Document ofThe World Bank

Report No: 25310-BD

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SI)R 13.5 MILLION(US$18.24 MILLION EQUIVALENT)

TO

THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR A

SOCLAL INVESTMENT PROGRAM PROJECT

February 16, 2003

Rural Development SectorBangladesh Country UnitSouth Asia Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 2002)

Currency Unit = Bangladesh Taka (Tk.)Tk. 1.00 = US$0.0172US$1.00 = Tk. 58.15

FISCAL YEARJuly 1 - June 30

ABBREVIATIONS AND ACRONYMS

ARCS Audit Report Compliance SystemCAP Community Action PlanCAS Country Assistance StrategyCBO Community-Based OrganizationCG Community GroupCONTASA Convertible Taka Special AccountCPAR Country Procurement Assessment ReportCQ Consultant QualificationCSO Community Support OrganizationDC Direct ContractingEA Environmental AssessmentEMP Environmental Management PlanFMR Financial Monitoring ReportGB Goveming BodyGnB General BodyGOB Govemment Of BangladeshHPI Human Poverty IndexIC Information and CommunicationICR Implementation Completion ReportIDA International Development AssociationIPI Income Poverty IndexLIL Learning and Innovation LoanMAA Memorandum And Articles Of AssociationMD Managing DirectorM&L Monitoring and LearningMIS Management Information SystemMOF Ministry of FinanceMOU Memorandum of UnderstandingNGO Non-Government OrganizationNCB National Competitive BiddingNS National ShoppingOM Operational ManualPAST Project Appraisal And Supervision TeamPCT Procurement Core Team

PKSF Palli Karma Sahayak FoundationPMC Project Management CommitteePO Participating OrganizationPPRP Public Procurement Reform ProjectPROCMOR Procurement Monitoring ReportQCBS Quality And Cost Based SelectionRFP Request for ProposalSA Social AssessmentSAP Social Assistance ProgramSDF Social Development FoundationSFA Sub-Project Financing AgreementSGA Subsidiary Grant AgreementTOR Terms of ReferenceSSS Single Source SelectionUP Union ParishadVDC Village Development CommitteeVI Vulnerability Index

Vice President: Mieko NishimizuCountry Director: Frederick T. Temple

Sector Director: Constance A. BemardTask Team Leader: Wahida Huq

BANGLADESHSOCLAL INVESTMENT PROGRAM PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 33. Sector issues to be addressed by the project and strategic choices 5

C. Project Description Summary

1. Project components 52. Key policy and institutional reforms supported by the project 63. Benefits and target population 74. Institutional and implementation arrangements 7

D. Project Rationale

1. Project alternatives considered and reasons for rejection I 12. Major related projects financed by the Bank and/or other development agencies 123. Lessons learned and reflected in the project design 134. Indications of borrower commitment and ownership 145. Value added of Bank support in this project: 14

E. Summary Project Analysis

1. Economic 142. Financial 153. Technical 164. Institutional 165. Environmental 176. Social 197. Safeguard Policies 21

F. Sustainability and Risks

1. Sustainability 222. Critical risks 22

3. Possible controversial aspects 23

G. Main Conditions

1. Effectiveness Condition 242. Other 24

H. Readiness for lmplementation 26

I. Compliance with Bank Policies 26

Annexes

Annex 1: Project Design Summary 27Attachment 1: Relationship between Project Components and Implementation 32

ArrangementsAnnex 2: Detailed Project Description 33

Attachment 1: Target Strategy 37Attachment 2: Information & Communication Strategy & Implementation 39Attachment 3: Monitoring and Learning 40Attachment 4: Institutional Development at the Community-Level 43Attachment 5: Implementation of Community Infrastructure Sub-Projects 46Attachment 6: Community Infrastructure Works 48Attachment 7: Sample Sub-Project Financing Agreement 50Attachment 8: Social Assistance Program 56Attachment 9: Pilot Private Financing of Community Utilities 62Attachment 10: Environmental Supervision 65Attachment I 1: Measurement of Poverty Indices and Findings of the Social 69Assessment StudyAttachment 12: Summary of the Tribal Development Plan 72

Annex 3: Estimated Project Costs 77Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 78Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 81Annex 6: Procurement and Disbursement Arrangements 82Annex 7: Project Processing Schedule 98Annex 8: Documents in the Project File 100Annex 9: Statement of Loans and Credits 101Annex 10: Country at a Glance 103

Figure 1: Relationship between Project Components and Implementation Arrangement 32Figure 2: Implementation of Community Infrastructure Sub-projects 47

MAP(S)IBRD No. 32249

BANGLADESHSocial Investment Program Project

Project Appraisal DocumentSouth Asia Regional Office

SASRD

Date: February 16, 2003 Team Leader: Wahida HuqSector Director: Constance A. Bernard Sector(s): Other social services (50%), GeneralCountry Director: Frederick T. Temple transportation sector (40%), Media (5%), GeneralProject ID: P053578 education sector (5%)Lending Instrument: Specific Investment Loan (SIL) Theme(s): Rural services and infrastructure (P), Other

rural development (P), Gender (S), Poverty strategy,analysis and monitoring (S), Rural policies and institutions(S)

dPrdjct1Fihiarcini Data, .- 4 b * - ',4-i t t

[ Loan [X] Credit [ Grant [ Guarantee [ Other:

For Loans/Credits/Others:Amount (US$m): SDR 13.5 million (US$18.24 million equivalent)

Proposed Terms (IDA): Standard CreditGrace period (years): 10 Years to maturity: 40

Service charge: 0.75%

BORROWER 1.61 0.00 1.61IDA 17.89 0.35 18.24LOCAL COMMUNITIES 2.69 0.00 2.69Total: 22.19 0.35 22.54Borrower: PEOPLE'S REPUBLIC OF BANGLADESHResponsible agency: SOCIAL DEVELOPMENT FOUNDATIONAddress: House 3, Road 2A, Banani, Dhaka-1213, BangladeshContact Person: Mr. M. Hafizuddin Khan, Managing DirectorTel: (880)-2-9894622, 9894611 Fax: (880)-2-9873095 Email: mdsdf@bdcom.com

Estimated Disbursements (_Bank FY/US$m):r ' ^ .R-. ;r.* :-0,0 -' :, 200, -f 1,- 20ns6.5 '. .0i6 207Annual 1.00 5.00 6.00 :5.00 1.24

Cumulative 1.00 6.00 12.00 17.00 18.24

Project implementation period: 4 yearsExpected effectiveness date: 06/16/2003 Expected closing date: 06/30/2007

A. Project Development Objective

1. Project development objective: (see Annex 1)

The objective of the project is to develop effective and efficient financing and institutional arrangementsfor improving access to local infrastructure and basic services through the implementation ofcommunity-driven small-scale infrastructure works and social assistance programs.

The project area will be Jamalpur and Gaibandha districts, which rank among the highest in povertyincidence both in terms of income and human development (Annex 2, Attachment 1). The pilot privatefinancing of community utilities will be anywhere in the country where opportunities exist.

2. Key performance indicators: (see Annex I)

The project will measure the success of reaching its development objective through the following keyindicators:

* About 1,800 community sub-projects successfully completed, in terms of participation of thepoor and women, beneficiary satisfaction, technical quality, cost-effectiveness and operationand maintenance.

* About 50 percent of the poor and vulnerable groups in the project area benefit fromsmall-scale rural infrastructure and social assistance programs.

* At least 50 percent of the beneficiary communities continue to prioritize needs usingparticipatory processes.

* At least 10 percent of the community groups in the project area able to leverage externalresources to support their additional needs.

* Increased awareness and opportunities for reducing vulnerability.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: IDA/R2000-204[IFC/R2000-216] Date of latest CAS discussion: December 12, 2000

The overarching objective of the CAS is to help realize Bangladesh's aspirations of reducing povertywithin one generation. The Government of Bangladesh (GOB) visualizes a 50 percent decline in thenumber of people below the poverty line by 2010. To achieve this, the CAS focuses on three criticalareas: (a) consolidating gains in human development; (b) implementing an integrated approach to ruraldevelopment; and (c) accelerating and broadening private sector-led growth. Critical cross cutting issuesidentified by the CAS are institutional capacity-building, governance, macroeconomic stability, socialconcerns (e.g., gender equity and empowerment) and environmental protection. For those sectors wherea comparative advantage can be demonstrated (e.g., rural water supply and sanitation infrastructure andmicro-credit and human development), the CAS identifies the scaling up of NGOs and community-drivenapproaches as a priority.

The proposed project is in line with the CAS objectives. By focussing on a process-oriented communitydriven approach, the project aims to explore new ways of delivering critical social assistance andinfrastructure services to the poor. In so doing, it will address governance, institutionalcapacity-building, and social objectives of the CAS. Empowering local communities of the poor willensure that they obtain services from local government and other providers in a transparent manner. Theprocess of social mobilization will also ensure that community groups include the most vulnerable andthat gender equity considerations are taken into account. Finally, by fostering partnerships among

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communities, NGOs, the private sector, and local-level institutions, the project approach is consistentwith the key lesson of partnership articulated in the CAS.

2. Main sector issues and Government strategy:

Main Sector Issues

Participatory poverty assessments, as well as GOB's draft Interim Poverty Reduction Strategy Paper(I-PRSP), have established that poverty in Bangladesh is not only about lack of income. Poor people haveprovided accounts of their state of poverty in terms of gender inequalities, powerlessness, and exclusionfrom basic services such as health and education, participation in the development process and materialwealth. The two project districts, Jamalpur and Gaibandha, reflect the deprived conditions of the poorestin the country. The main factors contributing to chronic poverty continue to be the following:

Limited access of the poor to key infrastructure and basic services. Access to tubewells for drinkingwater is good (about 90 percent), but the incidence of arsenic contamination poses a major threat in manyparts of the country. In addition, nearly 80 percent of all illnesses in Bangladesh are related to waterborne diseases. In the rural areas, only about 40 percent of the people have access to sanitation facilities.Access by road is constrained due to poor conditions, particularly in the villages. Bangladesh has one ofthe lowest levels of per capita consumption of electricity compared to other South Asian countries. Lessthan 30 percent of the population have access to power. In rural Bangladesh, the figure is about 10percent, and in coastal and remote areas, it is as low as three percent.

Limited human capital development: The literacy rate of the poor is 32.6 percent compared to 42.3percent of the non-poor. (The poor are defined as households with a monthly income of less than Tk.1,000 (US$17) and the non-poor with monthly income of Tk. 3,000 or US$52 equivalent). GOBestimates that there are about 40 million illiterate people in the age cohort of 5-35 years. About 20percent of the poor children (0-4 years) in the rural areas suffer from diseases compared to 11 percent ofthe non-poor. The infant mortality rate has declined, but deaths of children under five still account forhalf of all the deaths in Bangladesh. The levels of malnutrition are also among the highest in the world.An estimated 700 children die every day in Bangladesh due to malnutrition. Among those surviving, 60percent of those under five years of age are underweight, and more than half are stunted. Matemalmortality is six for 1,000 live births, one of the highest in the world. Anemia and umderweight duringpregnancy contributes to about 25 percent of the matemal deaths. Over 80 percent of births inBangladesh take place at home, and only 22 percent of the deliveries are assisted by trained attendants,14 percent by doctors or paramedical workers and the remaining by untrained traditional birth attendantsor family members.

Limited success of existing poverty programs. Poverty and social assessment studies indicate thatexisting poverty reduction programs (e.g., micro-credit and safety net programs such as food for worksand vulnerable group development programs) have not helped to significantly reduce poverty of thepoorest and vulnerable groups in a sustained manner. Existing micro-credit programs do not target thepoorest, and safety net programs focus only on the survival of the vulnerable groups during economic ornatural shocks. Various studies have shown that the poorest, totalling- 12 million individuals or 2.5million households in Bangladesh, are not reached by the micro-credit programs. The reasons can begrouped broadly under two categories: (a) those relating to the socioeconomic conditions of the poorest,which have bearings on their capacity and skills to use loans for financially viable activities; and (b)those relating specifically to regular micro-credit, which include lack of multiple income earning sources,seasonal shortfalls in income, lack of grace periods, lack of flexibility in the use of the weekly savingsand unwillingness of peer groups to accept a perceived "higher risk" member.

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Poor local governance. There is little accountability of the government agencies and local govermment,as well as NGOs, to the people, particularly the poor. Local bureaucracy lacks motivation to promoteparticipatory planning and implementation. Lack of peoples' institutions at the village level makes itdifficult for the citizens at the grassroots to ensure that their development priorities are reflected in thenational policies and plans. The nearest local govermment for the people at the grassroots is the UnionParishad (UP) but this institution is not yet able to fully address local development needs due to resourceand capacity constraints. Lack of coordination amnong the various organizations in rural areas alsocontribute to inefficiencies.

Government Strategy

The govemment strategy for reducing poverty, as reflected in the I-PRSP, focuses on four areas: (a)expanding the scope for pro-poor economic growth through expanding income and employmentopportunities for the poor; (b) fostering human development for the poor; (c) providing social safety netsfor the poor against various anticipated or unanticipated income (consumption) shocks; and (d) favorablyinfluencing participatory governance by enhancing the voice of the poor and strengthening women'sempowerment. The main operational challenge for the GOB is to improve efficiency and outreach ofbasic services through greater participation of community-based organizations (CBOs), localgovernment, NGOs and the private sector. In response to this challenge the Govemment is exploringpossibilities of partnerships with these organizations and seeking altemative institutional mechanisms todeliver basic services. Examples of successful partnerships exist in the delivery of primary education,health and nutrition services, water supply, and micro-credit. The Government has successfully engagedwith NGOs in non-formal education, health and nutrition programs. Rural electricity cooperatives havefunctioned effectively, as the legal framework allows members to choose managers and hold themaccountable.

The Government is experimenting with other institutional models to improve access and quality of basicservices. One model is based on the use of autonomous, not-for-profit foundations registered under theCompanies Act (1994). These foundations provide a variety of services, such as wholesaling ofmicro-finance; leveraging private equity in transport infrastructure investments, promotion of horticultureexports, and extension and technical support for development of silk production. Of these, the PalliKarma Sahayak Foundation (PKSF), which is responsible for wholesaling micro-credit through NGOs,has been successful because of transparent rules of business and a strong govemance structure. PKSF hasrecently initiated a "Financial Services for the Poorest" project to find out whether micro-credit can beused profitably by the poorest and if it can be made more effective by combining other support services,such as safety nets, training and marketing services, and awareness raising.

In June 2001, the GOB established the Social Development Foundation (SDF) as a not-for-profitcompany to promote community-driven initiatives through decentralized planning and management of'development programs. SDF will encourage formation and strengthening of informnal institutions at thevillage and community levels and also strengthen existing community organizations for addressing theneeds of the poor.

Some of the current social assistance programs of NGOs target the poorest and socially-excluded groupsthrough social mobilization and increased access to basic education, health services, and information;empowerment through creating a voice in decision-making and monitoring; awareness of legal rights;skill training with linkages to micro-credit; and employment. The coverage of these programs is limited,and there is a large unmet demand.

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

The project would attempt to address the issues of lack of organizations to promote participatorygovernance, access to infrastructure and basic services, and development of human resources.

Strengthening SDF to promote participatory governance. The SDF is expected to play an important rolein participatory governance, fostering social capital formation and advocating for appropriate pro-poorpolicies. The project will support capacity-building of SDF in these areas and help it develop the abilityto spread, scale-up, and institutionalize the successful principles and practices emerging from the projectimplementation.

Introducing community-driven approaches. The project will promote the adoption of community-drivenapproaches in two districts to replace more traditional, top-down interventions currently employed in thecountry. SDF will contract competent organizations, referred to in this project as participatingorganizations (POs) to work closely with conununity groups, devolving key decisions regarding smallinvestments to these groups, thereby promoting greater community ownership of poverty reductioninterventions.

Introducing a results-oriented social assistance program for the poorest and vulnerable groups. Tomeet the demand for social assistance, the project will complement existing programs in the two selecteddistricts and where there are gaps in coverage. The project will provide results-oriented grant funding tocompetent POs which have demonstrated efficiency and effectiveness in the delivery of this type ofprogram.

Piloting partnerships with the private sector: Output-based incentives will be tested to encourage theprivate sector to provide community utility services. Effective mechanisms for regulation, targeting, costrecovery, and public- private partnerships will be tested. Some models exist in the country, and theproject will provide a further impetus.

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

The project aims to develop institutions, promote community-driven principles, pioneerperformance-based social assistance programs for the poorest, and leverage private financing for basicutilities. The project is piloting novel approaches to develop procedures, test different products andapproaches, and demonstrate impact. At mid-term review (December 2005), the project'simplementation arrangements and performance would be assessed in terms of achievement of theexpected outcomes and outputs and successful mechanisms identified for scaling up.

The project will have the following four components:

(a) Strengthening SDF: There are four sub-components to this component: (i) information andcommunication (IC); (ii) capacity building of SDF; (iii) monitoring and learning (M&L); and (iv)project management support (including environmental assessment and tribal development). Theproject will finance technical assistance, monitoring and evaluation studies, establishment andincremental staff, and operating costs of SDF;

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(b) Institutional development at the community-level: This component will provide support tothe community in terms of raising awareness, motivating and engaging the rural poor toparticipate in community-driven initiatives, changing attitudes and behaviors among localstakeholders, development of organizations at the village-level, and preparation of CommunityAction Plan (CAP). This component will have two sub-components: (i) information andcommunication campaign; (ii) formation and strengthening of Village Development Committees(VDCs), Community Groups (CGs), and the project management committees of CGs, anddeveloping a demand-led CAP. The project will finance the cost of services related toinformation dissemination at the local-level, institutional development, preparation of the CAP,and environmental assessment and screening;

(c) Implementation of Community Action Plans: The CAP will prioritize community's needs forsmall-scale infrastructure and social assistance based on informed choice and eligibility criteriaindicated in the menu of options in the Operational Manual (OM) of the project. The project willfinance: (i) 85 percent of the costs of the expenditures of the approved community infrastructuresub-projects; (ii) costs of NGO services to implement the social assistance programs, includingone-time seed capital and cost of legal assistance for the very poorest and vulnerable groups, andthe implementation of the tribal development plan; and (iii) costs of services for appraisal andsupervision of sub-projects, including environmental supervision; and

(d) Pilot Private Financing in Community Utilities: Under this component, the project willfinance technical assistance and a maximum of 70 percent of the approved costs of sub-projects.The technical assistance will help SDF to identify, develop, appraise, and supervise pilotsub-projects in piped water supply and off-grid electricity.

; P :-:>:' 1 i:, . ' 4 *. Indicative' T, . .0BinIy %IofS , ,,, > 'Comphnefitt ,, ,;q. ,,- -. ttsX . inacin

- *~~~i... ~~~.p, US$M)~~~~~ .'Tta .I-n' j( U.S$.K!). !finaiifcing-1. Strengthening of SDF 1.91 8.5 1.39 7.62. Institutional Development at the Community-Level 0.38 1.7 0.30 1.63. Implementation of Community Action Plans 19.35 85.8 15.84 86.84. Pilot Private Financing of Community Utilities 0.90 4.0 0.71 3.9

0.0 0.0Total Project Costs 22.54 100.0 18.24 100.0

Total Financing Required 22.54 100.0 18.24 100.0

2. Key policy and institutional reforms supported by the project:

Promotion of cost recovery and testing of alternative financing modalities: The project proposes tointroduce community contribution for financing small-scale rural infrastructure. Communities will beexpected to make a contribution towards the sub-project costs in cash, labor, or materials. In addition, forthose activities that have the potential to generate user fees, private financing options will be explored.Local private entrepreneurs will be encouraged and supported to invest, operate, and maintain publicservices in local communities. In this way, the project will introduce, develop, and test differentmodalities to finance demand-driven sub-projects at the community level, promoting cost recoverywherever possible. These approaches mark a shift from the current practice in the country. After twoyears of implementation, the alternate approaches will be the subject of evaluation to determine if andhow each model should be expanded on a larger scale.

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Expansion of social assistance services using performance based contracts: The focus of the socialassistance program will be on advocacy and capacity building of the poor and vulnerable groups to equipthem to participate in social and economic activities. Social assistance will be targeted to areas in theproject districts where there are gaps in coverage of other social assistance programs. Performance basedcontracts will be introduced to assess the quality of services by POs where payments would be linkedexplicitly to the achievement of results pre-specified in the contract.

Promotion of decentralized management of services and improvement of local governance: The,projectwill help strengthen community organizations and more open local planning practices. These initiatives,along with direct funding to communities, will ensure decentralized management of developmentprograms at the village level. These activities would enable the poor people to increase their role in localgovernance. UPs will be involved in community planning and review and supervision of sub-projects.Such involvement would enhance local capacity for improved service delivery, transparency, andaccountability.

3. Benefits and target population:

The targeting for community infrastructure works would be broad-based but includes specific conditionsfor inclusion of the poor and women in the eligibility criteria for financing of sub-projects. The socialassistance services will be targeted at the very poor and other vulnerable groups. Hence, in the formationof groups, assessing community demand, and implementation, the priority of the poor and theirparticipation are key criteria. The guide to targeting social assistance program is the Vulnerability Index(VI) developed by SDF. (See Annex 2, Attachment 1.) The project aims to cover approximately 1,400(about 54 percent) villages in the two districts.

The main benefits of the project are:

* About 250,000 people (of whom at least 30 percent will be poor and women) will benefitthrough access to safe water, sanitation facilities, and other essential social, transport andtrade infrastructure services through the implementation of about 1,800 communityinfrastructure sub-projects. An additional 300,000 poor and socially excluded(female-headed household, disabled, tribal people, street children, etc.) will benefit from thesocial assistance program. Impacts will include improved welfare, enhanced productivity,increased family income, and reduced vulnerability of the poorest in the subprogram areas.

* Better social inclusion through addressing specific priorities of vulnerable groups, includingwomen, children, disabled, and tribal people.

* Strengthened local governance by empowering community organizations to hold localgovernments accountable for services; promoting and demonstrating participatory localplanning processes that involve the community at large; and creating functional spaces forparticipatory local governance.

* Increase availability of resources for, and local level supply of, basic services by testinginnovative delivery arrangements, improving efficiency of public investment, promotingcost recovery in service delivery, and building capacity of organizations at the local level.

4. Institutional and implementation arrangements:

The duration of the project will be four years. The institutional and implementation arrangements for theproject are described below. (See also Annex 1, Attachment 1.)

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Social Development Foundation would be the executing agency for the project. The chief executiveofficer of SDF is the Managing Director (MD), who will be responsible for overall project management.SDF is an autonomous organization, which is guided by the rules and framework of its MAA comprisinga General Body (GnB) and Governing Body (GB). The GnB comprises 20 members representing theGovernment (7), NGOs (8), civil society and academia (4), and the MD of SDF (ex-officio). The GnB isresponsible for approving the annual budget and the work program of SDF. From the GnB, a GBcomprising nine members has been formed. The GB comprises Government officials (2); NGO officials(3); one senior researcher from a leading research organization-Bangladesh Institute of DevelopmentStudies (BIDS); the chief executive of the apex micro-finance organization-PKSF; the Chairperson andthe MD of SDF. Except for the MD, all members of the GB serve for two years but are eligible forre-election for an additional term. The GB appoints the MD.

SDF will be responsible for the overall project coordination, as well as promotion, appraisal, financing,and supervision of sub-projects. Broad administrative and financial powers for the implementation of theproject have been delegated to the MD.

SDF initially will have about 17 professional staff. There are three sections under the MD headed byGeneral Managers (GM). These sections are: Program, M&L, and Finance and Administration (F&A).GM Programs will be responsible for the IC campaign, institutional development at the local level, andpreparation and implementation of CAPs. GM M&L will be responsible for the establishment andoperation of a Management Information System (MIS), process monitoring, and impact evaluation. GMF&A will be responsible for financial and administrative matters, including procurement. Each of theGMs will have Managers for each of the areas of activity mentioned above. The organizational structureof SDF and the roles and responsibilities are described in the OM.

The rules and procedures which will guide the implementation of this project are described in theproject's OM. The SDF will contract support organization to assist with field level implementation.

Support Organizations: SDF will contract two competent POs, referred to in this project as CommunitySupport Organizations (CSOs), one for each project district, to assist with the following activities: (a)information and communication; (b) institutional development of community groups; (c) preparation ofparticipatory Community Action Plans; (d) supporting interested community groups with the preparationof community infrastructure sub-project proposals for submission to SDF for financing; and (e)supporting the community groups with the implementation of the sub-projects, including financialmanagement. The SDF will contract two organizations to assist with the appraisal and supervision of theinfrastructure sub-projects. These organizations are referred to in this project as Project Appraisal andSupervision Team (PAST). The implementation of the Social Assistance Program (SAP) will be carriedout by four POs who will be selected based on their track records.

Together with the CSOs, the project will engage with local stakeholders at different levels in the projectareas to create awareness about the principles of the project and its operating mechanisms. Based on theresponses, the CSO will mobilize informal inclusive VDCs in the target villages. VDCs would compriselocal government members of the UPs, school/college teachers, and representatives of the poor andwomen to oversee the community planning exercise, prioritization, implementation, and maintenance ofthe sub-projects. CSOs will collaborate with these committees in the identification of needs andpriorities in terms of small-scale infrastructure and social assistance for the very poor and vulnerablegroups, to be agreed on in a CAP. VDCs will be responsible for the review of the CAP and coordinateproject activities.

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Role of Community Groups: As a result of the prioritization process, the interested persons (includingpoor and women) in the villages will be supported in forraing interest-based Community Groups (CGs).Each CG will elect a Project Management Committee (PMC) which would be responsible for sub-projectpreparation, implementation and operation, and maintenance of small-scale infrastructure sub-projects.CG and PMC members will be trained in project preparation and supervision. CGs will be responsiblefor the implementation of community infrastructure works. A fundamental principle that the project willbe testing is the extent to which communities will raise their own matching fund, in cash and kind forsub-projects, to build ownership and longer term commitment to success. It is also expected that thecommunity-driven development process will help to establish a voice of the poor in a wider localgovernance context, either through representation or increased support and partnerships.

CGs interested in sponsoring sub-projects with matching contributions will prepare proposals withassistance from CSO and submit these to SDF for possible funding, provided these are in the initial menuof options selected under this project and complies with the eligibility criteria established in the project(Annex 2, Attachment 6). PAST would carry out appraisal and supervision of the sub-projects based onthe check-list provided in the OM. PAST would also support the communities with technical andfinancial management. The PAST would recommend SDF to grant approval of eligible sub-projects andcertify the release of funds for eligible activities.

Procurement: IDA financed procurement of goods and works (community sub-projects) will follow theBank's Procurement Guidelines. Consultants and NGO services including training will be procured inaccordance with the Bank's Consultants' Guidelines.

Infrastructure sub-projects would account for about 65 percent of the project costs followed byconsultants and NGO services, and small quantity of goods. It is expected that approximately 1,800small-scale community infrastructure sub-projects will be financed under the project in about 1,400villages in the two districts. There will be a few pilot community utilities sub-projects.

SDF will have overall responsibility of procurement management and ensuring compliance with theBank's procedures. SDF has prepared a draft Procurement Plan. Goods, involving small contracts thatare unlikely to attract foreign bidders, will be procured through National Competitive Bidding (NCB) orshopping. Consultants and NGO services will be procured following quality- and cost-based selection,selection under fixed-budget, consultants' qualification, individual consultants, single-source selectionmethods.

