Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 68506-AZ
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF US$30 MILLION
TO THE
REPUBLIC OF AZERBAIJAN
FOR THE
SECOND RURAL INVESTMENT PROJECT
June 13, 2012
Sustainable Development Department
South Caucasus Country Unit
Europe and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 26, 2012)
Currency Unit = Azerbaijani New Manat
AZN 0.79 = US$1
US$ 1.27 = AZN 1
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AzRIP Azerbaijan Rural Investment Project
AzRIP-AF Azerbaijan Rural Investment Project Additional Financing
AZN Azerbaijani New Manat
CDD Community Driven Development
CIG Common Interest Group
CIS Commonwealth of Independent States
CPS Country Partnership Strategy
ECA Europe and Central Asia Region of the World Bank
EMF Environmental Management Framework
EMPF Environmental Management Plan Framework
ExComm Local Executive Committee
FAO Food and Agriculture Organization
FM Financial Management
GDP Gross Domestic Product
IDP Internally Displaced Person
IFR Interim Financial Report
IBRD International Bank for Reconstruction and Development
IGA Income Generation Activities
LSMS Livings Standards Measurement Survey
M&E Monitoring and Evaluation
MIS Management Information Systems
MP Micro-project
OM Operational Manual
PAT Project Assistance Team
PDO Project Development Objective
PM&E Participatory Performance Monitoring and Evaluation
PMU Project Management Unit
RGAC Regional Grant Approval Committee
ROO Regional Operations Office
SAAC State Agency for Agricultural Credits
SFDI Social Fund for the Development of IDPs
PRA Participatory Rural Appraisal
WG Working Group
Regional Vice President: Philippe Le Houerou
Country Director: Asad Alam
Sector Director:
Sector Manager:
Laszlo Lovei
Elisabeth Huybens
Task Team Leader: Daniel Owen
Table of Contents
I. Strategic Context ............................................................................................................ 1
A. Country Context ............................................................................................................... 1
B. Sectoral and Institutional Context .................................................................................... 1
C. Higher Level Objectives to which the Project Contributes ............................................. 3
II. Project Development Objectives ................................................................................... 4
A. Project Components ......................................................................................................... 5
B. Project Financing ............................................................................................................. 6
C. Lessons Learned and Reflected in the Project Design ..................................................... 7
III. Implementation .............................................................................................................. 9
A. Institutional and Implementation Arrangements ............................................................. 9
B. Results Monitoring and Evaluation ............................................................................... 10
C. Sustainability.................................................................................................................. 11
IV. Key Risks and Mitigation Measures .......................................................................... 11
A. Economic and Financial Analysis .................................................................................. 11
B. Technical ........................................................................................................................ 12
C. Financial Management ................................................................................................... 13
D. Procurement ................................................................................................................... 13
E. Social (including safeguards) ......................................................................................... 13
F. Environment (including safeguards) .............................................................................. 15
Annex 1: Results Framework and Monitoring ...................................................................... 17
Annex 2: Detailed Project Description ................................................................................. 20
Annex 3: Implementation Arrangements ............................................................................. 30
Annex 4: Operational Risk Assessment Framework (ORAF) ............................................. 46
Annex 5: Implementation Support Plan ................................................................................ 50
MAP: IBRD 38276
i
.
PAD DATA SHEET
Azerbaijan
Second Rural Investment Project (P122944)
PROJECT APPRAISAL DOCUMENT .
EUROPE AND CENTRAL ASIA
ECSS4
.
Basic Information
Date: 13-Jun-2012 Sectors: Other social services (40%), Microfinance
(15%), Water supply (15%), Rural and Inter-
Urban Roads and Highways (15%),
Transmission and Distribution of Electricity
(15%)
Country Director: Asad Alam Themes: Rural services and infrastructure (33%),
Participation and civic engagement (25%),
Rural non-farm income generation (25%),
Decentralization (17%)
Sector
Manager/Director: Elisabeth
Huybens/Laszlo Lovei
Project ID: P122944 EA
Category: B - Partial Assessment
Lending
Instrument: Specific Investment
Loan
Team Leader(s): Daniel Owen
Joint IFC: No .
Borrower: Republic of Azerbaijan
Responsible Agency: State Agency for Agricultural Credits (SAAC)
Contact: Mr. Subhan Asgerov Title: Director
Telephone
No.: 994-12-934693 Email: [email protected]
.
Project Implementation
Period: Start
Date: 01-Sep-2012 End
Date: 30-Mar-2017
Expected Effectiveness
Date: 01-Sep-2012
Expected Closing Date: 30-Sep-2017 .
Project Financing Data(US$M)
[ X ] Loan [ ] Grant [ ] Other
[ ] Credit [ ] Guarantee
ii
Proposed term: The IBRD flexible Loan with a variable spread has a final maturity of 17 years
including a grace period of 4 years.
For Loans/Credits/Others
Total Project Cost (US$M): 53.60
Total Bank Financing
(US$M): 30.00
.
Financing Source Amount(US$M)
Borrower 20.00
International Bank for Reconstruction and
Development 30.00
LOCAL BENEFICIARIES 3.60
Total 53.60 .
Expected Disbursements (in USD Million)
Fiscal
Year 2013 2014 2015 2016 2017 2018 0000 0000 0000
Annual 4.07 6.54 7.02 6.92 4.42 1.03 0.00 0.00 0.00
Cumulati
ve 4.07 10.61 17.63 24.55 28.97 30.00 0.00 0.00 0.00
.
Project Development Objective(s)
The Project Development Objective is to improve access to and use of community-driven rural
infrastructure and expand economic activities for rural households. This would be achieved through: (i)
the provision of grants to finance eligible demand-driven micro-projects in rural infrastructure; (ii) the
provision of training and consultants‟ services to support micro-project development by enhancing the
capacity of engaged local stakeholders in all aspects of micro-project program development; (iii)
building opportunities for rural employment and livelihood support services through the provision of
training and consultants‟ services to carry out pilot livelihood support services in six communities; and,
(iv) supporting project management capacity at the Project Management Unit and its Regional
Operations Offices for the purposes of effective management, implementation and monitoring and
evaluation of Project activities. .
Components
Component Name Cost (USD Millions)
Rural Community Infrastructure 18.90
Technical Assistance for Rural Infrastructure 4.73
Project Management and Results Monitoring 6.37 .
Compliance
Policy
Does the project depart from the CAS in content or in other significant
respects? Yes [ ] No [ X ]
.
iii
Does the project require any waivers of Bank policies? Yes [ ] No [ X ]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Legal Covenants
Name Recurrent Due Date Frequency
Schedule 2, Section I. A. Institutional
Arrangements X
Description of Covenant
1. The Borrower shall carry out the Project in accordance with the Operational Manual 2. The Borrower shall maintain the PMU and ensure it is adequately staffed with qualifications in
accordance with procedures necessary for the carrying out of the project. 3. The Borrower shall ensure the Working Group shall be maintained with broad stakeholder
representation satisfactory to the Bank.
Name Recurrent Due Date Frequency
Schedule 2, Section I. C. Micro-projects X
Description of Covenant
1. The Borrower shall make Grants to Beneficiaries in accordance with eligibility criteria and procedures
acceptable to the Bank. 2. The Borrower shall make each Grant under a Grant Agreement with the respective Beneficiary on
terms and conditions approved by the Bank.
Name Recurrent Due Date Frequency
Schedule 2. Section I. D. Safeguards X
Description of Covenant
The Borrower shall ensure that the Project is carried out by the Project Implementing Entity in
accordance with the provisions of the EMF and/or EMP(s). .
iv
Conditions
Name Type
Description of Condition
Team Composition
Bank Staff
Name Title Specialization Unit
Myrtle Laura Diachok Operations Officer Monitoring and
Evaluation SDV
Joseph Paul Formoso Senior Finance Officer Disbursement CTRLA
Ahmet Gokce Consultant Procurement ECSO2
Daniel Owen Senior Social
Development Specialist Task Team Leader ECSS4
Hiwote Tadesse Senior Program
Assistant Operations ECSSD
Deepal Fernando Senior Procurement
Specialist Procurement ECSO2
Rufiz Vakhid Chirag-
Zade Senior Operations
Officer Institutional
Arrangements ECSS1
Ghada Youness Senior Counsel Legal LEGEM
Gulana Enar Hajiyeva Environmental Specialist Environment ECSS3
Yagut Iltifat Ertenlice Procurement Assistant Procurement ECCAZ
Norpulat Daniyarov Sr Financial
Management Specialist Financial Management ECSO3
Martin Henry Lenihan Senior Social
Development Specialist Social Safeguards LCSSO
Sabina Vagif Majidova Team Assistant Logistics ECCAZ
Tural Jamalov Financial Management
Specialist Financial Management ECSO3
Non Bank Staff
Name Title Office Phone City
Peter Reid Consultant, Livelihood
Specialist Lyme Regis
Yoshiko Ishihara Consultant Rome .
Locations
Country First
Administrative
Location Planned Actual Comments
v
Division
Azerbaijan Beylaqan Rayonu Beylagan Rayon X
Azerbaijan Yardimli Rayonu Yardymli Rayon X
Azerbaijan Salyan Rayonu Salyan Rayon X
Azerbaijan Sabirabad Rayonu Sabirabad Rayon X
Azerbaijan Saatli Rayonu Saatly Rayon X
Azerbaijan Bilasuvar Rayonu Bilasuvar Rayon X
Azerbaijan Neftcala Rayonu Neftchala Rayon X
Azerbaijan Masalli Rayonu Masally Rayon X
Azerbaijan Lerik Rayonu Lerik Rayon X
Azerbaijan Lankaran Rayonu Lankaran Rayon X
Azerbaijan Imisli Rayonu Imishli Rayon X
Azerbaijan Calilabad Rayonu Jalilabad Rayon X
Azerbaijan Astara Rayonu Astara Rayon X
Azerbaijan Agcabadi Rayonu Aghjabadi Rayon X
Azerbaijan Tartar Rayonu Tartar Rayon X
Azerbaijan Zardab Rayonu Zardab Rayon X
Azerbaijan Zaqatala Rayonu Zaqatala Rayon X
Azerbaijan Yevlax Rayonu Yevlakh Rayon X
Azerbaijan Oguz Rayonu Oghuz Rayon X
Azerbaijan Ucar Rayonu Ujar Rayon X
Azerbaijan Tovuz Rayonu Tovuz Rayon X
Azerbaijan Samaxi Rayonu Shamakhi Rayon X
Azerbaijan Saki Rayonu Shaki Rayon X
Azerbaijan Samkir Rayonu Shamkir Rayon X
Azerbaijan Kurdamir Rayonu Kurdamir Rayon X
Azerbaijan Qabala Rayonu Qabala Rayon X
Azerbaijan Qusar Rayonu Qusar Rayon X
Azerbaijan Quba Rayonu Quba Rayon X
Azerbaijan Xacmaz Rayonu Khachmaz Rayon X
Azerbaijan Qazax Rayonu Qazakh Rayon X
Azerbaijan Goranboy Rayonu Goranboy Rayon X
Azerbaijan Qax Rayonu Qakh Rayon X
vi
Azerbaijan Ismayilli Rayonu Ismayilli Rayon X
Azerbaijan Goycay Rayonu Goychay Rayon X
Azerbaijan Daskasan Rayonu Dashkasan Rayon X
Azerbaijan Balakan Rayonu Balakan Rayon X
Azerbaijan Barda Rayonu Barda Rayon X
Azerbaijan Abseron Rayonu Absheron Rayon X
Azerbaijan Agsu Rayonu Aghsu Rayon X
Azerbaijan Agdas Rayonu Aghdash Rayon X
Azerbaijan Gadabay Rayonu Gadabay Rayon X
Azerbaijan Agstafa Rayonu Aghstafa Rayon X
Azerbaijan Qobustan Rayonu Gobustan Rayon X
Azerbaijan Samux Rayonu Samukh Rayon X
Azerbaijan Siyazan Rayonu Siazan Rayon X
Azerbaijan Xizi Rayonu Khizi Rayon X
Azerbaijan Haciqabul Rayonu Hajigabul Rayon X .
1
I. Strategic Context
A. Country Context
1. Over the past decade, Azerbaijan has experienced many of the same challenges as other
Commonwealth of Independent States (CIS) transition economies including deterioration in
infrastructure and service provision and increasing inequality. Infrastructure attrition in
Azerbaijan has been particularly acute in rural areas and the poor quality of public infrastructure,
exacerbated by a weak public expenditure framework, has been one of the factors impeding
development since the mid-1990s. Roughly 45% of the main and regional roads are in poor
condition, hindering social and economic development and limiting growth prospects in rural
areas of the country. The Government places high priority on infrastructure provision, including
power supply and gasification, irrigation investments and major highways crucial for the
development of Azerbaijan as a transport corridor, internal connectivity and the development of
regions within the country.
2. Since independence, oil and gas discoveries have given Azerbaijan new means for
combating poverty and developing a diversified and sustainable middle-income economy.
Driven by the oil boom, per capita income rose from a post-independence low of just US$470 in
1995 to $4,820 in 2009. The economy has continued to grow in recent years, recording an
average annual GDP growth rate of 24% in 2005-2008, with 12% growth in the non-oil sectors.
3. Strong growth and rising government social spending have reduced poverty markedly,
from 49% in 2001 to 16% in 2008 and to 7.6% in 2011, according to official estimates. This
decline has been largely driven by high growth rates averaging more than 20% over the period.
Higher minimum wage rates over the last decade are likely to have contributed to poverty
reduction. Minimum wages were last increased by 10% in January 2012 to the equivalent of
US$118 a month. Social transfers, including a well targeted social assistance program, have also
contributed to declining poverty. Data suggests that while rural and urban poverty rates have
fallen sharply, much of the poverty is rural.
4. Azerbaijan‟s development challenge is to maintain momentum by strengthening the non-
oil economy, improving competitiveness and by building skills and strengthening its institutions.
Azerbaijan faces an important challenge in improving governance and fighting corruption and
new challenges are emerging in economic prospects. The rapid growth derived from oil and gas
revenues is likely to plateau over the coming decade and decline thereafter. While Azerbaijan
has weathered the global economic crisis relatively well, the crisis has underlined the need for a
diversified economy, market-based policies and improved social services.
B. Sectoral and Institutional Context
5. Deficiencies in basic infrastructure (roads, water, and energy) in rural areas serve as
an obstacle to poverty reduction by discouraging people and businesses from residing in or
investing in rural space. Despite the tripling of government investment in basic infrastructure
since 2006, there are still important gaps in terms of access and quality of public services
between urban and rural areas. While over 90% of households in Baku have access to piped
2
water, the same is true for less than 33% of households in rural areas and in many parts of the
country outside Baku people receive as little as three hours supply per day. Similarly, rural
communities suffer from unreliable supplies of gas and electricity, a problem that becomes
especially acute in remote mountainous areas where access may be completely lacking.
Furthermore, the 2009 Country Economic Memorandum states that domestic vehicular traffic
has increased 10% per year since 2003, leading to increasing pressure on local road networks and
negative impacts on rural economic development. According to the 2008 Living Standards
Measurement Survey (LSMS), improved access to, and the quality of public utilities will not
only improve household livelihoods and living conditions but also the operating environment for
rural enterprises such as food processing and light manufacturing.
6. While rural poverty reduction depends on increasing incomes from agriculture and the
diversification and growth of the non-farm rural economy, there are significant constraints
facing the development of both sectors. Currently, employment in rural areas does not
guarantee a route out of poverty; the working poor account for 60% of the rural poor compared
to 50% for the whole country and 35.6% in urban areas. This is due to the poorly paid and
seasonal nature of employment in rural areas (median monthly earnings AZN 75 versus AZN
120 in urban areas), the lack of non-farm rural enterprises and the numerous constraints farmers
face in maximizing income earned from agriculture. A key constraint is the weakness in
infrastructure provision such as rural roads, irrigation and drainage systems. Irrigation is
particularly problematic, with at least 50% of all irrigated land damaged due to the effects of
salinity resulting from degraded irrigation and drainage systems. Similarly, farm profitability
and off-farm employment is constrained by undeveloped value chains with farmers typically
producing for their own consumption or sale in informal markets at very low prices. This is
compounded by the absence of market infrastructure such as storage, packaging and processing
facilities. Despite these constraints, agri-food is a key sector for the country‟s development,
being the second largest exporter after oil and gas and employing close to 40% of the total
workforce in full-time or seasonal employment. There are significant opportunities for
generating off-farm employment at the upper end of the agricultural value chain which is
currently underdeveloped.
