Page 1 PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB1054 Project Name Tanzania Second Social Action Fund Region AFRICA Sector Other social services (60%);General agriculture, fishing and forestry sector (10%);Ports, waterways and shipping (10%);Micro- and SME finance (10%);General water, sanitation and flood protection sector (10%) Project ID P085786 Borrower(s) UNITED REPUBLIC OF TANZANIA Implementing Agency Government of Tanzania President's Office, State House P.O.Box 9120 Tanzania TASAF Management Unit Old Kilwa/Malindi Street P.O. Box 9381 Tanzania Tel: 255-51-123582/84 Fax: 255-51-123582 tasaf@ud.co.tz Environment Category [ ] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [X] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared August 11, 2004 Date of Appraisal Authorization September 8, 2004 Date of Board Approval November 23, 2004 1. Country and Sector Background The Poverty Reduction Strategy Paper (PRSP) set within Vision 2020/2025 for the United Republic of Tanzania outlines the main thrust of the Governments strategy to tackle poverty. The PRSP focuses on three dimensions of eradicating poverty: (a) reduce income poverty, (b) improve human capabilities, survival and social well-being, and (c) contain extreme vulnerability among the poor. The Government of Tanzania (GOT) has adopted the internationally-endorsed Millennium Development Goals (MDGs) as the basic minimum achievements for its citizens to have a tolerable level of human existence. The GOT has further adopted the Public Expenditure Review (PER) as a tool to assess the extent to which resources are being used to meet the PRSP goals, ensure fiscal discipline and accountability, prioritize between competing needs, promote efficiency, and guide the Medium-Term Expenditure Framework (MTEF). The main development challenge for the GOT is widespread poverty as evidenced by the 2000/2001 Household Budget Survey which showed that 19% of the population lives below the Page 2 food poverty line while 36% live below the basic needs poverty line of under US$1 per day. In the capital city, these figures were 13% and 18% for food and basic needs poverty lines respectively. Thus, inequalities are high as evidenced by the 2000/2001 Gini co-efficient of 0.35, and also reflected by the overwhelming rural and peri-urban distribution of the poor. Access to safe drinking water in 2002 was 70% for urban and 50% for rural populations. Although gross primary school enrolment in the country is now at 100%, tere are challenges of increasing secondary school enrolment as a strategy to improve on numbers of entrants into vocational training and education institutions in the strategy to build a skilled workforce. Health indicators (maternal and infant mortality, malaria-related morbidity, and HIV/AIDS-related illness) remain high in spite of the many efforts of Government and several NGOs. Within the strategy to attain MDGs, the GOT expects to see improvements in many indicators – including the ones mentioned above. The achievement of poverty reduction through the PER, MTEF, and other tools has been hampered by the failure of public sector resources to reach the poorest sections of Tanzanian society, especially in the rural and peri-urban areas. Poor performance by the public sector, skewed growth in favor of urban areas, and limited opportunities to generate higher government revenues for targeting towards poverty-reducing programs have been identified as significant obstacles to the achievement of better poverty reduction results. Furthermore, the limited success in mobilizing traditional/informal and market mechanisms to assist the poor in their response to shocks (drought, HIV/AIDS, low producer prices, etc.) has constrained the success of public sector measures to secure incomes for rural and peri-urban populations. The GOT is promoting the adoption of a community driven development (CDD) approach in a number of sectors: especially primary education, agriculture, and social protection. Investments with a CDD approach have been complemented by the implementation of programs aimed at strengthening the decentralization process so that decision-making can be brought to the Local Government (District Council, Urban Council, Islands, and Village Council) level. Public sector reform strategies are also being supported in order to improve the efficiency of the public sector, complemented by a national privatization program aimed at mobilizing the private sector for poverty reduction goals. 