IDA will carry out prior review of the following contracts: all goods contracts estirnated to costUS$ 100,000 equivalent or more each irrespective of procedures and the first contract each forprocurement under NCB and shopping, regardless of value. All other contracts will be subject to postreview by IDA. IDA's prior review will be required for consultants' (firms) and NGOs' contractsestimated to cost US$100,000 equivalent or more for firms, and US$50,000 equivalent or more forindividual consultants. All community sub-project contracts will be subject to post review. Annex 6provides more detail.

Financial Management: At SDF professionally qualified accountants would be responsible for overallfinancial management of the project. F&A unit is headed by a GM and includes one Manager and anAccounts Officer. The GM and the Manager have been appointed and the Accounts Officer will beappointed before implementation begins. The GM is an experienced chartered accountant. SDF currentlyfollows the Accounting Manual of the government, which provides a system for transactional controlover expenditure, basic book keeping principles and reporting. The financial management system in SDF

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is adequate to cover all project related transactions. The sources of funds (Government, IDA andcommunity contributions) and use of funds are accounted for and reflected in the financial statements ofSDF. Books of accounts are maintained using double-entry bookkeeping principles and on accrual basis.Separate books/records (cash and cash book ledger, trial balance etc.) is maintained at the SDF usingMicrosoft Excel and will soon move to an integrated computerized accounting system. A FinancialManagement Manual, which outlines the control and accountability frameworks adequate to meetproject's financial management requirements, has been prepared. The financial management system atSDF will be computerized within the four months of project implementation. Transaction-baseddisbursement procedures will be applicable for withdrawal of funds from the Credit.Financial management at the community level will be carried out by a book-keeper of each CG who willbe trained by SDF and the CSO. CGs would maintain simple accounts for the sub-projects implementedby them. The selection of the CG book-keeper and completion of training will be conditions ofdisbursement of the first tranche of sub-project funds. This is reflected in the Sub-project FinancingAgreement (SFA) between SDF and the CG. A sample SFA is provided in Annex 2, Attachment 7. TheSFA also requires that the CG adequately protects and maintains the assets created and/or purchased bythe CG.

Flow of Funds: IDA funds will be channeled through the Ministry of Finance (MOF) to SDF which willmaintain a Convertible Taka Special Account (CONTASA) in a commercial bank under terms andconditions acceptable to IDA. In addition, SDF may also access the credit directly from IDA. SDF willmaintain a separate account in a commercial bank for funds received as Government contribution to theproject. The Finance Division (FD) of MOF would provide IDA Credit and Government funds to SDFunder a Subsidiary Grant Agreement (SGA). The MD or a designated official of SDF will be theauthorized person to withdraw funds from the Credit.

Funds will flow from SDF to the communities under a SFA which will specify the terms and conditionsfor payment. PMC of the CG will be required to open sub-project bank account in the name of the CG.Beneficiary cash contributions would be deposited in the same bank account of the CG.

Disbursements Method: Disbursements from IDA credit would be made following IDA's currenttransaction-based disbursement procedures (reimbursements with full documentation or againstStatements of Expenditure (SOE), and direct payments). Payment to the CG for approved sub-projectswould be in three tranche specified in the sample SAF (Annex 2, Attachment 7). Payment of funds to theCG will be closely monitored to ensure that processing time does not adversely affect the execution ofthe sub-project implementation. Service standards (benchmarks) have been developed to monitor theturn-around time for funds transfer from SDF to CG. Regular feedback will be obtained from the MISreports and the process monitoring reports in order to take corrective measures, if needed.

Auditing Arrangement: SDF would hire private auditor for annual financial audit under terms andconditions acceptable to IDA. The scope of the annual audit would include project accounts, specialaccount and statement of expenses (SOEs). The audit reports would be submitted to IDA within sixmonths of the end of each fiscal year. The audit will be carried out in accordance with InternationalStandards of Auditing and the cost of the audit would be eligible for financing from Credit. The auditorswould be selected in accordance with the IDA's guidelines for selection of consultants.

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Process of Action Learning: The project will have in place process monitoring which will help SDFestablish a regular action-learning mechanism among all stakeholders to scale up or influence otheragencies to adapt successful methods and principles. The process monitoring system will allow SDF,along with key stakeholders, to carefully analyze implementation experiences after completion of therounds of community mobilization, institutional development, and community project implementation.This will help refine the process itself and update the OM accordingly, as well as assess the performanceof implementing partners.

Reporting and Mid-term review (MTR): SDF would subrnit to IDA quarterly progress reports onimplementation progress against the project's output/outcome indicators. A comprehensive review of theproject will be undertaken at the end of first year of project implementation to learn from experience andmake necessary adjustments to the project design. This report would cover: (a) physical progress andfinancial expenditure; (b) progress against performance indicators; (c) problems faced duringimplementation and remedial actions taken; (d) findings of the process monitoring; and (e) social andenvironmental aspects. The comprehensive review report would also include an implementation plan forthe following year.

A MTR would be carried out in December 2005, which would be an in-depth assessment of the project'sprogress. This review will provide an opportunity to reformulate design and approaches as appropriate.SDF would commission specific studies which would fonn the analytical base for the MTR. The termsof references for the proposed studies would be submitted to IDA for review. The proposed studieswould be completed and reports provided to IDA three months before the MTR. SDF would beresponsible for contracting and managing the consultants engaged for the proposed studies.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

A number of alternative design options were considered for this project. The rationale for rejection ofthe different options is outlined below:

a. Project size and durationThe traditional investment project providing a single large loan to finance a five-to-seven yearinvestment was considered but deemed inappropriate because of several innovative features ofthis project which needed to be tested before scaling up. These include: (i) direct financing ofcommunity groups; (ii) leveraging private sector finance for investrnents in community utilities;and (iii) application of performance-based contracts. Although Bangladesh has a number ofsuccessful community-based programs, direct financing of community groups is yet to be tested.

Given the "learning by doing" nature of the project, a Learning and Innovation Loan (LIL) wasconsidered as a possible financing instrument for the project. However, the US$5.0 million limitof a LEL was considered too small an amount to implement and test the investment activitiesproposed under the project.

b. Implementation andfinancing arrangements.The possibility of subsuming project components under existing or proposed stand-alone projectsin education, health, rural transport, water and sanitation, etc. was explored. However, thisapproach was not considered sufficiently flexible to allow the innovation proposed under theproject. The option of using PKSF was also considered, but rejected for the following reasons:(i) activities envisaged under the project extend beyond the core mandate of PKSF, which

focuses mainly on wholesaling of micro-credit through NGOs; (ii) PKSF's institutional capacityis likely to be stretched by the burden of implementing SIPP; and (iii) a dedicated SDF offers amore independent and participatory structure for community and NGO participation.

The option of transferring project funds to NGOs, as intermediaries, for the implementation ofthe community infrastructure projects was considered but was not accepted because of thepossibility that such an approach may create a dependency amongst the poor and thus couldretard the longer-term capacity for the community to carry out such investments themselves.

Channeling funds to local government for financing social investment purposes was consideredand rejected for this initial project for the following two reasons. In the current situation wherethe poor are not organized and generally lack "voice", there is a risk of elite capture of theresource at the local government level. The management capacity at the UP level is also limited.However, SIPP design includes institutional development at the local-level to enable the localgovernment to participate in the project in an enabling and coordinating role. If there is evidenceof positive partnerships between poor community groups and the local government, a follow-onproject could consider financing community-driven development through local government.

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

Latest SupervisionSector Issue Project l (PSR) Ratings

l _________________________________ .___________________________ I (Bank-flnanced projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Expand horizontal and vertical Micro-finance II (0) S Soutreach of ongoing successfulmicro-finance programs to reach thepoor and micro-entrepreneurs.

Improve the capacity of the Bangladesh Integrated U Scommunities to improve the nutritional Nutrition (0)status of pregnant/lactating women,and children.

Extend financial services to the ultra Financial Services for thehard-core poor. Poorest (LIL) (0)

Improve and expand Non-formal Post-Literacy and Continuing S SEducation (NFE) programs. Education (0)

Alleviate arsenic water contamination Arsenic Mitigation Water U Sas a factor in the reduction of Supply (0)arsenic-induced mortality andmorbidity.

Improve the livelihood of poor people Fourth Fisheries (0) S Sdependent on fisheries resources.

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Promote participation of local Second Rural Roads and S Scommunities in establishing an Markets Project (0)improved, sustainable rural transportand trading infrastructure.

Other development agenciesEnhance the capacity of, and Human Right and Governanceopportunities for, women, men, and Program (I{UGO)children to demand improved (DFID-financed)governance and recognition of theirrights.

Reduce rural poverty through Targeting the Ultra Pooreconomic and social advancement of (DFID-financed)the poor, specially the ultra poor.

Strengthen local governance capacity Sirajganj Local Governancein Sirajganj district. Development Fund (ongoing)

(UNDP/UNCDF-financed)

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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3. Lessons learned and reflected in the project design:

The project is based on the global experiences with social funds, community-driven projects, and countryexperience with community-based programs.

Global Lessons

* Direct financing of community groups has been shown to improve the effectiveness and costefficiency of small infrastructure works. This is because communities themselves havemost to gain from the proper use of resources. Although this modality has been well testedin many countries, it is yet to be tried in a properly-designed manner in Bangladesh. Theproject aims to test this approach.

* Fund flow directly to the community helps ensure more access to this needed input,generates more capacity for managing and controlling funds, builds community confidence,and provides empowerment for out-sourcing contracts, and above all, increasesaccountability of the service providers to the community.

* Service providers, including NGOs, need to be made accountable for project outputs andoutcomes. Correctly aligned incentives help to improve both quality and quantity ofservices delivered. For this reason, outputs-based contracts that make payments based onperformance (and not just inputs) will be introduced in the project.

* The role of facilitators or change agents should be to provide information and createawareness about the services around the communities that they can access and how toaccess them. It is then that the communities can plan in their own way.

* Global experience suggests that given the right incentives - in the form of subsidy transfersand/or credit options - the private sector can play a significant role in reducing the cost andimproving the efficiency of service delivery. This is particularly the case for services whereuser fees are readily charged and cost recovery is feasible. The project will exploremodalities for promoting increased involvement of the private sector in provision ofservices.

* There should be simple, clear rules of business. These need to be widely disseminated andthen consistently and transparently enforced.

* Flexibility of the program design allowed the institutional arrangements to evolve and adaptto local needs and demands.

* There should be a simple OM, independent monitoring system, computerized MIS,standardized financial management procedures, regular and rigorous auditing andquantitative and qualitative monitoring and evaluation.

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Country Lessons

* Experiences with several not-for-profit Foundations set up by the Government have shownthat operational autonomy and an appropriate management team are critical factors in thedelivery of services for the purpose of which the organization has been set up. Bureaucraticand political interference impede performance.

4. Indications of borrower commitment and ownership:

The Government has provided funds for the initial establishment of SDF. To get a head start withimplementation, recruitment of MD and core staff (three GMs and five Managers) has been completed,procurement of essential office equipment, and consulting services have been initiated. Rules andprocedures for project implementation and financial management are in place. There is an agreement inprinciple that the Government will provide SDF a portion of the Government's expected contribution tothe project after negotiations of the credit for this project. The Government would also consider anendowment to SDF, provided satisfactory progress is reported at the MTR. The Government's I-PRSP hasrecognized SDF as one of the institutional mechanisms to promote poverty reduction programs.

5. Value added of Bank support in this project:

IDA's global experience of social investment programs has been drawn upon proactively to assist withthe design of SDF's activities, roles, and responsibilities. Ongoing Bank participation will ensure thatinternational experience continues to be applied within the project, and that sound international qualitystandards of monitoring, evaluation, and impact assessment are employed. By supporting the Project, theBank would play a critical role during implementation as a catalyst, using leverage generated by itssignificant lending volume in Bangladesh and its recognized advisory capability to forge effectivepartnerships among Government, NGOs, and communities for sustainable service delivery. The Bankwould be able to facilitate the sharing of regional information and experience among this project andthree District Poverty Initiatives Projects in India and the Poverty Alleviation Fund project in Pakistan,thereby enhancing the quality of this project.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):0 Cost benefit NPV=US$ million; ERR = % (see Annex 4)o Cost effectiveness* Other (specify)The project aims to set in motion a process of social mobilization and participatory planning by whichthe rural poor community would be able to articulate their priorities for community infrastructure andsocial assistance services. Consequently, project investments are for information and communicationcampaign and institution building at the national and community-level to facilitate demand-driven needsprioritization. This investment would help to empower communities to build social capital and improvelocal governance. The project would finance community infrastructure sub-projects identified andprioritized by community groups, as well as social assistance programs. These investments wouldsignificantly increase the level of economic activity. Knowledge, motivation, and access to publicinfrastructure, services and markets commonly called "intangible assets," are crucial factors for theeconomic productivity of individuals, as well as enterprises. The benefits produced by these assets can besummarized below:

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* Maintenance and improvement of transport and trade infrastructure will help reduce spoilageof perishable commodities through access to markets. Access to health centers and schoolswould also be improved. Better access to markets will generate economic benefits frommarket transactions, whereas access to health facilities and schools increases productivity,which in turn contributes to increased income.

* Investment in safe drinking and sanitation, by improving the health of rural populations aswell as reducing time spent, especially by women, in transporting water, will contribute topoverty alleviation and increase the productive capacity of rural people, particularly women.The benefits of improved water supplies (quantity and quality) on health outcomes arewell-documented. These health benefits in turn lead to labor productivity and income gainsvia a variety of direct and indirect pathways.

* The project will also contribute to employment and income generation in rural areas bothdirectly (through improvement of infrastructure to give efficient access, as well asinvolvement of local populations in the construction of basic infrastructure funded under theproject). The indirect contribution would be through the new and/or additional economicopportunities generated by local physical infrastructure improvement and improved capacityfor economic activity due to better health and water supply.

Given the problems of quantification of social benefits, the present economic analysis does not computean overall economic rate of return of the project, but rather demonstrates the economic justification ofundertaking the community-driven development actions described above by carrying out analysis ofselective infrastructure such as water supply and sanitation and small markets.

Economic analysis for community-driven investments in water and sanitation systems indicate that thesystems can be viable under reasonable assumptions on incremental time savings, as well as workingdays generated by their implementation. Based on the spoilage savings analysis, the economic IRR forrural markets have been estimated to be 30.6 percent.

2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact:

The estimated cost of the project over a four-year period is US$22.54 million. Of this amount, about 65percent will be spent for community infrastructure sub-projects. The beneficiary community would beresponsible for the maintenance of these sub-projects. It is estimated that community contribution in thefinancing of the infrastructure sub-projects will amount to about 12 percent of the total project cost. It isexpected that the infrastructure sub-projects under the project would substantially improve theproductivity of the existing rural infrastructure by bridging critical gaps and sharing of O&M cost by thecommunity would have a beneficial impact on the budget. Similarly, if the community utilities pilotsub-projects are successful, there would be some budgetary impact, as less of scarce public funds wouldbe needed for scaling up this model of private participation in infrastructure development. Duringproject preparation special attention was given to keep the recurrent cost of SDF to a minimum of about5 percent of the total project cost. If SDF performs satisfactorily and is prepared to scale up thecommunity-driven development, it could be another mechanism for the Govemment to channel funds foreffective poverty focused activities.

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3. Technical:SDF will finance only technically feasible, simple, labor intensive community infrastructure sub-projectswhich can be easily maintained and operated by the conmmunities. Technical standards will conform todesigns in existing Bank, NGO-assisted projects, and best GOB practices to ensure sectoral coherenceand compatibility. All sub-projects will be screened by qualified staff in PAST and SDF, andcommunities can contract technical assistance to assist in design and implementation of sub-projects.Training programs are also offered under the project to develop community organizations capabilities toprepare, implement, operate, and maintain sub-projects. The social assistance prograrn will beimplemented by competent NGOs selected by SDF.

4. Institutional:

4.1 Executing agencies:

SDF will be the main executing agency of the project. (Details of its governance structure is provided inSection C4.)

4.2 Project management:

SDF would have the overall coordination role for the project. The MD would be responsible for theday-to-day management of the project and be accountable to the GB of SDF. The operational autonomyof SDF would allow the management team of SDF to remain flexible and adapt, based on implementationexperience. SDF would be responsible for project coordination. monitoring, financial management,procurement, disbursement, and audit. SDF will address any problems faced by any of the serviceproviders in carrying out their responsibilities. The staff of SDF would be selected through opencompetition and be professionally competent. SDF will appoint competent organizations to assistcommunities to mobilize and prepare sub-project proposals; assist with the appraisal and supervision ofthe community sub-projects; and carry out the social assistance program. SDF will have independentorganizations carry out process monitoring and impact evaluation.

4.3 Procurement issues:

According to the Country Procurement Assessment Report (CPAR) of 2002, procurement is a genericproblem in Bangladesh. Based on the CPAR recommendations, the Government has embarked upon apublic procurement reform program through the Public Procurement Reform Project (PPRP), withtechnical assistance from IDA. The project provides for procurement training to officials from the publicsector, as well as the private sector.

At the project level, the procurement issues involve appropriate utilization of funds by community groupsand selection of consultants and NGOs by SDF. SDF will have overall responsibility for procurementmanagement. However, community sub-projects, involving about 65 percent of the project costs to beused in about 1,400 villages in the project districts, will be implemented directly by the CG through theirPMC. As mentioned before, the newly recruited staff of SDF has no previous experience withprocedures for procurement of goods and services financed under IDA Credit. SDF has recruited aProcurement Manager. The SDF staff will be required to build expertise in procurement. Based on thereview, there are substantial risks associated with procurement. To minimize procurement associatedrisks, the following arrangements have been made:

(a) in accordance with the sub-project financing agreement between SDF and CG(represented by PMC) for each sub-project with a ceiling of US$8,200 equivalent, SDF

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will disburse the funds to the community in three installments against certifiedprogress/completion reports by PAST;

(b) community groups will be provided with hands-on training by CSO to handle smallprocurements. The staff of SDF already took a short course on procurement. Specifictraining on community contracting will be provided once the CSOs and PAST arerecruited;

(c) SDF formed a Procurement Core Team (PCT) to deal with all procurement matters;(d) SDF identified a procurement consultant whose services will be procured for about six

person-months spread throughout the project period;(e) the Bank would conduct sample ex-post reviews; and(f) the project provides for procurement audit by independent auditors.

4.4 Financial management issues:

There are no significant country issues that may affect project implementation. The generic problem oflengthy procedures in releasing govemment counterpart funds is not expected to be an issue in thisproject because it has been agreed that GOB will provide its contribution to SDF in two installments.The first installment will be provided within 30 days after completion of negotiations for the Credit forthis project and the second one by June 30, 2004.

The risks affecting financial management are assessed "moderate" on three considerations: (i) SDF'sfinance team does not have sufficient exposure to fiduciary safeguards required for CDD projects; (ii)CGs may fail to comply with the terms and conditions of the sub-project financing agreements (SFA);and (iii) the CSO, responsible for capacity building of CGs may fail to train CG groups in propermaintenance of sub-project book-keeping and maintenance of accounts. To mitigate these risks and buildthe financial management capacity at SDF and community levels, the following arrangement have beenmade/agreed:

* SDF has appointed qualified staff in finance and accounting who have had preliminarytraining on CDD Financial, Procurement and Disbursement arrangements, and more suchtraining has been planned;

* The appointment of former Controller and Auditor General as MD of SDF will provideadditional guidance for ensuring appropriate fiduciary controls for the project;

* The SFA includes several safeguards to address the risk of non compliance with the termsand conditions of the agreement: (a) eligibility criteria for payments, (b) remedial clauses incase of default with the contractual obligations, and (c) completion of pre-specified physicaltargets;

* the FM Manual of the project includes simple accounting procedures for maintainingsub-project accounts at CG level. SDF has also prepared a separate simple manual outliningaccounting policy and procedures for CGs.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The majority of the sub-projects in SIPP are not expected to lead to environmental impacts of anysignificance. There is the possibility that a small number of sub-projects may have environmentalramifications, or result in adverse impacts in case mitigation measures are not adequately implemented.An environmental assessment of SIPP was conducted and accordingly, all community infrastructuresub-project proposals submitted to SDF will be subject to a series of environmental evaluation exercisesin order to:

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(a) screen projects with significant negative environmental impacts;(b) mitigate potential negative impacts through changes in sub-project design, location or

execution;(c) prevent or mitigate negative cumulative impacts;(d) enhance the positive impacts of sub-projects; and(e) prevent additional stress on environmentally sensitive areas.

To meet these objectives, the project's Environmental Assessment (EA) Manual provides for: (a) amethodology and administrative structure for environmental management; (b) forms for environmentalmanagement of community infrastructure sub-projects; and (c) an environmental supervision andmonitoring plan. These elements are included in the project's OM.

5.2 What are the main features of the EMP and are they adequate?

The inputs to manage the environmental impacts of community infrastructure sub-projects constitute theEA Manual for the project. More information on the EA Manual and the proposed arrangements formanagement, including supervision and capacity-building, are given in Annex 2, Attachment 10.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: May 1999; updated August 2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describemechanisms of consultation that were used and which groups were consulted?

Consultations were held with concemed departments of C;OB, NGOs and potential members of CGs, andtribal population in the project areas. The final updated EA Manual reflects findings of theseconsultations. During consultations, there were some suggestions on further simplification of the forms inthe EA Manual. These have been revised.

5.5 What mechanisms have been established to monitor End evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives ancl results of the EMP?

The EA Manual sets out a series of steps for environmental assessment of sub projects. Theenvironmental assessment procedure consists of a number of steps, specified in this nmanual:

Step one: Filling out the Routing Slip (Fonn 1) by PMCStep two: Filling out the Environmental Sensitivity Form (Form II) by CSOStep three: Filling out the Environmental Screening Form (Fornm III) by CSOStep four: Filling out the Environmental Review Form by CSO, orStep five: Filling out the Limited Environmental Assessment Form by environmentalspecialist.Step six: Clearance of environmental screening, and review or assessment, by SDF.

The EA Manual contains-formats for ES, ER and LEA along with an Instruction Manual for EA ofcommunity infrastructure works sub-projects in SIPP. The Manual also contains guidelines onindependent environmental auditing of SIPP sub projects and monitoring of cumulative impacts. Theinstitutional arrangements suggested by the EA Report sets out appraisable indicators which will reflectthe success or failure of environmental management of the sup projects. See Annex 2, Attachment 10 fora brief account of environmental supervision, monitoring and auditing.

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6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

A Social Assessment (SA) study was carried out to gain operationally relevant understanding of thesocial underpinnings and incentives determining behavior and needs of various actors, especially thepoor communities, vulnerable groups, indigenous population, local rural elites, local governmentagencies, line departments, NGOs, district administration, and the private sector. The study identifiedthe following key social issues relevant to project objectives: (a) exclusion of poor women,female-headed household, physically handicapped people, and tribal groups from mainstreamdevelopment; (b) problems of malnutrition of children and high female mortality; (c) overall lack ofawareness about health, nutrition, education and human rights; (d) lack of employment opportunities; and(e) lack of an organized "voice" to demand accountability from service providers. The findings of thesocial assessment and consultations are reflected in the targeting strategies (Annex 2, Attachment 8) andproject components.

Consultations in the two districts revealed that there is shortage of programs for the development ofvulnerable populations. The existing micro-finance program is not targeted to the poorest and safety netprograms focus only on short-term survival, rather than development of the vulnerable groups. NGOs areproviding social assistance programs on a limited scale and do not cover the needs of vulnerablepopulation.

According to the 1991 Census, tribal populations in Gaibandha and Jamalpur come to 8,600, whichconstitutes 0.2 percent of the total population of the two districts. In rural areas, the tribal population is0.3 percent in Gaibandha and 0.1 percent in Jamalpur. The Tribal Development Plan (Annex 2,Attachment 12) provides more details.

Action Plan for Women's Empowerment

The project will undertake activities that meet the needs and priorities of poor women, such as,identifying formats and media that reach poor rural women; facilitating planning capacity and groupformation of women; recruitment of women workers, as well as gender training, of all staff of SDF, CSO,and PO. Specifically, the following actions will be taken:

* incorporate gender mainstreaming strategy in IC* recruit women at all levels and provide gender training to all staff* ensure significant membership of women in VDC and CG, and their active participation in

proposal preparation, implementation, and monitoring* collection of gender-disaggregated data, as well as development of indicators.

Social Development Outcome/Outputs

The project is not expected to produce significant social development outcomes in four years. However,a process would be initiated which would, over time, lead to improved quality of life of the poor andvulnerable groups through enhancing their access to social and economic opportunities. These outcomewould be measured by the following: (a) capacity for collective decision-making and action; (b) ability todesign and implement sub-projects; (c) ability to access social and economic infrastructure and services;(d) strengthening social capital as measured by community cohesion and inclusion in VDC and CG; and

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(e) enhanced empowerment of vulnerable groups (participation in community decisions and social andlegal awareness). Details of expected outcomes are provided in Annex 1 and indicators in Annex 2,Attachment 8.

6.2 Participatory Approach: How are key stakeholders participating in the project?

Social assessment for the project included household surveys, focus group discussions and workshopswith stakeholders at six districts. Furthermore, nationwide consultations with NGO and civil societyrepresentatives were also organized. The project will be initiated with national and local levelinformation and communication campaign, which will continue during implementation. NGOs also willbe involved as CSOs for facilitating institutional development at the village level. CSOs will beresponsible for facilitating VDC, which would consist of at least 50 percent from the target groups(women, poor, and vulnerable), and formulation of participatory CAP, which will map infrastructure andsocial assistance needs. CSOs and VDC will organize public meetings regularly so that CAP is developedand implemented in a transparent and inclusive process, which prioritizes the needs of vulnerable. Thesepublic meetings will also facilitate participatory monitoring of infrastructure and social assistance results.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

The project will be initiated with national and district, sub-district, union and community workshops.CSOs, POs, other NGOs, and civil society representatives will be key participants at these consultations.POs will facilitate implementation of the project at the local level. The roles and responsibilities of theCSO and PO are described in the OM of the project.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

The following institutional arrangements have been undertaken:

* VDC will include representatives from local government and at least 50 percent of themembers from the target population, e.g. women, the vulnerable and tribal groups. Thiswould develop capacity and mutual accountability between the local/government andvulnerable population. This would further increase ownership by the vulnerable groups andensure outcomes that meet their needs.

* VDC, together with CSO will develop the CAP and monitor the progress of infrastructuresub-projects and socialUassistance. These feedbacks would assist in redesigning SDFinterventions.

* There will be continuous IC, so that vulnerable groups are aware of the services and be ableto access social and economic opportunities provided by the project.

* SDF, PO, and CSO will pay considerable attention to staff selection, recruitment process,staff compensation packages, and terms of employment. These would ensure that staff haveexpertise and incentives to design and implement a community-driven project for sustainabledevelopment of vulnerable groups.

6.5 How will the project monitor performance in terms of social development outcomes?

The project has identified process and outcome indicators which will be reviewed through a monitoringand evaluation learning exercise. Reputed extemal agencies will be contracted for carrying out processmonitoring and impact evaluation through the life of the project. There will be a baseline and agreedindicators to monitor the social development outcomes. Performance-based contracts forservice-providers will be introduced in the project. Project appraisal and supervision teams will becontracted to facilitate supervision of the implementation of CAP and social assistance programs.

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7. Safeguard Policies:7.1 Are any of the following safeguard policies triggered by the pro ecl?

