Domt of The World Bank FOR OMCLAL USE ONLY R1ot NQ- P-5879-BU N~4ORANIDU AND RECOMMENDATION OF THE PRESIDENT OF THE IWi TTIOAL DE V EWI ASSOCIATION TO TBE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE ANDUNT OF SDR 7.5 MILLION TO THE REPUIBLIC OF BURUNDI FOR A SOCIA ACTION PROECT APRIIL 20, 1993 t;T., :; t l,t i .tnez~ ~ rrr,. F r- ; v; ,!J Tbis doememt has a restrcted disributi and may be used by recidpits only in the performance of their officil dutim Its contents may not otherwise be disclosed without World Bank athorization. CURRENCY EVALENTS Perid Averge Currency Unit = Burundi Franc (FBu) 1990 = FBu 171 1991 = FBu 200 1992 = FBu 213 WEIGHS AND MEASURES Metric Internat;onal Standard System GLOSSARY OF ABBREVIATIONS BURSAP Burundi Social Action Project ISTEEBU National Statistical Institute MIS Management Information System MU Management Unit NGO Non Governmental Organization UNDP United Nation Development Fund WFP World Food Program FOR OFCLAL USE ONLY. PUBLIC OF BURUNDI S ACTION PROJECr Credit and Project Summary Borrower : Republic of Burundi Amount : SDR 7.5 million (US$10.4 million equivalent) IBma : Standard IDA terms, with 40 years maturity FinancngPlan Local Foreign Total % DA 6.7 3.7 10.4 66 Governmente 5.3 - 5.3 34 TOTAL 12.0 3.7 15.7 100 1/ Includes condtibutions by governmet (some In the form of counterart funds geneated by foreign aid), local commnities, and beneficiaries. Rate of Retur N.A. Staff Apraisal Rellort: 11167-BU : IBRD 24302 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 authoriaton. MEMORANDUM AND RECOMMENDATION OF THE PRESIDEN"T OF THE INTERNATIONAL DEVELOPMENT ASSOCATION TO TH EECU DIlECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BURUNDI FOR A SOCL ACTION PROlECT 1. I submit for your approval the following meuaorandum and recommendation on a proposed development credit to the Republic of Burundi for SDR 7.5 million, the equivalent of US$10.4 million, on standard IDA terms with a maturity of 40 years, to help finance a social action project. 2. Backgro. Per capita GNP in Burundi was about $210 in 1990, one of the lowest in the world. The degree of monetaron of the economy is still low. Since the inception of its structul adjus_tm program in 1986, the government of Burundi has made important progress in improving its macro-economic fiamework and in iteraizing the need for adjustment. Equaly important, it has increased public spei'ding in health and education, from 26% of the current budget in 1982 to 36% in 1991. Neverthtless, the combined effects of a high population growth rate (3.1%) in an already densely inhabited country and inrnal inefficiencies in the management of these sectors, make it Increasingly difficult to maintain a satisctory level of delivery of essential services. Because Burundi has one of the lowest urbanization rates in the world, poverty in Buundi is primarily a rural phenomenon, cha by high childhood morbidity and mortality rates, high level of illiteracy Cm line with the sub-Saharan averages), and a lack of non-farm rura employment opportunities. Sector programs in health and education are not designd to direcdy target those who cannot participate directly in productive activities nor do they attempt to addrs acute poverty problems. In particular, no comprehensive program has been implemented to aid women in rural areas who face acute problems because of lack of access to land, or cohorts of youth who enter the labor force without employment perspectives. 