goal* Economic Development Institute *K;A of The World Bank | %'37q thing he Fo, : ii'tences and tue elons G. Blh. Ir 3Th EDI LEARNING RESOURCES SERIES EDI LEARNING RESOURCES SERIES Social Funds and Reaching the Poor Experiences and Future Directions Proceedings from an international workshop organized by The World Bank and AFRICATIP La Red Social de Am6rica Latina y el Caribe NGO-WB Committee with the support of African Development Bank Canadian International Development Agency International Labour Office Organization of American States Edited by Anthony G. Bigio The World Bank Washington, D. C. Copyright s 1998 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing August 1998 The Economic Development Institute (EDI) was established by the World Bank in 1955 to train officials concerned with development planning, policymaking, investment analysis, and project implementation in member developing countries. At present the substance of the EDI's work emphasizes macroeconomic and sectoral economic policy analysis. Through a variety of courses, seminars, and workshops, most of which are given overseas in cooperation with local institutions, the EDI seeks to sharpen analytical skills used in policy analysis and to broaden understanding of the experience of individual countries with economic development. Although the EDI's publications are designed to support its training activities, many are of interest to a much broader audience. EDI materials, including any findings, interpretations, and conclusions, are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Because of the informality of this series and to make the publication available with the least possible delay, the manuscript has not been edited as fully as would be the case with a more formal document, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to photocopy portions for classroom use is granted through the Copyright Clearance Center, Inc., Suite 910, 222 Rosewood Drive, Danvers, Massachusetts 01923, U.S.A. The complete backlist of publications from the World Bank is shown in the annual Index of Publications, which contains an alphabetical title list with full ordering information. The latest edition is available free of charge from the Office of the Publisher, 1818 H Street, N. W., Washington, D. C. 20433, U.S.A. Anthony G. Bigio is an urban specialist inthe Environment and Natural Resources Division of the World Bank's EconomicDevelopment Institute. Library of Congress Cataloging-in-Publication Data Social funds and reaching the poor: experiences and future directions: proceedings from an international workshop organized by the World Bank ... [et all / edited by Anthony G. Bigio. p. cm.-(EDI learning resources series) Papers presented at the International Workshop on Social Funds, May 21-24,1997, Washington, D.C. Includes bibliographical references (p. ). ISBNO-8213-4209-6 1. Economic development projects-Citizen participation- Congresses. 2. Community development-Congresses. 3. World Bank. 1. Bigio, Anthony G. II. World Bank. III. International Workshop on Social Funds (1997: Washington, D.C.) IV. Series. HD75.8.S66 1998 338.9 ' 22-dc2l 98-16017 CIP Contents Foreword ......................................v Acknowledgments ....................................... vii Part I Overview 1 1. Main Outcomes and Recommendations .....................................3 2. Partnerships and Participation in the Workshop .................................... 13 Anthony G. Bigio Part II Updating the Conventional Wisdom 17 3. The World Bank's View on Social Funds .................................... 19 Sven Sandstrom, Vinod Thomas, Ishrat Husain, Joseph Stiglitz 4. The Partners' View of Social Funds .................................... 27 Eduardo Diaz Uribe, Magatte Wade, Manuel Chiriboga 5. The World Bank Portfolio Review of Social Funds Projects .................... ................. 35 Prem Garg, Soniya Carvalho, Christine Kessides 6. The Inter-American Development Bank's Study of Social Funds .............. ............. 43 Margaret Goodman, Samuel Morley Part III A Close Look at the Key Issues 51 Parallel Thematic Sessions 7. Social Funds: From Responses to Emergency to Development ............... ............... 53 8. Financial Resource Mobilization for Social Funds .................................................... 59 9. Role of NGOs in the Design, Management, and Implementation of Social Funds ...... 65 10. Decentralization, Local Governments, and Social Funds ......................................... 71 11. Social Funds, Private Sector Development, and Microenterprises ............. ............ 77 12. Designing Social Fund Components-Sectors, Themes, and Access ............ .......... 83 13. Monitoring and Evaluation of Social Funds .......................................................... 89 14. Sustainability of Subprojects, Maintenance, and Operations ................. ................. 95 15. Environmental Assessment of Social Funds Subprojects ....................................... 101 16. Social Funds Systems, Outreach, and Communication Systems .......................... 107 Constituencies' Consultations 17. Social Funds' Directors ........................................................... 113 18. Municipalities .......................................................... 115 19. NGO Representatives .......................................................... 117 20. Development Agencies ........................................................... 119 Regional Consultations 21. Africa ........................................................... 121 22. Eastern Europe and Central Asia ........................................................... 125 iii iv Contents 23. Latin America and the Caribbean ............................................................. 129 24. Middle East and North Africa ............................................................. 133 25. Development, Equity, and Social Justice ............................................................. 135 Aminata Mbengue Ndiaye, Senegal 26. Workshop Concluding Remarks ............................................................. 139 Steen Jorgensen and Ishrat Husain Part IV Original Workshop Papers 147 27. The Social Investment Fund in the Context of National Development ............... 149 Marco Camacho, Director, Social Investment Fund, Bolivia 28. Financial Resources Mobilization for Social Funds ................................................. 159 Hussein M. El Gammal, Managing Director, Social Fundfor Development, Egypt 29. Social Funds: An Expanded NGO Critique ............................................................. 167 Jane Covey, Executive Director, and Tim Abbott, Research Assistant, Institutefor Development Research, United States 30. Social Investment Funds, Local Governments, and Communities in Central America ............................................................. 179 Patricia de Jager, Director, Federation of Municipalities of Central America, Guatemala 31. Social Funds and Development of the Private Sector: The Case of Mali .............. 185 Lamine Ben Barka, Director, AGETIPE, Mali 32. Designing Social Fund Components: Sectors, Themes, and Access ...................... 191 Scarlette Gillings, Director, Social Fund, Jamaica 33. Zambia Recovery Project-Evaluations and Perspective of the Central Government ............................................................. 199 Irene M. Kamanga, Permanent Secretary, Ministry of Finance and Economic Development, Zambia 34. Sustainability of Subprojects, Their Operation and Maintenance ......................... 205 Werner Neuhauss, Sector Economist, Social Policy Department, KfW, Germany 35. Appraisal and Environment Assessment of Social Fund Subprojects: The Case of Ethiopia ............................................................. 211 Abebaw Alemayehu, Deputy Director, Social Fund, Ethiopia 36. Information Systems, Outreach, and Communication of Social Funds ............... 219 Sam Kahkobwe, Director, Social Action Fund, Malawi Annexes 227 Annex 1: Workshop Program ............................................................. 229 Annex 2: List of Participants ............................................................. 235 Annex 3: International Workshop Credits ............................................................. 247 Foreword In May 1997, about 250 social fund practitioners came together in Washington, D.C. for a work- shop sponsored jointly by the World Bank's Economic Development Institute and a number of its partners from inside and outside the Bank. As the conclusions of the workshop clearly state, social funds have become an important instrument in our fight against poverty Social funds have also proven to be effective in forging partnerships with the private sector and with community groups to help the poor help themselves. In fact, social funds are reaching areas and groups heretofore untouched by public sector interventions, demonstrating that par- ticipatory development can be both cost-effective and quick. Social funds, however, should not be seen as a magic wand that will eradicate poverty. They can only be truly effective when combined with sustainable economic policies and investments in people. As a follow-up to the workshop, the World Bank is supporting regional seminars as well as the strengthening or creation of regional networks of social funds, and we see an increasing need for this kind of knowledge exchange and learning. Looking back at ten years of experi- ence, the Bank has found social funds to be a unique and valuable instrument, both in reaching poor people directly and in catalyzing the energies of a wide range of partners: public, private, nongovernmental organizations, and local communities. Looking forward to the next ten years, it is crucial that we build on the lessons of experience to ensure that we use this instrument as effectively as possible. The ideas of those who have contributed to this volume will help us achieve that goal. Sven Sandstr6m Managing Director The World Bank v Acknowledgments This publication benefited from the collaboration, advice, and comments of a number of people. Steen Jorgensen and Soniya Carvalho served as peer reviewers and brought to their role of oversight and quality control their experience and knowledge of social funds. Deepali Tewari reviewed the audiotapes of the discussions that took place in the ten the- matic parallel sessions and on that basis wrote the resulting section, shortened and edited the original conference papers, and provided general assistance in the editorial task. Alberto Harth, David Steel, Roy Thomasson, and Mary Schmidt prepared the summaries of the regional consultations. Manuel Chiriboga, Eduardo Diaz Uribe, Prem Garg, Ishrat Husain, Tariq Husain, Vinod Thomas, and Magatte Wade provided substantive comments on the pro- ceedings in their capacity as steering committee members. Jan Bojo, Katrinka Ebbe, Gita Gopal, Jennifer Sara, Michael Stevens, and Norbert Mugwagwa commented on the summaries of the parallel sessions. Cecilia Zavaleta was in charge of formatting, spellchecking, and assembling the various versions of the manuscript. The image on the cover is the work of Patricia Hord, who designed the workshop's program. I am extremely grateful to all of them for their work. I especially wish to thank the authors of the ten original papers, who agreed to reflect on their operational experience with social funds, and the workshop participants whose commitment and enthusiasm was the substance of the event. Anthony G. Bigio Economic Development Institute The World Bank vii Part I Overview 1 Main Outcomes and Recommendations Objectives and Results of the International Workshop The International Workshop on Social Funds, held May 27-30,1997, at the World Bank's head- quarters in Washington, D.C., had the following objectives: * To assess a decade's implementation experience of social funds and their impact on pov- erty reduction * To establish a broad consensus on their main achievements, weaknesses, and risks * To generate a set of recommendations for improving existing operations as well as for the design of future social funds i To facilitate the integration of international and regional networks of social funds. The workshop participants included: (a) general managers and high-level staff of social funds; (b) representatives of central government institutions that oversee the operations of the funds; (c) representatives of municipal governments that interact with social funds in the selection and implementation of subprojects and of their regional associations; (d) representatives of nongov- ernmental organizations (NGOs) and civil society organizations that work with social funds; (e) staff of the World Bank and of other multilateral and bilateral development agencies that finance, design, and supervise the implementation of social funds; and (f observers including researchers, academicians, and consultants involved with social funds and representatives of national governments that are establishing new social funds operations. Stock-taking occurred in different forms: through the presentation of the World Bank's and of the Inter-American Development Bank's studies on social funds, as well as through many individual interventions by social funds' managers during the plenary sessions and in working groups. Ten original papers were also presented by relevant practitioners on specific topics related to social funds' design, management, and implementation. These papers provide an overview of current design and implementation challenges and concerns facing social funds. More than two of the workshop's four days were devoted to group discussions, organized by topic, constituency, or regional perspective. It was in these discussion groups that the consensus and common understanding of the specific successes, weaknesses, and risks of social funds were achieved. Each of these groups also generated a set of specific recommendations that were pre- sented briefly in plenary sessions and that were reviewed by the workshop participants. In itself, the international workshop was also the first step in integrating the international and regional networks of social funds by bringing together families of programs that started with different sector priorities and approaches, such as the AGETIPs in Western Africa and the social investment funds in Latin America, and by stimulating the creation of social funds networks in Eastern Africa, Eastern Europe and Central Asia, and Northern Africa and the Middle East. The international development agencies and the NGOs at the workshop committed them- selves to more integrated and coordinated support to social funds. They also committed to the promotion of a more systematic use of Internet-based tools, such as the social funds World Wide Web page launched by the World Bank just before the workshop, to maintain the global 3 4 Overview dimension of the information exchange and to promote further collaboration among the re- gional networks and the programs themselves. The publication of these workshop proceedings is a contribution to this broad international effort. Social Funds: Main Achievements and Weaknesses On the basis of the results of the plenary presentations and discussions, of the contents of the two new studies by the World Bank and the Inter-American Development Bank, and of the ten specific papers commissioned for the workshop, the following understanding of the main achievements and weaknesses encountered by social funds over their first ten years of imple- mentation (1986-96) was summarized. While it was clear to all participants that social funds have performed differently in accor- dance with their objectives and their national contexts, they agreed on their commonalties and the major achievements and weaknesses of social funds, which were analyzed under four main angles: * National poverty reduction strategies * Effectively reaching the poor * Social participation and partnerships in development * Sustainable approaches for service delivery. National Poverty Reduction Strategies * Social funds have forcefully and effectively made a case for the importance of social equity objectives in national development and for addressing the needs of marginalized groups as a priority both in structural adjustment and in economic growth. * They have piloted numerous successful innovations in emergency and development work. Their accomplishments enabled them to outlive the emergency phase during which they generally were created and to become permanent instruments for economic and social development. * However, their visibility and high-level support often arouse misplaced expectations that social funds will eradicate structural poverty, while their budgets are small percentages of overall public spending and macroeconomic policies may be driven by growth objec- tives with no poverty reduction or income distribution goals. * Social funds are also experiencing a complex transition from the creation of short-term employment in the emergency phase to permanent job establishment, which is required to address issues of structural poverty in the more challenging context of promoting social development. Effectively Reaching the Poor * Social funds have successfully served the poor and those communities that, on account of physical isolation, social exclusion, or gender and ethnic barriers, were not benefiting from the national investment programs or from the state's ordinary social safety nets, if available. * In doing so, they have shown the ability to respond quickly to the needs of the benefi- ciary target groups and to deliver jobs, services, and infrastructure efficiently, using mod- em and cost-effective management tools and techniques at low administrative costs. * While social funds have improved the quality of life in targeted communities, their ac- tual impact on the permanent level of income of the beneficiaries is difficult to assess, due to the provisional nature of the jobs created and to a general lack of baseline infor- mation on ex ante incomes. Main Outcomes and Recommendations 5 * At times social funds do not reach the poorest of the poor, who are unable to express their needs, formulate requests, obtain a sense of ownership of the projects, and marshal the required participation. Cultural, gender, and ethnic barriers to development require spe- cial efforts through social communication and community outreach programs. Social Participation and Partnerships in Development * Social funds have highlighted the importance of civil society participation in both emer- gency and development projects and represent the first family of development programs with a clear role for community-based organizations in the design and implementation of subprojects. * They also successfully introduced and practiced innovative partnerships between the public and private sectors, promoted the creation and access to markets of microenterprises, and strengthened the capacity of municipalities and local governments in delivering services. * But the relative independence of social funds may be difficult to coordinate within the public sector and sometimes causes conflicts with line ministries. The stable manage- ment of social funds may suffer from the discontinuity of the political cycles. Social funds still depend heavily on international funding, while their programs are not always inte- grated in national budgets and planning processes. * In countries with decentralized national governments, the social funds' centralized man- agement of significant amounts of resources to be invested locally may undermine the au- thority of municipalities. Local priorities may not match the centrally driven menu of sub- projects, and high subproject preparation standards may contrast with low local capacity. Sustainable Strategies for Service Delivery * Social funds' accomplishments in job creation and the rehabilitation or building of social and productive infrastructure are remarkable. These in turn have improved significantly the quality of life of the beneficiary communities. * Moreover, social funds have re-established functional links between the state and the beneficiary communities, returning credibility to the public sector and introducing a cul- ture of contractual commitments, transparency, and accountability in the management of public resources. * Cost recovery and user fee policies, often the result of painful sector reform processes, maybe disregarded by the social funds' goals of rapid service delivery, and lessons learned in the implementation of sector projects may not be always incorporated in the design of subprojects. * The insufficient operation and maintenance of subprojects, especially of social and eco- nomic infrastructure, jeopardizes the long-term benefits of these investments. The ability of line agencies, municipalities, and communities to take over and continue subprojects has so far been limited. Major Recommendations for the Future Role of Social Funds This consensus on the achievements and weaknesses of social funds was based, among other things, on the differences between social funds that are created and operate within an emer- gency context and those that are governed by developmental objectives. Regional and cultural contexts also account for the diverse challenges, constraints, and opportunities that each pro- gram faces. Recognition of diversity was assumed as the basis for the collective agreement on future directions. 6 Overview The format of the global consultation process at the workshop did not call for the development of recommendations to be formally endorsed by the participants before the end of the event. Rather, the conclusions and recommendations of the working groups and of the plenary sessions were summarized by the session leaders and by the chairpersons, based on the consensus obtained. Throughout these summaries, as well as in the presentations of the World Bank and Inter- American Development Bank studies and in the ten original papers, three major recommenda- tions for the future of social funds emerged that policymakers, practitioners, and social funds stakeholders seem to agree: 1. Social funds should seek a better integration and more definite role within national mac- roeconomic policies and strategies for the reduction of structural poverty. 2. Social funds should pay more attention to developing sustainable communities and local organizations and to building their capacities. 3. Social funds should systematically mainstream their innovations, operating principles, and techniques throughout the public sector. Each of these recommendations has been articulated from different angles and with differ- ent emphasis according to regional or constituency perspectives, but they seem to suggest the general direction of the next generation of social funds and concrete recommendations for ac- tivities that could be introduced in the work-program of the existing ones. The following ideas are more detailed and were drawn from various sources and presentations to articulate the three main recommendations: 1. Social funds should seek a better integration and more definite role within national macreconomic policies and strategies for the reduction of structural poverty. * Social funds can play an active role in obtaining political commitment to the incor- poration of social equity objectives in macroeconomic growth policies and at the same time dispel unjustified expectations about the effect of social funds on struc- tural poverty. * Social funds should not duplicate or overlap other national initiatives but serve as a specific instrument in the arsenal of social safety net programs that reach out to iso- lated regions, ethnically or socially excluded communities, and marginalized groups. * Representatives of a key social fund stakeholder group, namely, the poor them- selves, should be consulted systematically by the management of funds to ensure that the program's priorities are shared, as well as the ownership and participa- tion of beneficiary communities. * The institutional location of social funds within the public sector should better address the issues of coordination with line ministries, of integrating sector poli- cies, and of making social fund financing more sustainable and an integral part of public spending. * Municipalities that have the mandate and the capacity should assume the funding and responsibilities from social funds for subproject identification and implemen- tation, limiting the fund's role to contract managers and to supporting linkages with community groups. In turn, municipalities should allocate resources to sus- tainable operation and maintenance of infrastructure and services. 2. Social funds should pay more attention to developing sustainable communities and local organizations and to building their capacities. * To enable socially isolated communities to establish functional and productive links with both public and private sectors, social funds should work with more flexible menus that respond to community needs as they evolve over time. Main Outcomes and Recommendations 7 * Social funds should promote projects for sustainable local economic development; these will include the organization and nurturing of microenterprises, skills training to facilitate access to the labor market, and access to credit for productive initiatives. * Social funds should support the development of social capital through the involve- ment of NGOs in the design, not only in the implementation, of subprojects, the training of community-based organizations, and facilitating the open selection of subprojects based on the needs of women. * The promotion of sustainable provision of basic services to the poor should be supported beyond capital investments with capacity building in operation and maintenance. This training will be targeted at user groups, local contractors, and municipal technical and administrative staff. 3. Social funds should mainstream their innovations, operating principles, and techniques systematically throughout the public sector. * In those regions and countries where social funds have a track record of accom- plishments, social funds should present their management approaches and inno- vations routinely to national policymakers and promote them with the legislative and the executive branches. - Social funds should help introduce community participation, responsiveness to de- mand, and the use of willingness-to-pay indicators to all public social sector pro- grams and innovative procedures-social communication and outreach, manage- ment information systems, and delegated contract key line ministries. - In their dialogue with international development agencies, social funds should pro- mote the adoption of participatory development policies and strategies, to be dis- cussed and negotiated with national governments as the basis for financial assistance. Specific Recommendations from the Ten Parallel Sessions The following condensed summaries of recommendations were made by the working groups after analyzing and debating the ten following topics and after extensive discussions about the papers written and presented by selected social funds practitioners. Social Funds: From Responses to Emergency and Crisis to Development * Social funds' objectives need to be redefined within the national poverty reduction strat- egy and integrated with sectoral policies. Their investments should concentrate on the neediest regions and communities. * While support at the highest political levels is necessary, funds can be protected from political interference by a stringently defined mandate and beneficiary selection criteria. * Funds should consider retraining their personnel in capacity building within communi- ties and NGOs. They should obtain staff specialized in social sciences who can be effec- tive within the new mandate in community participation. * The quality of projects needs to be sustained. Indicators need to be defined for participa- tory processes, institutional development, and improved quality of life in target commu- nities, so that reliable evaluations can be conducted. Financial Resources Mobilization for Social Funds * Credit programs should be an element of social funds to facilitate the creation of a re- volving pool of resources. 8 Overuiew * As social funds mature, they should try to mobilize resources from local institutions and donors and eventually to borrow from commercial sources. * Social funds should raise additional resources through financial participation of the com- munity, which can supplement public investments in rural areas significantly. * The mandate of social funds should be flexible, so that they may eventually transfer to line ministries or to local governments the activities that are their ultimate institutional responsibility, while retaining those that do not belong to other institutions. * Their organization should be parallel to that of the government, so that their activities can be in line with the policies and plans of ministries and sector agencies. Role of NGOs in Design, Management, and Implementation of Social Funds * Social fund programs need to be integrated into a national public investment for long- term poverty reduction, making use of NGO participation and civil society consulta- tions, as in those countries where NGOs help prepare country assistance strategies. * The World Bank should study the role of social funds in macroeconomic policies. * Donor agencies should negotiate with national governments the roles of NGOs and civil society in the management, design, implementation, monitoring, and evaluation of social funds and formally inscribe these roles in project documents and contractual agreements. - Social funds should allocate specific budgets for the participation of community-based groups in their activities, parallel to but separate from the financing of NGO interventions. • Capacity-building activities should become a full-fledged component of the social fund menu, instead of being merely part of administrative overhead costs. Decentralization, Local Governments, and Social Funds • Local governments should avoid replicating centralized decisionmaking processes and ensure that investment decisions are participatory and taken at the lowest appropriate level. Furthermore, local governments should ensure the principles of subsidiarity, trans- parency, and accountability in the use of their resources. * Local governments must strengthen and diversify their financial resource bases through better revenue collection, as well as through the identification of local sources of revenue and the increase of national transfers. * Social funds should enhance coordination of efficient local social investment, and should work closely with municipalities to ensure the sustainability of projects. * Where decentralization is in place, social funds should foster the creation of municipal funds for local social and economic development, assist municipalities in obtaining ac- cess to external sources of funds, and transfer their expertise in identifying locally needed subprojects. Social Funds, Private Sector Development, and Microenterprises * Social funds should reinforce the accountability of public sector management through the delegated implementation of projects by medium and small private operators. * This approach has so far been applied to public works and construction contracts, but it should be extended to other sectors, such as rural development, natural resources man- agement, and trade. * The competitiveness of medium and small private operators should be supported through microfinancing programs, managed by social funds working through national financial institutions. Main Outcomes and Recommendations 9 Training programs for small operators should be developed and implemented to im- prove their professional skills as well as their overall management capacities. Designing Components of Social Funds: Sectors, Themes, and Access * The choice between a project menu that defines the initiatives that can be financed and one that defines only those that are excluded should be based on the local characteristics of poverty and the scope and role of the social fund within the government's overall poverty reduction strategy. * Participatory research should define the social context of support, and communities should be organized, trained, and sensitized before needs are identified. * A study to evaluate the impact of institutional, capacity-building, and participatory pro- cesses should be undertaken to delineate tradeoffs between investments for physical in- frastructure and investments for building social capital. * A consultative process that provides continuous and vigilant feedback and involves key stakeholders at national, regional, and local levels should be established, and clear crite- ria and procedures for facilitating the access of marginalized social groups should be provided. The Monitoring and Evaluation of Social Funds * Monitoring is the basis of evaluation, and both should be conceived as an integral part of the project cycle, so that learning can take place as events unfold. * The most important audience of the evaluations are the beneficiaries themselves. Partici- patory evaluation should be promoted, so that communities can be involved through rapid appraisal techniques. * Evaluations should focus on the effectiveness of social funds in improving the quality of life in participating communities. They should be clear and focused with modest and realistic objectives, so that they provide answers to questions. * Coordination on evaluations is needed among donors and line ministries so they can exchange and share the learning that comes from evaluations and avoid costly duplica- tions. Regional networks can provide opportunities to agree on common evaluation meth- odologies. * The dissemination of evaluation findings among policymakers deserves considerable attention. Sustainability of Subprojects, Maintenance, and Operations * A sound project design, adapted to local conditions and based on simple technologies that facilitate beneficiary involvement should always be chosen and beneficiaries should be involved in the selection. * Technical and administrative competencies for operations and maintenance should be provided to users and local agencies through training and should be accompanied by the necessary funds. * Long-term financial resource mobilization for operations and maintenance is related to expanding the financial resource bases of municipalities and district administrations; reforms of sector policies and administrative processes need to be supported by the gov- ernment and by all donors. * Infrastructure should be managed like a business, not a bureaucracy, by introducing com- petition and giving users and other stakeholders a strong voice and real responsibility. 10 Overview Appraisal and Environmental Assessment of Social Funds Subprojects * Environmental concerns in development projects are connected directly to poverty re- duction goals. Social funds should strive for more environmental awareness across the public sector and strengthen their linkages with environmental agencies. * Social funds should actively promote environmental subprojects related to the sustain- able use and conservation of natural resources; they have a strong link to improving the role of women in development. * Environmental assessment procedures should be simple and practical, and a handbook for this specific purpose should be developed and adapted to regional contexts. * Regional workshops and the use of the Internet can facilitate the exchange of relevant experiences on environmental issues among social funds and their networks across coun- tries and regions. Information Systems, Outreach, and Communication of Social Funds * To develop an information, outreach, and communication strategy, social funds need to analyze stakeholders to identify the main actors, their interests and attitudes, and how they can be reached. The findings of the client consultations can be used to develop ap- propriate messages. - The information, education, and communication strategy design should highlight the features of social funds of interest to each target group to ensure a long-term relationship between the communities and the program. The information flow has to be two-way and will evolve over time. * Institutional responsibility for communication strategy is determined by the nature of the information to be disseminated and may require partnerships with other public or private sector agencies. * An information, education, and communication strategy must have adequate resources to achieve its objectives, which are germane to the overall purpose of social funds. Follow-Up Work from the Perspective of Main Constituencies Social Funds' Directors * Social funds should introduce productive projects that address structural poverty and transfer their management culture, innovations, and lessons learned to national, state, and local agencies. * The creation of new regional networks of social funds in Sub-Saharan Africa, in Eastern Europe and Central Asia, and in the Middle East and North Africa is encouraged. * La Red Social and AFRICATIP will strengthen their ties and collaborate to assist emerg- ing networks and to build an international network based on regional groupings. * International donor agencies will support the creation and the integration of social funds networks worldwide, and the World Bank will manage the global World Wide Web page on social funds. NGO Representatives * NGOs should establish more permanent relationships with social funds and become in- volved in their management structures, as well as in the identification, design, and evalu- ation of projects. * Social funds should focus on building the social capital of communities they work with and the capacity of NGOs, community-based organizations, and municipalities. Main Outcomes and Recommendations 11 * NGOs should establish an intemational network to exchange information on their expe- riences with social funds and further explore areas such as local economic development and gender issues. This network should interact systematically with La Red Social and with AFRICATIP. * NGOs should develop and maintain high standards of professionalism and ethics in their administrative practices and their interactions with social funds. Local Government Representatives * Where decentralization will allow it, social funds should foster the creation of municipal funds for local economic development and transfer to them their current responsibilities and capacities. International Development Agencies * Employment promotion and income generation at the local level should be among the initiatives that are financed by social funds. Gender issues should be addressed more forcefully in the design and implementation of these initiatives to overcome current barriers. * Donor coordination is required in every country where a social fund is operating, espe- cially for reporting and evaluation, as well as to maintain flexibility in components fi- nancing. e International coordination should be established among all agencies that support social funds via: regular exchanges of information and meetings; the development and mainte- nance of the global World Wide Web page; the joint preparation of handbooks, studies, and evaluations. • The impact of social funds on national institutional development and public sector man- agement reform should be studied internationally. Future Challenges for Social Funds in Their Regional Contexts Eastern Europe and Central Asia The nature of the transition economies of Eastern Europe and Central Asia defines the key regional roles of social funds: * They can actively foster privatization by introducing competitive procurement, provide training to small-scale operators, and rehabilitate infrastructure to be privatized. * Especially in the area of health and education infrastructure, social funds can help achieve the balance between community participation and social sector reform strategies. * Social funds can introduce managerial capacity, help give legitimacy to local govern- ments in the provision of services, and introduce municipal cost recovery. * Social funds can help create and build capacity of community associations and facilitate their links with local governments and line agencies. Latin America and the Caribbean In view of the completed transition from structural adjustment to economic growth in most of the countries of the region, social funds are now expected to carry out the following functions: * Facilitate the transition to peace and social reconciliation in Central America * Combat the current economic crisis and emergency situations in the Caribbean 12 Overview * Contribute to structural poverty reduction in South America, where their integration with macroeconomic policies and other poverty reduction programs is essential. La Red Social will continue to play a key role in facilitating the exchanges among social funds; its electronic InterRedSocial network will further facilitate the interaction among its members and its global connections. Middle East and North Afinca Social funds in the Middle East and North Africa can contribute to the social stability of those countries embarking on a process of economic and political modernization; other countries in the region still face violent internal conflicts and require emergency social funds interventions. Social funds were introduced to the Middle East and North Africa quite recently, but national governments seem eager to adopt and replicate this approach. Sub-Saharan Arica Africa is still undergoing a process of economic stabilization, and many countries are facing specific issues of post-conflict reconstruction that call for emergency social funds interven- tions. The region already has the largest concentration of social funds, with the AGETIP agen- cies of West Africa regrouped within AFRICATIP. The social funds of Eastern and Southern Africa will develop their own network to be called Social Funds NET. While AGETIPs have a strong track record with delegated contract management of small-scale infrastructure and public works, the African social funds have concentrated in human resources development (health and education). Once Social Funds NET is operational, the two networks are expected to es- tablish a close relationship. 2 Partnerships and Participation in the Workshop Initial Identification of the Global Learning Event The innovative nature of social funds, their contributions to poverty reduction, their widespread recognition as well as controversy surrounding them in developing countries and within the development community, all called for a global exchange of experiences and lessons learned. The Economic Development Institute (EDI) of the World Bank, after facilitating some regional exchanges among social funds' managers in Latin America and Africa, identified the ne,ed for a global learning event in 1995 and initiated the preparation of the workshop in early 1996. At the same time, nongovernmental organizations (NGOs) that have a permanent consulta- tive forum with the World Bank (WB), the WB-NGO Committee, identified social funds as the most significant Bank-supported portfolio of programs that effectively include civil society or- ganizations in their design, management, and implementation. In the spring of 1996, the com- mittee requested the Bank's management to organize an international learning event on social funds. The separate initiatives on social funds of the EDI and of the WB-NGO Committee were thus combined successfully into one, with Bank management's support, and EDI's prepara- tions for the workshop integrated the WB-NGO Committee's objectives. A strong demand for the opportunity to share experiences and views with stakeholder con- stituencies was strongly supported by the staff of the World Bank in charge of the design and supervision of the credits and loans that finance the implementation of social funds. The insti- tutional interest in the subject was confirmed by two recent studies of social funds: the World Bank's Review of the Social Funds Portfolio, which was a desk review, and the Inter-American Development Bank's Social Investment Funds in Latin America: Past Performance and Future Role, based on field work carried out in eight countries and on the review of evaluations of all funds in the region. Establishment of Partnership Agreements and Management of the Process The first step in designing the international workshop was to identify key stakeholder groups for inclusion in the design process: social funds, NGOs, and community-based organizations, central governments and municipalities were all considered as such; in addition, multilateral and bilateral development agencies that make substantial technical and financial contributions to social funds were considered essential stakeholders. To ensure stakeholder ownership, the objectives and design of the international workshop were developed and finalized over nearly one year of consultative process with the representa- tives of these constituencies. An initial outline of the meeting was presented for review within the World Bank in June 1996. A more detailed concept document incorporating comments from the initial review was broadly circulated to all stakeholder representatives in November 1996. By early 1997, a partnership for the joint implementation of the international workshop had been established among the World Bank, the WB-NGO Committee, La Red Social de Am6rica Latina y el Caribe, and AFRICATIP, the latter two being the regional networks of social funds. 13 14 Overview The partnership was formalized by the creation of a steering committee that was entrusted with the design, objectives, and content of the event. The steering committee provided guidance and specific recommendations on the design of the international workshop, and its members took an active role in the plenary sessions of the workshop. The steering committee completed its mandate with the revision and approval of the present publication of the workshop proceedings. Within the World Bank, the international workshop was the result of intense collaboration between the EDI, the Poverty and Social Policy Department, the NGO Unit, the Learning and Leadership Center, and the Quality Assurance Group. All of these departments appointed man- agers to the steering committee and provided staff for the working group in charge of prepar- ing the event. Institutional and financial support for the initiative during the final stages of its preparation was provided by the Social Protection Group of the Human Development Net- work and the Poverty Reduction and Economic Management Network. A panel of advisors, consisting of representatives of all the World Bank departments that sup- port social funds in the regional and the central vice presidencies, provided guidance on the selec- tion of relevant themes, on the appointment of the ten session leaders who were commissioned to prepare thematic papers, and on the nomination of participants to be invited to the workshop. The Role of the Supporting Agencies Shared ownership of the event was demonstrated clearly by the willingness of all social funds to finance the costs of air travel and subsistence for their representatives; the same was true of all international development agencies and all observers. On the other hand, the costs of air travel and subsistence of NGO representatives and of representatives of central governments and municipalities were subsidized to facilitate their participation. The Economic Development Institute of the World Bank received generous financial sup- port for these subsidies from the African Development Bank, the Canadian International De- velopment Agency, the International Labour Office, and the Organization of American States. These agencies also contributed substantially to the implementation of the workshop by providing chairpersons and session leaders for the plenary and parallel sessions. This partici- pation reinforced the ties between the international development agencies and holds the prom- ise for further collaboration among them. Participants The 250 workshop participants included: (a) general managers and high-level staff of social funds; (b) representatives of central government institutions that oversee the operations of the funds; (c) representatives of municipal governments that interact with social funds in the selec- tion and implementation of subprojects and of their regional associations; (d) representatives of nongovernmental organizations and civil society organizations that work with social funds; (e) staff of the World Bank and of other multilateral and bilateral development agencies that fi- nance, design, and supervise the implementation of social funds; and (f) observers including researchers, academicians, and consultants involved with social funds and representatives of national governments that are establishing new social funds operations. Plenary and Parallel Thematic Sessions Half of the workshop was devoted to plenary sessions. The plenary on May 27 included the perspectives of various constituencies, the World Bank's findings from its review of social funds, and the findings of the Inter-American Development Bank's study of social funds. The plenary Partnerships and Participation in the Workshop 15 on May 28 presented the outcomes of the ten parallel working group sessions on specific issues, as well as related plenary debates. On May 29, the plenary presented the outcomes of constitu- ency consultations, a keynote speech on Development, Equity, and Social Justice by the Minis- ter of Family Welfare of Senegal, and the conclusions reached at the workshop. The parallel thematic sessions on May 27 and on May 28 presented the unique opportunity for participants to focus and interact on a set of specific issues identified as priorities for social funds. Initiated by session leaders, who drew upon their experiences managing social funds, the sessions addressed the key issues with the assistance of professional facilitators from the Learning and Leadership Center. The presence of resource persons drawn from the World Bank staff active in project design and supervision contributed to the quality of the discus- sions. Simultaneous interpretation in English, French, Spanish, and Russian was available in all the meeting rooms, and the sessions were recorded to facilitate the subsequent preparation of these proceedings. Constituencies' and Regional Consultations The consultations of May 29 enabled the different constituencies-social funds' directors, NGO representatives, municipal representatives, and international development agencies officials- to discuss the initial outcomes of the workshop, to elaborate upon common strategies for the promotion and improvement of social funds, and to arrive at recommendations that were then presented at the final plenary session. The regional consultations of May 30 enabled the participants from the Africa, Latin America, and the Caribbean, Eastern Europe and Central Asia, Middle East and North Africa regions to meet separately and to focus on the follow-up to the workshop in each region. Organized by AFRICATIP, La Red Social de America Latina y el Caribe, and by the staff of the World Bank, of the Inter-American Development Bank, and of the Organization of American States, these one- day events facilitated the articulation of operational decisions for the future of social funds in their regional contexts. Social Protection Board World Wide Web Page on Social Funds Before the international workshop, an initial version of the social funds World Wide Web page was developed jointly by the Social Protection Board of the Human Development Network and hosted in EDI's website. The web page offered online access to the workshop's program and to key documents prepared for the event. During the workshop, it provided a mechanism for participants to express their views on the sessions and to indicate their personal areas of interest for follow-up work. Since then, the social funds web page has further evolved and acquired a new and permanent Internet address, where relevant and constantly updated in- formation is posted: http: / /www.worldbank.org/sp /html/social-funds.html Part II Updating the Conventional Wisdom 3 The World Bank's View on Social Funds Speakers Sven Sandstr6m, Managing Director Vinod Thomas, Director, Economic Development Institute Ishrat Husain, Principal Advisor, Poverty Reduction and Economic Management Keynote Speaker Joseph Stiglitz, Senior Vice President and Chief Economist Sven Sandstr6m, Managing Director I would like to welcome all of you to the Bank and to thank you for com- ing. It is a particular pleasure to thank our joint partners of this workshop: AFRICATIP, the Red Social, and the NGO-World Bank Committee, and all the others who have supported the event and its preparation. This workshop is billed as a global learning event, and we at the Bank certainly look forward to benefiting from the rich experience that all of you bring from all over the world. I am very pleased to note that this event, proposed as a "workshop," emphasizes work and that the day following the conclusion of the workshop is being left open for further consultations among all concerned on how to implement the outcomes of the discussions here on a regional scale. Poverty reduction We all share the same goal: how to reduce poverty as effectively as pos- sible. We all have a different comparative advantage in how we set about achieving that goal, yet we share common ground. The Bank tries to take a comprehensive approach to reducing poverty and supports a strat- egy that has three core elements: * Policies to promote broad-based economic growth * Investments in human capital * Social safety nets for vulnerable groups. It is within this framework that social funds have become an important and rapidly growing tool for us at the Bank. Supportfor safety net The Bank's work in the safety net area has evolved significantly. Ten years operations ago, we supported very few safety net operations. As of last year, how- ever, we were supporting over 50 (social funds) projects with Bank and International Development Association commitments of US$1.3 billion. If we include the high proportion of cofinancing that social funds typically attract, we are probably talking about several billion dollars for the sup- port of these funds. Since the first social fund supported in Bolivia, the 19 20 Updating the Conventional Wisdom Bank has used this instrument in another 35 countries for a variety of ur- gently needed tasks: water supply and sewerage rehabilitation; school and health postconstruction; nutrition programs for mothers and infants; the building of rural access roads; and support for niicroenterprises. Reaching the local We have found that social funds can be a unique and invaluable instru- level ment in reaching people at the local level directly and in capitalizing the energies of a wide range of partners: public sector, private sector, NGOs, and the local communities themselves. Looking back on the past ten years, the scale and scope of our activity has been substantial. Looking forward to the next ten years, it is crucial that we use the lessons of experience to ensure that we deploy this instrument as effectively as possible. So, what have we learned? Main lessons learned * Social funds are not a panacea. Sustainable poverty reduction re- quires a complement of actions from sound macroeconomic poli- cies to broad social investments to targeted investments focused directly on the poor. Social funds are only one of many instru- ments to reduce poverty. It is important to keep the overall strat- egy in proper perspective. - Social funds are not an appropriate response in every country Their suitability must be assessed carefully in relation to the spe- cific needs of the communities concerned and to other possible approaches for reaching the poor. * Even when social funds are deemed appropriate, one size does not fit all. What may be an unqualified success under one set of conditions may fail under another. * The fourth lesson is participation. Decisions related to social funds must reflect not only the views of the local community but also the views of the poor within that community. This is easier said than done; it takes time and patience. But without the full partici- pation of the people affected, social funds do not work. * The necessity of partnership has been a valuable lesson. No or- ganization can act alone and expect to succeed. Collaboration is essential throughout the process, from design to funding to imple- mentation to evaluation. The Bank is very much aware and ap- preciative of the value of partnerships at every level, from other international institutions to the private sector to civil society. NGOs in particular, with their grassroots knowledge and experi- ence, have shown the Bank the usefulness of community-based projects. The Bank welcomes advice on how to expand on these partnerships as it moves forward. Given the rich experience of the participants in this workshop, the Bank is convinced that the design and implementation of social funds in different ways in different country situations can be addressed here productively. Some questions In conclusion, here are a few specific questions for the workshop's participants: * Are social funds in fact reaching more poor as compared with more traditional approaches? The World Bank's View on Socil Funds 21 * Are social funds helping to build and strengthen the institutional capacity for designing, implementing, and delivering social ser- vices, or are they displacing and weakening existing institutions such as sector ministries and departments? * Will the subprojects financed and completed under social funds be maintained and operated adequately by local communities or by local government organizations? * How do the costs of completing projects supported by social funds compare with those implemented by more conventional public sector agencies? Vinod Thomas, Director, Economic Development Institute This workshop has great potential and promnise for the future of social funds. Diversity of The workshop attendees here demonstrate diversity. The stakeholders stakeholders here represent different aspects of this important effort and bring vari- ous perspectives: social funds' managers, people from civil society, NGOs, government officials, academicians, and people from the donor community. This is a diverse audience, and its assembly is tirnely be- cause views do differ, experiences do vary, and convening in this kind of forum holds great promise of improving the group's impact. Key experiences are under scrutiny, not only at the World Bank and at the Inter-American Development Bank, but in the papers that were brought here. These papers offer substantial evidence and experience of what might be working and what might be working less well around the world. To collect this evidence and to view it carefully and critically is most worthwhile. Lookingfor common The diversity of experiences across Africa, Latin America, and the rest ground of the world notwithstanding, there are some commonality of lessons that help translate them into findings that can aid countries that have not as yet had the same experiences. These commonalties of experiences within very different countries are important, whether the experience relates to the autonomy of decisionmaking, to decentralization, or to private sector participation. When the risks associated with some of those programs are considered, the issues of management and general eco- nomic policymaking become strong factors. Similarly, successes have a number of commonalties. These are a source of comfort: they show that this exercise can and does make a difference because people can learn from experiences other than their own. Learningfrom one All of the workshop participants bring different examples to share, but another some of the experiences of addressing poverty in Latin America and build- ing up poverty maps have been transferred to Africa and elsewhere. Simi- larly, from the African experiences, people in Latin America and in other regions are looking at delegated contract management very carefully. Lessons can be learned from each other; concrete examples of this have happened in the past and can happen more forcefully in the future. Forging partnerships Learning from each other can only happen in a forum of partnership, which perhaps is the single most important hallmark of this event. It truly 22 Updating the Conventional Wisdom is an event that has occurred with the participation of various stakehold- ers as well as institutions. Within the Bank itself, the workshop signals an important partnership among not only the Economic Development Insti- tute and the Learning and Leadership Center, but the NGO Unit, the So- cial Protection Board, and the Poverty and Economic Management Net- work. This workshop is important to the Bank as a way of moving forward. Looking ahead, AFRICATIP and La Red Social de America Latina y el Caribe, the NGO-World Bank Committee, the African Development Bank, the Canadian Agency for International Development, the Interna- tional Labour Organisation, the Organization of American States, and, most important, the social funds themselves, have assembled to share their experiences. This partnership is also the way to the future: where we go from here will be determined by the degree of interaction con- tinuing among us in the future. Ishrat Husain, Principal Advisor, Poverty Reduction and Economic Management Social funds do not operate in a vacuum. The broad trends and changes occurring in the countries in which social funds operate form a back- drop for the subsequent discussions and debate to take place during the next three days of this meeting. Diversity of Experiences with social funds show a great deal of heterogeneity. A va- experiences riety of players are involved in social funds. The content of social funds programs themselves vary greatly, and views about their efficacy di- verge. The Bank hopes that this workshop will be able to characterize what works and under what circumstances, what does not work and why it does not, and what can be learned from each other to improve the overall situation. Finally, those experiments and ideas that did not perform as expected must be discussed. Despite a great deal of divergence arising from specific country circum- stances, stages of development, and policy and institutional chasms, many insights into the development experiences have been gained over the last several decades. They include the following: Broader trends in * The role of the state is changing from an omnipresent, omniscient, development all-powerful, and all-doing entity that tries to do everything for everyone. The state is trying to be more selective, become more of a facilitator, often an organizer, often a mobilizer and a helper. The state does what it can do effectively and leaves other parts of the civil society, including the private sector, the community or- ganizations, the individuals, and the firms, to do what they can do best. This division of labor between the state and the remain- ing parts of the civil society is one of the emerging trends within industrialized as well as developing countries. * A growing body of evidence demonstrates that there is no tradeoff between economic growth and income inequality. The literature of Kuznet's curve is being proven wrong. Empirical research and suc- cessful experiences of East Asia show that better income distribu- tion, fewer inequities, and greater concern for sharing and caring The World Bank's View on Social Funds 23 do result in higher economic performance. Most important, how- ever, they also lead to social stability and social cohesion. * It is becoming increasingly clear that investments in human and social capital have greater payoffs in terms of sustainable devel- opment as compared to physical capital. In the 1950s and 1960s, we were all obsessed with investment in physical capital, but in the next century the countries that have the knowledge, the skills, and the know-how will achieve sustainable development. Social capital is the glue that holds these societies together. * From Alaska to Zimbabwe, from Australia to Ukraine is a greater realization that decentralization and devolution of authority to lower tiers of government and to communities are in the larger interest of everyone concerned. The days of central planning, where a small group of technocrats allocated resources for the entire nation, for all the regions, and for all the individuals, are gone forever. The new paradigm of planning calls for allocation based on the demand of communities and households at the low- est functional level. * Finally, community and civil society participation in the gover- nance of day-to-day affairs have become commonplace. Civil so- ciety should not be considered a threat or a direct challenge to the authority of the state or of the elected governments, but an ally, a helper, and a complement to carrying out the development agenda, which cannot be carried out by the governments alone. Particularly if poverty reduction is the goal, listening to the poor, in- volving them in decisionmaking, in the planning and implementation of programs and projects that affect their lives is a must. Empowerment of the poor is as critical to their well-being as giving them the projects, investments, and programs to improve their quality of life. Closing remarks Some of these insights implicitly or explicitly shape and influence the thinking of social funds, but this is an evolving process. New insights are made every day. This discussion of the future of social funds should be informed and take into account these broad trends, which are not confined to any particular country or a particular group of nations. Fail- ing to do so may render social funds less responsive than they have been in cases of economic emergencies and as short-term palliatives. Their role as a long-term development instrument should be examined in light of these emerging trends. Keynote Speaker: Joe Stiglitz, Senior Vice President and Chief Economist Understanding the The determinants of development have extended in recent years be- determinants of yond the usual prescriptions of macroeconomic stability, avoiding development price distortions, and liberalization of trade and investment to the effective role played by institutions, including the government. We now better understand the complementary nature of the relation- ship between governments and markets. We understand the limita- tions of markets, the limitations of government, and how they can work together. In practice, the quality of these institutions is highly 24 Updating the Conventional Wisdom variable across developing countries. East Asian countries have dem- onstrated that the strength of their institutions were as important to their development path as were the right policies. Unfortunately many countries, including many in Africa, are faced with weak institutional infrastructures that either mute the impact of good macroeconomic and sectoral policies or delay the response func- tion inordinately. Governments and At the economywide level, the government can serve several roles ef- poverty alleviation fectively. One of these roles is the promotion of equality and alleviation of poverty. Poverty alleviation in tum requires a range of actions in ad- dition to sound macroeconomic policies. These actions encompass the creation and maintenance of a social safety net, including the following: * Access to basic health services * Promotion of education and training • Investment in infrastructure • Transfer of technology and know-how to the poor. The record, however, shows that in many, if not most, developing coun- tries, the poor have by and large not benefited from govermment pro- grams and projects in these areas. The reason, of course, has been the weak capacity of government. States with weak institutions have to find other ways to deliver basic social services and economic infrastructure to their poor citizens. One of these ways is to work in partnership with private sector and community organizations, sometimes called civil so- ciety. Social funds offer such a model to merge the govermment, the pri- vate sector, and the community organizations in the joint delivery of social services and infrastructure with the poor communities that have been left out in the past. Socialfunds Social funds are expanding in all parts of the developing world. The attractive feature of social funds is that they use the comparative strengths of each of the government, private sector, and community organization partners and coalesce them into an integrated whole. The communities identify, design, and help implement projects such as schools, health clinics, roads, and water supply that will serve their needs. The govern- ment provides financing, monitors and supervises the projects, and en- sures that the operation and maintenance of these facilities is adequate. The private sector offers technical expertise, materials, labor, and orga- nizational skills to implement these projects. Social funds allow the pri- vate sector firms to compete for the projects. This competitive bidding process should allow the projects to be completed at the least cost, thus helping efficiency and resource allocation. Targeting and equity At the same time, equity objectives are also met: areas in which projects are implemented are areas in which the majority of the population is poor. Projects are identified by the beneficiaries themselves and respond to their needs. This new arrangement is different from the conventional approach, in which the public sector agencies and departments did ev- erything themselves, sometimes with disastrous results. The World Bank's View on Social Funds 25 Economic benefits of One of the lessons that the Bank has learned from the experience of so- involving people cial funds is that involving poor citizens in the choices, design, and imple- mentation of projects responsive to their immediate needs may unearth new but modest sources of domestic savings for capital formation. These savings, effected mainly through the labor of the poor and the mobiliza- tion of parts of their unspent incomes, frees up public resources for other uses. This can potentially reduce the claims of the public sector on the national economy. In addition to domestic savings, the poor also learn new skills and techniques, including that of organization, which should improve their prospects for earning incomes. This approach has taken hold in a small number of developing coun- tries and in few communities within those countries. The jury is still out. The purpose of a conference like this one is to explore ways to leam from the best-practice experiences in the world and to apply these prac- tices to a growing number of cases. Some words of Decentralization, the devolution of authority to local communities and caution local governments, and partnerships with the private sector can improve the quality of government interventions and also reach the vulnerable and marginalized groups in the population. But there is always a seri- ous risk that the resources of local governments will be captured by spe- cial interest groups. This can negate the objectives of decentralization and community participation and can lead to misuse and misallocation of resources. Checks and balances must be built into the system, with mechanisms of accountability put into place. Social funds should not be considered a newly discovered panacea for all countries at all stages of development. Social funds need not be created in situations where well-functioning institutions exist for delivering services to the poor efficiently and cost-effectively. If such institutions exist in some sectors, then social funds should not intervene in those sectors. Where existing institutions are not functioning effectively, or they can be reformed within a reasonable period, attention should be focused on improving these institutions rather than creating social funds. The Bank's assessment suggests that in emergency situations, social funds have proved to be successful when all traditional institutions collapsed or ceased to operate. Neededfocus The Bank recommends that the participants focus attention on three broad questions as they begin this workshop: * How do we make social funds more effective? * How do we make sure that social funds are directed at the niches where they are most needed? * How can they complement the development of a broader array of institutions that are essential to the alleviation of poverty in the developing world? 