2. Objectives The PDO is to empower communities to demand, implement, and monitor services, and access opportunities that contribute to improved livelihoods through the sustainable achievement of specified MDG indicator targets within the Tanzania PRSP. The key outcome indicator will be the percentage of targeted poor communities receiving grants to complete their subprojects within the agreed time-frame to benefit the following: (i) households without access to and use of specified service packages, (ii) vulnerable individuals needing assistance, (iii) food insecure households with limited employment opportunities, and (iv) individuals with limited access to market-driven micro-finance services. The Project will contribute to the goal of GOT to build human capabilities through (i) reducing vulnerability and managing livelihood risks by improving health (including tackling HIV/AIDS), education, and water and sanitation, and (ii) increasing empowerment and accountability in the Page 3 areas of finance and governance. The Country Assistance Strategy (CAS) is aligned to these goals by focusing on four areas of strategic importance; two of which inform the design of TASAF II as they seek to bring about (i) “sustainable rural development to improve the livelihood of the majority of the poor, who live in rural areas”, and (ii) “improved social infrastructure, to improve social indicators and enhance access to essential public health services by the poor” (CAS, p.20) 3. Rationale for Bank Involvement While GOT has recognized the importance of strengthening the three spheres of government (National, Local, and Village), most efforts in the past have gone into addressing capacities and actions for the first two levels. Decentralization strategies are being implemented to empower Local Government Councils (LGCs), and sector-wide approaches in a number of sectors have been adopted to facilitate joint action between National and Local Governments in the provision of services within the PRSP and MDG framework. The rationale for Bank involvement through this project is based on the need to capacitate the Village sphere of government so that it can mobilize the poor to take actions that can assist them contribute to poverty reduction for themselves. The alternative of budget support was considered and rejected because sufficient accountability mechanisms between Village and Local Governments have yet to be built up to allow for an adequate monitoring and reporting of development outcomes against resources made available. The hypothesis is that TASAF II will give GOT the necessary tools to facilitate the mainstreaming of the CDD approach into budget support (where it is possible to track inputs from the budget against outputs and outcomes at the Village Council level). A number of development partners are active in putting resources through budget support and basket funds; most targeted at National and Local Governments, but few at Village Governments in spite of the expressed desire to reach the poorest sections of the population. The Bank has, over the last four years, tested the delivery of resources to community through direct funding, with facilitation and management being handled by Local Governments. Experience from implementing the Tanzania Social Action Fund (TASAF I) in 40 districts and the 2 Islands has convinced the GOT and the Bank that expanding this mode of resource utilization in support of service delivery is a pre-requisite for equipping the Village Government to partner National and Local Governments in the attainment of PRSP objectives and MDGs. The Bank has also been able to tap into global knowledge and experiences on the use of CDD approaches to empower the poor, and this is the main comparative advantage the Bank has. The social fund allows for sector-organized interventions from National and Local Governments to become responsive to multi-sectoral demands from communities. Thus, the Bank’s involvement in this project is part of GOT’s program to empower communities while making its structures more responsive to community demands. Given that Tanzania has over 12,000 Village Governments, lessons from TASAF I give the Bank a particular advantage in scaling up the CDD approach. 4. Description The two components are: (i) National Village Fund (NVF), and (ii) Capacity Enhancement (CE). Page 4 Based on the PDO and as a project adopting the CDD approach, it was necessary to provide a mechanism that would allow Local and Village Governments to respond to community demands for interventions that improve livelihoods and allow communities to contribute to the attainment of specified MDG indicator targets. The management of a NVF will require the enhancement of capacities at National, Local and Village levels in the empowerment of communities to participate in risk reducing and mitigating activities thereby contributing to poverty reduction. Thus, the CE component is to facilitate the implementation of the NVF component. The principal target group of the NVF are the poor, and access to the Fund will be by communities who are considered poor because they (a) lack access to basic social and market services; (b) are able-bodied but food insecure; and (c) are vulnerable (i.e., orphaned, disabled, elderly, affected/infected by HIV/AIDS, etc.). Three types of beneficiary groups will be targeted by the NVF in order to improve their livelihoods: (i) service poor households who will avail themselves of improved services in health, roads, education, water and sanitation, markets, banking, and others, (ii) food insecure households with able-bodied adults who will increase their incomes from working in NVF- financed public works programs, and (iii) vulnerable individuals who will work through community-based organizations to access resources for increasing incomes at the household level. The NVF will be managed by LGCs (in response to community