3. IDA supports an overaU poverty alleW;ation strateg which follows a four-pronged approach: (a) growth, to be fostered by measures being taken under the on-going third adjustment credit (SAC I) which reinforce the goverament's effbrt to rationalize the management of public expenditures and encourage private sector initiatives; (b) employment geneon, through the removal of ecnomic and legal bottlenec, the promotion of micro- enterprise development, and an emphasis on off-firm employment and labor-intensive public works programs; (c) improvement in the provision of essential serices to the poor, through cpacity building, adequate public speqding and increased efficiency, and (d) improved knowledge and monitoring of poverty. The Social Action Project (BURSAP or in the local language Twlezimbere) will cut across al four areas and will address structura constaints which gready hibit induals from realizing their economic potenial (eg. low level of monetaiizatlon, lack of off-farm productive activities, fagile community capacty). Ihe BURSAP aims more specificaly at encouraging bottom-up initiatives and involving the poor in productive and social activities to trigger growth. In support of the goverment's decenalization efforts, BURSAP would also help local comm ties to improve their management capaci and to shift more responsibilits to local authorites In the design of development activities. 4. Objectves. Within the global goal of poverty alleviation, the primary objectives of the project are to: (a) encourage a larger participadon of the populadon In small-scale productive activities (and hence economic growth), as well as to assist beneficiaries through the provision of basic social services aNi rehabilitation of infrastructure; (b) foster local and non- -2 - governmental pardtiipation In the development process; and (c) monitor the county's social situation as. a means to Improve goveranmt economic and socia policy formulaion and implementation. 5. P Descndoa. The project consists of two components: a poverty alleviation program, and a monitoring poverty program. (a) Rv= Alleviation. This component aims at supporting poor populations to participate direcdy in activities conducive to growth and to improve living standads in selected regons. This component will finance grass-root sub- projects In the following areas: (O) income generating activities such as training, start-up equipment, markeedng support, and-on a pilot basis-easier access to credit; (ii) enhancement of light economic infastructure needed to facilitae crafsmanship and trade channels for inputs and products (bridges, feeder roads...); (ii) rehabilitation of basic socil inastructure for essential services especially in primary education and basic health; and (v) high priority social actives (flmily planning, literacy programs and food sulemention) with high externalities. In addition, the development of local NGOs will be encouraged through advise, training and limited financial support. (b) M onitorp. This component aims to improve the governmens capacity to implement a global social strategy by allowing an sessmnt of relatve social conditions, to improve knowledge of poverty within the country, and to reinforce the government's ability to incorporate povery and social concerns into its sectoral and macroeconomic strategies, and to allocate more efficiently minimal resources to a core program of sena social services. The project will also implemeat surveys to follow up the Impact of adjustment measures at both the household and the sectoral/macroeconomic levels. A targeting system wil be organized first, followed by the devehpment of a long-term monitoring mecansm. 6. I Eianig. The two components will be financed tbroujh an autonomous agency which would serve as a mechanism to chanel IDA's and government's fund. Other donors are likely to contribute through, imtearia, import-generated counterpart funds. The WFP and UNDP intend to contributechnicaly and operationally. 