7. There are important disparities between urban and rural areas in terms of access to
health services and education attainment. Physical remoteness to health care has been cited in
the 2008 LSMS as an explanation for lower utilization by the poor. Over two thirds of women in
the poorest quintile surveyed by the LSMS reported distance from a health facility as
representing a barrier to access, versus 14% in the richest quintile. Similarly, health service
utilization for both out-patient and in-patient services is higher in Baku and other urban areas
than for rural areas. For education, in rural areas, post-secondary education attainment rates are
below 11% compared to 40% in Baku. In general, rural areas have lower access to both pre-
school and post-secondary education, while the quality of the learning experience at primary and
secondary levels is affected by the poor condition of school facilities.
8. Institutional capacity at the local-self government level to address these urban-rural
disparities is growing and in need of support. Key institutions at the local level in Azerbaijan
include Municipalities and Local Executive Committees. Local Executive Committees
(ExComms) represent the various agencies and line Ministries of Central Government and are
3
primarily focused on regulatory functions and the development needs of larger settlements.
While elected Municipal Councils were established by law in 1995, they are still relatively new
institutions with limited responsibility (for roads, parks, cemeteries and some aspects of social
care) and financial capacity to support the provision of critical rural infrastructure. The Second
Rural Investment Project in Azerbaijan (AzRIP-2) is well placed to support the developing
decentralization agenda through mobilizing local communities to work closely with both
ExComm authorities and municipalities in the development of infrastructure in underserviced
rural communities.
9. Aside from the decentralization agenda, AzRIP-2 further reinforces a range of other
Government strategies and programs. AzRIP-2 complements specific strategies such as the
Regional Development Program covering 2009-2012 which is focused on strengthening the
productive potential of the regions in non-oil sectors (such as agriculture and tourism) and
improving living conditions to ease the pressure on migration to Baku. AzRIP-2 is similarly
aligned with Government action programs in other sectors such as infrastructure (prioritizing
power supply, roads and social infrastructure), and the state program for agriculture covering
2008-2015 which prioritizes the rehabilitation of irrigation networks and the development of
food processing enterprises. The Operational Manual (OM) specifies that micro-projects which
do not confirm to national legislation and regional development programs will not be supported
by AzRIP-2.
10. In terms of rationale for Bank engagement, AzRIP-2 not only builds on the successful
implementation of the original project, but also the experience with Community Driven
Development operations elsewhere in the region and globally. Beyond Azerbaijan, the World
Bank has supported a range of successful Local and Community Driven Development (CDD)
activities across Europe and Central Asia (ECA) that finance improved service delivery,
infrastructure provision and income generation in countries as diverse as Croatia, the Kyrgyz
Republic, Poland and Russia. These projects respond to the infrastructure and service deficits
that arose during the transition era following the privatization of collective farms and local
industries previously responsible for social infrastructure and service provision. They also
respond to a need to support alternative, more participatory and transparent forms of local
governance. These projects build on global best practice by the Bank to support participatory
decision making, local capacity building, and community control of resources through CDD.
Over the last decade, the Bank has increasingly used CDD projects across a range of countries to
address critical infrastructure needs and the current global CDD portfolio amounts to
approximately US$2 billion of Bank investments per year. According to the 2008 World
Development Report on Agriculture for Development, CDD can also contribute to the agriculture
for development agenda by first focusing on the provision of basic services and public goods and
then by supporting income generating activities once basic needs have been met.
C. Higher Level Objectives to which the Project Contributes
11. The Country Partnership Strategy (CPS) for Azerbaijan for 2011-2014 is focused on
achieving results in two key pillars: (i) building a competitive non-oil sector; and (ii)
strengthening human and social services; with a cross-cutting filter for improving governance
and institution-building across all activities. The importance of improved access to rural
4
infrastructure through cost-effective approaches that support rural communities‟ demand-driven
infrastructure investment priorities is emphasized in the CPS. Rural infrastructure projects have
a high impact on employment generation. Rehabilitation of small scale irrigation works
increases productivity significantly and school rehabilitation leads to increases in school
enrollment. The CPS identifies the primary vehicle for achieving these outcomes as the
Azerbaijan Second Rural Investment Project.
12. The Government‟s current development program is laid out in its strategy document
“State Program on Poverty Reduction and Sustainable Development 2006-15”. The broad
development goals include: maintaining macroeconomic stability; creating enabling conditions
to improve income-generating opportunities; improving the quality and access to basic health
and education services; improving infrastructure; and strengthening the social protection system
to better protect vulnerable groups. The project is also in line with the objectives of the state
programs on regional development, poverty reduction and food security.
II. Project Development Objectives
A. PDO
13. The Project Development Objective is to improve access to and use of community-driven
rural infrastructure and expand economic activities for rural households. This would be achieved
through: (i) the provision of grants to finance eligible demand-driven micro-projects in rural
infrastructure; (ii) the provision of training and consultants‟ services to support micro-project
development by enhancing the capacity of engaged local stakeholders in all aspects of micro-
project program development; (iii) building opportunities for rural employment and livelihood
support services through the provision of training and consultants‟ services to carry out pilot
livelihood support services in six communities; and, (iv) supporting project management
capacity at the Project Management Unit and its Regional Operations Offices for the purposes of
effective management, implementation and monitoring and evaluation of Project activities.
B. Project Beneficiaries
14. Under Component A - Rural Community Infrastructure, beneficiaries will include
individuals in rural communities in the 11 currently un-serviced rayons (Shabran, Siyazan, Xizi,
Abseron in the North, and Agcabadi, Beylaqan, Masalli, Uardimli, Lerik, Astara and Lankaran
Rayons in the Mugan-Salyan Zone) who will benefit from mobilization and access to improved
infrastructure. Other beneficiaries will include households and individuals from well-performing
micro-projects in the 45 existing rayons served under the original Azerbaijan Rural Investment
Project (AzRIP) and the Azerbaijan Rural Investment Project Additional Financing (AzRIP-AF),
who will benefit from second generation community infrastructure and livelihood support
services.1 These rayons comprise: Aghsu, Balakan, Gabala, Gakh, Gobustan, Guba, Gusar,
Ismayilli, Khachmaz, Oghuz, Shaki, Shamakhi, Zakatala in the North; Aghstafa, Barda,
Dashkasan, Gadabay, Goranboy, Khanlar, Qazakh, Samukh, Shamkir, Tartar and Tovuz in the
1 AzRIP became effective on January 18, 2005. The total project costs were US$21.10, of which US$15 million was financed
from a Bank loan. On March 27, 2008, additional financing of US$15 million was approved to support the expansion of
activities under AzRIP. The closing date for AzRIP was March 31, 2012.
5
North West; Aghdash, Goychay, Hajigabul, Kurdamir, Ujar, Yevlakh and Zardab in Lower
Shirvan; Bilasuvar, Imishli, Jalilabad, Neftchala, Saatly, Sabirabad and Salyan in Mughan
Salyan, and; Babek, Julfa, Kengerli, Ordubad, Sadarak, Shahbuz and Sherur in Nakhchivan.
Micro-projects in Nakhchivan are to be fully financed by Government funds. Other zones are
eligible for World Bank financed micro-projects. Individual, household and community-level
beneficiaries will be measured, tracked and monitored (incorporating social and gender data
disaggregation) using baseline surveys and follow-up impact evaluation. It is expected that in
total 600 eligible communities in 56 rayons will be serviced under AzRIP-2 and an estimated
1,500,000 community members are expected to benefit from infrastructure investments. Under
Component B – Technical Assistance for Rural Infrastructure, beneficiaries are projected to total
130,000 under participatory rural appraisal engagement; 9,000 in training and 10,000
beneficiaries in Community Network activities including workshops, cross visits and
Community Investment Conferences. Livelihood pilots are expected to benefit approximately
1,200 people. Women‟s empowerment through incubating leadership and participation in
decision-making has been a prominent feature of AzRIP‟s results narrative and a strong gender
focus will continue under AzRIP-2.
C. PDO Level Results Indicators
15. Achievement of the Development Objective will be assessed through the increase in
access to and use of rural infrastructure; the change in access to markets and basic social services
through improved rural infrastructure; and improved economic opportunities for rural
households. The outcome and intermediate indicators are specified in Annex 1.
II. Project Description
A. Project Components
16. The project is a Specific Investment Loan (SIL) with a total investment cost estimated at
US$53.60 million, of which US$30 million will be financed by the World Bank Loan. The
Project will scale up AzRIP both geographically into currently un-serviced rayons and vertically
through the inclusion of pilot livelihood support services and second generation institutional
support in current AzRIP active project areas. The Project has three components.
17. Component A - Rural Community Infrastructure. This component will finance
demand-driven micro-projects in rural infrastructure. Micro-projects eligible for finance through
Project proceeds would increase access to, and quality of local economic and social
infrastructure, such as roads, rural water supply, irrigation, schools, clinics and markets. Costs to
be supported from the project include identification, design, construction, rehabilitation, and
initial operation and maintenance of the micro-projects. Potential investments include basic
economic (e.g., rehabilitation of secondary roads, potable water systems, irrigation infrastructure,
electricity transformers) and social (e.g., school and clinic rehabilitation and construction)
infrastructure, based on priority needs identified by communities. The Project will target rural
communities (greater than 1,000 and less than 10,000 people with smaller communities open to
clustering with neighboring communities to achieve scale) in regions that meet established
selection criteria and have a higher relative incidence of poverty. The average size of micro-
projects will be US$70,000, while projects over US$85,000 will require prior review. Current
6
micro-project cycle procedures will be maintained in the new Project, including local governance
arrangements involving local authorities and sectoral line ministry representation in project
screening and approval and public and private sector linkages for key operation and maintenance
medium-term projections. Three categories of micro-project grants will be supported under
Component A: (i) micro-projects in previously un-serviced rayons which meet eligibility criteria
set out in the OM; (ii) second generation micro-projects in active AzRIP communities with high
performance ratings from previous micro-project implementation and which meet eligibility
criteria set out in the OM, and; (iii) micro-projects submitted by Common Interest Groups
supported under the pilot scheme in Component B which meet eligibility criteria as established
in the OM.
18. Component B - Technical Assistance for Rural Infrastructure. The objective of this
component is to enhance the capacity of engaged local stakeholders, including community
groups, local authorities, Regional Grant Approval Committees, Project Assistance Teams and
staff in the Regional Operations Offices in micro-project program development and to provide
technical assistance for pilot livelihood support initiatives. Stakeholder capabilities in functions
of contracting, procurement, financial management, and participatory monitoring and evaluation
will be strengthened. Livelihood support services will be piloted in six communities selected
among communities that successfully implemented economic infrastructure projects under
AzRIP and meet eligibility criteria described in the OM. Livelihood support services will
include mobilization and organization of common interest groups (CIGs), identification of
income generation activities (IGAs), preparation of business plan proposals, legalizing CIG
status, and training CIG members in business management. CIGs that are well organized and
performing in accordance with standards set out in the OM and equipped with quality business
plans may submit their proposal as a micro-project under Component A, Category (iii).
19. Component C - Project Management and Results Monitoring. This component will
finance the administrative and operational project implementation and management costs,
including overheads of Project Management Unit (PMU) professional staff, as well as PMU and
four Regional Operations Offices (ROOs) and their associated support staff, project outreach,
and support to Regional Grant Approval Committees (RGACs). AzRIP-2 will continue the
current practice of regular and rigorous project monitoring and evaluation using mixed
quantitative and qualitative methods and results based, gender disaggregated indicators
implemented on multiple levels – project, rayon and community. AzRIP-2 will also maintain the
intensive effort of physical verification of works and technical aspects of sub-project
implementation.
B. Project Financing
20. The Lending Instrument for the project is a SIL of US$30 million for a period of 5 years
from 2012 to 2017. The Loan will be a single currency (US dollar denominated), variable spread
loan, with a maturity of 17 years inclusive of 4 years of grace, a front end fee of 0.25%, with
repayments linked to commitment.
21. Total project financing requirements are estimated at US$53.60 million, inclusive of
price and physical contingencies, taxes, interest, and the front-end fee. The Government of
Azerbaijan will finance US$20 million towards total project costs, including 100% of costs of
7
micro-projects for Nakhchivan. The World Bank Loan of US$30 million will finance
Components A, B and C. Information on costs and financing sources is provided in Table 1.
Table 1. Project Costs by Component and Use of Financing
Project Components
Project Cost
(in millions)
IBRD
Financing
%
Financing
1. Component A: Rural Community Infrastructure
2. Component B: Technical Assistance for Rural infrastructure 3. Component C: Project Management and Results Monitoring
Front-End Fees
Total Project Costs
41.64
4.75 7.21
0.075
53.60
18.90
4.73 6.37
30.00
63
16 21
C. Lessons Learned and Reflected in the Project Design
22. The proposed project is a repeater project, building on the current AzRIP design and
institutional and implementation mechanisms with day-to-day management under the aegis of
the existing PMU, which will be strengthened with additional core and technical staff as needed.
The repeater project is founded on a similar yet enhanced PDO, project design and institutional
arrangements as the existing project.
23. AzRIP, under implementation since 2005, has garnered widespread recognition for its
strong results record and positive impact. The high quality operation has successfully achieved
its development objectives and has been acknowledged for delivering tangible results on the
ground and improving people‟s lives. The cumulative record of AzRIP is one of significant
improvement of rural communities‟ access to infrastructure services, improved mobility and
increased farmers' incomes. Beneficiary surveys have indicated that travel times to schools and
markets have been reduced by 47% and 26% respectively as a result of the rehabilitation of rural
roads. Livelihoods have improved significantly. The rehabilitation of irrigation systems,
reaching over 700,000 people, has increased average productivity by roughly 30% and added
more than $1 million to the value of production in project areas while primary school enrollment
has increased by 25% subsequent to school rehabilitation. Moreover, in villages where roads
have been rehabilitated under the project, 78% of farm products are now brought to markets in
nearby towns by farmers themselves (as opposed to 18% in non-project areas). In project areas,
farmers can now sell their produce at their farms at 20% higher prices, while prices for the same
products in non-project areas have decreased. A keen emphasis on sustainable infrastructure,
maintenance contracts and accountability has helped ensure that over 90% of infrastructure
rehabilitated is operational. The income of over 600,000 farmers has increased and 150,000
rural poor now have access to safe water. Women‟s empowerment has been a prominent feature
of AzRIP‟s implementation results narrative and a gender focus will continue under AzRIP-2 to
support women‟s participation and empowerment and dedicated gender tracking and monitoring
of project implementation and impacts.
8
24. The AzRIP-2 approach to local development pays particular attention to issues of
sustainability and maintenance. Participating communities prepare maintenance plans and cost-
share for maintenance of assets in conjunction with municipalities and service providers.
Financial and institutional sustainability has been strengthened through mobilization by
municipalities and line ministries of over US$800,000 for the operation and maintenance of
rehabilitated infrastructure.
25. A Social Assessment carried out as part of preparation of AzRIP-2 reaffirmed the
appropriateness of design choices and presented a series of recommendations which have been
integrated in the revised OM for the project. These relate to additional advocacy and promotion
work in new rayons with larger concentrations of internally displaced people; review of
settlement size eligibility criteria for national minority group areas with smaller settlement sizes;
and intensified efforts to foster women's leadership.
26. Impact evaluation findings from the first phase of AzRIP demonstrate a significant
economic boost as a result of project interventions and improvements in financial security
resulting from asset value and service enhancements and increases in on-farm and off-farm
income. A Cost-Benefit analysis of AzRIP micro-projects carried out in 2010 recorded very
high net present values and monetary appraisals of anticipated revenues from micro-projects at
85 times the value of initial investments. Participating communities from the first phase of
AzRIP have expressed strong demand for AzRIP to stimulate livelihood and income generating
opportunities and AzRIP-2 is incorporating this sequential evolution in project design.
Experience from CDD practice globally attests to the viability of this model and phased
evolution of a CDD program from an initial focus on welfare and public goods to second
generation public plus private goods and a productive investment focus.
27. Building on lessons learned under AzRIP, rayons that have demonstrated successful
results from AzRIP micro-project implementation will be eligible to request further support for
complementary rural infrastructure investments under a second generation window in
Component A. Evidence suggests that several engagements in one community are more likely to
have an impact on poverty reduction. These second generation micro-projects will also step up
efforts to crowd in private sector participation and thereby leverage additional capital, as well as
new ideas and skills in support of local development initiatives. An incremental approach is to
be incorporated within AzRIP's community engagement strategy to introduce support for
productive infrastructure and livelihoods support services. Diagnostic work on livelihoods to be
undertaken during the first year of Project implementation will determine the appropriate support
services for income generation and livelihood strengthening in the pilot communities. The
selected pilots would be targeted at a restricted number of communities that successfully
implemented economic infrastructure projects under the original project and would be
conditional on feasibility assessments. Probable areas of support would be business
development services, local organizational capacity strengthening, market and institutional
linkages and value addition initiatives.