demands) through the VG – which will ensure that beneficiaries elect a Community Management Committee (CMC) to manage resources available for each subproject. The main outcomes will be: · increased availability and use of basic and market services by households · improved employment opportunities for individuals to meet basic needs · increased cash and other benefits reaching vulnerable individuals Under the CE component, beneficiaries will be agencies (public and private) that support communities to make the best use of resources made available under the NVF, as well as poor individuals participating in group savings and taking advantage of investment opportunities created by various private-public partnerships. The CE component will respond to individuals from LGCs and various agencies supporting Village Governments, comprised of Village Councils and Village Assemblies, implement subprojects. The main outcomes will be: · extra skills in subproject cycle management gained by individuals · increased opportunities to save and undertake profitable investments by poor individuals. The NVF will provide money to a Village level fund, Mfuko wa Kijiji/Shehia/Mtaa (MWK), as the principal input for households to produce outputs that improve service availability and use, as well as incomes for the able-bodied poor and the vulnerable. Beneficiaries will be facilitated to identify priority problems, design interventions, and prepare proposals which TASAF will finance in the form of subproject grants given to MWK. Each subproject will be managed by a democratically-elected CMC; with specified amounts retained by the LGC and Village Council to finance facilitation for the successful subprojects management. Key outputs for the first component are: · households with increased access to and use of specified service packages Page 5 · individuals with increased and quantified employment opportunities and cash transfers through the subprojects · vulnerable individuals receiving assistance from subprojects The CE component will provide resources for training, monitoring and evaluation of activities financed from the NVF component; the main outputs being the number of subprojects completed in a satisfactory manner. Members of CMCs, their trainers, and the training of trainers will receive support under this component. In addition, support will be given to voluntary Savings Groups of at least 10 members. Key outputs for the second component are: · individuals participating in informal and formal savings and market-driven initiatives · individuals reached with capacity enhancement activities at Village, Ward, District/Municipal, and National levels The Project adopts the Social Risk Management (SRM) approach to social protection by creating rules for households to access resources that can stimulate economic activities to allow poor households to increase their incomes and address issues of vulnerability and manage risks under conditions of limited availability and use of social services. Thus, the Project provides a multi- sectoral response to the needs of communities whose actions will better prepare them to take advantage of market-created opportunities as well as utilize resources made available under the MTEF. Communities and sectors (represented at Ward and District/Municipal levels) will be able to undertake activities that assist GOT meet its targets as laid out in the PRS – in health, education, water and sanitation, savings mobilization, incomes among the poor, tackling vulnerability, and increasing access to the market by the poor. 5. Financing Source: ($m.) BORROWER/RECIPIENT 15 INTERNATIONAL DEVELOPMENT ASSOCIATION 129 IDA GRANT FOR POOREST COUNTRY 21 LOCAL COMMUNITIES 15 Total 180 6. Implementation There are currently no other international agencies participating in the financing of project. Implementation arrangements are based on GOT’s Constitutional provisions that create and define the roles of Village, Local and National spheres of Government. They are also informed by the CDD approach which seeks to empower communities and Local Governments that achieve a better alignment between communities and Governments, and build capacity and accountability at all levels of implementation. Under TASAF, Government extension staff at Ward and District levels will conduct general sensitization on all TASAF activities, but specialized activities (e.g. dealing with the vulnerable, engineering supervision, training of savers, etc.) will require specialized skills from Government, private sector, and civil society organizations. Page 6 At the national level, the project will fall under the President’s Office, with oversight vested in a National Steering Committee (NSC) drawing membership from both public and private sectors. A Sector Experts Team (SET) will be constituted to complement the work done by LGC-level teams of experts in ensuring that LGC and VGs conform to nationally-developed sector norms. Fidiciary oversight for both the NVF and CE components will be left to a Management Unit (MU), whose Executive Director and staff will be answerable to the NSC. Regional Secretariats, headed by Regional Commissioners (RCs) will have a technical backstopping function – strengthened by the placement of a TASAF Accounts Officer (TAO) who will cover 3 districts and oversee fiduciary matters and supervise the Justification Assistants in the LGCs. At the Local Government level, the Project will be managed by LGC Steering Committees (representing government and civil society organizations) chaired by the most senior Government official in the District, and reporting to Councils of elected representatives. These Councils will be able to call on National and Regional administrations to provide technical expertise (including fiduciary support) as available and needed. The Village Council will delegate the responsibility for day-to-day management of subprojects funded by NVF to a CMC as the administrative arm under TASAF II (see Table 1). Under TASAF, communities are ‘need-defined’ rather than being geographical entities. Table 1. Government organization Level Elected body Administrative body National Parliament Sector Ministries Local Council Line Departments Village Council Management Committees The decision to include the Village Government in the subproject cycle was motivated by the intention to mainstream TASAF support into Government structures in the interest of improving sustainability. It was also made on the basis of lessons from TASAF I, where the failure to provide an explicit role for the Village Government in some instances resulted in conflicts between the democratically elected subproject management committees and the LGCs mandated with ensuring community participation. While an official assessment of the Village level structures has not been undertaken, a 2003 assessment of Local Government Authorities recognizes the variability in capacity between District Councils; this is most likely replicated at the Village level. The large number of Districts and Municipalities (130) in Tanzania makes it necessary to provide some technical support at an intermediate level – the Regional Secretariat in this case. At Village/community level, the presence of extension staff at the Ward level provides accessible technical expertise for the Village Council and CMCs to draw on. The CMC provides Village Councils with a mechanism to implement subprojects (especially financial management and procurement). The location of TASAF II in the President’s Office is based on the project’s multi-sectoral nature and the need for effective co-ordination (reflecting community demands whose activities cut across several sector ministries.). The President’s Office also coordinates Regional and Local Government administration, which provides policy and operational guidelines for Village and Local Governments. This arrangement will support the mainstreaming of the CDD approach used by TASAF II into planning, implementation, monitoring, and evaluation of development procedures adopted by Village and Local Governments. Page 7 Experience in the implementation of TASAF I identified the problem of sector norms and standards which exist but are poorly enforced at the Village and Local Government levels for a variety of reasons. In order to tackle this problem under TASAF II, a SET will be constituted from senior sector experts to support the NSC, and review all subprojects from districts for conformity with sector norms and standards. The SET will either recommend their funding using TASAF II resources, or defer their funding until sector experts have done further reviews and/or further district field appraisals. The SET will also, on an annual basis, review proposals which were outside sector norms with a view to determining if any or some of them could offer a substantial basis for recommending changes to sector norms. Another constraint identified is the lack of sufficient accounts staff in LGCs, and this has been addressed by (a) making the availability of such staff a pre-condition for a district to handle a certain level of resources, and (b) providing funds under the CE component to strengthen the fiduciary capacity of Local Governments required by community subprojects (in particular justification, internal audit, monitoring, and management information systems). The distribution of responsibilities in a community subproject are summarized below in Table 2. The CE component of TASAF II will be providing capacity building, as necessary, to District and Village level authorities to ensure that the financial management requirements, including reporting, are met. The bulk of procurement will be undertaken by CMCs, and members will receive training in bookkeeping and procurement prior to funds being disbursed to them. At the District level, TASAF II will address weak financial capacity by providing concerned LGCs with resources to hire Justification Assistants (Accounts Assistants) to support subproject implementation. Graduation of LGCs so that they can take on more financial responsibilities will be based on the availability of district-employed accounting and internal audit staff (not paid from the project), plus two years of ‘clean’ audit reports. Funds will flow into a Special Account, to be administered by MU. Disbursement of all funds to Local Governments will be against schedules of subprojects approved at the Village, Local/Island, and