7. &roectlW1eldo. The project management will be contacted to wTwtezimbere", a nonprofit organizaton with whkh the Govermment of Burundi has signed a framework agreement. The management unit (MU) of Twitezibere is already in place. Sub-projects will be idendfied and developed by communities and submitted to the MU for appraisal based on well-defined cteria (imcluded In the Opations Manual which has been finalized). Ihe MU will select sub-projects and an a c&wor control system will be set up with the partdcipaon of outsiders to the MU. Implementaton wil be contracted out to NGOs, small scale pfivate sucor enterpMes, local government and other developmet agencies. Local communities will be closely associated In the ImplemeItation of the subprojects. A strg follow-p and monitoring system will be instted, based on a ce management information system and the use of benefiaries _m The poverty monitoring component wil be funded by the MU and will be implemented by the Nioal Staiical Institute (ISTEEBU). 8. Project SustainaiHJl. Beneficiary contribution (in cash, material or labor) will be a prerequisite for any sub-project to be considered for financing under the poverty alleviation component. In addition, participation of communities in designing, implementing, and maintaiing sub-projects will also be required. Strengthening local NGOs who are involved in many of these projects will also improve sustainability of sub-projects. Regarding the sustainabiity of the Twitezimbere istinttion itself, the mid-term review will determ;ne the desirability of its sustainability in light of its implementation record. For this reason, incremental operating expenditures are not financed on a declining basis. Should the project be successful in efficiently implementing micro-projects which have a good record of improving the living standards of the populstion, past experience with Social Funds has shown that It should have no problem in raising the money from extsrnal donors, organizations, and the government to cover these expenditures. The poverty monitoring component of the project contains a strong capacity building element and significant traning which will allow long-term effects. 9. Lessons from Previous Bank/IDA Involvement. The PCR for the First and Second Strucural Adjustment Credits pointed out weak micro and sectoral linkages as one of the reasons for the mitigated performance of the adjustment program. These operations did not include any measures aiming directly at promoting community participation in rj;al areas. Past and ongoing projects in social sectors (education and health) show that community participation in basic infrastructure (schools and health centers) is critical, but delicate to achieve in the absence of a bottom-up approach. The project will rely on intermediary agencies-irrespective of their institutional settings-with strong local interest to implement projects. Earlier involvement in poverty areas was hindered by lack of reliable statistics, a drawback to be addressed by the second component of the proposed project. The design of the project draws from lessons learned from other projects in the region (i.e., the Zambia Social Recovery Projedt) or elsewhere (i.e., the Bolivia Emergency Sotial Fund -PPAR no. 8449). 10. Rationale for TDA . The project is an integral part of the counrSy strategy presented to the Board in June 1992 which supports achieving sustained economic growth while reducing poverty and increasing the access of the poor to basic social services. In addition to being an essential element of the poverty alleviation strategy, the project is a key complement of the reform program undertaken under the Third Structral Adjustment Credit. IDA's involvement is also justified because IDA can play a unique catalytic function and help mobilize other donors' resources into these poverty alleviation efforts in a coherent framework. Finally, the project will be an opportunity for IDA to enhance both government decentralization efforts and NGOs' capacity to participate in local development activities. 