28. Over the longer-term, the expected transformative impact of AzRIP-2 is twofold: (i) to
facilitate the translation of enhanced social capital into financial capital and economic well-
being; and (ii) to secure gains achieved in solidarity and social cohesion at the local level and
9
extend these pathways into improved governance and accountability between citizens and the
State. The intensive investment in social capital in AzRIP-2 is manifested by the design
emphasis on social and gender inclusion, social mobilization, collective decision-making,
establishment of local governance groups and networks (community networks, cross-visits
between communities and regional and national community investment knowledge sharing and
networking) and broad mandates on transparency, information access and communications. The
expected outcomes from such social capital investment include improved local governance, a
sustained demand side stimulus for inclusive economic growth and continued attention to
targeting to the most vulnerable and a focus on social inclusion.
29. The proposed operation is hence aligned with the CPS‟s cross-cutting filter on 'improving
governance and institution building‟. In particular, the articulation within the AzRIP sub-project
cycle of roles and responsibilities at the rayon level and its attendant municipal governance
support can be broadly understood as supporting decentralization efforts in Azerbaijan.
III. Implementation
A. Institutional and Implementation Arrangements
30. The proposed project builds on the ongoing AzRIP design and its institutional and
implementation mechanisms which proved to be successful in terms of achieving results on the
ground. The project will be under the general management of the State Agency for Agricultural
Credits (SAAC), which is the Ministry of Agriculture‟s agency for overseeing international rural
development projects. Day-to-day management of the project will be delegated to the Project
Management Unit (PMU) constituted within SAAC. The PMU has successfully implemented
the on-going AzRIP. It reports to the Director of SAAC and would have direct responsibility for
management, administration and coordination of the proposed project. The PMU has developed
the necessary experience and competence to manage all core functions including program
management, regional coordination, community mobilization and facilitation, capacity building,
training, procurement, financial management and monitoring and evaluation (including
environmental monitoring). This would facilitate a smooth transition from the current to the new
project. Annex 3 provides a chart of the proposed project organization. The project
implementation arrangements are described in detail in the OM. The OM for AzRIP-2 is based
on the manual utilized for guiding operations under the previous project and updated and revised
accordingly. The PMU comprises core staff, including the Director, Deputy Director, Engineers
and Community Development, Procurement, Financial Management, M&E and MIS Specialists.
As required, the project could also finance additional core and technical staff to provide
specialized inputs that are not currently available in the project structures and also to ensure that
all project activities are carried out effectively. In particular, the implementation of livelihood
activities will require a full-time Coordinator in the PMU. It is also proposed to add a Legal
Specialist to the core PMU team and to enhance its communications competencies. The PMU
has acquired solid experience in procurement and has established a reliable and effective
accounting and internal control systems under AzRIP. The PMU will continue to use these
arrangements for the financial management of AzRIP-2. The PMU is planning to retain existing
accounting software and accounting staff.
10
31. The project institutional arrangements at the national level also include the project
Working Group (WG) established by SAAC to review the OM on a quarterly basis and adopt
revisions, as required. The WG includes representatives of the Ministries of Economic
Development and Agriculture, the Parliamentary Commission on decentralization, Regional
Grant Approval Committees and civil society.
32. At the regional level, the PMU will be supported by the Regional Operations Offices
(ROOs) which are the PMU representatives in the project zones to support and monitor the
community project portfolio. The existing ROOs would continue to operate as under the
previous AzRIP projects. The ROOs have been operating as umbrella offices, incorporating
Project Assistance Teams (PATs), Technical Design Companies and Regional Grant Approval
Committees (RGACs) in one location, under the coordination of a Program Specialist
functioning as an extension of the PMU. This has worked well, and the same approach will be
adopted for AzRIP-2. The PATs are currently functioning as the Service Providers for providing
community mobilization, training and consultancy services for communities. The RGACs will
continue to review the project proposals for approval, while the Technical Design Companies
will help to develop local capacity for infrastructure development and maintenance.
B. Results Monitoring and Evaluation
33. The implementing agency of AzRIP has a good system in place for monitoring and
evaluation, including an intensive effort of physical verification of works and technical aspects
of sub-project implementation, which is conducted at several levels (project, rayon and
community). Reports from the field are generated regularly to produce monthly, quarterly and
annual progress reports. Several improvements will be made in AzRIP-2, including: (i)
sharpening of existing indicators and generation of new indicators with which to track progress
and measure impact, in particular to assess women‟s participation and empowerment, economic
changes and social capital impacts; (ii) improved monitoring and reporting on the complaints and
grievance redress mechanisms which were built into AzRIP; and (iii) using MIS information
more effectively for internal and external communications.
34. Impact Evaluation and Special Studies. A rigorous impact evaluation with quantitative
and qualitative components will be conducted for AzRIP-2. Specifically, the project plans to
conduct impact evaluation baseline, mid-point and end line field surveys. As part of the
monitoring and evaluation framework, the project will also undertake several thematic
evaluations and studies including the effects of the sub-projects on technical quality, women‟s
participation and empowerment, economic changes and social capital impacts.
35. Regular monitoring and reporting, including maintaining the MIS, will be carried out by
the PMU, who would also undertake the special studies with the assistance of contracted
consultant services. The impact evaluation and more complex special studies will be supported
by the Bank‟s Development Impact Monitoring and Evaluation (DIME) team.
11
C. Sustainability
36. This project will continue to use the AzRIP model which has demonstrated sustainability
by using an integrated approach to infrastructure development which combines sound economic
analysis in the selection of micro-projects, solid engineering design with support from Technical
Design Companies and attention to social dynamics and environmental sustainability.
Operations and maintenance plans prepared by communities will allow them to identify potential
funding gaps and develop financing mechanisms and strategies for long-term maintenance
requirements.
IV. Key Risks and Mitigation Measures
37. Since the proposed project builds on the ongoing AzRIP design and its institutional and
implementation mechanisms, the overall risk is anticipated to be Low. Potential risks are
summarized in the Operational Risk Assessment Framework (Annex 4). The proposed Project
has been strongly endorsed by the Cabinet of Ministers and the Prime Minister‟s Office and the
Project will coordinate closely with relevant central and local line ministries and agencies.
Project implementation risks are expected to be Low as existing PMU staff are experienced and
strongly committed to the project, and appropriate mitigation measures are in place, including
increased monitoring and evaluation at several levels, to ensure transparency and accountability
within the project.
V. Appraisal Summary
A. Economic and Financial Analysis
38. For the original project, an ex-post cost benefit analysis was conducted for 18 of the 340
micro-projects implemented between 2005 and 2009. This exercise was completed by an
independent consultant, who selected an equal number of projects from each of the three target
regions, as well as an equal number of water (potable and irrigation), health, and roads projects.
The findings of the cost-benefit analysis demonstrated a positive economic return from the
micro-project investments.
Ex-Post Cost Benefit Analysis of a Sample of 18 Micro-Projects
Project type
Project
Cost
Stream
Project
Benefit
Stream
Net Present
Value Budget
Number of
beneficiaries
Average for four water projects 39,979 143,096 103,117 31,171 1,444
Average for two irrigation
projects 54,631 11,776,892 11,722,261 34,154 1,200
Average for six health post
projects 442,719 120,334 80,582 38,281 2,645
Average for six roads projects 36,313 1,190,578 1,154,264 30,796 1,626
12
39. In addition to the above analysis, the beneficiary assessment for the original project also
demonstrated important socio-economic benefits. Where AzRIP rehabilitated rural roads, the
travel time to school and markets was reduced by 47% and 26% respectively. Moreover, 78% of
farm products are now brought to markets by farmers themselves, eliminating costly
intermediaries. This represents a significant achievement compared to non-beneficiary villages
in the same region where only 18% of farm produce are brought to market by the farmers
themselves. The value of agricultural production increased by more than US$1 million where
irrigation systems were rehabilitated and primary school enrollment increased by 25% after
rehabilitation of school buildings.
40. As a repeater project, supporting similar types of sub-projects, it is expected that AzRIP-
2 will yield similar positive economic returns and socio-economic benefits. However, given the
expected large number of micro-projects, a full cost-benefit analysis will not be carried out for
each micro-project. However, economic criteria and basic economic analytical tools will be used
to appraise micro-projects both at the community level (who will assess the financial costs of the
project and the degree to which it benefits the majority of community members), along with the
RGAC who will score each proposal based on a number of economic criteria. The specific
economic criteria to be used are outlined in the OM.
41. The livelihoods pilots will also be designed and implemented on the basis of economic
feasibility analysis to be undertaken during the first year of AzRIP-2 implementation, prior to
launching the livelihood initiatives.
B. Technical
42. Project investments will be based on appropriate technology for the infrastructure needs
of local communities, the majority of which have already been tested and validated under the
original project. Over the course of AzRIP implementation, the technical quality of the
completed infrastructure works has improved significantly. In the last year of the project, the
World Bank Task Team Engineer and engineers working for the independent evaluation
consultants deemed construction and engineering works completed in a sample of micro-projects
to be satisfactory. The preparation of each community micro-project is supported by a Technical
Design Company hired by the PMU for each operational zone who ensures technical norms and
standards are adhered to. The Technical Design Companies are responsible for helping with the
preliminary designs of each project, comparing technical and costing feasibility of alternative
designs, preparing technical documentation packages, environmental standards, as well as the
preparation of implementation monitoring and sustainability plans. Each community must also
designate a Community Engineer to collaborate with the Technical Design Company and Project
Assistance Team Engineers. Furthermore, a maintenance plan designed to ensure the
sustainability of the micro-project after its construction must be presented by the community
before the project is approved. For AzRIP-2, these practices will be scaled up to new project
areas and the OM will address in detail technical norms and standards for project preparation,
implementation, as well as operation and maintenance. Also, regular internal and external
technical audits will be undertaken to ensure construction meets the required technical standards.
13
C. Financial Management
43. The financial management (FM) arrangements have been assessed as satisfactory under
AzRIP and will be continued under AzRIP-2. The PMU will be responsible for FM
arrangements. The most recent FM supervision (December, 2011) indicates that the Accounting
and Internal Control system of the PMU is reliable and effective. Under AzRIP, the PMU have
submitted timely Interim Unaudited Financial Reports (IFRs) and project audit reports, the
quality of which have been assessed as satisfactory to the Bank. FM staffing arrangements of the
PMU were also assessed as adequate. The PMU will continue to use these arrangements for the
proposed project. The Bank and management of the PMU will work together to ensure that the
current PMU staff and systems for the proposed project needs are retained. Currently, the PMU
fully complies with the audit requirements of the ongoing project. As is the case with AzRIP,
independent auditors will audit project financial statements under terms of reference acceptable
to the Bank and in accordance with International Standards on Auditing (ISA). The PMU will
submit quarterly IFRs covering the period of one quarter, format and content of which have been
agreed with the PMU.
D. Procurement
44. A procurement assessment carried out during the pre-appraisal of AzRIP-2 in April 2011
found three potential risks: (i) the procurement environment may be affected by the problems
related to governance and corruption; (ii) probable attempts of administrative intervention in
procurement and selection under the AzRIP-financed sub-projects; and (iii) as the project
embraces community participation procurement, the pilot livelihood initiatives may face
procurement risks due to lack of capacity at that level.
45. The assessment concluded that due to their previous involvement in AzRIP, PMU staff
are familiar with Bank procurement procedures and have acquired the adequate experience and
capacity to carry out procurement activities related to the proposed Project. Risk mitigation
measures were discussed with PMU during project appraisal. The Procurement Plan will be
updated at least annually (or as required) to reflect project implementation needs. Procurement
under Component A - Rural Community Infrastructure will be will be carried out by the
communities under the guidance of the ROOs.
E. Social (including safeguards)
46. The primary stakeholders driving this project are the communities themselves, who will
be actively supported in identifying, selecting, planning, implementing and maintaining
infrastructure micro-projects. Communities targeted for assistance will be those suffering
serious infrastructure deficits and will be identified using socio-economic infrastructure
indicators provided by rayon authorities. This ensures that the most disadvantaged communities
in terms of infrastructure access are targeted for mobilization. Under the original project, about
30 communities whose primary inhabitants were national ethnic minorities benefited from
micro-projects and this number is expected to expand under AzRIP-2 as the project moves into
new rayons in the east of the country where ethnic minorities such as the Lezgins account for a
larger proportion of the population. A number of these rayons also border conflict-affected
areas.
14
47. Social development principles such as participation, transparency, gender and social
inclusion and local ownership underpin the micro-project selection, preparation and
implementation process.
48. Aside from communities, other key stakeholders include Rayon ExComm authorities
(local representatives of central government) and the relatively new municipalities. ExComm
authorities play a key role at critical junctures in the micro-project process including the
selection of project communities, the decision to mobilize, securing the relevant permits, and the
handover of specific community projects for operation and maintenance to the relevant line
agencies and ministries. Rayon ExComm representatives also participate in the RGACs.
Currently, municipalities have limited responsibility for rural roads, parks, and cemeteries, as
well as limited financial resources. AzRIP-2 will complement the national decentralization
agenda through engaging municipal officials as community project group members, targeting
training and capacity building measures at municipal officials, and transferring rural roads to
municipalities for operation and maintenance purposes. Furthermore, there is strong
involvement of private sector stakeholders in the form of contractors for the construction of civil
works, as well as Technical Design Companies who support communities in project design and
supervision.
49. Positive social impacts of the Project will include reduced travel time to access markets
and social services resulting in improved incomes, as well as enhanced human capital, increased
agricultural productivity, job creation during micro-project construction and increased
availability of power and potable water to households. Alongside these tangible benefits, it is
also expected that communities will benefit from increased levels of social capital, with
community members, especially women, becoming more engaged in decision making that
affects their lives, along with increasing trust, transparency and information sharing among
community members. This will largely be the result of the strong emphasis placed on consensus
building, broad based participation and community ownership during the community project
process.
50. Compared to the social benefits, Project social risks are relatively minor and mitigation
measures are already in place from the original project. Potential risks include elite capture and
gender bias in sub-project selection, the exclusion of IDPs and ethnic minorities from decision
making processes and project benefits, and potential resettlement impacts of micro-projects. In
order to assess these risks, a Social Assessment was conducted in March 2011. This analysis
found that the risk of elite capture was minimal, as AzRIP successfully introduced informed
participation of the beneficiaries and transparent decision-making at the community level. The
approach created a strong sense of community ownership of the infrastructure project during its
identification and planning, as well as for operations and maintenance.
51. In terms of gender, women actively participated in the process and were well represented
in the community level project committees („Community Group‟). AzRIP-2 will continue to
promote these key principles while paying closer attention to new challenges related to the
inclusion of Internally Displaced Persons ( IDPs) and ethnic minorities, such as intensifying
mobilization and participation of IDPs in the two new rayons (Agdzhebedi and Beilagan) where
15
their presence is significant; better coordination with the Social Fund for the Development of
IDPs Project (SFDI); and more emphasis on female leadership. AzRIP-2 will attempt to capture
social outcomes rigorously through a set of social capital indicators.
52. AzRIP-2 does not trigger OP 4.10 (Indigenous Peoples), but the Social Assessment
carried out as part of project preparation examined some aspects of one major national minority
group (the Talysh) in the southern rayons, which will be included in the newly expanded
coverage areas of AzRIP-2. The study found that the Talysh are integrated in wider society.
Interactions with Government institutions (rayon ExComm and municipality) are well
established and communications in the national Azeri language are not a constraint. Key village
institutions are not different from those in other areas and, with prevailing practices of broad
leadership structures and public meetings, are unlikely to provide an obstacle to AzRIP-2‟s
approach of inclusive participation and transparent decision-making. Like other areas, women
holding public offices, such as teachers and health workers, actively participate in public
meetings and are listened to. The project does not trigger OP 4.12 (Involuntary Resettlement) as
it will not finance activities that will require land acquisition or the displacement of livelihoods
or residences. These potential impacts will be screened out using provisions in the EMP
checklist.
F. Environment (including safeguards)
53. The project does not raise any significant adverse environmental concerns. Experience
derived from the original AzRIP indicates that positive environmental impacts resulted from the
implementation of micro-projects such as improved irrigation, water supply and sewerage
systems. The potentially adverse environmental impacts of AzRIP-2 are mainly associated with
civil works during micro-projects‟ implementation, and include, inter alia, dust, noise, soil and
water pollution, generation of waste materials, waste disposal (including medical waste), and
damage to soil by excavation works.
54. Environmental Assessment. These potential negative environmental impacts trigger the
Operational Policy OP 4.01. The impacts are minor and can be prevented or minimized through
appropriate preventive actions and mitigation measures. Therefore, the project is classified as
Environmental Category „B‟, requiring a partial environmental assessment. Since micro-projects
are not pre-identified and will be determined in the course of project implementation by
applicant communities through intensive participatory processes, an Environmental Management
Framework (EMF) will be applied which will establish screening mechanisms and govern the
process of development and implementation of specific mitigation plans. The EMF for the
original AzRIP has been updated by the Borrower to address impacts from the newly proposed
activities to strengthen rural livelihoods and to reflect the expanded geographical coverage. The
updated EMF has been discussed with stakeholders and has been publicly disclosed by the
Borrower on April 15, 2011.
55. Capacity for the EMF implementation has been built under the original project through a
series of training regularly provided to the PMU, its Regional Offices and potential beneficiary
communities. The PMU Environmental Specialist is responsible for training delivery, assisting
the Regional Offices and applicant communities throughout the micro-project cycle and closely
16
supervising implementation of specific preventive and mitigation measures by project
beneficiaries. The same good practice will continue under AzRIP-2.
G. Other Safeguards Policies triggered
56. Projects on International Waterways. As was the case with AzRIP, AzRIP-2 will
support activities on rehabilitation or construction of irrigation and drainage systems, water
supply improvement and wastewater treatment. Such activities are likely to be developed inter
alia on rivers flowing into the Caspian Sea and trans-boundary rivers, which are international
waterways for the purposes of the World Bank Operational Policy on Projects on International
Waterways (OP 7.50). It is expected (and also based on the experience under the original
project) that proposed micro-projects would not produce a noticeable change for the abstraction
volumes of the systems and would not have an adverse change to the quality or quantity of river
flows, while the works would not change the nature of the original systems. With OP 7.50 being
triggered, riparian states have been notified accordingly.
17
Annex 1: Results Framework and Monitoring .
Country: Azerbaijan
Project Name: Second Rural Investment Project (P122944) .
Results Framework .
Project Development Objectives .
PDO Statement
To improve access to and use of community-driven rural infrastructure and expand economic activities for rural households. .
Project Development Objective Indicators
Cumulative Target Values Data Source/ Responsibility for
Indicator Name Core Unit of Measure Baseline YR1 YR2 YR3 YR4 End Target Frequency Methodology Data Collection
Percentage increase in
access to and use of rural
infrastructure Percentage 0.00 0.00 15.00 20.00
3 times during
project (baseline,
mid-term, final)
Randomized impact evaluation
DIME, Contracted firm
Percentage of households
that are satisfied with the
quality of basic rural infrastructure
Percentage 10.00 40.00 64.00 3 times during project (baseline,
mid-term, final)
Randomized
impact evaluation DIME, Contracted firm
Percentage reduction in travel time to market,
hospital, school, safe
water source
Percentage 0.00 30.00 48.00
3 times during
project (baseline, mid-term, final)
Randomized
impact evaluation DIME, Contracted firm
Percentage change in
income from household
economic activity Percentage 0.00 16.00 23.00
3 times during
project (baseline,
mid-term, final)
Randomized impact evaluation
DIME, Contracted firm
.
Intermediate Results Indicators
Cumulative Target Values Data Source/ Responsibility for
Indicator Name Core Unit of Measure Baseline YR1 YR2 YR3 YR4 End Target Frequency Methodology Data Collection
Number of micro-projects Number 79.00 79.00 215.00 368.00 521.00 600.00
3 times during
project (baseline,
mid-term, final)
Randomized impact evaluation
DIME, Contracted firm
Direct project
beneficiaries Number 197500.00 197500.00 537500.00 920000.00 1300000.00 1500000.00
Quarterly and
annual project reports
Project MIS PMU/ROOs
18
Female beneficiaries Percentage Quarterly and
annual project reports
Project MIS PMU/ROOS
Participants in
consultation activities
during project
implementation (number)
Number 700.00 700.00 2000.00 3500.00 4800.00 5600.00
Quarterly and
annual project
reports
Project MIS PMU/ROOS
Intended beneficiaries
that are aware of project
information and project supported investments
Number 0.00 13000.00 35000.00 61000.00 86000.00 100000.00 3 times during project (baseline,
mid-term, final)
Randomized
impact evaluation DIME, Contracted firm
Number of Women in
Community Project Committees
Number 0.00 160.00 400.00 700.00 1000.00 1200.00
Quarterly and
annual project reports
Project MIS PMU/ROOs
Percentage of subprojects where necessary
maintenance operations
are taking place with community engagement
Percentage 0.00 0.00 0.00 0.00 0.00 70.00
Six-month and 1
year after MP
completion
Micro-project evaluations
PMU/ROOs
Grievances registered related to delivery of
project benefits addressed
(%)
Percentage 0.00 0.00 60.00 60.00 70.00 80.00
Quarterly and
annual project reports
Project MIS PMU/ROOs
Change in community
members who feel they
have some influence in community decision-
making processes
(male/female)
Percentage 0.00 0.00 0.00 30.00 30.00 40.00
3 times during
project (baseline,
mid-term, final)
Randomized impact evaluation
and qualitative
studies and focus groups
Contracted firm
Change in degree of people‟s trust in
community groups
Percentage 0.00 0.00 10.00 20.00 40.00 60.00
3 times during project (baseline,
mid-term, final)
Randomized
impact evaluation and qualitative
studies and focus
groups
Contracted firm
Change in people‟s willingness to contribute
to community project
costs
Percentage 0.00 0.00 15.00 30.00 50.00 60.00
3 times during
project (baseline, mid-term, final)
Randomized
impact evaluation
and qualitative studies and focus
groups
Contracted firm
No. of trainees in
capacity building
activities by kind of activity
(male/female/youth/
minorities/IDPs/municipal/ExComm)
Community training;
Cross visits; Seminars; Conferences
Number 0.00 1100.00 5500.00 10000.00 14500.00 19000.00
Quarterly and
annual project
reports
Project MIS PMU
No. of villages which
hold community-wide Number 0.00 0.00 30.00 60.00 90.00 120.00
Measured 6 and 12
months after
Regional
evaluations PMU
19
meetings organized by
Community Group to discuss public matters
after project completion
(measured at 6 and 12
months after completion
of sub-project)
project completion
No. of communities with new projects
implemented with
internal resources (including activities with
municipality and ExComm)
Number 0.00 0.00 50.00 110.00 260.00 420.00
Measured 6 and 12
months after project completion
Regional
evaluations, PMU
No. of communities with
projects implemented with external resources
Number 0.00 0.00 30.00 60.00 90.00 120.00
Measured 6 and 12
months after project completion
Regional
evaluations PMU
.
20
Annex 2: Detailed Project Description
Azerbaijan: Second Rural Investment Project (P122944)
1. Objective: The Project Development Objective is to improve access to and use of
community-driven rural infrastructure and expand economic activities for rural households. This
would be achieved through: (i) the provision of grants to finance eligible demand-driven micro-
projects in rural infrastructure; (ii) the provision of training and consultants‟ services to support
micro-project development by enhancing the capacity of engaged local stakeholders in all
aspects of micro-project program development; (iii) building opportunities for rural employment
and livelihood support services through the provision of training and consultants‟ services to
carry out pilot livelihood support services in six communities; and, (iv) supporting project
management capacity at the Project Management Unit (PMU) and its Regional Operations
Offices (ROOs) for the purposes of effective management, implementation and monitoring and
evaluation of Project activities.
2. This repeater project is a Specific Investment Loan (SIL) with a total investment cost
estimated at US$53.6 million, of which US$30 million will be financed by IBRD. The Project
will scale up AzRIP both geographically into currently un-serviced rayons and vertically through
the inclusion of pilot livelihood support services and second generation institutional support in
current AzRIP active project areas.
3. The Project has three components:
Component A - Rural Community Infrastructure -US$41.64 million
4. Two categories of micro-project grants will be supported under Component A: (i) micro-
projects in previously un-serviced rayons which meet eligibility criteria set out in the Operational
Manual (OM); (ii) second generation micro-projects in active AzRIP communities with high
performance ratings from previous micro-project implementation and which meet eligibility
criteria set out in the OM, and; (iii) micro-projects submitted by Common Interest Groups
supported under the pilot scheme in Component B which meet eligibility criteria as established
in the OM.
5. The current AzRIP provides investments in demand-driven micro-projects to eligible
communities in five regions (Mughan-Salyan, Lower Shirvan, Nakhchivan, North and North
West). This component will extend coverage and provide funding for demand-driven micro-
projects in rural infrastructure in eleven new rayons in the North and in the Mugan-Salyan zones.
The average size of the micro projects will be US$70,000, while micro-projects valued at over
US$85,000 will require prior review by the Working Group. Micro-project expenses eligible for
financing from the project include identification, design, construction and rehabilitation of the
investment. Potential investments, based on priority needs identified by communities include,
inter alia, rehabilitation or construction of:
Potable water systems
Irrigation infrastructure
Sewerage and drainage systems
Secondary roads and small bridges
21
Small-scale local electricity distribution
Primary schools and kindergartens
Health centers
Community centers
Parks
Market places
6. Costs: This component will support costs related to the identification, design,
construction, rehabilitation, and initial operation and maintenance of the investment.
Beneficiaries are required to share the cost of the investment and to ensure the availability of
funds for O&M after the grant funding has been completed. Micro-projects require a minimum
community contribution of 10% of the investment cost, of which at least 2% must be in cash.
7. Eligibility: The project targets newly eligible rural communities and communities in
existing project coverage areas in 56 rayons across the country (11 new rayons and 45 rayons
served under AzRIP). These comprise the North zone rayons of Aghsu, Balakan, Gabala, Gakh,
Gobustan, Guba, Gusar, Ismayilli, Khachmaz, Oghuz, Shaki, Shamakhi, Zakatala and new
rayons of Absheron, Khizi, Shabran and Siyezen and; North West zone rayons of Aghstafa,
Barda, Dashkasan, Gadabay, Goranboy, Khanlar, Qazakh, Samukh, Shamkir, Tartar and Tovuz;
Lower Shirvan zone rayons of Aghdash, Goychay, Hajigabul, Kurdamir, Ujar, Yevlakh and
Zardab and Yevlakh; Mughan Salyan zone rayons of Bilasuvar, Imishli, Jalilabad, Neftchala,
Saatly, Sabirabad and Salyan and new rayons of Aghjebedi, Astara, Beylagan, Lenkaran, Lerik,
Masalli and Yardimli; Nakhchivan zone rayons of Babek, Julfa, Kengerli, Ordubad, Sadarak,
Shahbuz and Sherur. Micro-projects in Nakhchivan are to be fully financed by Government
funds. Other zones are eligible for IBRD financed micro-projects.
8. These rayons will benefit from mobilization and access to improved infrastructure.
Households and individuals from well-performing micro-projects in the 45 existing rayons
served under AzRIP will benefit from second generation community infrastructure and
livelihood support services.
9. The size of the communities should be greater than 1,000 and less than 10,000 people,
but smaller communities can cluster with neighboring communities to achieve scale, in regions
that meet established selection criteria and have a higher relative incidence of poverty. A total of
600 micro-projects are expected to be implemented in communities meeting eligibility criteria.
10. Current micro-project cycle procedures as detailed in the AzRIP OM will be maintained
in the new Project. Grants to project beneficiaries shall be delivered in accordance with
eligibility criteria and procedures acceptable to the Bank and shall include the following: (a) the
Grant(s) shall be denominated in Manat; (b) grants for financing micro-projects under
Component A shall be made available to: (i) municipalities; community-based organizations
registered as legal entities, which consist of representatives of rural communities with
populations of more than 1,000 and less than 10,000 (including clusters of smaller communities
that add up to 1,000), eligible under the OM; and any other associations and organizations as the
Government and the Bank may agree.
22
11. ROOs shall launch a promotion and outreach campaign, issue requests for micro-project
proposals and assist in the preparation of micro-project proposals. Investments will be identified
by beneficiaries, prioritized through local participatory planning processes, and appraised
according to technical, financial, social, economic, institutional and environmental criteria set
out in the OM. Micro-project committees formed as part of community mobilization, as defined
in the OM, shall submit proposals of micro-projects to ROOs on behalf of their respective
community. ROOs shall appraise and evaluate micro-project proposals based on the following:
(i) impact on the community; (ii) institutional capacity to implement the service intended by the
Micro-project; (iii) financial viability; and (iv) technical and environmental safety. Any micro-
projects involving land expropriation shall not be eligible for consideration. ROOs shall register
the results and forward the summary evaluation of proposals to the respective Regional Grant
Approval Committee (RGAC) for their approval or rejection. Any members of the RGACs who
may have a potential conflict of interest in a particular proposal shall recuse themselves from
making a decision on that particular proposal.
12. The amount of individual grants shall be based upon the estimated cost of goods, works
services and operating costs that will be required for the Micro-project, and shall not exceed 90%
of the overall costs of Micro-projects. The Government shall take necessary actions, satisfactory
to the Bank, to ensure that, where proposals approved by the RGACs call for implementation of
micro-projects by community-based organizations that are not already registered as legal entities,
the charters of such organizations shall be registered in accordance with the laws of the
Government in a timely manner. The Government shall provide each Grant under a Grant
Agreement with the respective beneficiary community on terms and conditions approved by the
Bank, which shall include the following:
(a) The Beneficiary shall ensure that the grant funds are used exclusively for the
purposes specified for the Micro-project approved by the RGAC.
(b) The Beneficiary shall provide no less than 10% of the total cost of the Micro-
project, in cash or in-kind.
(c) The Government shall obtain rights adequate to protect its interests and those of
the Bank, including the right to: (i) suspend or terminate the right of the Beneficiary to
use the proceeds of the Grant, or obtain a refund of all or any part of the amount of the
Grant then withdrawn, upon the Beneficiary‟s failure to perform any of its obligations
under the Grant Agreement; and (ii) require each Beneficiary to: (a) carry out its Micro-
project with due diligence and efficiency and in accordance with sound technical,
economic, financial, managerial, environmental and social standards and practices
satisfactory to the Bank, including in accordance with the provisions of the Anti-
Corruption Guidelines applicable to recipients of loan proceeds other than the
Government; (b) provide, promptly as needed, the resources required for the purpose; (c)
procure the goods, works and services to be financed out of the Grant in accordance with
the provisions of this Agreement; (d) maintain policies and procedures adequate to enable
it to monitor and evaluate in accordance with indicators acceptable to the Bank, the
progress of the Micro-project and the achievement of its objectives; (e) (1) maintain a
financial management system and prepare financial statements in accordance with
consistently applied accounting standards acceptable to the Bank, both in a manner
adequate to reflect the operations, resources and expenditures related to the micro-
23
project; and (2) at the Bank‟s or the Government‟s request, have such financial
statements audited by independent auditors acceptable to the Bank, in accordance with
consistently applied auditing standards acceptable to the Bank, and promptly furnish the
statements as so audited to the Government and the Bank; (f) enable the Government and
the Bank to inspect the micro-project, its operation and any relevant records and
documents; and (g) prepare and furnish to the Government and the Bank all such
information as the Government or the Bank shall reasonably request relating to the
foregoing.
13. The Government shall exercise its rights under each Grant Agreement in such manner as
to protect the interests of the Government and the Bank and to accomplish the purposes of the
Loan. Except as the Bank shall otherwise agree, the Government shall not assign, amend,
abrogate or waive any Grant Agreement or any of its provisions.
14. A village may not implement more than one project at a time, but since numerous
municipalities comprise two or three villages, it is not excluded that more than one project can be
implemented in one municipality. Eligible proposals have to be endorsed by at least 50% of
community members 16 years or older with adequate representation as specified in the OM. The
proposals have to include information on appraisal criteria such as presence or efforts to create
community groups, participation in training programs, ability or willingness to collect taxes and
a statement confirming the communities‟ investment share. The OM explains the detailed
eligibility and appraisal criteria.
15. AzRIP-2 support for second generation projects for community infrastructure and
Common Interest Group proposals will be based on eligibility criteria and performance ratings in
accordance with project and CIG evaluation standards set out in the OM.
16. Procurement. Procurement by grantees will be conducted based on the September 2003
“Manual for Conducting Very Small-Value Procurement under World Bank/IDA Small Grants,
Loans and Credits.” Training on compliance with the procurement procedures will be provided
as part of the capacity building and technical assistance for proposal preparation. Eligible
expenditures include works, goods and services for micro-projects.
17. Reporting. The micro-project recipient will be required to complete regular reporting as
described in the cooperation agreement. The reports serve three main purposes: (i) regular
progress monitoring; (ii) performance monitoring; and (iii) payment requests based on progress
and performance.