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 9 No

Natural Habitats (OP 4.04, BP 4.04, GP 4.04) C9 Yes * No

Forestry (OP 4.36, GP 4.36) ( Yes * No

Pest Management (OP 4.09) ( Yes * No

Cultural Property (OPN 11.03) ( Yes * No

Indigenous Peoples (OD 4.20) * Yes U No

Involuntary Resettlement (OP/BP 4.12) ( Yes * No

Safety of Dams (OP 4.37, BP 4.37) ( Yes * No

Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) U Yes * No

Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* () Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

The project has been designated as Category B, i.e. with moderately significant environmental impacts,which can be remedied or mitigated. It is recognized that the large number of sub-projects(approximately 1,800) will include many that have only positive or no environmental impacts, or have

only minor impacts (Category C). For this reason, a simple screening process has been devised to filterout category. A sub-project, that may potentially cause significant irreparable environmental impacts.

Such sub-projects will not be eligible for financing under the project. In addition, guidelines have been

prepared to avoid cumulative effects of numerous small scale sub-projects, that when taken on anindividual basis, are exempt from EA because of their low impact, but as a whole may have significantenvironmental impact. These guidelines are an integral part of the SIPP operational procedures anddocumented in the EA Manual.

No involuntary resettlement or impacts on cultural property are envisaged under the project, and the OMand EA Manuals clearly state that those sub-projects which may require land acquisition and involuntaryresettlement would not be eligible for funding. Some investments may involve donated land. Someconcrete measures are being taken in the project to ensure that land contributions are truly voluntary, thatundue social pressure is not exerted on individual land owners or operators, and that all relatedtransactions are conducted in a transparent manner. The project's OM includes simple guidelines forLand Donation, which includes the consultation process, detailing minutes of village consultation,agreements reached, names and addresses of the donors, details about location of land, whether the site isfree of squatters, identified by the community; and certification of donation from each donor. Thetransfer of voluntary contribution of land will be formalized through a simple Memorandum ofUnderstanding (MOU) between the designated member of the community group and each and everylandholder contributing the land for the sub-project. Construction of the sub-project involving donatedland will start only when the MOU has been signed. A sample MOU is included in the OperationalManual.

A Tribal Development Plan (TDP) has been developed and finalized in consultation with tribalpopulation. Details of the TDP are in Annex 2, Attachment 12.

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F. Sustainability and Risks

1. Sustainability:

Sustainability issues relate primarily to project outcomes and sustainability of SDF. SDF would besustainable if key stakeholders (Government, NGOs, community organizations, and donor organizations)find that it has contributed to good practices in improved local governance, community financing of basicservices, capacity building/knowledge transfer to communities, communication, and acting promptly onfeedback. It will build partnerships with NGOs to assist in institutional development of communityorganizations. It will have a process monitoring system to receive feedback and respond. The operationalsystem designed under the project will ensure community financing and sustained O&M of theinvestments. SDF's sustainability also depends on its continued autonomy which is ensured by anindependent GB and transparent operating rules and procedures. If project outcomes are successful, theGOB is expected to provide an endowment for continued services of the organization.

The sustainability of the community infrastructure sub-projects and their benefits would be ensuredthrough the demand driven approach, community contribution towards the cost of the project andcommunity managed implementation. The sustainability of the impacts of the social assistance programscan be ensured through the building of social and legal awareness, literacy and occupation skills of thepoor and vulnerable. The application of performance based contracts would help to ensure that the socialassistance services eligible under the project will be properly delivered.

The VDC can be sustained through successfully establishing operational linkages with local government,line departments, NGOs, and the private sector and through exploiting the potential of this institution tobuild local leadership. The CG is likely to be sustained once the power of collective action isinternalized by the group. The training of the community groups in identifying and prioritizing theirneeds would empower them to demand quality and timely services from the service providers. The skillsobtained from the training would remain with the beneficiaries beyond the lifetime of the project.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk,Mitigation MeasureFrom Outputs to ObjectiveSDF operations and targeting are subject M SDF will have a competent MD and maintainto political interference. an independent GB.

Well-defined eligibility criteria for sub-projectfinancing will been developed.

SDF will not have operational M . SDF will have a continuous process monitoringmechanisms to review feedback from the system and an MIS to ensure feedback andkey stakeholders, take appropriate responses to it.actions.

The project's OM will be continuously revisedto reflect revisions to the operating guidelinesbased on feedback.

An efficient financial and disbursementmechanism will ensure quick flow of funds tothe communities.

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Elites in the community or other political S SDF will appoint experienced CSO forforces may disrupt the social information dissemination and socialmobilization and organizational mobilization; these organizations would haveprocesses. an excellent track record in these activities and

experience in addressing such social risks.

Project intervention may not benefit the M Application of eligibility criteria to ensure poopoorest and other vulnerable groups. benefits; training in participatory approaches,

process monitoring to ensure participation ofthe poor.

Commitment to the project at the level of M SDF to regularly and widely communicate andgovernment and other key stakeholders inform stakeholders about the key lessons andwane. successes about the project.From Components to OutputsSDF will not be able to hire competent M SDF will advertise widely and have transparenstaff and services to carry out project selection and well-defined selection criteria.activities. The GB of SDF will have delegated the hiring

and firing powers to the MD.

Performance-based contracts for service-providers will be used.

SDF will not have adequate procurement S PCT have been formed; Procurement Managermanagement capacity. recruited; Procurement consultant selected;

training of staff, CSOs, PAST and PMCs willbe provided.

Communities cannot raise matching S Support organizations will assist communitiescontributions. in developing structures for decision-making.

Communities will not be able to use the S CSO, PAST along with SDF, will providefuids effectively. training to the CG in fund management. In

addition, PAST will supervise and provideadvice as necessary on implementation.

Infrastructure built are not maintained S Sub-project approval checklist will includeproperly. appraisal of community's plans for operation

and maintenance.Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

None

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G. Main Credit Conditions

1. Effectiveness Condition

(a) the Development Credit Agreement has been duly signed, authorized or ratified by the Borrower;(b) the Project Agreement has been duly authorized or ratified by SDF; and(c) the Subsidiary Grant Agreement has been executed on behalf of the Borrower.

2. Other [classify according to covenant types used in the Legal Agreements.]

Management and Operations of SDF

(a) SDF shall, at the end of each quarter of the fiscal year, furnish to the Association a progressreport in form and substance satisfactory to the Association, showing implementation progress againstthe project's output and outcome indicators;

(b) SDF shall:

(i) no later than August 31, 2004, carry out, in accordance with the terms of referencesatisfactory to the Association, a comprehensive project implementation review; aimedat: (A) documenting progress toward objectives; and (B) identifying obstacles to projectimplementation and formulating remedial steps; and

(ii) promptly after completing such review, carry out recommendations arising out of saidreview, taking into account the Association's comments thereon.

Financial Covenants

(a) SDF shall maintain records and account, adequate to reflect in accordance with sound accountingpractices its operations and financial condition and to register separately the operations, resources andexpenditures related to the Project.

(b) SDF shall:

(i) have its records, accounts and financial statements in respect of the Project for eachfiscal year audited, in accordance with auditing principles consistently applied byindependent auditors acceptable to the Association;

(ii) furnish to the Association as soon as available, but in any case not later than six monthsafter the end of each such year, (A) certified copies of the financial statements in respectof the Project reflecting the records and accounts referred to in paragraph (a) of thisSection, for such year as so audited; and (B) the report of such audit by said auditors, ofsuch scope and in such detail as the Association shall have reasonably requested; and

(iii) furnish to the Association such other information concerning such records, accounts andfinancial statements, as well as the audit thereof, as the Association may from time totime reasonably request.

(c) SDF shall prepare, in accordance with guidelines acceptable to the Association, and furnish tothe Association not later than 45 days after the end of each calendar quarter, a Financial MonitoringReport for such period, which:

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(i) sets forth actual sources and applications of funds for the Project, both cumulatively andfor the period covered by said report, and projected sources and applications of funds forthe Project for the six-month period following the period covered by said report; and

(ii) shows separately expenditures financed out of the proceeds of the Credit during theperiod covered by said report and expenditures proposed to be financed out of theproceeds of the Credit during the six-month period following the period covered by saidreport; and

(iii) sets forth the status of procurement under the Project and expenditures under contractsfinanced out of the proceeds of the Credit, as at the end of the period covered by saidreport;

(d) SDF shall furnish the first Financial Monitoring Report to IDA no later than February 15, 2004,covering the period from the incurrence of the first expenditure under the Project through the end ofDecember 31, 2003; and thereafter each FMR shall be furnished to the Association not later than 45 daysafter each calendar quarter, and shall cover such calendar quarter.

H. Readiness for Implementation

E 1. a) The engineering design documents for the first year's activities are complete and ready for thestart of project implementation.

2 1. b) Not applicable.

2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

2 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

D 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

N 1. This project complies with all applicable Bank policies.FI 2. The following exceptions to Bank policies are recommended for approval. The project complies

with all other applicable Bank policies.

Wahida Huq Constance A. Bernard Frederick T. TempleTeam Leader Sector Director Country Director

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Annex 1: Project Design SummaryBANGLADESH: Social Investment Program Project

-~ ~ ~ ~ ~ ~~~6 .. - or KePr& ance,. 'Clta'CollectIoni StrategyrierarchWysof Qb'jetit ' 1 J -4 -. . Collectio Strateg Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)Increase social and economic Increased provision of rural Survey reports;opportunities of poor and transport infrastructure and Annual economic update;vulnerable groups through water and sanitation facilities CAS Progress reports.greater community and private with mobilization of localsector participation. resources.

Increase in communityimplemented and maintainedrural infrastructure and waterand sanitation facilities.

Improved targeting andincidence of social safety netprograms.

Greater coverage of rural areaswith respect to energy access.

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-~~~~~Y' ~ evPei-frt n4?', ~'Da JXC'6IIetidfJStrafg &X§Z@i *g4'3g1t Xi~!~A'. : I -2-- j i Critical Assumptio-ns

Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:

Develop effective and Minimum 50 percent of SDF Progress Reports. No major macroeconomicefficient financing and community infrastructure shocks or natural disasterinstitutional arrangements for sub-projects effectively MIS Reports. occur to constrain or eliminatimproving access to local managed and maintained by project achievements.infrastructure and basic conmmunity groups by EOP. Process monitoring reports.services through theimplementation of At least 50 percent of Impact Evaluation Report. SDF operations and targetingcommunity-driven communities continue to remains free of politicalinfrastructure works and social prioritize needs using interference.assistance programs. participatory processes at least

one year beyond sub-projectcompletion.

At least 50 percent VDC Targeting strategy benefit theformed continue to manage poor and the vulnerable.activities in inclusive mannerby EOP.

At least 10 percent of the Community mobilized intocommunity groups mobilized effective and inclusive localunder the project are able to institutions.leverage external resources tosupport additional needs byEOP.

Increased awareness and Participatory planningopportunities to reduce methods and appropriatevulnerability (such as, 50-60 eligibility criteria forpercent of participants in the sub-project/program appraisaSAP are aware of their basic and resource allocationrights; use health services, procedures would be applied.such as immunization,pregnancy related care; accessto wage/self employment).

Community-drivendevelopment principlesadopted as a policy, localplanning, and implementationof small scale infrastructure byEOP.

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~~. *~~- ~ jXy,P* drranc ~ Data%blIIecti0n4StFitRgy-. I A ~ ***r

tjHierarchyjqf,QbJeWVk .- , '. . _AdarmI mptiions-'Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:SDF strengthened and Compared to 2003 baseline, Mid-term review and impact SDF will appoint competentproviding high quality SDF realizes at least 40% evaluation reports. staff, support organizations.participatory planning, improvement in ancd service providers to assistmanagement, M&L and IC Organizational Capacity with the identification andservices to support the Assessment ratings (based on prioritization of sub-projects.program. agreed measuring instrument)

by MTR and 70 percent by SDF will have in placeEOP. operational mechanisms to

Beneficiary Assessment review and funds to respond inAt least 50 percent of targeted Surveys. a timely manner to thecommunities have received MIS Reports. cornmunity's proposals.and understood projectmessages through IC by MTR SDF Quarterly Progressand 80 percent by EOP. Reports.

IDA, Supervision Reports.SDF adopts a policy ofdisclosure of annual financialand performance audits.

Inclusive village and At least 50 percent of the Reports and surveys Elites in the community orcommunity level institutions stakeholders are aware of the conducted by the independent other political forces do notformed, strengthened. main project principles: monitoring and evaluation disrupt the mobilizing and

inclusiveness, demand-driven agency, using socio-economic organizing processes.through participatory indicators and beneficiaryplanning, and community assessments. CSOs can sustain effectivecontribution by EOP. assistance to communities

Reports provided by the CSO, while increasing coverage.At least 500 VDC formed and PAST and participatingfunctional by MTR and NGOs. Cooperation from the localanother 1,400 by EOP. governments and local

IDA supervision mission administration.50 percent of VDC have active reports.participation of poor and Communities are interested invulnerable groups throughout participating in the programs.the project.

At least 50 percent of the poorvillagers actively participate invillage meetings on needsidentification andprioritization.

80 percent of communityaction plans are responsive toneeds/priorities of poor andwomen.

At least 80 percent of the CGformed in the project areinclusive.

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Community action plans in Community-driven Comparison of standard cost Continued political supporsmall-scale infrastructure and infrastructure investments and project cost data. local and national level forsocial services are successfully compare favorably against community-based and privimplemented. current approaches in terms of Quarterly and annual reports sector approaches.

costs, benefits, and of SDF.sustainability by EOP. Communities able to

Reports and studies of the implement and maintain gcRoughly 1,400 sub-projects in independent monitoring quality sub-projects.small-scale infrastructure agency.cornpleted by EOP. Local economy offers

MIS reports. appropriate employment80 percent of sub-projects opportunities.completed in one yearsatisfactorily operating and Contracted organizationsmaintained by EOP. provide quality services.

At least 80 percent ofmembers of vulnerable groupsin each project village benefitfrom social assistanceprograms.

Private Sector/NGO/ Regulatory framework and Consultant's reports SDF selects a competent TCommunities collaborate in model contracts for private MIS team.building, operating, and provisioning for utilitiesmaintaining basic utilities. developed.

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Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Strengthening of SDF US$1.91 million SDF Quarterly Progress Reports. Communication strategy well

designed.1.1 Information and IDA supervision andCommunication. disbursement reports. SDF has high calibre1.2 Capacity-building management team.1.3 Monitoring and Learning Financial Management Reports.1.4 Project Management Support

MIS reports.

2. Institutional Development at US$0.38 million SDF Quarterly Progress Reports. IC campaign has good outreach.Community Level

IDA supervision and CSO teams are well-trained in2.1 Awareness raising and disbursement reports. project rules and criteria.information sharing2.2 Institutional development and Financial Management Reports. CSO able to motivatepianning communities to participate in

MIS reports. needs assessment and planningactivities.

Stakeholder and beneficiaryassessment.

3. Implementation of US$19.35 million SDF Quarterly Progress Reports. CSO able to mobilize interestedCommunity Action Plans persons to form CG.

IDA supervision and3.1 Small-scale Commnunity disbursement reports. Communities develop capacity toInfrastructure Works decide on priorities and raise3.2 Social Assistance Program Financial Management Reports. matching contributions.

MIS reports. Infrastructure implementationcoincides with dry season.

Stakeholder and beneficiaryassessment. Timely flow of funds.

Specialized NGOs are effectivein delivering services tovulnerable groups.

4. Pilot Private Financing in US$0.89 million Consultants Reports and MIS NGO/Community/Private sectorCommunity Utiliffes reports have capacity and willingness to

innovative financing,iimplementation, operation, andnmaintenance arrangements.

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Annex 1: Attachment 1

Relationship between Project Components and ImplementationArrangements

(a) Strengthening of SDF

Recruitnent of core SDF staffAppointment of CSO

Strengthening of SDF and support to implementation*Inforrnation and communication, institutional developmient\

. *~~~Output and Process Monitoring and Input Evaluation>: *> *~~Financial Mtanagement and Administration/

-Sub-project funding and sub-contracting of services/

ldeeopnta (c) Implementation ofthe community Plnlevel (by CSOs)

Implementation of Cl sub-Mobilization, identification .... .......... . .. .... ... project by CG in Yr. I

planning of Yr. I villages villages

Implementation of CI sub-Mobilization, identification .... .... .......................... project by CG in Yr.2planning of Yr.2 villages villages

- - - - - - - - - - - - - - - - -__ _ p I mplementation of SAP by PO inYr. 1 villages

() Piot Prvate Parc4aion-_ in ------------------- Implementation of SAP byCommunity Infrastructure PO in Yr 2 villages

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Annex 2: Detailed Project DescriptionBANGLADESH: Social Investiment Program Project

The objective of the project would be achieved by: (a) setting in motion an inclusive demandidentification and follow-up process for social development needs which will contribute to improvedinstitutional development at the village level; (b) demonstrating cost effective and participatory meansfor provision of basic services; and (c) strengthening the SDF to identify emerging successful proceduresfor social development to influence and assist in scaling up. The project would be implemented over aperiod of four years at a total cost of US$22.54 million. T'his cost includes US$0.15 million for theimplementation of the EA and TDP. The components are described below with base cost estimates.

By Component:

Project Component 1 - US$1.78 millionStrengthening of SDF and Project Management Support

This component will ensure that SDF will be able to facilitate dissemination of project information,community mobilization and local level planning, provide timely and adequate financing forcommunity-driven infrastructure and social assistance programs, and carry out monitoring andevaluation. The component will also build SDF's capacity to learn from project implementation,scale-up, and institutionalize successful approaches to community-driven development. These activitieswill be carried out through four sub-components described below.

(a) Information and Communication (IC): Specific objectives of the IC program at the nationallevel are to:

* provide timely and well-targeted information about SDF's philosophy and mandate and theproject to the primary stakeholders at the national level (NGOs, the private sector, and localand national government bodies);

* promote a responsive and cooperative environment among national level organizations andthe support and participating organizations of SDF, which would motivate them to sustainthe new behavior;

* enhance the quality of project design and implementation by collecting, documenting, anddisseminating knowledge gained by communities regarding good practices and lessonslearned;

* contribute to creating and developing strategic partnerships through active recognition of theroles and contributions of various stakeholders in its media initiatives.

The project will finance the cost of: (a) technical assistance to refine the IC strategy and developcommunication materials for the project; and (b) equipment, training, workshops, and preparation ofappropriate posters, leaflets, radio spots, and videos for dissemination throughout the project areas. (SeeAttachment 2 for details.)

(b) Capacity-Building: Since SDF is a new organization, its staff would need training in developinga shared vision for the organization, building a cohesive team, learning about operational procedures,resource management, appraisal (including environmental screening of sub-projects), and supervision ofproject activities. There would be a technical assistance of three person-months to help with the overallmanagement of the project in general, and development of SDF policies and modalities for goodgovernance, management of human and financial resources, and monitoring of project performance in

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particular. The project would finance management training for SDF staff on procurement, servicecontracting, financial and administrative procedures, and environmental assessment.

(c) Monitoring and Learning (M&L): The M&L would support project coordination andsupervision and help strengthen the effectiveness and quality of project operations. SDF would establisha computerized MIS for regular input and output monitoring. Together with the internal monitoringprocess, process monitoring and impact evaluation will also be carried out. SDF would contract reputedinstitutions for process monitoring and impact evaluation. A baseline survey will be carried out duringthe first year of the project by the impact evaluation institution. A comprehensive review of the projectwill be undertaken at the end of first year of project implementation. A mid-term review of the projectwill also be carried out at the end of second year of project implementation. The project will finance theestablishment of MIS, consultant services for process monitoring, impact evaluation and special studies.SDF would finalize the selection of the institution to carry out process monitoring and impact evaluationby March 31, 2003. (See Attachment 3 for further details.)

(d) Project Management Support: The project would finance salaries and benefits of incrementalstaff of SDF, rental of office space, purchase of vehicles, office equipment, furniture, and fixtures,including computers and requisite software. Staff salaries and operating costs would be eligible forfinancing on a declining reimbursement percentage basis. The project will finance the cost of supportservices (such as, community support, appraisal and supervision of sub-projects and programs, andimplementation of a social assistance program) which will be contracted by SDF. To provide resultsoriented incentives, performance-based contracts will be used.

Project Component 2 - US$0.36 millionInstitutional Development at Community Level

Two CSOs will be responsible for creating awareness of project principles and mechanisms at thedistrict, sub-district, union, and village level, mobilization and institutional development, and planning atthe village level. These activities will be carried out through the following two sub-components.

(a) Awareness raising and information sharing: The project will finance the cost of CSO servicesfor raising awareness, motivating, and engaging the excluded poor to participate in development ofsustainable social and economic capital assets, as well as changing attitudes and behaviors among localstakeholders. The information sharing and communication activities would contribute to: (a) improvedinformation flow among and between stakeholders; (b) better informed community actively participatingin project design and implementation; and (c) improved accountability and transparency regarding rolesand responsibilities of stakeholders participating in the projects.

(b) Institutional development and planning: The project will finance the formation andstrengthening of local-level organizations and preparation of local-level plans by CSO. The project willsupport the formation of VDC for coordination of local development and assisting with the preparationof the CAP. The CAP will prioritize infrastructure activities selected by communities on the basis of agiven resource-base and social assistance needs for the poorest. The need for different types of socialassistance services would be a priority area of community action planning. Each communityinfrastructure sub-project will be sponsored by CG and implemented by a PMC which will be selectedfrom among the CG members. The project will also support the formation and strengthening of CG andits PMC in the preparation of sub-project proposals for submission to SDF for funding, implementation,and operation and maintenance of the facilities. (See Annex 2, Attachment 4 for details.)

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Project Component 3 - US$ 18.07 million

Implementation of Community Action Plan (CAP)

The project will finance a range of small-scale community works (such as arsenic-free water supply andcommunal sanitation facilities, and transport and trade infrastructure) and social assistance programs,which are identified and prioritized in the CAP, based on informed choice as indicated in the menu ofoptions in the OM. This menu of options is based on the preferences of the communities expressedduring the social assessment study carried out for this project. The project will also finance socialassistance services targeted at the very poor and vulnerable. The two sub-components are describedbelow.

(a) Community Infrastructure Sub-project. The project will provide matching grants directly tocommunities for the implementation infrastructure sub-projects which satisfy the eligibility criteriaestablished in the OM of the project. Initially, a number of sub-project options, such as rural connectingroads, culverts, foot-bridges, drainage, small markets and boat landing jetties, and different types ofwater and sanitation schemes will be eligible for financing. More could be added to the list ascommunity needs are identified through participatory planning exercises. Proposals for all eligible typesof investments would conform to the standard procedure, documentation, and technical, economic,environmental, and sustainability criteria as described in the OM. It is expected that about 1,800sub-projects will be financed under this component. The project will provide an allocation of about Tk550,000 (US$9458 equivalent) for small-scale community infrastructure works for each project village.However, the ceiling for the cost of each sub-project would be Tk 475,000 (US$8169 equivalent)..Communities will be required to contribute 15 percent of the total capital investments up-front both incash and in-kind (labor, materials, and services), as well as bear the full operation and maintenance costs.SDF will finance the remaining balance through the execution of a SFA with CG. The SFA will describethe terms and conditions of the matching grant. This approach, complemented by institutionaldeyvelopment at the local-level, is expected to give control of decisions and resources, and build capacityof communities, who are the ones with most to gain from making efficient and effective use of resources.(See more details in Annex 2, Attachments 5 and 6.)

(b) Social Assistance Program (SAP): The objective of the social assistance component is toincrease the capacity of the poorest, in need of social assistance and socially excluded groups to availthemselves of social and economic opportunities. The SA study identified those destitute women,female-headed poor households, youth-at-risk, out-of-school children, artisan community, physicallyhandicapped, victims of natural disaster, and the indigenous population. These groups are the poorestand vulnerable to economic and social shocks. They are also not able to improve their quality of livesdue to social, legal, and economic constraints.

Social assistance will be provided to all the enumerated poor and vulnerable groups identified in the CAPby the end of the project. Activities eligible for financing under this program will include five types: (a)advocacy programs; (b) occupation skills training; (c) support for pregnant women and risk pooling pilotinitiatives; (d) legal aid support, and (e) one-time seed capital for the graduated trainees and most badlyaffected natural hazard victims to acquire productive assets. The menu of activities was developed fromthe needs articulated in the social assessment study. Special programs will be undertaken to providesupport to female workers who have recently been retrenched from the ready-made garment factories.SAP will operate in the villages covered by CAP and irnplemented by competent POs. (See more detailsin Annex 2, Attachment 8.)

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Project Component 4 - US$0.81 millionPilot Private Financing of Community Utilities

Drawing upon the lessons from the successes within and outside the country, SDF would develop andtest new approaches to leverage private/NGO/community participation in basic utilities, such as pipedwater supply and off-grid electricity. The project will finance technical advisory services and matchinggrants for about ten pilot sub-projects anywhere in Bangladesh where potential to recover costs throughuser fees exist. The technical advisory services will include identification, development, appraisal of thepilots, and overseeing the implementation. A systematic learning and adaptation to ensure financialsustainability and commercial operation of these infrastructures will be undertaken. Based on lessonsfrom these pilots, decisions will be taken at the mid-term for further scaling up. The selectedorganization will operate under the overall guidance of the MD under terms of reference acceptable tothe Association. (See more details in Annex 2, Attachment 9.)

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Annex 2: Attachment 1

Targeting Strategy

Targeting Districts

The challenge of the project is to target interventions in those areas where the productivity of theresources is maximized in order to increase the welfare gains of the poor. The "learming by doing"approach of the project predicates that the geographical area for interventions be not too large to stretchthe limited capacity of SDF, and not too small or have unique characteristics which may not providelessons for improvement in design and future scaling up. Another important consideration is that theproject area should include the relatively poorer regions of the country. Based on these considerations,Gaibandha and Jamalpur districts have been identified as project areas for institutional development andimplementation of CAP components.

According to the Bangladesh Human Development Report 2000 prepared by BIDS for GOB, these twodistricts score high Human Poverty Index (HPI) and Income Poverty Index (IPI) values. Jamalpur scored>50 in HPI and IPI, while Gaibandha ranks >50.1 in IP[ and HPI is between 40.5 and 50. Annex 12provides the methodology for the calculation of poverty indices. The districts are located on each side ofthe Jamuna River. About 0.63% of population of the districts is tribal.

Table 1: Basic Data of Gaibandha and Jamalpur Districts

Literacy Rate (%) % of PopulationAreas Pop Living in With Having

District (sq.km) (m) Upazila Union Village Mlale Female Overall thatchedl Electricity Proper_______ houses Sanitation

Gaibandha 2,179 1.9 7 82 1,230 26 16 24 64 4 4Jamalpur 2,032 1.9 7 67 1,362 32 17 21 56 6 5

Targeting within Districts

Of the 2592 villages in the two districts, the project airns to cover approximately 1,400 (54 percent).These villages would be selected based on the criteria provided below. However, the CSO will havesome leeway in the precise strategies for targeting within the project districts:

* areas with relatively less access to basic infrastructure and social assistance services;* unions and villages should have relatively greater proportions of poorer and more

disadvantaged groups;* coverage should avoid saturation of project support to all or the majority of villages within

the unions, but rather attempt to create a "demonstration" effect within a few villages whichcan spread more spontaneously.