4 The Partners' View of Social Funds Speakers Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe Magatte Wade, former President, AFRICATIP Manuel Chiriboga, Co-Chair, NGO-World Bank Committee Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe La Red Social de America Latina y el Caribe is the regional network of socialfunds and of other poverty reduction programs and institutions; its members are over 25 agencies of both Spanish-speaking and English-speaking countries. Its mandate is to foster horizontal exchanges among its members and to promote the importance and the quality of poverty-reduction programs at the national and international levels. Created in 1991 in Mexico, it is managed by a coordinating committee of six (two per subregion), and by a chairperson that is electedfor two years on a rotating basis. The Organization of American States, through its Departmentfor Social Policies, provides the technical secretariat of La Red Social. This event is most important for the Social Network of Latin America and the Caribbean. The network has allowed La Red Social to cooperate among various countries in the struggle against poverty. It recently also completed an important study of the potentials and the limitations of social funds. Social investment Social funds, created as instruments of the social policy pursued by each funds' origins and country, were designed to mobilize resources rapidly for the financing of characteristics social action programs. They appeared in Latin America and the Carib- bean in the last decade as a response to the economic crisis of the 1980s, the imbalances induced by adjustment policies and the impacts of adjustment policies on the poorest and most vulnerable groups. At the time, ministries in the social sectors lacked the capacity to expand their programs rapidly and efficiently. The effectiveness of social funds derives, in our opinion, from the organizational lack of sophistication and their relative indepen- dence from the public sector. They are characterized by the following: * Independence from the traditional schemes of the public sector * Administrative autonomy and political support * Transparency * Capacity to hire competent staff outside public sector administra- tive regulations * Simple and dynamic implementation processes * Implementation methodologies, based on modem social management concepts, that focus on sustainability and the participation of society. 27 28 Updating the Conventional Wisdom Over time, social funds have proven that they effectively can coordinate among entities, channel resources, develop social infrastructure, pro- mote the participation of local authorities and the community, and inte- grate the private sector and civil society in their programs. Their trans- parency in operations is widely acknowledged and has resulted in financial and technical support from international entities. Impacts of social funds are commensurate with the budgets that are allocated to them. Although their achievements have been considerable, the magni- tude of poverty, especially in the poorest economies of Latin America and the Caribbean, remains overwhelming. Structural causes of The immediate objective of social funds was to cushion the impacts of poverty in Latin adjustment policies on the poorest, not to attack the structural causes of America poverty. Although many experts stated that liberalization and global- ization policies would benefit the poorest sectors, what has been con- firmed is that the structural causes of poverty cannot be modified in the short or medium term only by expanding economies. Despite economic growth, poverty in Latin America and the Caribbean region continues to increase because structural causes of poverty do not weaken auto- matically with economic liberalization and growth. How should these be Finding a solution to structural poverty requires a review of the devel- addressed? opment model as well as the macroeconomic policies adopted by gov- ernments. Social development and economic growth must be under- stood as integral parts of the same process. Eliminating the causes of structural poverty requires overcoming the false dichotomy between the social and economic aspects of development. In other words, poverty reduction should be the main objective of macroeconomic policies in the social sectors. Currently, poverty is broadly defined by the lack of public services and the lack of opportunities to generate income, as well as the inability of people to act in their own interests, to express their needs through con- crete proposals, and to organize collectively to implement solutions. Poverty constitutes a challenge to the peaceful coexistence of people and represents ignorance of their social, economic, and political rights. How- ever, creating permanent jobs and implementing productive projects for poverty reduction are not simple tasks. Fundamental Poverty reduction has two fundamental requirements: enabling the poor conditions for and marginal groups to participate in decisionmaking about their own sustainable poverty development, and giving them access to capital, technology, credit, and reduction land, especially in the case of the rural poor. Programs to deliver these basics must be designed with accuracy and sophistication within a frame- work of macroeconomic social policies whose main objective is poverty reduction. Social gains made through specific programs will be unsus- tainable in the absence of reform at the state level and the democratic participation of the people. A comprehensive, consistent, and long-term policy with a modem strat- egy to manage social programs is essential to reduce poverty, adjusted to the socioeconomic characteristics of each country. Social funds can be useful instruments for the implementation of such a policy. The Partner's View of Social Funds 29 Future role of social One of the most important roles for social funds is to expand their ac- funds tivities facilitating community participation and the interaction among the state, the private sector, and grassroots communities, which in turn enhances the sustainability of investments. Sustainability of investments is an important factor, especially in poor communities. Social funds ac- tivities can include training and advice on the development of programs for poorer communities. Social funds should continue with poverty al- leviation programs, those oriented to reinforce human capital as well as those oriented to rehabilitating the infrastructure. Magatte Wade, former President, AFRICATIP AFRICATIP is a network of African agencies that were set up to carry out labor-intensive public works. Created in Burkina Faso in 1993, its permanent secretariat is in Senegal; it has a current membership of 14francophone and anglophone countries, mainly in West Africa. The networkfacili- tates cross-country fertilization among the institutions engaged in the fight against poverty. Given that AGETIPs have increased the absorptive capacity of international loans in African countries, the network can become a catalyst for mobilizing other resources in countries where AGETIP agencies operate. By strengthening its ties with social funds and international development agencies, AFRICATIP can better promote economic growth and poverty reduction. The context In the early 1980s, structural adjustment programs had serious social costs for most African countries, particularly in terms of job loss. An unemployment rate of about 30.0 percent resulted from cuts in govern- ment payrolls and the restructuring or liquidation of enterprises and financial institutions. The situation was aggravated by urbanization, making the labor supply particularly elastic in our countries. In Senegal in 1989, young people accounted for 67.2 percent of the total number of unemployed men and 52.0 percent of the total number of unemployed women. During that period, the economic growth rate was around 2.1 percent compared to a population growth rate of 2.8 percent. The con- stant deterioration of public finances reduced investment expenditure to levels inadequate to cover infrastructure rehabilitation and operat- ing and maintenance (O&M) costs. It was clear that none of the existing public enterprises or administrative services could develop a rapid and efficient solution and implement a sound public works program. Creation of the Public African governments and donors, particularly the World Bank, began Works and to explore ways of reducing what came to be known as the social costs Employment of structural adjustment. In Senegal, the approach took the form of the Agencies creation, in 1989, of the Agences d'Execution de Travaux d'Interet Public (Public Works and Employment Agencies-AGETIPs). These publicly funded, privately run nonprofit, nongovernmental agencies now exist in 14 African countries. Creation of AGETIPs represented a veritable revolution in the attitude of African governments and led to a new role for the state, one that allows it to focus on policy and basic objectives. A large number of the states' prerogatives, particularly in the area of works implementation, monitoring, and supervision, have been del- egated, while they retain their responsibilities for programming, de- fining development priorities, and project management. 30 Updating the Conventional Wisdom Objectives of The principal objectives of AGETIPs were to: AGETIPs * Create, at least temporarily and as rapidly as possible, a substan- tial number of new jobs, especially in urban areas, through labor- intensive projects * Through the execution of project-financed works, upgrade the skills of the labor force, increase competitiveness among contrac- tors, and enhance the efficiency of the public agencies involved * Give the economy more capacity to respond to the opportunities for creating jobs sustainable beyond the project execution period * Implement simple, rapid, flexible, transparent, and easy-to-over- see procedures for identifying and appraising prospective opera- tions, awarding contracts, and paying contractors * Demonstrate the possibility of expanding the field of application of labor-intensive projects and develop procedures that can be used by the public sector in carrying out similar activities * Implement projects with outcomes that are economically and so- cially valuable, while combating poverty by making basic services accessible to the poorest communities. Basic principles The underlying principles of AGETIP operation are as follows: * AGETIP is independent from the state, and its relationship with the state is regulated by a signed agreement between the two parties. * As specified in its manual of procedures, AGETIP is impartial in its relationship with third parties, and its decisions do not dis- criminate or grant preferential treatment to any third party. * To be effective, cost minrimization is of constant concern to all AGETIP staff. Work methodology To increase local capabilities to enable Africans to manage their pro- and performance grams and projects themselves, AGETIPs are responsible for the process of design, contracting, and implementation of projects whose final ben- eficiaries are generally the municipalities or the public. The process in- cludes codesigning subprojects with local municipalities and communi- ties; publicizing contracts; contracting, supervising, and commissioning works; and paying suppliers. While remaining responsible for overall project management, AGETIPs contract out most services. Applying the principle of delegated contract management, using private sector meth- ods to manage public works contracts, AGETIPs have proved to be good performers. To date, they have carried out works equivalent to US$700 million in 14 countries of Africa, with US$140 million paid out in wages. These works have made major contributions to the welfare of the com- munities by improving access to basic socioeducational services (educa- tion, health, water supply, sanitation) and raising living standards through labor-intensive and food for work programs that benefit the poorest segments of the urban and periurban populations. Sustainability Sustainability has three facets: sustainability of investments, institutional sustainability of AGETIPs, and financial sustainability of investments contracted by AGETIPs. Sustainability of investments-The living standards of populations in ur- ban and periurban areas have improved substantially due to infrastructure The Partner's View of Social Funds 31 public works and employment programs. It is not enough simply to con- struct these works. The O&M of such works is a major consideration, and solutions need to be explored with the local and state authorities and, above all, with the beneficiary communities. For this reason we propose strength- ening the beneficiary ownership aspect of the programs by ensuring prior- ity for grassroots initiatives, community participation in the formulation, financing, implementation, monitoring, evaluation, and O&M of projects. Institutional sustainability-There is concern that AGETIPs enjoy a mo- nopoly position in the delegated contract management of public works. In reality, AGETIPs are responsible for about 10 percent of the overall volume of public works contracts. The rest are awarded to large con- tractors through international competitive bidding. Like the World Bank when it was created, AGETIPs were a response to an emergency situa- tion. Institutional sustainability will be determined by how well they are able to deliver as they adapt to the changes in national contexts with decentralization. Financial sustainability-AGETIPs so far have had a market for their services. They rely on international donor funds for financing public works and at present cannot survive in the absence of external support. In the future, as decentralization advances, municipalities will have to increase their own revenues and acquire fiscal management skills. Both these areas are being supported by the second generation of AGETIPs. AGETIPs are expected to become self-financing in the future, with capi- tal for investments provided mainly by municipalities. Manuel Chiriboga, Co-Chair, NGO-World Bank Committee The NGO-World Bank Committee was created as aforumfor policy dialogue between the World Bank and the NGO world. It includes the representatives of NGOsfrom all developing regions as well as of NGOs of the Organizationfor Economic Cooperation and Development (OECD) countries. The com- mittee is under the joint chairmanship of an NGO representative and a managerfrom the World Bank. It meets twice a year, once in Washington, D.C., and once in a developing region, to discuss strategies forfacilitating participation of civil society organizations in the development projectsfinanced by the World Bank through changes in policies and operational procedures. It also carries out studies and evaluations of its own through its NGO working group. Within the World Bank, the NGO Unit acts as permanent technical secretariat to the committee. Socialfunds and The connection between social funds and structural adjustment programs structural has been pointed out as one of the greatest limitations of social funds: adjustment * Structural adjustment programs in many cases have eliminated the very policies and programs that were directed to resolve the problems brought about by structural adjustment programs. The issues of agrarian reform and of access to land for the rural poor are pertinent examples. * Social funds have limited outreach: only about 20 percent of pov- erty-stricken people benefit from social funds' support. Assistance given by social funds does not seem to be sufficient for the pov- erty-stricken to find a way out of poverty in a sustainable way within the social funds' timeframe. 32 Updating the Conventional Wisdom * Although NGOs consider social funds to be important programs, we believe that social funds are not part of a broader development strategy. They are limited in scope, and they lack integration with a development strategy that benefits from the participation of all development actors. They also lack a permanent mechanism to coordinate with various departments in government. * The methodology of social funds limits the development of a po- litical system through which local government can connect and relate with social groups to generate good governance conditions at the local level, with small entrepreneurs, farmers, urban groups, NGOs, and so on. Established as a temporary mechanism or a transitory program, social funds were intended to transfer resources to those groups that were hardest hit by adjustment programs. In the last few years, they have become more like permanent poverty reduction programs. NGOs point out that, while the purpose of social funds is not to eliminate the struc- tural causes of poverty, it is possible for them to affect some of its symp- toms and manifestations. NGOs' views of social The organization of social funds as efficient, less bureaucratic, and more -funds businesslike entities with a willingness to work with all development ac- tors is appropriate. However, NGOs view them as very much a part of the central government structure, managed by institutions that are close to the president, the executive branch, or the prime minister's office. Thus, social funds run the risk of being politicized, as has occurred in many countries. Socialfunds' views of Social funds often see NGOs as promoters, supervisors, trainers, and NGOs suppliers of services. This perception limits the more comprehensive participation of NGOs in the identification, design, management, moni- toring, and evaluation phases of development projects. Consequently, projects do not benefit from the substantial experience, knowledge, and comparative advantage that NGOs have in the promotion, strengthen- ing, and empowerment of social organizations. The criteria used for hir- ing NGOs are often the same as those applied to the private sector. This negates the reality that local development takes time, a critical element that is necessary to strengthen the capacity of people and empower them to participate in government programs. The role of an NGO is different from that of a private sector entity providing services in an efficient man- ner. Resource allocations need to reflect the rationale behind what the two entities deliver. Often NGOs are not compensated adequately for the time, investment, and effort that they infuse in local development. Applying private sector selection criteria to the selection and hiring of NGOs offers the wrong incentives and brings about a loss of continuity along the project cycle. The effects of these criteria limit the develop- ment and prevents NGOs from maximizing a learning process that would in turn benefit the outcomes of the projects. Social funds are reluctant to invest in productive activities. NGOs see this area as promising and as perhaps the only avenue for sustained local economic development. It is in this area that they feel they can facilitate greater economic participation by the people. The Partner's View of Social Funds 33 What NGOs can do Based on a recent study of social funds, their methodology for contract- with socialfunds ing work, and an analysis of the way NGOs can participate better in operations concerning social funds, here are a few specific suggestions for the NGO sector. If we can take concrete actions based on these sug- gestions, we will be able to make a stronger and greater contribution to social funds as a strategy for development. * Social funds present a big challenge for NGOs and this challenge requires reflection. The organizational small, intense experiences should be expanded and multiplied. How can organizations move from micro experiences to regional experiences? How can the time needed from the start of an activity until its completion be re- duced? * NGOs and social funds should understand better the implications of their work in regard to development policies. They should try to connect with each other as NGOs and create organizations that offer better negotiating capacity with governments and other de- velopment actors in the arena dealing with social funds. * Social funds, in order to improve their operations, should iden- tify programs that strengthen NGO management capabilities. So- cial funds should develop strategies to build the capacity within NGOs to develop more professional qualifications. 5 The World Bank Portfolio Review of Social Funds Projects Speakers Prem Garg, Director, Quality Assurance Group Soniya Carvalho, Task Manager, Portfolio Review of Social Funds Projects Christine Kessides, Principal Economist, Transport, Water and Urban Department Prem Garg, Director, Quality Assurance Group Overview The Portfolio Improvement Program (PIP) was launched by the World Bank about a year ago to improve the performance of its project portfo- lio. Within that review, the performance of social funds was evaluated for such things as efficiency, targeting, and sustainability. The World Bank's As the largest multilateral development finance agency, the World Bank portfolio lends about US$20 billion annually for development all over the world. Its portfolio of 1,500 projects under implementation accounts for close to US$120 billion of commitment on the part of the World Bank. Com- bined with the contributions of cofinanciers, borrowers, and beneficia- ries themselves in terms of their own counterpart financing, the total portfolio of these 1,500 projects represents an investment of close to US$300 billion, not an inconsequential amount by any standard. A key element of the World Bank's support, especially after Mr. Wolfensohn assumed the presidency, is ensuring that the large amount of resources devoted to these 1,500 projects in the portfolio is used as effectively as possible in reaching our shared goals of sustainable eco- nomic development and poverty alleviation. The track record of the recent past in this respect leaves something to be desired. Roughly speaking, at completion, about one-third of the projects the Bank finances do not measure up to the high standards initially set for them. Development is a risky business; it involves complex issues. It takes place in countries where institutions are weak, and it seeks inno- vation. Given this context, clearly nobody expects that every single project at the Bank will achieve all of its objectives; nevertheless the Bank does believe that there is room for improvement. The World Bank's Central to the PIP is the concept of projects at risk, that is, based on some Portfolio leading indicators derived and endorsed by historical analysis, the PIP Improvement tries to identify projects that run high risk of not achieving their objec- Program tives. Using projects at risk as the underlying concept, the overall portfo- lio is examined and parts or clusters in the portfolio are identified, by 35 36 Updating the Conventional Wisdom country, by sector, or by instrument. A high concentration of risky projects should be subject to more intensive attention by the Bank as well as by the borrowers. If clusters seem to be doing unusually well, they offer potential lessons for replication elsewhere and should be examined. Based on the analysis of the past few months, 14 such clusters were iden- tified. The social funds cluster is one of them. Social funds were identi- fied as a cluster that appeared to be doing particularly well. To what extent that initial assessment is borne out by more in-depth analysis, and the lessons that can be drawn for application elsewhere, is the sub- ject of the review. The Bank's findings are being shared with the work- shop participants. Soniya Carvalho, Task Manager, Portfolio Review of Social Funds Projects Purpose of the review Based on the mandate we received from the Quality Assurance Group, we set out to determine how the social funds portfolio, comprising 40 projects under implementation as of June 1996, was faring: How well was this portfolio performing? Was sustainability of social funds' sub- project benefits an issue? Methodology of the A quick word on the methodology of the review. This was a desk review. review Our sources of information were all printed matter on social funds, Bank and non-Bank, and this was complemented with considerable verbal infor- mation and insight derived from interviews with several task managers within the Bank. Most of the team members of the Portfolio Review have also worked firsthand on a number of social funds projects. Many of us have visited the countries represented at this workshop, and the invaluable insights provided locally have colored our thinking, overtly or implicitly. Objectives of social In order to assess the performance of social funds projects, they have to fiunds projects be judged in the light of their objectives. While social funds projects have multiple objectives, they have typically included one or more of the following three objectives: * Creating employment opportunities in response to an economic shock (short term) * Delivering basic services to the poor (long term) * Building local capacity for the sustainable provision of services (long term). Although social funds projects started with the short-term emergency objective, they are increasingly incorporating longer term service deliv- ery and capacity-building goals. The Portfolio Review found that around 80 percent of recent social funds projects, that is, those approved in fis- cal years 1994-96, had long-term objectives. Yardsticksfor As the objectives of social funds projects evolve over time, their design assessing and implementation need to change as well. The yardsticks used to performance monitor performance should reflect evolving objectives. In other words, social funds projects with longer term service delivery and capacity- building objectives should not be judged by the same criteria that are applied to social funds projects with emergency objectives. The World Bank Portfolio Review of Social Funds Projects 37 Findings relating to The Portfolio Review found that social funds projects that respond to socialfunds projects emergency situations through the rapid creation of employment oppor- with short-term tunities are likely to achieve their objectives. The design of such social objectives funds projects reflects their emergency nature well. The Portfolio Re- view did not, therefore, dwell on this cohort of social funds projects. Assessing the With respect to social funds projects with longer term objectives, the performance of social Portfolio Review asked questions such as: Is the school still running, funds projects with complete with teachers and textbooks, one year after the building was longer term objectives constructed? Is it truly the community that is demanding the subproject, or is some other entity biasing community demand? Does community demand adequately represent groups such as the poor? Are there sanc- tions for communities who do not contribute the required amounts to- ward subproject costs? The ABCs of the The review of social funds projects that aimed at delivering services and Social Funds building local capacity yielded mixed results. Rigorous quantitative data Portfolio on outcomes are limited, but available evidence led us to give the fol- lowing grades to the social funds portfolio: * A on internal efficiency * B on poverty targeting * C on the sustainability of subproject benefits, signaling caution. The social funds portfolio appears to do rather well on internal efficiency and not badly on poverty targeting. However, the Portfolio Review's assessment of the likely sustainability of subproject benefits points to emerging issues and concerns. Why an A on internal efficiency?-There are definitional issues in com- paring administrative costs across programs and agencies, but social funds appear to deliver services at a lower overhead cost compared to public agencies. Some evidence shows that social funds construct infra- structure at lower per-unit cost compared to public agencies, with cost savings as much as 50 percent in specific cases. Some evidence also indi- cates that social funds construct infrastructure within a shorter time com- pared with public agencies. Hence, an A on internal efficiency. Why a B on poverty targeting?-Social funds seem to be successful in reaching generally poor groups through the judicious use of several strat- egies for the preselection of beneficiaries and preassignment of benefits. These include targeting mechanisms, eligibility criteria, appraisal crite- ria, and positive and negative subproject menus. While social funds may be reaching generally poor groups, how poor these groups are is defi- nitely an issue. Some evidence shows that social funds projects are not reaching the poorest regions or the poorest population groups. This shortfall is not surprising, given that communities most in need of assistance may also be the least capable of preparing viable project pro- posals and implementing them. Without considerable preinvestment in outreach, training, and technical assistance, social funds may miss criti- cal parts of their intended target groups. Hence, a B on poverty target- ing. Why a C on sustainability? The following presentation will explain. 38 Updating the Conventional Wisdom Christine Kessides, Principal Economist, Transport, Water and Urban Department The issue of The issue of sustainability has a number of dimensions, some of which sustainability were already mentioned. The one addressed here is the sustainability of subprojects. This issue comes up when the transition of social funds from the emer- gency or crisis mode to the longer term is examined. The transition is essentially the change from building a facility to delivering an ongoing service. By implication, how the services are being used needs to be monitored and evaluated, not just what was disbursed or built. Based on written material and existing evaluations, the review is limited nec- essarily by the kind of information available. There is not a great deal of information available on the longer term impact of social funds as yet. While the review looked at components in all sectors, education, health, and economic infrastructure, the analysis here refers in particular to eco- nomic infrastructure: water and sanitation, roads, bridges, drainage, and public works in general. Sustainability issues Concepts for the requirements underlying the sustainability of services in the economic are derived from our understanding of best practices within the indi- infrastructure sectors vidual sectors. Basically, two requirements are critical for the sustain- ability of economic infrastructure investments: the right incentives and adequate means. The review examines three dimensions as the compo- nents of sustainability: - Do these subprojects meet the effective demands of beneficiaries? * Are the subprojects producing a technology and a service level that is suited to this demand and is suited to the existing capacity to carry out the service? a What are the commitment, the resources, and the capacities for operations and maintenance? It is important to note that the requirements for sustainability condi- tions vary by subsection because they are inherently different. In par- ticular, these requirements to create sustainability may be more difficult to achieve in practice in water and sanitation, in drainage, and in the transportation subprojects than they are in building schools or clinics. Key determinants of From the perspective of economic infrastructure, the term demand- sustainability: driven means not just that the project idea originated from the commu- 1. Effective demand nity requesting the project, but even more important, that the commu- nity is ready to pay an opportunity cost for choosing one project over another. Effective demand implies that the users or the beneficiaries have some financial stake in what they choose. Do they contribute either in cash or in kind? Do beneficiaries or community organizations of benefi- ciaries invest time to participate in the subproject? Effective demand cannot be gauged realistically in the absence of the dissemination of adequate information to understand and to evaluate alternatives. Sometimes sponsors essentially offer one choice, not giv- ing the community a full understanding of the implications of a particu- lar kind of service. The World Bank Portfolio Review of Social Funds Projects 39 Demand expression varies by the kind of goods or services being delivered. Water supply and latrines are an example of essentially private goods, goods that are individually used and for which indi- vidual users can express and realize a willingness to pay. Public choices are more complicated with respect to public goods such as schools or rural roads; a differentiated strategy for eliciting demand, depending on the kind of subproject that is being produced, is needed. 2. Appropriate The second determinant of sustainability is the appropriateness of technical standards the technical choices presented to communities in light of their effec- tive demand for levels of service that the technology provides. Tech- nology choices must be tailored to suit the available capacity for op- erations and maintenance (O&M). Water, sanitation, and transport investments involve more complex technology and design issues than a school or a clinic; this raises some questions about whether the system was in place to evaluate and make use of the appropriate technology for those kinds of services. Many social funds were designed to rehabilitate existing infrastruc- ture. Rehabilitation was undoubtedly appropriate when the social funds were in the emergency phase, but it may not always be the service the users want now, because those facilities were originally put in place under a perhaps more centralized and very different service delivery system. Offering technology choices that are too complex or expensive is as much of a problem as offering technology choices that are too sim- plistic or inexpensive to deliver at the level of service people are will- ing to pay for. Are social funds always in a position to offer nuances of choice across a wide range of sectoral services? On this issue the review drew from best practices in the individual sectors examined. The first issue in O&M arrangements has already been mentioned: the need for clear ownership of the infrastructure and accountability for who will operate and maintain the project. 3. Institutional The third issue, which is not always elaborated as much, is the need arrangementsfor for a formal backstopping arrangement if the community is expected O&M to carry out O&M. A good system is needed to give the community support when it has problems and when issues arise, for example the issue of mobilization of recurrent financing. The need to train those who will be responsible for the O&M is an important institutional issue. Sometimes those responsible may be in the community, sometimes they may be a private contractor, or sometimes they may be in the ministry. User training is needed, par- ticularly in water supply and sanitation. Sanitation education has not always been provided and is very important. If the operator is going to be the sectoral agency, sometimes basic budgetary reforms need to be addressed. It is not always helpful to rely on sectoral agencies if they are embroiled in a dysfunctional budgeting system or do not have the necessary resources. 40 Updating the Conventional Wisdom 4. The needfor The last point, which is in some ways the most important, is the need for consistency across consistency across projects in the same sector. The Portfolio Review found sectors from the experience in sectoral projects, for example water and sanita- tion, that in some cases communities, even very poor communities, have been willing, indeed anxious, to contribute to a service that would meet their needs and that they knew they would receive. However, if they could get the service for free, or with less arduous requirements through, for instance, a social fund, then the social fund undermined the sectoral reforms that had been in place for some time in that country. Questions asked in The review posed two questions about social funds, based on the crite- the economic ria and the definitions mentioned earlier: infrastructure sectors * Are the existing social funds in the portfolio under review de- signed for sustainability according to the criteria and the defini- tions mentioned? * Under what conditions are social funds actually better than other sector-specific approaches? Findings on The first conclusion of the review was that the later generation of social sustainability funds had better integration of sustainability elements in their project design than the earlier generation of social funds. There was more em- phasis on active community participation throughout the project cycle, including at the disbursement and supervision stages in cases when user committees organized maintenance and operated accounts from which they disbursed resources. More often, the later generation of projects re- quired community contributions, as opposed to sponsor contributions, and attempted to ensure that the demand for the project was coming from the community. There is more attention to the suitability of technical op- tions and alternative service levels and more focus on training, although the review did feel that there was not enough attention given to training. The need to integrate Overall, the Portfolio Review's conclusion is that the portfolio projects sectoral best practices are improving in sustainability, but more projects can learn from some of the best practices in specific sector projects. Social funds have often been generators of best practice. Similarly, good examples and experi- ences related to community contribution and community organization are found in specific sector projects, for example in rural water and sani- tation, rural roads, and so on. A greater exchange of experience across these project types would benefit all projects. The Bank has a primary responsibility for ensuring that the best practice lessons from sectoral projects are also applied to investments made through social funds in those sectors. When are socialfunds Under what conditions are social funds actually better than other sec- appropriate tor-specific approaches? At what point is the social fund the best opera- mechanisms? tion? At what point should an approach be based more on sector-spe- cific investments? There are a number of considerations: * First, the policy and institutional conditions for sustainability re- quire long-term concerted efforts in each sector. * Second, water and transportation subprojects are more complex in all the dimensions of sustainability than education or health The World Bank Portfolio Review of Social Funds Projects 41 investments. This makes it difficult for multisectoral projects to ensure that all the elements needed for sustainability are in place, particularly in the absence of efforts to strengthen sectoral agen- cies, perhaps through donor support. Third, social funds should not and cannot replace the responsi- bilities of sectoral agencies and local governments for assessing local demands and delivering local services. Parallel efforts and greater attention to the development of local capacity of govern- ments and sector agencies to assume their rightful responsibili- ties is needed. Replicability Replicability requires the consideration of sustainable ways by which services can be provided to unserved populations across a particular coun- try. To provide a sustainable level of service will, in some cases, require significant reforms: financial reforms at the sector level, reforms of bud- getary systems, reforms in subsidy levels, reforms of user charges, and so on. This is a tough menu of reforms to be carried out by social funds; indeed, social funds cannot undertake reforms of this extent. Moving beyond the social funds approach and undertaking fundamental institu- tional and policy reforms at the sectoral level that may be required to permit sustainable services expansion and delivery to the entire target population is needed in many countries. This means a transition from social funds, which have been particularly effective on an emergency or experimental basis, to other approaches that can address the medium- term issues of sustaining service delivery in key sectors. Socialfunds in the Finally, the review in its concluding chapter looked at the future of so- future cial funds. Broadly, three alternative paths were considered: The first was to focus on the question of transition. Because social funds are strong at demonstrating good practices and good governance, they can be im- portant in drawing best practices from other sectors. For example, there are some best practices in the water and sanitation and in the rural trans- port sectors. More experiences need to be exchanged outside social funds with some of the better programs in other sectors. The emphasis on tran- sition also means providing training and capacity building to both com- munities and the small-scale contracting industry. Again, training is emphasized, because it needs more focus and more specialization. The second future path for social funds is as special-purpose vehicles, providing selective seed capital to foster innovations in community de- velopment, to experiment with new technologies, and to act as the government's agent in remote areas and for very small-scale activities. Even though many of the social funds might already characterize them- selves as special-purpose vehicles, they have gotten much broader. This possible path needs focus, as well as this question: What is the niche for social funds? And third, funds can become specialists in delegated contract manage- ment, an area which will perhaps invariably be developing outside the public sector. This is where AGETIPs specialize. It is this particular area that cari be opened to competition within the private sector and that can become a self-financing activity as well. 6 The Inter-American Development Bank's Study of Social Funds Speakers Margaret Goodman, Senior Evaluator, Evaluation Office Samuel Morley, Senior Advisor, Social Programs, Sustainable Development Department Margaret Goodman, Senior Evaluator, Evaluation Office Inter-American The Inter-American Development Bank (IDB) works exclusively in Latin Development Bank's America. It has just concluded a study and published a book called So- study of social cial Investment Funds in Latin America: Past Performance and Future Role. It investment funds occurred about two years ago that social funds have become overwhelm- ingly popular all over the world. They started out as a way of respond- ing to adjustment and have developed in different ways, doing various things. The IDB decided to look at them to determine what is working and what is not working. The Canadians, the Germans, the Swedes, and the Organization of American States (OAS) also thought the subject de- served review, so a project was created. The outcome of this project was many seminars and a book. The IDB was interested in this project be- cause, since 1989, it has lent over US$1.3 billion for social funds, making it the largest contributor to social funds in Latin America. Methodology of the The IDB hired consultants who looked in-depth at social funds in Bo- study livia, Chile, El Salvador, Guatemala, Haiti, Honduras, Nicaragua and Peru. They spoke to recipients of projects and assessed their satisfac- tion. The IDB examined these projects for sustainability; it also did a desk study of all social funds. Characteristics of Social funds were created as a response to an alarming rise in poverty. socialfunds Some social funds have political objectives. FONAPAS helped in the consolidation of the peace process in Guatemala. FONCODES was aimed at ensuring governability in frontier regions of Peru. The second social fund in Bolivia is linked to decentralization. In Chile FOSIS is showing that the government is committed to eradicating extreme poverty. A key characteristic of social funds is that they are demand-driven. There are good things and bad things about that. One of the great in- novations of social funds is the quick implementation of subprojects. Between 1991 and 1995 Bolivia's social fund implemented 1,500 sub- projects; Honduras implemented 7,000; Nicaragua implemented 3,500; Peru implemented 18,000. 43 44 Updating the Conventional Wisdom Social funds have built significant social infrastructure, particularly the emergency funds. They have substantial external support, in fact, that is one of their problems: they are probably too linked to external support. And finally, while the World Bank gave them a B in targeting, in com- parison to other programs, the IDB probably would give them a B+, because they have really been very good at targeting the poor. Nicaragua's social fund has projects in every town, in every backward part of Nicaragua, and this is fairly commonplace. Social funds are very good at targeting. There is, however, one issue with targeting. Should social funds attempt to reach the maximum number of people or the maximum number of very poor people, which may actually be in the cities? Or should they attempt to reach the most isolated regions? This dilemma has not been resolved so far. Models of social The IDB found several models of social funds. The emergency funds are funds usually in the office of the presidency; they are financially independent, with a board of directors that includes representatives of other minis- tries as well as representatives from civil society. They are often exempt from procurement and civil service rules, which makes them much more efficient than other organizations. If other countries could just eliminate their procurement rules, they might also be building much faster. The second model of social funds is a part of a ministry, for example, the Bolivia fund or FOSIS in Chile, which are at the second stage. They have more formal agreements with the ministries, they lay less em- phasis on emergency procurement, and civil service rules are followed more closely. Then there are the larger funds in Colombia, Costa Rica, and Mexico. These are usually large umbrella institutions. They have no autonomy. They are financed from the national budget. They implement or coordinate many social programs with the objective of reaching the poorest. Relationship with line Initially there were cooperation problems with line ministries. Emer- ministries gency funds wanted to disburse fast, and sustainability was not of con- cern to social funds: they just constructed projects. After a while, schools had no students and health posts had no nurses. So now there is more coordination with government entities, either formal or informal. The Chile fund negotiates its budget with the ministry of finance and ex- ecutes programs with line ministries. The Mexico fund signs agreements between federal and state governments, although it is not certain that there is any follow-up on these agreements. The Colombia and Costa Rica funds finance activities of existing institutions. Relationship with The relationship with local governments and local communities is a new local governments concept accompanying the idea of decentralization. In Bolivia, citizen and communities participation is a condition for receiving fund support. Not only is it a condition, but increasingly municipalities have to cofinance projects. Cen- tral governments are transferring resources to the municipalities, and citizen participation decides which projects the municipality wants to cofinance. Cofinancing is realigning the funds with communities, and it is helping them to prepare development plans. The Inter-American Development Bank's Study of Social Funds 45 Communities have different ways of organizing participation, for example community assemblies, solidarity committees, and so on. Bolivia has an interesting form of citizen participation called vigilance committees. These committees oversee the proper expenditure of project money and the mayor's work in ensuring the needs and demands of communities are met. Sustainability and The workshop's participants are now asking whether projects built by maintenance culture social funds are sustainable. Are they any more or less sustainable than other projects? Roads that were built by the funds and roads that were not built by the funds are all decaying. There does not seem to be much difference in terms of sustainability. A maintenance culture, which means that what is built is maintained, does not yet exist in Latin America. There is no reason to expect social funds to ensure maintenance better than any of the other ministries. If this culture is instituted, then projects will be sustained, both by the ministries and by the social funds. Community Citizen participation is emphasized greatly to achieve sustainable out- participation and comes of projects. There is nothing like money to sustain a project. The sustainability idea that money is being transferred to the municipalities, that the mu- nicipalities can pay workers for maintaining projects, as in the case of Bolivia, is an important catalyst. Clearly there is not enough training. National and local governments should start paying more attention to training needs and budgets, be- cause the bilateral and the multilateral agencies cannot keep supporting training at the current rate. National budgets have to start allocating resources for training. Some management There are some management issues. A demand-driven approach may issues and reduce funding for poorer communities, because they are often the ones contradictions least able to develop their own projects. Moreover, there is a contradiction between central approval and local priority-setting. This is almost a problem of the technocrats against the people. In some countries, the technocrats at the central level are excel- lent, and they want projects to be technically sound before they approve them. In other countries, the technicians are not as good. However, there may be a more democratic aspect here, because the technicians do not demand as much of the projects as the more technically advanced coun- tries do. Proliferation offunds The multiplication and duplication of funds is actually a problem in and conflicting goals many Latin American countries. Often, there are several funds all com- peting for the same resources and all delivering similar services. This often results in wasteful overlap. Conflicting goals between funds and stakeholders is an important aspect that bilateral and multilateral agencies need to recognize. There is a "get the money out" mentality in funds; this often does not help to build sus- tainable projects, which may require training, be more complicated, and require more coordination. Citizen participation takes time, and, although very democratic, is not the most efficient system of implementing projects. 46 Updating the Conventional Wisdom Quick jobs or The creation of quick jobs, as opposed to training, often results in the training? creation of too many bricklayers, often of not very good caliber. So that when the fund goes, people are no more able to get a good job than before. Quality of projects Sometimes there is a contradiction between building quality projects and using local labor, because when asked, municipalities often want quality projects. And yet bilateral and multilateral agencies say they want local labor to be employed. Environmental issues Finally, there are some environmental issues. Thousands of small projects in social funds may harm the environment and be hazardous to public health. Funds are often not prepared to cope with environmental problems. Very few of them have environmental experts on their staff. If communities take over projects, they need special training in environmental issues to en- sure proper knowledge about the environment. Gauging environmen- tal impacts will take considerable monitoring which, at this point, is not being done. Samuel Morley, Senior Advisor, Social Programs and Sustainable Development Department The IDB's measures of the impact of the funds and the outstanding is- sues and conclusions from the IDB study are summarized here. Impact: the limited Despite the large amount of resources that the IDB and the World Bank scope of socialfunds have been lending to the funds, their scope is small. Only one fund in the region, Nicaragua, spends as much as 1 percent of the gross domes- tic product (GDP) in its fund; only three countries-Chile, Panama, and Uruguay-spend more than US$15 per year per poor person. And the poor countries on average spend less than US$10 a year. In other words, the impact of these funds is necessarily small, because their scope is fairly small. Small impact on The IDB began its study thinking the funds had a major impact on em- employment and ployment and income. Our study shows the estimates we made. We incomes collected the data on employment generation in all the funds and ex- penditures per year on average in the funds. The study found that the impact of the funds on employment and income is small. Only the first emergency fund of Bolivia added more than 1 percent per year to the total number of jobs in the economy. Only three funds in the region added more than 0.5 percent to the number of jobs. In other words, the funds did not have a major impact on the supply of jobs in the economy. The IDB's conclusion is that funds really are not important generators of employment or income. Most of the jobs created were temporary. Most of the local employment or virtually all of the local employment was for unskilled labor at wages equal to or below the minimum wage in the region, not an above-poverty wage. The total expenditure of funds was not sufficient to move people out of poverty. Some part of that total ex- penditure went to material and to skilled labor that came in with the contractors from outside the poor communities. The nter-American Development Bank's Study of Social Funds 47 Improved living So what was the impact, then, of these funds? The IDB's conclusion is conditions of the poor that social funds' impact is not on employment and income. The big impact is on improvement in living conditions. The funds deliver gov- ernment services to poor communities that never had them before; they develop simple systems of targeting based on basic needs, and they build simple social infrastructure quite efficiently at low cost. They improve the living conditions of the poor even if the measured income of the poor does not go up very much. Social funds symbolize the determnination of goverrunent to do something to overcome the abysmal living conditions of people, particularly in the coun- try and particularly in faroff, underserved areas. That is a big contribution. In addition, they helped to pacify countries in which there was substantial civil wars and helped start the process to ameliorate their living conditions. Beneficiary The only impact evaluations the IDB has are beneficiary evaluations; evaluations that is, the IDB asks the beneficiaries in the communities how they evalu- ate what they received: Was it working correctly? Did they like it? Was the choice an adequate one? Was the project sustainable? The IDB study summarized about 800 project visits in various countries in which this sort of beneficiary evaluation was done, and in general, the beneficiary evaluations are quite positive. School projects have the highest evalua- tions even if a few schools that were built are not operating. Beneficia- ries give health posts a high priority, but there are problems in many areas with staffing and supplies. Sustainability Sustainability problems are much higher in water and sanitation projects, problems and there are two reasons for that. One reason is that they are techni- cally more complex, and the second reason is that there is no education or health ministry supporting them. The local community has to main- tain that sort of project itself. It requires training, and it requires local financial resources, neither of which these poor communities tend to have. In terms of sustainability, this is an ongoing problem for funds. Should socialfunds Whether social funds should be temporary or permanent is a funda- be temporary or mental issue, especially among funds in Latin America, where the deci- permanent? sion has not been taken. As everybody has said, funds were originally started as a response to a macroeconomic or social emergency, but that does not imply that they should be closed after the economy recovers. From the workshops that the IDB has had in the region, it seems that regardless of whether the objective of funds is expressed as poverty re- duction or alleviation, as long as there is a poverty problem, there is a role for a fund. Funds should be thought of as instruments to comple- ment other actions and programs of governments to reduce poverty. What social funds do in any particular country is going to depend on what will help the poor, what the government is doing, and what local conditions prevail. The funds themselves are small. The government does other things. Funds ought to be part of an overall plan or strategy for poverty reduction, so that it fits with all other government programs. Enable socialfunds to Multilateral banks need to realize the imnportance of increased flexibility be more homegrown in the menu of activities they permit social funds to undertake. If the 48 Updating the Conventional Wisdom funds are going to be viable, long-term instruments of poverty reduc- tion, then banks have to be more flexible in the type of activities and projects that they are willing to finance. What is going to be effective and reduce poverty depends on local conditions, and banks have to give the people in the country more of a role in deciding what that is. "One size fits all" is not appropriate for poverty reduction, because con- ditions are different and because governments' abilities are different. FOSIS in Chile, a fund that was not supported in any major way by the IDB, is a central part of the government's machinery for poverty allevia- tion and is extremely flexible. The fund concentrates on productive projects, supports substantial microcredit activities, and imparts sub- stantial training to cornmunities. More national It is also crucial that governments increase their contributions to the financing resources allocated to social funds if the funds are going to be perma- nent. The funds are a way to direct more government goods and ser- vices to the poor, but they cannot be financially sustainable in the future with 85 to 90 percent of their resources coming from external donor agen- cies. Nobody can claim that funds are really successful or that they are sustainable until the countries themselves attach sufficient importance to what they do to pay a greater share of the costs. Evaluating social The benefits of nonemergency fund operations are the services that come funds projects out of the infrastructure they build, not the income generated during construction for carpenters and bricklayers. In evaluating fund projects, the value added as a result of the extra services coming from the project should be considered. This distinction is relevant for projects that upgrade or replace infrastructure, as op- posed to those that build new infrastructure. To assess the value that is added as a result of a project, the service available before the project must be compared with the service available after the project. It is the improvement in the service that emanates from the project that is a mark or measure of success, not the disbursements. The point is not how much is built, but the irnprovements in living conditions that are caused by the building. Socialfunds and the Social funds should not replace the public sector in tasks that are the role of the state government's inherent responsibility. To do so can undermine ongoing public sector reform and institution-building programs. The objective of funds should be to reinforce and broaden, rather than supplant, the role of state institutions in the social field. Undoubtedly, in many countries, fund portfolios are going to continue to have schools and health posts and other such social projects because funds have been shown to be effective in that role. However, that is really an interim solu- tion until the management and operational procedures developed by funds can be transferred to the social ministries or to the municipalities. Training and All funds should be devoting more resources to training and commu- community nity development. It seems there are two parts to that. First, it will help development to guarantee that projects are sustainable after they are built; second, the training will help poor communities, particularly the very poorest The Inter-American Development Bank's Study of Socal Funds 49 communities, to develop effective projects and teach them how to raise resources for themselves within or outside the govemment. Working with community development is the kind of training that the funds have a role in providing to communities. FOSIS is a good example of this. Transparency to avoid On the political side, mechanisms for the rapid disbursement of project the pitfalls of political grants to poor municipalities have an obvious potential for partisan pa- patronage tronage and for political advantage, particularly during election processes. This has to be faced. To reduce the improper management of financial resources, it is critical to adopt transparent and objective selection crite- ria for projects. Additionally, to ensure long-term support for funds by international donors, it is important that technical staff are not treated as political appointees to be changed with each new government. The needfor ex ante The current system the IDB is using to measure the success and impact evaluations of fund projects, beneficiary evaluations, is really inadequate. What is needed instead is ex ante data on the condition or the availability of the kind of infrastructure that is going to be built. That needs to be in the fund application so that ex post the Bank can see the improvement in the infrastructure made by the fund operation to measure its impact on improved living conditions in the local community. It may never be pos- sible to get an adequate measure of changes in income caused by the fund, but if productive projects are pursued, the IDB will have to decide what sort of ex ante data is needed for that sort of project as well. The needfor more An important area in which there is widespread interest is productive productive projects projects. The IDB's evaluation could not find a clear-cut case for either success or failure. Some worked, some did not. Multilateral agencies have to be more pragmatic in areas with large pockets of structural un- employment, poverty, and few income-generating activities. The com- munities themselves invariably state the need for more than schools, health posts, and water projects: they express the need for some sort of income-generating activity. The IDB thinks funds should be facilitating the development of produc- tive projects in communities, not necessarily financing them. They need to help the communities find sources of financing. Funds should not be tumed into small development banks, as this will probably not work. There is a tendency to equate productive projects with microcredit. The scope of productive projects is much greater than microcredit, even though microcredit may be an important part. It includes land reclama- tion, reforestation, irrigation, feeder roads, and so on. There are a num- ber of other things that multilateral banks can consider as ways of help- ing communities develop income-generating projects. Part III A Close Look at the Key Issues 7 Parallel Thematic Session: Social Funds-From Responses to Emergency to Development Session Leader Marco Camacho, Director, Social Investment Fund, Bolivia Resource Persons Constance A. Corbett and Qaiser M. Khan (WB) Facilitator Maurice Aaron Sterns (WB) Session expectations This session examined the problems faced by social funds in their transition from institutions with short-term, emergency response objectives to ones with longer term, developmental objectives. Can such a transition be accomplished with minor organizational modifications within a short time? What lessons can be drawn for the design of a social fund, given the likelihood of an extension of its life? A desired outcome of this session was a set of design recommendations to ease the transition of a social fund when its life is extended. Main Points of the Presentation The changing context The first emergency social fund in Bolivia, created to operate separately for the socialfund in from state institutions, came into existence at a time when the state was Bolivia highly centralized and incapable of responding to the needs of the coun- try, and the regional structure was too weak to foster development. In 1991, the emergency social fund gave way to the first social investment fund (SIF). In the absence of national or sectoral policies, the social fund set investment priorities and managed the project contracts with little community participation. Constitutional reforms introduced in 1994 defined three tiers of govern- ment: central, departmental, and municipal or local. Central government sectoral ministries are responsible for regulating the work of the sectors. Municipal governments are responsible for investment, execution, ad- ministration, control, supervision, and operations and maintenance (O&M) of the infrastructure in the health, education, production, and social sectors. The Popular Participation Law legally recognizes com- munity organizations as representatives of the civil society before the state and provides mechanisms for their participation within the mu- nicipal context in needs identification, project prioritization, develop- ment planning, works execution, and services administration. Transition of the The second social fund was concurrent with the decentralization that socialfund gave legitimacy to a new range of development actors at the national, regional, and local levels. Democratic systems were being founded, all 53 54 A Close Look at the Key issues mayors and municipal council members were to be elected, and norms for the sharing of resources with municipalities were being established. At the central level, the Ministry of Human Development was respon- sible for the articulation of social policies. These policies required inter- ventions within a framework that entails participatory and gender-sen- sitive planning for technically sound projects. As an investment instrument for implementing the government's social policy, the social fund underwent a transition. Its organizational and insti- tutional structures was modified to promote technically sound municipal investments that were defined through participatory processes, with which the funds had little familiarity. The fund decentralized and established de- partmental units for technical administration, financial administration, project evaluation, and project implementation, as well as a department for the preapproval of projects through departmental technical commit- tees. Responsible at its central level for overall control and standards set- ting, the social fund in Bolivia facilitates and expedites the process of trans- ferring social investment-related tasks to municipalities over time. What did the social The fund no longer coordinates investments with ministries, but rather in- funds have to do vests in accordance with social sector policies. This transition required mana- differently? gerial and technical staff to be trained in social management and in build- ing social capital to enable them to facilitate participatory needs identification and planning at the local level. Capacity building of municipalities in project implementation and management of municipal investments as defined by a national program for municipal strengthening is now a major component of the SIF's program. Community needs are communicated to municipal governments; municipalities assess feasible projects based on their local budgets and negotiate projects to be supported by the social funds. Socialfunds sector Social fund investments, limited to localities of 5,000 or fewer inhabit- investments based on ants, take place in education, health, basic sanitation, and institutional classification of support projects. Bolivia's Ministry of Finance (MOF) has defined some municipalities of the 311 municipalities as creditworthy and capable of generating their own resources. These are eligible for loans from the central government as well as from the SIF. Another group of municipalities have been de- fined as too poor; they are eligible to receive concessional resources as grants. The cofinancing policy of the fund is in keeping with MOF's cat- egorization: creditworthy municipalities receive 50 percent cofinancing from the fund for projects they identify, while the poorer municipalities receive 80 percent. Through cofinancing, the social fund seeks to ensure that investments conform to rules and norms defined by national sector policies and meet the needs of the people as presented to the fund by their municipal representatives. A total of US$200 million from taxes is distributed by the central government among the municipalities, with 10 percent of the amount earmarked for administrative and recurrent costs. While other social funds can learn from the experience of Bolivia, it is important to remember there is no recipe for an easy transition appli- cable to the funds that exist today. The procedures of an emergency fund are determined by the nature of the emergency. The fund requires an enabling environment supported by the country's government to evolve Social Funds: From Responses to Emergency to Development 55 into a development-oriented institution. These changes cannot be brought about in the short term, just as they cannot be realized without the simultaneous transition by other government institutions to a more participatory direction to development. Discussion Participants debated whether infrastructure projects executed by minis- tries and line agencies have less cause to suffer from technical problems. that reduce their useful life as compared to those executed by funds. When projects are executed by technically weak entities, be they com- munities or municipalities or contractors that are not technically adept, poor design can impact their useful life. Inadequate arrangements for project O&M have been another important factor in the reduction of usefulness. Focusing on the links between sustainability and project quality, the discussion reviewed experiences, attempting to strike a bal- ance between community involvement and the sustainability of projects. * To bring about a better balance between community involve- ment in project implementation and the quality of projects de- livered, the social fund in Eritrea undertook an intense com- munity capacity-building exercise despite the significant im- plications for overhead costs. As an emergency response mechanism, the social fund had been successful in terms of quantitative indicators. There were, however, marked short- comings in the quality or works delivered, rendering sustain- ability of investments questionable. The government chose to coordinate the allocation of resources between the MOF and the line ministries so that ministries would be committed to include social fund projects in their budgeted plans. * The social fund in Mexico is focusing on strengthening the tech- nical and administrative capabilities of municipalities and com- munity organizations that participate in social fund subprojects to stress sustainability. In its experience the quality of public works has been poor, regardless of who executed projects, gov- ernment agencies or community groups. There is, however, a striking difference in the willingness of communities to par- ticipate in the O&M arrangements for projects executed by the fund, as opposed to projects executed by public agencies. * In Angola, the social fund is positioned as an autonomous in- stitution under a technical ministry with partnerships with line ministries, NGOs, and local organizations. The social fund has set up nine decentralized technical teams that work directly with communities. Communities contribute 10 percent of the project funds directly and receive 90 percent of the funds via written contracts with representatives of the community, be it a church or another NGO. The social fund then gives technical support to communities to maintain the quality of the infra- structure that is delivered. 