National levels. Funds to the Local Government will be accompanied by a schedule showing which subprojects have been approved, what resources are to be (i) retained at the Local/Island level to finance facilitation of subprojects using LGC and Ward-level extension staff, (ii) sent to a MWK account to facilitate supervision by the Village Council, and (iii) sent to an account in the name of the CMC for the approved subprojects. The MU will disburse these subproject funds to the LGC as a single tranche for fully capacitated LGCs and in two tranches for LGCs with a Justification Assistant paid for by the project. Similarly, funds for MWK from the LGCs will be disbursed to the Village Council and CMC until the Village Councils have attained a pre-defined fiduciary capacity (when funds will go into the MWK for disbursement to the CMC). Page 8 Table 2: Roles and Responsibilities in Subproject Cycle by Beneficiary Group Process Service Poor Able-bodied Poor Vulnerable Extended PRA led by Extension workers/ NGOs Extension workers/ NGOs Extension workers/ NGOs Appraisal by: VC/LGC/NSC VC/LGC/NSC VC/LGC/NSC Approval of projects by VC/LGC/NSC VC/LGC/NSC VC/LGC/NSC Disbursements to:* CMC CMC CMC Implementation by: CMC CMC/LGC CMC/LSP Signatories to the bank accounts: CMC CMC+LSP** CMC+LSP Reports sent to: VC/LG VC/LG VC/LG Justification Reports prepared by: CMC CMC+LSP CMC+LSP Completion reports done by: CMC CMC+LSP CMC+LSP Inauguration done by: LGC LGC LGC Operation & Maintenance AMC LGC PIAs, AMC * Disbursements will be made from MU to LGCs, who will retain 7.5% for supervision, and transfer 2.5% to the VC for supervision, and the remaining 90% will be transferred to the CMC. **Each type of subproject will require a different type of local service provider (LSP). Possible LSPs for each beneficiary are as follows: Beneficiary group Possible LSP Hired by Service poor communities (Service Packages) Village Project Manager/ Technical Supervisor. LGC/VC Able-bodied poor Labor-Based Contractors. LGC/VC Vulnerable persons NGO/CBO CMC Approval and disbursement of TASAF contributions to subproject costs will be as follows: (i) less than US$5,000 will be approved by Village Councils and disbursed in a single tranche by the MU, rising to US$8,000 for subprojects that are demonstrably designed to contribute to more than one MDG; (ii) up to $20,000 will be approved at the LGC level and disbursed in three tranches; and (iii) up to $50,000 will be approved by the NSC after review by the SET and disbursed in three trances (table 3). Table 3. Sub-projects approval levels Sub-project Village Council LGC NSC Addressing a single MDG <$5,000 $5,001-20,000 Addressing 2 or more MDGs <$8,000 $8,001-20,000 $20,001- $50,000 LGCs will only approve subprojects for funding from the NVF if they (i) have been generated from communities through an extended-Participatory Rural Appraisal (E-PRA) process, (ii) meet the stipulated community contributions, and (iii) do not violate any sector norms and standards. As long as subprojects meet the above three criteria, LGCs will endorse those approved by the Village Council, and SET will in turn endorse those approved by LGCs. Page 9 The CMC will be responsible for reporting on expenditures against amounts received. For subprojects with more than a single tranche, subsequent tranches will only be disbursed upon satisfactory justification of 70% of funds already received. The LGC will be responsible for the justification process using documentation available at the Village level. For accountability, the CMC will prepare reports for the Village Council, which will make quarterly public reports to the Village Assembly before submitting reports to the LGC. These reports will be used to trigger releases of tranches from TASAF accounts held by LGCs. Members of the Village Council will also make presentations on progress to the Ward Development Committee and to the LGC as required. The MU will provide a link between LGCs and higher levels of technical backstopping in planning, implementation, monitoring, evaluation, and auditing (both service and financial). A Village Council must fully account for all resources before it can qualify to apply for more subprojects. 7. Sustainability The President of Tanzania as well as the Minister of Finance wrote to the World Bank requesting a follow-up operation to TASAF I, and a high-level Government Project Preparation Team has been set up to prepar e TASAF II. This commitment to the Project is complemented by GOT’s commitment to policies contained in the PRSP, and Government interest in the CDD approach as a way of empowering communities to participate in the implementation of the PRSP. On-going activities for the revision of PRSP are highly participatory, and clear milestones are expected from this process to guide its implementation for the attainment of MDGs. There is also commitment to decentralization below the LGC as a way of empowering communities, and this is demonstrated by constitutional provisions that recognize Village Government as the third sphere of governance (to complement National and Local levels). The GOT thrust to ensure external assistance comes in the form of budget support will