11. Agre Actions. Agreement has been reached on the following: (a) management of the project will be undertaken by an autonomous institutional stucture and staffing independent from the adminitraion (three staff, including the MU director have been already recruited after a highly selective screening); (b) an Operational Manual will detail a set of clear procedures for project implementation and precise criteria to evaluate and select sub-projects, as well as mehanisms to assure strong involvement of beneficiaries in sub-project identificadon and of NGOs and decentralized agencies in project execution and supervision; (c) audit wiUl be undertaken three times a year during the first year of project implementation and twice a year thereafter - one audit per year wil also include a technical as well as financial audit; (d) annual replenishments of the project account will be programmed into the PEP; (e) any change to the statute of the implementing agency, the Agreement between i * implementing agency and the govenment, or to the Operational Mamua will require approval by IDA; and (t) the implementing agency will be staffed at all dmes by competent persomnnel with terms of reference, experience, and qualiflcations acceptable to IDA. Conditions of credit effectiveness include: (P) the MU has selected 25 sub-projects for finacing and IDA has approved the selection of at least 10 of those sub-projects; (i) the Project Account has been opened d t Iitil Deposit of US$100,000 has been dted by the Borrower; ad (ii) a MIS aceptable to IDA has been installed In the MU and Is operational. 12. E Environmeentl category is B. Enironmly beneficial sub-projects wil be weighted positively by the MU and sub-projects with potentia effects will have to comply with the fotthcoming ewnironen framework being developed under the National Environment Straeg. 13. Progam Obetive Qorj. The project wold coribute to the Bank Program Objective of poverty reduction through: 0) employment creato and income generatin in private, small scale actvities; (ii) enhanced access to basic social Infastrucure (educadon and health) and essental social servic (iteracy, family planning and nuitonal status); and (c) improved poverty monitoring. 14. Benehts. The main benefits will be to improve the living coons of selected categories of poor and vulnerable (especy women and youth) through higher productivty, enhanced access to essent socia infstructure and poteniay mcreased employmet opportunitie. The communities where target groups live wil beft both from the products of the work pe,-.ormed and from better education, health and sanitation serices, and other collecdve goods to the production of which they wfll be associated. Ihe project wiUl also provide an opportunity for existng loWal NGOs to expand, and for new ones to be cread. Finally, thrugh its survey component, the project will alow the govenmen to improve its knowledge of poverty and thus its frmulation of both social and maconmic policy. 15. Ridk. Main risks associated with the social action program componet of the project relate to the low management caacity of local NGOs, and to the lack of entrpneuria experience of the target populations, which could lead to inefficient and low project mpolementation. To avert these risks, objective and carefully designed sets of sub-project selecion criteria have been defined. Additionally, an emphasis will be put on basic training for beneficiaries and execudng agencies and tecal assitance will be provided for sub-project appraisal. Strong sub-project suapevision, a tanparent magement iono n system, and random auditng of accounts will enhanc management efficiency. Pcuement mechaisms wil be similar to those successfuly used under eistin projects such as the European Community micro-realization project. Local NGOs wil be assisted by expedenced intrin NGOs, so as to upgrade their still low ppr and managg capacites. The risk that some parts of the poverty monitorg component be too difficult a task for STEEBU will be reduced through capacity building of dtis instfttion and a mid-term of the progam. The risk that fte govement