18. Beneficiary community contribution. Ten percent of micro-project costs will be
provided through community contributions in cash or in-kind. The minimum cash contribution
shall be 2%. The in-kind portion of the Community Contribution can be work (unskilled labor),
services, material and equipment. Members of the Community Group and the Municipal
Council can not be paid for their work. Their work can be considered as in-kind community
contribution when calculating the budget for the Community Project. The in-kind contribution is
estimated by the PAT team at design in consultation with the Community Group. The Technical
Design Company calculates up to a maximum of 8% of the micro-project budget for the
24
technical package accompanying the Project proposal. Community in-kind contributions are
verified at ROO site visits and documented in the Monitoring Reports submitted to the PMU to
trigger release of the CP tranches.
19. Participatory Performance Monitoring and Evaluation (PM&E). AzRIP-2
monitoring and evaluation activities are facilitated and coordinated by the Monitoring and
Evaluation and MIS Specialists at the central level and the M&E/MIS Specialist at the regional
level. The objectives of the M&E activities are to: (i) provide AzRIP-2 staff and stakeholders
with regular information on project implementation and outputs; (ii) identify bottlenecks and
impediments in project implementation; (iii) ensure that all the activities under AzRIP-2 are
implemented in compliance with the OM; (iv) determine to what extent the PMU achieves its
goals and objectives, and how it affects the intended beneficiaries‟ social conditions and
capacities; and (v) maintain acceptable performance standards for environmental and social
impacts. Besides project level and local level project monitoring, AzRIP-2 relies on
participatory monitoring and evaluation that engages local communities, as well as
municipalities and other stakeholders in a collaborative approach. The main objective is to
improve accountability, strengthen partnerships between all stakeholders, primarily between
local governments and communities and interest groups, encourage inclusiveness and promote
empowerment at the local level while accumulating lessons learned. Participatory M&E
methods to be used include community workshops, Participatory Rural Appraisal, beneficiary
assessment, self-assessment/evaluation methods, and community records and indicators.
Component B - Technical Assistance for Rural Infrastructure – US$4.75 million
20. This component will fund technical support services for micro-project implementation
and pilot livelihood support services. There are two sub-components, namely: (i) sub-component
B1 on Supporting Micro-Project (MP) Development and (ii) sub-component B2 on Piloting
Livelihood Support Services.
21. (i) The sub-component on Supporting MP Development will enhance the capacity of
engaged local stakeholders including communities, local authorities, RGACs, Project Assistance
Teams (PATs) and staff in the ROOs in all aspects of micro-project program development.
Stakeholder capabilities in functions of contracting, procurement, financial management and
participatory monitoring and evaluation will be strengthened.
22. The MP preparation, selection and implementation steps are described in detail in the
OM. In summary, the MP cycle comprises the following seven main steps:
1) Outreach planning
2) Community mobilization and MP preparation
3) MP appraisal
4) MP approval
5) Signing of Cooperation Agreement and MP implementation
6) MP completion and handover
7) MP evaluation.
25
23. PATs and Technical Design Companies provide assistance to communities in
identification and preparation of project proposals through community mobilization and follow-
up activities. After appraisal by the ROO, the proposal is sent to the Regional Grant Approval
Committee (RGAC) for approval. The RGAC comprises a mixture of government and civil
society members identified and selected from stakeholders in the economic zone of operations of
the ROO. The OM establishes procedures on how the RGACs deal with the MP approval
process and MP proposals. Approved MPs enter into a cooperation agreement with the PMU
which will become effective once the Beneficiary Investment Share has been deposited in the
recipient‟s account. MPs below US$l5,000 can be implemented directly by the community and
their legal entity will act as both implementing and executing agency. They will recruit workers,
purchase equipment, materials and small-scale services (e.g. a plumber), and undertake
procurement activities which will have been described in detailed procedures in the scope of
work of the contract. MPs above US$15,000 are executed by outside contractors, who will be
contracted by the legal implementing entity according to the competitive procurement
procedures described in the scope of work of the contract. The ROO Procurement Officer will
ensure that adequate procedures are included in the contract, train the implementing partners and
supervise the procurement aspects of project implementation.
24. (ii) The sub-component on Piloting Livelihood Support Services was developed in
response to demand from communities supported under the original project who had invested in
economic infrastructure such as rural roads and irrigation systems. Community demand centered
on the need to support income generating activities at the community level. Diagnostic work
conducted by an International Livelihood Consultant recommended piloted livelihood support
services in six communities that already successfully implemented AZRIP micro-projects
focused on economic infrastructure such as road rehabilitation or irrigation schemes. Further
community selection criteria recommended included having a mix of communities from
Azerbaijan‟s agro-ecological zones (highlands, upland-rainfed, and lowlands), along with
willingness and commitment to organize Common Interest Groups (CIGs) focused on income
generation activities, and a willingness and capacity to engage in new activities and form new
institutions. These factors will be assessed in advance of providing services by PAT‟s
facilitators and PMU staff conducting follow-up field visits to communities that implemented
economic infrastructure. Once selected, communities will be eligible for the following services:
a. Mobilization and Organization of Common Interest Groups: Mobilization within
communities will begin with a three or four day Participatory Rural Appraisal (PRA)
process. While similar to the process used for mobilizing communities for infrastructure
micro-projects, the aim of the PRA exercise will be to conduct a participatory diagnosis
of the community‟s economic challenges. Adopting this approach will generate
important information on existing and potential on-farm and off-farm income generating
activities, and opportunities and constraints to realizing those opportunities. The PRA
exercise will further determine whether or not a community is committed and capable of
forming a Community Interest Group (CIG). CIGs will be selected among participants in
the PRA process, but unlike Community Project Groups, will be composed of people
with a common economic interest (e.g. dairy producers, handy-craft workers,
beekeepers). A particular emphasis will be placed on supporting CIGs that include or are
exclusively composed of women and youth. Following the PRA exercise, mobilization
26
teams will return to each community with one or two weeks to assess progress in group
formation, to provide training on group dynamics, and to begin facilitating the process of
identifying income generating activities.
b. Identification of Income Generating Activities: Income generating activities will be
identified based on the diagnostic work conducted during the PRA process and will
respond to real needs identified by the community. Key principles underlying the
selection of activities should include their potential to: (i) be people centered and
participatory; (ii) be socially, environmentally and economically sustainable in the long
term; (iii) partner with other private sector actors (e.g. agri-business processors, tourist
operators) and donor initiatives (e.g. Oxfam, IFAD); and (iv) empower vulnerable
community members such as youth and women. When identifying specific investments
necessary for implementing the IGA, priority should be given to fixed assets (e.g.
buildings and equipment), costing less than AZN 50,000, that are technically feasible and
within the competence of the CIG to realize. Potential investments may relate to farm-
based activities (e.g. agricultural machinery and equipment); off-farm activities (e.g. milk
processing facilities); and non-farm activities (e.g. carpet making looms, honey
production equipment). An economic feasibility analysis will be required for identified
IGA proposals.
c. Business Plan Preparation: Once activities have been identified, training and advisory
services will be provided around the preparation of business plans. This support will
include market analysis, procurement planning, financial analysis and planning,
implementation planning and human resource and organization/management planning.
d. Formalizing CIG Status: The PMU will also provide legal support to CIGs in
formalizing their status as limited liability companies. Once registered, CIGs can open a
bank account for depositing income generated by the CIG.
e. Training and Technical Support: CIG members will also benefit from training and
advisory support on implementing their selected IGA. Topics covered will include basic
book-keeping, management principles, as well as technical topics relevant to the activity
selected.
25. It is estimated that providing the whole range of livelihood support services will cost
AZN 20,000 per community (10,000 for mobilization / organization services, and 10,000 for
training and technical support). At the end of the mobilization and training process, CIGs may
be eligible to submit their IGA business plan as a micro-project proposal that could be funded
under Component A. The eligibility of the proposal will depend on an assessment made by the
PMU according to criteria such as the: (i) regularity of CIG meetings; (ii) election of CIG office
holders; (iii) maintenance of good records; (iv) technical and economic viability of the proposal
– judged on the basis of the quality of the business plan; (v) environmental and social
sustainability of the proposal; and (vi) relevance of the proposal to the PRA diagnosis. Only
once these criteria have been met to the satisfaction of the PMU will a proposal be deemed
eligible for funding. All micro-project proposals will have to contribute 20% to the overall cost
of establishing the IGA, at least 10% of which must be cash. Further details on this sub-
component will comprise a dedicated operational manual prepared for the livelihoods pilots prior
to launch of the pilot program.
27
Component C - Project Management and Results Monitoring – US$7.21 million
26. This component will finance the administrative and operational project implementation
and management costs, including overheads of Project Management Unit (PMU) professional
staff as well as PMU and Regional Operations Office (ROO) support staff, project outreach and
support to Regional Grant Approval Committees (RGACs).
27. Management responsibility for AzRIP-2 will come under the State Agency for
Agricultural Credits (SAAC) within the Ministry of Agriculture. AzRIP-2 will be managed by
the Project Management Unit (PMU) located in the SAAC office in Baku to provide overall
coordination and four decentralized Regional Operations Offices (ROOs) in the selected project
regions. Because the program is community demand-driven, decisions as to where, how and
what investments will be made are not defined in advance. The project will be managed with an
OM that will provide the PMU the authority and operational guidance needed to deliver and
account for funding, provide for institutional capacity building, and supervise implementation of
selected micro-project by recipients. The ROO staff will be guided by the procedures in the OM
to work with eligible communities, to assist them in identifying and developing micro-project
proposals and in seeking approval from the Regional Grant Approval Committees (RGACs).
The ROOs will then prepare cooperation agreements with the grant recipients for implementing
the MPs that have been approved by the RGACs. The recipients will implement their MPs under
the supervision and with the institutional support of the ROOs. The ROOs will monitor and
report on a step-by-step basis on the process and decisions made in the micro-project cycle and
keep detailed records in the Management Information System (MIS).
28. Evaluations will also include qualitative and participatory evaluation analysis, which will
allow ROOs, the PMU, the Government, the Bank and other donors to have regular updates of
the progress of the program. The PMU and the ROOs will use the MIS and M&E results to
continuously improve project management.
29. In addition, a randomized impact evaluation will be utilized in AzRIP-2. The impact
evaluation will seek to provide answers to four sets of questions. First, it will analyze the impact
of the project on poverty reduction. Second, it will assess whether the project improves access to
and use of basic services, such as education, health, water, roads. Third, it will evaluate the
impact of the project on communities‟ awareness and participation in community development.
Fourth, it will evaluate the impact on social capital dimensions, such as groups and networks,
trust and solidarity, collective action and cooperation, social cohesion and inclusion and
information and communication. A special focus of the evaluation will be on gender issues and
the methodology will include specific designs to disaggregate project results by gender.
28
Attachment 1 to Annex 2:
Summary Description of Sub-Component on Piloting Livelihood Support Services
30. This subcomponent will serve to:
a. Develop capacity of involved stakeholders (communities, groups and individuals) to
identify, plan and implement income-generating micro-projects;
b. Identify and test selected institutional models for community livelihood projects;
c. Test the process of livelihood project planning and management with communities:
through identification, design, implementation, analysis and evaluation; and
d. Develop detailed operational guidelines for scaling up the livelihood pilots.
Activities and Responsibility
31. Work under this sub-component will be captured in two main phases, Inception and
Implementation. The main activities in the Inception Phase will be as follows:
Inception
Information outreach, selection of communities
Identify shortlist of possible communities
Visit local authorities and communities, information sharing, assess communities
Select final pilot candidates
Diagnostic
Diagnostic research conducted by contracted researchers on the key constraints to
income generation in selected communities
Diagnostic workshop to verify research findings and identify lessons learned
Community mobilization
Mobilization workshops for the entire community
Participatory Rural Appraisal exercise to select micro-project
Establish Community Groups
Training, IGA project planning
Training Community Groups in IGA methodology
Development of community IGA Proposals and Business Plans
Selection of IGA Projects by the Community Groups
Registration, Appraisal, Approval of the Community Group as a legal entity
capable of implementing an IGA
Approval and signing Cooperation Agreement between the Community Group
and the PMU.
32. The main activities in the Implementation Phase will be as follows:
Procurement and Implementation
Procurement of inputs for realizing the IGA
Start implementation of projects
Monitoring and evaluation
29
Quarterly review of progress, on-going project adjustment
Annual review and workshop
Project evaluation
Completion, Handover and Evaluation
Completion and handover
Implementation Arrangements
33. The PMU will lead in implementing the pilots, managing the workplan, supervising
activities, facilitating partner relationships and monitoring progress of the projects. The PMU
will also work closely with community groups and local government authorities throughout the
pilot phase. AzRIP-2 PMU will need to recruit additional capacity to enable it to undertake
additional tasks. This will include legal, agricultural, and business development expertise.
34. Communities will be selected according to criteria developed for the purpose. Those
selected will be community groups or associations registered under the Municipality, and as such
they are allowed to generate revenue.
35. A number of topics to investigate have been identified and these will be addressed during
the Inception Phase through a mixture of quantitative and qualitative methods. National NGOs
and service providers will be selected for this work based on competence, reputation and
previous performance. It seems likely that a number of pilot initiatives will be related to
agricultural markets, and will engage in value chains. Depending on the selected sub-sectors and
commodities, private sector partners will be selected who are competent and are prepared to
invest. Depending on the nature of the pilots, other partners will be selected to work with
community groups, to support their work and help deliver positive outcomes.
Criteria for selection of Communities
36. The process of selection of communities will be made using the following criteria.
Levels of vulnerability
Levels of assets (physical, financial, natural)
Levels of income, income diversification
Local agro-ecology
Altitude, relief/topography, kind of agriculture (main crops, livestock etc),
irrigation
Existing activities
Main farm, non-farm and off-farm activities undertaken by community
Local employment
Opportunities for local employment
Willingness to participate and contribute through savings
Communities must be willing to engage in new and challenging activities.
30
Annex 3: Implementation Arrangements
Azerbaijan: Second Rural Investment Project (P122944)
1. Project institutional and implementation arrangements for:
A. Project Administration Mechanisms
Project Administration Mechanisms
2. The project will be under the general management of the State Agency for Agricultural
Credits (SAAC). Responsibility for the day-to-day management and administration will be
delegated to the Project Management Unit (PMU) which will be maintained within the structure
of the SAAC. The PMU functions will include procurement, financial management and
disbursement, ensuring project compliance with the Operational Manual (OM) and the World
Bank safeguards, monitoring and evaluation, and reporting. The PMU has extensive experience
with World Bank-financed operations, and the successful implementation of AzRIP is the basic
justification for using the existing project implementation arrangements, including management
structure, for AzRIP-2. The AzRIP-2 Organization Chart is shown on Page 32. The project
institutional arrangements occur at the national and regional levels. Institutional arrangements at
the national level include the Project Working Group and the PMU.
3. The PMU will maintain core staff, including the Director, Deputy Director, Engineers,
procurement, financial management, environmental, M&E, MIS and community development
staff, and quality control personnel. The PMU has developed the necessary experience and
competence to manage core functions such as procurement and financial management, which
would allow for a quick start of project implementation. The PMU Director is responsible for
ensuring, on a daily basis, that the project is progressing according to plan and is responsible for
ensuring that the PMU is fulfilling its tasks. The Deputy Director will be in charge of day-to-day
operations of AzRIP-2, reporting to the Project Director. The M&E Specialist will be
responsible for establishing a project-wide M&E system to track the progress of the project. The
community development staff will be in charge of community mobilization and enhancement
activities of the project. The Environmental Consultant will coordinate the environmental
monitoring work and ensure that project activities are carried out in accordance with the EMP.
The Senior Engineer will coordinate engineering aspects of the project and ensure that AzRIP-2
technical standards are followed in design and implementation of MPs.
4. SAAC maintains the Working Group which was established with the primary objective to
review and adjust the policies and procedures outlined in the OM to effectively meet the project
needs. The Working Group is also tasked to review community projects in excess of US$85,000.
The Working Group consists of relevant representatives from the Ministry of Economic
Development, Ministry of Agriculture, the Parliamentary Commission on decentralization and
municipal development, chairpersons of RGAC and a member of civil society.
5. The PMU will be supported by four Regional Operations Offices (ROOs) acting as the
project‟s representation at the regional level. The PMU will provide institutional support to the
ROOs which will be responsible for daily project management and monitoring of the community
31
project portfolio. The ROO staff will be contracted by the PMU and include skills required to
carry out appraisal, contracting, supervision and monitoring of community projects. These
centers will maintain close liaison with local authorities, civil societies, private sectors, and
communities. The ROOs will be focal points for project activities and fully equipped with
computers, office equipment, and dedicated transport for field staff. The ROOs will also
accommodate the Project Assistance Team (PAT), the Regional Grant Approval Committees
(RGAC) and the Technical Design Companies. The ROOs will support and monitor the
operations of PAT and facilitate the meetings of regional micro- project grant approval
committee. The ROOs will also facilitate contacts of the technical design companies with
participating communities and will be responsible for communications outreach at the rayon
level.