Targeting within Villages

The project aims to address the needs of the poor. Hence, in the formation of any groups, communitydemand assessment, meetings and subsequent implementation, and involvement of the poor in all theseactivities will be guiding principles. However, it is also important strategically to involve the middleclass and the elite. The involvement of the elite could influence pro-poor policies and intervention athigher administrative and political levels. The middle-class participants can be members of communitygroups, but should be in supportive rather than leading roles.

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Targeting the Very Poor and Vulnerable Groups

For the very poor, who may be less able or willing for social reasons to be fully active in all theinstitutional development activities, the program will target specific social assistance activities. Theguide to targeting social assistance program is the VI developed by SDF. People will be eligible forsocial assistance if they score a minimum of seven.

Table 2: Vulnerability Index - a Guide to Targeting

Indicators Score ScalePossession of asset No homestead/cultivable land=3; Only homestead=2; Cultivable land (less than

10 decimals=2; Cultivatable land less than .10+ cattle=l; Cultivable land>.10=0

Access to wage/self No wage employment for six months=3; unemployed for three months=2;employment employed for more than six months=0Monthly income Equal to or less than Tk. 600=3; more than Tk 600 but less than Tk. 1,500= 2;

more than Tk 1,500 but less than Tk. 3,000= 1; equal or more than Tk.3,000=0.Literacy level Cannot write or read =2; semi-literate=l; can read and write=0Social and/or institutional Not associated with any local organization; not related to any member of theassociation local government body or the village leader; not a member of any factional

group= 1; Close to local body or a factional leader=0Gender Women victims of gender violence = 2; Female headed households with no adult

ctive male member in the house and/or domestic help or some other lowroductive activity=3; Male adult but inactive and female household member

active low productivity job=2; Female better-off or inactive=0Demographic group Tribal=3, Scheduled caste=3; People with disability-3; Child labor=3; children

below five years not immunized=3; out of work garment industry worker=3; outof school children but not in regular employment=2; children in school=0

Indicative Phasing of the Activities in Project Districts:

Considering the preparatory work to be taken by a new SDF and the learning process, the activities in thevillages in the project districts have been phased in the following manner:

Table 3: Indicative Phasing of Villages

Districts Year 1 Year 2 Year 3 Year 4 TotalGaibandha 60 190 225 225 700Jamalpur 60 190 225 225 700Total 120 380 450 450 1400

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Annex 2: Attachment 2

Information and Communicationt Strategy and Implementation

Objectives

One of the first tasks of SDF will be to develop an effective IC strategy, as this will provide the basis forbuilding a common understanding of the principles and scope of the project. It will also identifymeasures at the local level to empower communities and at national level to create an on-goingdiscussion on progress and key determinants of success. The IC strategy will assist project stakeholdersto contribute to a behavior change from the role of passive beneficiary to active participant in sustainablesocial and economic development.

Implementation Mechanism

SDF will contract a media firm to develop the IC strategry and development of materials fordissemination. The IC strategy would be implemented at the national level by SDF and in the projectareas by CSOs. The strategy will ensure that accurate and relevant project information is disseminated toall the stakeholders (CG, VDC, line departments, local government, NGOs, private sector, etc.).Appropriate feedback mechanisms would be established to make improvements to the strategy to ensurethat the activities developed are strategically oriented and relevant to each target group. In particular, thecommunications strategy would include the following:

* disseminate information about SDF;* awareness raising activities on the roles and responsibilities of activities targeted at VDC,

CG, CSO, PAST, and SDF as behavior change agents and the use of communication as a toolfor this purpose;

* opinion research, audience segmentation, message, and channel development. These arecritical in establishing networks and developing targeted outreach, information and behaviorchange strategies to increase effective participation of the poor;

* team building, mediation, conflict management, and trouble shooting activities wouldfacilitate the formation of various groups and relationships and promote cooperative andresponsive behavior;

* material development and media program activities would reinforce participatory andbehavior change processes, inform and educate the stakeholders on SIPP and improve theimage of SDF and the project, as well as provide transparency and infornation sharing withother organizations working for poverty reduction;

* building of a dynamic knowledge base on the communities' development experiences.

The IC Manager at SDF will play a key role in coordinating the implementation of the IC strategy.Specifically, the IC Manager will be responsible for: (a) information dissemination across SDF and to allexternal stakeholders at the national level; (b) training CSO on the IC strategy and their responsibilities;(c) developing operational linkages with the MIS; (d) ensuring that knowledge sharing takes placebetween the CSOs and PAST working in the project to ensure quality standards in communications andoverseeing communications activities across the project area; and (e) supporting the CSO and other SDFstaff by ensuing that consistent, accurate and timely information is disseminated across SDF and theexternal teams working with SDF at the national and local-levels.

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Annex 2: Attachment 3

Monitoring and Learning

This Annex provides a framework for project monitoring, evaluation and learning. There will becontinuous assessment of project implementation, as well as periodic assessments of project performanceand impacts relating to the project development objectives. Predetermined targets of selectedperformance indicators will be reviewed one year after implementation, at mid-term, and prior toimplementation completion. Overall responsibility of project monitoring, evaluation and learning wouldrest with the M&L unit in SDF.

Monitoring of the project will be carried out through the conventional methods of monitoring physical,financial, and logistics aspects of the project. In order to capture the processes of communityparticipation, satisfaction with project services, and institutional dynamics, there would also be processmonitoring.

Management Information System (MIS)

The objective of the MIS would be to track the progress of the project in order to facilitate managementand supervision. The MIS would consist of a customized database application including principaldatabase, data input forms, and programmed macros and functions in order to generate the requiredoutputs. The database would be maintained at SDF. There will be two distinct modules, one to monitorthe progress of the participatory approach of the project and the other the implementation of the physicaland financial aspects of the project.

Implementation of the project at the field level would be carried out by the CSO, PAST, POs, and theprivate sector. Using a number of paper-based forms, these service providers would collect data to beentered into the system. SDF's computerized system would allow for tracking of project progress duringimplementation. Reporting forms have been developed to help capture data for input into the MIS. Theseforms would be modified, if necessary, based upon the first year's implementation experience. The formswould be simple and user friendly to ensure that data accuracy is not compromised. The data for othersub-systems, such as the Accounting and Financial Management, will be provided and entered by users,and may include bank transfers, bank statements, modes of payment, budgets, procurement, anddisbursement plans. The MIS would be functional by August 2003.

Process Monitoring

Process monitoring will be a fundamental part of the overall monitoring, evaluation, and learning systemof the project. While many of the project monitoring activities will be concerned about tracking eventsand numerical targets, they would also play an essential role in identifying changes and the need forpossible modifications. Process monitoring would provide SDF management a more direct and objectivecommunication of the qualitative changes and processes taking place throughout the project. It wouldalso be a valuable feedback mechanism from the communities on how to do things better, as well as toget a clear assessment of hard-to-measure shifts in community attitudes. SDP focus of processmonitoring would be in the areas of institutional development at the village level, client satisfaction withthe project services and mechanisms to ensure transparency, inclusiveness, equity and cost efficiency.This would SDP help to learn and provide a feedback to allow adaptation of the project design asnecessary.

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SIPP processes would be assessed through systematic qualitative analysis, for example, conducting focusgroup (FG) sessions on randomly selected community members. The FG discussion should ensure selfassessment by the community members, i.e., the identification of the SIPP processes that the communitymembers regard as important, their own analysis on the extent of which these processes are operatingaccording to plan and their suggestions on improvement. Furthermore, FG discussions would also beheld at the national and district levels with Government agencies, NGOs, the private sector, and otherstakeholders. Appropriate participatory appraisal techniques would be used to supplement the FGdiscussions.

SDF would appoint independent organizations to carry out process monitoring. This would be reputableorganization engaged in social science research and process monitoring. The contracted agencies wouldhave access, and contribute, to the project data gathered by the project's MIS. Several times a year theagency would verify the quality of project implementation. It would do so by analyzing the data gatheredby the MIS, in the light of direct information on client satisfaction obtained through the use ofparticipatory methods, including client assessment. A list of process and impact indicators are providedin the OM. The contracted agency would be expected to provide an assessment report to the project andexchange information with selected groups every six months. The process monitoring would beconducted continuously throughout the life of the project. A draft terms of reference (TOR) for theprocess monitoring is provided in the OM.

Impact Evaluation

The objective of the impact evaluation is to independently examine the achievements of the project'sdevelopment objectives, based on assessment of the pro ject's performance indicators. In addition, thestudy would also carry out beneficiary assessment on a sample basis. In view of the innovative featuresof the project, a baseline survey would be essential. Impact evaluation would be carried out in fourstages: a baseline survey; assessment after the first year of project implementation; a mid-term impactassessment; and final impact evaluation at the end-of-project cycle. The first year and mid-termassessments would precede the mid-term review of the project. At this time, it would be possible toevaluate the project's success with the community infrastructure works and also the institution buildingactivities. The third stage of impact assessment would focus on the project's development objectives andthe extent to which has been achieved. Moreover, it would also focus on sustainability indicators. Theevaluation would assess the sustainability of the institutions created by the project and sub-projectsfinanced with project funds. The data from the four-stage evaluation process will provide usefulinformation for future initiatives. SDF would appoint an independent organization to carry out impactevaluation studies, with the TOR acceptable to the IDA.

Action-learning system

Due to its pilot nature, the project and its stakeholders will be on a steep learning curve from thebeginning. A culture of respect of new ideas and experimentation, including those suggested by thecommunities, have to be instilled with the rigor of performance-based contracting. This implies that theproject focus has to, in broad terms:

* start with demonstrating effectiveness: this will test whether the ideas achieve the desiredchange, and will generate enthusiasm and a "demonstration" effect to other communities andagencies. This will be roughly equivalent to the first round of mobilization and communityproject implementation;

* identify ways to improve about efficiency: how to effectively achieve the key outputs atlower cost and/or with better use of resources;

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* consider scaling-uW, after having demonstrated cost-effective mechanisms of translating,standardizing, adopting, and replicating the project elsewhere while not losing its originalprinciples.

These objectives will require special management capabilities from project management and theparticipating organizations that are contracted. SDF will provide the appropriate support to this endthrough TA, training, and workshops.

Mid-term Reviews (MTRs)

There would be two MTRs of the project. One would be at the end of the first year of project activitiesand another at the end of the second year. These reviews would be based on the project's monitoringreports, as well as specific in-depth studies which would, include but not be limited to, the following: (a)effectiveness and efficiency of SDF and the institutional and implementation arrangements; (b)performance of the service providers; (c) performance of the pilot private financing component; and (d)assessment of the "before" and "after" situations in the project areas.

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Annex 2: Attachment 4

Institutional Development at the Community Level

Institutional development at the community level will include the following activities: (a) awarenessraising and information sharing; (b) formation of VDC; (c) preparing CAP; and (d) formation of CG andPMC.

Awareness-raising and information sharing at the local level

The project will support a process to actively involve poor and marginalized rural conmmunities throughan effective information and communication program. The outcomes of this component would beincreased access to information relevant to their development, increased competence to assess thecredibility of information sources, increased ability to use the opportunities opened through thisinformation, and the motivation to change and sustain new development-oriented behaviors.

Parallel to the national project level the IC strategy, through the CSO at the local level, will assist projectstakeholders to actively participate in social and economic development. The awareness-raising andinformation-sharing activities would focus on the following:

* raise awareness of the poor and marginalized people to challenge existing practices andconstraints and adopt participatory behaviors within the project frarnework; inform theresidents of the project area, stakeholders, and others about the project - its objectives,rationale, scope, and operating principles (e.g., eligibility criteria for accessing funds,contracting procedures etc.);

* provide timely and well targeted information about the project to the primary stakeholders,i.e, the communities and to other stakeholders, e.g., NGOs, the private sector, andgovernment bodies, its philosophy and mandate, and the services being offered;

* make special arrangements to motivate and engage the excluded poor, especially women, toparticipate in community-driven initiatives;

* facilitate leaming opportunities for the poor to reduce the cost of participation throughproviding information on when, where, how, and what specific steps to be taken to exerciserights under the project;

* promote a responsive and cooperative environment at the village/Union levels that wouldmotivate the poor and women to sustain new behavior.

Implementation Arrangements: The CSO will be mainly responsible for the implementation of thiscomponent, with appropriate support from the SDF. The CSO contracts will include the milestoneindicators, which would provide the basis for evaluating the performance of the CSO. A detailed TOR ofthe CSO is provided in the OM. The CSO will field appropriately-trained and supenrised communityfacilitators, who will be based in the villages. With matexials provided by SDF, the CSO will carry out anextensive information campaign in the project Districts, IJpazila, and Union and village levels. The teamwill explain the project, the operational modalities and rules, eligibility criteria, and communityparticipation at all stages of the cycle. The information dissemination will be done through localnewspapers, radio, posters, leaflets, meetings, and personal contacts with the community members,particularly the poor.

Meetings and different target audience responses will be noted and recorded, especially to noteenthusiasms and concerns regarding the nature of the SIPP. The feedback will also be essential,

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particularly, in the first round of mobilizing to assess material and messages used. The CSO wouldreceive feedback and work with the IC Manager in SDF to improve the strategy.

Selection of villages: The discussions and the feedback arising from the awareness-raising campaign willbe carefully assessed and will be used to provide an indication of the enthusiasm and generalcharacteristics of the area in response to new ideas. Within the overall number of unions where the ICcampaign would be carried out, the CSO would identify the villages based on the expression of interestand demand for project services. In the targeted villages, CSO will undertake intensive mobilization.Selection of villages will depend on demand being created. A key performance indicator in the CSOcontract would be selection of villages according to the criteria established under the project.

Formation and Strengthening of VDC: Situational Development and Planning

A participatory, demand-driven mechanism focusing on the poor population would involve ruralcommunities and their institutions at the village level and their linkage to other institutions. Building andstrengthening these institutions would be the comerstone of the institutional development component.Social mobilization and demand identification through a participatory planning process, local-levelinstitution building, and training would be key activities to be financed under the project.

The village has been identified as the unit for social mobilization and institutional development. Socialmobilization activities would include identification of poor and vulnerable people, inspiring to formsocial groups, explaining the need for social groups, setting up of an executive committee, groupleadership training, facilitating group meetings, discussion of problem and issues, and taking measures tosolve problems at individual and group-levels.

Through the CSO, the project would promote informal institutional structure at the village-level, theVDC. The VDC would have an overall coordination role in the social and economic development of thevillage. The CSO would ensure that the VDC represents the needs and priorities of the total villagepopulation, particularly the poor. The VDC would comprise not more than 11 directly elected persons,including a Convener. The committee would be inclusive and represent poor men and women (at least30 percent). The VDC would establish links with line departments, POs, and the private sector forcontinuous support in the implementation of the development plans.

Preparation of CAP

CSO, in parallel to formation of the VDC, would carry out a needs assessment of the villages in terns ofsmall-scale infrastructure and social assistance services. The assessment will be carried out throughparticipatory methods for resource and social mapping techniques, wealth ranking and institutional Venndiagrams. This exercise would result in simple village profiles, which would be validated throughdiscussion with the VDC. The village profiles would include:

* Identification of key community groups (by poverty status).* Identification of the needs and aspirations of different poverty groups.* Existing organizations and their functions.* Available infrastructure, social services, and their effectiveness.* Presence of support institutions and their functioning.* Main issues and opportunities.

Based on the village profiles, a CAP would be prepared by the CSO in close collaboration with the VDCand with the participation of the village population. The CAP would include the village profile, critical

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baseline socioeconomic data, and enumeration of social groups in need of social assistance support bytype. Project priorities would emanate from the CAP and be based on the knowledge that Tk 550,000would be provided for infrastructure sub-project purposes by the project per village. Discussion onproject ideas would include a description of the activity, justification, identification of poor beneficiaryhouseholds, implementation mechanisms and approximate estimates of project costs. Livelihood andeconomic activities are likely to be an important priority to the communities. While these would bedirectly financed by the proposed project, the CAP should reflect these needs and other sources offinancing should be explored by the CSO.

Support to CG and Project Management Committee (PMC)

The CG is a group of individuals living.in close proximity to each other and/or other social groups,grassroots entrepreneurs or associations able to identify a need and come together to access projectfunds. Each CG will comprise of individuals who are interested in sponsoring sub-projects. Based onthe CAP, the CSO would form CGs to carry out the prioritized projects. At least 30 percent of the CGmembers should be women and come from the poor and vulnerable groups. The CG will be responsiblefor the sponsored sub-projects, but the detailed tasks of preparation of proposals, and management of theimplementation of the sub-projects will be devolved to a nine-member PMC, which will be elected byCG through a transparent process. At least 25 percent of the members of the PMC should be women andrepresent the poor. The chairperson of the PMC would be a locally-respected person and elected by theCG. CSO will assist with the election of the PMC and provide training on overall project management toCSO and specialized training to PMC on sub-project preparation, implementation, hiring of expertise,and financial management.

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Annex 2: Attachment 5

Implementation of Community Infrastructure Sub-projects

Preparation of Sub-project Proposals

After the CAP is finalized for each batch of project villages, the following actions in the sub-projectcycle will be taken to implement the community infrastructure works prioritized in the plan:

* formation of CG, election of a PMC for the CG, and training to the CG and PMC providedby CSO;

* preparation of sub-project proposal by PMC, with the assistance from the CSO; the proposalwould include a description of the activity, justification, and identification of poorbeneficiary households, implementation mechanisms and estimated costs;

* review of the proposals would be carried out by the CG and VDC, with CSO facilitation; thereview should focus on the following: (i) location, size, and components of the project; (ii)community contribution; (iii) long-term commitment to maintenance; (iv) environmentalimpact; and (v) gender roles.

Appraisal and Approval Process

After community review, the CSO will help the PMC to submit the proposal to SDF for funding. Thenext stages in the project cycle are appraisal and approval of the sub-project.

Appraisal: SDF will appoint two consulting firms to form PAST to assist SDF conduct both desk andfield appraisals of the sub-projects. The desk appraisal checklist will include the following: (i)inclusiveness of the beneficiary community; (ii) type of works to be undertaken; (iii) technical simplicity;(iv) environmental impact; (v) financial viability assessment against benchmarks for investment costs perunit (e.g., cost per benefiting households); (vi) economic viability; (vii) evidence of the community'scommitment to the project; (viii) minutes of the meeting and the participant list; (ix) operation andmaintenance plan; (x) cost of the sub-project within the financial limit; (xi) cost of the sub-projectcompared to public agencies; and (xii) geographical distribution of projects in the project districts.

Field appraisal will be carried out to cross check the information contained in the application andconfirm the community's commitment to the activity. The CSO will facilitate the field appraisalmeetings, which would be attended by all stakeholders. The checklist for the field appraisal are asfollows: (a) level of community participation, including participation of the poor, and women; (b)governance of PMC; (c) banking arrangements; (d) understanding of the project's financing rules,implementation and operation, and maintenance arrangements; (e) technical feasibility; (f) costeffectiveness; and (g) operation and maintenance plan. The appraisal criteria is detailed in the OM, andSDF will review these annually, based on the feedback from the stakeholders.

Approval and Funding: Once project proposals are approved, SDF will inform the applicant CG toexecute a SFA. CSO will assist the CG to open a bank account and CG will deposit the communitycontribution in that account. Attachment 7 of this annex includes a sample SFA.

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Implementation and Supervision

Sub-project implementation would be carried out either directly by the members of the CG with hiredskilled labor or local contractors. The selection of local contractors will be done according to the WorldBank's Guidelines on Community contracting. Community groups will use proven standard communityprocurement and fund management procedures. Funds will be provided in the tranches, according topredetermined level of progress. SDF will be assisted by PAST to supervise the implementation of thesub-projects.

Figure 1: Implementation of Community Infrastructure Sub-projects

................

Information andConunnication

| Participatory \| Evaluation |\

Community Needs AssessmentBaseline Data Collection

4......' Problem identification and AnalysisPrioritization Develop CAP

.~ ~............,.,._.xBeneficiary Assessment

;. ".. ........... .....

Completion Hand Election of VDC, and formationof CG and PMC and

Endorsement of Local Priorities

Technical Audit andImpact Assessment

\ ~~~~~~~~~~~~~~~~~~~~~~Developing detailed sub- projectProcurement, Implementation proposal, environmental review,

Supervision Community Revjw

LaunchandDisbursement . . .Technical, Financial Rleview and

Sub Project Criteria *plying for SDF.......... ................... FundsandSuvoort

Signing of Agreemnent, Opening B A Tai Jof Bank Aorount Trafining . * E/

Approval

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Annex 2: Attachment 6

Community Infrastructure Works

Menu of Sub-project Options

The project will focus on selected transport and trade infrastructure, and water supply and sanitationfacilities for very poor groups. The menu of the different technological options will be disseminated tothe community through the information and communication campaign enabling them to choose the mostaffordable and technically efficient option. It is possible that during the needs assessments exercise,other investment options will be requested. Ifjustified, these would be considered by SDF for financingafter review of the various technological options.

In the transport and trade category of activities, the project will finance improvement of rural roads andculverts and primary markets based on technical, financial, and economic eligibility criteria which havebeen provided in the OM. A key criteria for financing will be connectivity. Project funds will be used tofinance development of a small section of rural roads which connect with markets, schools, healthclinics, or other key places of business. The project will also finance culverts needed to fill in the gaps inthe existing road infrastructure. The communities will be responsible for identification andimplementation of the sub-projects.

In order to raise the service level of the poor and vulnerable groups, the menu of sub-projects includewater and sanitation. Furthermore, the project will finance arsenic-free water supply facilities in areaswhere water is contaminated by arsenic. The technical options include community tubewells, dug-wells,rainwater harvesting technology, and small surface water filters.

Sub-project threshold and community contribution

To keep the sub-projects simple and within the manageable limit of the community, the maximum costper trade and transport sub-project will not exceed Tk 475,000 (US$8169 equivalent). To ensurecommunity ownership of the proposed sub-project, a minimum contribution of 15 percent of the projectcost will be required in a combination of cash and labor or services. The community will be responsiblefor operation and maintenance.

Sub-project Selection Criteria:

Selection will be based on the following criteria: (a) target beneficiaries; (b) community participation; (c)technical considerations; (d) cost effectiveness; (e) implementation arrangements; (f) environmentalimpact; and (h) sustainability. In order to qualify for funds, sub-projects would have to meet thefollowing criteria:

* be community based; i.e., sub-projects are identified, prepared, and managed by thecommunities; demonstrate community involvement, ensuring ownership, and maintenance bythe communities;

* should have an elected PMC;* involve simple and user friendly technology that is manageable by the communities;* serve poverty reduction objectives, be gender sensitive, and meet environmental impact

assessment criteria;

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* at least, 50 percent of the poor and vulnerable groups in the village should benefit eitherdirectly or indirectly from the project;

* cost of each sub-project should not exceed T k 475,000;* community contribution should not be less than 15 percent of the total sub-project cost;* labor cost should be at least 30 percent of the total community contribution;* water and sanitation sub-projects should directly benefit only the poor and vulnerable

groups;* only neighborhood latrines will be eligible for financing;* proposal should have an adequate provision for maintenance; at least 2 percent of the project

cost should be mobilized by the community as maintenance fund;* sub-project site should preferably be in public or communal land, or land belonging to local

authority; in the latter case, permission from local authorities would need to be obtained andevidence of the permission should be submitted with the proposal; in case of privately ownedland, it should be officially donated to the beneficiary CG, according to guidelines on LandDonation provided in the OM;

* sub-projects should be technically viable; sub-project should adequately conform to thetechnical norms and standards adopted by SDF;

* sub-projects should not require any involuntary resettlement or have adverse impacts oncultural property;

* sub-projects which are categorized as "A" in environmental screening will not be financed;* baseline survey should be conducted to compare before and after project situation;* communities should choose from the design options provided by SDF, unless a more

technically suitable or cost-effective option is suggested by the community.

Expected Outcomes of the Community Infrastructure Works sub-prolects

The qualitative and quantitative change expected should be discussed with communities beforehand. Thegeneral outcome indicators, irrespective of the type of infrastructure would include: (a) beneficiarysatisfaction with respect to technical quality, timeliness, and responsive to needs; (b) number of peoplewith increased access to the infrastructure provided; (c) improvement in the lives of the poor and women;and (d) percentage of women and poor among the total beneficiaries of the project. Specific indicatorsfor the trade and infrastructure sub-projects would include: (a) amount of time saved in travel; (b)increase in number of transport providers; (c) increase in attendance in schools/health centers; (d)increase in mobility of women and their activities in the markets; (e) increase in lease value of theimproved market and jetty infrastructure; and (f) increased business turn-over. Indicators for water andsanitation sub-projects would include: (a) improvement in health; and (b) reduced hours for fetchingwater.

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Annex 2: Attachment 7

Sample Sub-Project Financing Agreement (SFA)

Between

. .................. Name of the Community Group.................... Village; ... Union; ... Upazila; .... District

and

Social Development FoundationRoad 2/A, House 3, Banani 1213

Dhaka

Agreement Dated 200_ between the Community Group {Name of the CommunityGroup, name of the village, union, upazila, district) (herein after represented by its Project ManagementCommittee (PMC) President/Secretary {Name --------; Resident of Village---; P.0.------ Union----;Upazila-----; District------}) as the First Party andSocial Development Foundation (herein after represented by Mr./Ms. ; DesignationAddress ; as the Second Party.

Preamble

The two parties to this Sub-project Financing Agreement (SFA) being interested in efficientfinancing and institutional arrangement for improving access to basic infrastructure through theimplementation of community-driven small scale infrastructure sub-projects in the village {Name of thevillage)-

The First Party to this SFA being a Community Group (CG) consisting of . membersfrom [name the village] is interested in the implementation of [type of infrastructure to be specified].For the purpose of implementation of the referenced sub-project, the CG (name of the CG} has formed aProject Management Committee (PMC) comprising President (name), Treasurer (name) and Secretary(name) and members (names).

The Second Party, being an autonomous organization interested in the reduction of poverty atthe grassroots level and registered under the 1994 Companies Act, is interested in contributing toimproved access of basic infrastructure, thereby improving the well-being of the First Party. TheSecond Party will use the services of Community Support Organizations (CSO) to assist the CG and thePMC with the preparation of the sub-project proposal and training in accounting and book keeping. TheSecond Party will also use the services of Project Appraisal and Supervision Team (PAST) to appraisethe sub-projects and certify the implementation progress.

This SFA is, therefore, entered into between the representatives of the parties specified above.

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Object of the Agreement

The total cost of the sub-project (Tk.---) will be financed by First Party (15 percent of the cost)in cash and labor and the Second Party (85 percent of the sub-project cost in grant).

The object of the present agreement consist of paying the matching grant by the Second Party tothe First Party. The grant amount is Tk..

The said grant amount provided by the Second Party shall be used by the First Party under theterms established under the present agreement.

The grant shall be administered by the PMC and the grant account will be jointly operated by theTreasurer and President or Secretary of the PMC.

The First Party is exercising through the PMC all its rights and fulfilling all its duties, resultingfrom this agreement.

The approved sub-project proposal is attached in Annex 2. Some details of the sub-project areprovided below:

1. Name and type of the sub-project: -2. Location of the sub-project: mouza [name] in the village [name] in [name of union],name of upazila], [name of district],:3. Details of the number of beneficiaries and their economic status (Section I to this SFA)4. Activities to be carried out: As per the sub-project proposal in Section 2.5. Anticipated results of the sub-project:

i...........ii . ..........111. ..........

iv. ..........