56 A Close Look at the Key Issues Focusing on the differences among mission, attitudes, orientation, and the changes in skill mix required when a social fund transitions from a short-term to a long-term institution, the discussion explored questions such as: What are the implications of the transition for the scope of ac- tivities and the sectoral emphasis of investments that a social fund sup- ports? What are the changes in modalities that affect procurement re- quirements, coordinating mechanisms with ministries, and community participation? * The initial scope of activities supported by the AGETIP in Senegal was to meet the very short-term needs of employment generation. By its third phase, the scope of activities had ex- panded to integrate local government activities with those of the AGETIP's, so that it did not substitute for local govern- ment. The initial staff skill mix that focused on contract man- agement changed to include expertise in municipal finance, local government development, participation, and aptitude that facilitates the adoption of appropriate technology. An important distinction was made on the issue of staffing needs: staff- ing was not always related to the current phase of the social fund; it has to be geared to respond to the general needs of the country as well. * The social fund of Yemen, in order to make inroads into the tradi- tional social system of the country, hired women community de- velopment officers in its very first phase to facilitate interaction and involvement of women as well as men of the community. There was some agreement that transitioning social funds could be clas- sified broadly into three stages of evolution, from the first stage when they distance themselves from existing government institutions to a tran- sition that focuses on developing more harmonious relationships with government agencies. * The first stage of a social fund can be described as one of very little insight, high visibility, and ability to deliver infrastructure quickly without asking itself too many questions. Staff with strong technical skills is characteristic of this stage with significant num- bers of architects and engineers. * The second stage has more development-oriented vision, when questions about the sustainability of infrastructure begin to be asked: project quality, design standards, and financial sustainabil- ity from the perspective of O&M. Technical skills evolve to a higher level of sophistication, and technical alternatives for the design of the infrastructure are likely to be explored. * The objectives of the third stage could be distinguished by a move away from delivering infrastructure to building sustainable com- munities through the delivery of infrastructure. At this stage, the staff skill mix changes to include professionals with greater com- petence in issues related to social organization, so that technical solutions can be modified as appropriate for the social context. Social Funds: From Responses to Emergency to Development 57 Substantial discussion focused on the evaluation of social funds as they graduate from the emergency stage. Clearly evaluations had to take into account the changing objectives of social funds as they tran- sition. What indicators could be used to measure success? Who should conduct the evaluations? Concern about the objectivity of self-evalua- tions was expressed, because they may not be independent of the implementing agency. Quantitative indicators based on short-term measures indicate that so- cial funds have been effective and efficient as institutions; however, when they move toward a more development-oriented focus, quantitative in- dicators of progress become less useful in determining how effective and efficient a social fund is. Experience has shown that social funds that conduct beneficiary assessments as part of their own learning pro- cess, not only to fulfill donor requirements, acquire the capacity of de- veloping tools and outreach instruments that are much more effective than quantitative indicators. Recommendations * Social fund objectives need to be redefined within the national poverty reduction strategy and integrated with sectoral poli- cies. Their investments should concentrate on the neediest re- gions and communities. * While support at the highest political levels is necessary, funds can be protected from political interference by a stringently defined mandate and beneficiary selection criteria. * Funds should consider retraining their personnel in capacity building within communities and NGOs. They should obtain staff specialized in social sciences who can be effective within the new mandate for community participation. * The quality of projects needs to be sustained. Indicators need to be defined for participatory processes, institutional devel- opment, and improved quality of life in target communities, so that reliable evaluations can be conducted. 8 Parallel Thematic Session: Financial Resource Mobilization for Social Funds Session Leader Hussein El Gammal, Managing Director, Social Fund for Development, Egypt Resource Persons Jay Chaubey and Michael L. 0. Stevens (WB) Facilitator Anis Dani (WB) Session expectations In examining the problemsfaced by a socialfund when its mandate is widened and its life extended, this sessionfocused on three major concerns: (1) the "dependency syndrome" that can jeopardize basic structural adjustment measures; (2) raising beneficiary expectations in afinancially unpredictable environment; and (3) shifting donor priorities. How can these concerns be addressed in the design of a social fund? A desired outcome of this session was a set of design recommendations for the optimal financial structure of a social fund and for the financial sustainability of its operations by raising resources in the national context. Main Points of the Presentation Objectives The main objective of the presentation was to illustrate how a long-term perspective, since its inception, has guided the design and development of the Social Fund for Development of Egypt (SDF) and the issues and challenges it faces, as it strives to become financially sustainable. As a consequence of its strong emphasis on finding sustainable approaches that can be emulated by government agencies over the longer term, the social fund has attempted to facilitate the forging of relationships be- tween organizations that can be transformed into more permanent and financially sustainable units over time. Programs of the The five core programs that the SDF supports are: Social Funds for * The Public Works Program provides part-time jobs through labor- Development intensive works using local labor. It has the added benefit of pro- viding improved transport between villages, as well as making improvements in water supply, drainage, and sanitation. * The Community Development Program finances income-generation and employment-creation activities, social development projects, im- proved delivery of essential community services, credit for working capital and equipment for household production, grants for estab- lishing and maintaining primary health care, and vocational training for youth and the unemployed. 59 60 A Close Look at the Key Issues * The Enterprise Development Program provides credit and techni- cal assistance packages that include training for entrepreneurs in marketing and management. It generates permanent jobs for about three to five employees per loan and delivers training to aid the success of microenterprises. * The Labor Mobility Program, without subsidies from the gov- ernment, provides local industries and small entrepreneurs with the following: appropriate training to upgrade skills in areas where the demand for trained technicians exceeds the supply; training to facilitate skills development for labor affected by public sector layoffs; labor restructuring; and retooling of specialized vocations to meet the demands of the market. * The Institutional Development Program focuses on capacity build- ing of intermediaries and NGOs. Rationalefor In the absence of a critical impact, a fund risks being judged unworthy assessing scale of of merit. The SDF believed that the community, government, and re- interventions gional unemployed groups would perceive that it had contributed to creating jobs only if it generated at least 10 percent of the jobs required by national targets. This approach of setting a threshold for targeting and creating impact guided the assessment of financing requirements for all programs. The structure of SDF's organization structure was designed to be flexible and to facili- linkages between the tate the mainstreaming of pilot methodologies into the workings of min- fund and the istries and government departments. This was important to enable the government's dynamic transformation of government entities from delivery-oriented agencies to policymaking and strategic planning organizations, as decentraliza- tion advanced and reforms became entrenched. The fund is established as a quasi-government agency, with its board consisting of government and nongovernment actors: the chairman of the board is the prime min- ister who chairs Egypt's Council of Ministers as well as the Council of Governors, thereby ensuring political support at the highest level. There are ten ministers on the board of directors, thus enabling synchroniza- tion of SDF's plans with relevant government agencies. Six public fig- ures representing the private sector and civil society are members of the board, thereby assuring the responsiveness of the fund to the needs of the private sector and the people. A regional SDF office is in each of the 26 governorates, where it manages core SDF programs and the execu- tion of subprojects. Issues that the SDF is Egypt's SDF is likely to be confronted with the following two issues: the groping to address problem of a dependency syndrome, and the problem of sustainability. A dependency syndrome characterizes the risk of the government devel- oping unrealistic expectations of the SDF and attempting to transfer the blame for its own failings onto the SDF. The involvement of key minis- ters on the fund's board should keep the government aware of both the potential as well as the limitations of the SDF and help defuse undue accusations of failure if the need arises. Financial Resource Mobilizationfor Social Funds 61 Sustainability refers to subprojects financed by the SDF and to the SDF as an institution. The SDF has managed to achieve a reasonable degree of sustainability of subprojects by requiring a certain amount of financ- ing from sponsoring agencies before the implementation of public works projects. Sustainability of the institution, however, is a more complex issue. Mobilizing donor resources requires confidence-building in the effectiveness of the program as well as in the use of resources. This takes time. At any point during this process, donor priorities or goals may change, and funds, like the SDF, need to be sensitive, proactive, and responsive to such situations. Discussion The discussion focused on the difficult issues of governance and public sector management deficiencies that contribute to the need for a social fund and on the relationship between a fund and the government's machinery. The discussion addressed the immediate concerns of man- aging a social fund and its appropriate institutional roles when a social fund's life is extend ed. The following issues were raised during the discussion: * Funds are justifiable instruments during periods of adjustment, when the government has a limited capacity for domestic resource mobilization, as well as in situations where government is miss- ing or weak, that is, where the ministries lack capacity to deliver antipoverty programs or are unable to deliver services as effec- tively as a fund. * Development agencies recently expressed the view that gains of macroeconomic reform can erode very quickly, perhaps in two or three years, unless the social and economic enhancement of target groups is pursued for a longezr time. The kinds of ac- tivities a fund typically finances need to be supported for a rea- sonable number of years beyond the achievement of economic stabilization. * Social funds have demonstrated that they can be catalysts for change. They have helped focus attention on expenditure deficits in social sector ministries, generated additional resources for them, and improved their levels of effective spending. * Social funds expect a commitment from their governments to bet- ter define the roles of line ministries, whether it is service delivery or policymaking. This clarification is essential if continued finan- cial support for social funds is to be meaningful. Concern was expressed about the pressure often applied by develop- ment agencies to replicate one model of a fund in all countries, regard- less of the specific contexts. Dependence on donor finance prevents funds from developing the indigenous approaches that are necessary for success. 62 A Close Look at the Key Issues * The Ecuador social fund depends completely on external donor finance. Although raising resources for its second phase was easier for the social fund than for its first phase, donors seemed inflex- ible in allowing the social fund to develop an approach that was country-specific and more suitable to local needs, despite the suc- cess of the first phase. * The social fund of Zambia, a direct descendant of the Bolivia so- cial funds, encountered a lack of flexibility in external donors during preparation of its first phase, as they attempted to repli- cate the Bolivian experience. Consequently, during implementa- tion, provisions and procedures had to be constantly revised and adapted to the Zambian context. However, preparation for the second phase was done entirely by the Zambians, and the credit agreement was negotiated with the World Bank on the basis of the Zambian position. * The Egypt social fund encountered initial resistance from donors, especially U.S. Agency for International Development (USAID), to programs for job creation through small and microenterprise development and execution of labor-intensive public works. It was under pressure to restrict its activities to financing severance pay for workers made redundant by privatization and some income- generating activities for low-income groups. It took two years of negotiation to arrive at an "Egyptianized" concept of a social fund. The discussion then focused on a search for ways to replenish funds, once the first tranche of donor funds was exhausted. What can social funds do? * Benin's capacity to reimburse loans, even when they are on soft terms, is limited, given the country's indebtedness. If the govern- ment did not request more financing, managers of social funds had to imitate managers of a commercial enterprise. They ex- plained the philosophy of the fund's activities to arouse donor interest and then solicited financing from them. Donors appeared more willing to underwrite the fund's programs after the success- ful pilot phase, which had been supported by the World Bank. * When the Egypt SDF found that all its resources would be com- mitted sooner than expected, it began requesting replenishment from donors using two arguments: first, that the economic re- form envisaged was far from complete and if employment was not generated, social unrest could jeopardize any gains made; second, given the success of the first phase, replenishing the so- cial funds was reasonable so that the fund could continue to ex- pand its operations. There was participant agreement that possibly the only way for a fund to tackle structural poverty was to support productive projects. International banks, however, are reluctant to support productive projects, particularly when they involve land purchase or land reform. The discussion then focused on strategies that could eventually help a fund to graduate from dependence on external donor finance. If a fund Financial Resource Mobilizationfor Social Funds 63 concentrated on the development of enterprises and microenterprises, could such programs be made self-sustaining over time with the creation of mechanisms like revolving funds? Was there experience with other ways of financing microenterprise development? * The World Bank is supporting Bangladesh's Poverty Allevia- tion Project, which is similar to a microenterprise program that a social fund is likely to support. The US$100 million credit goes to an NGO and is used entirely for microcredit. Initially the NGO was supported directly by the government, but after several years of operation, the government requested support from the World Bank. * By the end of its first two phases, Egypt's SDF will have capital- ized about US$600 million to US$700 million with its Enterprise Development Program, making the fund about 60 to 70 percent sustainable by the year 2000. The interest rate charged to benefi- ciaries of the program is significantly higher than the interest rate the SDF has to pay. In April 1995, the SDF's obligation to the gov- ernment of Egypt was discharged. By 2000, the Enterprise Devel- opment Program is expected to transform into a sustainable insti- tution that will facilitate the leveraging of credit and technical assistance from a multitude of banks and agencies. On cost recovery for infrastructure projects, participants agreed social funds should not rely too much on written agreements with line agencies and other government entities for recurrent costs, because they are often not backed by available resources. Private management of services and build-operate-transfer types of projects for operations and maintenance of infrastructure were suggested as possible avenues for recovering re- current costs. Social funds could learn from other programs that success- fully manage cross-subsidized repayments from different user groups and perhaps emulate them to enhance cost recovery. Recommendations * Credit programs should be an element of social funds to facilitate the creation of a revolving pool of resources. * As social funds mature, they should try to mobilize resources from local institutions and donors and eventually to borrow from com- mercial sources. * Social funds should raise additional resources through financial participation of the community, which can supplement public in- vestments in rural areas. * The mandate of social funds should be flexible, so that they may eventually transfer to line ministries or to local governments ac- tivities that are their ultimate institutional responsibility, while retaining those that do not belong to other institutions. * Their organization should be parallel to that of the government, so that their activities can be in ]ine with the policies and plans of ministries and sector agencies. 9 Parallel Thematic Session: Role of NGOs in the Design, Management, and Implementation of Social Funds Session Leader Jane Covey, Executive Director, Institute for Development Research, United States Resource Persons Carmen Malena and Adriana de Leva (WB) Facilitator Voltaire F. T. Andres (WB) Session expectations In examining the institutional autonomy of socialfunds, the demand-driven nature of project proposals, and broad stakeholder participation, this session assessed the level of interaction be- tween socialfunds and nongovernmental organizations. Its outcomes were recommendationsfor (1) a greater role for civil society in identifying social funds as antipoverty instruments; (2) the use of socialfunds as vehicles for strengthening community organizations; and (3) the creation of a stronger role for socialfunds in the definition and implementation of a national social policy. Main Points of the Presentation Objectives In posing the question "Are social funds, as currently structured, governed, and implemented, actually bringing to the poor commu- nities and target groups the benefits they are intended to bring?", the presentation's objective was to expand the discussion beyond the narrow goals of social funds to the longer term development needs in a country. Based on the World Bank evaluations of social funds as well as on the critiques of social funds by the NGO sector, the pre- sentation aimed to inform on advocacy efforts and to foster a policy agenda for dialogue and action on issues that are of particular con- cern to NGOs. The NGOs' The three defining characteristics of social funds are (1) autonomy, perspective on social (2) responsiveness to demand through demand-driven projects, and funds (3) stakeholder participation. Autonomy Administrative flexibility and political independence are conceptu- ally important elements that contribute to autonomy, which is a real strength of social funds. Stronger public accountability mechanisms could help protect the political autonomy of funds. The achievement of autonomy would be facilitated by stakeholder participation in the decisionmaking at local, national, and subnational levels. These stake- holders 'must include representatives of poor groups that are the in- tended recipients of social fund investments. 65 66 A Close Look at the Key Issues * The Jamaica social fund includes mechanisms for ensuring au- tonomy, in large part due to the lobbying and advocacy of the NGO Council of Jamaica. Two of the seven seats on the na- tional board of the social fund are allotted to civil society rep- resentatives. As a result, the people whose mandate is the wel- fare of the ultimate fund stakeholders have a part in the decisionmaking for the governance of social funds. These rep- resentatives of civil society should be able to influence the macro design issues of the fund that are of particular concern to the NGOs. Responsiveness to For a social fund to respond to demand, the capacity of recipients to demand through demand a project is essential and critical. In the absence of this, social demand-driven funds cannot respond to the priorities and concerns of poor communi- projects ties. Improving the capacity of a community to express its needs is es- sential for the effectiveness of funds. How can the voice of the commu- nity be heard and expressed in an effective way? How can consultation and participation be brought about, not just with the private sector con- tractors, intermediaries, and NGOs, but with the community? In some countries, under some conditions, at the point of inception of a social fund, there may be no effective way to institute consultation and par- ticipation: communities may not be well organized, institutional infra- structure at the community level may be lacking. This is an area of par- ticular concern to NGOs. * In Sao Tome and Principe, the social fund had to eliminate one of a social fund's defining characteristics: the demand-driven nature of projects. Communities were unable to select projects they felt would be most helpful for them. The project's menu consisted of preappraised projects, because the social funds did not perceive communities as organized adequately to ask for what they wanted and needed. Investing in immediate in- terventions was considered more important by the social fund than investing in the longer process of developing community capacity to demand projects throughout the country * In Guatemala, a 1994 study found that there was a lack of community or NGO involvement, even in cases where the funds professed community ownership of projects. Rapid dis- bursements were favored over community organization and participation. Schools were built five times faster than the rate at which line ministries deliver school buildings. A 1996 study of the same fund found that in most cases no mechanisms were in place to encourage local organizing and priority set- ting, and the local people perceived social funds as penaliz- ing such activities. Stakeholder Of the three defining characteristics of social funds, stakeholder partici- participation pation should be considered the predominant one. Of particular con- cern is the fact that ill-timed and inadequate stakeholder participation results in the poor macro design of funds. Consequently, mechanisms Role of NGOs in the Design, Management, and Implementation of Social Funds 67 for establishing community processes that may be appropriate to a par- ticular culture or capability are not established. Inappropriate menus of subproject options that do not lend themselves easily to sustainability at the community level are developed. As funds are maturing, the rea- sons for analyzing tradeoffs between emergency and long-term invest- ments are of great importance to NGOs and to the communities they work with. * The social fund in Argentina consulted with selected target communities to define subproject menus. Many NGOs have a seat on the provincial bodies that decide which communities are eligible for the support, thereby being involved to some extent in the governance of the fund. * The Zambia fund's primary partner is the community, as op- posed to other intermediaries. Communities have decided to focus on human capital development. They have chosen longer term development processes over emergency interventions. Questions for the Limited local capacity is an often cited constraint for the expression of session discussion local demand and priority setting. Adequate capacity requires invest- ment in almost all parts of the developing world. The NGO sector feels that, so far, tWs has not been addressed systematically. What are the priorities for local capacity building? Whose capacities should be built? How should this process be undertaken? How should it be financed? What is the role of a fund in promoting or supporting government and civil society cooperation at the local level? What structures and processes can ensure participation in governance? What does it take to create a "place at the table" for civil society, and what process will allow its voices to have influence? How can communities be included in the design and evaluation of projects? How can evaluations be an ongoing process for bringing about continuous improvements? What are the payoffs and returns on investments in community participation beyond those that accrue to projects themselves? How can funds be integrated into the local development processes? What mechanisms can facilitate the in- volvement of civil society in the debate on funds and their role in the articulation of a social policy at the national level? Should civil society be involved in a debate concerning funds and the broader issues of mac- roeconomic policy? What are the critical concerns that NGOs bring to that debate? Discussion Community participation was seen as important an issue to poverty re- duction goals as the provision of services and infrastructure. There are, however, conscious and subconscious constraints to facilitating partici- pation, the foremost of them that participation implies the distribution or the sharing of power. While funds increasingly acknowledge the importance of community participation, guidelines and resources for them to invest in these areas are inadequate or missing. Meaningful and equitable participation requires 68 A Close Look at the Key issues activities such as broad-based information sharing with a community, participatory needs assessment, consultation with marginalized groups, facilitation of collective decisionmaking, consensus building, formation of local organizations, and training. These activities cannot occur sponta- neously, nor can they be implemented free of cost. The participants felt that ensuring community control and community decisionmaking authority as part of project activities was important. NGOs and community-based organizations should not be considered representatives of the community or voices of the poor. Investments in capacity building are needed at all levels; they are not confined to com- munities or NGOs alone. . In Zambia, experience has shown that, without the involve- ment of sector ministries and district staff, government agen- cies and communities were unable to sustain their interaction with one another after a project was over. Where NGOs had been used as intermediaries, while the quality of works was better and projects were implemented within a shorter period of time, there was little community ownership as projects were seen as belonging to Oxfam or Save the Children or some other NGO that had been involved. * In Egypt, the capacity of NGOs to manage programs profes- sionally is a critical issue, especially because most NGOs have a charity advocacy mindset. The challenge for the Egypt fund is going to be to train NGOs to do community development work outside the sectors they specialize in and to train them to mobilize and raise funds. In recent years it has become increasingly common to consult with NGOs in the design of a fund, but these consultations frequently have been frustrated by a divergence in the expectations of the parties involved. Many NGOs are concerned with policy issues related to broader na- tional social development and poverty reduction strategies. The extent to which NGOs can engage in policy discussions effectively, however, depends largely on the national context. Funds are also perceived by many, precisely or erroneously, as instruments of social policy. As such, they may have to interact with NGOs as full-fledged stakeholders in development policies, in addition to soliciting their advice and techni- cal assistance in subproject implementation. Government indifference or suspicion toward NGOs was identified as a key constraint to participation of NGOs in government-supported pro- grams. To increase the potential of NGO involvement, funds could first of all recognize the importance of community capacity building and then broaden their scope from an exclusive emphasis on investments in in- frastructure to include investments in people and processes and then budget accordingly. Role of NGOs in the Design, Management, and Implementation of Social Funds 69 Recommendations * Social fund programs need to be integrated into a national public investment in long-term poverty reduction, making use of NGO participation and help in preparing country as- sistance strategies. * The World Bank should study the role of social funds in mac- roeconomic policies. * Donor agencies should negotiate with national governments the roles of NGOs and civil society in the management, de- sign, implementation, monitoring, and evaluation of social funds and formally inscribe these roles in project documents and contractual agreements. * Social funds should allocate specific budgets for the participa- tion of community-based groups in their activities, parallel to but separate from the financing of NGO interventions. * Capacity-building activities should become a full-fledged com- ponent of the social fund menu, instead of being merely part of administrative overhead costs. 10 Parallel Thematic Session: Decentralization, Local Governments, and Social Funds Session Leader Patricia de Jager, Director, Federation of Municipalities of Central America, Guatemala Resource Persons Tim Campbell and Anwar Shah (WB) Facilitator Reidar Kwam (WB) Session expectations In examining decentralization and the functional links between municipalities and social funds, this session focused on three major themes: (1) the strengths, weaknesses, and comparative advantages of socialfunds and municipalities in the 1980s; (2) the changes that have taken place within municipalities with the advent of decentralization in the 1990s; and (3) the impediments to decentralization posed by the current structure of socialfunds. A desired outcome of this session was a set of recommendationsfor reorienting socialfunds to support decentralization and the role of municipalities in social development. Main Points of the Presentation Objectives The main objective of the presentation was to discuss a methodology that promotes coordination among the actors in development, includ- ing social funds, to make development effective and sustainable through the advent of decentralization. Municipal If local governments are to keep the welfare promises made to their con- government stituencies, they need to develop the institutional, financial, manage- responsibilities and rial, and technical capacity to perform in a manner commensurate with needs in Central their responsibilities. Municipal governments need assistance in pro- America moting participatory democracy, enhancing the generation and collec- tion of local revenues, and training staff to improve their technical and administrative skills. Innovative and appropriate mechanisms for the redistribution of rev- enues need to be devised and established to prevent the gap between municipalities and communities from widening. Budgetary transfers from central to local governments need to be direct, transparent, timely, and automatic to enable local governments to plan their operations. Recommendationsfor A series of forums attended by mayors and specialists have been taking advancing place in Central America to discuss the role of social funds. The objec- decentralization tive of these meetings and discussions were to: define guidelines for future relationships between funds, local governments, and NGOs; ar- ticulate recommendations for actions and agreements between funds 71 72 A Close Look at the Key Issues and municipalities in order to advance decentralization and eliminate the hierarchical relationship between them; and strengthen local gov- ernments in Central America. In those forums the Federation of Munici- palities of Central America (FEMICA) presented a six-step proposal to achieve these objectives: Step 1 In order to facilitate the coordination of actions at the local level, a general agreement and specific agreements should be endorsed by the National Association of Municipalities. Municipalities should be cat- egorized according to a poverty index, which will be the basis for their required contribution to the implementation of subprojects. The agree- ment must spell out the financial contributions, technical requirements, implementation, and operations and maintenance responsibilities of all the actors involved: funds, line ministries, and local governments. Agree- ments for subprojects must be accompanied by a commensurate and timely transfer of resources. Step 2 A support committee including beneficiary representatives should be created at the local level to ensure the sustainability of investments. The support committee must include representatives of project benefi- ciaries and of the municipality and must identify available labor for project execution. It should exercise control over the construction and supervision of projects, provide leadership to stimulate and coordinate the collection of user charges and fees, and pursue adequate operations and maintenance of works. The management and operation of completed projects should be jointly shared by and be defined by specific agree- ments between the support committee and the municipal department of public works. Step 3 Municipal investment priorities should be determined by the munici- pality in conjunction with its constituents. Local governments must define creative strategies to facilitate dynamic and participatory plan- ning. Investment plans must consider municipal annual budgets and the resources available. Where such plans do not exist, proposals should be prepared, debated, and developed within the public forums that are provided for the legal framework. Step 4 The municipal government and the community should be responsible for the management of resources and contracts for the execution of projects. Funds, through financial support, transfer of technical knowledge, and exchange of personnel, should train municipalities to pursue in-depth preinvestment studies, spell out eligibility criteria, and develop techni- cal specifications and project designs. The use of local contractors, NGOs, and local materials should be ensured to facilitate the generation of local jobs, strengthening the local private sector as well as reducing costs. Step 5 Socialfunds should build up the capacities of local governments. They can do this by facilitating and supporting the training of municipal gov- ernments in public administration, municipal finances, municipal ca- dastre, tax collection, and the setting of tax rates and user charges. Step 6 Local governments of larger urban areas should create their own social municipal fund. Counterpart contributions to implement projects could Decentralization, Local Governments, and Social Funds 73 vary in accordance with the classification of municipalities on a poverty scale. The fund could provide resources for operations and maintenance to line ministries, where decentralization has not already taken place. It could be financed from transfers of municipal current savings accounts, central government transfers, other resources received by the munici- pality and community, and neighborhood-generated revenues. Discussion Since Latin America has experienced a proliferation of funds at both national and municipal levels, the discussion focused on lessons re- lated to resource allocation and implementation. Issues and prob- lems of targeting, differences in the perception of local development priorities between different tiers of government, comparative advan- tages of different institutions in delivering different products and services, and the importance of project software and hardware framed much of the discussion. Participants agreed that decentralization needed to be an integrated ef- fort and to cover society as a whole, not remain confined to government functions. What were the experiences with decentralization in Latin America? How long does it take to enhance the role of municipalities in the social sector? * In Chile, since decentralization has been enforced, more than 20 percent of the overall investment budget is transferred to local governments. The social fund itself has decentralized re- gionally. Its resources are allotted based on development strat- egies prepared by regional governments and supported by the fund to facilitate negotiations with the central government. De- cisions about resource allocation to municipalities in a region are based on the municipalities' ranking on the poverty scale as well as on the willingness of the municipalities to invest their own resources. Within a municipality, the municipal council decides which vulnerable groups should receive the investment. * Mexico initiated its decentralization process in 1990. Within the five or six years after the process was set in motion, decen- tralization touched the population at large and municipalities came to be viewed, not just as top-down institutions, but as the main link between the public sector and communities. In these municipalities, the community manages resources trans- ferred to them; it is in charge of procurement and executes and manages the works. Substantial discussion followed on the capacity of municipalities to un- dertake such tasks under decentralized systems, but the participants remained divided on whether there was a certain order or pace that should be followed when implementing decentralization. It was defined more as a wave that had to be ridden when it appeared, rather than as a planned event. 74 A Close Look at the Key Issues * In West Afrca people with university degrees are rare. The move toward decentralization in the main and secondary cit- ies can be criticized on the grounds of inadequate municipal resources and scarce capacity. However, the, perception of the people is that "it can't be worse than what we had: we had no services, all the power was concentrated in the national capi- tal, and we had no local power." Even if fiscal reform in Africa could be immediate, and revenues of local governments could be doubled or tripled, municipalities would still not be able to provide necessary services because their initial revenues are so low. As a result, municipalities have to create partnerships with local actors to find new ways of producing goods and delivering services. Exploring what should come first, decentralization or institutional strengthening of municipalities, the discussion focused on necessary conditions, prerequisites, adequate access to resources, and enabling frameworks for decentralization. * In CentralAmerica, despite political decentralization and may- oral elections, there is as yet no political will to enforce admin- istrative decentralization. Given the acute levels of poverty, however, the municipalities in the region are unwilling to wait for institutional reforms to be in place, given the mandate to act in the social sector. * The concept of decentralization is strongly embedded in Zimbabwe's constitution. Local governments are explicitly rec- ognized, and decentralization is seen as a rational basis for revenue sharing in the country. However, local government development is constrained by the legal framework, which prevents municipalities from generating their own revenues and becoming self-sufficient. * In accordance with the policies of Nicaragua, local govern- ments are entitled to 2 percent of the sales tax collected. This percentage is, however, often reduced by the central govern- ment, and no replacement is provided. It is not possible to ex- ercise the autonomy that comes with decentralization in the absence of financial autonomy and without the prerogative of generating revenues. On the role that social funds could play in facilitating decentralization, the participants agreed that finding a way to link investments made by funds with municipal development objectives was important, so that funds could become a new tool to give real meaning to decisions made by locally elected leaders. Decentralization, Local Governments, and Social Funds 75 * In Nicaragua, the social fund, with the support of the Inter- American Development Bank and of the World Bank, is initiat- ing training and management programs for local governments. * The social fund in Mongolia includes in its program capacity- building activities for national, regional, and local govern- ments, as well as for NGOs and grassroots organizations. * In Trinidad and Tobago, the Ministry of Social Development organizes workshops to train the staff of local governments and of NGOs together to enable them to articulate their view of the country's development needs and facilitate their advo- cacy efforts for change. In addition, pilot projects are imple- mented to stimulate communities to define their own needs and formulate their own projects. While recognizing the role of social funds as catalysts for participatory planning, the participants felt caution should be exercised, because too many development mandates could be assigned to a single institution. The efforts of a fund in promoting decentralization need to be carried out within the context of national strategies, in which the wide array of de- velopment actors have clearly defined roles. There was consensus that the objective of funds is not to promote democracy, but rather to promote processes that strengthen the development of human and social capital. Recommendations * Local governments should avoid replicating centralized decisionmaking processes and ensure that investment deci- sions are participatory and taken at the lowest appropriate level. Furthermore, local governments should ensure the prin- ciples of subsidiarity, transparency, and accountability in the use of their resources. * Local governments must strengthen and diversify their finan- cial resource bases through better revenue collection, as well as through the identification of local sources of revenue and the increase of national transfers. * Social funds should enhance its coordination of efficient local social investment and work closely with municipalities to en- sure the sustainability of projects. * Where decentralization is in place, social funds should foster the creation of municipal funds for local social and economic development, assist municipalities in obtaining access to ex- ternal sources of funds, and transfer their expertise in identi- fying locally needed subprojects. 11 Parallel Thematic Session: Social Funds, Private Sector Development, and Microenterprises Session Leader Lamine Ben Barka, Director, AGETIPE, Mali Resource Persons Bikki Randhawa and Peter Watson (WB) Facilitator Fredrick Edwin Nunes (WB) Session expectations This session, highlighting the success of AGETIPs in the areas of private sector development and employment creation through delegated contract management and the promotion of labor-intensive techniques, was expected to address the following questions: (1) How to ensure a sustained volume of work in the future to keep newly created enterprises in business? (2) How can these enterprises trans- form themselves to be able to compete for contracts requiring a higher level of technology? A desired outcome of this session was a set of recommendations for sustaining the gains made by the private sector through the investments made by AGETIPs. Main Points of the Presentation Background When the AGETIPE was set up in Mali, urban areas were marked with high unemployment rates and growing social tensions that required quick intervention to generate jobs and avert crisis. The only sector that generates jobs rapidly and efficiently is the public works sector; hence, it was chosen for the social investments. Traditional The government was the main source of contracts for public works. management of public However, the construction sector was marked with lethargy. No policy works to promote the development of the private sector existed. Public works procurement procedures were cumbersome, redundant, and not trans- parent; there were long delays in making payments for contracts ex- ecuted, often up to two years. The limited market for construction con- tracts was accessible only to the larger companies; small companies had no access to bank financing and were not competitive on account of their size and their limited financial, technical, and managerial capacities. While there are many urban centers in Mali, they were devoid of any business activity. Before AGETIPE, all project proposals could originate only from Bamako, Mali's capital city, and companies could access bid- ding documents only in Bamako. Creation of The main objective of the Mali AGETIPE, set up in 1992, was to reduce AGETIPE Mali urban unemployment by generating jobs through the execution of public 77 78 A Close Look at the Key Issues works and labor-intensive construction techniques. As AGETIPs of West Africa have become specialized over time in the delegated contract man- agement of public works, their objectives have broadened to encompass: (a) improving the performance of small-scale construction companies in the implementation of contracts; (b) enhancing their capacity to execute a wider range of contracts; and (c) improving the technical skills of indi- vidual workers. As delegated contract management companies, AGETIPs do not have their own assets, but they manage roughly 10 percent of the total investment in the construction sector and have generated roughly 20 percent of the jobs in the sector since their creation. Of the initial fund of US$240 million made available to AGETIPE, 30 percent came from Mali's national budget. Guiding principles To realize these broader objectives, AGETIPE took the following steps: * It enabled project proposals to be issued in the cities where the works were to be carried out. Contractors therefore had to as- sess local conditions before making their bids. An added ben- efit of this measure is the generation of commercial activity in secondary cities. * It adopted procedures that enabled AGETIPE to move to the pro- curement phase within ten days of issuing a project proposal. * It reduced the deadline for payments to enterprises to a maxi- mum of a fortnight upon submission of a request for payment. This procedure enables quick reimbursement to a company that can then execute its work within contractual deadlines. * It prequalified a number of existing consulting groups and con- tractors based on capacity classifications. This enabled fair com- petition for all companies with the same capacity. Being prequalified by AGETIPE and thus indirectly selected by the state,. companies can access tenders much more promptly. * It catalyzed the development of a "contract culture" among com- panies by requiring adherence to a basic code of ethics. This code requires companies to acquire insurance policies to protect them- selves against potential problems in the implementation of works of public interest. * It lobbied the banking sector for its agreement to guarantee small companies. Experience has shown that companies executed work in accordance with contracts and that it has not been necessary to call upon bank guarantees to complete works. The banking sec- tor has come to trust the private sector over time. * It established a training component to improve the technical ca- pacity of companies, targeting training on management, admin- istration, finance, and technical supervision of building sites. Major impacts of A far-reaching impact of the AGETIPE in Mali has been the introduction of AGETIPE in Mali an era of entrepreneurship. This has: * Established confidence between the government and the private sector. Social Funds, Private Sector Development, and Microenterprises 79 * Changed the fundamental relationship between the banking sector and the construction industry. * Helped numerous enterprises upgrade from an informal to a for- mal status. * Catalyzed significant activity in the construction materials industry. * Facilitated a considerable increase in the number of actors that participate in the sector: engineers, graduates fresh out of univer- sity, laid-off government workers, specialized workers wanting to work independently, businessmen setting up their own com- panies, and so on. * Supported an entire informal sector of food sellers and various re- tailers around construction sites. * Enhanced the technical capacity of the sector to a point where no company's bids are turned down because of noncompliance with tender specifications. * Resulted in an injection of more than $100 million into the country's economy. About 80 percent of the money invested by AGETIPE cir- culates in the national economy, as compared to 5 percent in the past when contracts were executed by foreign companies. Unresolved issues for Several issues and questions must be addressed with respect to the future thefuture demand of public works. Sustainability of the companies thathave appeared in the wake of the AGETIPE is questionable in the absence of a flow of contracts. Their future growth in the financial capacity of these companies and their relationship with the banking sector must be considered. Should future contracts prescribe a higher degree of technological complexity? Should small-scale companies be given more technical support? How can the government maintain a critical mass or a continuous stream of invest- ments in the public works sector to keep these companies in business? Discussion The discussion revolved around how the experience of AGETIPs in the construction sector could be extended to other sectors. The payment of 20 percent of the contract amount before startup, normal in the construction sector, is not the case in other sectors. The lack of start-up capital was seen as an important constraint in stimulating the creation of enterprises in other sectors. How can small-scale enterprises get access to credit? * Most social funds in Latin America have subsidized financial intermediaries to on-lend to the final small borrowers. One exception has been Banco Sol, a commercial bank in Bolivia. This bank is one of the few commercial banks in the world that is catering to the poor and has reached financial independence. * The social fund in Chile started out by giving commercial banks a 12 percent subsidy on the capital on-lent to cover transaction costs. In the last five years as commercial banks have discov- ered that poor borrowers do not necessarily imply higher credit risk, these subsidies have been reduced by half, and financial sustainability of credit programs for the poor is within reach. 80 A Close Look at the Key Issues Although microfinance programs need to be established to promote the development of the microenterprise sector, the participants felt it was unclear whether social funds and AGETIPs had a comparative advan- tage in undertaking these kinds of activities. Cases where social funds have supported the development of sectors other than public works through microfinance activities have represented only 10 to 15 percent of the social fund's disbursements. The public sector, which is the contracting agent, is able to control the demand as well as the supply of infrastructure contracts by helping en- trepreneurs develop and enhance their technical capacity. This is not so in other sectors, because the demand for services depends on the gen- eral growth of the economy. AGETIPs could intervene successfully and respond to demand in other types of public-sector procurement, such as uniforms for soldiers, policemen, and nurses; sheets for hospitals; food for ministries; and so on. It is conceivable that social funds and AGETIPs could act as intermediaries to establish links between small enterprises and specialized international markets. An important element in chang- ing other sectors is to foster change in the mindset. This change can be made by publicizing the results of pilot activities. * When the Senegalese government needed to rehabilitate the national stadiums to host the African Football Cup, the Minis- try of Public Works conceded that it would be unable to com- plete the work in time for the games. AGETIP, asked to take over the job, rehabilitated all the facilities on time, including fields complete with grass. Unfortunately the Senegalese team lost, and the national newspapers blamed the defeat on the high quality of the playing fields that AGETIP had delivered, claiming that the national team was not used to playing on such fields. However, the demonstration was significant, and AGETIPs are starting to influence the degree of accountability to which ministries are held. Apart from ensuring transparency in the contracting and procurement procedures in other sectors by favoring smaller contracts, thereby re- ducing the incentives for corruption, participants agreed that opening up new markets to medium and small enterprises required a trained labor force. Who should be providing such training and under what circumstances? * AGETIPE has provided continuous training for all compa- nies, including those that were awarded no contracts man- aged by AGETIPE. Some companies, unable to receive con- tracts in their first attempts, were subsequently successful because training enhanced their administrative, technical, and management capacities. The discussion then focused on the sustainability of subprojects and of enterprises that come into being in the wake of social funds and AGETIPs. On the first issue, while issues of cost recovery are obviously crucial, the Social Funds, Private Sector Development, and Microenterprises 81 participants agreed that the local government's taxation capacity and expenditure authority are also important. On the second issue, there was consensus that central governments have to increase their financ- ing capacity and support policies to support the availability of credit to small-scale operators. Companies cannot deliver on larger contracts that require equipment without government policies that facilitate access to credit. For example, the banking sector in West Africa requires a reori- entation to give loans beyond the 90-day deadline they work within at present. Another important element for construction companies to de- liver on larger contracts is a system to allow enterprises to rent equip- ment. In the absence of these two elements, the participants felt that the growth of private sector companies could not be sustained. Recommendations * Social funds should reinforce the accountability of public sec- tor management through the delegated implementation of projects by medium and small private operators. * This approach has so far been applied to public works and construction contracts, but it should be extended to other sec- tors such as rural development, natural resources management, and trade. * The competitiveness of medium and small private operators should be supported through microfinancing programs, man- aged by social funds working through national financial insti- tutions. * Training programs for small operators should be developed and implemented to improve their professional skills as well as their overall management capacities. 12 Parallel Thematic Session: Designing Social Fund Components-Sectors, Themes, and Access Session Leader Scarlette Gillings, Director, Social Fund, Jamaica Resource Persons Katrinka Ebbe, Deepa Narayan, and Adriana de Leva (WB) Facilitator Voltaire F. T. Andres (WB) Session expectations In examining the pros and cons of a program approach that defines subprojects that cannot befinanced under the socialfund as compared to an approach that defines subprojects that will befinanced, this session focused on the way the approach itsel can facilitate or hinder the access of different target groups to socialfunds' benefits. What should socialfundsfinance? How should this decision be made and by whom? A desired outcome of this session was a series of recommendations for identifying approaches to the development of subproject menus that facilitate a broader access of marginalized groups to supportfor socialfunds. Main Points of the Presentation Jamaica's National The Government of Jamaica's National Poverty Eradication Program Poverty Eradication (NPEP) was developed after an extensive consultative process involv- Program ing the sector ministries, the private sector, community representatives, and NGOs. It has five key elements: (a) poverty reduction activities di- rectly targeted to deprived communities; (b) interventions mainly tar- geted to unemployed youth and families with children; (c) a welfare system extending effective coverage to more needy persons; (d) equi- table access by the poor to quality education and health services; and (e) an enabling environment to support the achievement of poverty reduc- tion. Urgent short-term and effective interventions are needed to reha- bilitate the social infrastructure, increase the income of small farmers, reduce urban violence, and improve community and family life. Poor sustainability of social development programs in the past has been a result of resource constraints, persistent and systematic weaknesses in the system of public management, inadequate levels of community ownership of projects, and a lack of technical skills. These in turn were due to a lack of mechanisms for technology transfer so that communi- ties were ultimately unable to undertake a greater role in the manage- ment of public facilities. Objectives of the As a key component of the government's NPEP, the objectives of the Jamaica Social Jamaica Social Investment Fund (JSIF) are aligned with the broad Investment Fund 83 84 A Close Look at the Key Issues objectives of national development. Designed to be a demand-driven organization to mobilize and channel resources to low-income and socially underserved communities, the social fund aims to increase the capacity of the public sector, community-based organizations, and NGOs to design, implement, and manage community projects to address specific poverty alleviation priorities. Its activities include social infrastructure, economic infrastructure, social services, and in- stitutional strengthening. JSIF's target groups The rural population, women, children, unemployed youth, and the elderly were identified as the target populations for poverty allevia- tion. This selection was based on studies of leading poverty indica- tors, the socioeconomic situation, and the status of various social groups in Jamaica. Positive or negative A negative menu approach, or a menu of subprojects that identifies menu approach? specific activities that a fund will not finance, has the advantage of excluding benefits in areas that are not identified as high priority. It can provide clear guidelines regarding the scope of activities, make screening and appraisal easier and therefore faster, facilitate moni- toring and performance evaluation according to standardized sys- tems, and focus the fund's resources and energies in areas where it has a comparative advantage. The approach has the disadvantage of limiting coverage and raises questions about the exclusion of certain areas. Some terms of exclusion may lead to discrimination against some groups of poor. It also creates gray areas for decisionmakers if they should be called upon to choose between adherence to the rules and bending them to enable flexibility of response when exceptions are called for. A positive menu approach can become unwieldy, as the inclusion of additional activities must be left to the judgment of the officer. This introduces the risk of unwittingly extending the scope of the fund. It could also render the maintenance of standards and monitoring of activities difficult because of a lack of standardization, thereby mak- ing the program inefficient. Jamaica's socialfund A combination of both approaches is being considered by JSIF. The approach to fund identifies a limited range of subproject categories as eligible subproject menus and additional categories as excluded. A menu will be developed based on the poverty situation of Jamaica, the priorities identified, the mandate and the objectives of the fund, the role and scope of fund activities within the wider social program, an assessment of the impact on poverty of various activities, and considerations of sustainability and judicial feasibility. Activities to be financed in the social infrastructure sectors include schools, health centers, community centers, day care centers, and wa- ter and sanitation projects. In addition, social funds could also assist in building homes for children and centers for pregnant mothers and Designing Social Fund Components: Sectors, Themes, and Access 85 in family counseling. Economic infrastructure activities to be financed include feeder roads and small agroprocessing facilities. Subprojects that benefit a large number of beneficiaries will be preferred. The determinant factor in the selection of targeted sectors will be the level of need: the sector must be seen as a priority and the subproject fi- nanced by the fund should significantly impact poverty. The fund aims to maintain flexibility in selecting projects for funding and in- tends to conduct periodic reviews and adjust its subproject menu if needed. In this way, the fund will maintain a balance between the targets indicated by the government's poverty alleviation strategy and the actual demand for subprojects. Discussion The intention of Jamaica's fund to build social capital by creating social infrastructure was well received by the participants, given that urban violence is a problem in the country. Questions, however, were raised about how the fund would reconcile program definition by sectoral line ministries with its intent to define programs by commu- nity demands. * In order to facilitate the articulation of community priori- ties, the Jamaica fund employs a participation advisor. This advisor works through various agencies and consultants to facilitate the articulation of needs and to train communi- ties. Promotion activities in target areas include workshops where the need for projects proposed will be verified with the community's directly by the JSIF. For example, at one point the fund received requests for schools from a certain project area. When staff from the fund went to verify the community's priority, they discovered that what the com- munity really wanted was water resources management more than schools. Participants felt that if the objectives of a fund were short term, it would be reasonable to work through existing intermediaries. How- ever, if a fund had long-term development objectives, then it needed to have a process focus as opposed to a project focus. Funds could adopt a programmatic approach that would enable them to start by directly delivering subprojects. in their initial years and gradually transition to enabling other actors to take over. Taking note of the emphasis on institution building as a subproject category in Jamaica, the discussion focused on the exchange of expe- riences from other countries in trying to reach communities directly, avoiding the risk that intermediary agencies' priorities would super- sede community priorities in the articulation of project proposals. 86 A Close Look at the Key Issues * The social fund in Guinea-Bissau started out with a US$1 mil- lion pilot phase. Constrained in reaching communities directly because of a high illiteracy rate in the country, with few logis- tical means of its own to monitor field activities, it had to chan- nel resources through NGOs with little field experience. By the inception of its second phase, the fund had introduced a fundamental change in approach and started allocating re- sources to train village-level managers. * In El Salvador, the fund creates a development comrnittee in each locality where a subproject will take place. The com- mittee defines the community's priorities with the assistance of the fund and NGOs. Counterpart agencies and local gov- ernments interact with the development committee, which monitors funds utilized in the implementation of the sub- project. * The Malawi fund, in trying to overcome the problem of inter- mediary priorities superseding community priorities, gives re- sources directly to community groups, thereby also giving them control over the choice of the intermediary agencies they hire for proposal identification and development. The debate focused on how decisions about resource allocation between process investments and project investments should be taken, and the risks and constraints related to adopting a process focus were highlighted. * The difficulties that development agencies and international banks face in moving away from a project approach to a pro- cess approach stems from their need to report facts, figures, and outcomes against the resources they provide. It is easier to define the resources needed for a school building and to evaluate its impact on poverty education than to quantify the resources needed for a process like empowerment. As a re- sult, despite increasing recognition of the importance of so- cial capital creation, a very small amount of money actually is allocated to it. The Inter-American Development Bank, for example, allocates just about 5 percent of its contribution to social funds for process-oriented investments. On the subject of target group access to social funds projects, there was agreement that the finer details of the processes adopted for identifica- tion, project processing, and implementation could impede access of target groups to entire sectors. Project approval requirements are often those of financial institutions and donors, rather than based on local abilities. Communities could often be excluded because of the language of project documents, especially in countries where many languages are spoken, illiteracy prevails, or project writing skills are scarce. Turning to the subject of project menus, the discussion focused on fac- tors that funds needed to take into account. What conditions favor a negative or a positive menu approach? Designing Social Fund Components: Sectors, Thenes, and Access 87 * If the projects requested appear to be heterogeneous, a negative menu approach should be favored. When the projects requested appear to be homogeneous across a sector or sectors, a positive menu approach should be used. However, an important distinc- fion has to be made between needs and demand. Needs can often be identified externally, while demand can be expressed only by the people who request a project and are willing to pay for it. * Technical expertise available outside the fund should be a key fac- tor in determining project menu approaches. Often a fund will find itself working with communities that have access to no other technical expertise. In such cases, a positive menu approach should be favored. When funds finance a menu that includes small-scale irrigation, rural water supply, basic infrastructure or microcredit, the pool of skills needed can be extensive and diverse and may not be readily available. * Empirical evidence from many countries shows that funds have a high potential for stimulating private sector development. There- fore, once this takes place, the initial positive menu approach can be expanded to sectors in which skills become available in the country over time. In countries where the private sector is already well developed and communities have a range of skills outside the fund, a negative menu may be advisable. Subproject menu choices should be kept open to facilitate demand responsiveness. Recommendations * The choice between a project menu that defines the initiatives that can be financed and one that defines only those that are excluded should be based on the local characteristics of pov- erty and the scope and role of the social fund within the government's overall poverty reduction strategy. * Participatory research should define the social context of sup- port, and communities should be organized, trained, and sen- sitized before needs are identified. * A study to evaluate the impact of institutional, capacity-build- ing, and participatory processes should be undertaken to de- lineate tradeoffs between investments for physical infrastruc- ture and investments for building social capital. * A consultative process that provides continuous and vigilant feedback and involves key stakeholders at national, regional, and local levels should be established, and clear criteria and procedures for facilitating the access of marginalized social groups should be provided. 