6. Project Assistance Teams (PAT) will act as the Service Provider for AzRIP-2 zones and
will be responsible for coordinating all aspects of community mobilization, training, advising on
procurement and providing technical assistance to communities in the preparation of CP
proposals. The main services of PAT include rapid community assessment and organizing cross
fertilization visits and regional capacity building workshops. The PATs will also assist
community participatory M&E groups in monitoring implementation of the micro-projects. All
PAT staff are employed as full time local consultants by the PMU and coordinated by the Project
Deputy Director and community development staff. PAT reports directly to the PMU. The
PAT‟s work in the community is monitored by their respective ROOs, but they will operate
under the supervision of the PMU. PAT will consist of a team leader, mobilizers, trainers,
engineers, procurement officer and accountant.
7. The Regional Grant Approval Committees (RGACs) are located in the project target
zones and review all community project proposals for approval. The RGACs include
representatives from the rayon executive committees, municipalities, civil society and regional
representatives of the MOA and MOED. The RGACs will also be housed within the ROOs, in
order to facilitate communication. Finally, the PMU will recruit the technical design companies
in each zone with the objective to provide technical assistance to communities in engineering
aspects of micro-projects. The design companies would also assist the communities and the
PMU in quality control and construction supervision.
32
AzRIP-2 ORGANIZATIONAL CHART
33
B. Financial Management, Disbursements and Procurement
Financial Management (FM)
8. The financial management arrangements for the project are satisfactory. The PMU
within SAAC will be responsible for FM arrangements. The PMU implemented AzRIP and its
financial management arrangements have been assessed as satisfactory. The project was closed
on March 31, 2012. The latest FM supervision indicates that Accounting and Internal Control
System of the PMU is reliable and effective. Financial Management staffing arrangements of
the PMU were also assessed as adequate.
9. The Inherent Risk, Control Risk, and Project Risk of the project are all rated as Moderate.
Due to a gap between the closing of the previous project and the anticipated effectiveness of
AzRIP-2, retroactive financing shall cover expenditures incurred and payments made for
eligible expenditures in an amount not exceeding US$ 4.2 million prior to the date of signing of
the Loan Agreement but on or after April 1, 2012. Therefore, the sustainability of the current
staffing arrangements of the PMU is assessed as low risk.
10. Country systems: A number of studies carried out for Azerbaijan (PEFA Assessment,
February 2008 and ROSC, September 2006) in the Public Financial Management (PFM) area
identified set forth recommendations to strengthen public and corporate sector accounting,
auditing, governance, and financial accountability frameworks. The Government has made
efforts to strengthen public financial management by enacting a Budget System Law,
modernizing Treasury operations and strengthening the capacity of the Chamber of Accounts.
The Government continues to receive donor support to reinforce public financial management,
particularly to improve budget preparation and allocation, introduce an internal audit function
and increase overall accountability and transparency in financial reporting. Despite the lack of
broad reliance on country systems in some areas of PFM, for Planning and Budgeting and
Internal Controls in AzRIP-2, country systems will be used and accompany relevant procedures
prescribed in the OM.
11. Budgeting and counterpart funding: The PMU will have overall responsibility to
coordinate the budget preparation with all project beneficiaries. Budget figures will be entered
into the accounting software and their execution will be monitored through the quarterly interim
un-audited financial reports (IFRs). The PMU will ensure timely data inflows from project
beneficiaries in the agreed format. The project budget will be split by quarterly expenditures,
components and sources of finance. The draft project budget will need to be agreed with the
relevant government organizations and project beneficiaries before sending it to the Bank.
Government counterpart funding should be made available to government agencies in a timely
manner.
12. Flow of Funds: The Bank funds under the Project will be disbursed through transaction-
based disbursement methods that include: reimbursements with full documentation,
reimbursements on the basis of Statements of Expenditures for small expenditures with defined
34
thresholds, payments against issued Special Commitments, direct payments to third parties, and
payments through the Designated Account. Government co-financing funds will be disbursed
through the Treasury system of the MOF. To facilitate the flow of funds for micro-projects not
exceeding US$15,000 which do not require the selection of a subcontractor, AzRIP PMU shall
facilitate opening of a local bank account at a commercial bank at the regional level by
municipalities representing the interests of local communities. The initial grant transfer shall be
made after approval of the Community Project and signing of the Cooperation Agreement.
Subsequent transfers will be based on agreed milestones. For MPs above US$15,000 and
executed by contractors, payments will be made directly to the subcontractor based on the
community‟s request and submission of necessary documents for subsequent MP tranches.
13. Accounting: The PMU maintains its accounting records in 1C based accounting system.
It has been agreed with the PMU that it would retain the existing accounting software. The
software will have the capacity to generate IFRs of the project.
14. Internal controls: Existing Accounting and Internal Control systems of the PMU have
been assessed as reliable and effective. To further strengthen the internal control environment
of the project the Bank will hire an independent consultant to review at least 25% of civil works
contracts for accuracy of design documentation and conduct physical verification of works.
This would allow the Bank to ensure that funds are spent for intended purposes and eligible
expenditures. In case of funds applied to ineligible expenditures, the implementing agency
should return the portion of ineligible expenditures to the Bank. All financial management
related documents will be signed first by the FMS and approved by the PMU Director.
15. Financial Reporting: The PMU has a history of submitting timely IFRs for AzRIP which
were satisfactory to the Bank. The PMU will submit quarterly IFRs covering the period of one
quarter, the format and content of which have been agreed with the PMU for AzRIP-2.
16. External Audit: Currently the PMU fully complies with the audit requirements of the
existing project. As was the case with AzRIP, a financial audit of the project financial
statements will be required: independent auditors will audit project financial statements under
terms of reference acceptable to the Bank and in accordance with International Standards on
Auditing (ISA). Project audit reports will need to be submitted to the Bank within six months
of the end of each calendar year and at project closing. In accordance with "The World Bank
(the Bank) Policy on Access to Information" dated July 1, 2010 the Bank requires that the
borrower makes the audited financial statements publically available in a timely fashion and
manner acceptable to the Bank. In addition, following the Bank‟s formal receipt of these
financial statements from the borrower, the Bank makes them available to the public in
accordance with this policy.
Disbursements
17. The loan will be disbursed through transaction-based disbursement methods that include:
reimbursements with full documentation, reimbursements on basis of Statements of
Expenditures for small expenditures with defined thresholds, payments against Special
Commitments, direct payments to third parties, and payments through the Designated Account.
35
18. Designated Accounts. To facilitate project implementation, a Designated Account will
be opened in a commercial bank on terms and conditions acceptable to the Bank, for the IBRD
loan. The Designated Account, which will be managed by the PMU, will be replenished on a
quarterly basis, as needed. The total ceiling will be limited to US$2 million for the IBRD loan.
The Designated Account will be audited annually in conjunction with the audit of the project
financial statements.
19. Disbursements will be made on the basis of full documentation for: (i) contracts for
goods costing more than the equivalent of US$200,000 each; (ii) contracts for works costing
more than the equivalent of US$1 million each; and (iii) services under contracts of more than
the equivalent of US$100,000 for each consulting firm and more than the equivalent of
US$50,000 each for individual consultant. Disbursements below these thresholds and for
expenditures against incremental operating costs and training would be made according to
certified Statement of Expenditure (SOEs). For all expenditures financed under Statement of
Expenditures (SOEs) full documentation in support of the SOEs will be retained in the PMU for
at least two years after the project closing date. This information will be available for review by
Bank missions during project supervision and by the projects auditors. SOEs will be audited in
conjunction with the annual audit of the project. Further instructions on the size of the
Minimum Application and on how funds will be withdrawn from this Loan will be provided in
the Disbursement letter.
20. The withdrawal of proceeds from the IBRD loan will be made in accordance with the
following schedule:
Category Amount of the Loan Allocated
(expressed in USD)
Percentage of
Expenditures to be
financed (Net of VAT)
(1) Goods, works, non-consulting
services, and consultants‟ services,
Training, and Incremental
Operating Costs for the Project
8,925,000 100%
(2) Grants
21,000,000 90%
(3) Front-end Fee 75,000 Amount payable pursuant to
Section 2.03 of this
Agreement in accordance
with Section 2.07 (b) of the
General Conditions
(4) Interest Rate Cap or Interest
Rate Collar premium
0 Amount due pursuant to
Section 2.07(c) of this
Agreement
TOTAL AMOUNT 30,000,000
36
21. Government Contribution. The Government‟s contribution of US$20 million to finance
project expenditures will be disbursed from budget allocations through the Treasury system of
the MoF, and managed by the PMU. Funds will be released to the project to finance project
expenditures as expenditures are incurred, and the Project Account shall be replenished
regularly to minimize delays in project implementation.
22. Beneficiary Contribution: The beneficiary contribution to finance project expenditures is
US$3.6 million.
23. Retroactive financing. Withdrawals up to an aggregate amount not to exceed US$4.2
million equivalent may be made for payments made on or after April 1, 2012, for eligible
expenditures.
Procurement
24. Procurement for the Project will be carried out in accordance with the World Bank‟s
“Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans
and IDA Credits & Grants, January 2011” and the “Guidelines: Selection and Employment of
Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers, January
2011;” and the provisions stipulated in the Legal Agreement.
25. Procurement Risk Assessment. A procurement assessment carried out during pre-
appraisal AzRIP-2 in April 2011 found three potential risks: (i) the procurement environment
may be affected by problems related to governance and corruption; (ii) probable attempts of
administrative intervention in procurement and selection under the project funded sub-projects;
and (iii) as the project involves community participation, including in the proposed livelihood
pilots, addressing procurement issues at that level may create problems due to lack of capacity.
As a result, the overall project risk for procurement is considered substantial. Risk mitigation
measures have been discussed with the PMU and incorporated in project design. The
procurement plan for the first 18 months of implementation was finalized during negotiations.
It will be updated at least annually (or as required) to reflect project implementation needs. The
procurement under the Rural Community Infrastructure Component will be undertaken by the
community under the guidance of the Regional Operations Offices.
26. The general conclusion is that the core PMU has adequate experience to carry out
procurement activities related to AzRIP-2. The staff is familiar with Bank procurement
procedures and guidelines as they have been involved in, and gained substantial knowledge and
experience during the implementation of AzRIP. The Project will finance various contracts for
civil works with a wide geographic spread, technical services, consultancy contracts and several
contracts for goods, as indicated in the Procurement Plan.
27. Procurement Plan and Procurement Arrangements. The PMU, has developed a
Procurement Plan for project implementation which provides the basis for procurement
methods. All contracts in the procurement plan shall be grouped in bid packages as much as
possible to encourage better/wider competition. This plan was agreed between the Borrower
and the Bank during negotiations. It will be available at the office of the PMU and on the
37
Bank's external website. The Procurement Plan shall be updated in agreement with the Bank
annually or as required to reflect the actual project implementation needs and improvements in
institutional capacity. Contracts not subject to Bank‟s prior review will be post reviewed by the
Bank‟s Procurement Specialist assigned to the project. Post review of contracts will be carried
out once per year. Not less than 5 % of the contracts under Component A: Rural Community
Infrastructure Component; and 20% of the contracts under Component B: Technical Assistance
for Rural Infrastructure, and Component C: Project Management and Results Monitoring will
be post reviewed by the Bank.
28. The following measures were agreed to mitigate the remaining risks and maintain the
implementing team‟s capacity:
The procurement section of the OM will be prepared by the PMU which, among other
things will elaborate on the roles and responsibilities in the management and
coordination of the procurement process, preparation of terms of reference and
technical specifications, evaluation, establishment and appointment of evaluation
committees, conflict of interest mitigation measures, record keeping, contract
management, a complaint handling mechanism, etc;
as needed, additional staff with experience in procurement will be hired to strengthen
the capacity of the PMU for coordination and management of the procurement and
management of the significant number of contracts;
the Bank‟s Procurement Specialist assigned to the project will provide the team with
a full set of the most recent procurement documents, including but not limited to
Procurement and Consultant Guidelines, standard and sample bidding documents,
proposal, evaluation report documents, etc.
29. It was agreed that the PMU will maintain complete records under AzRIP-2 for each
activity, to include complete procurement documentation for each contract, including bidding
documents, RFPs, advertisements, bids received, bid evaluations, no objections, letters of
acceptance, contract agreements, bid security, advance payment guarantee, performance
security, photocopies of invoices and payments and related correspondence, etc. The PMU will
also keep copies of the procurement files relating to the Rural Community Infrastructure
Component. Contract award information will be promptly recorded and contract rosters
maintained. Agreed reporting formats will be included in the OM.
30. Procurement of Goods, and Non-consultant technical services: Goods and non-
consultant technical services estimated to cost US$300,000 equivalent and more will be
procured through ICB. Goods, equipment and non-consultant technical services estimated to
cost less than US$300,000 may be procured through NCB and less than US$ 100,000 through
Shopping. Direct Contracting may be used with prior agreement with the Bank.
31. Procurement of Works: Works contracts estimated to cost US$3,000,000 equivalent or
more will be procured through ICB. Works contracts estimated to cost less than US$3,000,000
may be procured though NCB and less than US$100,000 through Shopping.
38
32. Selection of Consultants: Consulting services under the project will be procured in
accordance with the Bank‟s Consultant Guidelines mentioned above and by using the standard
RFP and contract forms. Consultant‟s services would include Quality and Cost Based
Selections (QCBS), Fixed Budget Selection (FBS), Consultant Qualifications (CQ), Least Cost
Selection (LCS), Single Source Selection and Individual Consultants (IC). Consultancy
contracts estimated to cost more than US$100,000 equivalent will be selected through QCBS.
Individual Consultants would be selected in accordance with the provisions 5.1 to 5.6 of Section
V of the Consultant Guidelines. This method will require comparison of at least three qualified
candidates interested and available to undertake the assignment. For contracts with firms
estimated to cost less than US$100,000 a shortlist may be based solely on national firms unless
qualified international firms express interest in accordance with the provisions of paragraph 2.7
of the Consultants Guidelines.
33. Community Participation Procurement (CPP): Procurement of goods, works and services
under the Rural Community Infrastructure component shall be carried out in compliance with
the Community Participation Procedures method in accordance with paragraph 3.19 of the
Procurement Guidelines.
34. Operating Costs: These expenditures would cover costs incurred for all components
under the project, such as communications, utilities, office supplies and maintenance, fuel and
vehicle operation and its maintenance, salaries of support staff, eligible social charges, etc.,
which would be financed by the project as per annual budget approved by the Bank and would
be procured using administrative procedures of the Implementing Agency, which were reviewed
and found acceptable to the Bank. Operating costs will not include salaries of civil servants.
35. Other Special Procurement Arrangements: Retroactive Financing may be used for
advance contracting in an amount not exceeding US$4.2 million from the proceeds of the Loan.
C. Environmental and Social (including safeguards)
36. Environmental. The AzRIP-2 community projects, similar to AzRIP, will include rural
roads, water supply, sewerage, electricity, small bridges, small irrigation systems, schools and
kindergartens, health centers, community centers, etc. In addition, the menu of eligible
activities will be expanded to accommodate livelihood support activities to be identified during
implementation. The experience of AzRIP indicates positive environmental impacts resulting
from the implementation of the micro-projects, such as reduction of erosion through proper road
rehabilitation, improved wastewater treatment and improved water supply. There are also
certain negative impacts which might occur during the implementation of micro-projects.
Since micro-projects will be identified during the project implementation, the types and degree
of associated impacts will be determined accordingly. Consequently, the mitigation measures
will vary to address specific impacts, which can be summarized as follows:
Construction and general impacts: health and safety hazards for construction worker
and the public; noise; dust; soil and water pollution from fuel and oil; generation of
waste materials; surface run-off; excavation of materials and disposal of surplus soil;
risks to environmentally sensitive areas;
39
Water supply impacts: over-exploitation of water resources; interruption of surface
and underground drainage patterns; contamination of resources during construction
works; damage to soil during excavation;
Rural and suburban roads rehabilitation impacts: noise, dust, vehicle and pedestrian
safety, changes in drainage and traffic patterns;
Small bridges and footbridges construction impacts: changes to river regime and
riverbanks; disturbance to aquatic habitat and water quality during construction;
Wastewater, drainage and sewerage construction impacts: smell, impacts on the river
regime, pollution by the effluent;
Small-scale irrigation impacts: impacts on water resources; water logging of the soil;
discharge of wastewater;
Minor buildings: generation and disposal of wastes during construction/rehabilitation,
medical waste management during operation of medical facilities;
Livelihood support activities: the project will not provide financing for pesticides and
for activities likely to lead to increased pesticide use.