6. Detailed cost of the sub-project

Si. Activity Unit No. of Unit Cost Total CostNo. Description Unit (in Taka)

2. _ _ _3. _ - ___

6.To _____ _ =

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7. Financing Plan

Community Contribution by the First Party (in Taka) Grant byName of CG members who contributed Cash In kind* Total CG Second

Party (in_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ______T ak a)

I 2 3 (1+2) 4

Total

* The contribution in labor should not exceed 30 percent of the total community contribution

8. Fund Release by Second Party: The Second Party will release the approved grantamount in three installments against certification by PAST on the completion of the activitieslisted in the table below.

Installment number and Activities to be completed by the First Party and certified by PASTpercent of the approved before release of installment amount

grant amount1' installment: 40 percent a) Signing of the SFA,

b) Opening of sub-project Bank Account by the First Party;c) Providing evidence (such as, deposit slip) of cash contribution of First

Party deposited into the sub-project Bank Account,d) Availability of a trained village book keeper for recording sub-project

fund and expenditures,2 installment: 35 percent a) Submission of financial statement of first installment;

b) Submission of a report on implementation progress on the activities asper the approved sub-project proposal (activities would include, e.g., in thecase of culvert, completion of layout and trench cutting)

3'd installment: 10 percent a) Submission of financial statement of first and second installments andwork completion reports

Obligations

The First Party agrees with the following:

i. execute all works, according to the approved sub-project proposal; any change willrequire prior concurrence of the Second Party;

ii. facilitate training of its members, organized by the CSO for effective implementationof the sub-project;

iii. complete the sub-project through a participatory process with due diligence andefficiency, as per specifications within the time agreed;

iv. follow satisfactory financial management arrangements, as indicated in Section 2 to theSFA.

v. ensure timely contribution of the CG members;vi. ensure that the goods and services to be financed under the sub-project are procured in

a transparent and efficient manner, according to the community contracting procedures(Section 3);

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vii. monitor the work and report to the Second Party in the agreed formats and time frame;viii. carry out proper maintenance of the facility constructed;ix. ensure equitable use of the asset by all the prospective beneficiaries;x. display all information (including financial) about the sub-project and its progress in at

least three public places;xi. provide any member of the CG information about the progress and disclose all

financial statements; andxii. permit at all times, the Second Party or its representatives to inspect the accounts,

records, and physical works under the project and comply with therecommendations/observations as a result of such inspection.

The Second Party agreed to the following:

i. release the agreed installments within seven working day of the receipt of completedocuments;

ii. ensure that the CSO and its staff provide all necessary assistance and training requiredby the First Party for the effective management of assets; and

iii. ensure timely availability of the services of PAST

Remedies

The Second Party may resort to the following remedies:

i. In case of default or noncompliance with this SFA, the Second Party may suspenddisbursement of any undisbursed funds for subsequent installments until satisfactoryexplanation/clarification is provided as to the noncompliance;

ii. In case of willful negligence, the Second Party will have the authority to freeze theBank Account of the First Party and take any other legal actions under the law of thecountry; and

iii. If in the judgment of the Second Party, the First Party has engaged in corrupt orfraudulent practices in the implementation of the sub-project, the Second Party maysuspend disbursement and take any legal action under the law of the country.

Signature of the Representative of the Signature of the Representative of theFirst Party I Second Party

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Section 1

List of persons (with socioeconomic status) benefiting from the sub-project agreed upon inthis SFA

Section 2Approved sub-project proposal

Section 3

Satisfactory financial management arrangements comprise the following:

(a) The First Party shall open a separate Sub-project Bank Account for sub-project funds.The First Party's cash contributions for project activities and the contributions received from theSecond Party shall be deposited into the sub-project Bank Account. The sub-project Bank accountwould be used for sub-project-related receipts and payments only. No other resources should bedeposited to this sub-project bank account. Operation and Maintenance contributions, any savingscontributions, and related payments shall not be made into and from this sub-project BankAccount.

(b) The First Party shall have a trained simple accounts book keeper (who is trained duringsocial mobilization).

(c) The First Party shall maintain the folloWing accounts registers/records, as per thesimple formnats provided by the Second Party: (i) simple Cash/Bank book providing details ofamounts received and details of payments along with classification of major heads; (ii) register ofcontributions received from members in cash, labor, and materials; and (iii) register of materialspurchased using project funds and materials utilized. These book/registers shall be completed, atleast on a monthly basis, and signed by authorized CG members.

(d) The First Party shall maintain vouchers/bills/supporting documents for the variousreceipts and payments (systematically numbered), and copies of the sub-project Bank accountstatement, including the pass book issued by the commercial bank.

(e) The First Party shall prepare a simple report each month as per the format provided bythe Second Party. This summary report would indicate: (i) amount received from First Party andSecond Party cash contributions, amount spent on the various items, and balance in the Bankaccount or cash; (ii) the details of the work being carried out (activity to be completed, cost, thework already completed, and the work to be done in the next month); and (iii) amounts of the FirstParty's contribution in labor and materials (the formats of the accounts registers/records wouldfacilitate easy preparation of this report).

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(f) The First Party shall regularly (at least once in a month) present this report to itsmembers and to the CSO. The First Party shall also display this report in the notice board in apublic place or at the sub-project site. In addition, the books/registers, vouchers and bankstatements shall be brought to the meetings of the First Party and CSO and PAST and be open forscrutiny by CG members.

(g) The First Party shall provide a copy of the report to the Second Party whenever anyinstallment payment is requested.

(h) The First Party shall provide the accounts registers/records, supporting documents, andall other information to the Project Auditor appointed by the Second Party.

(i) The First Party shall maintain similar accounts for its Operation & Maintenancesub-project Bank Account; and present a summary statement for this account to its PAST andcsO.

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Annex 2: Attachment 8

Social Assistance Program

The project will support social assistance services aimed at filling the existing gap in the ongoingprograms. To provide services efficiently and effectively and maintain continuity, the social assistancepriorities will be identified on a wider scale from a consolidation of CAPs (see above). The objectives ofthe social assistance program are to increase the capacity of the poor and socially excluded groups toparticipate in mainstream development activities through:

(a) increased access to information and knowledge about health and nutrition, includingwomen's health, immunization services, personal hygiene, water and sanitation issues;literacy and leadership program; and human and legal rights, including child rights;

(b) motivation towards increased participation, 'voice' and empowerment in working withlocal government bodies for local-level planning, decision-making, and monitoring,thereby decreasing social exclusion and improving local govemance;

(c) increased economic opportunities for skill development and access to income-creatingassets.

The social groups eligible for assistance under the component would include the hard core poor, femaleheaded poor households, youths-at-risk, out-of-school children, ethnic communities and those affected bynatural calamities (river erosion, floods, etc.) affected persons. Among these, priority will be given tothose who are ranked 7 and above in the VI (Table 2, Attachment 1). The indices include indicators,such as (a) possession of productive assets; (b) access to employment; (c) level of literacy; (d) socialinclusion; (e) social and/or institutional association; (f) gender; and (g) specific demographic grouprepresenting children. It is expected that approximately 300,000 poor and vulnerable people will benefitfrom sub-projects financed under this component.

Description of Social Assistance Program Packages

Social exclusion and vulnerability issues will be part of the IC campaign and one of the key areas ofcommunity plans. CAP will identify and enumerate the number of vulnerable people who are notcovered under any social assistance program. SAP will be provided for these excluded groups by fourPOs selected by SDF through a competitive process. Each PO will operate in a designated number ofvillages in the project districts. The VDC will assist the POs to provide need-based services and monitorthe progress of SAP. An integral part of the SAP program would be social mobilization of the poor andvulnerable members of the community to enhance their ability for group social action. Socialmobilization activities would include awareness building and social cohesion through public villagemeetings, sensitization about rights, and focused group discussions on various socioeconomic issuesaffecting the livelihood of these groups.

Advocacy Programs

Extensive advocacy programs will be carried out in the villages. The advocacy programs on health andnutrition, and water and sanitation aspects, will raise general awareness but special attention will begiven to highlight the need for child immunization, pregnancy-related risks, and the importance of healthinsurance. The advocacy programs will also focus on gender equality, women's and children's rightsissues, such as violence against women, dowry, child marriage, trafficking, building awareness of legal

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entitlements, personal and family laws, employment and core labor standards, property and financialsystems, environmental issues, and rights.

Creating Awareness in Health and Nutrition Issues. Messages targeted especially for the very poor andvulnerable groups will be disseminated using inter personal techniques related to the project villages.The PO will discuss several health and nutrition-related issues, such as natural sources of vitamins andminerals in locally available food, appropriate nutrition during pregnancy and lactation, delayed marriageand pregnancy, child spacing, and contraception. This campaign will include hygiene, water andsanitation, arsenic contamination of ground water, easily available safe water sources, and other healthissues.

Awareness about immunization will be a critical activity. Communities will be sensitized to ensure thatat any one point of time, all children under one year of age in the catchment area, are covered fully by theroutine immunization against the six diseases. The specific task of the PO service provider would be toensure that all households with children under one year of age are aware of the need to immunize theirchildren with the six vaccines; are aware where and when the outreach immunization sessions are held;and they access these sessions for services. The responsibility of the PO would be to follow-up thosewho failed to attend the immunization sessions and ensure that they are immunized with the requiredvaccine. The PO would also be responsible for identifying the bottlenecks in the systems which may bepreventing accessibility and availability of the immunization services; bringing these to the notice of theUpazilla health authorities at the sub-district level, and working with them for a solution.

Advocacy for Increased Enrollment, Out-of-School Reduction, and Quality Education: The mainobjective of this program will be to involve the community people actively in campaign and advocacyactivities in their own constituencies for increasing enrollment, reducing out-of-school children, andimproving the quality of primary education, particularly in the areas of improving school environment,planning and management, and classroom culture. The issues of campaign and advocacy will vary indifferent constituencies according to specific needs and concerns. The advocacy process will also lead toprovide a conceptual framework of what the community expects from the schools, quality of theeducation expected from the schools, accountability of the school management to the community,particularly to the parents of the poor students, and enhance the awareness of the people's representativesabout their responsibilities with regard to ensuring quality of education.

Program for people with disabilities: The major aim of this program will be to: (a) advocate the needs ofpeople with disabilities and their inclusion in the development process. Such advocacy will be carried outin two ways: (a) one part will be done through the IC carmpaign by CSO; and (b) more detailed awarenesson'disability at the village level will be done by the PO for creating a supportive environment so thatpeople with disabilities are able to participate in mainstream development activities. POs will undertakesocial leadership training, skill development for building people's capacity to access social and economicopportunities.

Social Advocacy, Monitoring and improving accountability mechanisms. This program will provideknowledge and awareness on how to access public resources, on pooling local community initiatives forlocal development; participation in local development groups, and committees; understanding the rolesand responsibilities of the local government; understanding who is accountable to whom; and formationof citizens' groups for civic action. It will also carry out a campaign on violence against women andchildren, based on, such as dowry, early marriage, trafficking of women and children. Communities willbe trained on how to monitor public services using the report card methodology. Finally, the programwill help form citizen's watch groups to access common property and public resources, to carry outparticipatory monitoring of public services and local government activities.

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Legal and human rights program. The program will include development of an understanding of (a) thefamily laws of all the religions practiced in the country; women's rights, laws regarding violence againstwomen; children's rights, child abuse, child labor laws; rights of agricultural wage laborers andsharecroppers; and (b) local mediation (or shalish) and how to make the shalish more inclusive, pro-poorand pro-women; (c) conflict resolution in natural and common property resources; and (d) disseminationof Patients Charter of Rights and Information on rights to quality education and creating demand toachieve those rights.

Occupational Skills Program

Development of Livelihood Skills. Adults and adolescents (including out-of-school children, retrenchedgarment workers, disabled people) aged 11-35 should be provided with such literacy education thatwould help them to attain the following competencies/skills:

* communication skills such as reading, writing, arithmetic, accounting listening, speaking andunderstanding;

* empowering skills such as decision-making in the family, group and community levels; insocial and development issues, such as, negotiating in village councils, resolving feuds andconflicts, control over family income, expenditure, savings and investments, increasingmobility and having greater "voice";

* livelihood skills, such as skills training based on market demand for displaced artisans andpeople with disabilities, poor people, for gainful employment/self employment and increasedproductivity.

An estimated total of about 35,000 persons will be provided occupational skills training.

Seed Capitalfor Graduated Trainees. The project will provide one-time seed capital of Tk. 4,000 foreach graduate of the occupational skills porgram to acquire some productive assets. It is expected thatthis support will enable the recipient to undertake some income generating activities, make some savingsand over time become eligible for micro-credit. It is estimated that about 80 percent of the total traineeswill successfully graduate from the skill program.

Support for pregnant women and community-based, health-risk pooling initiatives

Support to Pregnant Women: The community will be sensitized to seek trained attendants for childdelivery; facilitate development of linkages with facilities for referral care and EOC; increase awarenessabout the need for spacing, especially to those who have not yet completed their family size; buildawareness of the need for accepting contraceptives; and arrange for transportation of poor womenrequiring emergency care.

POs would franchise safe-delivery services to existing private providers in the community by payingthem to provide an agreed package of services, including a minimum number of ante-natal care, deliveryservices, including medicines and drugs, and subsequent handling of any emergency either at their ownfacility or through referral to a higher-level facility. The payment would also include funds fortransporting the women to other facilities. This would also ensure that the service providers would beable to ensure the provision of quality care by the providers. The service provider would be responsiblefor providing the trained attendants support to set up their practice within the community and formreferral linkages with the public or private facilities, as well as facilitate development of linkages withfacilities for referral care and EOC. These providers will liaise with the existing network of TBAs to

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ensure that they refer patients to them and also do not consider them as a potential sources of competitionwithin the community.

Risk pooling: Two pilots on risk-pooling or community-based health financing initiatives will beundertaken, which would be targeted at the vulnerable amd disabled populations to improve the accessand equity of the disadvantaged groups. The PO will be expected to include in his proposal a detailedplan of implementation, strategies, activities, and indicators for monitoring, as well as the developmentof the capacity to implement and monitor this component.

Legal Aid

The program will include provision of legal aid to poor men and women, and other vulnerable groups.The project will provide financial support for legal assistance to about 140 persons to improve theiraccess to justice, especially in areas of dowry-related violence, prevention of early/child marriage,polygamy, marital dispute, physical abuse, rape, violence against women and children, child abuse, andworst forms of labor.

Financial Support For Emergency Relief

This support will include provision of emergency relief to the victims of natural disasters. Tk 4,000 willbe provided to 10 families 10 worst affected villages per year, according to agreed criteria descibed in theOM.

Performance Based Contracts for PO

To provide results-oriented incentives for service providers, SDF would pioneer the use ofperformance-based contracts for the delivery of social assistance services to its target groups. Under thisapproach, payments under the contract will be linked explicitly to the achievement of results specified inthe contract. Implementing performance-based contracts will require the following: (a) specification ofthe performance indicators, and the relative weights for each indicator; (b) setting of targets forperformance indicators; (c) amount of total paymnent to be linked to performance; and (d)measurement/audit of the performance measures. The following table provides exarnples of the types ofresults against which performance will be measured for the different interventions to be funded under theproject. The performance standards specified are indicative, and the exact levels specified in contractswill be set, depending on individual circumstances. The monitoring of performance against these resultstargets will form an important part of the overall monitoring and evaluation undertaken by SDFmanagement. This monitoring will also help to evaluate the development of measures of performanceand standards set in contracts over time and adjust these for new contracts.

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Program Performance Indicators Expected OutputsAdvocacy Programs * At least 80% of the children wash hands.

* Creating awareness on * Immunization: * At least 80% of the children immunized.immunization, health, Number of Children * Identified children have taken all the shots within the immunization period of 12environment and under seven months.nutrition issues. immunized.

* Support to pregnant * At least 50% of the identified women have received ANC.women: number of * At least 50% of the identified women have received PNCpregnant womenreceived essential anteand post-natal care(*ANC and PNC**).

Advocacy on increased * No. of school-going 0 At least 70% identified going to school.enrolment. children * Out-of-school children reduced to 40%.

* No. of out-of-schoolchildren

* Access of tribalchildren to pre-primar)school

Advocacy on accountability * VDC formed with the * At least 20% of school and health management committee include membersin public service. target population. from VDC.

* VDC demanding * At least 50% of VDC have taken social action programs.accountability of * At least 30% of VDC have taken past in Local Government and govemmentpublic services. planning exercise.

* VDC participating in * Improvements in public services observed in 25% of implementation areas.planning andmonitoring exercisesof Local Govemmentand Public Service.

* Improvement of publicservices in projectareas.

Advocacy on legal, human, * No. of cases of rights * Poor and women comprise at least 50% of shalish committees.women's and children rights. violation. * At least 50% of target groups are able to recall 50% of key messages/content of

* No. of cases of the training.violence against * No. of rights violation cases reduced by 25%.women and children. * No. of cases of violence against women reduced by 25%.

* No. of shalishfacilitated by VDC.

* No. of successfulmediation and conflictresolutions.

Support to high risk * Referral system * At least 80% of identified women used referral system.pregnant mother. established. * At least 50% of identified women went to EOC.

* No. of women taken toEOC.

Livelihood skill. * No. of people trained. * At least 80% of successfully completed training.* No. of trained people * At least 50% of trained people able to get employment or credit.

able to eam a livingthrough employmentor access to credit.

*ANC requires two dosage tetanus immunization, iron foliate tablets and other ante natal care package**PNC requires examination by health technician at least once during the 42 days after delivery to observe the healthof the child and mother.

Implementation Arrangement

SDF will select four POs through a transparent process to ensure that competent organizations canparticipate. The draft TOR of the PO is provided in the OM. The selection will be based on well-definedcriteria to ensure program quality and fairness. Since each of the packages will require services inseveral functional areas, it is very likely that one PO will be a partner of other specialized organizations

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and compete for the package. Implementation of the SAP will be in villages which are covered in theCAP. The OM provides detailed implementation modalities of SAP.

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Annex 2: Attachment 9

Pilot Private Financing of Community Utilities

Scope of the Pilot

The SDF is considering the use of matching grants to leverage private/PO/community participation inbasic utilities. This pilot component will attempt to test and develop alternative financing andimplementation modalities for delivery of basic utilities through the private sector/PO and communitypartnership. The sectors to be covered would be those which have good potential for generatingsubstantial user revenues, i.e. rural piped water supply and off-grid electricity. Different approacheswould be developed and tested in different localities in Bangladesh. After two years of implementation,these approaches would be the subject of independent evaluations to determine if and how each modelshould be expanded on a larger scale.

Background

The component will initially start with arsenic-free water supply. Bangladesh has had one of the largestprograms in small-scale private provision for household water in the world. Almost 75 percent of the 10million handpumps were privately financed. This thriving private sector participation is, however, limitedto individual household systems, and recent experience has shown many of them to be drawingarsenic-contaminated water. The need for communities to access arsenic-free water may also necessitatethe use of higher capital cost solutions than handpumps, and require the development of integratedsystems rather than the self-supply system in use at present. There are several small scale, i.e., coveringaround 100-300 households private and quasi-private water-supply systems already operating in ruralareas, with investment costs of around US$40,000 each. These community-based, piped water-supplysystems reflect different institutional arrangements for development, financing, implementation andmanagement. These programs have demonstrated initial successes, but key issues related to theirsustainability, and the ability to scale up these approaches, such as institutional arrangements includinggroup management, access to financing, cost sharing, and accountability need to be better understood.There is some interest among private entrepreneurs in forming partnerships with communities in the saleand distribution of water, but there is a lack of knowledge of the market and technology appropriate forrural areas and small towns. For other sectors, there are as yet no known initiatives to provide off-gridelectricity supply in the country. However, the Government has recently selected four areas(Lalmonirhat, Kutubdia, Sandwip, and Debhata) for the promotion of private investments in renewableenergy and off-grid electricity. Globally, there are successful programs for private sector-communitypartnerships in water supply and off-grid electricity.

Examples of several options are provided below to consider their applicability and pros and cons forsmall-scale water projects in Bangladesh.

One-time up-front contributions: An example of this type of scheme is the funding mechanism used forthe Chilean rural electrification program. The scheme sees competitively awarded subsidies given toprivate companies bidding to provide services for both on-grid and off-grid subsidies. The subsidies areprovided before construction of the scheme starts.

Payments against construction milestones: This approach has been proposed for the piloting ofsmall-scale water systems in some towns in Paraguay, where the operator will be reimbursed with public

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funding a rate per connection achieved. It is also used in some rural electrification projects (e.g., inGuatemala). Some part of the funding may be provided upfront.

Payments against the achievement of operating and performance targets: IDA funds were used toreimburse operating costs for the Guinea water lease, assuming that performance standards were met.Similar approaches have been seen in other infrastructure sectors. In the case of Peru, the Governmentfunded the rollout of public telephones in rural areas, bidding them to the operator asking for the leastsubsidy. Of this subsidy, 60 percent was paid by installation, with the remainder paid in monthlyinstallments over the next five years. assuming that the operating targets were met.

Subsidiesfor consumption to existing consumers: In Chile, the central government runs a subsidyscheme, which covers part of the water bill for households identified as being poor. TIhis hasperformance-based elements in that it pays for part of the cost of water actually delivered.

The type of scheme to be adopted depends upon a number of factors including:

* The nature of the scheme being financed.* The policy objectives, e.g., are they aimed at connecting people to a system, or provide

support to those presently connected.* Ease of monitoring the performance of the facilities.* The extent to which the private service provider can obtain financing for construction of the

facility. If local capital markets cannot support this, then it will be more difficult tostructure a scheme where payments are made after the facility has been completed.

Likely structure of schemes in Bangladesh

The SDF is considering supporting relatively small schemes in villages in Bangladesh that would seepiped supply from surface or ground water sources to household connections and/or stand-posts andsome off-grid electricity supply. Mode of financing the different types of sub-projects would differ. It isexpected that some projects would be developed by community groups, in particular the provision ofwater uncontaminated by arsenic. Electricity provision, however, might be more commercially viableand hence more likely to attract private entrepreneurs. SDF would use the following funding modalitieswhen dealing with community groups and private entrepreneurs:

* Use a matching grant to mobilize community financing - SDF would provide a matchinggrant for not more than 70 percent of the capital cost to a consortium of a community entityand a credible PO to construct and operate the pilot project. These projects would have userfees paid for by members of the community and others using the facility.

* Use a grant to mobilize privatefinancing - SDF would provide a grant to either thecommunity or the participating organization, which would disburse this on aperformance-related basis to the private entrepreneur constructing and operating the project.These projects would have user fees paid by the members of the community and others usingthe facility. The grant would be no more than a fixed percentage of the total project cost.The remainder of the project cost would be funded by the private entrepreneur, who wouldrecover this through the user fees.

The contractual arrangements governing these projects would have to be worked out initially on acase-by-case basis, but some the key considerations would be:

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* The need to encourage expansion of the networks through incentives for connections.* To what extent the service providers can obtain financing from commercial banks to bridge

the gap between investments and payment.* The need to encourage efficient operation of the system, including ensuring it is providing

sufficient quantities of water and also that water is being treated as necessary.* Providing a higher fraction of subsidies to facilities aimed at poorer users in the communities

(e.g., stand posts).

The activities to be funded under the proposed credit would be:

Sub-component 1 -Technical Advisory Services

The Technical Advisory agency would undertake the following tasks: (a) assistance to interestedcommunities, POs, and the private sector in the broad design of possible small piped-water supply andoff-grid electricity, including technical design, assessment of commercial feasibility and requirements forsubsidies and/or financing and hence possible role for SDF, options for structuring SDF support, and theproposed arrangements for the oversight and monitoring of service provision; (b) preparation of requestsfor proposals (RFPs) for small-scale private projects, including expected project scope, relevant technicaldetails, form of assistance to be provided by SDF, e.g., structuring of any grant component, draftcontracts between SDF and the service provider, and criteria for selection of service provider; (c)evaluation and appraisal of proposals from POs and the private sector, including assisting SDF in theawarding of projects on a competitive bid basis; (d) supervision of project implementation, includingretaining auditors to evaluate progress and monitor achievement of performance targets by the serviceprovider, which would relate to the support to be provided by SDF; and (e) recommending to SDF therelease of payments to the service provider, based upon the results of this monitoring. Detailed draft TORhas been provided in the OM of the project.

Sub-component 2 - Pilot Projects in Community Utilities

The project will help pilot ten sub-projects in rural water supply in arsenic-affected areas and off-gridelectricity anywhere in Bangladesh where potential for charging user fees exists. Support to theseprojects would follow the approaches outlined above, but the details will be decided on the basis of thefeasibility work to be undertaken in sub-component 1. Eligibility criteria, financing mechanism,contracting procedures, and the Tripartite Financing Agreement will be acceptable to IDA.

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Annex 2: Attachment 10

Environmental Supervision

All sub-projects proposed for financing under the project would be subjected to an EA, with thefollowing objectives:

* prevent execution of projects with significant negative environmental impacts* decrease potential negative impacts through adaptations in sub-project design or execution* enhance the positive impacts of sub-projects* prevent environmentally sensitive areas from additional stress caused by humans.

SDF has designated two of its staff - Community Development and Technical Managers - forenvironmental supervision. These staff members will require a certain level of environmental assessmentcapacity in order to insure that EA for the sub-projects are carried out in accordance with the EA manual,as well as to ensure that mitigation measures are adequately implemented by the proponents. Similarly,the PAST team members and CSOs will also need some environmental awareness and environmentalassessment skills. SDF will arrange for environmental training for the Managers CornmunityDevelopment and Technical by February 28, 2003. SDF will contract an environmental agency withproven experience in these areas. The environmental agency will be responsible for holding a trainingworkshop based on the project's OM requirements for environmental management of sub-projects. Thetraining should focus on the enviromnental roles and responsibilities of the designated SDF Managers, aswell as those of the PASTs and CSOs. The training should also highlight the environmental profile ofthe project areas, and any Environmentally Sensitive Areas, cumulative impacts, and the mitigationmeasures of negative impacts. After this training activity the Technical Officer should be able to train theCSOs and PAST members.

After this training activity the PAST members should be able to monitor and evaluate the environmentalactivities of the CSOs and Community Groups. The CSOs should be able to advise the PMC on how tofill out the Environmental Routing Slip using Form I of this manual. Most importantly, the CSOs shouldbe able to undertake Environmental Screening and Environmental Review and be adept at using Forms II,mI and IV of this Manual.

The environmental assessment procedure consists of a number of steps, specified in this manual:

Step one: Filling out the Routing Slip (Form I) by PMCStep two: Filling out the Environmental Sensitivity (ES) Form (Form II) by CSOStep three: Filling out the Environmental Screening Form (Form IH) by CSOStep four: Filling out the Environmental Review (ER) Form by CSO, orStep five: Filling out the Limited Enviromnental Assessment (LEA) Form byenvironmental specialistStep six: Clearance of environmental screening, and review or assessment by SDF.

Step 1: Filling out the Routing Slip (Form I) by PMC

Each and every sub-project requires its own Routing Slip, as shown in Form I. All sub-project proposalsrequire a Routing Slip, i.e., one is not valid without the other. The intention of the Routing Slip is tovisualize the environmental history of a sub-project for purposes of Monitoring & Learning, or forEnvironmental Auditing. The Routing Slip has to be filled out as follows:

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* the first two components by the sub-project proponent during sub-project preparation;* the third, fourth and fifth component by the proponent (or a facilitating institution) during

sub-project preparation.