13 Parallel Thematic Session: Monitoring and Evaluation of Social Funds Session Leader Robert van der Lugt, Principal Evaluation Officer, Operations Evaluation Department, World Bank Resource Persons Alan Dock, Juliana Weissman, and Margaret Grosh (WB) Facilitator Fredrick Edwin Nunes (WB) Session expectations This session examined the efficiency, adequacy, and cost-effectiveness of monitoring and evaluation as distinct elements. Are the monitoring levels currently employed optimal? Do external reporting re- quirements impact negatively on the internal management of information? Since disbursementsfor poverty alleviation without long-term sustainability of investments cannot affect structural poverty, are current evaluation approaches adequatefor measuring sustainability and impacts of subprojects? Desired outcomes of this session were recommendations for goal-oriented and effective monitoring and evaluation of socialfunds operations. Main Points of the Presentation Objectives The main objective of the presentation was to analyze the monitoring and evaluation (M&E) of social funds as it is currently undertaken. It was structured in three segments: findings on the M&E of social funds, based on research by the Operations Evaluations Department (OED) of the World Bank; key concepts that clarified the meaning of M&E and guided the discussion; and arriving at a consensus on elements of M&E that should be discarded and defining the future directions that M&E should take. OEDfindings on OED has evaluated three social funds: the fund in Honduras, the socialfunds AGETIP in Senegal, and the first and second Social Investment Fund (SIF) in Bolivia. The finding of the evaluation of the Honduras fund was that it had been too extensively monitored by donors and external auditors in addition to its own internal monitoring. As a result, the staff of the fund was unable to cope with the workload. The conclusions of the evaluation were the following: (a) more attention to monitoring was needed, which requires computerization; (b) because the monitoring design was basically an attachment to statistical household surveys, it did not capture the impact of the fund on its beneficiaries as well as on the informal sector; (c) there were methodological problems in 89 90 A Close Look at the Key Issues measuring nonmonetary incremental benefits of the projects; and (d) the design and implementation stages needed more work to ensure impact evaluations generate the required results. OED's findings noted that the monitoring system in the AGETIP Senegal was excellent, perhaps even excessive, and that it was possible to inte- grate the monitoring system completely into the management informa- tion system (MIS). The few evaluations that were done suffered, how- ever, from some statistical shortcomings related to sampling, resulting in a loss of inferences that could be drawn from causalities. Beyond em- ployment generation, on which there was substantive detail, there was little information on the project's social and economic impact. The audit report on Bolivia stated that the computer system, established under the first emergency social fund project, included a community profile to facilitate targeting and that the system was good for monitor- ing subprojects. However, insufficient ex ante data made it difficult to conduct follow-up evaluations. It recommended that the presentation of ex ante data become a standard part of community proposals, so that impact evaluations would be possible. World Bank's The World Bank's Review of the Social Funds Portfolio recommended more findings emphasis on evaluation of impacts on the ground and beneficiary pro- files of the low-income groups that are targeted for interventions. Inter-American The major conclusions of the impact evaluations conducted by the In- Development Bank's ter-American Development Bank was that the real impact of social funds findings was not so much on employment and income as on improvements in living conditions. This raises important implications for future evalua- tions of social funds: if improvement in living standards is to be mea- sured, then much less emphasis will be placed on the classical income- based evaluation instruments. Separating Monitoring includes the work of an MIS to give information on in- monitoringfrom puts, outputs, and project outcomes; it is focused on the internal func- evaluation tioning of the fund. It asks questions such as: Were we efficient? Did we pay on time? Did we disburse? Evaluation requires gathering in- formation to measure results, such as impacts on the ground, changes in living conditions, reductions in poverty levels, and so on. It does not require information on the characteristics of a school building, but information on the education that is imparted in the school building and its effects. However, what funds execute, manage, or deliver is outside their do- main: they receive a proposal for an output identified and proposed by a beneficiary or client group, efficiently deliver the output, and move on. The result of the output and its impact are not the responsibility of social funds or AGETIPs, but rather of the public sector agencies in charge of overall poverty reduction at the national level. The impacts of social funds' output need to be sustained by the originators of the proposal for the investment to be worthwhile in the long term. Socialfunds are The efficiency of social funds and AGETIPs has led them to receive the concentrating on financial and parallel support of numerous development agencies, each monitoring Monitoring and Evaluation of Socil Funds 91 with its own requirements for monitoring; the reporting requirements are also slightly different in each case. Evaluations are Evaluations serve different audiences, require multisectoral synthesis inconclusive of information, and often have moving goal posts: from emergency em- ployment to poverty alleviation, from capacity building to local empow- ernent. Despite the extensive M&Es of social funds, the same questions are not clearly answered: Did we reach the poor? What are the impacts on living conditions, education, and health? The Bolivia social funds, for example, must be the most evaluated so- cial funds in the world. The same is true for the Senegal AGETIP. How- ever, after these extensive evaluations, there is very little cumulative useful information. What do we evaluate Generally, the key question we want answered is: What is the project's and how selective impact on poverty? This can be measured either by the income mea- should we be? surement method or by measuring changes in living conditions. Other questions that are asked relate to the impact of a social fund on capacity building, institutional development, interadministrative coordination, and sector coherence. Some other evaluations focus on participation, gender, and access by minority groups. Many donors are now concerned and would like to know more about the sustainability of subprojects. Need for extreme Evaluations must be extremely selective in the questions they ask. The selectivity number of funds that are evaluated also must be restricted, because many funds have more aspects in common than the issues that divide them. There is a need to agree on a program of evaluation that covers selected donors and selected funds and that can yield conclusions likely to be valid for a wider range of funds. Value of qualitative More attention needs to be-focused on the less traditional modes of evaluations evaluation to impart quicker understanding of what is going on with social funds. There are two schools of evaluation methodology, the quantitative and the qualitative. The quantitative school argues that statistically sound databases are needed to derive quantitative econo- metric causality from statistically significant surveys. These evalua- tions may work for larger projects, are extremely expensive, are enor- mously time-consuming, and take a long time to generate the detailed information that is expected. Social funds need information faster; qualitative evaluations may give more judicious information on im- pacts than quantitative evaluations. Discussion Discussions began with spirited refutations to the suggestion that social funds and AGETIPs were preoccupied with the efficiency of their inter- nal functioning and were unconcerned with the sustainability of their investments. Examining the issue of sustainability is, on the contrary, very much a part of the criteria applied to the project selection process of social funds. 92 A Close Look at the Key Issues * One of the mandates of the social funds in Egypt is to work with grassroots communities to identify needs so that projects can be sustainable in the long term. * AGETIPs work with municipalities, the private sector, NGOs, and other agencies that deliver services. Commu- nity requests come to AGETIPs through the municipalities, which are the main clients of AGETIPs' clients. Mayors are involved in the project selection process. There was agreement that monitoring systems focus far too much on physical data, even though they provide information for manage- ment purposes. What most monitoring systems do not provide is baseline data for further evaluation purposes. Compared to the attention devoted to other aspects of social funds, little is given to evaluation, and therefore too little is known about the funds' impacts. Evaluations are rarely designed as integral parts of project processes and take place after projects are completed, so that the information cannot alter the course of projects. An interest- ing exception was presented. * The social fund in Nicaragua performs three kinds of evalu- ations: the first one is known as the project quality inquiry. It is conducted at the time of project delivery by the field engineer according to internal procedures. One year after the project has been handed. over, a second evaluation called project quality evaluation is done. At this time the evalua- tion attempts to measure usage, capacity utilization, and so on. A third evaluation, impact evaluation, involves benefi- ciary participation and attempts to answer questions such as: How much community participation was there in project identification? What was the quality of this participation? Does the community have high self-esteem? Are they proud of the project? The discussion searched for answers to the impact-related questions that evaluations now pose, even though those questions may not reflect the original objectives and the design of a social fund. Ques- tions that require responses related to measures of community em- powerment and promotion of institution building do not easily trans- late into indicators against which assessments can be made. Given the limited resource investment in the social sector of a country through a social fund, evaluations need to assess whether the ques- tions posed are reasonable in the first place. Evaluations are expen- sive, numerous, and often draw conclusions that are too complex. Donors are responsible for much of the complexity in evaluations, because of changing goals and a disconnect between the objectives of the funds and the criteria by which they are evaluated. However, these changes in perspective need to be accommodated because funds are flexible and evolve over time. Monitoring and Evaluation of Social Funds 93 Mexico, over the last eight years, has executed social funds financed in part by the World Bank. Initially the funds re- sponded to information requests by the Bank using meth- odologies, indicators, and measuring systems recommended by the Bank; these evaluations were considered efficient. In the last few years, new indicators have been added by the Bank. Evaluations done against these additional indicators by the Ministry of Social Development highlighted the need to enhance the technical and administrative capacity of mu- nicipalities and community organizations. The Bank, nev- ertheless, conducted its own evaluation, only to arrive at the same findings. When the Mexicans did their own im- pact evaluations against the data of their 1990 census, they found that social infrastructure had a positive impact on the quality of life in participating communities, even though measurements against indicators for mortality, productiv- ity, health, and education did not demonstrate that poverty had been significantly reduced. Participants agreed that the definition of poverty by economic crite- ria alone was inadequate and that social and cultural criteria as well as national contexts were important factors to consider. Qualitative assessments of poverty could often be more important than quanti- tative assessments. Evaluations of poverty impacts of a social fund can be misleading when viewed in isolation. There was agreement that evaluations need to be simple to provide useful answers. They need to focus on activities supported rather than on the funds them- selves, because the ultimate objective is to deliver services that im- prove the quality of life of participating communities. * The emphasis in the evaluations of operations within the World Bank is shifting from projects to sectors. Within five years the Bank will conduct evaluations to determine if a country assistance strategy, that is, the entire portfolio of projects in a given country, has been successful. Evaluations are likely to become bottom up: looking at the country and region and then returning to the evaluation instruments used, rather than attempting to measure the specific im- pact of each instrument. Evaluations will ask questions such as: Did the Bank's approach to structural adjustment, to eco- nomic development, or to poverty alleviation work in a given country? What were the instruments used? Were they used correctly? Was a social fund an appropriate answer to compensate for a structural poverty problem? Three basic audiences were identified for evaluations: communities and project beneficiaries, executing agencies, ~and financing agencies or donors. Given the overlaps in the requirements of these audiences, there was consensus on: (a) the importance of coordinating evalua- tions for the sake of efficiency; (b) promoting beneficiary participation 94 A Close Look at the Key Issues in evaluations to answer many of the quality of life questions now be- ing posed; (c) developing criteria for the qualification of entities that conduct evaluations; and (d) finding solutions to the problem of dif- ferent evaluation methodologies that prevent the gathering of system- atic information. Much more attention is needed to the dissemination of evaluation findings to pertinent audiences such as line ministries, implementing agencies, NGOs, members of parliament, and so on. Recommendations * Monitoring is the basis of evaluation, and both should be con- ceived as an integral part of the project cycle, so that learning can take place as events unfold. * The most important audience of the evaluations are the ben- eficiaries themselves. Participatory evaluation should be pro- moted, so that communities can be involved through rapid appraisal techniques. * Evaluations should focus on the effectiveness of social funds in improving the quality of life in participating communities. They should be clear and focused with modest and realistic objectives, so that they provide answers to questions. * Coordination on evaluations is needed among donors and line ministries so they can exchange and share the learning that comes from evaluations and avoid costly duplications. Re- gional networks can provide opportunities to agree on com- mon evaluation methodologies. * The dissemination of evaluation findings among policymak- ers deserves considerable attention and resources. 14 Parallel Thematic Session: Sustainability of Subprojects, Maintenance, and Operations Session Leader Werner Neuhauss, Sector Economnist, Social Policy Dept., KfW, Germany Resource Persons Gita Gopal, Jennifer Sara, and David Steel (WB) Facilitator Najma Siddiqi (WB) Session expectations This sessionfocused on the options available to socialfunds with long-term development objec- tivesfor achieving the sustainability of subprojects. In addition to applying sound selection pro- cedures and ensuring ownership of subprojects by target groups, should socialfunds take on the responsibilityfor operations and maintenance? What are the risks of this approach, bothfor social funds as well asfor the sector institutions in the country? Alternatively, what provisions should socialfunds take to ensure the operation and maintenance by beneficiaries or by permanent line institutions? Desired outcomes of this session were specific recommendations for ensuring the long-term sustainability of subprojects. Main Points of the Presentation Elements that can The use of investments by beneficiary groups throughout their useful lead to sustainability life has been a matter of concern in activities supported by Kreditanstalt fur Wiederaufbau (KfW) many years, not just in the case of social funds, but of other projects as well. To ensure sustainability of subprojects, the following conditions must be met: * Facilities created through subprojects must meet the expectations of those who benefit directly from them, with respect to location, technical design, and use. * They must be of appropriate technical quality, yet adapted to lo- cal conditions. * They must be part of an overall package of services from the start, so that conditions essential for their sustainability can be fulfilled. * The institution responsible for operations and maintenance (O&M) must be technically and administratively capable, and users must be aware of who is responsible for O&M. * O&M costs must be covered by user charges or taxes, or both. Socialfunds and When social funds deliver infrastructure projects efficiently and quickly recurrent expenditure that other institutions are to inherit and to manage, they ultimately cre- budgets ate new pressure for recurrent cost financing on the budgets of those institutions. Adequate funds to cover these additional recurrent costs 95 96 A Close Look at the Key Issues can only be attained by improving sectoral performance, an area over which social funds have no influence, or by recovering user charges or local fiscal revenues. Two strategiesfor Two alternative scenarios, both with strengths and weaknesses, are out- ensuring lined in the following paragraphs for social funds to improve the sus- sustainability tainability of the subprojects they finance: 1. Involve the responsible sectoral institutions. 2. Avoid the responsible sectoral institutions. Involving sectoral Involving sectoral institutions, social funds can take the following institutions three steps: 1. Sign agreements with recipient agencies to cover O&M costs. Such agreements do not always yield results, and funds cannot enforce them when there is a paucity of funds, or budget law restrictions to prevent recipient agencies from raising revenues. 2. Avoid supporting projects that burden recipient agencies with O&M costs. Choose instead simple, small projects that require little or no recurrent resources, as KfW is doing in West Africa, except for Mali, where a maintenance fund supported by na- tional revenues has been created, and experience is yet to be gained. The negative side of this approach is that funds may not supplement the initiatives of the local population but rather increasingly make them redundant. 3. Support in parallel an investment program that aims to strengthen sector institutions and implement reforns to im- prove public sector revenues. Avoiding sectoral In avoiding sectoral institutions, social funds have two options: institutions 1. Transfer the responsibility for O&M to the beneficiaries, NGOs, or the private sector. Such arrangements have not always yielded good results. While theoretically ideal, making these arrangements is time-consuming and often complicated, especially when the fa- cilities are technically complex, for example, in the water supply or sanitation sectors. Leasing facilities to the private sector could be an appropriate option. 2. Take over the responsibility of O&Mfrom line ministries and local administrations, creating parallel administrative struc- tures. This scenario is happening in Latin America. In some countries funds are paying teachers' salaries (Guatemala), fi- nancing training for water users committees delivered by NGOs (Honduras), and setting up maintenance funds for the upkeep of facilities (Nicaragua). KfW initiatives To improve the sustainability of subprojects in several Latin American countries, KfW, often in cooperation with other donors, has: * Given support to target groups and administrations in project preparation * Assumed project planning costs Sustainability of Subprojects, Maintenance, and Operations 97 * Assisted consulting services to develop simple standards and ap- propriate technical solutions in water projects * Seconded local experts to work with social funds staff to improve construction quality * Supported social funds in creation of a department for social pro- motion to facilitate user involvement in all phases of the project cycle. KfW recently suggested a revolving fund in Honduras to finance main- tenance costs through local governments, with the initial financial re- sources provided by KfW. Discussion The concept of sustainability was seen as extremely complex and varied across countries and regions. The discussion defined the differences be- tween projects financed by the first generation and the second genera- tion of social funds, with the latter positioning themselves as perma- nent development institutions. Three aspects of sustainability beyond that of subprojects were also discussed: financial, institutional, and com- munity sustainability. The sustainability of a community was seen as linked to the macroeconomic environment, to productive activities, to microcredit, and to long-term community development. Some of these are beyond the scope of the accomplishments of a social fund. * A study of the issues related to participation and sustainabil- ity in subprojects financed by the social fund in Armenia re- vealed that a community's willingness to participate in main- tenance is directly related to the quality of work and services delivered. This in turn is linked to competitive procurement policies and to the active involvement of private contractors who are interested in getting work from the funds while the communities supervise the work. The willingness of the com- munity to invest in supervision is linked to the community's participation in the identification of projects that meet its needs, as well as to its financial contribution. The study noted that chances for the sustainability of infrastructure without com- munity participation were about 30 percent. Likelihood of sustainability increased to 46 percent in projects that benefited from participation. * The social fund in Angola, approaching the design of projects from the perspective of community sustainability, is piloting an attempt to link project sustainability to income-generating activities in communities where the social fund has financed social infrastructure. * An interesting mechanism for O&M of projects is applied in Sni Lanka. Once a project is agreed upon with a community, fund staff give the community an estimate of the capital needed for its implementation. Whatever savings the community accrues for the estimated expenditure, by way of its own capital and labor contributions, are then transformed into seed capital for O&M. Continues on next page 98 A Close Look at the Key Issues Continuedfrom previous page * Recognizing that there is laxity with respect to maintenance, the Mexico fund is pursuing a strategy of intense participation throughout the project cycle, including the management of fi- nancial resources, to ensure the ownership of projects by their beneficiaries. This process provides a fertile ground for other strategic actions related to O&M. * The government is fully involved in projects supported by the social fund in Zambia. Government officers provide technical supervision, training communities at the same time. To ensure allocations for O&M from government budgets, the social fund maintains good communications with key officials in the Min- istry of Finance, to whom it provides credible proof that main- tenance funds are utilized as intended. Substantial discussion focused on community contributions as indica- tors of demand and ownership. Some funds make them a condition for initiating procurement. Computing community contributions was not seen as a problem if they are made in cash; concern, however, was ex- pressed about converting community contributions made in kind into cash equivalents. In the case of public sector or formal private sector projects, costs related to materials, labor, supervision, and operation and maintenance are all built into the overall cost of the project. The value of in-kind contributions made by a community or NGO are recognized either not at all or inadequately. The social fund in Zambia has attempted to address the issue of calculating community contributions by analyzing the costs of implementing a standard technical design for a subproject as provided by the relevant government agency. Given that the materials that rural people will contribute to a project will be different from those a standard design would call for, it took the Zambia fund almost six months to arrive at acceptable val- ues for material contributions made by the community, and costs for the water that women carry to the site have not yet been ascertained. Based on the experience of Central America, it was observed that funds are more effective in countries that have government ministries for social activities, who can set national priorities and obtain the support of other ministries to carry out their func- tions. A favorable macroeconomics policy framework as well as a government's overall poverty-reduction strategy were also seen as important ingredients of sustainable outcomes. Other factors cited were the prior existence of a maintenance culture in a community and a completed project that satisfied the community's needs. Sustainability of Subprojects, Maintenance, and Operations 99 Preliminary findings from a study of rural water supply systems in about 20 countries conducted by the World Bank-United Na- tions Development Programme Water and Sanitation Program indicate that sustainability is a problem with more than half of the water systems examined. According to the study, sustainability is linked to three key factors: willingness to pay, responsibility, and capacity at the community-user level. * Establishing willingness to pay requires time to communicate all the information about how technology can be tailored to appropriate levels to meet the community's needs and to ne- gotiate different levels of service based on the willingness of the community to assume the financial burden of an improved water supply. * The study found that there are often no clear perceptions about who is legally responsible for the land or the ownership of a water system. The perceptions of the community, of the local government, and of the national government about legal frame- works are often inconsistent. * Capacity at the community level for sustaining the water sys- tem is obviously important; equally important, however, is the capacity of the public and private sectors to provide opera- tional and technical support. Interesting questions raised in the discussion, but not answered were the following: What quantitative criteria can be used to evaluate sus- tainability? Is there a link between efficiency and sustainability? Can a project be considered efficient if it is not sustainable? Are there clear criteria for the quantification of community contributions to subprojects? Recommendations * A sound project design, adapted to local conditions and based on simple technologies that facilitate beneficiary involvement should always be chosen, and beneficiaries should be involved in the selection. * Technical and administrative competencies for operations and maintenance should be provided to users and local agencies through training and should be accompanied by the necessary funds for training and implementation. * Long-term financial resource mobilization for O&M is related to expanding the financial resource bases of municipalities and district administrations. Reforms of sector policies and admin- istrative processes need to be supported by the government and by all donors. * Infrastructure should be managed like a business, not a bu- reaucracy, by introducing competition and giving users and other stakeholders a strong voice and real responsibility. 15 Parallel Thematic Session: Environmental Assessment of Social Funds Subprojects Session Leader Abebaw Alemayehu, Deputy Director, Ethiopia Social Rehabilitation and Development Fund (ESRDF) Resource Persons Jan Bojo and Olav Kjorven (WB) Facilitator Reidar Kvam (WB) Session expectations In examining the environmental assessment of social funds subprojects, this session focused on the following questions: (1) How are environmental concerns addressed during the promotion, design, selection, and implementation phases? (2) How does a socialfund evaluate the magnitude of the envi- ronmental impact of its subprojects? (3) How does it arrive at cost-effective measuresfor mitigation of negative impacts? A desired outcome of this session was a set of recommendationsfor improving the environmental impact assessment procedures of socialfunds. Main Points of the Presentation Objectives and The Ethiopia Social Rehabilitation and Development Fund (ESRDF), es- environmental goals tablished after a pilot phase, aims to contribute to Ethiopia's long-term sustainable poverty reduction and economic growth strategy. It has two environmental goals: first, to ensure that all subprojects approved are re- viewed for potential negative environmental impacts and that mitigation measures are put in place; and second, to support the government's na- tional conservation strategy by promoting better enviromnental practices and increasing the positive environmental impact of the fund's subprojects. Experience of the The pilot phase of ESRDF demonstrated that, despite low levels of envi- pilot phase ronmental awareness among its staff, no subprojects had major nega- tive environmental consequences. No environmental assessment was carried out for the microdams financed by the pilot project, and the early project appraisal forms lacked environmental checklists. However, the pilot project did succeed in promoting environmentally friendly ways of implementing subprojects; for example, the use of hollow blocks or bricks for construction instead of wood, the inclusion of pit latrines in school buildings, coordination with municipal bodies for solid waste disposal, putting incinerators in health centers, and so on. Subsequently, projects with positive environmental impacts and assistance for conser- vation schemes were successfully promoted, for example, gully recla- mation projects and tree nurseries. 101 102 A Close Look at the Key Issues Environmental impact Most subprojects likely to be proposed by communities are bound to classification system have localized and limited negative environmental impacts and, ac- cording to the World Bank's environmental classification system, are classified as B category projects. They do, however, require some at- tention. For example, poorly managed sanitation schemes could pose more serious health hazards than they intended to mitigate, as would the improper disposal of medical wastes. In urban areas, where the fund supports environmental sanitation subprojects in addition to fi- nancing community latrines, it also finances access roads so that suc- tion trucks can access the waste for disposal; these roads provide addi- tional benefits to the community. Small-scale irrigation subprojects raise some concerns; for these, the fund prepared environmental impact checklists and identified mitigation measures to be implemented. Environmental To accelerate the incorporation of environmentally beneficial sub- review at the project projects in the portfolio and enhance community awareness of envi- promotion stage ronmental issues, all ESRDF staff were introduced to environmental issues through a workshop, which trained them to promote environ- mentally positive projects. In addition, a multisectoral environmental team prepares the fund's environment action plan and updates the environmental checklists for project approval. This team consists of an advisor on gender issues and of the team leaders of the social infra- structure, water supply and sanitation, and small-scale irrigation teams. Promotional efforts by the team resulted in numerous applications from communities requesting funds for subprojects with positive environ- mental impacts. An interesting example is that of a case in the Tigray Region. The initial application from this region submitted by the Educa- tion Bureau requested a school subproject. When the appraisal team met with community members to identify their most ur- gent needs, the team discovered that the people really wanted the treatment of a gully that was fast degrading grazing land and affecting the livelihood of the villagers. Gully reclamation was undertaken by the fund, and the school was built by the villagers themselves later on. Environmental Environmental technical assistance is necessary during the formula- review at the design tion stages of relatively complex subprojects such as small-scale irriga- stages tion schemes. In the absence of NGOs or technical agencies to bear design responsibility, the services of a consultant are retained to en- sure that communities develop the requisite capacity to address the negative impacts of the schemes. Communities are also trained to en- hance their capacity to identify projects that are environmentally ben- eficial. Request forms are designed to facilitate collection of basic in- formation for environmental screening. More detailed and stringent forms are completed by the technical agencies or NGOs that assist com- munities in project formulation. When the analysis of these forms re- veals that serious negative environmental impacts are likely, either mitigation measures are introduced or the project is dropped. Eligibil- ity criteria for small-scale irrigation and water supply projects state Environmental Assessment of Social Funds Subprojects 103 that projects must have been submitted, reviewed, and positively screened by the regional bureaus of the National Resources and Envi- ronmental Protection Agency. Environmental Monitoring during implementation is carried out to ensure that the review during recommended mitigation measures are in place and all agreed proce- implementation and dures are being followed. Once implementation is over, monitoring is thereafter continued to verify that the subprojects financed are operational, that they are being used as planned, and that no environmental standards are being violated. Discussion The discussion revolved around general environmental concerns. Given the environmental degradation faced by countries in Africa and in other parts of the developing world, and the strong links between environ- mental degradation and poverty, addressing both macro- and microen- vironmental problems was seen as important. It should not be consid- ered a donor-driven luxury, as gender issues were viewed some years ago, but rather as a national priority in the context of sustainable pov- erty reduction. There was also general agreement that the negative impacts of sub- projects on the environment are generally minimal, and impact assess- ments done by inappropriate standards would be futile. World Bank guidelines for environmental impact assessments, in fact, do not exag- gerate environmental review demands. They require identification of impacts, and sometimes quantification, but rarely do they require their economic valuation, which would in most fund subprojects be unnec- essary. Funds, if they serve as promotion agents for the environment, could contribute to poverty reduction by encouraging beneficial mi- croenvironmental subprojects, for example, soil and water conserva- tion subprojects, tree planting projects, and so on. * In Rwanda, considerable loss of forest cover resulted from the felling of trees for fuelwood by people displaced by war. Reforestation projects, which are labor-intensive, have been supported by the social fund. These projects proved benefi- cial both in increased soil fertility as well as in generating employment for unskilled labor. Future maintenance by lo- cal municipalities one year after implementation, however, is of concern. Lack of environmental awareness in developing countries was cited as an important stumbling block to addressing environmental concerns, as had been the case in developed countries until some time ago. This lack of awareness often results in the false perception of environmen- tal issues as a luxury issue. Discussion focused on finding ways funds can contribute to raising awareness as well as affecting the environ- mental policies of their countries. When governments and people do not perceive environmental protection as an economic development issue, implementation of good policies is not easy. 104 A Close Look at the Key Issues * In Zambia central government policies are in place with re- spect to land management, poaching, and hunting issues. Imple- mentation of sound policies, however, is hindered by the inter- ference of some politicians who pursue their own agendas. * In Guinea-Bissau a cotton industry project financed by the Eu- ropean Union supports the production of farming inputs. While resources were allocated for an environmental impact evalua- tion, it was not carried out, before or after the project. Farmers, consequently, remain unaware of the environmental impacts of the inputs production. * The social fund in Zambia is a good case of a fund affecting poli- cymaking. It receives support from the National Environmental Fund to carry out studies relevant to environmental policies. * In Ethiopia there is significant government commitment to en- vironmental programs, because addressing environmental problems is an integral part of the government's strategy for poverty reduction. Community participation was seen as an integral tool in raising environ- mental awareness as well as for promoting environmentally friendly projects. * The Zambia social fund developed and uses participatory field appraisal methods. Regional and district staff are trained in facilitation techniques. This has changed the nature of the project cycle completely. The fund does not appraise a project in the field unless half the members of the community are women and does not approve a proposal unless it has the sup- port of the majority. In addition, when the fund, in conducting its own needs assessment, finds that communities are not ap- plying for project funds, it communicates its findings to dis- trict governments and supports them in helping the commu- nity to articulate project proposals. * The fund in Ethiopia recruits community facilitators from the communities themselves to bridge the gap between the fund and the people. Discussion focused on how to assess environmental impacts when subprojects have serious effects that require more than simple miti- gation measures. The professional environmental assessment capac- ity of institutions and individuals at the national scale, the design of mitigation plans, the capacity at local levels for implementation, and the need for training and capacity building were also discussed. Environmental Assessment of Social Funds Subprojects 105 Recommendations * Environmental concerns in development projects are connected directly to poverty reduction goals. Social funds should strive for more environmental awareness across the public sector and strengthen their links with environmental agencies. * Social funds should actively promote environmental sub- projects related to the sustainable use and conservation of natu- ral resources. They have a strong link to improving the role of women in development. * Environmental assessment procedures should be simple and practical, and a handbook for this purpose should be devel- oped and adapted to regional contexts. * Regional workshops and the use of the Internet can facilitate the exchange of relevant experiences on environmental issues among social funds and their networks across countries and regions. 16 Parallel Thematic Session: Social Funds Systems, Outreach, and Communication Systems Session Leader Sam Kakhobwe, Social Action Fund, Malawi Resource Persons Norbert Mugwagwa (WB) Facilitator Anis Dani (WB) Session expectations In examining the pros and cons of an information, education, and communication (IEC) strategy, this session focused on the design process that leads to the identification ofan IECfor a socialfund as well as on the challenges to the implementation and management ofan IEC. How does a socialfund balance political interests with a demand-driven approach? What is the role of social communication in eliciting demand and participation? How much does an IEC cost? A desired outcome of the session was a set of recommen- dationsfor designing and implementing information outreach and communication systems in socialfunds. Main Points of the Presentation Background The Malawi Social Action Fund (MASAF) was created at a time of mo- mentous political change, ripe with a strong enabling environment for open discussion on poverty in the country. The new government that assumed power in 1994 proclaimed poverty alleviation a central devel- opment objective and decided to work at the community level as rap- idly as possible. Given the lack of trust in the people because of their experiences with past governments, it was clear that the proposed so- cial action project could succeed only if it revised people's attitudes, roles, and responsibilities toward their own well-being. Objectives of the The MASAF was designed to change the way that all development ac- MASAF social funds tors, including the government, worked with their clients. Participation was, therefore, a key factor in the design of the concept and strategy of the project. The overriding principle for MASAF to support projects was that they should affect a wide range of poor people communities. Information, The IEC strategy was included in the design of the MASAF to enhance education, and full understanding of the objectives and working principles of the project communication for the beneficiaries, NGOs, public and private sector actors, and any strategy other interested groups. It was also intended to capture, document, and disseminate the experiences of various stakeholders during project de- sign and implementation and to identify lessons learned and best prac- tices, thus establishing an effective knowledge management system that could then be shared with similar projects. 107 108 A Close Look at the Key Issues Stakeholder analysis Recognizing the need for stakeholder participation, key stakeholders were defined as those groups whose understanding and acceptance of MASAF design would facilitate the free flow of messages to all levels and whose input would be valuable in clarifying and improving its de- sign. Six groups were thus identified: district commissioners, heads of sector ministries, NGOs, and donor development agencies representa- tives, besides the communities and the local CBOs. Systematic client Systematic client consultation was undertaken to learn from the com- consultation munities themselves how best they could be involved in project prepa- ration, how to fill key information gaps'for project implementation from the community's perspective, and how to ensure that project modalities would facilitate participation. This was seen as the beginning of a series of consultations that would lead to the design of a participatory imple- mentation and monitoring system. Areas investigated included the ex- istence and strengths of a community's organization and institutional networks, its experiences and attitudes toward participation, and its tech- nical capacity, particularly in facilitating direct community financing of planned projects. The pilot phase A one-year pilot phase resulted in. unprecedented inquiries and demand for assistance from communities. With the exception of credit, the de- mand-driven concept promulgated through the IEC did not specify the kinds of assistance communities could request. Besides stressing project eligibility criteria, messages emphasized the organization and capacity characteristics a community needed to receive MASAF's support. This created some misconceptions. The fund had to clarify that it was not an emergency fund, and an expanded list of activities that the MASAF would not finance had to be prepared and distributed. Successful implementation of the pilot phase led to the emergence of one group of major stakeholders, the members of parliament, and con- siderable interference in project cycles began to be apparent. This was overcome through workshops to communicate the role of the members of parliament as project facilitators, which resulted in their becoming yet another outreach tool for the fund. Any further attempts by mem- bers of parliament to interfere in project work with respect to contract- ing or procurement proved futile in the face of resistance from strong and well-informed communities. The entire process of communication demonstrated to the nation that, irrespective of political differences, it is possible to unite to achieve common development aspirations. The latent self-help spirit in the people had been underestimated in the past. Communities now re- ceive funds from MASAF, do their own procurement and account- ing, and directly pay private contractors or NGO intermediaries. The experience of giving self-help the right incentives at the right time demonstrates that the participatory and demand-driven approach to community development can be meaningful and effective only when Social Funds Systems, Outreach, and Communication Systems 109 supported by direct financing and by allowing independent manage- ment of project implementation by the communities concerned. Lessons learned * Communities need to be clearly informed of the opportunities available to them under a demand-driven project. The lack of clear-cut parameters results in tremendous pressure on the fund and its delivery capacity. * Facilitators chosen by the community should undergo project management training. This applies to politicians as well. * The IEC should determine the community's preferred choices for access, location, and distribution of project application forms. Formats of these forms should be revised until they are accepted as user-friendly. Where appropriate, these forms need to be translated into vernacular languages. * Rapid and wide dissemination of project information can re- sult in the unexpectedly prompt commitment of funds. A fund is likely to be faced with the prospect of receiving more project proposals than resources to support them. The credibility of a fund can be at risk when communities are gearing up to start work, but the backlog of approved projects cannot be imple- mented quickly enough. * It is important that stakeholders' experiences be documented and disseminated widely. MASAF has seen that stakeholders, especially communities, feel a greater sense of participation, ownership, and contribution to the development effort when they know that their experiences are being shared with others. Discussion Participants agreed that, as funds moved away from the emergency stage in response to changing economic and political conditions, com- munity capacity building and empowerment appear to become im- portant objectives. * AGETIPs were initially set up to create temporary jobs through the implementation of public infrastructure projects. Their main impact, however, has been the deliv- ery of infrastructure and the management of public funds transparently and efficiently, as well as stimulation of growth in the private sector. The more recent AGETIPs have shifted focus from job creation to sustainability of infrastruc- ture and capacity building of local governments to enable them to become accountable and responsive to the needs of their constituencies. The discussion then centered on an exchange of experiences surround- ing the integration of social messages for community strengthening with the implementation of projects geared to human capital development. 110 A Close Look at the Key Issues * The Canadian International Development Agency provided money to communities in the mountains in northern Pakistan, on the border with Afghanistan, to build rural infrastructure. The infrastructure itself, however, was not the objective of the support. The intent, rather, was to use the infrastructure as an entry into the community to spark a process that would com- municate the importance of the community's taking charge of its own development. * The Grameen Bank in Bangladesh has a strong element of community institution building integrated into its lending programs. One of the conditions for accessing credit is that participants pledge to distribute social messages and to par- ticipatory commitments that will help them seek ways to leave poverty permanently. The participants discussed the range of options and modalities that a project can use to communicate social messages: Is there a role for inter- mediaries in the communication strategy? Should information other than project information be disseminated? * In Zambia, apart from using the radio and billboards for communication of information, social fund zone officers are required to attend one-day meetings with communities, where they describe the menu of choices offered by the so- cial fund. Beneficiary assessments indicate that the people felt the one-day meeting was insufficient for them to absorb all the information. * Experience from Malawi has shown the importance of stress- ing that the fund is just one of many ways that communities can obtain assistance. Additionally, to build on the indirect benefits of public works programs, experience suggests com- municating the importance of savings to people who get sala- ries from the implementation of subprojects, so that they have the incentive and the financial assets to promote new economic activities. Some people have started small businesses with their savings. In the future the social fund could disseminate infor- mation about savings and investment to enhance income streams more systematically. In some countries, savings have been linked to access to a microcredit program. In discussing the volume of information that an IEC can disseminate to affect broad development, questions were raised about the costs of an IEC, because they diminish the pool of resources available for invest- ments. How are the costs of an IEC calculated? Does it include the costs of the management information system? Are costs of facilitators, zone area officers, and the participation of NGOs included? Social Funds Systems, Outreach, and Communication Systems 111 * The cost of the IEC in the Malawi fund is approximately 0.5 percent of the credit, that is, it is a low-cost and high-impact project component. Given the MASAF's concern for helping the beneficiaries or stakeholders in the common pursuit of a new way to manage projects, the IEC is a continuous process throughout the project cycle. Community development orga- nizations help with dissemination; this often entails local meet- ings, house-to-house surveys, and focus group discussions where findings are revalidated. By going to the community level, the MASAF relies on local government representatives to express the demands of the community. The capacity that this process builds is seen as a direct output of the MASAF. The IEC's costs are not only of outreach and information, but include the costs of providing general information on the pro- gram and the criteria for selection of projects, explanations of how to access the fund, and the cost of training, its most ex- pensive component. A management information system is in- cluded with management costs. While there was some debate about the costs of the IEC, since capacity building is part of the overall purpose of social funds, the participants agreed on the validity of allocating resources to design and implement an IEC. Recommendations * To develop an information, outreach, and communication strat- egy, social funds need to analyze stakeholders to identify the main actors, their interests and attitudes, and how they can be reached. The findings of the client consultations can be used to develop appropriate messages. * The information, education, and communication strategy de- sign should highlight the features of social funds of interest to each target group. In order to ensure a long-term relationship between the communities and the program, the information flow has to be two-way and will evolve over time. * Institutional responsibility for communication strategy is de- termined by the nature of the information to be disseminated and may require partnerships with other public or private sec- tor agencies. * An IEC strategy must have adequate resources to achieve its objectives, which are germane to the overall purpose of social funds. 17 Constituencies' Consultations: Social Funds' Directors Session Leaders Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe Magatte Wade, former President, AFRICATIP Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe Differences, It is important to show the differences and the commonalities between commonalties, and social funds and AGETIPs. Both AGETIPs and social funds have been achievements more efficient in the implementation of their programs and projects be- cause of their innovative approaches, as compared to line ministries and other government agencies. This is a consequence of the following: * Both work through participatory strategies and in close coordina- tion with communities at all levels of project and program design and management. * All projects and programs are implemented within the framework of decentralization and, therefore, in close collaboration with lo- cal governments. * They have been successful in targeting groups that traditionally have been socially excluded from government programs and actions. * Both have achieved significant involvement of NGOs and the pri- vate sector in their programs. * Both have been successful at performing the poverty-related tasks that were assigned to them during periods of adjustment and trans- formation. Thefuture While neither AGETIPs nor social funds can address the causes of struc- tural poverty, both are poised to analyze in-depth the causes of poverty in the communities they work with; they could develop strategies to over- come some of the causes. Productive projects should be promoted, em- phasizing the processes that qualify communities and strengthen them to compete with their products on national and international markets. Both AGETIPs and social funds should continuously evaluate their objectives and periodically revisit the rationale for their existence. An important area of focus in the immediate future for both AGETIPs and social funds should be the transfer of innovations, best practices, and lessons learned to cen- tral and local governments, to the private sector, and to NGOs. Future challenges Much of the work to be done by social funds and AGETIPs will not be possible without the political will of governments to maintain the 113 114 A Close Look at the Key Issues processes that have been set in motion by these mechanisms. Re- sources are not the only element needed: social funds and AGETIPs need more exchanges of experiences with other public and private sector institutions and communities. Magatte Wade, former President, AFRICATIP Despite the awareness of the differences between AGETIPs and the so- cial funds in Africa, and between the social funds in Latin America and Central America, it is important not to lose sight of the significant and diverse tasks that lie ahead to help the poorest of the poor. Agreements reached In light of the global consensus reached at this workshop about the im- portance of sharing information and experiences in the fight against poverty, the following were the outcomes of our consultations: * African social funds decided to create their own network, because of their differences from AGETIPs. Technical assistance will be provided by both the Red Social and AFRICATIP. * The Red Social and AFRICATIP jointly will lay the groundwork for a new international network. The meeting of AFRICATIP in December in The Gambia will be attended by Red Social. In turn, AFRICATIP will participate in the Red Social annual meeting in Buenos Aires. • The United Nations Development Progamme has pledged to sup- port the international network of social funds. Representatives of the newly initiated network of the social funds of Africa will par- ticipate in the meetings. * The World Bank, via the Internet, is facilitating the dissemination of information on social funds. Linking all the regional networks is planned. The World Bank, UNDP, and all other donors are asked to support the endeavor to create stronger ties between social funds and AGETIPs. 18 Constituencies' Consultations: Municipalities Session Leader Patricia Jager, Director, Federation of Municipalities of Central America Socialfunds and Decentralization of social funds is closely linked to the extent to which decentralization countries themselves have decentralized. The appropriate speed of de- centralization, the methods that should be adopted, the mechanisms to use, the changes to enact in the legal framework of a country: these ques- tions all require country-specific answers, and each country should be able to define the pace and content of its own decentralization process. Common elements for Despite the variation among countries and regions, some factors com- decentralization mon to the advancement of decentralization are important. The session concluded that a gradual process of transition is the most appropriate strategy to adopt for decentralization in countries where important ele- ments are missing. * The country must have a legal framework for decentralization that define the roles and responsibilities of the various levels of gov- ernment at different stages. * Decentralization should be a gradual process, financially sustain- able and adapted to each country's context. The transfer of func- tions from higher to lower levels of government must be accom- panied by financial resources commensurate with the function to be performed. * Raising civic awareness is an important aspect of decentraliza- tion that enables stakeholder participation. This requires a trans- parent sharing of information about municipal investments and audits. * Decentralization should not remain confined to government circles, but embrace all areas of society: local government, NGOs, and communities. These groups should be strengthened with train- ing. * Better coordination of social development activities among the various actors needs to be fostered, and municipalities need to ensure that local investments are within the framework of national policies for poverty alleviation. Recommendation Where decentralization is underway, social funds should foster the cre- ation of municipal funds for local economic development and transfer to municipalities the responsibilities for which they have a mandate. 115 19 Constituencies' Consultations: NGO Representatives Session Leader Manuel Chiriboga, Co-Chairperson NGO-World Bank Committee NGOs and The issue of poverty is a crucial development element. Its eradica- development tion cannot be achieved without goals shared among the govern- ment, civil society, private and public sectors, and NGOs. The expe- rience of Mali and Brazil highlights the way the participation of multiple actors has created a national will to overcome poverty. NGOs have invaluable experience in promoting local bottom-up develop- ment, that is, from the family to the community to the municipality. They have contributed significantly to the evolution of concepts of social capital and human development and have drawn attention to the importance of addressing gender issues to change the traditional relationships between men and women. Recommendationsfor * Social funds should establish a more permanent relationship socialfundsfor the with NGOs to strengthen grassroots organizations and em- future power them to participate as key actors in their own develop- ment. The boards of directors of social funds can gain greater legitimacy through the representation of multiple actors: the government, NGOs, community groups, grassroots organiza- tion, municipalities, and the private sector. . Social funds should focus on better utilizing the potential of NGOs by involving them, not just in implementation of projects as in the past, but also in the identification, design, and moni- toring and evaluation of projects. * Social funds should focus on building the social capital of in- stitutions, organizations, and government agencies. They should earmark significant resources for capacity building, not just within NGOs, but in municipalities and local governments as well. Recommendationsfor * NGOs should establish a network to exchange information NGOsfor thefuture about their experiences relative to their relationships with so- cial funds to identify practices that can be replicated. The net- work can also facilitate the identification of areas that need further analysis, in local development, capacity building, par- ticipation, gender issues, and so on. * The NGO network should interact with AFRICATIP and Red Social to permit the participation of network members in the meetings of the other networks. 117 118 A Close Look at the Key Issues * An important challenge for the NGOs in the future, if they are to become stakeholders at the highest levels, is to develop and maintain high standards of professionalism and ensure that their administrative practices conform with a strong code of ethics. 20 Constituencies' Consultations: Development Agencies Session Leader Azita Berar-Awad, Head of Unit, Development Policies Department International Labour Office Areas neglected by Issues the session felt had been neglected by social funds were the po- socialfunds tential for employment promotion and income generation at the local level and the gender dimension. The group felt that employment gen- eration as an objective need not remain confined to social funds that respond to an emergency, but can be a valid objective of social funds that become development-oriented mechanisms to facilitate poverty eradication and community development. Preliminaryfindings The gender dimension in social funds is an issue that was discussed in of the ILO study on many groups during the workshop. The Intemational Labour Office socialfunds (ILO) is reviewing the experience of social funds in terms of integrating a gender perspective in their work. Preliminary findings indicate that some activities in the portfolio mix supported by social funds do en- courage more women's participation than other activities. Findings also indicate that a demand-driven approach is not automatically a gender- sensitive approach until all the elements of capacity building or prepreparatory phases at the community level reflect women's priori- ties. Findings on targeting indicate that the potential for synergies from linking activities related to social funds to activities of NGOs, financial intermediaries, and cooperatives is underrealized. What will thefuture The group felt that there are two extreme alternatives for social funds in role of socialfunds the future: as an executing agency similar to AGETIP for infrastructure be? works, or as a multipurpose agency that implements a broader menu of projects. Between these two extremes lie variations that depend on the context of each country. While the group agreed on the need to build on the comparative advantage of social funds, it felt social funds could not be perceived as the only, or main, instrument for poverty eradication; their menu should not be overloaded. Social funds' objectives should be reviewed periodically as national conditions change. As they evolve, national or internal financing arrangements should be encouraged to make them less dependent on donor finance and more sustainable on their own. Agreements reached The session agreed on the need for a review of the impact of social funds on national institutional development as well as local institu- tional development, an area as yet understudied. There was agreement 119 120 A Close Look at the Key Issues that donors must strive to facilitate greater flexibility in social funds as they attempt to respond to the priority needs of their country and that donors should stop earmarking their financial support to social funds for certain components. Recommendationsfor Following are several easy and practical options suggested to institute ensuring multilateral or enhance donor coordination at various levels. coordination * Social funds' directors should request donor coordination at the country level, especially with respect to evaluations. The possi- bility of instituting a working committee of donors that meet regu- larly should be explored. * A directory of focal points for social funds among donor agencies should be created. This may be an efficient way to bring about donor coordination. * Best practices identified by donors should be linked with the World Bank's World Wide Web site on social funds to help dis- tribute information. * The production and dissemination of guidelines for social funds on issues such as gender, environment, participation, and so on should be coordinated. These handbooks could enumerate the various issues on which different social funds are working and highlight the comparative advantages of the different in- stitutions involved. 21 Regional Consultations: Africa Partner Institutions AFRICATIP, African Development Bank, World Bank Africa Region Organizers Lamine Ben Barka (AFRICATIP); Cesaltina Abreu (Angola Social Funds); Alberto Harth and Laura Frigenti (WB) Introduction The Africa Consultation was an opportunity to bring together for the first time all the AGETIPs and the social funds in Africa. In 1989, the first AGETIP began operations in Senegal. By 1993, six had been created in West Africa and had formed the AFRICATIP Network to share expe- riences and best practices. The first social funds began in Zambia in 1991. No network exists among the 11 social funds agencies. For many social funds' participants, the Africa Consultation was the first opportunity for the group to interact and even discover each other's existence. More- over, there had been no interaction between the AGETIPs and the social funds, although the AFRICATIP members had met with the Latin Ameri- can Red Social twice. Participants therefore valued their meeting with African colleagues and the opportunity of sharing knowledge and ex- perience through networking greatly. Agenda and outcome Following the introductory presentations were parallel meetings of the social funds and the AGETIPs. The social funds laid the groundwork for establishing their network, Africa Social Investment Funds Network (ASIFNET), similar to AFRICATIP and to the Red Social. The resulting creation of ASIFNET is well under way, and social funds members have designated committees for setting up the network. In the parallel session of AGETIPs, the Africa Region of the Bank pre- sented a profile of all social funds and AGETIP projects, highlighting the institutional organization, sustainability of subprojects, and lessons learned. Discussion centered on substantive issues and the subjects of greatest concern to the AGETIPs. Plenary discussion The first plenary discussion highlighted the similarities between AGETIPs and social funds, identifying the comparative advantages of each and what one group can learn from the other. The comparative advantages of AGETIPs are their ability to work with the private sector, the introduc- tion of private management principles in all aspects of their work, and the concept of delegated contract management of labor-intensive work. The comparative advantage of social funds lies in their success in encour- aging community participation; letting rural users decide project priori- ties, location, and design; and bolstering greater ownership of projects. 