provide TASAF with an opportunity to mainstream the CDD approach and ensure sustainability. The meeting of macro-economic milestones in the PRSP will be important for TASAF II sustainability as this will allow LGCs to provide the necessary recurrent expenditures for any infrastructure built through community efforts. Furthermore, GOT commitment to mobilize the private sector for the implementation of the PRSP will be necessary for TASAF II to be sustainable since community savings and investments will be market-mediated. The project has given LGCs authority to reject any community subproject request where such an investment would be contrary to sector norms and standards, and/or are outside the LGC’s development plan. This will ensure that only infrastructure where the LGC has recurrent budgets are constructed. For the transfer of incomes to food-insecure households, those with vulnerable individuals, and those willing to save, market mechanisms will be used in the implementation (market minimum wages will be used to determine the pay under public works, and savings groups will be linked with micro-finance institutions active in the commercial market). Capacity building budget is also provided for in the project. 8. Lessons Learned from Past Operations in the Country/Sector Page 10 Results from Participatory Poverty Assessments and Integrated Household Surveys conducted by GOT suggest that inequalities are on the increase and the benefits of positive economic growth are not reaching the poor effectively. TASAF I has demonstrated that communities have the capacity to identify, prioritize, and implement subprojects if adequate management guidelines are made available. Furthermore, international experiences suggest that activities to tackle poverty are more sustainable if they are owned by the poor, and are implemented through Local Governments. Analytical work in the Bank has demonstrated that social protection (SP) can be growth- enhancing if it adopts the SRM Framework, and the social fund remains an important instrument for operationalizing the SRM approach to SP by financing both ex-ante and ex-post interventions that address both individual (idiosyncratic) and community-wide (co-variate) shocks. Using results from OED’s evaluations, the project will focus on transformation issues in the relationships between the poor, Village and District-level structures, and foster a better balance between supply- and demand-driven development, especially the non-infrastructural outputs that create long-term sustainable development options for the poor. Challenges posed by decentralization have been addressed by integrating project management into LGC and Village Council structures without abandoning meaningful community empowerment that combines giving the poor a ‘voice’ with resources to make sure that the ‘voice’ leads to tangible results (including mechanisms for the operation and maintenance of assets created). 9. Safeguard Policies (including public consultation) Environmental Assessment (OP/BP 4.01): This policy is triggered given the fact that each subproject will need to be evaluated to ascertain whether there will be any environmental impact. Mitigating measures will be included and costed in the subproject design. An Environmental and Social Management Framework (ESMF) has been prepared in order to provide a process and guidance for handling safeguard issues that may arise during the planning, review and approval of subprojects. The ESMF has been reviewed and cleared by Bank and disclosed in-country and at Bank InfoShop. Involuntary Resettlement (OP/BP 4.12): This policy is triggered given the possibility that some subprojects may involve infrastructure construction and land acquisition. Since the subprojects are not known or identified in advance, a Resettlement Policy Framework (RPF) has been prepared, reviewed and cleared by the Bank and disclosed in-country and at Bank InfoShop. As part of the subproject cycle, an Extended Participatory Rural Appraisal will be undertaken with communities in order to identify environmental impacts. At both desk and field appraisal stages, the Local Government Authority (LGA) officer responsible for environment will sign off confirming that no adverse negative environmental impacts will remain following sub-projects implementation. Depending on the case, prior to subproject implementation, a Limited Environmental Impact Assessment or a full Environmental Assessments (FEAs) will be carried out as applicable under the oversight of the Sector Experts Team/NEMC/National Steering Committee. Upon approval these safeguard instruments will be disclosed, as described above. Page 11 Subprojects that cannot develop mitigation measures that are acceptable to the community and are not in line with national environmental policy guidelines and norms cannot be funded by TASAF II. 10. List of Factual Technical Documents TASAF II Environmental and Social Management Framework TASAF II Resettlement Policy Framework 11. Contact point Contact: Nginya Mungai Lenneiye Title: Sr Social Protection Specialist Tel: (202) 473-2860 Fax: (202) 473-8299 Email: nlenneiye@worldbank.org 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop