 5 118 177 183

IBRD 0 5 26 30 G A

IDA 0 0 0 0 016 80F

Total debt service 1 18 29 33 24IBRD 0 0 4 4IDA 0 0 0 0 ' '

Composition of net resource flows D

Official grants 5 2 13 12 35

Official creditors 0 17 0 6Private creditors 0 -2 -8 -2Foreign direct investment 0 4 14 15 I EPortfolio equity 0 0 0 0 78

World Bank programCommitments 0 0 12 0 A - IBRD E - BilateralDisbursements 0 2 6 6 8 - IDA D - Other multilateral F - PrivatePrincipal repayments 0 0 2 2 C - IMF G - Short-termNet flows 0 2 4 4Interest payments 0 0 2 2Net transfers 0 2 2 2

International Economics Department 8120/96

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Report No.: 16310 16310Type: PAD