121 122 A Close Look at the Key Issues New socialfiund One of the most important outcomes of the regional consultation was network created the decision by the social funds to develop ASIFNET. The group dis- cussed (a) the value and objectives of establishing such a network; (b) whether they should create their own network or simply expand AFRICATIP; and (c) when and how this network would be established. It was decided that ASIFNET would be open to all the social funds as well as the poverty alleviation funds in sub-Saharan Africa. Members formed a general assembly, which will meet once a year. They will elect a council, which will work through subcommittees to choose topics for discussion and take decisions on action programs. An interim commit- tee, consisting of the social funds of Angola, the Comoros, Madagascar, Malawi, Zambia, and Zimbabwe, was organized to draft the bylaws and provide resources to convene the first meeting. The need to share expe- riences between the social funds of Africa and Latin America was high- lighted. Participants decided that the committee for ASIFNET would place two members in charge of interacting and communicating with AFRICATIP and the Red Social to organize an effective network for the exchange of experiences across the two regions. AGETIPs: Enhancing The following decisions were taken at the session to enhance the capac- the capacity of ity of enterprises: enterprises * Develop better target training programs for small and medium enterprises (SMEs). * Promote a contractual culture among SMEs by monitoring and rewarding high performance and sanctioning poor performance. * Further split contracts to allow specialization and to improve com- petitiveness while providing incentives to work together when needed to coordinate works on the ground. * Enhance recognition of the tradeoff between promoting labor-in- tensive works and promoting the growth of SMEs, and clarify future directions. AGETIPs: Improving Signed agreements for operations and maintenance (O&M) from mu- O&M nicipalities is not enough. Resources are rarely available; this problem needs to be overcome at local levels through better resource mobiliza- tion and block grants. It is important to put mechanisms for O&M in place before, rather than after, the execution of works. Possible alterna- tives that can be considered are: * The creation of a special O&M trust fund account in which the government and municipalities deposit funds before the start of work to ensure medium-term O&M. This has been done in Mali. * The computation of specific costs of O&M for each subproject and including these resources in the municipality's or government's annual recurrent budget every year. * The capitalization of O&M by subcontracting it to the smaller en- terprises building the works. Other issues for In discussing the future role and functions of AGETIPs and the geo- AGETIPs graphical sites of their works, the following questions were raised: Should AGETIPs be involved in execution as opposed to planning and program- ming? Should they have a role in the decisionmaking for investments Regional Consultation: Africa 123 investments finance and priority setting, or should these functions be completely separate, as is the case with AGETIPs in Benin, Mali, and Mauritania? Focusing on poverty and social aspects, the group de- bated on whether AGETIPs should be more directly concerned with poverty alleviation, beyond the objective of employment generation through labor-intensive works. Urban as compared to On the issue of geographical location of works, some participants ex- rural: New areas of pressed concern about transferring the AGETIP approach to rural areas, interventionfor given that rural areas differ from urban areas significantly in diversity AGETIPs and density of population, actors and context, and environmental con- cerns. If job creation continues to be a goal for AGETIPs, the irrigation and reforestation sectors were highlighted as possible sectors for inter- vention in rural areas, so that jobs created could be more permanent as well as productive. Challenges faced by The main problems and challenges of social funds mentioned were: socialfunds * The tradeoff between rapid implementation and building institu- tional and technical capacity * The tradeoff between quality of project and quick payment and disbursements * Limited success with credit programs * The weak capacity of local public agencies and the difficulty of community groups in reaching the poorest * The need for more attention to O&M. Challengesfaced by The main problems and challenges faced by AGETIPs discussed were: AGETIPs * Improving the capacity of contractors and consulting engineer- ing firms * Improving the quality of works completed through better super- vision and greater focus on O&M * A lack of competition for the agencies * The need to ensure that AGETIPs recognize the capacity of mu- nicipalities as decentralization advances * Facilitating greater community participation and ownership of projects. Emerging directions The presentations were complemented by a short briefing on the pre- liminary findings of a current regional review. This review examines 28 social funds and AGETIP projects financed by the World Bank in the Africa Region of the Bank. The desk review will be complemented by participatory evaluations and stakeholder interviews in Angola, Benin, Burkina Faso, Madagascar, and Mali to highlight best practices in insti- tutional models and ways to sustain approaches as well as subprojects. Both AGETIPs and social funds, initially created to mitigate the intensi- fication of poverty, urban migration, and the negative impact of macro- economic adjustment, were a response to the weak implementation ca- pacity, inefficiency, and lack of transparency of the public sector. Having succeeded to a great extent in addressing those immediate challenges, social funds and AGETIPs are evolving into slightly different entities. Both are struggling to find ways to achieve more sustainable results on 124 A Close Look at the Key Issues the ground. The preliminary findings of the review indicate that the main challenges faced by social funds and AGETIPs in the future are: * Targeting the poor, especially women and children * Mainstreaming the principles they embody for improved public sector management, including procurement, technology choice, and beneficiary participation * Progressive decentralization and support for local development * Ensuring more sustainable results. Improving the Adherence to the following principles were highlighted as leading to institutional improved institutional performance: environment in the environment inthe 9* Mainstreaming agency principles future * Introduction of more competition and in some cases unbundling services * Aiming for further staff excellence * Allowing for greater flexibility * Keeping objectives clear * Forging better partnerships with local government and grassroots organizations * Greater involvement of sector ministries * Improving information collection and ensuring better coordina- tion among agencies. Improving The following actions to enhance sustainability of subprojects were sug- sustainability of gested: projects * Developing a long-term vision as social funds and AGETIPs move away from an emergency to a development orientation * Early involvement of beneficiaries * Creation of a standardized menu of technology choices, locations, and organizations * Organization of viable users' committees, particularly for O&M * Establishment of realistic local expenditure plans * Improving the technical and fiscal capacity of local governments * Setting criteria to improve performance and efficiency. 22 Regional Consultations: Eastern Europe and Central Asia Partner Institutions World Bank, Europe and Central Asia (ECA) Region Organizers Alexandre Marc and Betsy McGean (WB) Introductory and Social funds are fairly new in the ECA region. The microcredit compo- thematic nent of the Albania Poverty Alleviation Project was the first social in- presentations vestment fund (SIF) operation in the region, followed by the Armenian SIF. Currently, social funds are being prepared or implemented in Geor- gia, Moldova, Romania, Tajikistan, and Uzbekistan. SIF-type mechanisms are also beginning to emerge from sector projects to support reforms in health, education, and the environment. The ECA Regional Consulta- tion on social funds was a well-timed event that offered social funds' managers, government policymakers, nongovernmental organizations, and World Bank staff working on social funds their first opportunity to meet as a group and to discuss recurring themes in the design, imple- mentation, and impact of social funds in the region. Ideas emerged on defining or redefining some of the potential roles of social funds and establishing mechanisms for improving sharing and learning about so- cial funds across the region. A major outcome of the one-day event was agreement to hold a regional workshop in 1998 to follow up and explore themes emerging from the International Workshop. Findings from the The case of the Armenian social fund was presented to illustrate some experience of the of the positive and negative features of centralized planning that impact Armenia social funds social funds in countries in transition. Positive features, as presented by the Armenian social fund general manager, include: (a) movement to- ward decentralization across the region, (b) well-educated citizenry, and (c) nascent but growing construction industry. Unlike most developing countries, poverty in the region is not chronic. Negative aspects of cen- tralized planning include: (a) an oversized and unmanageable infrastruc- ture, (b) a negative bias toward the community, (c) a lack of consensus in decisionmaking, and (d) a high level of distrust toward local govern- ments and NGOs. The Armenian social funds' manager presented his views on key objec- tives of all social funds in the region: * Infrastructure development geared toward better quality of life rather than poverty reduction * Development of the private construction industry * Promotion of community participation 125 126 A Close Look at the Key Issues * Capacity building of contractors, communities, and local govern- ments * Downplaying expectations of substantial employment generation due to the limited absorption capacity of social funds to invest large amounts of funds, despite enormous demand for steady em- ployment. Group discussions Small groups discussed the implications of the Armenia experience, giv- ing participants the opportunity to examine the recuirring themes present across the region: privatization, decentralization, social sector reforms, and postconflict resolution and civil society. On privatization Participants agreed social funds have an important role in promoting privatization in the region, namely through the following: * Facilitating the transfer of assets from state enterprises and col- lective farms to local governments * Encouraging development of private contractors and increasing their capacity * Creating a demonstration effect in a wider market economy by enforcing contracts, demanding accountability for work quality, and demonstrating efficiency and rapid disbursement. Challenges for social funds' designers and managers include the fol- lowing: e Achieving effective coordination between social funds and min- istries to ensure that facilities rehabilitated by funds are not priva- tized * Enabling citizens to be heard and to be active in the privatization of social and economic services in their communities * Overcoming difficulties inherent in the rehabilitation of small in- frastructure facilities that are integrated with larger systems ex- tending beyond the boundaries of local communities. Decentralization and Discussions on decentralization focused on the impact of ill-defined roles social sector reform of different levels of government and line administrations; the absence of legal structures for introducing or expanding user fees and cost re- covery; and the potential for social funds to demonstrate to local gov- ernments an efficient and demand-driven way to deliver public services. Some of these issues also arose in discussions on social sector reforms. Other opportunities and challenges for social funds in reforming sec- tors include the following: * Demonstrating the importance of budgeting for capital construc- tion and recurrent expenditures * Balancing apportionment of social funds between infrastructure need and income deprivation, which may not coincide * Incorporating information campaigns with infrastructure re- habilitation to affect attitudes and behaviors, such as in the health sector. Postconflict Participants discussed the implications of social funds working in a po- resolution and civil litically or socially unstable envirorment. It was agreed social funds are society influenced by and can influence such an environment. Social funds can Regional Consultation: Eastern Europe and Central Asia 127 bring satisfaction to groups through acknowledging their needs, quick delivery of benefits that results in renewed hope, and using infrastruc- ture rehabilitation as a catalyst for developing relationships between minorities and majorities. Serious challenges for social funds in such an environment are likely to emerge from the breakdown of law and order and its effect on the movement of goods, contractors, laborers, and social funds staff countrywide. Another area of challenge could be posed by the emergence of internally displaced persons who are not a clearly identified community and are too destitute to take advantage of the opportunities that social funds present. Participants also viewed social funds as an impetus and process mechanism for organizing and channeling community initiatives. Consensus on next There was consensus about the desirability of a follow-up conference to steps be held in the region to reinforce ties among regional funds. Other ideas for developing a network to exchange information and experience were to set up World Wide Web sites about individual social funds and estab- lish a training center for the skills enhancement of social funds staff. 23 Regional Consultations: Latin America and the Caribbean Partner Institutions La Red Social, Organization of American States, World Bank Latin America and Caribbean Region, Inter-American Development Bank Organizers Eduardo Diaz Uribe (Red Social); Samuel Morley (Inter-American Development Bank); Benno Sander, Roy Thomasson (Organization of American States); Allan Colliou, Willem Struben (World Bank) The regional consultation was convened at the Organization of Ameri- can States General Secretariat, attended by 80 persons from regional and international financial institutions, national governments, social invest- ment funds (SIFs), and NGOs. Discussions and The discussions took stock of the implementation experience of SIFs in themes the region, assessed their impact on efforts to overcome poverty, and examined ways to increase the integration of regional and international networks of the SIFs as a means to share experiences. Presenters high- lighted the accomplishments of the SIFs and pointed out areas that need to be addressed effectively in combating poverty in the Americas and the Caribbean. The overall theme of the discussions centered on the challenges faced by the countries and the SIFs of the region in dealing with structural poverty, given that this is not why SIFs were created. The three major areas discussed were: the role of the SIFs in national poverty alleviation programs, how to incorporate community participation, and how much emphasis should be given to generating productive employment. Role of the SIFs Though essential, the SIFs are but one component of the national pov- erty eradication strategy, because governments have a constitutional role to alleviate structural poverty. Directors of SIFs pointed out that the funds are now expected to move from operating isolated programs to work- ing with governments to create integrated policies to eradicate poverty, including contributing to debates over fiscal and tax policies. The transition from an interim technical coordinating body to a subor- dinate body within the state can be difficult for the institutions. Unless SIFs have specific objectives that are integrated with the objectives of national policies, and unless their institutional framework falls within the overall national institutional framework, they cannot be effective in eradicating poverty. They could be at risk of competing with and dupli- cating efforts of other government and nongovermnental initiatives. 129 130 A Close Look at the Key Issues Community The second major topic discussed was the strategies of SIFs in develop- participation ing modalities for the participation of constituencies and NGOs. There was clear consensus on the need to involve all actors in social develop- ment in a systematic fashion, including the poor. The aim of participa- tion is not to develop national democracy in its broadest sense but to catalyze community action and to develop a sense of ownership. The group agreed that without beneficiary participation there is no project ownership and little likelihood for long-term project sustainabil- ity. Delegates, however, pointed out that, while participation is desir- able, it does not come free of cost; resources to bring about participation and local management need to be allocated to projects. Supporting Participants also discussed the problems and issues related to the democratic systems design of election systems and institutional structures, with the goal of ensuring democratic processes and community involvement so that representatives can add value, increase credibility and support for the SIF, and establish relationships with local governments for enhanced effectiveness. Decentralization An important strategy for the SIFs is to emphasize decentralization and participation as key elements. Finally, however, each country will have to adapt this strategy, based on different interests, focus, variations in available technology, and mechanisms for participation, as well as varia- tions in local development frameworks. In the absence of a standard model, SIFs need to be able to determine their own structures, methods, and procedures. Civil society Participation also involves integration of SIFs into civil society, increas- ing their collaboration with economic organizations, and transforming them into promoters of local development. SIFs must develop close ties with NGOs to determine the needs of marginalized groups. Finally, several participants noted that there has been little coopera- tion between governments and nongovernmental organizations in the past. In some cases govemments suspect NGOs of having a political agenda; the suspicion is often mutual. New mechanisms that create responsibilities for both parties while ensuring their mutual credibil- ity must be developed to bridge this gap, even though the process is likely to be a long one. Project design Participants, including international institutions, recognized that, while international banks had traditionally been good at designing large projects, their capacity had proven to be inadequate for the de- sign and implementation of small projects needed and demanded by communities. Both SIFs and development agencies need to find ways to build capacity to design and implement projects at the level of the community. Governments need to bear in mind that resources received from SIFs are loans and not grants. If the country is poor, it cannot afford to bor- row money and give it away with no mechanisms for cost recovery. With such indebtedness, unless the loans are cautiously administered and projects well-conceived, the loan can become a long-term burden. Regional Consultation: Latin America and the Caribbean 131 Efficiency in the design of SIFs and their projects is key to avoiding additional problems. Good design requires much work early to establish an adequate baseline of information. Since little is known about project impacts, there is a critical need to develop indicators for monitoring and evaluating projects to assess the contribution of SIFs to combating poverty. A focus on train- ing at the local level would allow better implementation. Innovation and More attention should be given to encouraging innovation. International flexibility institutions should permit more flexibility and wider choices in the menu of projects that SIPs develop in response to the specific issues in their country. Without incorporation of these elements, the long-term sustain- ability of SIFs can be hampered because of their continued dependence on international cooperation. Productive projects Though many participants thought that the only way to combat pov- erty was through productive projects, the initial objective of SIFs was to finance small-scale infrastructure. It is now widely recognized that SIFs can be effective at bringing about short-term increases in income streams in communities; in many cases, however, they are not equipped to imple- ment integrated projects. In specialized fields, such as agriculture, pri- vate sector development, credit, and marketing, their productive projects have been largely experimental. There was consensus, however, that in the future SIFs must give high priority to building small business capac- ity through training and microcredit if they were to have significant long- term economic impacts. Conclusion SIFs in Latin America and the Caribbean are relatively advanced in terms of networking and program development and management. Sharing their experiences with other SIFs worldwide and continuing the development of mechanisms for mutual learning are an important part of their work. They also will be involved in mainstreaming their work methodologies to central and local levels of governments in their own countries. 24 Regional Consultations: Middle East and North Africa Partner Institutions World Bank Middle East and North Africa Region Organizer David Steel (WB) Participation The regional consultation was an inaugural event and had two purposes: the first was to exchange experiences between participants; the second was to discuss whether to establish a Middle East and North Africa (MENA) re- gional network for social funds along the lines of those already established in Latin America and the Caribbean and in Africa. The 17 participants at the meeting represented the three social funds in Algeria, Egypt, and Yemen; the governments of Algeria and Pakistan; three NGOs from Pakistan and Yemen; and one international organization, the World Bank. The delegation from Pakistan joined the MENA region group because there was no Asia or South Asia regional consultation. Joint meeting with The first part of the day was spent with the Europe and Central Asia (ECA) ECA regional consultation; it consisted of a presentation and discussion on prin- cipal issues facing the social funds in that part of the world. The MENA re- gional consultation participants then pursued their own program for the rest of the day. Regional experience The representatives of the three sodal funds in Algeria, Egypt, and Yemen and the representative of the proposed social fund in Pakistan made brief presentations on their operations and the conditions within their countries that they were designed to combat. Principal findings from the discussion that followed were the relative newness of the social funds in the MENA region compared to other parts of the world, the different degrees of experi- ence within the region, the different sizes of the social funds, and the differ- ing degrees of involvement of civil society and NGOs in the economic and social development of their respective countries. Representatives expressed considerable interest in the presentation on the proposed social funds in Pa- kistan, which is intended to be funded entirely from private and nonprofit sources. Representatives agreed to exchange experiences later about the fu- ture of social funds in the MENA region, especially pertaining to sustainabil- ity, targeting, the role of microenterprise lending in a fund's operations, de- centralization, and interactions with civil society and NGOs in particular. Regional network to There was unanimous agreement that a regional network of social funds in be created the Middle East and North Africa region should be established. The repre- sentatives of the Egypt social fund, as the oldest and largest social fund in the region, agreed to host the first meeting of the network. 133 25 Development, Equity, and Social Justice Keynote Speaker Aminata Mbengue Ndiaye, Minister of Family Welfare and Mayor of Louga, Senegal The social dimensions The poor, the women, the young, the marginalized can and should take of structural part in and benefit from the fruits of growth in the world. To restructure adjustment their economies and to go back to a situation of growth, most of the Afri- can and Latin American countries, with the World Bank and the Interna- tional Monetory Fund, have launched structural adjustment projects with the support of their development partners. Despite interesting results in terms of microeconomic balance, these programs incurred important so- cial costs for their countries. Many people lost their work and fewer jobs were created, leading to a degradation of living conditions for the more vulnerable members of society, specifically children and women. To accommodate the social dimension of structural adjustment and to better alleviate poverty, social funds were implemented to reach com- munities who do not have access to job markets and to essential social infrastructures. These were given different names: social investment funds, AGETIPs, rehabilitation funds, and emergency funds. And these funds have been efficient instruments in the alleviation of poverty, pov- erty that threatens the peaceful coexistence of people, in fighting unem- ployment, and in improving the health, education, and environmental living conditions of the population. The widening gap The gap between developing countries and the more developed coun- between the rich and tries continues to widen. The ability of our governments to respond to the poor the fundamental needs of their populations is weakened constantly. The repercussions limit the fair participation of the marginalized, who fight daily to preserve their dignity and to contribute to our economies. Give both women and The fight against poverty can only be done through alleviation programs, men access to poverty which all citizens should be able to reach through a democratic process. alleviation programs The process should have economic structures that guarantee to every- body, and specifically to poorer families and to women, equal access to basic social services. In this framework, women, who are at the center of our families and who often are the family leaders, work daily in poverty alleviation. They try to find solutions to manage production and to find goods for their families in an economic situation that is more and more difficult. We are striving to develop the capacity of women to organize themselves. We give the greatest importance to the strategies of survival 135 136 A Close Look at the Key Issues they have developed, such as the creation of microenterprises. By ignor- ing women, we could be weakening the human resources of our coun- try and unfairly allocating our national resources. Practical In Senegal, the Ministry of Women and Children supports the initia- interventions to tives of families through different programs, activities that create em- support women in ployment, improve technology, and support women's partnerships. Senegal These programs are managed in a participatory and integrated approach. They encompass many forms of intervention, such as creating commu- nity infrastructure to improve living and working conditions of women; supplying them with resources to perform their daily tasks; delivering literacy programs to fight ignorance, one of the main barriers to the de- velopment of women; preparing information, education, and commu- nication curricula on topics relevant to their lives and the lives of their families; and implementing credit that supports the needs of women's organizations and their productive activities. These practical interventions to improve the well-being of women illus- trate what can be done through programs and plans that address the constraints of the populations. Such an approach enables Senegal to cre- ate sustainable effects that can be assumed by the beneficiaries through full participation and decentralization. The essential The participants have ten years of experience in social efforts and will components of good continue to promote their work to alleviate poverty in the countries that governance need it. The group has critically and constructively reviewed our com- mon concerns on the sustainability of approaches, popular participation, transparency, implementation of local democracy, and the operational partnership between different institutions: governments, donors, local communities, NGOs, and community grassroots organizations. The par- ticipants also highlighted the need to respect grassroots initiatives while developing institutional capabilities of local communities and commu- nity organizations to strengthen the capacities of the poor, giving them access to knowledge, to decisionmaking, to technologies that are cost- effective and sustainable. During the workshop, the group identified the essential components of good governace. The many recommendations of this conference will form the basis of a new drive in poverty alleviation within the framework of global synergy and international partnership. Eliminate exclusion If the declaration and program of Vienna in 1993 is accurate, that ex- and marginalization treme poverty goes against the free enjoyment of human rights, further emphasis must be given to community actions that alleviate, and finally eliminate, poverty. If the right to development is considered universal, a fundamental individual right, and democracy, development, and re- spect of human rights and basic liberties reinforce themselves mutually, no group wili be omitted from the services offered by the organizations represented by this workshop. If the Peking action plan, adopted in 1995 by the Fourth Conference on Women, which strengthens the power of women and guarantees their full participation on an equal basis in all fields, including decisionmaking and access to power, are essential con- ditions to development, no one will be left by the wayside. Exclusion and marginalization will be eliminated forever. Development, Equity, and Social Justice 137 Fairer social justice Finally, beyond declarations, beyond political will, each country and each institution must decide to find the right spirit and the right means to make a quantum leap to a fairer social justice. And it is thus that our meeting here in Washington, in this prestigious institution, the World Bank, will be symbolic. It will enable us to cross-fertilize, to establish dialogue between cultures, to establish networks for a fairer, more hu- man world.The President of the World Bank also articulated this new vision of human development during his recent visit to Africa. I hope our call will be heard. 26 Workshop Concluding Remarks Speakers Steen Jorgensen, Sector Leader, Social Protection Board (WB) Ishrat Husain, Principal Advisor, Poverty Reduction and Economic Management (WB) Steen Jorgensen, Sector Leader, Social Protection Board (WB) The coming of age of The accomplishments of social funds over a decade have been described socialfunds:from as well as the complications of coming of age as social funds enter their childhood to adolescence. A decade ago, few talked of social funds; today a large so- adolescence cial fund community gathers here. Of the immense learning over the last decade, these are a few of the themes discussed at this workshop: * Much time used to be spent arguing for the importance of de- mand-driven or demand-oriented mechanisms; today the work- shop participants discussed making that mechanism better. i Social funds are now discussing networks and talking about trans- fer of knowledge among developing countries. That is a very im- portant development, part of the maturation of social funds. a The importance of targeting and the gender dimension of target- ing has been addressed, how to do it better at lower costs with higher benefits. Targeting by type of services is also being discussed. i The participation of beneficiaries, local governments, and civil society in projects was considered. The criticality of participation throughout the subproject cycle was reviewed several times. Par- ticipatory monitoring was discussed; more discussion about this subject is needed as well as ways to disseminate good practices. * Sustainability was not mentioned a decade ago, yet it formed a major theme of this workshop. Sustainability stems from a philosophy that asks people what they want and gives them options and choices. So- cial funds have learned about sustainability from its NGO colleagues. * The importance of ownership of the development processes and projects by the communities was discussed. Social funds have proven that they can facilitate this ownership; they also have shown that they have considerable room for improvement. * The participants talked extensively about leaming by doing, not in isolation, but with sector agencies, local govemments, and poli- ticians, so that national policies are followed. * Other govemment actors can leam from the experiences of social funds, as they have contrived new ways of doing business for the government and maybe for the nongovemmental sector as well. 139 140 A Close Look at the Key Issues Growing into However, social funds still have mrore learning to do: adulthood * Social funds have not been particularly good at approaching col- leagues in development agencies, ministries, and NGOs to try to make learning a joint effort so that the country can really move forward. * That AGETIPs have been successful in implementing delegated contract management is an exciting idea. How does it apply to other sectors, especially to other parts of the public sector? * The roles of NGOs and local governments and their responsibili- ties need to be defined and formalized clearly Social investment funds need to be integrated within national priorities in public investment programs. * The environmental affects of social fund projects must be examined very carefully There may be real issues that have been overlooked. * Coordination among the networks of social funds, among donors on evaluation criteria and on processes, among the development actors and players in the various countries needs to be brought about. Some questions that Questions were asked for which there are no answers yet. They give could not be answered social funds something to consider in the future. How do social funds prioritize demands that exceed their resources? How do social funds prioritize various activities in terms of investing in infrastructure and building capacity in the community? Should prioritization across sec- tors within a country be discussed? These are key questions for social funds to think about. Social funds have not come to grips with gender issues. Some serious work is needed in understanding the gender dimensions of demand- oriented institutions such as social funds. Women are often marginalized in communities. How do social funds ensure that their demand is effec- tive, not just an implicit demand that is hidden to be discovered later? Finally, how is empowerment or participation measured? One school of thought considers social capital to be the method, understanding how communities interact and how communities go on, and social funds could explore it. There is not a good way of measuring it; yet empower- ment and participation may be the one lasting impact of social funds. The legacy of social The real, lasting impact of some of the more successful social funds may funds not be the infrastructure created. It may not be the nutrition programs delivered, but the fact that communities exist now who demand from government, from nongovernmental organizations, from local govern- ment, to be heard and to be taken seriously One of the determinants of the relative success of social funds so far has been their flexibility. It is good to be flexible and be a little crazy some- times. It is good to try things and change things when they do not work. Flexibility causes problems for evaluations, because social funds change objectives about three times in the first year and then about once every two years. But that can be good. If we think we know the truth when we start out, we might as well not try to do social funds, because I think that is the one thing that they do better than anything else: be flexible and be adaptable to the local circumstances. Workshop Concluding Remarks 141 Ishrat Husain, Principal Advisor, Poverty Reduction and Economic Management (WB) Introductory remarks This workshop has been more than what we had expected, very profit- able and productive, and I want to thank you on behalf of the World Bank and on behalf of the organizers for sharing your rich insights, your perspectives, and your views and for bringing very good suggestions to the table. Broad areas of Essential participation: what socialfunds should not do-Social funds agreement at this are part of an overall poverty reduction strategy to be designed by the workshop country itself, in broad participation with all the stakeholders, not only the government, not only the NGOs, not only the private sector, but all the stakeholders combined. Where socialfunds will not work-If government policies and investments do not support the interests of the poor but cater to the needs of the elite or the rich or the well-to-do, a social fund will not be an effective instrument of a strategy for poverty reduction. It has to be an integral part of the government's willingness and commitment to genuinely help the poor. So if governments, for political reasons, provide a social fund, while all the investments, the policies, and public expenditures are biased against the poor, the fund will not work. If a social fund exists where the rural areas are neglected, where primary education and health facilities are inad- equately paid attention to, then that social fund is not going to work. Social funds are part of the arsenal against poverty-There has been a maturity, an evolution, and a learning in social funds, which were origi- nally designed to compensate for the social dimensions of adjustment. But, today, after ten years, a group of practitioners have found a way to further that thinking and to make these social funds a potentially important in- strument for poverty reduction, again in the overall context. They are no longer an emergency compensatory mechanism; they are now one of the tools in the arsenal against poverty. That is the evolution of ten years. Targeting the poor-From a beginning of just one project in Bolivia, social funds exist now in 35 countries. Some of them are actually not emergency funds, but funds that seek the poor and marginalized segments of society. This is a completely new niche, a niche for reaching the poor. Where pub- lic sector agencies and the private sector have failed, social funds have stepped in. They have found a niche for themselves, to cater to those areas where the poor predominantly live and that other public or private agen- cies have missed. Socialfunds areflexible instruments-Social funds have also shown them- selves flexible, something that can be replicated in the institutional devel- opment strategies of their own countries. They have proved to be effec- tive in reaching out to the poor. The targeting efficiency of the social fund, although not perfect, is better than any other instrument seen so far. Social funds provide an avenue for community participation-Social funds have provided an opportunity for community participation, for the private sector, local governments, NGOs, and the central govern- ment. But the main actor that remains is the community itself, which is involved with the funds. 142 A Close Look at the Key Issues Socialfundsfacilitate a demand-driven approach-Instead of the tech- nocrats dictating investments, the demand-driven approach allows com- munities to identify and ask for subprojects that need to be constructed, maintained, and built under social funds. Accountability-Despite the devolution of implementation to local lev- els, social funds maintain accountability for operations. Fund managers can track on their computers for each subproject how much has been spent, how many times it has been audited. And that is something that cannot be expected from the public works ministries. Even five years after closure of these projects, audited accounts are unavailable. So the accountability of social funds is very, very important. Cost-effectiveness-Finally, as compared to traditional contractor-driven projects, the average social fund subproject, because it is constructed by the communities and supervised by them, is relatively more cost-effec- tive. In some cases, its costs are only half that of public sector public works agencies. Applications of the It is important to not lose sight of the characteristics, features, and positive lessons and principles that have emerged from social funds and have made them challengesfor quite effective. The challenge today is application of these principles national strategies to the wide body of national institutional development. If social funds multiply as they have in Bolivia, their activity becomes enclaved. The challenge is the application of the most effective aspects of social funds to influence national public sector management and national institu- tional development. This is the biggest challenge that social funds face in the future. Scope and There are opportunities for multiple players; do not consider this a zero- opportunitiesfor sum game. There is no conflict between the NGOs and the public sector multiple players agencies. There is no conflict between local governments and commu- nity organizations. Varied experiences in 35 countries show there is a place and an opportunity for all actors to participate in social funds. By unbundling the whole project process, roles and opportunities are cre- ated in which each player can participate effectively. Communities' and Start with the mobilization of communities-the poor really cannot ar- NGOs'mobilization ticulate their demand. Social funds will be making themselves and project noncredible if they believe that the poor, who are marginalized, living identification in the rural areas, for example, on the mountains of Guatemala, will be able to state their needs, their demands. The best group to mobilize those communities, those poor, are NGOs. They have the tools and the exper- tise to do so. After mobilization comes identification and selection of projects, which should be done only by communities and local commu- nity organizations. Communities cannot be expected to prepare projects. Government agencies, the local government agencies, and the munici- palities have the technical expertise to help communities translate those priorities into feasible projects. Project approval and Then there is appraisal and approval. There, the social funds staff shines. appraisal The social fund should not be a big ministry with 50,000 people, but a small, mean, and lean organization that intervenes only at the points where needed. So for appraisal and approval, bring in the social funds. Workshop Concluding Remarks 143 Financing can be done by the social fund itself, or the municipalities can participate or the communities can contribute their own labor or their own savings to the financing of those investments. From financing, go to implementation. One of the attractions of the social fund approach is competition. There should not be a monopoly of any single organiza- tion. Cost-effectiveness comes only through competition. Implementation Based on project specifications, community organizations should be asked whether they can implement the project. If NGOs have the capac- ity, they can implement it. So can the local municipality or the central government. Implementation should not be earmarked; responsibility for it should be given to the person or group that can implement the project most cost-effectively and promptly while conforming to specifi- cations. Social funds supervise the work and secure quality by ensuring it is done according to specifications. Monitoring Social funds have to monitor the project, see whether the objectives are being met, because a demand-driven project has no predetermnined set of rules. Mistakes, changes, and modifications all come from the moni- toring. It is a live process. The appraisal allows the social fund to keep making changes, and that is how a social fund must function. Operations and Clear, explicit arrangements for sustainability need to be built into the maintenance project. Is the water supply scheme going to be maintained by the local municipality? Is the education ministry going to provide the teachers, the furniture, the textbooks, and all the equipment for that school? Oth- erwise, a school will not be built. Or will the community organization be responsible? There is a village in Mali where the community, the poor villagers, hired a nurse and a part-time doctor to run the clinic that they built themselves. It was functioning better than the government dispen- sary, which had neither doctor nor medicines. Such arrangements have to be part of project design. Evaluation Evaluation and impact analyses have to be carried out to ensure that the impact is commensurate with the expectations at the start of the project. Either the social fund can do it, or bring in universities or research insti- tutes to visit the site and make the evaluation. There is a task for every one of us. There is no fight for kudos in poverty alleviation, because it is a big and very difficult challenge. All of us can contribute to it. Working collectively I listened to many conversations during this seminar, when people were for maximum saying, well, this is our turf, this is what we can do, this is what they effectiveness should do. I think we should not think that way. We should think about where and at what point in time we can make the intervention that is going to be most effective. If we have this kind of thinking, then there is room for all of us. This is a multiple-player, multiple-actor scene, and the results are going to be a win/win situation rather than a zero-sum game. Where do we go from Finally, I would like to come back to the question: Where do we go from here? here? This event convened all the social funds players; there have been conversations between Red Social and AFRICATIP and others. There are some good suggestions for the future. Some of them have already been articulated. One is a less bureaucratic and more informal network 144 A Close Look at the Key Issues of various groups that are already in existence. Red Social and AFRICATIP have already decided to cooperate and form an alliance. I hope that the other regions will form this kind of network and then try to align them- selves with this global alliance. We in the World Bank have started a World Wide Web page. The Web page will let us share information, share knowl- edge among ourselves, and keep each other aware of what is happening. A network is very good to start with, but if not kept alive, it disappears over time. We can all try to use electronic technology to keep ourselves informed. And there will be new, additional players. Bring them into the network. Do not become an exclusive, closed shop. It should be an inclu- sive, open-ended shop. So if there is Armenia, Azerbaijan, Georgia, Moldova, and Uzbekistan, new countries coming in with their social funds, let us try to include them in this information sharing and net- working. And new NGOs are coming in. Many NGO groups are realign- ing themselves. Bring them into this particular network. Workshop outcomes: We are now moving more and more in the direction of regional consul- regional consultations tations and regional groupings of NGOs. We had a meeting in Nicara- gua last year for Latin America and Caribbean region. We had a meeting with Asian NGOs in the Philippines. It may also be good if the people who are working on social funds can send representatives to these con- ferences to meet and discuss the progress, the programs, the policies, the challenges facing social funds. You do not have to duplicate every- thing. Take advantage of the existing mechanisms, existing opportuni- ties, in order to come together. Donors' working I am extremely happy that the donors have decided that they will form group: A virtual a working group. One of the frustrations is that each donor has its own network requirements, its own accounting procedures, its own procurement pro- cedures, sends 14 missions down to visit social funds, and has too many monitoring and evaluation reports. Let countries be in the driver's seat and let them specify the role of the donors. Donors should all work to- gether and come once a year for supervision or for monitoring all at one time. If they want to do evaluation, let them do it together, to minimize the costs and minimize the requirements of time as far as social funds are concerned. And I am extremely happy that the working group of donors on social funds will be a virtual network that will be constantly exchanging information. Some important Four important issues were raised at this workshop: questions 1. Gender-Any sample of the poor will show that the proportion of women among the poor is greater than their proportion in the population. But women so far, except a few good examples like Sri Lanka, have not yet been integrated into the decisionmaking process, into implementation, or into the choice of projects. I am reviewing Indonesia's village infrastructure project. The women asked for water supply, the men asked for roads, and roads are being built. The water supply schemes are not being built. So I think that if we want to reduce inequities, both in income as well as gender, one challenge is to integrate gender issues into the de- sign and implementation of social funds. Workshop Concluding Remarks 145 2. Capacity building-Before social funds start building capacity, they need to recognize how much unutilized capacity exists. The tendency is to think that because it does not belong to my organi- zation, I am not going to use it. That is a thought that occurs re- peatedly. There are organizations and institutions already that are deprived of financing, but new institutions are built to create new capacity. Please try to use existing institutions and ask whether you want to build a new institution, a new organization to do the work for social funds. I heard a lot about capacity building, but I did not hear the words "capacity utilization." I know-I have worked in Africa-there are capable Africans outside the govern- ment, outside social funds, but they are not being utilized. And expensive consultants are brought from North America and from Europe because they are being funded by donors. Let us use local capacity. 3. Decentralization-How should live linkages be established be- tween social funds and local governments? Latin America is way ahead of everybody else as far as decentralization is concerned. We should try to learn lessons from Latin America, because lo- cal governments and social funds should not conflict. They are all serving the same people, the same community. How to es- tablish natural linkages, working relationships, the division of labor between local governments and the social funds, that is the third challenge. 4. Targeting the poorest-How should we reach the poorest of the poor? We are reaching some poor, but there are extremely poor people living in remote areas, in marginalized areas, who are not being served by social funds. There has been progress in target- ing the poor, but the next-generation challenge is how to reach the poorest of the poor. To me, the new generation of social funds will have to meet these four challenges if they are to have any effect on poverty reduction. Part IV Original Workshop Papers 27 The Social Investment Fund in the Context of National Development by Marco Camacho, Director, Social Investment Fund, Bolivia 1980-85: A Period of Crisis A reversal in economic growth began to affect Bolivia toward the end of the 1970s, resulting in a economic crisis of staggering proportions by the end of the first half of the 1980s. Output declined, and a growing share of production shifted to the informal sector because of high tariffs and quantitative controls, an overvalued exchange rate, price controls, and strong regu- lations. Production and export levels dropped, prices soared, and hyperinflation reached a dra- matic 24,000 percent in 1985. All this, coupled with controls on interest rates and other financial restrictions, led to a flight from the peso and a sharp drop in private investment. Economic disruption fomented intense labor disputes as social groups competed just to maintain their share of a rapidly shrinking pie. Politically, Bolivia was becoming difficult to govern, and the country was witnessing extensive social conflicts. Structural Adjustment In August 1985 a new government administration headed by Dr. Victor Paz Estensoro initiated the New Economic Policy (NEP), a structural adjustment program that focused initially on stabilizing the economy, halting inflation, and restoring the balance in the external debt ac- count. Longer term structural adjustment measures were aimed at dismantling most price con- trols, reforming the trade regime, restructuring ailing public enterprises, and overhauling the tax system. Pursuing its economic program with remarkable tenacity, the government managed to re- duce inflation to 20 percent within a year of launching the program. There was little leeway, however, for addressing social issues. Even before the structural adjustment program was launched, social conditions in Bolivia were the worst in the southem hemisphere. The govern- ment concluded that effective action to address social issues was critical for the success of the economic program. Emergency Social Fund: A Compensatory Mechanism for Adjustment Measures The Emergency Social Fund (ESF), a response to the extreme social deterioration in the coun- try, provided emergency relief and implemented a program to generate employment for the groups most severely affected by adjustment measures. Created in February 1986, it had the following objectives: 149 150 Original Workshop Papers * To identify and promote efficiently the implementation of projects and programs with high social returns * To contribute to the alleviation of the social conditions in regions most affected by social crisis and unemployment * To provide grants, education, and technical training programs to develop a better-trained, more efficient work force. The ESF supported labor-intensive social infrastructure projects, such as the construction and repair of schools, health centers, basic self-help housing, and sewage and water systems, as well as cultural heritage projects. Economic infrastructure projects supported by the ESF in- cluded urban infrastructure, construction, maintenance, and improvements in access roads, irri- gation and drainage works, erosion control, land recovery, and reforestation. Welfare projects to improve living standards of families were supported in the food, nutrition, and health sectors. Outcomes of the Emergency Social Fund Demonstrating the Bolivian governLment's will and initiative to combat poverty, the ESF helped the state to regain the trust of civil society. It had a favorable impact on Bolivia's economic indicators, because it generated a positive capital flow of over US$210 million, which contrib- uted to a reduction in the current account deficit. Private sector confidence was bolstered, and its participation in the economy grew. Bolivia was beginning to enjoy remarkable price stability. The ESF's investments caused a gross domestic product (GDP) growth rate in 1990 of 2.6 per- cent compared with 1.5 percent before the investments. During the four years of its life, the ESF generated nearly 60,000 direct and 45,000 indirect jobs. In 1990 the number of jobs created equaled 1.8 percent of the economically active population and nearly one-third of unemployed workers. Fight Against Poverty, the Social Investment Fund Although the immediate crisis had been overcome, much remained to be done. In response to a more considered response to Bolivia's development needs, the ESF gave way to the Social In- vestment Fund (SIF), a more permanent institution that focused exclusively on health and edu- cation. The SIF was structured to coordinate and integrate its programming with the sector strategies and development plans of the respective ministries. An important implication of working within a framework of established norms, as opposed to outside them, as had been the case with the ESF, was that the SIF was not able to respond quickly. While projects were rapidly and efficiently processed and delivered during the emergency stages because of expedited pro- cedures, SIF projects had to go through more bureaucratic steps for approval. Bolivia developed a model to facilitate the prioritization of investments in rural and urban areas. Based on an analysis of the health and education indicators of cantons, geographical units lower than a municipality, priority areas were identified to enable the phasing of investments. For urban areas, priority areas were identified based on an analysis of the availability of basic services. Unfortunately the data used for this analysis was the outdated census data of 1976, which resulted in considerable mismatches between what was requested by the population and the conclusions derived from the data analysis. However, because this marked the first attempt in the country to focus its investments, development of the model was a significant event. Social Investment Fund, Phase I (1991-93) The objectives of the SIF were to improve the coverage and quality of health and education services by changing priorities guiding investments in primary and preventive health care and primary education; developing mechanisms to sharpen the focus of social programs targeted to The Social Investment Fund in the Context of National Development 151 the poor; and introducing procedures to facilitate easier coordination between the social actors. To meet its objectives, the SIF adapted intervention methodologies for the necessary coordina- tion and integration. It also used strict criteria to focus its interventions and facilitate commu- nity participation, including the participation of women. In the education sector, the SIF sup- ported infrastructure and equipment for primary schools and adult training centers. In the health sector, the SIF supported day care centers with nutrition components, training programs in nutrition, basic health and primary care projects, immunization campaigns, and potable water and basic sanitation projects. The SIF also supported institutional strengthening programs through the construction of infrastructure, in addition to contributing to the equipment and operating costs for 18 months for those agencies in charge of executing SIF projects. SIF Investments between 1991 and 1993 Total approved projects 1,418 Total committed amount US$111,244,030 Total disbursed amount US$42,542,351 Investments in urban areas 20% Investments in rural areas 80% Problems Faced and Actions Taken by the SIF At the time the SIF was created, its organizational structure complied with the requirements of the ESF, which had a fragmented sectoral focus. Interventions were isolated, geographi- cally dispersed, and demand-driven albeit with little community participation in the project processes. This lack of comprehensiveness hindered the realization of the full potential of the investments. Tlhe SIF came into existence when a set of norms and laws were enacted at the national level to guarantee economic stability and lay the groundwork for promoting private investment and growth. These laws redefined the role of the state and established a basis for privatization within a framework to enhance Bolivia's participation in a globalized economy. However, fast eco- nomic growth does not guarantee closure of the investment gap in social sectors. It was up to the SIF to generate external resources to provide for projects in the areas with the greatest need. Institutional Reforms A number of laws were enacted within the Bolivian government to support the stability of the economy and to promote private economic growth. They include reforms in the Bolivian con- stitution that address the country's ministries, decentralization, citizen participation, the economy, and the social system. Constitutional Refonns These reforms defined the functions and the roles of the government, the legislature, and the judiciary to enable a strong and efficient democratic system. With the enactment of the Law of Reforms to the political constitution of the state in 1994, for the first time the multiethnic and multicultural character of the Bolivian people was recognized, and indigenous organizations were acknowledged to ensure their participation in decisions that affect their lives. The enacted reforms secured the following: * Extension of the constitutional term for the president, vice president, and congressmen from four to five years 152 Original Workshop Papers * Direct election of half the national deputies in uninominal districts and of all the mayors and municipal council members * Inclusion of any citizen over 18 years of age in the electoral registry * Creation of the Constitutional Tribunal, which is in charge of solving competency con- flicts among public powers * Creation of the Judicature Council, which is the administrative and disciplinary arm of the judiciary system * Creation of the Office of the People's Defender, which is responsible for the advocacy, promotion, and dissemination of information with respect to human rights. MINIsTRIEs LAW. This law, enacted in 1993, defines the composition and functions of the cen- tral government's ministries, creating the Ministries of Human Development for the social sec- tor, the Ministry of Economic Development for the production and service sector, and the Min- istry of Sustainable Development for national planning and environmental protection. It aims to restructure the organization of the government in accordance with a development philoso- phy that identifies the complementarity of social and economic development. It requires a com- prehensive approach to planning investments and setting priorities to enable the sustainable management and use of available natural resources. ADMINISTRATIVE DECENTRALIZATION. The Law of Administrative Decentralization enacted in 1995 aims to strengthen administrative departments by decentralizing decisionmaking related to resource allocation for investments in the education, health, and infrastructure sectors. The responsibilities transferred to the departmental prefectures are planning, administration, con- trol, and supervision of human resources in education, health, and social assistance, as well as investment in secondary roads, rural electrification, irrigation, and support to production, tour- ism, and environment conservation. Resource allocations for the departmental prefectures are made mainly from 25 percent of the effective collection of a special tax on hydrocarburants from the Departmental Compensatory Fund and from the nation's general treasury for expen- ditures in health, education, and personal welfare services. POPULAR PARTICIPATION. The main objective of the Popular Participation Law, enacted in 1994, is to bring the state closer to the people by enabling citizens' participation in decisionmaking. The law recognizes autonomous municipal governments in urban and rural areas that are re- sponsible for local development and social infrastructure. Their resource base consists of a transfer of 20 percent of the internal tax collected by the national government. These resources are dis- tributed among municipalities in proportion to the size of their populations; municipalities also have the right to retain the income from local taxes. The law recognizes the organizations and associations of indigenous peoples, peasant communities, and neighbor associations as repre- sentatives of the civil society before the state. The law creates mechanisms for their participa- tion in the identification of needs and setting priorities for investments, as well as in the plan- ning, execution, and administration of municipal services. Vigilance committees are recognized in each municipality; they represent their grassroots organizations and supervise and control the performance of municipal administrations to balance urban demands with rural demands and to ensure the appropriate use of municipal resources. Economic Reforms The economic reforms enacted under this sweeping national reorganization included laws that privatized government-owned companies, safeguarded consumers, and changed the social se- curity and pension laws for the elderly and disabled. The Social Investment Fund in the Context of National Development 153 Capitalization of State Companies-The Capitalization Law, enacted in 1994, seeks to es- tablish a legal framework for transferring ownership and the administration of strategic state enterprises to the private sector, so that the government can allocate its resources to the more important areas of human development. SIRESE Law-This law creates state agencies responsible for regulating economic activity and for safeguarding the rights of the state, the private sector, and consumers. Pensions Law-This law changes the social security benefit packages for the elderly and for people with disabilities and reforms the system of death pensions. It expands the long-term social security coverage benefits to the informal sector and to independent workers. INRA Law-This law seeks the equal distribution of land resources and the legal recogni- tion of indigenous territories. It creates an equitable tax base that depends on the investment in and the productivity of farming activities. Human Capital Reforms The changes in the legal framework supporting the Bolivian social system included the criminalization of domestic violence, the expansion of the public health services, and reforms in the criminal justice system. Education Reform-The Educational Reform Law of 1994 requires that education be effi- cient, equitable, permanently accessible for all the people in Bolivia, free in every public facility, and mandatory at the primary level. It requires that the educational system adapt to Bolivia's multicultural and multilingual reality and that priority be accorded to primary education. It facilitates access to education for all Bolivians by offering a flexible, systemic, bilingual, and regionalized curriculum. It fosters the direct participation of parents, teachers, and the commu- nity in general in education planning, organization, control, and evaluation to ensure that it responds to their needs and interests. It unifies urban and rural education under one adminis- tration and offers a curriculum that includes both formal education and alternatives for those who cannot pursue their education in the formal area. Actions in Public Health-These actions expand the supply of medical service to a wider population, with free health service available to pregnant women, children under the age of five, and the elderly. Solidarity Bond-Under this scheme, half the capitalized share of public sector companies will be distributed as life and annual bonds for people over 65 years of age. Judiciary System Reform-These reforms are intended to reduce delays in the justice sys- tem by making it more human and efficient in the control of corruption. Law Against Domestic Violence-Domestic violence is punishable by law, especially in the case of acts of aggression against women and children. The Central Level of Government Law 1493 of Ministries of the Executive Branch requires that "the business of public administra- tion be performed through the State Ministries." This law also determines the number, compo- sition, attributions, and competencies of the new ministries. State ministries are composed of the minister, the national secretaries, and the undersecretaries. The national secretaries are re- sponsible for social and production areas that include the health, education, sports, culture, energy, mining, tourism, and transportation sectors. The Ministers of the Presidency, Finance, Economic Development, Human Development, and Sustainable Development are part of the National Development Council (CODENA), created in 1995. CODENA's functions are (a) to ensure convergence in the guidelines and policies for the country's development; (b) ensure cohesiveness in the national, regional, and local policies in the social, economic, and environ- mental areas; and (c) balance and match public investment priorities with external financing. 