37. The potential adverse environmental impacts are minor and can be addressed through
appropriate mitigation measures. For the purpose of OP 4.01 “Environmental Assessment‟, the
project has been assigned an environmental category „B‟. The Environmental Management
Framework prepared for the original AzRIP addresses most of the impacts specified above and
provides a framework mechanism for screening environmental impacts, developing mitigation
plans and monitoring environmental progress. As in the case of AzRIP, environmental
assessments will be carried out for specific micro-projects and/or project sites, and
environmental advisory services will be provided, as appropriate. An updated Environmental
Management Plan Framework was publicly disclosed in-country on April 15, 2011.
38. The Borrower‟s capacity to implement environmental safeguards has been developed
through experience with AzRIP. The original project supported environmental awareness
raising and capacity building activities both among the Regional Operations Offices and
potential sub-project beneficiaries. The PMU Environmental Specialist performed highly
satisfactorily and will continue close environmental monitoring of sub-projects, starting from
early stages of sub-project development, and will provide training and guidance to the PMU,
ROOs and community beneficiaries on project screening and appropriate mitigation measures.
Environmental training to be delivered under AzRIP-2 will include specific community/sub-
project guidance.
39. As was the case with AzRIP, AzRIP-2 will support activities around rehabilitation or
construction of irrigation and drainage systems, water supply improvement and wastewater
treatment. Such activities are likely to be developed inter alia on rivers flowing into the
Caspian Sea and trans boundary rivers, which are international waterways for the purposes of
the World Bank Operational Policy on Projects on International Waters (OP 7.50). With OP
7.50 being triggered, riparian states have been notified accordingly.
40. It is expected that micro-projects would not produce a noticeable change for the
abstraction volumes of the systems and would not have an adverse change to the quality or
quantity of river flows, while the works would not change the nature of the original systems.
40
The proposed project would not have any impact on the quality and quantity of the river flows
in the riparian countries. There would also be no impact on the Caspian Sea, since there would
not be a significant adverse change to the quality and quantity of water flowing to the Sea.
Similarly, water use in the riparian countries would not affect the project.
41. Social: OP/BP 4.12 on Involuntary Resettlement is not triggered as micro-projects
requiring land acquisition, or the displacement of people using land for livelihood or residential
purposes will not be financed under the project. The micro-project environmental checklists
within the environmental management framework have been updated by the client in order to
include additional questions to screen for land acquisition and resettlement.
42. Other social risks (findings from the Social Assessment). A Social Assessment was
carried out as part of the preparation of AzRIP-2. The exercise aimed at: assessing social of the
communities in the new rayons that would have important implications for project approach and
design; and examining measures to strengthen social outcomes of the project. A rapid social
assessment targeted two types of new rayons: (1) the two rayons near conflict affected areas
(Agdzhebedi and Beilagan); and (2) the southern rayons where one national minority group –
the Talysh – has a significant presence. The Social Assessment addressed issues of inclusion of
women and other vulnerable groups; and appropriate social capital indicators to incorporate in
project monitoring and evaluation. The exercise comprised a desk review, focus group
discussions and stakeholder workshops.
Rayons near Conflict Affected Areas
43. Neither rayon directly borders with the occupied area, but Agdzhebedi‟s west and
southwest boundaries border with partially-occupied rayons of Agdam, Khodzhaveno and
Fizuli. Some of its villages are within 10 km from the border with the occupied territory.
Beilagan shares some 30 kilometers of border with Fizuli. Since the 1994 cease fire, there have
been no major military operations although sporadic shootings in areas near the border have
been reported. Most people seem to believe that an imminent outbreak of any serious form of
violence is unlikely. According to the latest census data, the total population of Agdzhebedi is
about 123,000. Over 93,000 live in villages (kend)2. Beilagan‟s total population is about
87,000, and nearly 55,000 live in villages.
Table 1: Village Population in Agdzhebedi and Beilagan (2010)
Rayon Total village
population Of which
IDPs Number of
villages Agdzhebedi 93,042 8,642 40 Beilagan 54,577 3,928 24
Source: Agdzhebedi and Beilagan Rayon Executive Committees.
2 The term „village‟ (kend) refers to an official administrative-territorial division which is rural and less developed. „Settlement‟
(gasaba) is another type of administrative-territorial division used for a more developed and often larger locality. This document
follows these official designations, and uses the terms „village‟ and „settlement‟ separately. Under AzRIP-2, the settlements are
not beneficiary communities.
41
44. Internally Displaced Persons (IDPs). The number of IDPs living in the villages of
Agdzhebedi and Beilagan rayons is about 13,000 persons. In Beilagan, an additional 3,000
IDPs live in settlements. In Agdzhebedi, IDPs account for about 9% of the total village
population and in Beilagan their share is about 7%. In Agdzhebedi, most of the villages are
hosting IDP families. In Beilagan, all villages have IDP families, and in six of them IDPs
account for more than 10%. In most cases, IDP families are living on their own, mostly in
temporary housing in very poor conditions. Some families are still living in public buildings.
People report of marriages between members of IDP and non-IDP families in the same village,
but the identity of IDPs as those not originally from the community remains strong even after
almost 20 years of their residence. Field discussions revealed that IDPs believe, or wish to
believe, that the Government will give them new houses, and are awaiting the day when they
will move out of their current residence. This is unlikely to happen given the Government‟s
current low priority for IDPs living in rural communities regardless of their housing conditions.
However, the native village population seems to avoid talking about the likelihood of their
extended, if not permanent, residence in the villages in obvious consideration of the feelings of
the IDPs. In general, the native residents of the villages are highly sympathetic of the IDPs, and
seem to consider them as members of the same community.
45. Effects of the Conflict as Perceived by Community Members. Major effects of the
conflict as identified by the community members include: restricted use of public buildings as a
result of past and current occupation of IDPs; restricted use of farm land (some IDPs were
allocated land near the border, but cannot use it due to security risks) and anxiety and
psychological distress experienced by IDPs due to the painful memories of the past and future
uncertainties.
46. The Social Fund for Development of Internally Displaced Persons of Azerbaijan (SFDI).
SFDI has been operational since 1999. The World Bank has been financing some activities
through its Internally Displaced Persons Economic Development Support Project (IDP-EDS).
Micro-projects and micro-credit are the main activities financed by IDP-EDS. SFDI micro-
projects are essentially public infrastructure works, similar to those which are eligible under
AzRIP-2. Non-IDPs are also benefitting from the micro-projects. However, key features of
SFDI operational modalities are different from those under AzRIP-2. One of the most
important differences is the way infrastructure works are identified. While AzRIP-2 follows a
rigorous community process with strong emphasis on participation and transparency, which
includes mandatory, popular selection of the representative body („Community Group‟), SFDI
mostly works with the municipality for identification, planning and implementation of the
micro-projects.
National Minority Groups
47. Legal Rights. The Constitution guarantees respect for human rights and freedoms
regardless of ethnic origin, race, religion, languages or other distinctions. According to Article
25 of the Constitution, the State guarantees equality and respect of rights and freedoms for all
persons regardless of race, nationality, religion, language, ethnic origin, conviction or other
distinctions. Restriction of rights and freedoms of citizens based on racial, religious, ethnic
42
discrimination or of ethnic, political and social origin is strongly prohibited. Azerbaijan is a
party to the Framework Convention for the Protection of National Minorities since 2000.
48. The Talysh. According to the 1999 census data, national minorities constitute about 9.4%
of the total population in the country. The Talysh is the single most important minority in the
south where five new rayons will be included in AzRIP-2. The same census data reports about
77,000 Talysh persons in total in the country and most of them are believed to live in the
southern rayons. It is possible that the census figures are underreported. According to a study,
the Talysh make up nearly 95% of the rural population in some rayons.3 The same study cites
that the Talysh language belongs to a group of Iranian languages. Talysh speakers are also
found in Iran. The Talysh in Azerbaijan are bilingual, and some also speak Russian.
Proficiency of the Talysh in Azerbaijani is high except in remote and isolated communities.
Gender does not feature as an important factor to differentiate their levels of proficiency in
Azerbaijani.
49. Settlement Patterns and Main Livelihoods. The Talysh Mountains cover western parts of
the region. Mountainous areas of the region, especially Lerik and Yardymly rayons, are
characterized by a large number of small villages. While the Talysh are predominantly
agrarian, differences in climatic, geographical and natural resource bases serve to differentiate
main livelihoods of the residents of the region. The lowland Talysh cultivate such crops as rice
and tea, but in the mountainous areas livestock is the most important livelihood. In the lowland
along the Caspian coasts, the communities are engaged in fishing. The lowland area is more
accessible and hence integration with a wider economy can be more advanced.
Table 2: Population and Percentage of the Talysh in the Five Southern Rayons
Rayon Total population
(persons)
Proportion of the
Talysh (%)
Lenkoran 189,929 13.6
Astara 84,319 6.8
Lerik 63,314 11.4
Masally 173,937 21.1
Yardymly About 48,000 n/a Source: Census 1999, The State Statistical Committee
50. Decision Making and Participation. Community-level decision making mechanisms are
in principle the same as those in the Azeri communities, and would involve village-level public
meetings and/or discussions among the leaders. The latter not only includes official leaders
such as rayon ExComm and municipality representatives, but also Aksakhal members and other
respected persons, including women who are holding public offices (teachers, doctors and other
health workers).
3 John Clifton, Calvin Tiessen, Gabriela Deckinga and Laura Lucht, Sociolinguistic Situation of the Talysh in Azerbaijan, SIL
International, 2005 (http://www.sil.org/SILESR/2005/silesr2005-009.pdf).
43
Inclusion of Women and Vulnerable Groups
51. Participation of Women. AzRIP-2 promotes the participation of women, and
incorporates measures to achieve it, including an indicative target of women‟s representation in
Community Group membership (set at 35%). Such measures, however, are not binding, and
participation and inclusion of women and vulnerable groups is mostly left to the will of
individual community members. Evidence suggests that actual participation of women in
various project activities has been satisfactory. According to the results of a series of focus
group discussions (FGDs) conducted in randomly selected 24 communities with completed
Community Projects, 71% of women said they actively participated in the project4. Women‟s
representation in Community Group memberships is 31% which is slightly lower than the
target, but nonetheless at a satisfactory level. This is a significant achievement in considering
that selection was left to the popular votes without any separate quota for women. Discussions
with Community Groups during field visits indicated that women are not only represented in the
groups, but they are active members. Most villages have a good pool of female professionals in
public offices (schools, hospitals, etc.), who are known to the residents and have the capacity
and experience to fulfill public functions, from which female Community Group members are
mostly drawn. Women account for about 28% of the total participants of community
mobilization workshops at the project level. Achievement of this satisfactory level of
participation without any binding measures is again encouraging, and seems to suggest a
genuine interest of women in the project.
52. Most types of Community Projects provide gender neutral benefits, thus the selection
process is not likely to involve gender-based competition. One important exception is,
however, drinking water supply which would potentially attract a higher level of interest from
women since fetching water is predominantly their role in rural Azerbaijan. AzRIP financed 66
potable water Community Projects during 2005-2008, which is nearly 20% of the total for the
period, indicating that male dominance in Community Project selection is unlikely5.
Table 3: Women’s Participation
North
North
West Nakhchivan Total
Community
Groups Women 31% 34% 27% 31%
Youth 6% 18% 4% 10%
Mobilization Women 30% 31% 23% 28%
Youth 26% 30% 13% 24%
Source: PMU
4 AzRIP: Project Quarterly Status Report (July-September, 2010).
5 It is possible that more communities chose drinking water supply as the top priority, but the budgetary ceiling did not allow it to
be implemented.
44
53. Inclusion of Vulnerable Groups. Assessment of participation of youth is only possible
with the available data which covers the period 2009-2010. The youth‟s participation in
community mobilization workshops and training is reasonably high at about 21% and 10%,
respectively. For IDPs‟ participation, however, the data from the northwest zone which has a
sizeable IDP presence indicates more efforts are needed. On average, IDPs accounted for 14%
of the total population of the 19 communities where AzRIP was implemented, but less than 8%
of the participants of the village meetings. There are several communities where the difference
is quite significant, and in some communities with a high percentage of IDPs they are not
represented in the Community Group.
Social Capital Indicators
54. Following the World Bank‟s Social Capital Implementation Framework, potential
indicators were identified according to the five operational dimensions: (i) groups and networks;
(ii) trust and solidarity; (iii) collective action and cooperation; (iv) social cohesion and
inclusion; and (v) information and communication. Consultations narrowed down the potential
indicators, which include:
Number of Community Groups (CGs) which participated in cross visits
Number of projects and activities implemented with internal resources in cooperation
with municipality
Number of reporting meetings voluntarily organized by CGs
% of households willing to contribute to public projects
% of functional CGs six months after project completion
% of households which attended mobilization
% increase of community wide meetings
% of women in CG membership
Recommendations
55. Key recommendations of the Social Assessment are as follows:
Strengthen efforts to promote and ensure IDP participation and representation in
Agdzhebedi and Beilagan, especially in communities where IDPs‟ presence is
significant. Specific measures would include setting a percentage target for IDP
participants in community mobilization and CG membership.
Improve coordination on support to community infrastructure between AzRIP-2 and
SFDI in Agdzhebedi and Beilagan in order to maximize the benefits and avoid
potential duplication of efforts.
Adjustment of minimum population requirement (1,000 persons except for
Nakhchivan where it is 600) for eligible communities in some rayons (possibly Lerik
and Yardymly) where a great majority of the villages have less than 1,000 persons
and distance and poor accessibility makes clustering a challenge.
45
Preparation and implementation of a strategy to strengthen women‟s leadership
within AzRIP-2‟s programming.
Training of project staff on diversified women‟s constraints and female leadership.
Monitoring & Evaluation
56. The objectives of the monitoring and evaluation activities are to provide AzRIP-2 staff
and stakeholders with regular information on project implementation and outputs; identify
bottlenecks to project implementation; ensure that all activities under AzRIP-2 are implemented
in compliance with project regulations; determine to what extent the PMU achieves its goals
and objectives and how it affects the intended beneficiaries‟ social conditions and capacities;
and maintain acceptable performance standards for environmental and social impacts. The
project will continue to use the monitoring and evaluation procedures and existing MIS and
other relevant tools that have been established under the current AzRIP project, tailoring and
strengthening them as needed in order to better track and assess areas such as women‟s
participation and empowerment, economic changes and social capital impacts.
57. Data sources will include an impact evaluation including a baseline survey to be
conducted prior to project implementation; information from the MIS covering detailed tracking
of individual micro-projects and overall project progress including capacity building activities
at all levels, financial costs, etc. Periodic qualitative evaluations will be undertaken to measure
and assess the project‟s physical achievements, project impacts, and beneficiary satisfaction.
Additionally, after completion of the micro-project, community project evaluations will take
place after 6 months, 1 year and 2 years to assess the impact and sustainability of the project.
The costs of data collection and monitoring and evaluation will be covered under Component C
of the project (Project Management and Results Monitoring).
58. AzRIP-2 monitoring and evaluation activities will be conducted at three levels – central,
regional, and community. At the central level, the work will be facilitated and coordinated by
the M&E and MIS Specialists, with periodic supervision and monitoring done by the World
Bank and the Working Group through receipt and review of quarterly and special reports
provided by the PMU, as well as independent auditor reports. At the regional level, Community
Development/ Monitoring Officers will monitor project-level micro-projects, using the
performance indicators developed by the PMU for each type of infrastructure investment. The
ROO will also hire technical experts to monitor the technical quality of infrastructure works to
ensure compliance with technical standards established for the works. ROO staff will also visit
project sites at random for spot-monitoring. In addition, Community Groups will engage in
regular participatory monitoring and evaluation activities during project implementation. Data
collected at the regional and community levels will be entered by Regional MIS Officers into
the database for transmission to the PMU.
46
Annex 4: Operational Risk Assessment Framework (ORAF)
Azerbaijan: Second Rural Investment Project (P122944) .
Project Stakeholder Risks
Stakeholder Risk Rating Low
Description:
The Ministry of Economic Development may have concerns about the institutional
placement and context of the project, which they have expressed in the form of concerns on sustainability and efficiency issues in AzRIP.
Beneficiary capacity in new rayons to prepare and implement sub-projects may be weak.
Controversy around selection of additional project regions and beneficiary communities.
Risk Management:
The project is being developed in close collaboration with the Ministry of Agriculture and the Ministry of Economic Development and
enhanced communication mechanisms will be put in place to ensure that project implementation performance and results are broadly
disseminated. Additionally, indicators to measure sustainability will be developed for AzRIP-2 and shared proactively with MoED.
Resp: Both Stage: Both Due Date: Status: Completed
Risk Management:
As with AzRIP, efforts will be focused on stimulating community mobilization and strengthening community capacity to implement
sub-projects.