In most cases this will be all that is required for the Routing Slip. Only for projects where moderate orserious environmental impacts are possible, the second page (sixth component) will have to be filled outby a responsible Environmental Officer appointed by the SDF. This Officer will also be responsible forthe decision to implement or to stop the sub-project concerned. In case of a full Environmental hnpactAssessment (ELA) the Officer will also be responsible for provisions of the TOR.

Step 2: Filling out the Environmental Sensitivity Form (Form II) by CSO

In order to determine the sensitivity of the area concerned, Form II is prepared. This Form. isself-explanatory. For various types of landscapes or resources it indicates the whereabouts and limits ofthe highly- and moderately-sensitive areas through the use of figures with the following meaning:

* 0 - low environmental sensitivity.* I - moderate environmental sensitivity.* 2 - high environmental sensitivity (areas with high biodiversity or important natural

resources).* 3 - high population sensitivity (areas with high population pressure).

In the more sensitive areas some of the categories of sub-projects will not qualify for financial assistance,or only after submitting a full-fledged EIA.

No sub-project will be financed if it is found that the location of the said sub-project is rated 1, 2 or 3.

Step 3: Filling out the Environmental Screening Form (Form III) by CSO

The purpose of environmental screening of sub-project proposals is to determine at an early stage:

* whether the sub-project is environmentally qualified for financing;* whether the sub-project is only qualified for financing if relocated in an environmentally less

sensitive area;* whether the sub-project is only qualified for financing if some expected negative impacts are

excluded or minimized through "mitigating measures", identified through a ER;* whether qualification for financing requires further environmental guidance through a LEA.

The environmental screening is carried out with the help of Form Im. This table requires the followingsub-steps:

Sub-step 3a: Determination of the type of Sub-project

The first column of Form Ell shows a list of sub-project categories, expected to be proposed under theSIPP. The proponent should check in which category the sub-project concerned belongs. If a sub-projectcannot be classified at all, the CSO should ask assistance from the SDF.

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Sub-step 3b: Determination of the Environmental Screening Level

The remaining columns of Form mI serve to determine what level of environmental screening is required.The significance of the columns is as follows:

* C - relatively little impact is expected; an ER will suffice.* C+ - only an ER; the difference between C and C+ sub-projects is that the latter will be

favored bySLPP because of their expected positive enviromnental eflects.

* B - some moderate impacts might evolve; an LEA needs to be carried out;* A - severe negative environmental impacts might evolve; and this project will not be

funded.

In these columns, figures are indicated that correspond with the figures in Form II. By looking at thesefigures, the CSOs can see immediately whether the proposed sub-project will qualify for financing, andwhich environmental follow-up has to be given. The CSO simply note in which column the sensitivitylevel of the sub-project is indicated, and whether this sub-project requires an ER or an LEA.

When a figure is not available in any of the columns, the sub-project- will not qualify at all. When onlythe figure "0" is shown for a sub-project, it will only qualify for financing under SIPP if it is located in anarea with relatively low environmental sensitivity. Most of Bangladesh, in fact, is r ated as alow-sensitive area for these small-scale projects. When the figure "0" is shown, but the proposed projectis located in an area qualified as "1" (moderate sensitivity), the project will have to be relocated in orderto qualify.

Step 4: Filling out the Environmental Review Form (Form 11) by CSO

For sub-projects with minor negative or only-positive environmental impacts, the simplest level ofenvironmental assessment would be sufficient to prepare an ER.

For the ER the checklist in Form IV is prepared. The checklist again shows the categories of sub-projectsexpected to be relevant for the project. The first section lists potential negative environmental impacts,whereas the second section lists the major mitigating measures to minimize or eliminate these negativeeffects. In both sections the relevant impacts and measures are to be checked.

All checked items are included in the Routing Slip (Form I); which is handed over or sent to thesub-project approving authority. All identified mitigating measures should be included in or added to thesub-project proposal; to which the Routing Slip is attached. In cases of substantial adaptations, areformulated proposal may be added as well.

Step 5: Filling out the Limited Environmental Assessment Form (Form dK by EnvironmentalSpecialist (s)

LEAs will be required for all sub-projects that potentially have moderate environmental impacts, or forwhich impacts are likely to be complex.

LEA requires more environmental expertise than an ER, and will have to be carried out by anenvironmental specialist (national consultant or contractor) or a large national PO with relevant in-housecapacity. This will need to be contracted out by the SDF. Form V presents general TOR. Because of thelimited scope, an LEA should not take more than two week, including field work to be finalized. The

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results will be presented to the sub-project approving authorities in the form of a report (maximum 10pages).

Appraisal and Approval by SDFs PAST and MOEF

Sub-project proposals, Routing Slips, ER reports, and LEAs will need to be reviewed by SDF. For thispurpose, SDF has recruited Manager Community Development and a Technical Officer to be responsiblefor environmental screening and supervision. In addition, team composition of PAST will include anEnvironmental Specialist. The recruitment process for contracting PAST has been initiated by SDF.

Desk and field appraisals should involve assessing if impacts have been correctly gauged, and if themitigation actions proposed are sufficient to alleviate the potential impacts. If shortcomings are detectedduring the appraisal, the environmental assessment (usually a Routing Slip with attached ER, or LEA)should be retumed to the sub-project formulators, along with recommendations for modifying theproposal. After modifications have been made, the proposal and Routing Slip (Appendix I) with revisedER, or the revised LEA, may be resubmitted. If the appraisal shows that sufficient mitigation measureshave been incorporated in the project design, the environmental assessment of the proposal is to beapproved by SDF.

As per GOB regulations, all sub-projects require MOEF approval, but in practice this blanketrequirement of having to seek approval does not appear to be implemented for most public sector projectsin Bangladesh. In this case, it is recommended that the SDF should have this environmental assessmentreport and manual approved by the MOEF.

Implementation and Supervision by CSOs and PAST

Environmental supervision will be carried out by SDF's PAST so that strong links with field-basedactivities are maintained by the Foundation. The PAST will play a pivotal role in project implementationand supervision, as they will be present on a daily basis, and will stand to benefit directly from successfulproject implementation.

In theory, sub-project supervision will require the preparation of a supervision plan (as required by OD13.05 on Project Supervision), but for SIPP it would be more practical to group together varioussub-projects (e.g., on a sub-district basis) under a joint supervision plan. The supervision plan can beprepared by the SDF's PAST, or its preparation contracted out to consultants, contractors, or nationalPOs.

During the construction or implementation phase, it is possible that certain unforeseen impacts may occurdue to the sub-project. If significant, these should be reported to the SDF's Technical Officer, along withproposed mitigation measures, if these are known, and a revised sub-project budget. In the event ofnoncompliance, the proponents of the sub-project run the risk that the environmental auditors willidentify the problem and report this to SDF. In the case of gross negligence, this may result in punitiveactions, such as nonpayment of further installments.

Monitoring, Learning and Environmental Auditing by CSOs, PAST, and Independent AuditorsEnvironmental monitoring is directed towards measuring and evaluating changes brought about by thesub-projects and assessing the effectiveness of the mitigation measures proposed in the sub-projectdesign. SDF will not be involved in direct monitoring of the effects of sub-projects or aggregates ofsub-projects (i.e., groups of sub-projects), but will carry out monitoring of the environment in general.

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Annex 2: Attachment 11

Measurement of Poverty Indices and Findings of theSocial Assessment Study

Measurement of the Poverty Indices

The Bangladesh Human Development Report 2000 estimated the IPI and HPI values by districts based onthe following methodology. Income-poverty measures attempts to capture three aspects of poverty: itsincidence, depth and severity. IP measures include the head-count index, poverty-gap index, and squaredpoverty-gap index. HPI is composed of three indicators, one of which is a composite of threesub-indicators, capturing deprivation in health, in knowledge, and overall economic provisioning.Deprivation of overall economic provisioning comprise two parts, public and private. Deprivation inpublic provisioning is represented by three indicators: (a) percentage of population without access tohealth services (percentage of children not fully immunized and percentage of deliveries not ininstitutions, or non-trained health workers); (b) percentage of population without access to safe water; (c)percentage of population not having power supply in their homes. Deprivation in private provisioning isrepresented by the indicator "percentage children under 5 who are malnourished". The exactformulation is : HPI = [1/3 (P3 +P3 + P3,)]"

P, represents deprivation in longevity, measured by probability of dying before age 40; P, representsdeprivation in knowledge measured by percent of adult illiteracy (multiplied by 2/3) and percent ofchildren aged 6-14 not attending school (multiplied by 1/3); P3represents deprivation in economicprovisioning, which is an average of the values of the two indicators, deprivation in public and privateprovisioning.

Findings of the Social Assessment (SA) Study.

The SA study identified potential groups of beneficiaries of SIPP who are expected to benefit from thiskind of program and their needs. These groups includes poor women, female headed poor households,youth-at-risk, child labor, out-of-school children, the physically handicapped, victims of natural disasters,and some groups of the indigenous population. These groups usually are excluded from mainstreamdevelopment programs due to social, cultural, and structural factors, and they constitute about 22 percentof the tribe population. The following sections describes the potential beneficiaries and their constraintswhich make them vulnerable:

Women: Although good progress has been achieved in women's development, gender inequalities stillpersist with regard to access to, and control over, resources, human development, economicopportunities, legal status, power, and political voice. Among the women, the poor and girls bear thelargest and most direct costs of these inequalities. These disparities have significant negative impact oneconomic growth, poverty reduction efforts, and the general well-being of the population.Discrimination against women with respect to nutrition, access to education, and health services stillpersists, as demonstrated in high female child mortality, maternal mortality, and lower life expectancy forwomen. Early marriage and early and frequent pregnancies make poor women and adolescent girls morevulnerable to physical and mental abuse, STD, and HIV/AIDS infections. Although women have enteredthe labor market in large numbers, national data indicate persistent discrimination against women in thelabor narket. About 62 percent of women are economically active, but the female share in total earnedincome is less than one-quarter (Human Development Center, 1997). On average, the daily wage rate ofwomen is about half that of men, mainly because female laborers have less bargaining power (Zohir S,1999). Though the Constitution of Bangladesh grants equal rights to women and men in all spheres of

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public life, in family matters, such as marriage, divorce, custody of children, and inheritance, personallaw is practiced. Most of the existing personal laws discriminate against women, and hamper their rightto exercise their free choice. All kinds of violence against women is reported to have increased in thelast decade. Furthermore, recent loss of jobs by women in export-oriented ready-made garment industriesand the return of migrant workers due to the international economic crisis could create social andeconomic pressures in Bangladesh. These groups are not only poor, but are vulnerable 'to economic andsocial shocks, and they usually are unable to improve their quality of lives due to social, legal, economic,and political constraints.

Tribal population: According to the 1991 census, tribal people constituted about I percent of the totalpopulation of Bangladesh. Among the tribal groups, the majority are Chakma (21 percent), Marma (13percent), and Saontal (17 percent). The majority of the tribal population (42 percent) reside in ChittagongHill Tracts in the southeast of Bangladesh. Others are scattered in the hilly areas of north-west(Dinajpur), north-east (Sylhet) and north-central (Mymensingh). Among the tribal population, 37 percentare of Buddhists, 21 percent are Hindus, 18 percent are Muslim, 1 I percent are Christians and 13 percentfollow other religions. Some of the tribal populations, such as Chakma, Marma, Garo, Monipuri, andTripura are educated. A large number have moved to urban areas and generally work in the servicesector. The tribal population living in rural areas work in agricultural labor, and some of them are amongthe poorest. Some families earn their livelihoods from poultry and livestock rearing, rickshaw/vanpulling, and other manual labor. Consultations with tribal groups living in hilly areas and plain landsreveal that they are increasingly marginalized and economically deprived and have limited access toresources, as common property resources are encroached by the mainstream population. Furthermore,they are not able to utilize resources from forests as most of these are declared as protected land. Theirchildren usually attend missionary and NGO schools. Tribal groups living in the plains and working inagricultural labor usually migrate with families between neighboring districts for seasonal work. Theyusually live alongside the mainstream population, but still with separate identities.

Child labor: Most working children in Bangladesh cannot go to school because their families povertycompels them to earn a living. Children's work is often viewed by their families as valuable opportunitiesfor learning employable skills. According to the Report on the National Survey of Child Labor (1996), inBangladesh a total of 6.3 million children between the ages of five and 14 are economically active. Thisis 19 percent of the total number of children in that age group in the country and 12 percent of the totalwork force. Child work is more prevalent in rural areas, as 83 percent of the children work in the ruralareas, mainly in agricultural activities. Only about 4 percent of children work in the formal sectors, whilethe majority are involved in informal sector jobs, such as waste collectors, domestic servants (mostlyfemale), and workers in informal factories. Although enrollment in primary schools has increased, thereis a substantial number of out-of-school children (40 percent), mostly from the poorest families.

Other vulnerable groups are the physically handicapped population, people living in disaster prone areas,and artisan groups. About 10 percent of the population of Bangladesh is physically handicapped(Statistical Year Book, Bangladesh Bureau of Statistics, 1998). Thousands of people lose their assetsand livelihood every year due to land erosion, floods, and other forms of natural disasters. Artisangroups (e.g., weavers, blacksmiths, pottery workers) are losing their niche markets due to competitionwith other modem commodities.

Priorities of the vulnerable groups: Social assessment further found that the communities are aware oftheir needs and priorities, but are unable to avail themselves of services and infrastructure due to lack ofinformation, access, and empowerment. In general, the needs identified by these people includedemployment opportunities, health care, sanitation, education, safe drinking water, legal assistance, basic

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infrastructure (e.g., roads, culverts), and skill training. The indigenous population identified the need foreducation, health, fish cultivation facilities, skill training in weaving and cane processing, facilitation ofhorticulture cultivation, water, sanitation, and roads. Slum dwellers identified the needs for employmentopportunities, micro-credit, rights to ownership/tenure for urban settlement, education, health, sanitation,and a safe water supply. For the hard-core poor, the provision of income-earning opportunities was thetop most priority, followed by infrastructure development in the form of roads, schools, and healthservices. In the land erosion areas, priority was given to the rights to land, employment, and basic health,education, and sanitation services.

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Annex 2: Attachment 12

Summary of the Tribal Development Plan

Background

According to the 1991 census, the population of Jamalpur is about 1,874,440, of which 88 percent live inrural areas. Around 0.25 percent of the population are tribal, mostly Garo. Population of Gaibandha isabout 1,949,274, of which 93 percent live in rural areas. Around 0.38 percent of the population are tribal,mostly Santal.

Tables 1 and 2 give the proportion of the tribal population to the total population in the rural areas andtheir geographic location.

Table 1: Proportion of Rural Tribal Population

Area Total Urban Rural Tribal Tribal % ofPopulation Pop Pop rural

Urban Rural tribalGaibandha 1,949,274 137,497 1,811,777 1380 6079 0.3Jamalpur 1,874,440 212,226 1,662,214 1914 2521 0.1Total 3,823,714 349,723 3,473,991 3294 8600 0.2

The geographical distribution of tribal population in the project districts is as follows:

Table 2: Geographical Distribution of Tribal Population 7 Years and above (1991)

Area Rural Urban TotalJamalpur district 1885 1479 3364Bakshiganj upazila 620 19 639Dewanganj upazila 114 6 120Islampur upazila 124 41 165Sadar upazila 740 835 1575Madarganj upazila 72 207 279Melandah upazila 89 76 165Sarishabari upazila 126 295 421

Gaibandha district 4540 1037 5577Fulchari upazila 70 23 93Sadar upazila 457 423 880Gobindganj upazila 3080 76 3156Polashbari upazila 192 105 297Sadullapur upazila 356 64 420Saghatta upazila 112 221 333Sundarganj upazila 273 125 398

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The Garo population are living both in urban and rural areas of Jamalpur. The Garo groups living inurban areas work in the service and trade sectors, while the rural population's livelihood is mainlyagriculture. Members of the Garo conumunity are mostly Christians, a large number are literate, and itsmembers usually access public sector services. In Gaibandha, about 0.30 of the rural population aretribal, mostly Santal, with a few Oraon and Malpheri families. Out of seven upazilas in Gaibandhadistrict, Santals are concentrated in the Gobindganj upazila, and are an extension of their mainconcentration in the northwest districts. Santals are scattered in only six unions (Kanidia, Katabari,Razarhar, Shapahar, Shapmara, and Gumaliganj) out of a total of 16 unions in Gobindganj. Tribal groupsmigrate in-and-out of Gaibandha for seasonal work and usually live alongside the mainstream population,but with a separate identity. The literacy level, health status, and awareness-raising of the majority ofSantal families are low. They usually receive health and education services from missionary agencies andNGOs. A very few families have been able to make goocd progress in terms of social and economic statuswith higher education and diverse employment. Santals aure mostly landless. Eighty percent of them workin agricultural labor. Some families earn their livelihood from poultry and livestock rearing,rickshaw/van pulling. Only one NGO, Bangladesh Northern Evangelical Lutheran Church Foundation(BNELCF) has been implementing special programs for the advancement of the Santal population inGaibandha. Few NGOs are providing services to the Garo population in Jamalpur.

The literacy rate among the population of these districts is low, but that for rural tribal groups is stilllower. The literacy rate among rural tribes in the Project area is 17 percent, compared to the literacy rateof 24 percent in the district and 36 percent of the national population, as per the 1991 Census. The femaleand male tribal literacy rates is nine percent and 26 percent, respectively.

The most common health problems in the tribal areas are tuberculosis., acute respiratory infections,goiter, diarrhea and gastroenteritis. The common malmntrition problems found among the tribals areanemia, Vitamin A deficiency, and iodine deficiency diseases. The poor nutritional status among thetribals makes them more susceptible to infection, resulting in high mortality and morbidity. Lack of goodpersonal hygiene, environmental sanitation, awareness of health, and health-seeking behavior amongtribals constitute the major factors resulting ion their low health status.

Agriculture and agriculture labor constitute the mainstay of livelihoods for the majority of tribals livingin rural areas. Land is the principal source of livelihood for the majority of the tribal population, due tolack of education and enterprise. With the depletion of products from the forest, the dependence of tribalson land for sustenance has increased even more. The tribal households possess relatively small pieces ofland compared to other social groups, and they are mostly in agricultural labor. A few of the householdskeep livestock and poultry, which are important sources of income and nutrition.

2. Methodology for the preparationof TDPThe methodology used included (a) desk review, (b) social assessment, and (c) consultations with thetribal population in the project districts. A detailed social assessment study of six districts was carried outto collect primnary data on livelihood strategies, risk-response and impact, access to formal institutions,programmers and projects, informal institutions, common property resources, and sustainable livelihoodindicators of the poorest and vulnerable groups. The sample districts were selected by a team of expertsin consultation with SDF and the World Bank, with experience in survey, PRA techniques, Focus GroupDiscussions (FGD) and interviewing key informants. In the field they were assisted by the NGOs, localgovernment organizations, and the beneficiaries themselves. Consultations with tribal population wereconducted in the two districts with tribal concentrations, Bandarban and Dinajpur, and the two projectdistricts, Gaibandha and Jamalpur. Finally, national level consultations were also conducted with NGOsand representatives of the tribal population in Dhaka for finalizing the TDP.

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3. Implementation StrategyThe overall responsibility for the implementation of the TDP will be with the SDF's General Manager(Programs), who will be assisted by the two Managers (Social Assistance). These staff will be furthersupported by the CSOs, who will carry out the needs assessment surveys and prepare the communityaction plan, and NGOs, who will be contracted by SDF to implement the social assistance program. SDFhas planned for a training session on in-depth understanding of the socio-cultural, economic, political,and religious lives of the tribal groups for all the SDF staff and its support organizations. The CSO andparticipating POs would be encouraged to recruit local tribal-educated youth as community facilitators,trainers etc., as appropriate.

Baseline Survey: The baseline survey would be conducted by SDF to provide data for subsequentimpact evaluation.

Institution-building processes: There are villages exclusively inhabited by tribal groups and villages inwhich both tribal and non-tribal inhabit. Therefore, to address the needs of tribal in these differentsituations distinct strategies would be adopted. Likely processes are described below, and the actualimplementation will be participatory and situation-specific.

(i) Exclusive tribal villages: The CSO would consult both men and women tribal leaders, onthe kind of groups that would be formed from among the tribal families. VDC will includerepresentatives from all tribal groups. It is likely that CG would be formed separately foreach tribal sub-group.

(ii) Mixed Villages: Mixed villages would be of two types, tribal majority villages andnon-tribal majority villages. In both cases, tribal CGs and the non-tribal CGs wouldperhaps be formed separately and representatives from each CG will form an inclusiveVDC.

Community Infrastructure Works: The tribal groups through their institutions, would not only developCAP, but would be responsible for implementation and monitoring of the plans thus prepared. In order tobridge their knowledge gap, tribal youth would be trained as volunteers and provided necessary inputs inmanaging that sector interventions. The tribal institutions would receive capacity-building inputs fromthe project staff and functionaries for the evolution and management of sub-projects. Thecapacity-building inputs for the tribal communities would include visits to successful interventions. TheVDC would discuss the CAP and sub-projects in a meeting before submission to the SDF to ensure thatthe entire community is informed and gets a chance to give their advice and suggestions. The sub-projectproposals would be submitted by the CG to SDF for funding.

Social Assistance Program: The objectives of the social assistance program are to increase the capacityof tribal groups to participate in mainstream development activities through: (a) advocacy programs; (b)occupation skills training; (c) support for pregnant women and risk-pooling pilot initiatives; (d) legal aidsupport; and (e) grants for the graduated trainees and worst affected natural hazard victims.

4. Linkages with various ongoing programs of line departments and POs

In order to ensure effective services in the tribal areas, SDF, CSOs and POs, will ensureconvergence and synergy with important line departments, such as health, education, child welfare andnutrition, agriculture, horticulture and fisheries development. SDF, CSO, and PO will facilitate linkageswith other poverty reduction programs, such as micro-finance, vulnerable groups development, legalliteracy, and human rights programs.

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5. Monitoring and Learning

Monitoring formns are an integral part of the Project Management System, as it provides a continuousappraisal of performance of the Project and enables the Project Management to take up correctivemeasures, if any, required in implementation. The existing M&L System adopted in the ongoing SIPP,i.e., (a) input and output monitoring; (b) process monitoring; and (c) impact evaluation would ensureeffective implementation of TDP, which forms part of SIPP.

For the purpose of monitoring and learning of TDP, basic data relating to village wise infornation ontribal population, infrastructure facilities, land utilization, cropping pattern, livelihood etc. would berecorded by CSO in the baseline. The project interventions planned in the village as part of the CAP andthe project interventions actually implemented will also be captured in the M.I.S. The data collectionwould be the responsibility of the CSO, in association with the VDC. There will also be a third partmonitoring, which will be recorded in MIS

The suggested monitoring indicators for different components for TDP would include:

Monitoring Indicators

Components Indicators Source Frequency AgencyEconomic Food Security Local Annual Externalconditions From own production assisted by the government Agency

Project Registers &1. Income generating activities assisted by Reports from

the Project CSO/PAST/2. Mechanisms adopted to manage foocl beneficiary

insecurity assessment, SDF3. Increased income4. Changes in livelihood (No.)5. Improvement in skills (No.)

Economic activities established (No.)Social 1. Representation and voice in VDC, CG Local Annual Externalconditions 2. Representation and voice in local government Agency

government - Registers &3. Participation in SIPP activities Reports from4. Increased Enrollment in Schools CSO/PAST/5. Reduced Dropouts from schools beneficiary6. Accessibility to education related assessment, SDF

infrastructure7. Infrastructure relating to school, access

to villages8. Mortality and Morbidity

Process 1. No. of Tribal led VDC and CG formed Reports from Annul Externalfollowed 2. No. of Tribal VDC and CG able to Local Agency

access funds from SDF for successful government,completion of CIW CSO/PAST/

3. O&M of CIW satisfactory beneficiaryassessment, SDF

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6. Impact Evaluation:

The important areas for conducting impact evaluation to assess the benefits which the tribal populationwould receive as a result of the project include:

(a) food security;(b) increase in enrollment and completion of primary education;(c) improved health status, reduced morbidity and mortality;(d) employment including income through off-farm and non-farm activities;(e) Improvement in living standards;(f) Improved status of women;(g) Improvement in the access to marketing, formal institutions, etc.;(h) Sustainable village institutions; and(i) Increased participation and voice in development.

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Annex 3: Estimated Project CostsBANGLADESH: Social Investment Program Project

, : : :s . <;- .7-: :' 2' _ . ta i%flS A. Strengthening of SDF 1.47 0.31 1.78

B. Institutional Development at Community-Level 0.36 0.00 0.36

C. Implementation of Community Action Plans 18.06 0.01 18.07

D. Pilot Private Financing of Community Utilities 0.81 0.00 0.810.00 0.00

Total Baseline Cost 20.70 0.32 21.02Physical Contingencies 0.32 0.02 0.34Price Contingencies 1.17 0.01 1.18

Total Project Costs' 22.19 0.35 22.54Total Financing Required 22.19 0.35 22.54

Identifiable taxes and duties are 1.4 (USSm) and the total project cost, net of taxes, is 21.14 (US$m). Therefore, the project cost sharing ratio is 86.28% of total project cost net of taxes.

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Annex 4Economic Analysis

BANGLADESH: Social Investment Program Project

Rationale for Community Driven Investment

The main justifications for community-driven investment include (a) complementing public sectorprograms; (b) correcting for market failures; (c) increasing effectiveness and sustainability of socialinvestments; (d) scaling up poverty-reduction initiatives; and (e) making development inclusive.

(a) Complementing public sector activities. Experience has shown that policies aimed atpromoting national economic competitiveness and state-run public investment programs are insufficientfor poverty-reduction. These policies and programs often do not benefit the poor, and benefits often takeyears to trickle down. Community-driven investment offers the opportunity to fill this critical gap byachieving immediate and lasting results at the grassroots.

(b) Correcting Market failures. The market alone cannot provide all essential services and goodsfor poverty reduction. It often under provides public goods (e.g., roads, water supply, sanitation, qualityeducation, and health care for poor people), and over-harvests common pool goods (e.g., forests,watersheds, and fishery resources). Although national state-run programs focused on investing in humanand physical capital have the potential to redress some of these imbalances, experience has shown thatcentral government programs are often slow to deliver basic services and are often ineffective in reachingpoor people. Market and state-run activities can be effectively complemented by community-drivensolutions that engage CBOs, local governments, NGOs, and the private sector. By usingcommunity-driven approaches and local actors to provide key goods and services, governments cansupport immediate poverty reduction by efficiently building human and physical assets at the local level.

(c) Increased effectiveness and sustainability. Community management of developmentinvestments usually results in lower costs and in more productively-employed assets. Studies ofcommunity-organized irrigation systems in Asia, for example, have repeatedly found that infrastructureconstructed and operated by the farmers themselves, often without much external assistance, generate ahigher level of agricultural productivity than more modem systems constructed by government agencieswith substantial external assistance (Lam, 1998 and Tang, 1992). A recent study in Zambia comparesCBO-managed and contractor-managed approaches to developing school infrastructure programs. Unitcosts under the contractor approach were more than twice as high as under the CBO approach. Similarly,a recent study in South Africa shows that when CBOs are responsible for all aspects of the project(design, management, and monitoring), costs per beneficiary are less than half than when the CBOs arenot decision-makers (Adato, Besley, Haddad, and Hoddinott, 1999). As consumers, community membersare the most legitimate, informed, and reliable source of information about their own priorities.Community-developed facilities, such as health centers, schools, and water-supply systems, tend to havehigher utilization rates and are better maintained than when investment decisions are made by actorsoutside of the community. Experience also demonstrates that demand is better articulated whencommunities contribute to investment costs and control investment choices. A water supply study of1,875 households in rural communities in six countries (Benin, Bolivia, Honduras, Indonesia, Pakistan,and Uganda) suggests that water system sustainability is significantly higher when communities controlkey investment decisions and when they pay part of the investment costs, ensuring that they get what theywant and are willing to pay for (Sara and Katz, 1997).