154 Original Workshop Papers Neoliberal models of economic growth create inequities in the distribution of income and power. The reforms in Bolivia described previously should modify the economic, social, and political stratification. They are complementary to the neoliberal model implemented since 1985, yet their orientation aims to mitigate the imbalances of the past in the social area gradually and bring about a change in the relationship between the state and civil society. From Poverty Relief to Human Development The human development approach for the formulation of social policy has been adopted in Bolivia. Its objectives are the following: * To provide opportunities for poverty alleviation, satisfy basic needs, and develop hu- man capital to contribute to economic growth * To increase community participation in the identification of needs, and to improve the quality of services by community control and supervision of resources * To foster responsibility within communities in the search for solutions to their problems and in the fulfilling of their duties and obligations. Institutional Mandate of Social Funds The Supreme Decree 24010 of 1995 transfers the supervision of the SIF, the Peasant Develop- ment Fund (FDC), the National Fund for Regional Development (FNDR), and the National Fund for Social Housing (FONVIS) to the Ministry of the Presidency, through the National Secretary of Governmental Coordination. The intention of this decree is to give executive capacity back to the development funds, which is somewhat reduced when the funds are transferred to sectoral ministries for supervision. It redefines roles and interventions so that the SIF and FNDR finance water and basic sanitation projects. FNDR, however, must focus on the needs of towns with more than 10,000 people, while the SIF must focus on towns with fewer than 5,000 people. In this way, the funds become the investment instruments for the central government. Social Investment Fund, Phase II Replenishment of funding by the World Bank for the second stage of the SIF came when the effects of the fundamental changes in the economic and legal framework were starting to show. Reforms related to institutional, economic, and human capital further strengthened the foun- dations needed for the sustainable and equitable growth of Bolivia. CHARACTERInCS. SIF interventions are characterized by explicit criteria that guide their selec- tion and development. These interventions are required to be transparent, sustainable, partici- patory in their planning, gender sensitive, and technically sound. They must focus on regions prioritized by the Secretary of Rural Development, the National Secretary of Health, and the Education Reform. The prioritization of rural areas limits SIF interventions to localities with fewer than 5,000 inhabitants. Resources from the SIF budget are distributed among municipali- ties based on the level of poverty, as defined by the poverty maps, as well as on the basis of their total population. AREAs OF INVESTMENT. The SIF invests in education, health, basic sanitation, and institutional support. In the education sector, the SIF invests in formal education programs and finances equipment and the construction of school facilities. Through its support for informal education, it finances training of women to increase their productivity and efficiency. The Social Investment Fund in the Context of National Development 155 In the health sector, the SIF supports the construction of health centers, finances the purchase of equipment and supplies, and invests in institutional development and community training. The three programs in the basic sanitation sector supported by the SIF are potable water, night soil disposal, and solid waste management, which seek to reduce mortality and disease rates. The SIF's institutional support program helps public and private nonprofit development institutions become responsible for incipient projects in areas where government institutions are weak or absent. The SIF is implementing a program of municipal strengthening, directed toward creating local capacities to plan sustainable social investments. SIF II OurcomEs. Two hundred and eleven municipalities, or 68 percent of the total number of municipalities in Bolivia, have benefited from investments made by the SIF. The most impor- tant achievements have been the following: * Incorporation of the objectives of human development in a legal framework for the inter- vention strategy * Adoption of participatory planning as the main instrument for identification of priorities * Creation of a close working relationship with municipal governments in the cofinancing of investments. SIF Investments between 1994 and 1996 Total approved projects 1,270 Total committed amount US$122,512,258 Total disbursed amount US$93,682,756 Investments in urban areas 15% Investments in rural areas 85% General accomplishments attributable to the SIF are as follows: * The SIF's experience has been useful in strengthening social policies, especially in the education and health sectors. * In following the SIF's criteria of supporting projects that respond to priorities identified by municipal development plans, the work of nongovernmental organizations (NGOs) and the private sector have been integrated with local municipal priorities. * SIF technicians have become agents that facilitate transformation at the local level. * The SIF is an active member of the Plan of Strategic Actions for Human Development (PAE) and of the National Development Council (CODENA), thus contributing to na- tional development planning. Sector Objectives Proposed by the SIF Education Health Income generation Transform the educational Reduce mother-child mortality Increase GDP per capita system Strengthen attention to through income generation Improve service quality primary health Expand coverage Increase student enrollment Seek higher levels of equity and access to education 156 Original Workshop Papers Mission and Vision of the SIF In this new context, the SIF becomes an instrument of the national government to implement social policies oriented to the development of social capital in Bolivia. It strengthens local ca- pacities in three ways: * By facilitating participation in the debate and decisions related to development * By promoting equal access to the benefits of development * By contributing to the development of a responsible exercise of rights of both individuals and the society. The internal measures adopted by the SIF to facilitate institutional development are de- scribed in the following paragraphs. Decentralization The SIF has deepened the process of decentralization, forming interdisciplinary departmental teams that execute most of the identification of and preparation for investment projects. The central office sets norms and standards for procedures and maintains quality control. External Strengthening The SIF has assisted municipalities to develop their management capacity so that they can fulfill more efficiently the functions assigned to them by the Popular Participation Law. This program includes delivery of equipment, technical assistance, service operation, and maintenance manu- als, as well as coordination with professionals of different disciplines who provide services in support of municipal management. Another program will transfer the SIF's functions to munici- palities over time, so that they may be able to assume all processes related to the project cycle. Implementation of the Management Information System The delegation of functions to departmental offices grants departments new responsibilities and creates new needs for them, one of them the improvement of the data management system. To facilitate this, the SIF is implementing a management information system, which involves the modernization of software and hardware, networking among all the departmental and cen- tral offices through access to the Internet, construction of related systems, and the provision of a permanent technical support system. Personnel Training Training activities are aimed at improving the skills and abilities of executive and technical personnel, with special emphasis on social management skills, because the new institutional framework assigns new roles and functions to staff. Looking to the Future The sustainability of projects has been an area of concern both inside and outside the SIF. The sustainability of social investments is directly related to income level. If wages are inadequate to cover a family's basic needs, people will be less likely to contribute to the fees and maintenance costs of services. This realization has pushed the SIF to propose to enter the area of income generation and employment through a new program that improves the production and produc- tivity capabilities of communities that have benefited from investments made by the SIF. The Social Investment Fund in the Context of National Development 157 The income-generation program assumes the framework of the national sector policy as its reference point, which has the following goals: * To foster a technological leap in the agriculture sector * To stimulate more and better rural and urban employment * To fight poverty, improve living conditions, and increase the chances of human development * To increase food security * To strengthen participation of the majority and the historically excluded sectors * To implement strategies for recovery of natural resources and for sustainable management * To compensate the historic gaps in public investment in agriculture * To implement strategies of labor adjustment in rural areas through a process of microindustrialization. Conclusions The political contributions of the ESF were to orient the governance of the country to a more democratic system so that the neediest could be served. Its economic contributions have been the generation of employment and augmentation of the growth of the country's GDP. It also contributed to the institutionalization of the struggle against poverty. The SIF, as the successor of the ESF, faces the challenge of eradicating poverty in a systematic and organized manner by becoming the social instrument of the national government. Through its support to projects, it aims to guarantee the application of social policies at the municipal level and to induce local investment in health, education, and basic sanitation sectors. Both the ESF and the SIF helped redefine the new role of the state. Both institutions have inaugurated a new era in public administration by mainstreaming efficiency, effectiveness, and transparency in operations. The SIF's relationship with the state ensures that it will change and transform as an institution when needed, since it is the main instrument of social policy of the national government. Its entry into the productive sector is important because it is still too early to see the impact of new redistributive policies. Support for this area is important as Bolivia defines its future. 28 Financial Resources Mobilizationfor Social Funds by Hussein M. El Gammal, Managing Director, Social Fund for Development, Egypt The Vision and the Early Years, 1991-93 The primary goal of Egypt's Social Fund for Development (SFD), created in 1991, was to act as a safety net to protect vulnerable groups from the initial adverse effects of the Economic Reform and the Structural Adjustment Program (ERSAP) that began in 1990, as well as to improve the prospects for success of the ERSAP itself. Its mandate was extended to deal with the estimated 400,000 workers who were compelled to return to Egypt as a result of the Gulf War. Two years later, support from the United Nations Development Programme (UNDP) led to the establish- ment of the technical secretariat of the fund and thus to an increase in its efficiency. Objectives The objectives of the SFD derived primarily from the objectives of the ERSAP's ambitious pro- gram whose main goals included: (a) stabilization measures to restore macroeconomic balance; (b) reduction of inflation; (c) structural adjustment to stimulate medium- and long-term growth; and (d) efforts to minimize the effects of economic reform on the poor during the anticipated initial period of economic retrenchment. The first three objectives were addressed by the stand- by agreement with the International Monetary Fund and a structural adjustment loan from the World Bank. The SFD was the instrument to achieve the fourth objective of the ERSAP. Both the World Bank and the UNDP have helped mobilize resources for the SFD. Seventeen donors pledged US$612 million, including an International Development Association (IDA) credit equivalent to US$140 million. The World Bank required the following goals of the SFD so that it would be eligible for support to undertake socioeconomic development: * To mitigate the negative impact of structural adjustment * To facilitate the implementation of small-scale, development-oriented subprojects * To mobilize additional resources for poverty alleviation * To assist the growth of various nongovernmental and community associations to sup- port their developmental activities * To encourage community participation in developmental activities * To complement both macroeconomic policies and sectoral development strategies. The SFD's Priorities The SFD's priorities were established in response to such eligibility criteria. These required: 159 160 Original Workshop Papers * The targeting and active involvement of beneficiaries, both men and women, as an inte- gral part of the design and implementation processes of subprojects * The consideration by delivery mechanisms of the absorptive capacity of intermediary agencies, including local organizations and the private sector * In addition to conforming with the goals of ERSAP, the study of sustainability measures, for example, linkages with long-term employment and investment opportunities and the creation of revolving fund mechanisms * The introduction of program assessment tools, such as a management information system. Differences Between the SFD and Typical Emergency Funds Short-term emergency funds are normally fast-disbursing, targeted, and temporary in nature. They simply act as "bridge-financing" institutions while the nation waits for the anticipated results from a broader economywide structural adjustment program. The SFD, emphasizing the long-term perspective from the very start, introduced economic enterprise-oriented activi- ties in its initial phase. Geographic targeting under emergency funds typically focused on re- gions of greatest need. Under the SFD, however, all the envisioned activities had to serve the entire population regardless of place of residence. Unlike funds of an emergency nature, the SFD's management structure was adapted to manage long-term activities from the start. To provide emergency relief to target groups without compromising the elements of a longer term focus, the SFD required the following: * The introduction of social investment-oriented activities, including community develop- ment and labor-intensive public works • The initiation of economic enterprise-oriented activities, including labor mobility, small- scale enterprises, promotion, and microcapital lending * Support for sustaining public transport services for Greater Cairo and Alexandria, later dropped from the list of priorities - The introduction of institution building as an enabling mechanism to reach target benefi- ciaries most quickly * Consideration of the factors that could lead to the sustainability of the institution, not only the sustainability of subprojects financed by the SFD. Parameters that Guided the Design of the SFD's Organizational Structure Two basic parameters guided the organizational structure and functioning of the SFD pro- grams. The first parameter was to provide for permanency in the structure of the organiza- tion so that it could be transformed into more permanent units suitable for the labor adjust- ment services, small-scale enterprise promotion, and microcapital lending programs. A permanent agency would require specialized expertise, as well as a certain level of autonomy from the government structure. The second parameter emphasized sustainability. This went beyond the maintenance of projects and activities that the SFD supported; rather, it included the sustainability of approaches that could be emulated by government agencies to the point of becoming guiding principles. By the end of 1993, the SFD had established its basic administrative framework and hired a core staff of professionals. The success of the SFD can be attributed largely to this management framework, which had the following characteristics: * A relatively flat organizational structure with minimal hierarchical levels * Nontraditional functional specialization that emphasized an integrated approach * Programmatic design with built-in coordination mechanisms * A focus on potential, as well as on existing, beneficiaries Financial Resources Mobilization for Social Funds 161 * A proactive demand-driven strategy for defining projects * Political support from the highest level of government * Self-motivated staff requiring minimal supervision * An effective system of monitoring to enable the introduction of corrective measures * The ability to enlist enduring international support by facilitating audit missions * Transparency of regulations, and flexibility and fairness in implementation. The SFD's Organizational Structure The organizational structure is divided into three sets of units. The first set performs the basic functions of the SFD and comprises five core programs: * Public Works Program-This program provides job opportunities for the largest num- ber of people, especially for the unemployed and the poor living in vulnerable areas. It finances labor-intensive works to be executed by local contractors in rural areas without using capital-intensive technologies. These works include improvements to public roads, recycling, and the disposal of waste; maintenance of water supply schemes; sewage treat- ment plants; fencing of public buildings; and construction of small clinics and health care facilities. The program's activities are synchronized with the activities of the gover- norates and local communities in accordance with transparently established criteria for cost-sharing and execution. The program's approach appears to have affected local bu- reaucracies, who have started adopting the SFD's methodology for works on a small scale. Because of the great credibility of the program in the eyes of the beneficiaries, local communities demand the services of the Public Works Program, which is proof of the success of a highly visible and effective demand-driven approach. • Community Development Program-This program uses multiple strategies to empower and mobilize grassroots communities to make decisions and undertake implementation of projects. Its priorities are illiteracy eradication, leadership training for nongovernmental organizations (NGOs) and volunteer groups, institution building, and health care for women and children. The program finances income generation, new employment op- portunities, and social development projects; improves the delivery of essential commu- nity services; provides credit for working capital and the purchase of equipment for house- hold production; gives grants for establishing and maintaining primary health care for the community; and provides vocational training for the youth and the unemployed. * Enterprise Development Program-The primary goal of this program is to create local small-scale entrepreneurs and enhance their long-term sustainability. This is done by extending credits and grants to target groups, referring small entrepreneurs to credit institutions, assisting in the improvements or expansion of small businesses, and provid- ing training to managers in finance and marketing. The program also supports the cre- ation of business incubation centers, industrial parks, entrepreneurship training, food services, the establishment and maintenance of electronic libraries, fish farms, handi- crafts, light transportation, export development of small industrial products, and distri- bution and trade of agricultural products. It also conducts feasibility studies and evalua- tions of projects proposed by aspiring entrepreneurs. * Labor Mobility and Retraining Program-This program retrains workers who lose their jobs as a result of privatization. In an effort make Egypt's private sector competitive on the international market, the program supports local industries and small entrepreneurs with training to develop specialized skills to meet the demands of the free market. The program conducts an employment skills inventory and provides training, reorganizes vulnerable industries, and undertakes labor restructuring of the shipbuilding and weav- ing industries for export markets. 162 Original Workshop Papers Institutional Development Program-This program manages effectively the activities of the technical secretariat and provides services and tools to the core programs so that they can function efficiently. It prepares and reviews agreements with bilateral and mul- tilateral agencies, responds to their auditing and monitoring needs, and represents the SFD at international meetings and conferences. The program conducts surveys and es- tablishes monitoring mechanisms to ensure proper targeting, undertakes follow-up stud- ies, and invests in capacity-building activities for personnel in the technical secretariat and in the sponsoring agencies. The second set assists the core programs in carrying out their responsibilities by delivering services to beneficiaries, monitoring program activities, and solving any ensuing problems in the field. This set includes about 20 regional offices for the 26 govemorates and local communities. The third set provides all auxiliary services to the programs and donors and consists of the following departments: * Finance Department-This department fills a multitude of national and international reporting requirements for various stakeholders. It analyzes raw data to assess trends for making policy-level decisions and works closely with the management information unit to compile reports on disbursements and project expenditures. * Personnel and Training Department-Training is of utmost priority for SFD manage- ment. This department offers training programs and facilitates professional meetings for its personnel. Programs are offered on topics such as marketing, feasibility studies, effec- tive leadership, decisionmaking and problemsolving, financing of innovative small busi- ness enterprises and financial analysis, computer programming and its applications, en- vironmental assessment and technology management, change engineering, the design and implementation of technical cooperation, the development of NGOs, project evalua- tion and management, survey techniques and analysis, and privatization and related issues. It is worth noting that only two employees staff this department. * Management Information Systems Department-Apart from meeting necessary manage- ment requirements for decisionmaking and forecasting, the department maintains an in- formation system that monitors all SFD operations and activities. In addition to providing information for the SFD Secretariat, it provides information to beneficiaries, regional of- fices and local units, the government, sponsoring agencies, target groups, NGOs, and oth- ers. This unit played a dynamic role in the design of the social impact study, the design of questionnaires and subsequent data analysis, and the transfer of telecommunications tech- nology to improve the information network between headquarters and regional offices. * Credit Department-This department performs five functions. First, it develops finan- cial packages for programs supported by the SFD in conformity with donor require- ments. Second, it collaborates with financial intermediaries to structure projects and de- fine procedures for monitoring and implementation. Third, it serves as a clearinghouse for beneficiary profiles and their performance. Fourth, it manages a system for tackling loan defaults. And fifth, it prepares monitoring reports such as semiannual interest rate reports that compare market interest rates with the varying interest rates charged by different donors for beneficiaries. The department disburses credit to sponsoring agen- cies and beneficiaries through commercial banks that have a wide network of branches. * Planning and Projects Department-Targeting effectiveness is of prime concern for this department. It developed a control system for operations that provides the necessary flexibility, especially in an environment where operations are expanding, complexities are growing, and decentralization is becoming increasingly important. Recognizing the need for adequate, but not excessive, control mechanisms, the department adopted an approach that allows it to grow incrementally as operations expand. Financial Resources Mobilizationfor Social Funds 163 * Internal Audit, Contracts, and Legal Affairs Department-This department, responsible for the internal audit of all activities of the SFD, checks on the efficiency of accounting, the financial and operational internal control system, and monitoring of environmental impacts. It examines assets, liabilities, and results; takes the necessary steps to ensure that programs and projects are effective and efficient; and guarantees compliance with national and international obligations and regulations. * International and Public Relations Department-This department is responsible for the publications of the SFD, including the procedures of programs and periodic newsletters, advertisement campaigns, media relations and releases, press conferences and television interviews, and conferences and seminars. It organizes and manages a series of regional, national, and international exhibitions that give SDF beneficiaries the opportunity of exporting their products and of gaining marketing experience. The SFD's Management Structure The SFD is a quasi-governmental agency subject to auditing by the government of Egypt, as well as to evaluations by its 17 donors. Its board of directors is chaired by the prime minister, thus ensuring political support at the highest level. The ten ministries on the board of directors allow the SFD's plans to be synchronized with the plans of relevant executing agencies. It includes six public personalities that represent concerns of the private sector and the community, thus ensur- ing the responsiveness of the SFD to their respective needs. The executive committee is autho- rized to make decisions on behalf of the board of directors, within wide mandates, thus authori- zations are made without delay The managing director has a wide latitude of discretionary authority commensurate with his responsibilities, so that ordinary operations are carried out with minimal external interference and promptly enough to respond to beneficiaries' needs and sponsoring agencies' requests. The five general directors, one for each major program, have enough delegated authority to manage their respective affairs without the continual direct inter- vention of the managing director. This provides for flexibility and accountability. Achievements of the SFD The chief accomplishments of the SFD fall into the areas of poverty alleviation, beneficiary targeting effectiveness, and creating employment opportunities. Poverty Alleviation: Measurement and Targeting Equity, efficiency, and cost-effectiveness are the guiding parameters for the choice of targeting mechanisms. The SFD uses three different mechanisms for targeting benefits to beneficiaries. The first one involves individual assessment methodology: eligibility of individuals and groups is determined by case workers on the basis of wealth, income, family size, and means tests. The Community Development Program often relies on this method of targeting. The second one, the self-targeting method, is often used by the Public Works Program: it requires beneficiary contri- butions of about 10 percent of project cost, as does the Community Development Program. Eligi- bility requirements for programs and projects may include beneficiary participation in self-help community projects or labor-intensive infrastructure projects. Geographic targeting is the third targeting mechanism used by the SFD. It is based on poverty maps that are constructed using information on income, household characteristics, employment, access to basic services, and housing conditions. Social dimension of adjustment surveys are used to produce single or mul- tiple indices of poverty to facilitate prioritization of intervention locations. Poverty profiles are prepared to define poverty, because it is a multifaceted phenomenon that cannot be captured by 164 Original Workshop Papers a single indicator such as income or wealth. Often a more advanced technique of the poverty profile method known as the absolute versus relative poverty is adopted, using indicators of household size, occupation, educational level, nutrition status, health, and access to safe water and sanitation. This defines poverty in relation to the mean income or expenditure in the coun- try and therefore varies over time and across locations. Assessment of Targeting Effectiveness Planning for the second phase of the SFD's program was based on the social impact assessment of the first phase, which used various indicators for different programs. * Community Development Program-The degree of service utilization of the education, literacy, health services, and income-generating programs; the economic impact of mak- ing loans to generate income; the impact on self-esteem and peer esteem among benefi- ciaries; the impact on employment opportunities and perceptions of same; impact on savings by income-generating loans; and the level of satisfaction with services delivered. * Enterprise Development Program-Loan size; type of enterprise; level of partnership in the enterprise; sector and employment opportunities used by the enterprise; financial, technical, and marketing assistance needed by the enterprise; and the perception of well- being among beneficiaries created by their participation in projects supported by the SFD. * Public Works Program-The length of employment provided by the public works projects; wage. differentials; and improvements in income levels and living conditions in the vi- cinity of the projects. The overall assessment of the effectiveness of targeting was positive. For example, 93 per- cent of the beneficiaries reported that literacy training had made their daily lives easier, and 90 percent of the beneficiaries of the Public Works Program reported improvements in their in- come levels, with 90 percent benefiting from temporary employment. The incidence of child labor varied according to location, average dependency per household was very high, and ac- cess to electricity was not considered a proxy for welfare. Ninety-five percent of the beneficia- ries reported that their self-esteem had improved as a result of their participation in programs supported by the SFD. Creating Employment Opportunities for Targeted Groups During the first three years of its operation, the SFD contributed significantly to the alleviation of unemployment problems in Egypt. The Public Works Program generated less permanent employment, but benefited the highest number of individuals. The Community Development Program generated the greatest number of both temporary and permanent jobs, but benefited fewer people when compared with the number of beneficiaries of the Public Works Program. It has been estimated that the SFD provides about one-third of the new job opportunities needed for development in Egypt. Financial Resource Mobilization for the SFD Guaranteeing international financial resources did not pose a problem for the SFD's first phase, in large measure due to the leadership of the World Bank. Other international donors volunteered to finance the first phase. The second phase was relatively easier to finance, most notably because of the achievements of the first phase, which were documented by numerous auditing missions from donors and the World Bank. Transparency of policies and procedures and their application, the advanced and accurate management information system, and timely financial reports were other factors that contributed to securing financial support from donors for the second phase. Financial Resources Mobilizationfor Social Funds 165 Planning and developing programs and subprojects that impact the effectiveness of a social fund can be inhibited by the opportune or inopportune disbursement of funds, as well as by the predictability or uncertainty surrounding the steadfastness of funding. In principle, financial support from the national budgets, regardless of their size, is an indicator of a government's commitment to a social fund. In the case of Egypt, the government doubled its contribution in the second phase, a clear indication of its satisfaction with the performance of the SFD, as well as a signal of its continued support. This signal is important to the international donors and their constituencies. SFD budgets entail large sums of money from national and international contributions. These funds must be disbursed to achieve the goals of the programs. The challenge is to disburse the funds, provided that three prerequisites are satisfied: * The funds should reach only those who are targeted beneficiaries and who deserve them. * They should be disbursed via agencies with experience in dispensing funds at reason- able cost and through available outlets. * The funds must be accounted for and, in the case of loans, be reimbursed by the beneficiaries. Synchronizing the receipt of funds from donors with the disbursement of funds to interme- diary implementing agencies often poses a problem, especially in the case of large projects, such as public works programs or health projects that require sizable amounts of funding. Another problem is monitoring disbursement of funds from intermediary agencies to ben- eficiaries to ensure that the intermediaries are implementing projects effectively and to ensure that all the funds have reached the ultimate beneficiaries as scheduled. It is not common prac- tice for commercial banks to lend to the poor who have no collateral to guarantee their loans. This is a dilemma that the SFD is still grappling with: how to balance the requirements of com- mercial intermediaries so that they can assist needy individuals for whom social funds were set up in the first place. Issues for the Future Considerations for the future of the SFD include the problem of its financial dependency on donor agencies and the discrepancy between the objectives of these donors and the govern- ment of Egypt. These are the same problems faced by all social funds in some measure. The Dependency Syndrome Social funds are generally supported by international donor agencies through grants and soft loans initially for about three years, with the expectation that emergency assistance will not be warranted thereafter. Experience shows that the success of the first phases of the social funds normally leads to a replenishment of funds for the second and even the third phases to transi- tion the social funds from emergency to long-term objectives and to expand program coverage. As the people in the country become accustomed to the funds, local governments use these resources to supplement their budgets, and the social funds themselves are transformed into permanent quasi-government structures. This scenario creates a perception of indefinite de- pendency on international financing agencies, which risks structural adjustment programs by postponing the implementation of much needed structural reforms. These risks can be managed by establishing the duration for each phase of the social fund with no guarantee of an extension unless the donor community gives the fund meticu- lous performance reviews and a plan is implemented to phase out the fund's activities. Donors should also appreciate that structural adjustments are not a panacea for all eco- nomic woes and that it is therefore unrealistic to expect a social fund to solve structural, social, and economic problems. 166 Original Workshop Papers The Lack of Congruence between Goals of Donors and Borrower Countries A lack of congruity in the goals of the national governments and of the donors can result in complex conflicts, especially when numerous donors support a social fund, each with its own perspective and priorities for assistance. The SFD avoided many of these conflicts through in- tense negotiations, which led to agreements with bilateral and multilateral agencies that gave the SFD's management wide latitude in the allocation of resources within broadly defined ob- jectives. The SFD, on the other hand, gained the trust of donors by adopting refined and accu- rate accounting procedures to generate reports to their satisfaction. Site visits were arranged on short notice to show donors that all their procedures were being followed scrupulously. It was ultimately the transparency of operations and procedures, the accuracy of information pro- vided, effective reporting mechanisms, and the autonomous organizational structure of the SFD that helped minimize incongruence between donors' goals, as well as those of the govern- ment of Egypt. 29 Social Funds: An Expanded NGO Critique by Jane Covey, Executive Director, and Tim Abbott, Research Assistant, Institute for Development Research, United States Foreword In order to understand better the role of social funds in social policy reform, how they work, and whether they offer meaningful opportunities for stakeholder participation, this paper seeks an expanded definition of those key characteristics that constitute a social fund. It reviews the development of social funds from their inception as emergency relief measures to medium- term instruments of social development. The assumptions that guide the activities relating to social funds are also questioned from the nongovernmental (NGO) perspective. These critiques and the data available on individual social funds may provide a clearer vision of the constraints and resources under which social funds operate and may indicate possible directions for policy dialogue and change. Due to resource constraints, the scope of this paper is limited to World Bank-sponsored social funds, although those initiated by the Inter-American Development Bank in Latin America and the Caribbean are of equal interest to NGOs. During the last decade, social funds have emerged in an increasing number of developing nations as a decisive instrument of social policy A number of stakeholders are keenly interested in social funds' development. The World Bank envisions social funds as an efficient response to negative effects of structural adjustment in borrower nations, with the added advantage of generating visible benefits. As intermediary financing institutions with decentralized delivery systems, social funds are more flexible than most regular, bureaucratic structures and can fund projects more rapidly, prompting some government ministries to investigate and even adopt strategies pertaining to social funds. Civil society and NGOs look to social funds as funding mechanisms that focus on the needs of the poor and that actively solicit the participation of local interest groups in microproject planning and implementation. The most optimistic sce- narios envision local communities receiving social funds' financing for small-scale projects that they propose themselves, resulting in beneficiary ownership and greater sustainability. Much like the parable of the blind men and the elephant, social funds represent different things to different stakeholders, yet often the innovative qualities that make the concept of social funds attractive to so many groups are either of low priority or absent in existing social funds. Much of the World Bank's literature on social funds refers to general, defining characteristics of social funds, despite the fact that individual social funds differ widely in both form and content. While some funds, such as Zambia's social funds, actively seek to increase community participa- tion, others work only with government contractors. The macrodesigns and the priorities involv- ing social funds vary according to country-specific constraints-political, social, and economic- as well as the capacities of both governmental and nongovernmental institutions. Although 167 168 Original Workshop Papers individual social funds are designed with well-defined goals and strategies, NGOs express con- cern that the priorities of the designers may not be those of the poor in beneficiary communities. Structural Adjustment and Its Effects An economic development model that equates growth with increasing national assets and con- siders social expenditures nonproductive has guided the World Bank for most of its history. Typical Bank policies-establishing market-driven economies, privatizing state-run industries, and removing government subsidies from protected sectors-frequently neglect their social costs. When structural adjustment became a precondition of debt restructuring and continued aid disbursements in the early 1980s, cuts in low-cost housing, health, education, and social welfare had severe social consequences for the poor in borrower nations. In the well-docu- mented case of Bolivia, privatizing the state-run mining company entailed massive layoffs that cost more than 20,000 families their primary sources of income. The process of curbing inflation and making Bolivia more attractive to transnational investors devastated entire communities. Many NGOs have long asserted that sustainable growth in the developing world is only possible if the basic needs of vulnerable populations are met. Critics of adjustment claim that its impact on the poorest social sectors and significant contribution to the widening gap between rich and poor outweigh the benefits of stabilizing developing economies. The foundation of World Bank development theory remains rooted in establishing export-oriented, market-driven economies, increasing national assets, privatizing state-run industries, and removing govern- ment subsidies from protected economic sectors. Over the past few years, however, the Bank has acknowledged that the results of adjustment policies have been unsatisfactory. A growing body of documentary evidence from the World Bank's own internal evaluations underscores the need to mitigate the adverse effects of structural adjustment. Addressing the October 1995 meeting of the Nongovernmental Organizations Working Group on the World Bank, Bank Presi- dent Wolfensohn indicated that he is happy to reassess structural adjustment, but some sort of economic planning is needed to tackle inflation and inequitable distribution (NGO-World Bank Committee Meeting, Washington, D.C., October 23,1995). Social Investment Funds and Macroeconomic and Social policy Social funds started as emergency relief measures and were intended as temporary institutions. But just as structural adjustment programs are not a quick economic fix and have evolved into longer term features of national development, so are social funds used over a long term to support develop- ment in the social sectors and facilitate poverty reduction. What originally was a short-term re- sponse to economic crisis evolved into an instrument for longer term, social-economic development. Bank promotion of social funds does not represent a fundamental change in position away from structural adjustment; rather, social funds are instruments of social policy that support adjustment strategies. Some critics hold that the primary utility of social funds is to make structural adjustment more politically palatable. Others contend that as long as structural adjustment policies continue to exacerbate poverty and create newly poor groups, the beneficial effects of social funds projects will be undermined. Finally, critics worry about the erosion of universal social sector services, such as primary education, in countries undergoing structural adjustment, and warn that social funds should not be seen as an adequate instrument of social policy for the 1990s. Additional measures must be taken to reverse the effects of the disinvestment in the social sector of the late 1980s and early 1990s. The Nature of Social Funds What distinguishes social funds from other Bank initiatives, and has increased NGO interest in their development, is the unique way in which social funds projects are designed and funds are Social Funds: An Expanded NGO Critique 169 delivered. The World Bank defines a social fund as a mechanism through which resources are channeled, according to predetermined selection criteria, to demand-driven subprojects pro- posed by public, private, or voluntary, formal or informal organizations. Most social funds appraise projects for funding using strict selection criteria, supervise their imple- mentation, and monitor their effectiveness. According to Bank evaluations, a qualified microproject should be relevant to community needs and foster a commitment to sustain activities beyond the life of the fund. Instead of fund managers predesigning and implementing projects, a wide range of stakeholders submit proposals. Significantly for NGOs, applications for funding are usually restricted to government agencies. In theory, the demand-driven nature of social funds represents a funding window for NGOs and other community representatives who, because the World Bank makes loans exclusively to governments, would otherwise not be eligible for direct funding. Objectives and priorities continue to evolve over time, but the three general aims of social funds are: * To mitigate costs associated with recession and structural adjustment * To improve living conditions by rapidly providing basic social services * To enhance and strengthen decentralized delivery systems by supporting both govern- mental and nongovernmental organizations that are responsive to community needs. The first two objectives reflect the reactive nature of the early emergency funds, while the third holds the most promise for social capital investment over the long term. The evolving guidelines, priorities, and criteria of social funds include a number of mea- sures designed to make project activities more relevant and sustainable. Depending on the coun- try-specific conditions they are designed to address, funds may place more emphasis on some of these objectives than on others, but the following goals generally apply to most of them: * Attracting substantial foreign funding and creating a workable channel for funneling large quantities of foreign and central government funds to small projects. The Bolivian Emergency Social Fund was particularly successful in this area. * Increasing the participation of beneficiaries in cost-sharing. In lieu of providing addi- tional funds, local contributions often take the form of labor. i Heightening beneficiary participation in identification and implementation of microprojects. i Providing funding to local institutions, such as community-based groups, NGOs, and local governments in a more flexible, transparent, and rapid manner. The Bank currently esti- mates that between 15 and 20 percent of resources involving social funds flow through NGOs. * Improving the technical and institutional capacities of local organizations. * Ensuring that the poorest sectors of the population benefit from and participate in social funds-sponsored projects. In addition, social funds sometimes create temporary employment activities. The Senegal Agence d'Execution des Travaux d'Interet Public contre le Sous-Emploi (Agency for the Execution of Public Interest Works Against Unemployment, or AGETIP), for example, is primarily a response to widespread urban unemployment. Social funds also can be used to build political support for economic adjustment programs, although some critics express concern that funds may have been used to finance government favors. The most far-reaching effect of the first social fund, the Bolivian Emergency Social Fund, was that it provided the impetus for the World Bank and other agencies to experiment with new kinds of projects concerned with the social costs of economic crisis and adjustment. Bank evaluators considered its qualities of flexibility, learning by doing, and focusing on small-scale, technologically simple projects worth replicating in future social funds. Streaming from Bolivia's experience, a number of social funds currently in operation are autonomous government struc- tures reporting directly to the borrowing country's president, while others act as private asso- ciations contracted by the government to plan and implement services. 170 Original Workshop Papers An Examination of Key Social Funds Characteristics Social funds studies by World Bank evaluators tend to focus on "lessons leamed," judging social funds by how effectively they meet their stated goals and principal objectives, rather than by whether these aims are the most responsive to genuine beneficiary needs. As long as social funds meet their predefined goals, the World Bank considers their flexibility an asset and is less concerned by variations between the macrodesigns of individual social funds. Others in the NGO community view such "ends/means" justifications with concem (NGO-World Bank Committee Meeting, Washington, D.C., October 23,1995). They claim social funds that do not conform to their own defining criteria may preclude meaningful beneficiary participation, a key characteristic that makes social funds attractive to NGOs. In an effort to isolate the qualities that are essential components of social funds and inherent to their definition, this section explores those attributes that the Bank ascribes to social funds in general. In this way, individual social funds may be assessed, not only by whether they meet their specific goals, but also at a more fundamental level, by whether they meet the definition of social funds. This is a significant consideration, because available evidence suggests that a fund lacking any of these key characteristics might meet its specific objectives, yet still preclude mean- ingful stakeholder participation and fail to address the genuine needs of the poor. The follow- ing sections examine institutional autonomy, the demand-driven nature of project proposals, and broad stakeholder participation as key characteristics of social funds. Autonomy Social funds are frequently created as new agencies within a host govemment, enjoying vary- ing degrees of administrative bureaucratic autonomy from regular, ministerial structures. So- cial funds are often more effective and flexible when they are free from government procure- ment procedures and can offer private sector salaries to their staffs. A recent World Bank report stresses that political and institutional autonomy is critical to maintaining consistent, transpar- ent, and objective criteria for allocating project funds. The research contends that from the out- set, autonomy has been an important component of many Latin America social funds, but has been a more recent development in Africa. In part, this may be due to the success of the Bolivian Emergency Social Fund, which influenced a core of Bank personnel who now specialize in social funds and move from project to project, taking their original model with them. This study identifies four components of social funds' institutional autonomy: (a) legal sta- tus, (b) the legal authority to approve projects, (c) exemptions from civil service salary sched- ules, and (d) exemptions from the government's procurement and disbursement schedules. The choice to locate a social fund within a government ministry or to create a separate entity seems to be made by fund administrators for regional as well as institutional reasons. For ex- ample, regional World Bank staff in both Sao Tome and Principe and in Guinea were against new bureaucracies outside centralized governmental control. In Egypt's case, the government itself was reluctant to coordinate with nongovernmental and private sector organizations. Social funds' autonomy can still be high when the fund resides in a govemment ministry, as in the case of Zambia, as long as political authorities understand the need for the fund's au- tonomy and commit to it. As a general rule, however, a higher degree of institutional autonomy is usually achieved when the fund exists separately from regular government structures. Social funds' political autonomy is a concem of Bank managers and NGOs alike. Indepen- dent analysis of the social funds of Sri Lanka and El Salvador, for example, points to the vulner- ability of social funds to political manipulation. In Sri Lanka, the concern centered on the use of a social fund, the Janasaviya Trust Fund, for political patronage. In 1995, El Salvador's presi- dent appointed a close political ally, the head of the National Secretariat for Reconstruction (SRN), to head the social fund. Before the end of the year, actions to merge the social funds with Social Funds: An Expanded NGO Critique 171 the SRN led to social fund employee strikes and an uneasy standoff as they contested the rea- sons for reorganization. It was widely believed that the ruling party sought this merger to con- trol all development funds before national elections. The relationship of donors to national governments makes intervention to prevent or correct such occurrences delicate and complex. NGOs contend that if measures such as stakeholder participation were mandated features of social funds, as well as governance at both national and local levels, stronger public account- ability mechanisms would help protect the political autonomy of social funds. Demand-Driven Projects The demand-driven aspect of social funds also seems central to their definition, and a key qual- ity distinguishing many social funds from similar programs. Demand-driven means that a so- cial fund relies on outside organizations, both governmental and nongovernmental, to propose projects for funding. A social funds microproject is ideally generated by stakeholders, with funding granted to those proposals meeting specific, preestablished criteria. This characteristic distinguishes social funds from social action programs, used as multisectoral investment projects in African countries. Project components of social action programs are designed upfront by social action programs development professionals within the program. The demand-driven nature of social funds is crucial to a capacity-building agenda that fosters stakeholder participa- tion by local institutions and NGOs. Because they solicit proposals from many stakeholders, social funds have the potential to fund projects that address genuine community needs. The demand-driven nature of a social fund is an essential, defining characteristic; however some social funds, such as the Sao Tome and Principe Social Infrastructure Fund, dropped their demand-driven mandate and instead preappraised a set of projects to meet specific basic needs. According to Khadiagala's research, Sao Tome ranks among the lowest of the African social funds in both autonomy and demand-based proposals; Bank appraisals stress that while not in ideal condition, the operation of the Sao Tome fund depends on adapting to a country-specific reality, where local institutions are either nonexistent or have an extremely limited capacity. Such deviation from the intrinsic definition of a social fund, however, calls into question the overall purpose of Sao Tome's fund and limits its goals to providing services rapidly rather than to enhancing local capacities. There is a significant correlation between social funds' autonomy and demand-driven ap- proaches. The first Bolivian Emergency Social Fund provided a model for other autonomous, demand-driven social funds in Guatemala, Honduras, and Nicaragua. There are a few note- worthy exceptions. Zambia's Micro Projects Unit is contained within the finance ministry, but retains control over demand-driven project selection. The Senegal AGETIP, considered by the Bank to be an autonomous institution, until recently would accept proposals only from gov- ernment ministries and municipalities. Excluding nongovernmental participants from sub- mitting projects in this case meant that the fund failed to increase service delivery to tradition- ally marginalized groups. It is plausible that funds lacking community-based, demand-driven project proposals will fail to enhance and strengthen decentralized delivery systems-one of their principal aims. Although more research in this area is needed, some of the Bank's own evaluations support a link between increases in social funds' institutional autonomy and higher instances of demand-driven function. Institutional autonomy frees the social funds from bureaucratic constraints often found in line ministries, but does not necessarily lead to community-based, demand-driven projects. A review of the Guatemalan social funds shows that they approved proposals months ahead of normal bureaucratic channels and built five times as many schools as the government was able to do in the same period. The key to meeting these goals was a decentralized delivery system, which utilized the skills of private contractors and the capacities of local institutions. Yet in 1994, a Center for Democratic Education evaluation of Guatemala's social funds underscored 172 Original Workshop Papers the lack of community or NGO participation in the design or management of the social funds themselves, even in cases where the funds profess community ownership of the funded com- munity projects. A second study in 1996 found that community-based demand continues to be constrained by application procedures that exceed the capacity of small, local NGOs and popu- lar organizations. Stakeholder Participation Those who are directly affected by both adjustment policies and aid projects are usually ex- cluded from developmental decisionmaking. The first social funds were established before par- ticipation became a mainstream issue within the World Bank. The Bank defines participatory development as a process through which stakeholders influence and share control over devel- opment initiatives, and the decisions and resources that affect them. Bank policy identifies lev- els of participation ranging from information-sharing, consultative, and joint assessment mecha- nisms-in which participants are asked for their opinions and advice may be sought-to shared decisionmaking, collaborative, and empowering mechanisms where the ability to influence and share control is heightened. Since the 1994 board approval of the Participation Action Plan, the notion that broadened stakeholder participation builds ownership, increases governmental ac- countability, and aligns projects to the needs of beneficiaries has become official doctrine. Two years later, it is clear to observers both inside and outside the Bank that operationalizing partici- pation requires systemwide change in Bank procedures and culture. By definition, social funds, at least at the subproject level, require stakeholder participation and as such are one laboratory for leaming how to mainstream participation. Advocates of popular participation see social funds as a means of engaging the poor and other marginalized groups in the development process and making aid more relevant to au- thentic needs. How participation actually happens in social funds, who participates, and who benefits are of specific concern. Many in the NGO community feel that the Bank's recognition of the diversity of project stakeholders should not underscore the importance of the primary beneficiaries of aid and the need for the meaningful involvement of affected communities in decisionmaking in addition to information-sharing. To these organizations, participation "is not simply another 'component' of project planning, but rather a fundamental reorientation of the planning process." Just as NGOs are more than merely efficient service providers, nongov- ernmental and community stakeholders have greater roles to play than simply acting as infor- mants or low-cost implementers. Stakeholder participation needs to be expanded to include involvement in the design of social funds themselves. In the view of NGOs, popular participation in social funds needs to be extended to the macrodesign level so that the menu of subproject options, procedures for community involve- ment, and tradeoffs between immediate assistance and long-term development reflect better the priorities of affected people. More broadly, NGOs contend that where poverty is not differ- entiated (for example, rural, urban, and gender aspects), local development demands are not factored into the social funds' macrodesign, and social funds are created outside or in parallel to local development processes, funds are likely to fit the priorities of affected people poorly, to lack synergy with other development investments, and to be unsustainable. The need to disburse funds rapidly is still a prime motivation for many social funds, but merely targeting regions with a large percentage of poor people does not guarantee that a project will be relevant to their needs. Unfortunately, this is precisely what some social funds have done. Targeting takes time, but as long-term instruments of social policy reform, social funds will need to collaborate on a deeper level with nongovernmental and community-based orga- nizations to develop macrodesign criteria that truly assist those most in need and address their concerns. Some newer social funds are experimenting in this area. For example, the Argentina Social Funds: An Expanded NGO Critique 173 social fund has consulted with selected target communities to define the subproject menu, and NGOs sit on provincial bodies that decide which communities are eligible for social fund assis- tance. In Jamaica, the NGO council successfully lobbied the Cabinet of Ministers to structure the seven-person Social Investment Fund Board with two seats for representatives nominated by the NGO council. A 1996 World Bank study also supports involving NGOs in the design phase of social funds. According to this report, the latest generation of social funds has had a greater developmental orientation and has included procedures and resources for NGO promotional and capacity building functions (Comoros, Kenya, Madagascar). If these procedures truly foster NGO par- ticipation in macrodesign, they represent a promising development that warrants monitoring to determine whether they become institutionalized outside the Africa region. Civil Society Roles in Anti-Poverty Lending Priorities and objectives for a social fund are generally set during consultation between the World Bank and the borrower government. Often, the creation of a social fund is a precondition of continued aid disbursements, as was the case with Mexico's Fondos Municipales de Solidaridad and Guatemala's Fondo de Inversi6n Social (FIS). World Bank financing of a social fund depends on the types of loans for which the borrowing nation is eligible. This is a critical consideration. Understandably, a borrowing government responsible for loan repayments may be leery about disbursing funds in a decentralized manner through NGOs, or about increasing its debt burden. According to sources at the World Bank NGO Unit, the government of Nepal recently rejected a proposed social fund for this very reason. Often governments are nervous about stakeholder involvement in microproject design and project implementation. Where the state has the exclusive mandate for development planning and social sector services and where popular democracy has not been practiced, it is likely to have even greater difficulty accepting stakeholder involvement in macrodesign. But without community involvement in shaping the goals and priorities of a social fund, its criteria and guidelines may fail to address the needs of the affected poor. Most social funds provide some mechanisms for demand-driven funding, thereby respond- ing to requests generated by local groups, such as community organizations, governments, and NGOs, rather than identifying projects themselves. As such, they rely on collaboration between national governments and other stakeholders, including NGOs. These relationships have the potential for friction. Bank evaluators cite rivalry for resources; reluctance to work with gov- ernments, which is an area of mutual distrust; and the sheer number of NGOs claiming to be legitimate representatives of stakeholders as obstacles to collaboration. Social funds such as the Bolivian Emergency Social Fund may strengthen some of the insti- tutions with which they work and help establish government-NGO relations. On the other hand, World Bank staff sometimes feel that the selection of subprojects may not be rigorous enough to guarantee that only the best are picked and note that some coordinating NGOs, lacking implementation capacity, require assistance by fund staff. Many Bank concerns about cooperation with NGOs arise from the limited institutional capacity of many of these organiza- tions. Local institutions often lack the ability to effectively propose and reliably implement projects. This is precisely what the funds are supposed to improve, but most social funds lack a mechanism for enabling NGOs and other local organizations to upgrade their capacities. To date, recognition that intermediary institutions need strengthening has not led to more proac- tive institution-strengthening investment policies. To this list of conflicts, NGOs might add limited levels of stakeholder participation, a funding process still dominated by government interests, and a tendency for funding to go to govern- mental or private contractors. In a positive response to this last issue, the Bank has suggested 274 Original Workshop Papers a cap on funding to public agencies, proposing that a minimum of 33 percent of funds be earmarked for private voluntary organizations and NGOs, in order to reduce public reliance on the social fund for off-budget financing. Both the Bank and the NGO community seem to be in agreement that the patronage issue-the use of funds by government leaders to further their own political careers-needs to be addressed. Operationalizing Social Funds-Private Contractor and Community-Based Models Judging from social fund criteria evident in the available case studies, it seems possible that distinct social funds trends or models are emerging as social funds proliferate beyond their Latin American origins. According to this hypothesis, the adaptation of one type of social funds over another reflects institutional priorities, as well as regional constraints and assets. We offer this idea in the hope that it may elicit additional evidence indicating changing patterns in the evolution of social funds, for example, whether a shift in emphasis away from infrastructure projects toward human capital formation or economic projects is a growing trend. Thinking of models for social funds is only useful if it helps to guide analysis. The distinc- tion between social funds that favor private contractors and those that are community-based is not essentially regional in nature, although the operational details of specific projects may be. Some social funds, their operational criteria reflecting the constraints and resources of the host government, tend to favor implementation by private contractors rather than development of the capacities of local community institutions: Senegal's AGETIP and the Bolivia Emergency Social Fund were, for example, implemented by private contractors. These implementers repre- sented a number of stakeholders, some within the community, but more commonly from the more developed private sector of the country. The Bank feels that such funds are best suited for civil works projects, where roads, schools, and housing schemes require a fairly high level of technical skill and institutional capacity. Other funds have relied on contractors from outside the affected communities to implement their projects. In rare cases, such as the pilot flagship social fund in Armenia, a social fund is administered in partnership with an outside NGO, the Armenian Assembly of America. Social funds' designers considered this a necessary step, due to the lack of local institutions and the diminished capacity of the Armenian government to manage the social fund on its own. The contractors whose proposals received funding in Guatemala tended to be those whose institutional capacities were already well developed. Applications were written in difficult lan- guage and were not easily available to the public. Members of former state security forces and construction firms from urban areas possessed the technical knowledge required to submit fundable projects, while community groups often lacked such skills. Such evidence from the Guatemalan case illustrates the risk in private contractor-based projects that the poor will not have a high level of participation or be the real beneficiaries. Evaluators from the Center for Democratic Education found that the Guatemalan social funds are typically controlled by elements from the business community, which have no rela- tionship with the general population, and have no concept of the real needs of the people. In one social fund dealing with agrarian reform, non-Bank donors actually expressed reservation about subsidizing the rich through selling land to the poor. Other NGO criticisms of social funds are that funds predictably go to contractors rather than really helping local communities. The social funds do not fund preinvestment costs, which the authors of the Center for Demo- cratic Education study find can be prohibitively expensive for some bidders. A community-based model may be represented by the Zambia social fund; in the imple- mentation of typically small infrastructure and social assistance projects, the major partners in the Zambia social fund are the communities themselves. These projects are less concerned with temporary employment generation or social infrastructure and instead focus on what is called human capital formation, which includes extending coverage of health, education, water and Social Funds: An Expanded NGO Critique 175 sanitation services, and training to the affected communities. Some observers attribute the Zambia community-based model to the significant involvement of the European Union in its design. Other examples of community-based social funds may be the Nicaragua and even the Bolivian fund, which involved a wide array of stakeholders. The current social fund in Honduras em- ploys a wide variety of organizations-community-based, governmental, and private sector- in project implementation. Goals of Social Funds Social funds have evolved since their inception and continue to adapt to changing realities. A review of existing social funds and attention to the start-up of new funds attests to their great variation and flexibility. This review indicates that many social funds have chosen to adopt a short-term welfare agenda, instead of addressing the longer term employment needs of af- fected communities and local level capacity building. NGOs and others take issue with this approach when social funds are mid- to long-term interventions rather than emergency mea- sures as originally conceived. In Latin America in particular, NGOs call for a greater financing of productive projects, which may channel assets to the poor through measures such as land reform and credit. In the Bolivian Emergency Social Fund and in many subsequent social funds, it is clear that economic and social infrastructure projects rather than credit schemes and microenterprise de- velopment received the bulk of the funding. Only 10 percent of overall funds in Guatemala, and none of the World Bank resources, are allocated to income-generating activities. NGOs and external evaluators overwhelmingly recommend increasing the amount of funding for microenterprises and income generation. The Bank's own assessment of microcredit and bank- ing activities is that, while these may be important, they should be managed as proper loan programs, because creditworthiness analysis and other banking functions are outside the scope of social funds. The World Bank believes such activities are better managed by existing finan- cial institutions or by separate entities such as the Grameen Bank. Social funds do make some loans, but most have found their microcredit efforts less successful than their other projects. Community and Institutional Impacts of Social Funds One goal of social funds is to promote local institutional capacity. However, a study of the Guatemala social fund found that it generated community divisiveness and that social funds procedures provide no mechanisms for communities to decide jointly which project is most important to them. Rather than encourage local organizing and priority setting, the social fund is perceived to penalize such tendencies. Observers also express concern that social fund implementation through private contrac- tors, NGOs, and community groups undermines public sector reform. Privatizing social ser- vices, in particular, risks their sustainability unless state responsibilities and roles are clearly spelled out. In cases such as Guatemala and Bolivia, limited integration with national and re- gional planning lead to the development of parallel bureaucracies. For example, schools were built with no teachers to staff them. Because provisions for operation and maintenance after financing are often inadequate, evaluators also indicate that the useful life of the physical infra- structure created by some social funds may be shortened by inadequate provisions for opera- tion and maintenance. NGO-Bank Dialogue: Shared Concerns and Differing Perspectives More than 50 social funds have been initiated since the first was approved for Bolivia in 1987. The wealth of experience represented in these lending operations has been tapped by Bank staff 176 Original Workshop Papers to continue to evolve fund policy and practices through internal reviews, negotiations with borrowing governments, and dialogue with NGOs at tlhe national, regional, and global levels. An overarching conclusion of experience to date is that it is extraordinarily rich and diverse, reflecting local differences, as well as changes in the original model itself. Two broad questions underlie the debate conceming social funds: * To what extent are social funds fulfilling their goals and functioning according to their essential characteristics? * To what extent are social funds an integral component of national and social develop- ment policy? This element of debate centers on operationalizing social funds more effectively. Targeting the funds better, ensuring sustainability, preventing politicization, and streamlining subproject implementation are high on the agenda of project officers and involved NGOs. Opinions differ on the extent to which funds fulfill their potential as anti-poverty instruments. NGOs critique fund operations on two dimensions. First, they question the fundamental premise that a cultur- ally sound, politically legitimate, or developmentally appropriate social fund can be designed without civil society participation at all stages and levels of decisionmaking. They seek social funds governance structures that are accountable to the interests of affected people. NGO and community participation needs to be incorporated into the social funds' national decisionmaking bodies. At the local level, strengthening intermediary institutions that can assist the democratic process and the inclusion of underrepresented groups is essential. Second, NGOs are pressing for more attention to (a) capacity building of local institutions, (b) projects promoting productive economic activity and human capital development over emergency measures, and (c) community-government institutional arrangements capable of sustaining social and economic programs over the long term. Specific changes in social funds policy and management flow from these perspectives: * One-third of a social funds board should be nominated by NGOs, popular organizations, and community-based organizations. * Govenmments should publish development plans for areas that are receiving social funds funds. * Open, publicized community meetings should be held to select projects that will become social funds applications. * Social funds should provide technical assistance and financial resources to help commu- nities to develop proposals for social funds projects. This started taking place in Guate- mala after the Center for Democratic Education critique of 1994. * All contractors should hire local, community workers for a fixed proportion or type of job, and women should share equally in employment opportunities. * Bidding systems for social funds should include the following aspects: (a) approved projects should be part of a local development strategy, not atomized and unsustainable small projects, (b) priority should be given to projects that seek to modify structural causes of poverty, not only immediate problems, and (c) national publicity of bidding should be assured. In claiming the right and necessity of civil society participation in determining policy for social funds, as well as in operations, NGOs further assert that there should be dialogue on a second basic question: To what extent are social funds an integral component of national and social development policy? In this arena, NGOs typically question the extent to which social funds are linked to long-term economic policy and the relationship between short-term social fund investments and long-term strategies in the social sectors-health, nutrition, education. They also raise questions about the nature of policymaking itself. Social Funds: An Expanded NGO Critique 177 Independent analysts, NGOs and NGO consortia, are making a variety of recommendations at a higher level, among them, the following: * Social funds should not be developed independently from public social programs; complementarity of social targeting and universal coverage should be maintained. * Definitions of poverty used by social funds should be reviewed, taking into account not only income and satisfaction of basic needs, but also exclusion, gender and ethnic rights, human rights, and legal protection. * The World Bank should develop a specific participation strategy for social funds that guarantees the participation of NGOs and people's organizations in all stages of design and implementation of social funds. World Bank perspectives tend to focus on operations-how to ensure or improve the perfor- mance of social funds. Staff are in a steep learning curve in the design and management of decentralized, demand-driven projects that require community-level participation for success; but the institution's development paradigm does not yet include social development as a legiti- mate element. Therefore, social funds are peripheral rather than essential to mainstream Bank lending. A presidential Social Development Task Force established in 1995 to define a broader development paradigm has experienced substantial resistance to the notion that social aspects are essential to the Bank's model. However, as World Bank staff and national governments define long-term development policy through country assistance strategies, the larger role of social funds in terms of national policy needs to be examined. Growing openness by the Bank and the growing participation of civil society in the policy analysis and dialogue leading up to country assistance strategies may expand opportunities for this debate to unfold. As a relatively new intervention addressing overwhelming poverty, social funds are engaged in a learning process. Social funds do seem to fill the vacuum left when adjustment mandates have obliterated government social spending, or when the existing bureaucracy lacks the infra- structure, capacity, or credibility to meet the needs of the poorest citizens. Their noted flexibility should serve them well in this regard, but beneath their participatory veneer lie serious ques- tions about their scope and mission and the ultimate contribution social funds can make toward poverty reduction and sustainable development. Hopefully, an informed dialogue between all social funds stakeholders will lead to new innovations and steps that will ensure broader par- ticipation in designing social funds and make development more equitable and sustainable. Such a dialogue might also lead to innovation beyond the social funds themselves. As mi- crocosms of three related issues-popular participation, state reform, and social aspects of the development paradigm-social funds provide an experimental base that can inform broader World Bank reform. 