will atempt to limit the autonomy of the MU has been addressed through the insttutional setp agreed upon befbre negotain. -5 - 16. B _ . I amsatsfledtamthe proposedCredtwouldcomplywiththeArticles of Agreement of the Association and recommend that the Execudve Directors approve it. Lewis T. Preston President By Sven Sandstrom Acting President 'Attachmnt Washington, D.C. April 20, 1993 -6- SCHDiDIJ A Page 1 of 1 SOO& ACLQN Pi Estimated Costs and Financinf Plan Estimated Costs US I X foreiw X Totl E_. E .e awe Coset Local Foreign Totat _ _ A. Social Action Program 9,068 1,479 10,546 14 75 S. Poverty Monitoring 721 1,184 1,905 62 14 C. Management and lpplem. 1,044 143 1,187 12 8 D. PPF 0 400 400 100 3 Totat BASELINE COSTS 10 833 3.206 -14039 23 100 Phys ica Continrencies 739 267 1,007 27 7 Price Contingencies 437 200 637 31 5 Totat PROJECT COSTS 12,009 3673 15,682 23 112 * Figures may not add up due to roundirg. Financing Plan _ _ _ _ _ _ _ _ _ _ _ _ _ _In_U S S _ _ _ _ _ _ _ Local Foreign _ Totat IDA 6.7 3.7 10.4 66 Covernsaent 5.3 --- 5.3 34 TOTAL 12.0 3.7 15.7 100 * includes contributions by government (some in the form of counterpart funds generated by foreign aid), Local commities, and beneficiaries. -7-Zs- aPage 1 of 2 IRPXMI,,1, DE BURUND SQ=3A AC=lNRJC em ent and Diburemen Prowm=nllS$ mBilion) Project Elnnt ICB |LCB Other Total Cost 1. Works 1.1 Sub-project 1.7 0.6 2.3 (1.4) (0.4) (1.8) 2. Goods 1.0 1.5 3.1 5.6 2.1 Equlpmentvehicles (1.0) (0.8) (1.4) (3.2) 4. Services 4.1 Tedhical Assbtnce 1.4 1.4 (1.3) (1.3) 4.2 Trainng & Studies 0.5 0.5 (0.5) (0.5) 43 Socal Fund Training, Techn. 4.8 4.8 Milgtance & Studies (2.6) (2-6) iS. S. MiscUnous 5.1 cremen Opeting Costs 0.7 0.7 (0.6) (0.6) 53 PFRefinancIg 0.4 0.4 (0.4) (0.4) TOTAL 1.0 3.2 11.5 15.7 .__ ___ ___ ___ ___ ___ _ |(1.0) (2.2) (7.2) (10.4) Note: F in prenhes npm%t MDA Fnncin. - 8 - s~nSMEDU B Page 2 of 2 AUlocation of IMA credit by Disbursement Category (in US$ million) Category . X of Exp.nditure _ ____.__.__ . _ to be finoced SOCIAL ACTION PROW 1. Civil works 1.60 75X 2. Equipment and Materials 2.10 100X of foreign expenditures _______________ 50X of loc4t expenditures 3. Technical assistance 2.25 50S Training and studies . POVERTY NONITORING 4. Equipment, vehicles, and materials .40 100C of foreign xpenditures 501 of local ex enitures 5. Technical assistance 1.50 100X t rainina and studiies 6. Incremental operating expenditures .20 95X |§PROJECT ABLOSEE" 7. Equipment, vehicles, and materials .10 100C 8. Technical assistance .45 100X of foreign expenditures SOX of local expenditures 9. Incremental oeratirs x Nitures .40 951 10. PPF refinancing .40 _ 11. Unallocated 1.00 TOTAL 10.40 _ Estimated 1DA Disbursements (in US$ million) IDA's Fiscal Years FY94 FY95 FY96 FYM FMY98 Annual 1.4 2.0 2.8 3.4 0.8 Cumulative 1.4 3.4 6.2 9.6 10.4 -9- SCHE]2ULE Page 1 of I Timetable of Key Prgcessing Events Time taken to prepare the project Two years Prepared by Government with IDA assistance First IDA Mission : December 1990 Appraisal Mission Departure : June 1992 Negotiations March 1993 Planned Effectiveness July 1993 This repot u baWd on e finding of an aoprpisim mn which visited Euzundi fiom June 17 to July 8, 1992. The misso onsd of Mom and Mm" Bac* Mult, sr eonoms (AM3P, mssn lade an tak anger, Aandre Mmr, econoos (APTSP), Lynne ShbumBm, _noms (AP3PH), hiaino Dainm, demogrphe (AFP), Cadtin Duyo, sociologist (ons ). Mr. Steen Joresen (AF6PM) wa lead adviser. Peer revwer wer Mm. Antoine Simwit (AP ) and Auby Wams (EXTIE). Contibution am acowlkdpd m Mum Catheine Crss, implnta_ n speciali (onsuant), Ann*-Mano oetz, nul cedt specialist (conula), an Mo. Eile Mu , finan anlys (AP3PH). Mesam Francisco Ar acasa (AP3DR) and Main coliou (AP3PH) ar tho Depat t Director and the msan g Diision Chief, rqepcvely. - 10 - SCEZDUJLE D - 10- ~~~~~Page 1 of 2 im SrATIS AN a OUwOPMATONS w BURUNDI LStawmentot mm&ukua lDACtef (As oEnuay 31. 