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(d) Scaling up poverty-reduction efforts. Because community-driven development devolvesresponsibilities and resources to the local level, activities can occur simultaneously in a large number ofcommunities without being constrained by a central bureaucracy. When poor communities are entrustedto drive development, and are provided with appropriate information, support, and clear rules of thegame, a system can be put in place not to provide for poor people, but to facilitate their active andongoing role in rolling out poverty-reduction efforts.

(e) Inclusive Development. Representative CBOs can provide voice and empowerment to groupsthat are typically excluded from the development process. The interests of women, indigenous groups,ethnic minorities, and the disabled might not be effectively expressed through standard political andeconomic structures. If these minority groups are actively involved in CBOs, they will help makedevelopment processes more inclusive.

Economic Analysis

The economic analysis for infrastructure sub-projects demonstrates the economic justification ofundertaking the community-driven development actions described earlier through a "least return,"cost-benefit analysis which would ask by how much the productivity of people would need to beincreased to make the investment viable. This type of analysis has been done on water and sanitationsub-projects. (Ideally, a cost effectiveness analysis of community infrastructure irmplementation by lineagencies and NGOs should have been performed, but this was not possible because of lack of reliabledata.) For rural markets, a standard EIRR was calculated based on the spoilage saving method.

Economic Analysis for water and sanitation investments: In order to verify whether the level of benefitrequired to produce an economic rate of return above 12 percent is reasonable, iterations of the ERR havebeen produced for water supply systems and sanitation. If the level of the key parameters that ensureseconomic returns above 12 percent is unrealistic (i.e., greater than a realistic threshold), the project willbe considered unviable. The key parameters on which the analysis is carried out are: (i) the incrementaltime savings generated by reduced time for fetching water due to the proximity water supply; and (ii) theincremental working days due to better health conditions associated with improved sanitation. Theassumptions of the analysis are presented below.

Average household size 6Incremental time savings due to reduced water fetching (hours/hh/day) 1-3Incremental working days due to improved health conditions (days/hh/year) 1-12Opportunity cost of unskilled labor (Tk/day) Assumed at 80 percent of ongoing 40unskilled rural wage rate.Number of working hours in one working day 8Time allocated for income generation (percent) 10Time allocated for leisure (percent) 90Value of leisure (percent of opportunity cost of unskilled labor) 20O & M cost (percent of investment cost) 10Useful life of investments (years) 20

Only 10 percent of time saved is assumed to translate into income generation while the remaining 90percent, valued at 20 percent of the opportunity cost of labor, would be spent for leisure. Assumptions onthe range of time savings and additional working days are from a similar project in Pakistan (ASKCommunity Infrastructure and Services Project - ICR). The costs of the water supply and sanitationactions are based on detailed costing of ongoing projects by NGO Forum, an umbrella organization for

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water supply and sanitation projects in Bangladesh. Water supply and sanitation have been considered asa package jointly implemented at community level. They include both the software cost of communityawareness raising, mobilization, and investment planning, as well as the hardware cost of water supplyand sanitation construction and establishment. A standard conversion factor of 0.9 was applied to convertto economic prices. The duration of the analysis is 20 years, based on the average useful life of watersupply and sanitation projects.

ERR of community water supply and sanitation systems according to incremental time savings andincremental working days

ERR sensitivity to: Incremental time savings due to reduced water.______________________________ Ifetching

Incremental working days due to improved health I hour/day/hh2 hours/day/hh3 hours/day/hhI day per year per household -1%, 24%, 51%

2 days per year per household 2%, 25%, 54%

6 days per year per householk 10%, 33%, 66%1 day per month per household 20%, 47%, 87%

These results indicate that the viability of community-driven investments in water supply and sanitationsystems can be viable under reasonable assumptions of incremental time savings, as well as working daysgenerated by their implementation. The thresholds of incremental time savings and working days thatensure the economic viability of the investments are 2 hours/day/household of time savings and 1incremental working day/month/household, respectively. Both these assumptions seem reasonable,realistic and fall within the initially-defined range of value for these parameters. Based on theseconsiderations, these water supply and sanitation investments can be considered as economically viable.

Economic Analysis for Rural Markets: The benefits of rural market development were estimated on thebasis of increase in spoilage savings of the sellers of selected perishable items in developed marketscompared to underdeveloped status. Seven commonly-marketed, perishable items namely, fish, meat,eggs, fruits, vegetables, rice, and milk were included in estimating the spoilage savings of the sellers. Theeconomic life of the markets has been considered to be 20 years.

For annualizing, spoilage savings in percentage was first applied to the tumover of the perishable itemsper market day to arrive at spoilage savings in value terms per market day. Annual spoilage saving hasbeen estimated by multiplying the spoilage savings per market day by the total frequency of assemblingof the particular markets, assumed to be 104 days for those that assembled twice a week and 52 for oncea week. This has been assumed to be the annual benchmark estimate of spoilage savings due to marketdevelopment. To arrive at benefit streams for the entire life of the market in real terms, the benchmarkspoilage savings was projected at the stipulated annual growth rate (of the turnover of the selectedperishable items) of five percent. Based on these assumptions, the ERR is estimated to be 30.6 percent.

Community Financial Contribution (US$Total Project Community Government | IDA

Cost I II(US$ M)

Project Costs 22.54 2.69 1.61 18.24Share of Total Project Cost (%) 100 12 7 81

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Annex 5: Financial SummaryBANGLADESH: Social Investment Program Project

Years EndingIn US$ Milion

I Year1 I Year 2 | Year 3 I Year 4 | Year 5 i Year 6 T Year 7Total Financing Required

Project CostsInvestment Costs 1.9 5.8 6.7 6.5 0.0 0.0

Recurrent Costs 0.2 0.4 0.5 0.5 0.0 0.0Total Project Costs 2.1 6.2 7.2 7.0 0.0 0.0 0.0Total Financing 2.1 6.2 7.2 7.0 0.0 0.0 0.0

FinancingIBRD/IDA 1.7 5.1 5.8 5.6 0.0 0.0 0.0Govemment 0.2 0.5 0.4 0.5 0.0 0.0 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0Communities 0.2 0.7 0.9 0.9 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0Total Project Financing 2.1 6.3 7.1 7.1 0.0 0.0 0.0

Main assumptions:The implementation period is four years which would be spread over five fiscal years.

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Annex 6: Procurement and Disbursement ArrangementsBANGLADESH: Social Investment Program Project

Procurement

The total value of the project is US$22.54 million, of which IDA Credit will finance US$18.24 million.Procurement under the project will largely involve community sub-projects, followed by consultants' andPO services, and small quantities of goods.

The SDF will have responsibility for overall procurement management and ensure that procurementprocedures, criteria, and documentation agreed with IDA are in compliance. This will includeprocurement under sub-projects implemented by community groups. These responsibilities are describedin Annex 2, Attachment 6 and the OM.

Procurement arrangements will utilize the procedures established and the lessons learned from othercommunity-driven and social investment projects financed by the Bank. All IDA-financed procurementof goods and works will follow procedures outlined in the Bank's Guidelines for Procurement underIBRD Loans and IDA Credits, published in January 1995, and revised in January and August 1996,September 1997, and January 1999. Consultants' and PO services, including training, will be procured inaccordance with the Bank's Guidelines: Selection and Employment of Consultants by World BankBorrowers, published in January 1997, and revised in September 1997, January 1999, and May 2002.Procurement of goods, works, and services will follow the Bank's approved/standard documents.

Demand-Driven Community Sub-projects (US$14.75 million)

Small-Scale Community Infrastructure Sub-projects (US$13.99 million): The nature andcomposition of community infrastructure sub-projects financed under the project is described in Annex 2,Attachment 6 and the OM. In the interest of certain specific social objectives of the project, it isdesirable to call for the participation of local communities and POs, increase the utilization of localknow-how and employ labor-intensive and other appropriate technologies. It is expected thatapproximately 1,800 sub-projects would be financed under the project in about 1,400 villages in twodistricts. Rural communities from the project villages in these two districts are expected to submitproject proposals for matching-grant funding, using resources provided under the project. Sub-projectswould consist of proposals for small-scale community infrastructure works, implemented directly by theCG, represented through its PMC. The menu of sub-project options includes rural connecting roads,culverts, foot-bridges, drainage, small markets, boat landing jetties, and different types of water andsanitation schemes which will be eligible for financing. The total cost of each community-managedsub-project will not exceed US$8,200 equivalent. Communities will be required to contribute 15 percentof the total capital investment upfront both in cash and in-kind (labor, materials, and service), as well asbear the full operation and maintenance costs (about three percent of sub-projects' costs).

The PMC will take primary responsibility for hiring skilled workers and procuring materials. In certainsituations, hiring of local contractors or of technical services may be necessary. The community will hirethe contractor, based on receiving three quotations, with the proviso of direct contracting where receiptof three quotations is not feasible. In the case of quotations, works shall be on the basis oflump-sum/fixed price/unit rate contracts to qualified contractors awarded in response to a writteninvitation. The written invitation shall include a detailed description of the works, including basicspecification, the required completion date, a basic form of agreement acceptable to the Association, andrelevant drawings, where applicable. The award shall be made to the contractor who offers the lowest

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price quotation for the required work, and who has the experience and resources to complete the contractsuccessfully. A draft sample invitation for quotations with form of contract is included in the OM.

The CG would be supported by the CSO appointed by SDF. Standard price lists for materials will bemaintained by SDF and provided to the CSO. SDF would update the price lists every year. Theseestimates would-be used by communities as price ceilings to guide their procurement. The specificprocurement responsibilities of the PMCs and the procurement guidelines will be clearly explained byCSO during the orientation and training that would precede each sub-project implementation. Inaddition, PAST of SDF will ensure quality control. SDF will disburse funds to the community-managedsub-projects directly in tranche against certified progress/completion by PAST. A draft sample financingagreement between SDF and the community, specifying the mode and triggers for payment, is included inAnnex 2, Attachment 7.

Pilot Private Financing in Community Utilities (US$0.76 million): In addition to the communityinfrastructure sub-projects, drawing upon the lessons from successes within and outside the country,under this sub-component, SDF would develop and test new approaches by using matching grants to pilotprivate/PO/community participation in basic utilities, such as, arsenic-free water supply, off-gridelectricity supply. Depending on the type of community utilities, SDF would provide grant financing fornot more than 70 percent of the capital cost to either a community or a credible PO, or a combination ofthe two, which would disburse this on a performance-related basis to the private entrepreneurconstructing and operating the project. The pilot sub-project cost will not exceed US$70,000. Thecontracting procedure .will be similar to those for community infrastructures and be on the basis ofcompetition through open advertisement. SDF will appoint a Technical Advisory agency to assist with,inter alia, contracting arrangements acceptable to IDA, and provide oversight during implementation.

Goods (US$0.40 million)

Goods to be financed under the Credit include computers, audio-visual equipment, photocopiers, airconditioners, four vehicles, and office equipment. All procurement under the project is expected toinvolve small contracts, with estimated cost less than US$200,000. (Most contracts have a value of lessthan US$40,000, excepting vehicle contracts that exceed US$ 100,000.) The nature of these smallcontracts is unlikely to attract the interest of foreign bidders, as such procurement will not involveintemational competitive bidding.

National Competitive Bidding (NCB): Goods and equipment contracts estimated to cost less than theequivalent of US$200,000 per contract may be procured using NCB, up to an aggregate amount ofUS$200,000.

International/National Shopping (IS/NS): Up to an aggregate limit of US$300,000, goods of very smallcontracts or individual purchases of off-the-shelf items with an estimated value less than the equivalentof US$20,000 per contract may be procured through prudent shopping procedures by soliciting pricequotations from at least three suppliers, with the exception of vehicles which may be procured followingshopping procedure with an estimated value less than the equivalent of US$65,000 per contract.

Direct Contracting (DC!: Goods with individual contract costs less than the equivalent of US$2,000, upto an aggregate limit of US$20,000, may be procured following DC.

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Services and Training (US$5.77 million)

Consultants' Services: Major consulting services include community support, process monitoring,impact evaluation, information strategy development, project appraisal and supervision, technicalassistance for private financing community utilities, capacity-building, and MIS.

Oualitv and Cost-Based Selection (QCBS): Consulting services through firms estimated to costUS$100,000 equivalent or more per contract will be procured following QCBS. Major contracts includeimpact evaluation, project appraisal and supervision.

Selection under Fixed-Budget (SFB)lConsultants' Qualifications (CQ): Services through firms estimatedto cost less than the equivalent of US$ 100,000 per contract may be procured following either SFB or CQ.Major contracts for SFB include MIS design, infornation and communication strategy, and procurementaudit. Contracts fro CQ includes preparation of documentary films and audit service.

Single-Source Selection (SSS): Consultants' services through firms, satisfying Consultants' Guidelines(paragraphs 3.8 to 3.11) and with estimated cost less than US$100,000 equivalent per contract, will beprocured following SSS. Major contracts include: process monitoring and technical assistance forprivate financing in community utilities.

Selection of Individual Consultants C): Services for assignments for which teams of personnel are notrequired and the experience and qualifications of the individual are important, will be procured inaccordance with Section V of the Consultants' Guidelines. Individuals will be selected on the basis oftheir qualifications for the assignment. Contracts for specialists include evaluation, MIS, procurement,and capacity building.

POs' Services: Two sets of POs will be contracted under the project for providing: (i) communitysupport services and (ii) social assistance. POs providing community support are referred as CSO in theproject. Two CSOs operating in two districts will undertake the following major activities: conductextensive informnation and communication campaign, undertake community mobilization, identify localneeds, carry out participatory planning, and training, and assist the community with sub-projectpreparation. Four POs in two districts will provide social assistance services targeted at the poorest andvulnerable group through the following activities: advocacy programs on social and environment aspects,education, women's health, immunization, nutrition, human and legal rights, legal aid training andoccupational skills.

The services of the CSOs will be selected following QCBS, with selection criteria described in the OM.Contract payments will be on the basis of performance triggers. The selection process of CSO has beeninitiated and SDF has already received proposals. POs for social-assistance programs will be selectedfollowing a fixed-budget method (i.e., as per the budget disclosed in the request for proposals).However, under this method the budget shall remain fixed along with the line items. POs will submitonly technical proposals and need not submit any financial proposals.

Incremental Operating Costs (US$1.14 million)

Incremental operating costs will be financed by IDA on a declining basis. This includes salaries ofproject staff, office utilities, office rent, supplies, fuel, maintenance of equipment, and vehicles.

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Procurement and Selection Planning

A draft Procurement Plan for goods and Selection Plan for services have been prepared and attached inthe Project Implementation Plan (PIP). Prior to issuance of any invitation for bids for procurement ofgoods and selection of consultants/POs for services, the proposed Plan shall be furnished to IDA for itsreview and approval, in accordance with the provisions of paragraph 1 of Appendix I of the respectiveGuidelines. Procurement of goods and selection of consultants/POs will be undertaken in accordancewith Plans approved by IDA and with the provisions of said paragraph I of Appendi. 1 of the respectiveGuidelines.

Use of Standard Documents

For NCB procurement, SDF will use the Standard Bidding Documents for Goods approved by IDA. Forselection of consulting firms, the Bank's Standard Request for Proposals (RFP), including standardcontract form, will be used. For selection of POs, SDF will use the RFP-approved by IDA. The Bank'sStandard Bid Evaluation Form for goods and Sample Form of Evaluation for consultants' services will beused for submission of evaluation reports to IDA.

Prior Review Thresholds

Goods: IDA will carry out a prior review of the following contracts: all contracts estimated to costUS$ 100,000 equivalent or more irrespective of procedures, and the first two contracts each forprocurement under NCB and shopping regardless of value. For shopping, the review will include requestfor quotations, evaluation of quotations, and the purchase order.

Consultants'/POs' Services: IDA's prior review will be required for consultants'/POs' services contractsestimated to cost US$ 100,000 equivalent or more for firms, and US$50,000 equivalent or more forindividuals. IDA's prior agreement will be required for contracts under single-source selection, regardlessof value.

Post Review

For community sub-projects, all contracts are below the prior review threshold of IDA. For compliancewith the Bank's procurement procedures, post review will be carried out for community sub-projects andother contracts that are below the prior review threshold. The project also includes finds for carrying outprocurement audit of below-threshold contracts by an independent auditor. Such review (ex-post andaudit) of contracts below the threshold will constitute a sample of about 30 percent of the contracts.

Review of Procurement Performance

IDA will monitor the compliance with the requirements cif the Bank's different procurement methods andperformance standards on a continuous basis. As part of the project's planned mid-term review, acomprehensive assessment of procurement performance will also be carried out. Based on the review, inconsultation with the government, IDA may revise the prior review threshold, including the procurementand selection methods.

Acceptability of NCB

In order to ensure economy, efficiency, transparency and broad consistency with the provisions ofSection I of the Procurement Guidelines these measures should be followed:

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(i) standard bidding documents approved by the Association shall be used;

(ii) invitations to bids shall be advertised in at least one widely circulated national dailynewspaper, and bidding documents shall be made available to prospective bidders, atleast 28 days prior to the deadline for the submission of bids;

(iii) bids shall not be invited on the basis of percentage premium or discount over theestimated cost;

(iv) bidding documents shall be made available, by mail or in person, to all who are willingto pay the required fee;

(v) foreign bidders shall not be precluded from bidding, and no preference of any kind shallbe given to national bidders;

(vi) qualification criteria (in case pre-qualifications were not carried out) shall be stated inthe bidding documents, and if a registration process is required, a foreign firmdetermined to be the lowest evaluated bidder shall be given reasonable opportunity ofregistering, without any let or hindrance;

(vii) bidders may deliver bids, at their option, either in person, by courier service, or by mail;

(viii) all bidders shall provide bid security, as indicated in the bidding documents. A bidder'sbid security shall apply only to a specific bid;

(ix) bids shall be opened in public in one place immediately, but no later than one hour afterthe deadline for submission of bids;

(x) evaluation of bids shall be made in strict adherence to the criteria disclosed in thebidding documents, in a format and specified period agreed with the Association;

(xi) bid shall not be rejected merely on the basis of a comparison with an official estimate,without the prior concurrence of the Association;

(xii) split award or lottery in award of contracts shall not be carried out. When two or morebidders quote the same lowest price, an investigation shall be made to determine anyevidence of collusion, following which (a) if collusion is determined, the partiesinvolved shall be disqualified and the award shall then be made to the next lowestevaluated and qualified bidder; and (b) if no evidence of collusion can be confirmed,then new bids shall be invited after receiving the concurrence of the Association;

(xiii) contracts shall be awarded to the lowest evaluated bidders within the initial period of bidvalidity so that extensions are not necessary. Extension of bid validity may be soughtonly under exceptional circumstances;

(xiv) extension of bid validity shall not be allowed without the prior concurrence of theAssociation (a) for the first request for an extension if it is longer than eight weeks; and(b) for all subsequent requests for an extensions, irrespective of the period;

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(xv) negotiations shall not be allowed with the lowest evaluated or any other bidders;

(xvi) re-bidding shall not be carried out without the Association's prior concurrence; and

(xvii) all contractors or suppliers shall provide performance security, as indicated in thecontract documents. A contractor's or a supplier's performance security shall apply to aspecific contract under which it was furnished.

Reporting

The project will prepare quarterly Procurement Monitoring Report (PROCMOR), as per specific formatsagreed with SDF and GOB.

Procurement Management Capacity

Capacity Review and Risk Assessment: The Country Procurement Assessment Report (CPAR), broadlyaccepted by the Government in February 2001, stated procurement as a generic problem in Bangladesh.The CPAR recommended for procurement reform with a. series of actions. The Government hasembarked upon public procurement reform with IDA technical assistance (Public Procurement ReformProject- PPRP). The project has provisions for providing extensive procurement training to public sectorstaff, including private participants.

At the agency level, SDF will carry out small procurement of goods, followed by selection of consultantsand POs. Community sub-projects will be handled directly by the community groups, represented byPMC. However, SDF will have overall responsibility of procurement management and ensurecompliance with procurement procedures, criteria, and documentation agreed with IDA. Keeping this inmind, the team reviewed the procurement management capacity of SDF with a view to: evaluate thecapability of the implementing agency and of the adequacy of procurement systems in place to administerBank-financed procurement, assess the risks that may negatively affect ability of the agency to carry outthe procurement process, and develop an action plan to be implemented as part of the project to addressthe deficiencies. The assessment included organizational aspects, skills of staff, and suitability of rulesand regulations applicable to the agency.

SDF, being a new organization, has no previous experience with IDA-financed procuLrement. The MD ofSDF is a former Controller and Auditor General of the Government. His extensive experience inaccounts and audit provides some comfort relating to the internal control and procurement activitiesunder this organization. SDF has recruited a Procurement Manager, who is exclusively responsible forhandling all procurement matters, including community contracting. Although SDF will have overallresponsibility for procurement management, community sub-projects, involving about 65 percent of theproject costs to be used in about 1,400 villages of two districts, will be implemented directly by CG.Each CG will be represented by a PMC comprising about nine members and headed by a president. Bothat SDF and at the community-level specific expertise in procurement will be required. Based on thereview, there are substantial risks associated with procurement.

Strengthening Procurement Capacity: To mitigate the procurement-associated riskcs, strengthenprocurement management capacity, and ensure advance procurement actions as part of the projectpreparation, the following arrangements have been made/agreed:

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(i) in accordance with the SFA between SDF and PMC, for each sub-project with a ceilingof US$8,200, SDF will disburse funds to the community in three tranches againstcertified progress/completion by SDF-appointed PAST;

(ii) CSOs will provide hands-on training to the community to handle small procurements inaccordance with the community-contracting procedures included in OM. A shortprocurement training has already been provided to SDF staff by the Bank's resourcepersons. This will be followed by a specific training on community-contractingprocedures, once the CSOs and PAST are selected;

(iii) SDF will appoint a procurement consultant for about six person-months spreading overthe project period to assist in procurement matters. SDF has already identified thisconsultant;

(iv) SDF has formed a Procurement Core Team (PCT), headed by a General Manager andstaff with procurement, commercial, financial, community development, and technicalexpertise. The TOR of the PCT includes: preparation of procurement plan, communitycontracting documents, request for proposals for selection of consultants and POs,bidding documents for goods, inviting bids, short-listing of consultants/POs, evaluationof bids/proposals, awarding contracts, and monitoring contracts' implementation; and

(v) post reviews and procurement audit of a sample of about 30 percent contracts will becarried out.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

%'q ,bk. N I

h~~~~~~~~~~~~Nt' .O f, t W1. Works 0.00 0.00 14.75 0.00 14.75

(0.00) (0.00) (12.51). (0.00) (12.51)2. Goods 0.00 0.13 0.31 0.00 0.44

(0.00) (0.07) (0.25) (0.00) (0.32)3. Services 0.00 0.00 5.77 0.00 5.77

(0.00) (0.00) (4.61) (0.00) (4.61)4. Staff Salaries and Operating 0.00 0.00 1.14 0.00 1.14Cost

(0.00) (0.00) (0.80) (0.00) (0.80)

Operations and Maintenance 3/ 0.00 0.00 0.44 0.44(0.00) (0.00) (0.00) (0.00) (0.00)

Total 0.00 0.13 21.97 0.44 22.54(0.00) (0.07) (18.17) (0.00) (18.24)

"Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2'Includes (i) community sub-projects implemented by the communities and private pilot financing for

community utilities; (ii) goods to be procured through shopping and direct contracting; (iii) consulting andPO services to be procured following: quality- and cost-based selection, selection under fixed-budget,consultants' qualification, single-source selection, and individual consultants' methods; and (iv) incrementaloperating costs. Also includes community contribution of (i) US$2.30 million for investment costs (about15 percent of sub-project costs).

3/ Includes community contribution of US$0.44 million for operation and maintenance of community sub-projects(about three percent of sub-project costs).

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

* 44 ;X.,, ,s s. ^. J , f , -Selectloni Method o>0nIofsu taint Se&iceS -- F4

z Eipenditu e ,Catego ¢QCBS e. ;-- QBS ; , ~SFB i e ^ LCSrI " "CQ -Other . NIB.F- Total, ost

A. Firms 1.54 0.00 3.80 0.00 0.18 0.18 0.00 5.70

(1.23) (0.00) (3.04) (0.00) (0.14) (0.14) (0.00) (4.55)B. Individuals 0.00 0.00 0.00 0.00 0.00 0.07 0.00 0.07

(0.00) (0.00) (0.00) (0.00) (0.00) (0.06) (0.00) (0.06)Total 1.54 0.00 3.80 0.00 0.18 0.25 0.00 5.77

_ (1.23) (0.00) (3.04) (0.00) (0.14) (0.20) (0.00) (4.61)

1\ Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants' Guidelines), CommercPractices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Credit.

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Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

SS :421 '''';t.-6 '. ; .l1. Works < US$ 10,000; (a) Community Post-review(a) Small scale participationcommunity infrastructuresub-projects <US$70,000 (b) community/PO/(b) Community Utilities < ( cPrivate Participation

2. Goods (a) < US$200,000 (a) NCB (a) First two contractsregardless of value;

(b) <US$20,000 (for remaining post reviewvehicles <US$65,000) (b) IS/NS (b) First two contracts

regardless of value;(c) <US$2,000 (c) DC remaining post-review.

3. Services (a) >=US$ 100,000 (firms) (a) QCBS (a) Prior review(b) <US$ 100,000 (firms) (b) SFB*, CQ (b) Post-review

(c) >=US$50,000 (c) IC (c) Prior review(individuals)

(d) <US$50,000 (d) IC (d) Post-review(individuals)(e) Selective (e) SSS (e) Prior Agreement

contracts<US$ 100,000

Total value of contracts subject to prior review:

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every six months (includes specialprocurement supervision for post-review/audits). Besides, as part of the fiduciary control, Bank's staffwill carry out post review of contracts, in addition to procurement audits by independent auditors. months(includes special procurement supervision for post-review/audits)

*SFB-Selection under fixed budget in accordance with a budget disclosed in the request for POs. POs donot submit any financial proposals. *SFB-Selection under fixed budget in accordance with a budgetdisclosed in the request for POs. POs do not submit any financial proposals.

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of credit proceeds (Table C)Table C: Allocation of Credit Proceeds

{2gf xtenBdi~re+gaw,' . nou,inU6mil116n ;' 9R^;,,E+'i'd'i,ieretg..:-,.,,Community Infrastructure Sub-Project 10.94 85 percent of total eligible expenditure(small-scale)Community Utilities with PO/Private 0.56 70 percent of total eligible expendituresector/coinmunity partnership)*Goods including Vehicles and 0.29 100 percent of foreign expenditure, 100Equipment percent of local expenditure

(ex-factory), 70 percent of localexpenditure for the items procured

locallyServices including POs; private audit 4.38 80 percentand trainingIncremental Staff Salaries and 0.74 80 percent in FY03 and FY04 and 60Operating Costs percent thereafterUnallocated 1.33

Total Project Costs 18.24

Total 18.24*The project would provide matching grant maximum of 70 percent of the capital cost of thesub-project.