30 Social Investment Funds, Local Governments, and Communities in Central America by Patricia de Jager, Director, Federation of Municipalities of Central America, Guatemala Introduction The Central American municipality has evolved during the last decade. Today the munici- pal government is a product of popular elections. The local democracy demands perfec- tion, and in this sense it is necessary to complement the representative democracy with participatory democracy. Thus, citizen participation is indispensable in strengthening the municipal government. Presently, citizen participation is expanding within the existing legal framework, and, as new legal reforms are introduced, the community can channel its demands and actively partici- pate in its own development. The social investment funds (social funds) can contribute to the strengthening of local democracy by linking local government with the community. In this way they can guarantee a municipality with the capacity to respond to citizen demands and with the willingness to share tlie costs of social investment. To bring about efficiency, social funds should coordinate actions with institutions of the central government and with municipalities. They could help municipalities to improve the cadastre, improve their collection capacity, re- vise tax rates, and improve the efficiency of collection. They could also support and facilitate training for municipalities to enhance their administrative, technical, and managerial skills. The Federation of Municipalities of Central America (FEMICA) has asserted that moderniza- tion of the Central American state requires the integration of municipal government within a comprehensive national framework for development, wherein the municipal government takes responsibility for development of its community. Central American municipalities are characterized by their economic disparities; the major- ity are rural with high poverty indices. Development strategies need to recognize that 70 per- cent of the population of the region is poor. The only partner of the central government that can generate its own resources for investment is the local government. The local tax rates in the region are some of the lowest in relation to gross intemal product. The rates in Guatemala and El Salvador are 0.1 percent and 0.2 percent; in Costa Rica, Panama, and Honduras, 0.4 percent, 0.5 percent, and 0.8 percent, respectively. Nicaragua presents an exception with a tax rate of 2.1 percent. This presents another great challenge: to generate new local taxes and to increase local revenues that will strengthen intemal savings in order to capitalize social investment. If tax collection were improved, if the property tax base were strengthened by including all taxable property in its system, and if municipalities were able to revalue and reassess property values and collect more realistic property taxes, their revenue resources would be higher. Local 179 180 Original Workshop Papers governments could then contribute significantly to the cofinancing of social funds projects, thereby becoming important players in local development in their jurisdictions. It is important to emphasize that transfers from the central to the local government should be direct, punctual, and automatic. This would allow the local government to include these resources in their plan- ning for investment projects. The poorest municipalities that depend on rapid transfers would benefit the most. Social Funds and Local Governments The sustainability of projects supported by social funds are at risk because of a lack of re- sources for operation and maintenance. Communities cannot be held exclusively responsible for this shortcoming. Not all municipalities can be exclusively responsible for local develop- ment. Many municipalities do not have a suitable environment for economic development, which leads to low tax revenues. Nor can many communities pay for basic services; they often ineed to be subsidized. Any strategy promoted by governments should be directed mainly toward the support of municipalities that have the potential to undertake their own development, so that in time, they can aid weaker municipalities in replicating their success. In the meantime, appropriate cre- ative mechanisms for the redistribution of revenues should be established to aid the weaker municipalities, as is done in Costa Rica, where 8 percent of property tax revenues are redistrib- uted among the poorest municipalities. Another mechanism that can help to compensate imbalances is for poor and better-off mu- nicipalities to cooperate in the provision and sharing of certain services, such as supply systems for drinking water and solid waste collection and disposal, as well as in sharing administrative systems when the poorer municipalities lack management capacity for administration. It would be useful to examine the viability of involving social funds in the support of pro- ductive projects, especially in the poorest countries. The emphasis should be on enabling people to achieve adequate agricultural production at least for their own sustenance if not more, and perhaps also on creating and supporting microenterprises. Social funds could also stimulate the creation of new enterprises that use locally available raw materials and that generate em- ployment for the local people. Finally, incentives are the most important element in achieving participation of the local government and its people in area development processes. A series of meetings were convened in Central America to discuss the roles and perfor- mance of social funds to identify specific actions for the future. One such meeting took place in El Salvador from April 14 to 17, 1997. The general findings of the participants are listed in the following paragraph, after which is a proposal, developed at the El Salvador meeting, for the creation of incentives in partnership with social funds. Findings of the Meetings in Central America on the Roles and Performance of Social Funds Following are some common problems related to social funds: * The relationship of social funds to municipalities and communities is still vertical. * The emphasis is on the quantity of actions instead of their quality. * Although citizens participate in the identification stages of a project, there is little partici- pation during the design, implementation, and evaluation stages. * There is little investment in the training of beneficiaries to operate and maintain the in- frastructure that has been financed. * Municipalities that can govern and bring about consensus in decisions about local devel- opment have inadequate resources and technical capacity for such investments. Social Investment Funds, Local Governments, and Communities in Central America 181 Proposal for Strengthening Community Participation If the management and accounting processes for external financing of projects were simplified, municipalities could train communities in resource management and could strengthen com- munity participation in the project cycle. Social funds could do the following to help communi- ties and municipalities take ownership of projects: * Use criteria to allocate resources instead of project menus * Simplify project manuals * Give resources to municipal governments and to communities for hiring contractors, purchasing materials, and so on to strengthen their supervision and technical capacities * Entertain requests for projects that emanate directly from communities supported by municipal governments * Allocate financial and technical resources for the preinvestment phases of projects to strengthen communities and involve them in project processes * Decentralize the operations of social funds to autonomous and independent organiza- tions that have the functional authority and the necessary resources to make local decisions. FEMICA's Seven-Step Proposal for a Partnership with Social Funds to Strengthen Municipalities In analyzing the performance of social funds in the region and considering the perceptions and views of mayors and specialists, presented here is FEMICA's seven-step practical proposal to promote a better relationship between municipalities and social funds, with a gradual transfer of responsibility to municipalities. Some elements have been drawn from the experience of the Honduran Social Investment Fund, because it is the only social fund that has been working with the local government. 1. The functions and responsibilities of social funds should be transferred with their re- spective resources to those local governments that have the potential to promote eco- nomic growth, as well as the potential to increase their own resources. Where necessary and possible, municipalities should be given the training to assume this responsibility. 2. To formalize coordination at the local level, agreements defining roles and responsibili- ties of the various actors should be prepared and approved by all organizations involved. 3. The representation of the community that will benefit from the project should be for- mally structured before, during, and after the conclusion of the work to ensure its sus- tainability. 4. Priorities for investments should be established by local governments and their people. 5. Municipal governments and communities should manage contracts and resources for project implementation. 6. It is necessary and important for social funds to strengthen municipal governments and local institutions. 7. Municipalities should establish a fund with their own resources to undertake social investments. Step 1 To facilitate the transfer of responsibilities from social funds to municipalities, the following elements are important: * The transition should be gradual and commensurate with the capacity of municipalities to assume new functions and responsibilities. 182 Original Workshop Papers * Such a transition cannot be achieved without the political will to empower the transfer of responsibility. * Municipalities must be ready to facilitate the execution of works efficiently and at the lowest cost. * Municipalities should identify mechanisms in place that will enable community partici- pation within existing legal frameworks. * Use of resources by municipalities and communities should be transparent and open to public scrutiny. * In countries where decentralization has not advanced and where central government institutions continue to be responsible for local infrastructure, central agencies must agree to maintain infrastructure. * Civil society and nongovernmental organizations must participate in areas of local de- velopment where they have competence and interest. Step 2 Specific agreements that define roles and responsibilities for the various actors in the develop- ment process must have the following elements and must be endorsed by the National Associa- tion of Municipalities and the social fund. * In these agreements, municipalities should be classified in three categories according to the index of poverty. This classification should become the basis for counterpart funding for projects, for general commitments on the part of both entities to guarantee the execu- tion of projects, and for adopting processes that strengthen local governments. * The communities should be clearly identified. * A memorandum of understanding between the social fund, the municipal government, and the respective line ministry should establish the contribution and responsibilities of each actor, including the formula for counterpart financing based on the classification of municipalities according to a poverty index. * The roles, responsibilities, and resource allocations for operation of the works under con- struction must be specified. * Administrative and technical capacity-building activities that will enable municipalities to prioritize investments and develop municipal investment plans must be defined and supported. * Municipalities and social funds must be in agreement over each project to be executed in the municipality; these projects must be developed through a process of consensus build- ing with the citizens. * The specific agreement should include the following: - The investment amount - Definitions of the modes of financing cost overruns - A commitment from the municipal government to prepare the preinvestment stud- ies, as well as a commitment from the social fund to transfer the resources necessary - Cost-recovery mechanisms, tax rates, and collection responsibilities and a com- mitment from the municipality to inform users about them - The creation of a support committee elected from beneficiaries of projects during their participation in project processes that will ensure adequate operation and maintenance after project completion, as well as ensure payment for services - A formal agreement from the municipality to maintain a management structure with adequate personnel to operate and maintain the services in coordination with the support committee Social Investment Funds, Local Governments, and Communities in Central America 183 - A pledge on the part of the municipality to pay the social fund promptly in accor- dance with predefined schedules. Step 3 The list of community and municipal representatives who compose the support committee must be finalized before the start of work and should continue after completion to ensure sus- tainability of the financed projects. This committee should be structured through the same mecha- nism that generates community participation. It should identify beneficiaries as well as local labor for the project. It should audit the construction and supervision of projects. And it should coordinate the collection of user charges and fees and follow-up activities to ensure adequate operation and maintenance of infrastructure works. Step 4 Priorities for investments should be established by local governments and their people through participatory processes that facilitate the definition of investment plans to help municipalities develop a long-term vision. Where no municipal investment plans exist, municipalities must work within the legal framework to define projects in consultation with the community through mechanisms such as public councils or audiences. They must explain the projects and proceed only after the community gives approval. Step 5 Communities and municipalities should manage resources and contracts for projects. To strengthen these entities, only approved projects should include an elaboration of preinvestment studies. Social funds should facilitate necessary training and support these studies. Training of municipalities and communities should include not just administrative and technical training, but training in the transparent management of resources as well. Social funds and municipali- ties should have a program for the exchange of personnel to facilitate transfer of skills. Mayors and councils should take over resource and contract management of projects only if the com- munity is not willing to do so. Generating employment for the community and stimulating and strengthening the private sector should be guiding factors in choices about project design and implementation. Operation and maintenance should be the responsibility of the department of public works in conjunction with the support committee. Step 6 Social funds must strengthen municipal governments and local institutions. This should be an important focus in technical assistance and training for local governments, because they will be operating, managing, and sustaining works to be realized with social funds. Social funds could reduce their administrative structure and lower the costs of projects by transferring tech- nical assistance and training functions to local organizations with the necessary capacity. Al- ternatively, social funds could facilitate training to be given by different institutions of the central government that have local offices, such as the various institutes of municipal develop- ment present in Central America, whose roles are currently being reevaluated. Other institutes that could train municipalities are the councils of development in Guatemala, departmental councils of mayors in El Salvador, and district councils in Costa Rica. These institutes should also be considered for the assumption of some functions that weak municipalities may be unable to fulfill. 184 Original Workshop Papers Step 7 Municipalities should establish a fund with their own resources to undertake social invest- ments. Such a fund would be useful to sustain projects or to execute other works financed by social funds. Management of this fund should be transparent. The resources should come from the municipality's current savings account, from government transfers, and from any other contribution that the municipality receives. Resources can be supplemented by the com- munity through beneficiaries' contributions, neighborhood organizations, and other groups that benefit directly While the capacity to contribute will clearly be a guide for determining the size of donations, beneficiaries appear to be able to contribute at least one-third of the fund's total amount. 31 Social Funds and Development of the Private Sector: The Case of Mali by Lamine Ben Barka, Director, AGETIPE, Mali An Underdeveloped Private Sector Anyone who knew about the status of the private sector a few years back in most of the coun- tries that established agencies for execution of public interest works (in French, agences d'execution des travaux d'interet public, or AGETIPs, often called agences TIP) would easily admit that this sector has experienced an in-depth transformation. Indeed, the private sector, which most people agreed needed to be promoted and developed, has notably changed since the advent of AGETIPs. This may be explained primarily by the tremendous revival AGETIPs caused in the build- ing construction and public works (or batiments et travaux publics-BTP in French) sectors. It is commonly agreed that increased construction activity shows improvement in people's stan- dard of living. To show the remarkable impact AGETIPs have had on the development of the private sector in general and through the BTP sector in particular, the case of Mali is discussed, where the experience of AGETIPE-Mali seems, to a large extent, to reflect accurately that of all other coun- tries in which projects were established to execute public interest works. One of the dominant arguments before and during the establishment of AGETIPs concerned the need to develop the private sector. Efforts were made to translate the development into reality. Although the private sector in general needed support and revival, the BTP sector in Mali was in even greater need. BTP Professions in Mali In 1991, shortly before the establishment of AGETIPE-Mali, a World Bank-sponsored study on BTP indicated the following: * There were about 80 construction enterprises (all categories combined). * There were about 400 artisans, contractors, and entrepreneurs. * There were about 20 BTP professionals officially registered, including architects, coun- seling engineers, and surveying engineers. Most small-scale construction was carried out by local enterprises, but large-scale works, such as much-needed road construction, were contracted systematically to foreign enterprises for execution. Undoubtedly, many aspects of Mali's situation could apply to other countries in the subregion during the same period. 185 186 Original Workshop Papers One or two countries, C6te d'Ivoire and Senegal among francophone countries, had launched the BTP sector with relative success and had initiated bold infrastructure programs (C6te d'Ivoire, for example). Most of the other countries in the region experienced slow progress in BTP sector development. The most important reasons for low involvement of local firms in the construc- tion sector center around the following: * Difficult access for enterprises, including engineering firms, to public contracts * Difficult access to credit * Slow procurement and payment procedures * Lack of an effective policy to promote the sector. The government administration was, and remains today, the primary contract provider. Most local enterprises were denied access to public contracts. This was particularly true for bids that were designed to adhere to donor conditionalities and criteria, which dismissed de facto any local enterprise. These restrictive criteria were often related to the turnover in a given period, often required to be worth at least US$2 million, to a minimum number of years of experience, ten years, for example, or to experience in executing works similar to those being bid. Slow progress in the development of the BTP sector also stemmed from difficulties with the following: gaining access to bank services; obtaining various types of guarantees required from the tenderers and successful bidders; and acquiring tender bonds, good performance guaran- tees, start-up advances, and retention money. In addition, obtaining credit has been extremely difficult, although credit is vital to the ex- ecution of certain contracts for most enterprises because they lack significant financial assets. This remains true for the BTP small-scale enterprises that need credit just to secure equipment. There is still a dismal lack of a credit-for-equipment financing mechanism or a system for leas- ing equipment for small BTP enterprises. The World Bank report also indicates that the time needed to approve a public contract might be as long as 8 to 12 months. According to the report, complex, bureaucratic procedures required no fewer than 12 steps, including signature by the enterprise and registration of the contract. Partial payment for contracts required the same amount of time. According to the same report, this amount of time was also needed to make payments in local currency. In Burkina Faso, the length of time needed to procure a contract could reach 231 days, or about 8 months. In Senegal, the Director of the Urban Development Management Project is reported to have spent 528 days to procure a contract. Undoubtedly, such administrative redundancy and slow- ness effectively discourages existing enterprises from seeking these contracts and inhibits the establishment of new enterprises. The development of any sector of activity depends on the willingness of decisionmakers to act. This is true for national production in general and for economic activities in particular. This is especially the case for the BTP subsector, which cannot go forward without an effective gov- ernment policy for the execution of large infrastructure works. Well-planned, continuing pro- grams that involve and benefit local, rather than solely foreign, enterprises are needed. It is no exaggeration, however, to state that until the recent establishment of AGETIPE-Mali, there was no such policy in Mali to promote private enterprises and alleviate difficulties related to access to bank services and credit. The Advent of AGETIPs It is in this context that AGETIPs were established. Their origins are related to the effects of structural adjustment programs, which in turn resulted from the mismanagement of pub- lic finances. Social Funds and Development of the Private Sector: The Case of Mali 187 Objective of AGETIPs One of the essential objectives of these agencies was to reduce urban unemployment through the execution of public interest works using labor-intensive techniques. Objectives of an agency to execute public interest works included the following: * To create temporary employment in urban areas and contribute to the creation of perma- nent employment * To build the capacity of the private sector, more particularly small enterprises and engi- neering firms, so that they can execute a wide range of public works while improving the skills of individual workers involved in the project, allowing them to be competitive in the labor market after the project is completed * To provide the government administration with the means to manage the demand for goods and services efficiently, as well as to manage the funds used for these purposes * To demonstrate that it is possible for public contract procurement and management pro- cedures to be less redundant and more transparent. After problems were identified and objectives defined, it was essential to work in such a way that AGETIPs could efficiently meet expectations. Mode of Intervention-Quick Procedures AGETIPs that act as implementing agencies also act primarily as the delegated contracting authority. Their success and effectiveness result from streamlined procedures that achieve tre- mendous performance levels contrasted with the administration's delays in contract procure- ment and bill payment. Independence, impartiality, effectiveness, and cost-consciousness are the determining principles of these agencies. With AGETIPs, the average time for contract pro- curement is 10 days, and payment deadlines are even shorter: 7 to 15 days. At the same time, AGETIPs successfully fulfill their mission to promote small enterprises, at least in the BTP sector. Eligibility and qualification criteria in their manual of procedures allow easier access to contracts for any local enterprise that meets minimum conditions. Mea- sures were taken to significantly encourage, rather than inhibit, those who want to create small BTP enterprises. This resulted in a proliferation of BTP enterprises and engineering firms in all categories. AGETIPs as Catalysts for Development of the Private Sector Impact on Entrepreneurship AGETIPs brought about a true era of entrepreneurship and helped to achieve the following: * The institutionalization of a contracting culture. * The adoption by small enterprises of a new and more professional way of doing busi- ness, particularly in the use of insurance and financial sector services. In Mali, for ex- ample, until the establishment of AGETIPE-Mali, obtaining insurance policies as re- quired by BTP rules was not common practice for enterprises in this sector. Today, this is the norm. There were few contracts and little collaboration between enterprises and banks because of the small number of enterprises before the creation of the AGETIP, resulting in low demand for such services. Today, the number and size of start-up advance guarantees provided by commer- cial banks in Bamako for BTP enterprises constitute sufficient proof that an in-depth change has occurred in the relationship between these two partners, although there is still a long way to go. 188 Original Workshop Papers Another aspect of utmost importance is that AGETIPs have helped numerous enterprises upgrade from an informal to a formal status. Following are some documented examples of the successes of AGETIPs: AGETIPE-MALI * Enterprises and engineering firms working with the agency registered 780 insurance policies from 1993 to 1996. * Over US$8 million in guarantees were provided by Malian commercial banks to enter- prises working with the agency, to serve as start-up advances, from 1993 to 1996. * Number of work contracts awarded: 1,750. * Number of days of employment generated: 7,330,000. * Number of permanent jobs created: 166,608. * Salaries paid on work sites: about US$16 million. * Amount awarded through contracts to enterprises: about US$100 million. AFRICATIP * Investment achieved by AGETIPs: about US$700 million (or approximately F.CFA 250 billion). * Salaries paid: US$100 million. Multiplier Effect of AGETIPs in Private Enterprise Development in Mali As of December 31, 1992, AGETIPE-Mali had: * Created 37 engineering firms, of which 36 were qualified to receive work from AGETIP * Received 364 requests for registration by enterprises of all categories, of which 166 were qualified. Four years later, AGETIPE-Mali had: * Registered 233 qualified engineering firms, marking an increase of 547 percent * Registered 1,280 qualified enterprises, marking an increase of 671 percent. BTP Industry and Sale of Construction Materials Although the results of an exhaustive evaluation are not yet available to determine the impact of AGETIPE-Mali's activities on the small-scale BTP industry, this AGETIP has unquestionably had an impact on the construction materials industry. Any informed observer will easily note the considerable increase in the number of actors in the sector. Notably, the extraction and sale of construction materials are career niches where women are largely involved. In addition, an informal sector of food sellers and various retailers has mushroomed around work sites. Over- all, more than US$100 million has been injected into the country's economy. Training and Local Capacity Building TIP execution projects would have failed if they had had no long-term vision. Ensuring sus- tainability of this new approach requires the involvement of all the essential actors. It would serve no purpose to encourage small enterprises without helping them become sustainable and cost-effective. One way to achieve this is to promote a culture of entrepreneurship through training. For this reason, TIP execution projects always include a training/technical assistance Social Funds and Development of the Private Sector: The Case of Mali 189 component for their beneficiaries, engineering firms, and architectural companies, particu- larly for small BTP enterprises working on the projects. The objective of this training is to reinforce technical and managerial capacities of the enter- prises and engineering firms involved in projects and thus help build effective local expertise in the BTP sector. Results from AGETIPE-Mali's Technical Assistance/Training program, which started in 1993 and terminated in 1996, are quite satisfactory. For example, 3,714 beneficiaries, enterprises, and engineering firms attended a training program composed of 20 modules. This was the first time that this type of training was provided in Mali. Effects on the Government Administration One of the objectives of establishing the AGETIP project in Mali was to help the public sector direct and manage more efficiently, not only the demand for supplies and services, but also related expenditures. Another important objective was to demonstrate that it is possible to imple- ment more transparent and less redundant procedures for contract procurement and manage- ment. The willingness of the government of Mali to replicate the scheme in other sectors is indicative of the positive opinion they have of AGETIPE-Mali. The decision of the government of Mali to contribute over US$40 million as matching funds required by the credit agreement indicates that delegated contracting authority as a manage- ment tool for the government's administration is becoming common practice. Conclusions It is unquestionable that AGETIPs, since their establishment, have contributed significantly to the development of the private sector in general and small enterprises in the BTP subsector in particular. However, these achievements need to be institutionalized to avoid the problems of the past and to avoid nullifying the impacts and breaking the momentum of growth in the private enterprise sector. One of the most important results of AGETIP activities is that they continue to play a well- recognized role in local capacity building. Results also demonstrate the dissemination of a con- tract culture, brought about by the establishment of AGETIPs. The widely accepted practice of delegating contracting authority, as confirmed by the established and consolidated collabora- tion between AGETIPE-Mali and the government administration, indicates that the latter is being exposed to the contract culture. So far, state control has been the rule. The establishment of AGETIPs has inaugurated a new era of contracting with enterprises while encouraging the administration to use their services. The government needs to support the continued development of the private sector through regular programming of investments for infrastructure, as well as through more committed support to the construction industry. This will lead to better cooperation between banks and the BTP sector. However, without the integration of training into any program for stimulating the development of the private sector, prospects for the success of the sector are uncertain. Training is the cornerstone of capacity building. 32 Designing Social Fund Components: Sectors, Themes, and Access by Scarlette Gillings, Director, Social Fund, Jamaica Jamaica's National Context Jamaica's socioeconomic environment may be characterized as that of a middle-income devel- oping country. In the 1980s and 1990s the country faced economic reverses similar to those of other non-oil developing countries throughout the world, a fiscal and balance of payments crisis that led to prolonged stabilization and structural adjustment programs supported by the International Monetary Fund (IMF) and the World Bank. Among the policy measures intro- duced under the IMF stabilization programs over the past decade have been several currency devaluations, reductions in government spending, removal of subsidies, and increased rev- enue collections. Simultaneously, structural adjustment programs aimed at promoting economic efficiency and stimulating export growth have been introduced. Measures have included: privatization of several government services and public enterprises, trade and foreign exchange liberalization, and deregulation of many sectors. Despite several years of economic stabiliza- tion policies, Jamaica faces the challenge of an economic and social environment characterized by low growth and unacceptable levels of poverty. In general, Jamaica's living standard indices are relatively favorable compared with other middle-income countries in the region. However, 28 percent of the population lives in poverty. Sixty percent of the poor live in rural areas, with the remaining 40 percent distributed evenly in the urban centers. An underproductive small farm sector, low wages, lack of employment opportunities, low levels of education, and inadequate physical and social infrastructure con- tribute to a worsened poverty situation in rural areas. While access to sanitary facilities is relatively high in Jamaica, the rural population has less access than the urban population. In 1991, 24 percent of the population lacked access to safe drinking water, while in rural areas the proportion was 40 percent. There are also considerable deficiencies in the water and sanitation facilities within schools, health centers, and other public infrastructure, thereby increasing overall health risks. Road networks, especially in rural areas, are also in poor condition from lack of maintenance. High levels of crime and violence, mainly in poor urban areas, contribute to increased health costs and impede the delivery of social services. Violence also leads to weak investor confi- dence, migration, and a generally deteriorating quality of life, particularly among the urban poor. A disproportionate percentage of the poor are under the age of 25; 13 percent are elderly. Women comprise 51 percent of those living below the poverty line. The unemployment rate among the poor was 15 percent in 1995, 70 percent of whom were less than 25 years old; 65 percent were women. 191 192 Original Workshop Papers Poverty is largely a phenomenon of the working poor, because demand for their labor is not strong enough to push up real earnings, and they lack the skills that facilitate access to higher paying jobs. The majority of the poor are farmers, agricultural laborers, domestic servants, street vendors, and craftspersons. There is a clear association between poverty and years of educa- tion: nearly 70 percent of the employed poor reported no secondary education, compared with 45 percent of the employed nonpoor. More than 30 percent of primary school graduates are functionally illiterate. Under structural adjustment, social expenditures have been considerably reduced in real terms, both as a result of devaluation and of budget cuts. Since schools are underfunded, the shortage of inputs and the deterioration of infrastructure has affected the quality of education negatively Inequitable distribution of resources has led to poorly equipped, overcrowded, and physically deteriorated schools in lower income areas. This is exacerbated by vandalism and further corrosion of the infrastructure. Public funding for health care has been insufficient, leading to atrophy in public health care facilities, which are in poor repair and lack equipment and basic supplies. The Target Groups The current socioeconomic situation of Jamaica, and the status of various social groups within this setting, indicate that the rural population, women, children, unemployed youth, and the elderly are important target populations for poverty alleviation, while the rehabilitation of so- cial infrastructure would increase income and earnings for small farmers, as well as reduce urban violence and improve community and family life-areas that urgently require effective short-term solutions. This chapter shares some of the experiences of the Jamaica Social Investment Fund USFs) in the six months since its formal inauguration and highlights some possible lessons relevant to the design and development of social investment funds (social funds). It focuses on approaches to project selection and financing and the development of subproject menus that can facilitate the access of target groups to social fund resources. Jamaica's Poverty Eradication Strategy Poverty alleviation has become a major focus of government policy in recent years and has led to the promulgation of a national poverty eradication strategy and the establishment of a Na- tional Poverty Eradication Program (NPEP) to eliminate poverty. The policy differentiates be- tween private poverty, which is characterized by the inability of the individual to meet basic needs, and public poverty, which relates to the inadequate provision of basic public goods and services, such as roads, water, sanitation, and transport. Following are the five primary ele- ments identified in the poverty eradication policy: * An integrated program of poverty reduction activities geographically targeted to de- prived communities * Interventions mainly targeted to unemployed youth to prepare them for the world of work and to reduce early childbearing, and interventions aimed at families with children to reinforce parenting skills and responsibilities * A welfare system that is streamlined for more efficient administration with more effec- tive coverage for needy persons, which cushions the effects of economic adversity while expediting recovery for the new poor * Equitable access by the poor to good education and health services * An enabling environment that gives special attention to institutional management capa- bilities and the economic framework to support the achievement of poverty reduction. Designing Social Fund Components: Sectors, Themes, and Access 193 Jamaica's Social Investment Fund The Jamaica Social Investment Fund is a key component of the government's strategy for eradicating poverty. Designed as a demand-driven organization to mobilize and channel addi- tional resources to low-income and socially underserved communities, as well as to increase the capacity of government, it aims to enable community-based organizations and nongovern- mental organizations (NGOs) to design, implement, and manage community projects. The adoption of this particular instrument has special implications in the Jamaican context, because of the poor sustainability of social development programs in the past, despite signifi- cant efforts by successive governments to address the problems of poverty. Problems with sus- tainability are attributable as much to the resource constraints imposed by recent economic ad- justment programs as to persistent systemic weaknesses in the public management structure, which many people characterize as inefficiency of government and/or bureaucracy. Inadequate levels of community ownership have also contributed to the failure of many social infrastruc- ture projects. In many communities, public infrastructure has been the object of vandalism in the absence of viable community-led management structures. Closely associated with the inadequacy of community ownership is the absence of mechanisms for transferring technologies that would permit communities to play a greater role in the management of public facilities. Since commu- nities often lack technical resources, their facilities are apt to deteriorate more rapidly. Effectiveness and Possible Risks The effectiveness of a social fund depends on the soundness of its design and operational effi- ciency. A design derived from an evaluation of the national context will ensure that the opera- tional modalities of the social fund match the real poverty situation of the country. Caution must be exercised that the experiences of social funds worldwide are not overgeneralized. Models of social funds cannot be transferred from one country to another as virtual turnkey operations without adequate evaluation of relevance and feasibility of particular solutions, despite the urgency of poverty alleviation and the costs and time involved in developing an appropriate fund. Special attention should be given to the targeting of beneficiaries, the choice of subprojects, and internal mechanisms for management of resources and delivery of services. Jamaica has had the unique experience of quickly learning lessons that may be particularly useful to prospective social funds elsewhere in the English-speaking world. For example, the development of operational guidelines and related systems and procedures had to draw heavily on the experiences of other social funds in Latin America. The adoption of a new management information system proved a real challenge, since all the programming and documentation had been done in Spanish and had to capture the specific information requirements of the social fund. The JSFs found it necessary to conduct prolonged and detailed deliberations in adopting these systems and has had to commit itself to a policy of flexibility to ensure that the optimal system is eventually developed. The principal lesson here appears to be the necessity of adapt- ing rather than adopting solutions when establishing social funds in a particular country. To be participatory, demand-driven, and sustainable, the goals of most social funds, their operational effectiveness depends on a number of factors, which are discussed in the follow- ing paragraphs. Systems and Procedures The establishment of systems for management of the fund operations should: * Facilitate thorough planning and research, appropriate organizational structures, effi- cient use of resources, regular monitoring and evaluation to correct design and imple- mentation errors, and effective internal and external communication systems 194 Original Workshop Papers * Offer beneficiaries a range of options from which to choose the appropriate goods and services, and develop a mechanism to facilitate efficient bottom-up planning of subprojects. The procedures of the fund are geared to meet its objectives in the most effective way and to apply them to fund operations. Procedures for project selection, screening, evaluation, and imple- mentation must support the objectives of addressing priority poverty-related needs of commu- nities, as well as satisfy the highest standards of professionalism, thus ensuring transparency, impartiality, and accountability in all fund operations. These issues are of varying significance, depending on the country's particular conditions. In Jamaica, for example, issues of transpar- ency, impartiality, and accountability are of special significance because of the high level of public awareness, at least in the media, of the integrity of public institutions. To be effective, procedures must address the specific situation of the country and resolve corresponding problems in the field, thus expediting the process of delivering sustainable sub- projects. For example, communities are expected to participate in project identification, prepa- ration, and management, but preparation may be difficult because of the nature of the sub- project or organizational and other weaknesses at the community level. In such cases, procedures have to be designed to remove the bottleneck and facilitate faster preparation of projects. Staffing Social funds should be staffed with multidisciplinary teams of professionals. The complexity of the projects that social funds support, as well as the complexity of the political-institutional envi- ronment, require the joint efforts of many dedicated professionals from the fields of sociology, community development, economics, management, political science, law, engineering, architec- ture, quantity surveying, environmental studies, management information systems, and other fields of specialization. The successful coordination of these diverse talents and the negotiation of difficult inter-institutional and political issues at the national and international levels requires leadership of a very high caliber. The heads of social funds should therefore possess substantial qualifications and extensive professional experience to increase their chances of success. Beneficiaries: Who and What Should be Financed The identification of beneficiaries and the determination of subproject eligibility are two impor- tant issues to be resolved in the design of subproject menus. The immediate objectives of social funds and their specific role within a network of institutions implementing the poverty eradi- cation strategy and facilitating broader socioeconomic development directly influences the ap- proach to selection of beneficiaries and subprojects. In the Jamaican context, the JSFs functions as a more or less specialized agency, operating under the government's Poverty Eradication Program; several counterpart agencies address specific problems, for example, land settlements, microenterprises, environmental management, and skills training. Within this institutional context, the JSFs' mandate is to address specific poverty alleviation priorities. The beneficiaries of the social funds are the poor. But just who are the poor? The definition of the target group for purposes of the social fund program may differ from other approaches to targeting. A targeting strategy aimed at reaching the poorest quartiles of the population was adopted, based on studies of leading poverty indicators. It should be borne in mind that in Jamaica, the immediate focus has been on addressing deficiencies in the social infrastructure, because they affect the poorest groups in the population, as well as specially targeted groups such as school-age children. The identification of beneficiaries of the fund becomes problematic when the mandate to ad- dress community poverty and the associated guidelines for ensuring community participation Designing Social Fund Components: Sectors, Themes, and Access 195 and benefits are taken into consideration. Individual beneficiaries are explicitly excluded by the JSFs except where identified and endorsed by a community. The question therefore arises: Are not individuals the ultimate objects of impoverishment, consumers of goods and services, and bearers of responsibility to fulfill any covenants arising from the approval of projects? On this basis, should they not be considered? There are theoretical as well as practical difficulties in targeting individual benefits. At the theoretical level, individual poverty is the outcome of either poor individual choices or the existence of conditions that predetermine poverty in individuals, regardless of their attributes and decisionmaking skills. There would be little justification in transferring income in the form of a social funds grant from the population at large to individuals, unless they belong to a specially vulnerable group whose interest society feels obligated to support, for example, the aged, the infirm, the disabled, and children. Transferring funds to communities for the provi- sion of more broadly defined social goods and services addresses the social aspects of poverty, while facilitating at the same time improvements for individuals without introducing caprice and distortions into individual economic choices. The selection criteria of a social fund become, therefore, consistent with an efficiently functioning market economy. Notwithstanding these considerations, selection policies must be informed by some under- standing of the nature and causes of poverty and how the phenomena of poverty interact with various factors in the economic, social, and political life of a country. The decision on project financing should be guided by criteria of eligibility and sustainability of projects. The decision to finance or not is, therefore, contingent on favorable recommendations with respect to these criteria. Financing decisions are usually the responsibility of social fund senior management, except in special cases, for example, projects above a certain value may require board approval. Factors Influencing Finance The sectors to be targeted derive from the nature of the social fund and its functions. With respect to the nature of the fund's sources and forms of financing, principles of management and public finance may be applicable where, for example, it is poor management to finance recurrent expenses from capital investment. The form of financing, loans or grants, suggests the avoidance of recurrent expenditures and instead the financing of activities that are by their nature social investments, for example, teaching people to fish, as opposed to giving them fish. Yet a social fund has to do both. The important question then becomes how far the social fund is actually integrated into broader poverty alleviation and development strategies and instruments. Within this framework, the social fund may be seen as having a dual function: * As a kind of emergency intervention to arrest outstanding factors contributing to pov- erty and to facilitate effective, even short-term, responses to poverty * As a social fund providing long-term solutions to poverty by facilitating institutional strengthening and institutional changes and therefore improving social capital. Approaches to Menu Design: Negative or Positive Menus? Subproject menus can be designed to identify activities that the social fund will finance, which is a positive approach, or alternatively to identify activities the social fund will not finance, which is a negative approach. The exclusive negative menu approach, specifying the subprojects the social fund will not finance, is guided by factors, such as the following: * The poverty situation in the country and its identified priorities * The mandate and the objectives of the social fund * The role and scope of social fund activities within the wider social program 196 Original Workshop Papers * The determination of the activities that will affect poverty the most (in terms of priority needs and number of beneficiaries) * Considerations of sustainability and legality. This menu would exclude benefits that are not identified as high priorities, that are already addressed by other programs, or that do not affect poverty or meet social fund criteria for com- munity participation. Given the community focus of the JSFs, subprojects located on private land or aimed at providing benefits to individuals are excluded. Also, ownership of land must be verified by provision of clear titles. Following are the advantages of a negative menu approach: * It clearly defines the scope of the social fund to its officers, beneficiaries, and sponsors and thus avoids costly and time-consuming misunderstandings. * It makes. screening and appraisal easier, thus reducing processing time. * It facilitates development and monitoring of standards and performance evaluation; it also permits application of standardized systems and routines in operations and man- agement information systems, and administration; it encourages the focus of social fund resources and energies on things it can do well. * It encourages effective networking and interaction with other programs and agencies of government, as well as NGOs, thus strengthening the overall social policy implementa- tion system. For example, a fund may not be equipped to handle water projects; they can be handled by other organizations in collaboration with the social fund. There are several disadvantages to a negative menu approach: - • Problems of coverage can arise. Since not all areas are covered, the exclusion of some areas may have to be justified. Particular difficulties appear when excluded areas are advocated by stakeholders with power; conversely, excluded areas may affect stakehold- ers with little power, so their concerns may not be effectively articulated and recognized. * It can create problems for decisionmakers who must tread a thin line between bureau- cratic adherence to the rules and flexible responses to deserving cases. How can the ex- ception principle be applied by management? This requires good judgment, possible only with experienced and knowledgeable officers. Senior management should be in- volved when exceptions are to be made. * Some terms of exclusion may lead to discrimination against specific groups of the poor, for example, excluding projects on land where clear titles do not exist. This may discrimi- nate against squatter communities. Exclusion of individual benefits can discriminate against urban microenterprises. The positive menu approach includes activities the social fund will finance. This has the advantage of providing clear guidance on the activities to be financed. However, the attempt to be inclusive can be fraught with certain difficulties. * It may be unwieldy, even impossible, to include all possible activities. * The inclusion of additional activities has to be left to the judgment of an individual of- ficer, which could unwittingly extend the scope of the social fund. * It renders difficult the use of standards and monitoring, making overall operations less efficient and more costly, since standardization more readily facilitates the application of efficient system solutions. In practice, both the positive and negative menu approaches can be combined, specifying a limited range of subproject categories as eligible, while identifying additional categories as excluded from support. This approach will facilitate access of the target groups to social fund subprojects, once the menu has been developed by reviewing the poverty situation in the Designing Social Fund Components: Sectors, Themes, and Access 197 country, the identified priorities, the mandate and the objectives of the social fund, the role and scope of social fund activities within the wider social program, the activities that will meet the most priority needs and serve the most beneficiaries, and considerations of sustainability and legality. Social funds could therefore usefully adapt combined approaches to their subproject menus, clearly specifying priority areas, but also indicating subproject types that do not fall within the fund's scope and which are therefore not likely to be funded. Clear subproject menus will facili- tate access of target groups more effectively than vague ones. Sectors to be Targeted The selection of sectors for targeting raises a number of theoretical as well as practical prob- lems. At the theoretical level, there are problems such as the definition and measurement of poverty and the identification of beneficiaries. Since poverty is a multifaceted phenomenon, manifesting in a number of ways, measures of poverty adopted are most important. Per capita income or consumption, though useful indicators, may have weaknesses and hide important dimensions of poverty. Physical quality of life indicators are also extremely useful, as are indi- cators of income distribution and poverty concentration. However, they all address material manifestations of poverty and do not necessarily deal with the "consciousness" of poverty, that is, the way in which people perceive themselves and are perceived with respect to poverty. Such perceptions strongly influence social behavior and affect attitudes and expectations to- ward a fund. These could become critical determinants of success. These issues have numerous ramifications and must be considered when designing the social fund. The concept of social capital, for example, has recently emerged in the theoretical literature; it provides many useful insights into the problem of poverty and its solution. The JSFs has incorporated this idea into its operations at the level of subproject development and evaluation. On the practical side, there are issues related to the sociopolitical environment within which the particular social fund must operate and how stakeholders perceive the social fund. In the final analysis, as mentioned ear- lier, the determinant of effectiveness will be the perceptions of the fund and how well it meets its stated objectives of poverty alleviation. The environment of the social fund will vary from country to country; manifestations of poverty will vary as much as the extent of poverty. The social fund will need to target particular sectors because of the role they play in determining the overall incidence and severity of poverty. The JSFs Project Menus Jamaica's socioeconomic environment has been characterized by slow economic growth. In particular, the reduced role of the public sector has had a profound effect on social infrastruc- ture, especially since significant sums had been spent in previous years to improve community social facilities. Responding to this environment and to the particular deficiencies that are seen as important to poverty in Jamaica, the JSFs adopted a subproject menu that focused on four main areas: * Social infrastructure, which includes schools, health centers, community centers, day care centers, water, and sanitation, and which is dictated by the identification of the most critical areas of need, based on prior community studies and government priorities. * Economic infrastructure, which includes those projects that affect the poverty of targeted groups directly, for example, feeder roads and small agroprocessing facilities. There is great demand for urban-based economic projects, especially from depressed inner-city zones, and for infrastructure projects, such as small-scale irrigation works, which may also sig- nificantly affect the income-earning opportunities of the poor in rural communities. 198 Original Workshop Papers * Social services. * Institutional strengthening. In the case of economic infrastructure projects, individual benefits must be separated from benefits to the wider community and individual microbusiness enterprises benefits from com- munity projects. The test of the number of beneficiaries can resolve this problem, because projects that result in a high per capita benefit to individuals in relation to the national average or to the average for the fund may be screened, all things being equal. The determinant of sectors tar- geted is need. The sector targeted should be an area of priority need, and the fund's assistance should significantly impact poverty. Consultative Process in Developing Eligibility Principles and a Subproject Menu A meaningful and effective process of consultation is critical to the successful development of social fund eligibility principles and subproject menus. This ensures the involvement of key stakeholders from the poverty alleviation network in the planning and design processes, thus increasing the chances of success in targeting the most critical needs and the most vulnerable groups, as well as in developing strategies, policies, and procedures to facilitate access to social fund resources. In the case of the JSFs, the consultative process involved a number of stages, including the following: * National-level consultations on poverty involving the government, private sector, NGOs, community representatives, and international agencies * Sectoral, ministry-level consultations for research and policy development * Project-level research and policy development, for example, through special studies on critical poverty issues such as urban violence and poverty, using participatory techniques and involving communities * Development of a broad national policy on poverty. The outcomes of the consultations at various levels were extremely useful in guiding the development of the subproject menu and project selection strategies. Consultations with the NGOs, for example, influenced the selection of organizational strengthening as a menu priority, while the findings of the research on urban violence were instrumental in deciding to fund a conflict resolution project, which fell within the social services counseling and training modality. 33 Zambia Recovery Project-Evaluations and Perspective of the Central Government by Irene M. Kamanga, Permanent Secretary, Ministry of Finance and Economic Development, Zambia The Social Recovery Project (SRP) in Zambia is an effective demand-driven financing agency that empowers communities to be agents of their own development. The SRP also supports the government in developing poverty-focused policies. The SRP's community-based initiatives component works through the government of Zambia's Micro-Projects Unit (MPU) in the Min- istry of Finance and Economic Development. The SRP also supports the Central Statistics Office and a nongovernmental agent, the Participatory Assessment Group, to undertake both quanti- tative and qualitative poverty monitoring. The analysis of poverty-related data is supported by the SRP's Study Fund component. The SRP as an Executive Agent The government of Zambia views the MPU as an effective and efficient executive agent with the following characteristics: e It is close to, yet independent from, the Ministry of Finance and Economic Development. * It has clear objectives and targets and concentrates on delivering according to its con- tracts. It enjoys its own human resources strategy and management accountability sys- tem. It is small and maintains good communication with all entities concerned. * It has high management discretion as to how it achieves its goals. It contracts other bod- ies-governmental, private, and nongovernmental organizations (NGOs)-and estab- lishes clear partnerships. * It has maintained a learning process through regular reviews and evaluations. Annual beneficiary assessments and several technical evaluations and management reviews have been commissioned by the MPU itself for midterm evaluation and completion purposes and also by other agencies such as the International Labour Office (ILO) and the European Union (EU). The results are discussed with MPU management, the gov- ernment, and donors. Discussion papers are circulated, and MPU responses and ac- tion plans are agreed upon by stakeholders through the steering committee. The project cycle activities have thus evolved, and the development of the MPU remains dynamic and iterative. * It is accountable and transparent, and regular independent audits are undertaken at all levels. At the community level, the community, district staff, regional officers, and pro- vincial auditors regularly monitor project expenditure. At the management level, inde- pendent auditors carry out annual audits. 