1993) credit Fha BD AI/ UndWbud Nuwbw Year Bonvwef paqmw (oll (o (oD (A) Puy Dbsd Ln.0o 1957 Burundl 48 28aedlas V66-1992 Bundi 340.41 --dQwhi* Cr.A 1986 B w SFA 16.0 Cr. 1705 1986 Surundl SAC I 15.00 Cr. 1919 988 BUMl SAC 1 9000 (8) DsburiaSCrdts Cr. 153 1985 umnedl PqetThmwlon &Dst. $A8 031 Ct. 1620 1986 BunvAdl Scow sty 12.8 3.76 Cr. 1795 1987 Bunrndi E5c.&PubL Ent M t 7.5X 3.00 Cr. IW 1987 uruSa SecoandTemmuncmt 40 3.20 Cr. 187 1988 u Burg" MuW Apgt. De*p. 7.94 cr.1862 198S Bundi Populadon&Health 1400 4.46 Cr. 181 1988 Bunud EdtictrDep. 312 838 or.1889 188 Ud SnEa A 8.00 5.52 Cr. 196 19 Bunudl Second 2.00 1561 CO.W4 1909 BUd Agrcutu Sewie Sto 33.10 29.79 Cr. 215 1990 Bdun" sponSr 432 36.45 Cr. 2123 1990 Brd Cff S r 280 1666 Cr.2230 199t Burud Ene SectorReba 2.80 2M44 Cr. 2281 1991 Bun"ud Watr Supply*Stor 32.70 30.73 Cr.259 1992 unsdi P aSto Dee oet 17.0 17.21 Cr.26 199 Bdund SACm ! 3000 3053 Cr. 3419 992 Bmadl Agplus Pcaotloa 3.10 3.19 Sub-tot lactivopajas 327.7 W7A18 Tots! outstaadlngQeu maceflazlou) 4.80 66.11 dwbiabRepd 480 5.87 Toaudus(olmedby3aanksMIDA) 0.00 47945 bTol undh=sd m00 237.18 Ceditsbed 716 v2/ / Suml osal due' ad 'Tots! unds d Is higher thn Numbr 1 A Dromwer I)pe ofk slm v Eqit ThaI 71 EU 98 Vmdi ls oonsw 49 1.00 5.90 duBrndl ~~~mmubuuMmm tFbwtrn --in amladosed,tamiaali tpayuum sl es 4.90 LD0 5.40 laloom tshe4dblFC 0110 00 QA50 kmoubaMbyEFC ~~~~~~~0.0 0.00 0.00 CU -me.- memdibued m ~ Om C 0 UC - 11 - SCHEDULE D Page 2 of 2 NOTE ON PROJECTS W1TH SIGNIFICANT DISBURSEMfENT LAGS 1. Of 15 curently active projects in Burundi, four have disbursement lags above 50 percent. They are distributed in the (1) financial and telecommunications sectors; and (2) the agricultural sector. The slow pace of policy reform, poor project management and procurement difficulties are factors contributing to slow disbursements. The following are the specific reasons affecting disbursements on the four projects with the greatest lags: (a) Agricultural Services Sector Credit (2024-BU): Delays in effectiveness, slow recruitment of project technical assistance, complexity of the institutional setup of the project, slow implementation of the coopeative development component contributed to slow disbursement. Implementation issues are being addressed by the recruitment and training of local consultants and the redesign of the cooperative component. (b) MuyngaAgriculturalDelopment Credit (1857-BU): The geographical isolation of the project site has aggravated the recruitment and maintenance of qualified financial staff. In addition, the disbursement on works has been delayed by the difficulty to attract contractors to this part of the country. Disbursements are picking up. (c) Small Eneiprise/APEX Credi (1889-BU): Disbursement was slow at the beginning of the project due to the delay in credit effectiveness and low ceilings for eligible investments which excluded a significant segment of the market. Commitments have since accelerated significantly following revision of the sub-project eligibility criteria and increased Interest from investors and participating financial intmediaries. (d) Telecmmuncadons II (1805-BU): Major delays in procurement and an initial inadequate design have greatly hampered disbursements on this project. 2. To improve disbursements and implementation of projects, the resident mission has been reinforced through the recruitment of a long term local consultant. A country Implementation review was carried out in March 1993. A steady improvement in Burundi's absorptive capacity is expected as the result of reforms undertaken under the adjustment program and greater familiarization of project managers with the Bank's procedures. MAP SECTION IBRD 24302 C4MO SU OA; Iv_ I BURUNDI Z\M ,> .-˘6gURUNW -SOCIAL ACTION PROJECT * SU [ NRUNO!IRUNDO, ZAIRE s -;6XX~~~~~~~~~TAZAI $ \8 \ / XUT.ANA Y~~~~~~~CANUZ -w~~~~~~~~~~~~~~~~~~~~~~~~~~~~is phase oft- project_ bdRo