Resp: Client Stage: Both Due Date: Status: In Progress
Risk Management:
As with AzRIP, clear and transparent selection criteria to be used in selecting new regions and beneficiary communities, along with
active public information and dissemination campaigns.
Resp: Client Stage: Both Due Date: Status: Completed
Implementing Agency (IA) Risks (including Fiduciary Risks)
Capacity Rating Low
Description: Risk Management:
Gap between the closing of AzRIP 1 and effectiveness of AzRIP-2AzRIP-2 may result in
loss of experienced PMU staff.
Retroactive financing is in place to fill the gap.
Resp: Both Stage: Preparation Due Date: Status:
Governance Rating Low
Description:
Lack of support from the Ministry of Economic Development could influence the Ministry of Agriculture's views on the design and scope of the project.
Significant turnover and/or political appointments at top management levels of MoA, resulting in lack of competent management and failure to provide strong leadership, good
governance and transparent decision making.
Community concerns and priorities are not sufficiently taken into account.
Risk Management:
The project has received strong endorsement from the Cabinet of Ministers and the Prime Minister's office, and the task team will continue to work closely with the Ministry of Economic Development during project preparation to ensure their ongoing support.
Resp: Bank Stage: Preparation Due Date: Status: Completed
Risk Management:
The Bank will need to continue emphasizing the importance of a well governed agriculture sector to the national economy in the course
of our country dialogue. It will continue work with Government to build support and consensus for governance reforms.
Resp: Bank Stage: Both Due Date: Status: In Progress
Risk Management:
The project will enhance the role of communities in design and implementation, and ensure that adequate grievance redress mechanisms
47
exist.
Resp: Both Stage: Both Due Date: Status: In Progress
Risk Management:
The project will continue to use the transparent procedures established under AzRIP 1 with regard to the decision making process, which limit opportunities for interference.
Resp: Client Stage: Implementation Due Date: Status: In Progress
Risk Management:
Regular on-site supervision of civil works construction will be conducted together with procurement and FM reviews.
Oversight of rehabilitation works will be strengthened by increased participation of communities in tender award and construction
supervision.
Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Risk Management:
Properly established internal controls within PMU that ensure several levels of approval by procurement and FM of invoices. Reconciling of expenditures to the pre-approved procurement plan. Audits of project expenditures. PMU will have annual technical /
procurement audits to be carried out by independent consultants.
Resp: Client Stage: Implementation Due Date: Status: In Progress
Project Risks
Design Rating Low
Description:
Growing project complexity resulting from new component on strengthening household livelihoods, and scaling up of the number of regions the project will cover.
Non-transparent selection of participating grantees
Risk Management:
Design of new livelihoods component will be based on comprehensive diagnosis and analytics on sustainable livelihoods and
institutional arrangements and will draw on lessons learned from livelihoods support in CDD operations globally.
Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Risk Management:
Monitor implementation for consistency with guidelines to ensure that clear and transparent criteria are used for beneficiary selection
and project screening and approval.
Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Social and Environmental Rating Low
Description:
Proximity of two new rayons (Agcabadi and Beylaqan) to conflict-affected areas.
Risk that sub-projects benefit a small number of people and exclude women and
marginalized groups.
There is no risk related to involuntary resettlement or land acquisition. Potential land acquisition will be screened through questions in the EMF checklist as per AzRIP 1.
Beneficiary communities may fail to follow environmental requirements during sub-project implementation due to insufficient capacity or lack of understanding.
Risk Management:
If conflict occurs along the borders of these two rayons, the Bank and Project team will assess the continued feasibility of activities in these areas, or may recommend community mobilization or sub-projects designed to build community resilience to conflict.
Resp: Both Stage: Implementation Due Date: Status: Not Yet Due
Risk Management:
Regarding, inclusion of women and marginalized groups, the project will have a continued emphasis on inclusion of all relevant social
groups and robust grievance redress mechanisms.
Resp: Both Stage: Both Due Date: Status: In Progress
Risk Management:
48
AzRIP 1 supported environmental awareness raising and capacity building activities among both the Regional Offices and potential sub-
project beneficiaries. AzRIP-2 will continue the same good practice. The project EMP and OM contain clear procedures to be implemented for each sub-project.
Resp: Client Stage: Both Due Date: Status: Not Yet Due
Risk Management:
The Environmental Specialist will continue close environmental monitoring of sub-projects and will provide support and guidance to
community beneficiaries.
Resp: Client Stage: Both Due Date: Status: In Progress
Program and Donor Rating Low
Description: Risk Management:
No dependence on other donors.
Resp: Stage: Due Date: Status:
Delivery Monitoring and Sustainability Rating Low
Description:
Weak technical quality of small-scale infrastructure.
Inadequate O&M arrangements, leading to lack of sustainability of small scale
infrastructure.
Inability of communities to collect the required funds for recurring O&M costs for
rehabilitated infrastructure.
Livelihood activities unable to be sustained after project completion.
Risk Management:
Enhancement of PMU capacity to handle livelihoods component, and continued emphasis on capacity building and accountability, local
responsibility and empowerment, partnerships and sustainability.
Resp: Client Stage: Both Due Date: Status: In Progress
Risk Management:
Ongoing capacity building of Design Company and Engineers at the community and regional levels.
Resp: Client Stage: Both Due Date: Status: In Progress
Risk Management:
Continued support for developing adequate standardized maintenance contracts and ongoing M&E, including capital improvement plans
and longer-term maintenance schedules.
Resp: Client Stage: Both Due Date: Status: In Progress
Risk Management:
The project will further strengthen capacity of participating communities to take over the responsibility for O&M of rehabilitated infrastructure.
Resp: Client Stage: Both Due Date: Status: In Progress
Other (Optional) Rating
Description: Risk Management:
Resp: Stage: Due Date: Status:
Other (Optional) Rating
Description: Risk Management:
49
Resp: Stage: Due Date: Status:
Overall Risk
Preparation Risk Rating: Low Implementation Risk Rating: Low
Comments:
50
Annex 5: Implementation Support Plan
Azerbaijan: Second Rural Investment Project (P122944)
I. Strategy and Approach to the Implementation Support
1. The strategy and approach for the Implementation Support Plan (ISP) is built on the
following key aspects.
2. Capacity building activities and micro-project cycle implementation under all
components will be implemented by AzRIP-2 staff working at the PMU and in the regions,
supported by Individual Consultants under contract. The PMU will be supported by three
existing Regional Operations Offices (ROOs) and one new ROO acting as the project‟s
representation at the regional level. The PMU will provide institutional support to the ROOs
which will be responsible for daily project management and monitoring of the community
project portfolio. The ROO staff will be contracted by the PMU and include skills required to
carry out appraisal, contracting, supervision and monitoring of community projects. The ROOs
will also accommodate the Project Assistance Team, the Regional Grant Approval Committees
and the Technical Design Companies. The ROOs will support and monitor the operations of
PATs and facilitate the meetings of the regional micro-project grant approval committees. The
ROOs will also facilitate contacts of the technical design companies with participating
communities. The institutional capacity building activities and studies will be undertaken
through individual and firm contracts. The PATs serve as service providers for AzRIP-2 zones
and will be responsible for coordinating all aspects of community mobilization, training,
advising on procurement and providing technical assistance to communities in the preparation of
micro-project proposals. The Regional Grant Approval Committees are located in the project
target zones and review all community project proposals for approval. The RGACs includes
representatives from the rayon executive committees, municipalities, civil society and regional
representatives of the Ministry of Agriculture and Ministry of Economic Development. The
PMU will recruit the technical design companies in each zone with the objective to provide
technical assistance to communities in engineering aspects of micro-projects. The design
companies would also assist the communities and the PMU in quality control and construction
supervision. The Bank team will provide overall implementation support to this structure of
project work flow.
3. The PMU has sound experience in fiduciary aspects and fiduciary arrangements have not
been significantly altered for this repeater project. The Bank‟s Task Team will monitor FM
arrangements and compliance.
4. The PMU has adequate capacity for procurement, and adequate thresholds for post – and
prior-review have been established. Subsequent to a Procurement Post Review carried out under
AzRIP, procurement oversight in the PMU will be strengthened and management of MP
contracting will be subject to rigorous scrutiny. The Bank procurement supervision will remain
a high priority during project implementation.
5. The Bank‟s Task Team will focus on strengthening the M&E capacity and providing
assistance to the PMU M&E Specialist in a high standard M&E and impact evaluation. Survey
methodologies are subject to the Task Team‟s review.
51
II. Implementation Support Plan
6. The Bank's supervision team will include a Washington-based Task Team Leader and
country-based fiduciary, procurement and safeguards staff.
7. Technical support for Component A: The Bank's Task Team will include a Participation
and Institutional Specialist to provide supervision support for the micro-projects component in
similar vein to implementation support provided during the course of the initial AzRIP project.
The technical specialists will provide support for the capacity building/TA program and the
workflow for micro-projects and provide technical advice on the implementation of activities
under this component. The Bank's Task Team will include a Civil Engineer to review the
adequacy of the design, construction, operation and maintenance schedules, planning and actual
works. The specialist will perform site supervision, audits and spot-checks of construction and
completed works. This input will require on average one mission per year through the life of the
project.
8. Technical support for Component B: The Bank‟s Task Team will include general CDD
technical expertise and specialized expertise in capacity building and social accountability to
enhance delivery and impact under this component by ensuring the necessary quality of capacity
enhancement inputs and training at multiple levels for the PMU, regional teams, ExComms,
communities and other stakeholders. A second focus for support is that of livelihood/income-
generating activities and the Bank‟s Task Team will include a Sustainable Livelihoods Specialist
to assist the PMU with the design and implementation of livelihood pilots and associated market
and assessment studies. This input will be required for approximately 2 missions a year in the
first 2 years of the project, and 1 mission in project years 3-5.
9. Technical support for Component C. The Bank‟s Task Team will include a Monitoring
and Evaluation specialist team from the Development Impact Evaluation Group (DIME). This
team will provide ongoing technical support for M&E and impact evaluation design and
implementation including baseline and periodic evaluation throughout the life of the project.
10. Financial Management Supervision: The Bank's Financial Management Specialist based
in Baku will conduct one FM supervision every year throughout the life of the project. FM
supervision will cover, in addition to standard FM areas, detailed review of civil works contracts
and funds flow between PMU and regional offices of the project.
11. Procurement supervision: The Bank‟s Procurement Specialists based in Baku will be
members of the project team throughout the project. During project implementation, designated
Procurement Specialists will join the regular Bank implementation support missions. The
frequency of procurement supervision is expected to be twice per year. In addition to the prior
review supervision to be carried out by the Bank team, procurement post reviews are to be
carried out on at least 10% of the contracts subject to post review. As a minimum, one post
review report which will include physical inspection of sample contracts including those subject
to prior review will be prepared each year and not less than 10% of the contracts will be
physically inspected.
52
12. Environmental Safeguards supervision. The Bank‟s Environmental Specialist based in
Baku will be a member of the project team throughout the project. Besides supervision of
compliance with environmental safeguards, the specialist will provide assistance and support in
conjunction with the PMU‟s Environmental Specialist on environmental issues arising during the
implementation of Component A.
13. Social Safeguards supervision: The Bank's Task Team will include a Social Development
Specialist who will provide support to the PMU on social development issues, in particular in the
area of assessments and social analysis relating to social impacts and social sustainability.
III. Implementation Main Focus
14. Table 1 presents the main focus of implementation support over the life of the project.
Table 1: Implementation Support
Time Focus Skills Needed Resource
Estimate
Partner Role
First twelve
months
M&E – IE baselines
Institutional
development capacity
building, TORs,
training,
livelihoods capacity
development,
assessments and
procurement prior
reviews
Participation and
Institutional
Specialist;
Civil Engineer;
Social Safeguards,
Procurement,
Environmental
Safeguards, and
M&E Specialist
US$ 135,000 /yr
12-48 months Implementation
review of MPs;
Livelihoods pilots
initiation;
M&E mid-term
Participation and
Institutional
Specialist;
Civil Engineer;
Social Safeguards,
Procurement,
Environmental
Safeguards, and
M&E Specialist
US$ 110,000/yr
> 48 months Policy dialogue with
government
Pilot results and
dissemination
IE end line
Participation and
Institutional
Specialist;
Civil Engineer;
Social Safeguards,
Procurement,
Environmental
Safeguards, and
M&E Specialist
US$ 110,000/yr
53
Skills Mix Required
Skills Needed Number of
Staff Weeks
Number of
Trips
Comments
Task Team Leader
Social Development Specialist
Institutional Specialist
Civil Engineer
M&E Specialist
Procurement Specialist
Financial Management Specialist
Environmental Specialist
Livelihoods Specialist
50
18
12
10
12
12
12
10
12
10
7
2
4
4
Field based
Field based
Field based
Field based
Partners
Name Institution/Country Role
To Be Determined FAO/CP Institutional and Technical Supervision Support
IBRD 38276
DECEMBER 2010
BALAKAN
ZAQATALA
QAX
SAKI
OGUZ
QABALA
AGDASYEVLAX
GORANBOYXANLAR
SAMUXSAMKIR
TOVUZ
AGSTAFA
QAZAX
GADABAY
DASKASAN
KALBACAR
SARUR
TARTAR
QUSAR
QUBA
ISMAYILLI
GOYCAY
AGSU
DAVACHI
SIYAZAN
XIZISAMAXI
QOBUSTAN
BAKIABSERON
HACIQABULKURDEMIRZARDAB
SABIRABAD
SAATLI
BILASUVAR
CALILABAD
NEFTCALA
YARDIMLI
MASALLI
LERIK
ASTARA
IMISLI
BEYLAQAN
A G C A B A D IAGDAM
XOCALI
LACIN
FUZULI
CABRAYIL
XOCAVA
ND
QUBADLI
Z AN
GI L
AN
SUSA
B A B E K
SAHBUZ
CULFA
ORDUBAD
BARDA
UCAR
XACMAZ
SALYAN
L A
NK
AR
AN
Agstafa
Balakan
Zaqatala
Qax
Saki
Oguz Qabala
Ismayilli
Goycay
AgdasYevlax
Ucar
Xacmaz
Siyazan
Maraza
Kurdemir
Saatli
Sabirabad
Astara
Lankaran
Masalli
Yardimli
Neftcala
Salyan
Gazi-Mammad
Bilasuvar
Lerik
Zardab
Agcabadi
Beylaqan
Imisli
Samaxi
Xizi
Quba
Agsu
BardaTartar
Davachi
Khyrdalan
Qusar
Nabiagaly
Ganja
Kalbacar
Sadarak
Sarur
Babek
CulfaOrdubad
Zangilan
Lacin
Xocali
QubadliCabrayil
Fuzuli
XocavandSusa
Sahbuz
Agdam
Xanlar
Tovuz
Qazax
Samkir
GoranboyGadabay
Daskasan
CalilabadNAKHCHIVAN
BAKU
G E O R G I A
A R M E N I A
R U S S I A N
F E D E R AT I O N
I S L A M I C R E P U B L I C O F I R A N
Araz Ri
verAraz
Lake Sevan
Kura
Samur River
Mingechevir Reservoir
ShamkurReservoir
C a s p i a n
S e a
Karasu River
Katek
hchay
Iori
Chikilchay
Kura
Lenkaran
S ham
kirch
ay
ArazReservoir
Kura River
To Tbilisi
To Tbilisi
To Dilizhan
To Yerevan
To Jolfa
To Kayakent
To Rasht
45° 46° 47° 48° 49° 50° 51°
45°
39°
40°
41°
39°
40°
41°
46° 47° 48° 50°
AZERBAIJAN
SECOND RURAL INVESTMENT PROJECT
AzRIP2 EXPANDED PROJECT AREAS
AzRIP1 PROJECT AREAS
MOTORWAYS
RAILROADS
DISTRICT CAPITALS
CAPITAL OF AUTONOMOUS REPUBLIC
NATIONAL CAPITAL
DISTRICT BOUNDARIES
INTERNATIONAL BOUNDARIES
This map was produced by theMap Design Unit of The World Bank.The boundaries, colors,denominations and any otherinformation shown on this map do notimply, on the part of The World BankGroup, any judgment on the legalstatus of any territory, or anyendorsement or acceptance of suchboundaries.
500 10 20 30 40
KILOMETERS
AZERBAIJAN
ARMENIA
ISLAMIC REP. OF IRAN
TURK
MEN
ISTANT U R K E Y
SYRIAN ARAB REP. IRAQ
GEORGIA
UKRAINE
RUSSIAN FEDERATION
KAZAKHSTAN
Baku
B lack SeaCasp ian
Sea
BAHRAMTAPEHEADWORKS