Use of statements of expenditures (SOEs):

Transaction based or traditional disbursement procedures will be applicable for withdrawal of funds fromIDA Credit. IDA will require full documentation for all prior review cases where contracts exceed theequivalent of: (a) US$100,000 for goods; (b) US$100,000 for service contracts with firms; and (c)US$50,000 for individuals. Expenditures below the above threshold and all expenditures undercommunity infrastructure sub-projects, community utilities, incremental staff salaries and operatingcosts, and training expenses would be claimed on SOEs. During the initial supervision by IDA, themission will closely review the community infrastructure and community utilities sub-projects'expenditures to ensure that the fund is utilized for the intended purposes and in accordance witheligibility criteria described in the OM of this project. Any deviations noticed during such reviewswould be noted for remedy and improvement.

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Special account:

For utilization of IDA's share of project expenditures, SDF may open and maintain in a commercial bank,on terms and conditions acceptable to IDA, a Special Account in Convertible Taka (CONTASA) underthe Credit in accordance with MOF circular of September 02, 1991, revised on May 4, 1992 andDecember 24, 1992. SDF will be responsible for managing the Special Account, including submission ofwithdrawal of applications to IDA. The authorized allocation of the Special Account will be equivalentto three to four months of estimated expenditures, estimated to be US$1.80 million equivalent. At thestart of the project, the initial deposit to the Special Account will be limited to US$ 1.00 millionequivalent. The remaining amount of the authorized allocation (US$0.80 million equivalent) may berequested only after cumulative disbursements reach the equivalent of SDR 3.00 million.

It has been agreed that a comprehensive training on withdrawal of funds shall be provided to SDF staffbefore Credit Effectiveness. In addition, there will be regular hands-on training on disbursement to theSDF staff.

Retroactive Financing

In order to expedite project implementation, MOF has provided start-up funds for the establishment ofSDF and procurement of essential goods and services. Govermment of Bangladesh (GOB) has requestedretroactive financing, i.e., Bank's reimbursement from the proceeds of the IDA Credit, not exceedingUS$0.30 million equivalent in respect of (a) procurement of goods (US$0.05 million), (b) consultantsservices (US$0.07 million), and (c) staff salaries and operating costs (US$0. 18 million). In order to beeligible for retroactive financing, procedures for procurement, the use of consultants, and processing andclearance are subject to the Bank's Procurement and Consultant Guidelines. In addition, documentationrequirements for expenditures claimed under retroactive financing are the same as those for disbursementagainst payments made after the Credit Agreement is signed and effective.

Financial Management Assessment

There are no significant country issues that may affect project implementation. The generic problem oflengthy procedures in releasing government counterpart funds is not expected to be an issue in thisproject because agreement has been reached that GOB will provide its contribution to SDF in twoinstallments. The first installment will be provided within 30 days after completion of negotiations forthe Credit for this project and the second one by June 30, 2004.

Strengths: SDF has prepared an FM Manual to govern all financial management aspects of the project,including financial management at the community level. The Manual is a part of the project's OM andwould be revised and improved periodically, based on implementation experience. The FM manualincludes, inter alia, the following aspects: (a) organization and staffing of the financial functions,including the qualifications, experience, and TOR of the key financial staff (General Manager, Finance,Manager Finance, and Accountant); (b) flow of funds from IDA to Government to SDF and from SDF tothe CGs; (c) simple accounting system to be followed by the CG for accounting of project funds and fortransparency to its members; (d) project accounting system (including the information flow between thevarious units and entities, Charts of Accounts, books, records, accounting and financial procedures, andpolicies); (e) budgeting and financial forecasting system; (f) formats for Annual Financial Statement; (g)auditing arrangements, including TOR and selection method of the auditors; and (i) procurement andcontract administration monitoring system. A legal covenant is included that SDF shall maintain

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throughout the project implementation period a satisfactory financial management system for the project,including a computerized system, in accordance with the FM agreed with IDA.

Weaknesses: There are three potential weakness: (a) absence of a computerized financial management;(b) lack of familiarity with financial fiduciary safeguards required in IDA-assisted projects; and (c) weakfinancial management capacity at the CG level. SDF at this time lacks a simple and effective MIS toensure adequate coordination among various units of SDF and facilitate monitoring of funding status of alarge number of CGs, including disbursement of funds. The following mitigation measures have been orwill be taken. SDF plans to computerize financial management system to gather, store, and analyzefinancial information for timely decision. SDF will appoint a consulting firm to set up the MIS, and thesystem is expected to be operational within four months of project implementation. While the newlyappointed staff in SDF are qualified in finance and accounting, they would need training to deal withcommunity-driven type of operations. A brief training session has already been held. More are plannedthroughout the project period to address implementation issues. The PMC of CG will have a villagebook-keeper to maintain accounts. The PMC and the book keeper will be trained by the CSO and SDFstaff. This training is mandatory, without which PAST will not certify payment of the first installment ofthe matching grant. The financial management arrangements are included in the SFA. PAST will alsoreview the books of accounts of the CG.

Implementing Entity: SDF will operate under the legal framework of its MAA and have the overallresponsibility for implementation of the project. Its F&A unit will be responsible for overall financialmanagement functions of the project.

Flow of Funds from IDA and Government to SDF:

* The FD of MOF would provide IDA credit and Government contribution to SDF under aGrant Financing Agreement (GFA) between the Government and SDF.

* IDA funds will be channeled to a special account in a commercial Bank and operated by SDFunder terms and conditions acceptable to IDA.

* SDF will receive the Government contribution in two installments, and a separate accountwill be maintained in a commercial bank to receive the Government contribution.

* The MD or a designated official of SDF will be the authorized person to withdraw IDACredit proceeds and the Government contribution.

Flow of Funds from SDF to CGs:

* The project's OM includes eligibility criteria for sub-projects and PAST will appraise andrecommend the sub-projects, based on compliance with these criteria.

* Upon approval of a sub-project proposal from CG, two actions will be initiated: (a) CG willopen a bank account and deposit the community's cash contribution, and provide the bankstatement and the account number to SDF; and (b) an SFA would be executed between SDFand CG for the approved cost of the sub-project. The SFA would inter alia specify: (i) thetotal cost of the work; (ii) work completion milestones for payment of funds by SDF; (iii)payment terms and conditions; (iv) amount of beneficiary contribution; and (v) financialmanagement arrangements.

* Upon signature of the SFA and certification by PAST on the compliance with the conditionsfor payment, SDF would provide a check for the first tranche to the authorizedrepresentative of the CG in open meetings in the villages.

* Payment of funds would be monitored closely so that the processing time taken at the SDFdoes not adversely affect the execution of the sub-project by the CGs.

* Service standards (benchmarks) have been developed to specifically monitor the turn-around

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time for fund transfers from SDF to CGs.

Accounting policies and procedures: The overall accounting framework would be as follows:

* SDF registered as a nonprofit company under the Company's Act follows the statutoryaccounting policies and procedures. In addition, an FM manual for the project, incorporatingapplicable accounting policies and procedures for the community-driven developmentprojects, has been developed. This manual would serve as a reference document for SDFstaff.

* The financial management system in SDF is adequate to cover all project-relatedtransactions, i.e., all sources (Government, IDA, and community contributions) and the useof funds are accounted for and reflected in the financial statements of SDF.

* The FM manual includes detaifed Chart of Accounts for SDF. This Chart of Accounts isdesigned to allow expenditure data to be captured and classified by project activities,components, and disbursement categories.

* Books of accounts are maintained using double-entry bookkeeping principles and on accrualbasis. Separate books/records (cash and cash book ledger, trial balance, etc.) is maintained atthe SDF, using Microsoft Excel, and will move to an integrated computerized accountingsystem.

* The computerized accounting system at SDF would have control features and will processeligible transactions, based on controls developed in the system as per legal and operationalrequirements. The system would be able to provide financial data to measure performancethat are linked to the outputs of the project.

* In SDF book of accounts, payment of first installment to CGs would be treated as actualexpenditures, and payment of subsequent installments would be recorded as actualexpenditures only when physical milestones as per the SFA are reported by CGs and certifiedby PAST.

Accounting at CGs: In accordance with the SFA, the CG would maintain accounts of funds receivedfrom all sources and spent in simple accounting records. The formats have been developed. Each CGwould maintain the following books, for which formats have been developed:

* Simple cash/bank book providing details of amounts received into the project account anddetails of payments.

* Register of contributions received from members in cash or labor and materials.* Register of material purchased using project funds.

Internal Controls: To prevent unauthorized transactions and use of assets, controls have been developedand documented in the FM manual. Jobs are segregated and reporting functions are done as per jobdescriptions. Financial transactions at various levels are carried out, as per delegation of financial powerand approval authority indicated in the OM. Procurement policies for below prior review thresholdshave been developed, which is adequate for ensuring that funds are utilized for intended purposes. Assetmanagement system in SDF includes depreciation and disposal policy, procedures, for use and inventoryof assets. The FM manual also includes control functions to be followed by the CGs and the SFAincludes clauses for remedial measures in case of noncompliance with any provisiorL of the SFA. TheCG will maintain separate books and register for financial transactions and assets.

Staffing

* The organizational structure of SDF adequately provides staff positions in the finance unitwith job descriptions of key positions and clear reporting mechanisms. There is adequate

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segregation of duties within and outside the Finance Unit.* The F&A Unit of SDF is headed by a GM, who is an accounting professional with extensive

experience. The GM has overall responsibilities for financial management andadministrative functions of the project. The unit has a Finance Manager with experience inthe banking sector.

* SDF has recruited key finance staff (GM and Manager) through open competition. Theposition of Accountant will be filled by February 15, 2003.

* The Finance Manager is responsible for developing, updating, and operationalizing thecomputerized financial management system and financial planning, as well as forecasting.

* Training on the operation of computerized financial management system to the finance andaccounting staff to be given by the same consultants who would be appointed for developingthe computerized financial management system in the project.

Internal Audit: Staff responsible for reporting and monitoring would carry out periodic internal auditfunctions under specific audit plan and submit reports to the MD. Under the audit plan, the activities ofthe CG and the service providers, such as POs and the private sector and their contractual obligationsunder SDF, would be reviewed and reported. The findings of the internal audit will be acted upon withina month of the report after consultation with the relevant units and with the GB of SDF, if required.

External Audit: Since SDF is governed by the Companies Act, it is mandatory for its accounts to beaudited by a private audit firm. SDF will hire a Chartered Accountants firm to conduct the annual auditunder the terms of reference acceptable to IDA. The audit report would be submitted to IDA within sixmonths of the end of each fiscal year. The audit report will include a separate opinion on ProjectFinancial Statements and Special Account. The following audit reports would be monitored in the AuditReport Compliance system (ARCS):

Implementing Agency Audit [AuditorsSDF Project Account, SOE Private auditorDF Special Account Private Auditor

Financial Reporting and Monitoring: The mechanism for reporting and monitoring would be as follows:

* An adequate financial management system is in place.* The F&A Unit will be responsible for consolidating of financial transactions at SDF and CG

levels, maintaining supporting papers, and preparing timely consolidated FinancialStatements on a monthly basis.

* The F&A Unit would also be responsible for preparing quarterly Financial MonitoringReports (FMRs) after scrutiny of financial information received within and outside SDF,monitoring actual expenditure against forecast, and coordinating with other units of SDF toreconcile timely financial information. A set of customized formats of FMRs are included inthe FM Manual.

* Quarterly FMR showing IDA, Government, community expenditure would be submitted toIDA. In particular, the FMR would include: (a) sources of funds and application of funds(classified by components, sub-components, and summarized expenditure categories); (b)output monitoring reports comparing budgeted and actual expenditures or analysis of majorvariances on key physical parameters and unit rates for selected key items; and (c)information on procurement management for major contracts.

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Information System:

At the SDF level: PAST will send financial and physical progress reports to the Program Unit and theM&L unit after verification. The Program Unit will instruct F&A Unit for payment of funds to the CG,based on the certified reports of PAST, review of the funding status of the CGs, and physical progressagainst agreed milestones. The integrated computerized MIS and financial management system willprovide timely and reliable financial management information to IDA and SDF for raonitoring progressof the project and making appropriate decisions.

At the CG level, PAST would prepare and submit a simple monthly report to SDF. This would indicate(a) amount of funds received from SDF and community contributions in cash and monetized kindcontributions, amounts spent on various items, balance in the bank or cash book; and (b) details of thework being carried out and cost incurred.

Supervision Plan: The project will need intensive supervision, including field visits which will beconducted three to four times a year for the first two years of project implementation. The initialsupervision focus will be on the implementation progress of agreed actions and the operation of thecomputerized financial management system in SDF.

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Annex 7: Project Processing ScheduleBANGLADESH: Social Investment Program Project

.. 8s~ ~ ~ ~ ~~~~i goJ t Scedi!;> 'O S X ;/i;2ant1 .3-2 i -1fX,.,'

Time taken to prepare the project (months) 18 60

First Bank mission (identification) 11/01/1997 11/15/1997

Appraisal mission departure 09/15/1999 11/12/2002

Negotiations 01/07/2003 01/15/2003

Planned Date of Effectiveness 06/30/2003

Prepared by:IDA and Government of Bangladesh

Preparation assistance:

A PHRD grant (TF025337) of US$475,000 was received for project preparation by the Bank. Of this,US$190,360 was used to contract consulting services and finance workshops and training for thefollowing preparation activities: (a) social assessment study; (b) formulation of project design strategy;(c) identification of monitoring indicators and project evaluation methodology; (d) design of MIS;information communication strategy; technical components of the project; and (e) support for projectmanagement including training for procurement, financial management, and preparation of projectoperation manual.

Grant implementation results: The Grant was successfully executed. All planned outputs werecompleted and consultants' performance was generally satisfactory. The training programs andconsultative workshops benefited the client.

Bank staff who worked on the project included:Name Speciality

Andrea Ryan EconomistClive G. Harris Senior Private Sector Development SpecialistDeborah Lee Ricks Program Assistant (Washington)Habibur Rahman Education SpecialistJacques G. Toureille Task Team Leader (1998-2000)Jeeva A. Perumalpillai-Essex Task Manager (April-November 2002)Khwaja M. Minnatullah Senior Water & Sanitation SpecialistMohammad Sayeed Disbursement OfficerMohi Uz Zaman Quazi Senior Transport EngineerNilufar Ahmad Senior Social ScientistOwaise Saadat Task Team Leader (1997-1998)Paul Jonathan Martin Senior Environmental SpecialistPhilippe Dongier Task Team Leader (2000-March 2002)Prasad C. Mohan Senior Communication SpecialistSadia Afroze Chowdhury Senior Public Health SpecialistShahpar Selim Research Analyst

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Shakila Parveen Khan Program Assistant (Dhaka)Subrata Dhar Senior Communications OfficerSuraiya Zannath Senior Financial Management SpecialistWahida Huq Current Task Team Leader & Senior Operations OfficerYasmin Tayyab Program OfficerZafrul Islam Senior Procurement SpecialistZahed H. Khan Senior Urban Specialist

Others who worked on the project included:

Peer Reviewers

Name SpecialityBank StaffDinah McLeod HDNSPJeff Ruster PSAPPJulie Van Domelen HDNSPKeith W. McLean SDVSteen Lau Jorgensen Director, SDV

OtherAbdul Muyeed Chowdhury Executive Director, BRAC (a large national NGO)Donal Brown Senior Rural Livelihood Advisor, Department for International

Development (DFID), The British High Commission

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Annex 8: Documents in the Project File*BANGLADESH: Social Investment Program Project

A. Project Implementation Plan

1. Project Operational Manual (including Financial Management Manual and EnvironmentalAssessment Manual).

B. Bank Staff Assessments

1. Quality Enhancement Review - Quality Assurance Group, World Bank, May 30, 2002.

2. Aide Memoires, Management Letters, and BTORs of Preparation Missions for the project.

3. Tribal Development Plan.

C. Other

1. Operationalizing the Social Development Foundation - Design Challenges (July 2002).

2. Social Assessment Report of SIPP (May 1999).

3. A Preliminary Assessment of Kishoreganj Sadar Thana (KST) Project (February 2000).

4. Social Development Foundation's (SDF's) Organization Structure and Management Policies(February 2002).

5. SDF's Information Communication Program (February 2002).

6. SIPP - Review of Design Issues and Performance Indicators (November 2001).

7. SIPP's Water Supply and Environmental Sanitation Components (January 2002).

8. Design of MIS (January 2002).

9. Design of Community Infrastructure (January 2002).

*Including electronic files

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Annex 9: Statement of Loans and Credits

BANGLADESH: Social Investrnent Program Project02-Jan-2003

Difference between expectedand actual

Odginal Amount in Us$ Millions disbursements

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm RevJdP071794 2002 Rural Elect Renewable Energy Dev 0.00 190.98 0.00 0.00 201.40 27.04 0.00

P074040 2002 Renewable Energy Development 0.00 0.00 8 20 0.00 0.05 0 29 0.00

P074731 2002 Finandal Services for the Poorest 0.00 5.00 0.00 0.00 4.69 -0.42 0.00

P075016 2002 Public Procurement Reform Project 0.00 4.50 0.00 0.00 3.99 0.24 0.00

P044876 2002 Female Secondary Srhool Assis. II 0.00 120 90 0.00 0.00 101.92 -0 89 0.00

P057833 2001 Air Quallty Management Project 0.00 4 71 0.00 000 391 3.03 0 00

P059143 2001 Microfinance 11 0.00 151.00 0.00 0.00 74.48 7.46 0.00

P044810 2001 Legal & Judioal Capadty Building 0.00 30.60 0.00 0.04 28 29 6.32 0.00

P050752 2001 Post-Literacy & Contnuing Education 0.00 53 30 0.00 0.00 50.81 1.38 0.00

P069933 2001 HIV/AIDS Prevention 0 00 40.00 0.00 0.00 38.49 14.75 0.00

P009468 2000 Fourth Fisheries 0.00 28.00 5.00 0.00 21.68 19.20 0.00

P044811 2000 Financial Insttubons Development 0.00 46.90 0.00 0.00 15 52 17.13 0.00

P050751 2000 National Nutribon Program 0.00 92.00 0.00 0 00 86.78 35 63 0.00

P058468 2000 Agricultural Serv. lnnovaton & Reform 0.00 500 0.00 0.00 1.08 1.01 0.00

P049587 2000 Aquatic Biodiversity Conservabon 0.00 0.00 5.00 0.00 4.04 3.54 0.00

P009524 1999 Dhaka Urban Transport 0.00 17700 0.00 0.03 127.35 113.09 -2,21

P037294 1999 Third Road Rehabilitabon & Maintenance 0.00 273.00 0.00 0.00 150.12 151.80 3.75

P041887 1999 Municipal Services 0.00 138 60 0.00 0.00 87.76 2.96 0.00

P049790 1999 Export Dlversification 0.00 32.00 0.00 0.00 9.69 10.82 0.00

P050745 1999 Arsenic Mitgation Water Supply 0.00 32.40 0.00 4.35 20.98 25.30 0.00

P040713 1998 Silk Development Pilot Project 000 11 40 0.00 3.53 2.64 6.63 5.14

P009550 1998 Primary Education Development 0.00 150.00 0.00 25.63 43.34 53.57 14.91

P037857 1998 Health and Populabon Program 0.00 250.00 0.00 0.78 57.40 37.21 0.00

P044789 1998 Pnvate Sector Infrastructure Dev 000 235.00 000 0.00 14907 15626 0.00

P009518 1997 Second Rural Roads & Markets Improvement 0.00 133.00 0.00 0.00 090 -7.69 1364

Total: 0.00 2205.29 18.20 34.35 1286.39 685.68 35.23

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BANGLADESHSTATEMENT OF IFC's

Held and Disbursed PortfolioJun 30 - 2002

In Millions US Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1997 DBH 0.00 0.65 0.00 0.00 0.00 0.65 0.00 0.001991 Dynamic Textile 1.86 0.00 0.00 1.48 1.86 0.00 0.00 1.481998 Grameen Phone 13.33 1.58 0.00 0.00 13.33 1.58 0.00 0.001985/95 IDLC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001980/98 IPDC 8.13 0.00 0.00 0.00 8.13 0.00 0.00 0.001998 Khulna 17.34 0.00 0.00 0.00 17.34 0.00 0.00 0.001998 Lafarge/Surma 35.00 10.00 0.00 0.00 0.00 0.00 0.00 0.002000 Scancem 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00

Total Portfolio: 85.66 12.23 0.00 1.48 50.66 2.23 0.00 1.48

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

1998 Khulna 0.00 0.00 3.30 0.001999 Khulna Swap 1.30 0.00 0.00 0.002000 USPCL 0.00 4.00 3.00 0.002000 ULC - Bangladesh 5.00 0.00 0.00 0.002001 Dhaka Westin 8.75 0.00 0.00 0.002001 BRAC Bank 0.00 0.00 3.00 0.00

Total Pending Commitment: 15.05 4.00 9.30 0.00

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Annex 10: Country at a-dIanceBANGLADESH: Social Investment Program Project

POVERTY and SOCIAL South Low-Bangladesh Asia Income Development dlamorid-

2001Population, mid-year (n illons) 133.4 1,380 2,511 LIfe expectancyGNI per capita (Atlas method, USS) 370 450 430GNI (Atlas method, US$ billions) 48.6 616 1,069

Average annual growth, 1995-01

Population (%) 1.7 1.9 1.9 GNI GrLabor force (%) 2.9 2.4 2.3 GNI . Gro

per . primaryMost recent estimate (latest yesw available, 1995-01) capita . enrollment

Poverty (% ofpopulation below national poverty iine) 36Urban population (% oftotalpopulatIn) 25 28 31Life expectancy at birth (years) 61 62 59Infant mortality (par 1, 000 live births) 60 73 76Child malnutrition (% of children under 5) 61 49 Access to improved water sourceAccess to an Improved water source (% of populatfon) 97 87 76Illiteracy (% of population age 15+) 58 44 37Gross prmaryenrollment (% of school-age population) 122 101 96 -Bangladesh

Male 125 109 103 Low-income groupFemale 120 93 88

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1981 1991 2000 2001Economic ratios'

GDP (US$ billions) 19.5 31.0 47.1 46.7Gross domestic Investment/GDP 15.9 16.9 23.0 23.1 TrdExports of goods and servIces/GDP 6.5 6.8 14.0 15.4 radeGross domestic savings/GDP 9.7 11.4 17.8 16.2Gross national savings/GDP 14.5 13.7 23.0 20.5

Current account balance/GDP -4.3 -3.1 0.0 -1.7 Domestic i nInterest payments/GOP 0.3 0.5 0.4 0.5 . InvestmentTotal debt/GDP 23.9 42.6 33.1 32.7 savingsTotal debt service/exports 16.8 20.9 9 1 7.3Present value of debtGDP 20.3Present value of debtexports 110.6

Indebtedness1981-91 199141 2000 2001 200145

(average annual growth)GDP 4.1 5.0 5.9 5.3 5.3 -BangladeshGDP per capita 1.6 3.3 4.2 3.4 3.4 Low-income grupExports of goods and services 8.4 13.2 8.6 22.8 5.5

STRUCTURE of the ECONOMY19s1 1991 2000 2001 Growth of Investment end GDP I%)

(% of GDP)Agricufture 30.4 25.5 241 16Industry . 21.7 25.3 25.9 i

Manufacturing 13.4 15.2 15.6 _

Services .. 47.9 49.2 50.0

Private consumption 89.9 84.5 77.6 79.3 9a 97 9S 99 00 01General govemment consumption 6.7 4.1 4.6 4.5 -GO 0..GDPImports of goods and services 19.0 12.4 19.2 22.3 -

(vh1981-91 199141 2000 2001 Growth of exports and Imports (%)(average annual growth)Agricuitume 2.5 3.3 7.4 3.1 G0

Industry 5.2 7.3 6.2 7.2 40Manufacturing 3.3 6.9 4.8 6.7 20

Services 3.9 4.7 5.5 5.5

Private consumptlon 4.0 3.9 5.3 6.2 o 9G- - 99 1 0 01General govemment consumption 4.6 4.4 0.9 4.5 .20Gross domestic Investment 2.1 9.6 7.3 5.8 Exports -lmportsImports of goods and services 6.6 10.8 5.7 23.5

Note: 2001 data are preliminary esfmaltes.The diamonds show four key indicators in the country (in bold) compared with Its incomergroup average. If deta are mrissing, the diamond wil be Incomnplete.

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BangladeshPRICES and GOVERNMENT FINANCE

1981 1991 2000 2001 Inflation (%)DomestSc prices(% change) 10Consumer prices .. 8.3 3.4 1.6Implicit GDP deflator 6.0 6.6 1.9 1.6 4 \XGovernment flnance 2

(% of GDP, includes current grants) 0

Current revenue .. 7.2 8.5 9.2 96 97 9a 99 00 0

Current budget balance .. 0.7 0.7 1.0 -G DP deflator * CPOverall surplus/deficIt -17.9 5.4 -6.2 -5.9

TRADE

1981 1991 2000 2001 Export and Import levels (USS mill.)(US$ rmlilons)

Total exports (fob) ,, 1,698 5,752 6,467 10.ODORaw jute .. 120 72 67Leather and leather products .. 138 195 254 7.500Manufactures .. 1,278 5,123 5,761 * *

Total Imports (cit) .. 3,510 8,403 9383 56000

Food .. 297 381 349 2s,_00Fuel and energy .. 204 684 905Capial goods .. 1,231 2,133 2,515 0

95 96 97 96 99 00 01Export prce Index (1995=100) 71 103 95Import price Index (1995=100) .. 85 99 98 * Exports * ImlportsTerms of trade (1995=100) .. 83 103 97

BALANCE of PAYMENTS

1981 1991 2000 2001 Current account balance to GDP (%)(US$ rm/llons)

Exportsofgoodsandservices 933 2,113 6,611 7,248 1Imports of goods and services 2,718 3,829 9,060 10.084Resource balance -1,785 -1,717 -2,449 -2,836 o

Net Income -23 -102 -221 -266 -.Net current transfers 963 846 2,672 2,296 I I * E f

Current account balance -844 -973 2 -806

Financing items (net) 445 1,354 77 504Changes in net reserves 399 -381 -79 302 .4

Memo:Reserves including gold (USS millions) .. 880 1,599 1,307Conversion rate (DEC, hocal/USS) 16.3 35.7 50.3 54.3

EXTERNAL DEBT and RESOURCE FLOWS1981 1991 2000 2001

(USS millions) ComposItton of 2001 debt (USS mill.)Total debt outstanding and disbursed 4,663 13,193 15,613 15,294

IBRD 55 65 24 17 G'294IDA 1,085 4,360 6,431 6,439 F:446 A: 17

Total debt service 227 614 789 678 E: 3,546IBRD 4 5 7 7IDA 7 47 129 143 b:6,439

Compositon of net resource flowsOflklal grants 0 832 283 177Offidal credItors 500 487 355 401Pfivate creditors 15 34 16 270 _Foreign direct investment 0 2 194 166 D04,403Portfolio equity 0 52 0 3 C 149

World Bank programCommitments 212 451 198 235 A -IBRD E -BilateraDisbursements 158 253 356 312 B-IDA D-Othermultiateral F-PrivatePrncipal repayments 0 18 87 99 C -IMF G -Short-temmNet flows 158 236 268 213Interest payments 11 34 49 50Net transfers 147 201 220 163

ueveiopment Eoonomics wi3inu

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