199 200 Original Workshop Papers The image of the MPU as an executive agent, purposeful and performance-oriented, is at- tracting the attention of other donors, government departments, and politicians aiming to imple- ment community-based projects in specific sectors. A cormmunity transport infrastructure project under the World Bank-supported Roads Sector Investment Programme and a pilot environ- mental fund project soon will be part of the SRP's portfolio of work. A total of 1,103 applications were received in 1996 (1,064 in the education sector), and 203 were approved. The demand from communities for the services of the MPU outstrips its human and financial resources capacity. District staff are using these resources to realize their district plans. The SRP I was fully commit- ted two years ahead of schedule, and the SRP II is following the same pattern. The SRP is a victim of its own success. The challenge is to maintain the management effi- ciency and responsiveness of the MPU as other donors and components join it and as demand from communities and from the government for its services continues to increase. Effectiveness of the SRP The effectiveness of the SRP is considered by the government both in terms of the benefits accru- ing to participating communities and in terms of the costs of achieving outcomes. The effective- ness is also reviewed in terms of how well the SRP supports government policy, which empha- sizes rehabilitation and improvement of existing social infrastructure. The government also recognizes human resource development as critical to the poverty reduction strategy for Zambia. Although the MPU has rehabilitated 16 percent of all primary schools in the country, 4,000 schools still need rehabilitation or extension. The total population of school-going children re- quires double the present number of school places. Twenty-one percent of the rural health cen- ters scheduled for improvement have been rehabilitated by the MPU. This illustrates the mag- nitude of the problem and the scope for continuing activities of the SRP. The gains accruing from the rehabilitation of social infrastructure have been identified by various beneficiary assessments. Some of these benefits are: improved morale of teachers, pri- mary health caregivers, pupils, and patients; improved willingness to teach and learn; improved access to services; reduced maintenance costs; reduced travel or commuting distances, espe- cially for women; and increased likelihood of improved mother and child health. The SRP has found it difficult to quantify benefits. Any improvements to indicators, such as attendance rates, examination passes, and improved nutrition rates, cannot be attributed exclu- sively to improvements in the social sector infrastructure. Other factors, such as availability of books, medicines, and motivation of trained staff, make quantification of benefits difficult. In many cases, school attendance has not increased, but overcrowding and excessive shifts have been reduced. In some urban areas better classrooms may even have led to better-off parents gaining access to the few places for their children, while the poorer parents were left out. Mor- tality rates may be increasing due to the AIDS epidemic. Recent policy changes, especially for cost sharing in health and education at a time when poverty is increasing, also make it difficult to quantify the benefits of community-based social infrastructure projects. It is the task of the SRP-supported Living Conditions Monitoring Survey, the Participatory Poverty Monitoring of the Preparatory Assistance to ihe Government, the Household Food Security and Nutrition Monitoring Project, and others to monitor and assess the impact of gov- ernment efforts in the social sectors in developing human resources. The implicit goal of the SRP to include economic infrastructure as a major part of its project portfolio to create a favorable environment for the development of enterprises has not yet been fully achieved. Only a few projects have made it through the demand-led selection process, mainly because of the lack of clarity of ownership issues. The SRP needs to address these issues by developing appropriate mechanisms. The objective to make the poor less vulnerable has also been difficult to measure. All capable members of a community who will benefit from the project are expected to participate, and Zambia Recovery Project-Evaluations and Perspective of the Central Government 201 they do. This imposes costs on the poor and less poor, because participation requires time and therefore carries the burden of attached costs. Recent evaluations have found that women par- ticipate in the unpaid, unskilled labor market, while usually men receive skilled and paid em- ployment at the project site. The beneficiary assessments have found, however, that women and children benefit the most from education, health, water, and sanitation projects, which makes them less vulnerable in the long term. While targeting interventions to vulnerable groups within communities has been difficult, the SRP has made efforts to target a significant proportion of the poorest people who live in rural and remote areas. Although 44.6 percent of its projects lie in remote areas, the SRP recog- nizes that specific strategies are needed to reach communities in those areas. The data and analysis from the other components of the SRP, the Living Conditions Monitoring Survey and the Participatory Poverty Assessment, have been used to identify areas of special need that have particularly high poverty indicators, such as malnutrition, high incidence of female-headed households, and poor access to basic services. Participatory rural appraisals and needs assess- ment exercises have been commissioned in those areas. A mapping exercise is underway, which will help districts identify the most needy communities so that districts can adopt a more pro- active role in informing, advising, and planning with them. The SRP has also accepted that its microprojects do not necessarily benefit the incapacitated poor. Other programs in Zambia target these members of society. The SRP supports studies and evaluations for the government drought-relief programs and welfare schemes that affect policy formulation for programs designed to benefit the poorest and incapacitated members of society. Benefits accruing from SRP activities are unquestionable. Its effectiveness is also measured by the costs of implementing a project. Recent evaluations and analysis show that at the end of 1996 the overall administration costs remained below 20 percent of the total finance expended. This cost included all expenditures other than direct transfers to project communities, MPU staff, district and community training, monitoring expenses, and consultants costs. To remain cost-effective, the SRP realizes that the longer a community-based project takes, the higher its operating costs will become. For example, a visit to a community benefiting from a project costs over US$250. To minimize the number of visits necessary and therefore the costs of a project, without compromising smooth project implementation, the SRP aims to ensure that: a The design of the project is adapted to the technical capacity of the community. * The community is properly prepared before the start of the project, and their counterpart contribution is made available before project approval. * A thorough field appraisal is conducted that includes an assessment of felt needs, com- munity capacity, and commitment, as well as an assessment of the technical issues with respect to project design and implementation. * The quality of technical supervision is adequate. * Regular monitoring of projects is carried out by MPU and district staff. Implementation periods have been dramatically reduced from an average of 33 months in 1992/93 to 15 months in 1996. Recent evaluations show that the money spent on projects is spent effectively compared to the spending of other providers of similar services. The govern- ment therefore maintains that the SRP is effective and efficient. Participation and Empowerment of Districts and Communities District The SRP has spearheaded the decentralization process for govemment by instituting systems and procedures for project selection, appraisal, and monitoring and evaluation. Training and a policy of learning by doing have resulted in district staff that are better equipped to help communities to 202 Original Workshop Papers achieve their own objectives. The SRP addressed the challenge of poor capacity by intensifying training in technical and facilitation skills. The role of district staff as enablers is being reinforced. The challenge of coordinating district activities is being addressed by the government. Communities A major benefit of the SRP has been the empowerment of participating communities. The SRP recognizes that communities are capable of managing their own projects, handling and accounting for large amounts of money, for hiring and firing, and for completing techni- cally sound infrastructure even in the most remote areas of Zambia. The strategy of empower- ing by giving communities control over resources has brought about a dramatic change in the level of participation of communities in project processes: from being recipients of charity or relief activities, men and women of beneficiary communities now identify and analyze prob- lems, plan solutions, and take responsibility for those solutions. Beneficiary assessments have identified six key factors that affect participation: * Access to and the flow of information * Community organization and leadership * Community members' involvement, their numbers, and their gender * Types of community contributions * Types of projects and the felt need * Simplicity and timeliness of projects. The MPU project cycle activities have evolved so that these key factors are always assessed. Other government and donor programs that require community participation are now using the same procedures, which is a significant indicator of their success. Incorporating these fac- tors has resulted in a greater sense of community ownership of projects, enhanced capacity of the community, more accountability in project processes, and a greater sense of responsibility all around. Issues and Challenges of Community Participation Community participation has posed various issues and challenges, among them the following: * Self-reliance * Involvement of NGOs * Food for work program * Gender representation * Maintenance of infrastructure and sustainability * Paucity of community-based institutions. Self-reliance The SRP is sensitive to the risk of undermining self-reliance in affected communities. It grapples with the dilemma of supporting community initiatives without creating a sense of dependency in which communities always rely on outside assistance for solutions to their problems. The SRP sees its role as a supporter to existing community initiatives, one of a partner that supplies assistance only to those who have visible evidence of self-reliance, rather than those that expect handouts. The SRP is not involved in preproject identification activities, but rather relies on district staff, subdistrict institutions such as health advisory committees, parent-teacher asso- ciations, resident development committees, NGOs, and churches to facilitate the process of project identification with would-be participating communities. Zambia Recovery Project-Evaluations and Perspective of the Central Government 203 Experience has shown that if potential clients of donor funds receive information about funds availability and the underlying conditions of their use, their requests are likely to match the conditions of the donor, especially if the donor is involved with the information dissemination. Involvement of NGOs Beneficiary assessments have regularly found that, if an NGO is involved with a community-based project, the standard of construction, speed of implementation, and project management improves, but the sense of ownership, responsibility, and capability of the community are undermined. NGOs tend to take over decisionmaking, planning, and implementation for the communities. Food for Work Because Zambia has suffered two serious droughts since 1991, a food for work program was introduced. MPU experience has shown that in areas where the food for work program was implemented, the communities were unlikely to participate in SRP-supported projects without remuneration, because they received remuneration for their work in kind under the food for work program. Hence, the MPU avoids working in these regions. Gender Representation Women usually participate in the unskilled and unpaid work in the project cycle, but find it difficult to become as involved as men in decisionmaking. The MPU recognizes this problem and now requires that women comprise at least 50 percent of project committee members, so that they, too, benefit more fully from the management training of learning by doing. Maintenance of Infrastructure and Sustainability Various evaluations have shown that, although the sense of ownership and responsibility has improved as a result of community participation in projects, maintenance of infrastructure re- mains disappointing. The government of Zambia, with SRP support, has initiated a study to assess the main factors determining maintenance, to review government policy, and to make recommendations for donors as well as the government. Community-Based Institutions Presently few local institutions with specified powers and responsibilities represent communi- ties of interest. Various sectors are being reformulated at present. Community, subdistrict, and district institutions are starting to emerge. The MPU will be able to support these institutions, thereby increasing its investment in other sectors. Conclusion The SRP is an effective tool that addresses the critical demand for improved social infrastruc- ture. Although the benefits are difficult to quantify, qualitative assessments show the SRP to have been extremely useful. The challenge is to maintain the efficiency and responsiveness of the institution as demands on the SRP increase. The SRP is also effective in reinforcing the roles of district staff as enablers and of communi- ties as managers of their own development. The SRP is facing the challenges of helping com- munities to create institutions that represent communities of interest, targeting the poorest re- mote areas, and ensuring that women are also beneficiaries of the empowerment process. 34 Sustainability of Subprojects, Their Operation and Maintenance by Werner Neuhauss, Sector Economist, Social Policy Department, Kf`W, Germany Foreword Social funds have been set up in countries that are suffering recessions as a consequence of structural adjustment programs. The aim was to create institutions that would implement so- cial infrastructure programs in the most labor-intensive way possible but more efficiently and dynamically than the traditional state administration. In their first phase, the main emphasis was, and still is, on measures that create short-term employment and generate income for so- cially disadvantaged groups effectively, based on the idea that frequently problems to be ad- dressed are temporary Much less importance is given to the sustainability of the projects or to institution building. In all the countries where social funds were created is a great shortage of social and eco- nomic infrastructure. It is the poorer sections of the population who suffer most from this lack. So, social funds can also be seen as a medium-term policy instrument to combat poverty. The income and employment effects for the poor achieved by financing the construction of infra- structure facilities will certainly continue to play an important developmental role. But in the medium-term view, beside executing the work, ensuring that the project will be of lasting ben- efit, that is, that its effect will be sustainable, is at least equally important. For the purposes of this paper, the sustainability of an infrastructure project means that a project can be and is used by the target group throughout its useful life. This implies that the physical maintenance of the facility is ensured. It also implies that other financial and institutional condi- tions are met so that use by the target group continues when outside support is withdrawn. Problems of Achieving Sustainability Sustainability cannot be added to a project later. Rather, the various elements of sustainability have to be included in all phases of the entire project cycle. The facility must meet the expectations of those who will benefit directly with respect to location, technical design, and possibilities of use. If these expectations are not considered dur- ing the planning phase, the facility may be inadequately used and the local people will be less likely to ensure its maintenance. Maintenance may involve contributions from them in the form of cash or labor and material. Sociocultural questions will always have to be addressed if a commitment to maintain a facility is to be ensured. Target groups need to receive direct benefits so that they may have a sense of ownership of the facility and feel responsible for it. 205 206 Original Workshop Papers When set up, the facility must be of appropriate technical quality, as well as adapted to local conditions. This presupposes that meaningful sectoral quality standards are defined and ad- herence to them is consistent. The line ministries or the institutions responsible must have the appropriate technical and administrative competence to develop appropriate technical stan- dards. Some social funds, for example, develop standards for building construction adapted to local conditions by increasing the quantity of local materials used to reduce future costs of operation and maintenance. An infrastructure facility can be put to its designated use only when certain complementary conditions are fulfilled. In the case of a school, for instance, a school is usable only if a teacher, school furniture, and teaching materials are available. The construction of the facility must be integrated in an overall package right from the start. The office responsible for the operation and maintenance of the facility, for example, a line ministry, the communal administration, or a users' committee, must be technically and admin- istratively capable of ensuring that facilities remain operational and receive necessary mainte- nance. The capabilities and limitations of these institutions have to be considered from the out- set in the planning and execution of an infrastructure project. If the institutions that inherit responsibility for project maintenance are not involved from the beginning, they may fail to identify with the project and be less likely to assume charge for it once construction is over. Additionally, users must know which institution is responsible for maintenance, so that they can identify the responsible party or person. This will enable the transfer of responsibility to be reversed, if necessary. The costs of operating and maintaining the facility mnust be raised through user charges or taxes, or a combination of the two. The strong willingness to pay for these services, even by the poor, provides opportunities for instituting user charges. If the costs are met through these charges, a well-functioning mechanism for collection must be available. Financing user charges through taxes requires adequate tax revenue and an efficient fiscal administration. However, experience has shown that meeting all these conditions for ensuring the sustain- ability of investments is considerably difficult, not just in the projects supported by social funds, but in other projects as well. Special Features of Social Investment Fund Programs Given the lack of resources in developing countries, without external assistance, social infra- structure investments would be made gradually and commensurate costs of operation and maintenance would rise gradually as well. External assistance through development coopera- tion enables social infrastructure to be developed more quickly, requiring a rapid increase in the resources necessary to ensure adequate operation and maintenance. When infrastructure facili- ties are expanded rapidly through a social fund, there are important implications for the re- sources needed to meet recurrent costs. The social funds enable infrastructure projects of vari- ous kinds to be planned and executed quickly and efficiently, with a high degree of flexibility and in close cooperation with local small enterprises. A relatively high share of local resources- know-how, labor, materials-is used. This causes a large increase in social infrastructure facili- ties within a relatively short period, creating a financing gap between the number of facilities to be maintained and the insufficient funds available for their operation and maintenance. These recurrent costs can be met if resources are raised from the increased incomes of the target com- munity that the social fund investments may be stimulating, by reallocating funds from other budget items, by increasing taxes, by improving tax collection, or by enacting reforms for the financing of recurrent budgets, for example, by instituting user charges or fees. These methods to raise revenue require significant sector reforms, which social funds are not equipped to effect. The fact that other institutions inherit the projects supported by social funds is an impediment to the achievement of sustainability. Sustainability of Subprojects, Their Operation and Maintenance 207 Social Funds Sustainability Strategies and Their Problems In view of this situation, there are on principle two alternative courses of action to improve sustainability: Strategy A concentrates on involving sectoral institutions that are actually re- sponsible; Strategy B concentrates on avoiding sectoral institutions. Each alternative offers a number of variations, which can be combined: * Variation Al-The social fund concludes agreements with line ministries and/or dis- trict or local administrations, in which the latter undertakes operations and maintenance for the facility. To avoid risks to the sustainability of schools, new buildings are often financed only if the education ministry can prove to the social fund that salaries for teachers in the new schools have been requested. * Variation A2-The social fund initially concentrates on employment and income effects and selects projects that will not overburden local offices with additional operating costs once projects are executed. This can also be achieved if users or local institutions respon- sible must contribute to financing the investment and the social fund provides the addi- tional finance. The fact that social funds generally support only smaller, simple facilities increases the likelihood of achieving sustainable outcomes. In West Africa such projects include drainage channels, paving roads, and building walls. They involve little or no follow-up costs for recurrent cost budgets. • Variation A3-Parallel support is given to sector institutions under sector adjustment or investment programs, which include measures to improve general conditions in the sec- tor. These also include reforms to improve state revenues. In the second alternative, the following variations are possible: * Variation BI-Responsibility for ensuring sustainability is transferred to the beneficia- ries, who may be organized in user committees, school associations, and the like. Many social funds have placed great emphasis in recent years on involving the target groups, in some cases through facilitating greater involvement of nongovernmental organiza- tions (NGOs). * Variation B2-Some kinds of economic infrastructure lend themselves more easily to identifying direct beneficiaries and therefore to recovering operation and maintenance costs, for example, markets and slaughterhouses. Leasing such infrastructure to private operators is an appropriate option here, for they will then take responsibility for recover- ing recurrent costs. Models of this kind are on principle also conceivable for other types of facilities such as water supply schemes. * Variation B3-Social funds gradually take over tasks that are actually the responsibility of line ministries and administrations, thereby creating parallel institutional structures. All these alternatives have weaknesses, as well as strengths. * Variation Al-Social funds generally have few means to compel administrations and ministries to fulfill their obligations. Frequently, shortage of funds and budget law re- strictions prevent them from keeping their agreements. * Variation A2-If social funds concentrate on small, that is, employment-intensive projects where operations in the strictest sense is not really needed as, for example, with cleaning drainage channels and other such public works, there is risk that social fund measures will not supplement initiatives of the local population, but rather increasingly make them superfluous. When social funds finance rehabilitation of infrastructure, evidence shows that after rehabilitation needs are met, the social fund then comes under growing pres- sure to finance new construction. * Variation Bl-Although this is theoretically almost certainly the ideal solution, the diffi- culties of implementing it should not be underestimated. It is often difficult to organize 208 Original Workshop Papers groups or committees of this kind, and owing to the amount of time required, the pro- grams can only affect a limited number of people. If practically the whole population of a locality regularly uses the facilities, and if the basic functions are relatively easy to learn, as with schools, it is easier for grassroots organizations of this nature to do good work. It is helpful if the future users and operators can be given appropriate basic train- ing while the facility is being built. If the facility is complex, for example, water supply and sanitation, or of a different nature such as a loan program that requires debt servic- ing and repayment, more professional skills are needed. Hence, NGOs are increasingly involved in the process of forming user organizations, al- though adequate professionalism is not always guaranteed, even with the best of intentions. In some countries, the government sometimes takes a critical attitude to NGOs for political rea- sons as well. Social funds themselves generally have only a few staff members with the appro- priate training and experience to support these social processes. The problems entailed in op- tion B2 are discussed in detail in the following paragraphs. Various Approaches under German Financial Cooperation To counter these difficulties in practice, the emphasis on specific elements to ensure sustainabil- ity of projects supported by Kreditanstalt fur Wiederaufbau (KfW) depends on the region. In West Africa, strategy A is clearly given preference, that is, projects that cannot be guaran- teed sustainability by the agencies concerned are not financed. In Niger, for example, it is diffi- cult to ensure that even simple maintenance of sewage disposal systems, such as regular clean- ing of open sewers, will be done. Apart from excluding projects in which difficulties of this kind are to be expected, particular value is attached to the alpplication of simple standards and the use of adequate materials. This does not exclude extending the scope of intervention, for ex- ample, participating in programs to secure food supplies, but the social fund's part is always limited to executing projects. One exception occurred in Mali, where a maintenance fund was set up to be funded from national revenues. It is important to integrate strategies in sector investment programs, if any, as they always include sectoral reforms and the enhancement of institutional capacities, at least in Sub-Saharan Africa. We regard this, together with anchoring the idea of ownership, as a decisive element. In Latin America, on the other hand, social funds find they are increasingly assuming tasks that are actually the responsibility of line ministries and local administrations, as measures such as writ- ten agreements with the ministries to assume responsibility for operating costs, or the involve- ment of NGOs to ensure operation, have not always yielded the desired results (option B). These new tasks include the following: * Paying teachers' salaries for a time for some of the schools they funded, for example, in the case of the social fund in Guatemala * Financing a maintenance fund to keep the facilities financed by the social fund in good order, for example, in the case of the social fund in Nicaragua * Financing training given by NGOs to water users' committees and municipal adminis- trations to ensure that they could operate and maintain the facilities in their area of re- sponsibility, for example, in the case of the social fund in Honduras. As flanking measures, KfW has agreed to finance the following, often in cooperation with other donors, to improve the sustainability of social fund programs in several Latin American countries: * Support for target groups and administrations in preparing the project and making the application with training schemes for the future operators * Assumption of project planning costs Sustainability of Subprojects, Their Operation and Maintenance 209 * Support for consulting services in developing appropriate technical standards for the design of water supply projects and their execution * Support for local experts to work with the social fund's core personnel to improve the technical quality of works * Support in building up a special department in the social fund to ensure participation and involvement of users in all stages of the project cycle. KfW supported a study in Honduras in 1995 to examine and analyze the causes of poor sustainability of infrastructure projects supported by the social fund. The lack of technical ca- pacity in user groups and municipal administrations and a lack of information about sustain- able outcomes were found to be critical bottlenecks. Sector-specific training plans and materials that communicated clear instructions for operations and maintenance, for computing water user charges, and for developing formats for prequalification of contractors, as well as for speci- men contract documents to contract with NGOs, were developed. Moreover, KfW recently suggested a revolving fund in Honduras to finance maintenance costs through local administrations. The initial finance could come from donor support. This idea is still under discussion. Similar approaches also exist in Egypt. Conclusions The measures described here will not be sufficient in themselves to ensure operations and main- tenance of facilities. The following paragraphs, however, summarize the most important points. The construction of sound facilities adapted to local conditions with simple technology cer- tainly helps to reduce follow-up costs to a great extent, and this is of crucial importance. We still see this as a promising field of work, especially for engineers. Although there has been positive experience, the achievements of NGOs and user committees should not be either under- or overestimated. NGOs are not automatically better because they are not part of the government. Frequently they become directly or indirectly financially dependent on the government or donor organizations. They cannot fill the gaps left by an absent state. Public administrations, to make good use of the greater technical and administrative com- petence they acquire through training programs, need to have the necessary financial resources. Since most social funds worldwide are financed mainly by external donors, sustainability of infrastructure facilities can be secured over the short term if the social fund finances recurrent costs for a limited period; however, this cannot be a permanent solution. No experience has been gained as yet with the self-financed fund in Mali. It is not possible to sustain infrastructure projects, either those financed by social funds or those under classic sector projects, unless the necessary funds for maintenance are included in the planning of the concerned sectors. The financial resource bases of district and municipal administrations must be improved, both through their own revenue and through secured and precisely defined claims to alloca- tions from the central government. That will require a continuation of decentralization efforts, which have already started in many countries; social funds can play an important catalytic role in expediting decentralization. Improvements are also needed in administration systems. To quote one example, a start could be made with the shortage of land registers, which has been identified as a major obstacle preventing administrations from increasing their own revenues. So should social funds also fund land registers? As it has, on occasion, been apparent that institutions are furthering their own interests in extending the work of social funds in this way, it must be asked at this point whether it is right to keep transferring new work to social funds, for example, as financial intermediaries if they were to venture into the field of microfinance. There is a danger that they will ultimately become super bureaucracies, existing in parallel to traditional authorities, which will continue to exist, albeit reduced in status. 210 Original Workshop Papers This could prove risky, because social funds would then be moving away from their central competencies. Their efficiency could be reduced if they are overloaded. Necessary and serious reforms in sector policy and in administration systems, including the legal system, need to be supported by the entire apparatus of government and not just by one section. We are convinced that more efforts should be concentrated on transferring the positive lessons learned from so- cial funds to line ministries and sector institutions. Where social funds have particular com- parative advantages, namely, in carrying out small projects, they can be available to all public offices as central service units, but the responsibility for these projects should remain with the clients, such as line ministries and district administrations, or be given back to them. Donors should press for improvements to be made on institutional and administrative lev- els, particularly in the development of social infrastructure. They should also continue to pres- sure for sectoral reforms and maximize the potential of social funds to facilitate them. Interna- tional support from donors can be judged successful only if it can effect reforms in national policy that lead to more sustainable development. Finally, the principles for reform discussed in the World Development Report 1994, which was concerned with infrastructure for development, are also relevant for the discussion on social funds: * Manage infrastructure like a business, not a bureaucracy * Introduce competition-directly if feasible, indirectly if not G Give users and other stakeholders a strong voice and real responsibility. Progress in this direction will improve the likelihood that investments will be sustainable. 35 Appraisal and Environment Assessment of Social Fund Subprojects: The Case of Ethiopia by Abebaw Alemayehu, Deputy Director, Social Fund, Ethiopia Country Background Ethiopia was ruled by a feudal king until 1974, after which it was under military rule for 17 years until 1991. This period of civil war in Ethiopia was marked by an economic growth rate of 1.9 percent, a population growth rate of 2.9 percent, and serious drought and famine, as well as many complex social problems typically associated with poor economic performance. Pilot Phase of the Social Fund The pilot Ethiopian Social Rehabilitation Fund (ESRF) was created in December 1992 as part of the Emergency Recovery and Reconstruction Program (ERRP) to alleviate social problems that were brought about by the end of the long drawn-out war. The end of the war resulted in demobilization of a large number of soldiers, the influx of thousands of returning refugees, and thousands of families headed by women. It also left many more orphans and disabled persons who need to be rehabilitated and reintegrated into mainstream society permanently. The ESRF was established to provide financial and technical assistance to these groups of the population through community-based social and economic rehabilitation projects. The ESRF's performance was measured through an independent evaluation after 18 months of operation, a midterm government and World Bank review in October 1994, and a number of supervision missions. The joint evaluation and midterm reviews, though identifying some points for corrective action, all nevertheless found the ESRF had been effective in achieving the objec- tives for which it was established and hence recommended an expanded program. Based on the evaluation, the Ethiopian government decided to continue the ESRF as part of its poverty reduction program and expanded the fund to all regions of the country. It also de- cided to organize implementation on the basis of new federal structures, contributing 15 percent of the expected costs of the expanded program, which was established as the Ethiopian Social Rehabilitation and Development Fund (ESRDF). As a result, ten regional fund offices, including three subregional offices and a coordinating central office at Addis Ababa were established. Experience of the Pilot ESRF Establishment and Achievement The ESRF started operations in December 1992 with three pilot regions; up to 10 percent of its funding was for nonpilot regions. The aim of the pilot operation was to test whether a social 211 212 Original Workshop Papers fund could be an effective way to provide millions of poor households greater control over their economic and social advancement. Start-up funding for the ESRF was provided by the Ethiopian government (US$4 million), the World Bank (US$5 million), and the United Nations Development Programme (UNDP) (US$487,000) for the capacity-building and training component. As the pilot fund proved its ability to perform, it received additional support of US$3.6 million from the Canadian Interna- tional Development Agency (CIDA) and US$1.5 million from the Norwegian Agency for Inter- national Development (NORAD). Institutionally, the ESRF was designed to operate with speed and efficiency. It had a central management unit with five key professionals, including the manager, and three subunits with three key professionals each (at start-up), including the subunit head. In the pilot phase, a total of 1,026 microproject proposals were received from the community and other collaborators. Of these proposals, 219 projects were approved for funding. The microprojects were for social and economic infrastructure improvements, as well as productive and income-generating activities. Lessons Learned Participation of a broad range of agencies and communities in the identification, design, imple- mentation, and operation of microprojects is possible only if an organizational framework allows the active participation of different entities. To this end, the government placed the ESRF outside the normal bureaucratic structure, thereby bestowing upon it some degree of administrative and financial autonomy and flexibility. Compared to its workload, the ESRF's administrative overhead was low because staffing levels were increased gradually with growth in the workload. Communities can actively participate at every stage of the project cycle if they are given the chance to do so. Under the ESRF, communities not only initiated the largest number of propos- als, but also contributed about 17 percent of the project cost during implementation. The ESRF has been able to deliver essential community infrastructures and services at a cost savings of between 6.9 percent and 30 percent when compared to public agencies, because its project selection and disbursement procedures were simple and transparent. The ESRF has also been able to reduce the time needed for project delivery as compared to similar projects delivered by public agencies. The time saved by the ESRF ranges from a high figure of 60 percent for shallow wells to a low figure of 33 percent for primary village schools. This was possible because of project supervision. Project cost overruns were always minimal, averaging only about 2 percent of original project commitments. Although the ESRF performed well in the areas cited, initially it did not achieve much in key areas of women's participation and the environment. ]n community-managed microprojects, the participation and representation of women was marginal. Fuelwood was used for construction of schools and health facilities. Sanitation was not con- sidered as a component of health and school facilities that were rehabilitated and constructed by the fund. Fund staff awareness of negative environmental impacts and in promoting envi- ronmentally beneficial subprojects was low in the earlier months of ESRF operation. The Ethiopian Social Rehabilitation and Development Fund The ESRDF was established on February 13, 1996, with a proclamation approved by the House of the People's Representatives of the Federal Democratic Republic of Ethiopia. The ESRDF's establishment was a result of the positive evaluation of the ESRF's pilot phase. The ESRDF is an autonomous government entity directly accountable to the prime minister of Ethiopia. It is a countrywide program focusing on poor communities, mainly in rural areas Appraisal and Environment Assessment of Social Fund Subprojects: The Case of Ethiopia 213 throughout Ethiopia, with a special focus on women. The ESRDF is meant to build on the ESRF and to improve upon it in several respects. In contrast to the ESRF's emphasis on rehabilitation and reintegration of its target groups, the ESRDF is geared to contribute to Ethiopia's long-term growth by playing a central role in reducing poverty. The ESRDF aims to: * Extend coverage of health, education, water, and sanitation services so that these ser- vices will reach more of the poor in Ethiopia * Increase agricultural production through small-scale irrigation projects for poor farmers * Help communities increase their technical and managerial capacities in all aspects of subproject activities through the provision of capacity-building and training programs * Promote and make use of a community-based approach in the identification, prepara- tion, and management of subprojects. Unlike the ESRF, the ESRDF operates on a decentralized basis through regional offices. Re- gional offices are responsible for promoting the activities of the fund and for receiving, process- ing, and recommending community applications for ESRDF support. Regional steering com- mittees are responsible for approving subprojects proposed by the regional offices. The central office monitors and evaluates project implementation in all regional offices, man- ages financial transfers, and oversees the smooth implementation of the program. The ESRDF board is the highest policy-level structure of the fund. The ESRDF, with its long-term develop- ment perspective, seeks also to improve the ESRF in three important areas: promotion, project appraisal, and management information systems. Promotion TIhe ESRDF, being a demand-driven institution, depends on the capacity of communities through- out the country to conceive and prepare project proposals. Except for government agencies in urban areas, though, communities have not the experience or technical expertise to present a project in a way that would satisfy the appraisal procedures of the ESRDF. Moreover, many communities in remote areas could not easily be reached by the lean ESRDF structure. To address this problem, several districts (woredas) characterized by acute poverty have been selected. Community facilitators are to be recruited and deployed in those areas to carry out effective promotional activities and to support the community in formulating and submitting proposals for ESRDF funding. Therefore, the aim of promotion is not only to generate as many proposals as possible, as it used to be, but to generate as many proposals as possible from targeted poor communities, especially women. Without effective promotional mechanisms, the poor will stand the least chance of knowing about programs designed to help them. Project Selection The ESRF's appraisal procedures were meant more for speed than accuracy. The justification for an ESRDF subproject is that it will contribute to improving the health, education, and in- come-generating capacity of Ethiopia's poor. The focus of the ESRDF's appraisal process is narrower, while the rigor in selection is higher. The ESRDF appraisal revolves around the general principles of social, technical, economic, environmental, and gender feasibilities. The appraisal criteria for irrigation and water supply include economic analysis (economic rate of return) and environmental impact assessment. For schools and health facilities, an assessment of cost-effectiveness and provision for operations and maintenance beyond the project period, including adherence to norms established by the appropriate ministries, are the key criteria. The ESRDF has developed a computer-based management information system, used mainly to track the physical and financial progress of projects, which was not possible in the pilot phase. 214 Original Workshop Papers Environmental Impact Assessment of Subprojects To address environmental issues and ensure a sustainable economic growth, the Ethiopian gov- ernment has developed a national conservation strategy (NCS). The NCS articulates a set of policies, strategies, actions, and investment programs that address the prevalent environmen- tal and development issues in the country. Under the NCS, each national regional government is responsible for formulating regional conservation strategies based on the NCS guiding prin- ciples. The NCS is comprehensive in scope, highlighting a range of issues across several sectors, including land degradation and loss of forest cover, insufficient supply and poor quality of water resources, urban degradation, progressive loss of biodiversity, and inappropriate range- land management. Among activities being undertaken in line with the NCS are afforestation, protection of natural forests, construction of bund and check dams, and area closure. Within the context of this overall strategy, the ESRDF has two environmental goals. The first is to ensure that each subproject approved for funding is reviewed for potential negative envi- ronmental impacts and that appropriate mitigating measures will be taken for any impacts identified. Projects with negative environmental impacts that cannot be adequately mitigated will not be approved for funding. The second is to use the project as a practical vehicle for pursuing the government's environmental objectives through promoting better environmental practices and increasing the positive environmental impact of subprojects. Although the pilot operation of the ESRF demonstrated the effectiveness of the social fund approach for both rehabilitation and long-term development, as confirmed by an independent evaluation that justified the program's expansion to all parts of the country, environmental concerns were not high on its agenda at the beginning. This was partly due to the fund's lean structure and partly due to the low level of environmental awareness among the staff. Only a regional manager and two project officers were handling the whole range of operations in each of the three subunits. Concern for environmental issues; heightened, however, after the imple- mentation of some 60 subprojects. T he low level of environmental awareness during the initial period of pilot operation mani- fested in various mistakes, from which lessons were drawn for subsequent corrective actions. For the construction of schools and clinics, for instance, timber instead of hollow blocks or bricks were used. In Addis Ababa, the capital city, the rehabilitation and expansion of schools were undertaken without building pit latrines. Open drains were also constructed in the ab- sence of an arrangement with municipal bodies to provide containers for disposal of solid waste. The necessity of incinerators when constructing health stations was also not appreciated at first. No environmental assessment was carried out for five of the microdams constructed dur- ing this period. The first project appraisal forms also lacked an environmental checklist for assessing negative impacts. Later, however, with increased awareness these andL similar shortcomings were corrected. Some projects with a positive environmental impact were promoted and successfully imple- mented. Among these were gully treatments, tree nurseries, and assistance to conservation schemes in the form of hand tools. Despite the low level of environmental concern shown during the learning phase of the ESRF, no major adverse environmental impact has materialized. The only negative experience worth mentioning in this regard is red ash and stone quarrying microprojects, which led to the degradation of surrounding land. ESRDF Projects and the Environmental Classification System By World Bank classification, the ESRDF's projects in general fall under category B. A proposed project is classified as category B if its potential environmental impacts are site-specific and do not significantly affect human populations or alter environmentally important areas, such as Appraisal and Environment Assessment of Social Fund Subprojects: The Case of Ethiopia 215 mangroves, wetlands, and other major natural habitats. Few if any of the impacts are irrevers- ible, and mitigatory measures can easily be designed. A partial environmental analysis is re- quired, adapted to the particular environmental issues of the project. Most subprojects likely to be proposed by communities are expected to have localized and limited negative environmental impacts; the only potential area of concern is small-scale irriga- tion subprojects. Small-scale irrigation subprojects require special attention; certain of their environmental impacts have ecological and socioeconomic implications. These include the following effects on the human and natural environment, which are most significant in the context of ESRDF subprojects: * Existing land uses to be displaced or converted * Loss of land surface area to drainage and irrigation structures * Introduction or increase in incidence of waterbome or water-related diseases * Siltation. Other potential environmental impacts include the following: * Water-logging from inadequate drainage, over-irrigation, and seepage from canals and ditches * Salinization of soils * Increased soil erosion * Increased stream sedimentation. To protect the environment from such adverse effects of irrigation subprojects, a number of mitigation measures need to be implemented, among which are the following: * Compensation and accommodation of displaced people in the area to be developed • Physical soil and water conservation * Proper site selection and appropriate design and layout of furrows * Avoidance of unsuitable gradients * Efficient water application * Installation and maintenance of adequate drainage * Reduction of potential salinization by periodically flushing the irrigated land * Avoidance of stagnant or slowly moving water * Disease prophylaxis and treatment. Categories of subprojects other than small-scale irrigation, though expected to have rela- tively minor negative environmental impacts, still need some attention. The construction of health centers and schools with wood, for instance, should be avoided so as not to aggravate the problems associated with deforestation. Poorly managed water supply or sanitation schemes could pose more serious health hazards than they were originally meant to mitigate. The same applies to medical wastes generated by health centers, which can create health hazards unless methods of proper disposal are instituted. Although the ESRDF's overriding objective is the alleviation of poverty among remote rural communities, urban areas are not excluded from its activities. Thus, the fund also addresses urban environmental problems associated with communal latrines, drainage, waste disposal, and similar environmental sanitation subprojects when requests come from slum areas. When funding the construction of community latrines, an access road is also incorporated into the subproject so that suction trucks can collect and dispose of wastes. These access roads also con- fer other benefits to the community, as they can be used by fire trucks and ambulances as well. The construction of retaining walls has also been funded in town sectors to mitigate soil erosion and the collapse of land. 216 Original Workshop Papers The ESRDF Environmental Review Process With the establishment of the ESRDF, the fund has committed to address environmental issues more adequately. The four-day environmental workshop for ESRDF staff, which showed how to look at the ESRDF portfolio from an environmental perspective, is a result of this commnitment. The ESRDF also established a core environmental team at its central office, which comprises the following: * An advisor on gender issues and environment (focal person) * Social infrastructure team leader * Small-scale irrigation team leader * Water supply and sanitation team leader. At present, the team is preparing the ESRDF environmental action plan and modifying the environmental appraisal checklist. The establishment of the team was motivated not so much because ESRDF-funded subprojects were found to have caused many adverse effects, but rather to accelerate the incorporation of environmentally beneficial projects in the portfolio and boost community awareness of environmental issues. Promotional efforts are also being stepped up to encourage communities to identify envi- ronmentally friendly and beneficial subprojects in the areas of forestry and reforestation, soil and water conservation, and urban environmental sanitation, among others. That the ESRDF's promotional and awareness creation efforts have started to bear fruit is evidenced by the numerous applications coming from communities requesting funds for subprojects that will have a positive environmental impact. An exemplary case dating back to the ESRF period, where the direction of a project changed because of the participation of the affected people, is the Mitmak Gully Treatment Subproject in Tigray. At first, a fund application for building a primary village school was submitted to the regional ESRF office by the Education Bureau of the Tigray regional government. An appraisal team was thus dispatched to hold talks with the community. They found out that the community's most urgent need at the time was treat- ment of a gully that was fast degrading the grazing land, thereby severely affecting the liveli- hood of the villagers. Their previous effort to stem the problem via a retaining wall had proved unsuccessful. In compliance with the communities' wish, the gully treatment was duly un- dertaken, and the school was built later by the villagers themselves, as they had pledged to do during the consultation. The need to provide environmental technical assistance is clearly recognized by the ESRDF, especially during the formulation of relatively complex subprojects such as small-scale irriga- tion schemes. Fund request forms are thus designed in such a way that these issues are ad- equately addressed from the very outset. Small-scale irrigation subprojects have significant potential environmental impacts, especially those associated with microdam construction. Be- cause communities lack the ability to mitigate these impacts, the services of a consultant are retained unless nongovernmental organizations (NGOs) or line bureaus are going to bear re- sponsibility for mitigation. The ESRDF subproject cycle starts with promotion, one aspect of which is injecting environ- mental awareness among communities so that, as much as possible, either those projects with positive environmental benefits or those with the least negative impacts are identified. Com- munity training is also undertaken as part of the effort to enhance their innovative capacity for identifying projects of this nature. Fund request forms to be completed by communities are also designed to facilitate the col- lection of basic information useful for environmental screening of proposed subprojects. Tech- nical bureaus and NGOs that assist communities in project formulation are required to fill in more detailed and stringent forms. The eligibility criteria for small-scale irrigation and water Appraisal and Environment Assessment of Social Fund Subprojects: The Case of Ethiopia 217 supply subprojects especially verifies that the subproject has been submitted, reviewed, and positively screened by the regional Bureaus of National Resources and Environmental Protec- tion. After project officers have carefully studied these forms, if serious negative impacts are expected, either mitigative modifications will be introduced or the proposal will be dropped altogether. So far in ESRDF experience, however, no subproject proposal has ever been rejected on environmental grounds. During implementation, monitoring is carried out to ensure that recommended mitigative measures are properly applied and all agreed-upon procedures are followed. The monitoring exercise will also continue during the post-implementation phase to verify that the subproject is functioning effectively without violating the environmental standards and procedures set for it. In health centers, for instance, the proper use of incinerators, the correct disposal of wastes, and the cleanliness of the premises and its surroundings will be verified. For small-scale irriga- tion projects, observers will check from time to time to determine if people are drinking water from the dam. The quality of water from water supply projects is monitored both at the source and at homes. The management and proper maintenance of the facility by the community also must be checked from time to time, along with water transport and storage practices, site and home cleanliness, and personal hygienic practices. In educational subprojects post-implemen- tation monitoring includes verifying that school gardens are in place and that trees are planted. Trends Although concern for the environment is a new concept for ESRDF professionals, incorporating sound environmental criteria in the process of project selection and design is well under way, and there is progress in increasing the awareness of environmental issues. Environmental is- sues that have not been addressed to date, especially those concerning small-scale irrigation projects, are receiving increasing attention. Efforts are also being made to develop standard design criteria for microdam projects. The incorporation of environmentally beneficial projects into the ESRDF portfolio is progressing well, and all signs indicate that the pace will quicken as more and more communities apply for innovative and environmentally beneficial subprojects. The ESRDF will always need to stay abreast of international developments in environmen- tal matters, while upgrading the skills of its staff through training locally and abroad. Applica- tion and appraisal forms for subprojects will also be improved through periodic updating of environment checklists. The aim is always to make these checklists as simple, workable, and practical as possible, without, however, compromising their effectiveness as tools of proper environmental assessment. The ESRDF will also pursue its goal of serving as a vehicle of the government's environmental objectives more actively, providing policy feedback and translat- ing into practice strategies and plans of action. Conclusion and Recommendations When a social fund project is launched in a particular country for the first time, focus is likely to be restricted to such strategic goals as poverty alleviation, often in disregard of the environ- mental dimension. As was amply demonstrated during the pilot ESRF, it was only later that negative environmental and social impacts came to be appreciated, and measures devised to identify and mitigate them. The tendency to view environmental concerns as a donor-driven luxury is also strong at the beginning, since most professionals engaged in tackling issues of development either lack the requisite level of knowledge and awareness, or given the massive poverty they have to contend with, are tempted to dismiss environmental concerns as a futile and costly distraction from the real problems of society. 218 Original Workshop Papers Nevertheless, social fund projects have real and substantial environmental implications, rang- ing in seriousness from those health and education subprojects that require only review or limited environmental assessment to those such as small-scale irrigation subprojects that should be subjected to comparatively deeper assessment. Even with small-scale irrigation subprojects, however, the depth and rigor of assessment should be adapted to the social fund context, where the guiding principle is to respond quickly to communities' demands and deliver subprojects in the shortest possible time. The assessment procedures thus need to be as simple, workable, and practical as possible. Capacity building in the environmental awareness and assessment process, which is rudi- mentary now in the ESRDF, should be more actively pursued. Organizing training and work- shops locally for project officers to improve proficiency in environmental appraisal and train- ing of trainers abroad for environmental appraisal of irrigation subprojects are among measures considered for immediate action. The environmental capacity-building effort of all social fund projects should, however, be given more support by the World Bank through technical assis- tance, training, and advice. More effort should also be exerted to promote gender issues in relation to environmental concerns, since the link between environmentally beneficial subprojects and women is a strong one. Apart from their roles as providers of household welfare and security, they are also respon- sible for water, sanitation, energy, and food security. The ESRDF's environmental objectives will be difficult to realize without links to supportive agencies and institutions dealing with environmental issues. Hence, to this end new ties must be created, and existing ones must be strengthened through formal sets of agreements that define expected support services. A point that needs to be well understood is that social fund projects should not focus only on funding health, education, and water supply subprojects, which in every country are already likely to be the concerns of other institutions and line ministries. Emphasis should rather be on encouraging communities to propose environmentally beneficial subprojects, such as soil and water conservation, tree planting, preservation, and restoration of historical heritage sites. A manual offering practical and easy-to-use guidance for the environmental assessment of social fund subprojects also needs to be prepared by the World Bank. Each national social fund can then adapt this guide to its local conditions to carry out limited or full environmental as- sessments. The manual could also set standards for the development of an environmental as- sessment guide that each national social fund could use to evaluate its proposed projects. 36 Information Systems, Outreach, and Communication of Social Funds by Sam Kahkobwe, Director, Social Action Fund, Malawi Preamble Information systems, in the context of social funds, constitutes the structures for and methods of data collection, data processing, and diss- mination of information generated on the one hand. On the other hand, outreach and communi, on constitute strategic tools that feed into and out of a management information system (MIS) to improve delivery of project objectives. This chapter draws mainly from the experiences of the Malawi Social Action Fund (MASAF), one of the youngest in the current generation of social funds supported by the World Bank. Much of the substance relates to the Community Sub-Projects (CSPs) component of the MASAF Project. Background on the MASAF The MASAF Project was formulated immediately after Malawi underwent momentous politi- cal change, a process that allowed, among other significant changes, open discussion on the question of poverty in the country. Before then, to talk about poverty alleviation was more or less a hidden agenda for those who wanted to improve the lives of those living in deprivation, because the government insisted that poverty did not exist in Malawi. There was little commu- nity participation in self-help development work, while the limited social infrastructure was in a state of disrepair. The approach adopted by existing programs for small projects did not give much room for the people to exercise choice. It took the government two to three years to re- spond to requests, and when approval was granted, the people had no idea of how much fund- ing their project had, who was purchasing the project materials, and when the materials would be delivered. The single-party state had lost favor in the eyes of the people because of its high- handed approach to most aspects of public life. As a result, any effort by the government to- ward self-help community development was received negatively and distrustfully and was perceived as thangata (forced labor), which was a legacy of the colonial days. This apathy provided political capital to the new government that assumed power in 1994 when it proclaimed poverty alleviation as the central development objective in its manifesto and decided to spark development at the community level. In keeping with this policy, donor support for improving community infrastructure was sought. The World Bank was one of the first agencies to give support, and the Malawi Social Action Fund was conceived. A multisectoral project preparation team led by the Ministry of Economic Planning and Devel- opment undertook the task of project preparation. In view of the need for innovation in the 219 220 Original Workshop Papers prevailing political atmosphere, the team first and foremost chose to understand the percep- tions and dynamics of the poverty phenomena in different communities in Malawi and to learn from other project experiences in the country, as well as from similar projects in Zambia and Ethiopia. A study tour to the Social Recovery Project in Zambia and Emergency Rehabili- tation Fund in Ethiopia was made in September 1994. Rationale, Design, and Implementation of the Information, Education, and Communication Strategy The bulk of the activities of the Social Recovery Fund Project in Zambia bolsters rehabilitation, while the Ethiopian Social Rehabilitation Fund supports income-generating activities. On the political front, Zambia has a relatively more open system than either Ethiopia or Malawi. It was clear from the findings of the study tour of the social finds of Zambia and Ethiopia that the proposed social action project in Malawi could succeed only with a reorientation of people's attitudes, roles, and responsibilities toward the development of their own well-being. Conse- quently, the software aspects of the MASAF objectives, as stated in the MASAF Project Concept Document (PCD), were designed to promote a change in the way all development actors, in- cluding the government, worked with their clients. Participation, therefore, was a key factor in the concept, design, and strategy adopted by Malawi. The PCD defined MASAF as "a quick- disbursing, community-responsive mechanism to channel funds directly to projects identified and managed by communities themselves." The primary eligibility criteria for financing a subproject through MASAF is that the sub- project must affect a wide range of poor people in the communities. The target group is a com- munity that collectively defines itself by some administrative or spatial parameters and ex- presses the need to undertake a development project of their choice. An information, education, and communication (IEC) strategy was, therefore, included in the design of the project at its outset to ensure a complete understanding of MASAF's objectives and working principles by beneficiary communities, public sector agencies, nongovernmental organizations (NGOs), the private sector, and any other interested groups. This approach was also needed because of the wide controversy the project created in the minds of many people, including donors. While some people saw MASAF as a panacea for failures in the Malawian development approach, others saw it as a Pandora's box that would ruin other initiatives. There were concerns about the principles of direct community financing and independent project management because of a perceived lack of capacity at the community level. Community participation was erroneously interpreted to be necessarily top-down because of past experiences, not as the self-assertive and empowering process that MASAF advocates. Stakeholders Analysis and Consultations Given such a background, the PCD considered the need for stakeholder participation from the design phase of the project through to implementation and evaluation. In the design stage, key stakeholders for an IEC strategy were defined as those groups: * Whose understanding and acceptance of MASAF design would help facilitate the free flow of MASAF messages at all levels * Whose input would be valuable in clarifying and improving MASAF design. Four major groups of people were interviewed: district commissioners, heads of sector min- istries, NGOs, and representatives of the donor community. The findings of the stakeholder analysis confirmed the expectations of the project prepara- tion team. Most of the concerns expressed reflected larger questions raised in countries the team visited, as well as in the literature on social funds. These included concerns about autonomy, the Information Systems, Outreach, and Communication of Social Funds 221 lack of capacity at the grassroots level, institutional impacts, and sustainability. In the context of Malawi, problems of transportation could affect district officials and extension workers, facilita- tors needed to be trained, and the fund needed to be centralized relative to the District Develop- ment Fund. This is a financing mechanism for the DDC established under the deconcentration policy of District Focus for Rural Development under the United Nations Development Programme (UNDP) Fifth Country Program introduced in 1993. Additional issues identified were that the role of the district development committees had not been defined, and some feared that MASAF might undermine the value of NGO programs and other microprojects' initiatives being implemented in the country. Systematic Client Consultation The systematic client consultation was undertaken with communities within the MASAF con- text primarily to bring them into the loop of project preparation and to fill key information gaps from the community's perspective to ensure that project modalities facilitated full community participation. As the first of a series of consultations to end in the design of a participatory monitoring system or beneficiary assessment that would be part of the project framework, the systematic client consultation investigated three major areas: * The existence and strengths of community organization and institutional networks * Community experiences and attitudes toward participation * Community technical capacity, that is, skills in the community and in particular the fea- sibility of direct common financing as proposed in the PCD. These investigations confirmed that the basic design of the project was acceptable, particu- larly to the community, provided that some of the operational procedures were tested in the field and that continued collaboration with other complementary agencies at the grassroots level could be ensured. A one-year pilot phase began in 1995. During this period, considerable publicity for MASAF, training activities, and reports on project experiences resulted in unprec- edented inquiries and demands for assistance. In the pilot year, of US$1.3 million disbursed funds, 4.0 percent was spent on IEC activities. In the main phase (une-March 1997), 2.5 percent was spent mainly on radio advertising, workshops, and publications. In general, therefore, the IEC strategy was conceived to promote MASAF as a viable and alternative source of finance, clearly integrated with existing institutional structures, but dis- tinct from them because of its autonomy and quick disbursement procedures. Several promo- tional activities, meant to create awareness about the project and to stimulate interest, espe- cially at the principal beneficiary level, were undertaken. A variety of means were used to clarify MASAF principles, procedures, and potential benefits to stakeholders over time. Some of the key promotional activities included the following: * A national logo competition was organized through the print media, whereby the public was asked to propose a logo for MASAF. * The state president presided over the launching of the project in a rural setting at one of the pilot subproject sites where he presented the first tranche of money to the local project committee and unveiled the MASAF logo. Broadcast live and repeated later in the day on national radio, this particular event was instrumental in stimulating inquiries from the public about MASAF's capabilities. Diplomats and donor representatives who at- tended the launching ceremony witnessed a departure from past practices to an approach where people gathered not in well-known hotels, but in the village itself. * Radio programs were used, which included jingles, magazines, and feature slots. The jingles prompted prospective beneficiary communities to decide on the development projects they wanted to undertake, whether they were organized, and what they were ready to do for 222 Original Workshop Papers their share after which they could apply for assistance from MASAF. This approach aroused the curiosity of those who wanted to uplift their community life. At the midterm review, communities confirmed that they found the radio programs of considerable value, not only because of the information they contained, but also because they publicly acknowl- edged the value of the community's work, fostered a sense of ownership, and facilitated an exchange of experiences between different communities across the country * Other publicity methods included production of posters, information booklets, newspa- per supplements, advertisements on public transport, and press releases. One lesson learned was that the content of the IEC message needed, while promoting a demand-driven concept, to specify exactly the kinds of project requests that would be enter- tained by MASAF, for example, water supply and sanitation, and the kinds of project requests that would not be entertained, for example, highways. Other than stressing project eligibility criteria, the IEC strategy tended to emphasize organizational aspects and capacity assessment. All types of project requests were submitted to the MASAF Management Unit, including re- quests for credit for income-generating activities, construction of police units, orphanages, pri- vate schools, or private clinics. Another common misconception sparked by the high profile that MASAF received in the eyes of the public was the sense that the project would respond like an emergency fund. Other impacts of the IEC strategy were the following: * The different perceptions and experiences of poverty at individual, household, or com- munity level often generated friction in the community during project identification and prioritization, especially in areas where expectations for credit were high. * The change of priorities tended to reduce community participation and negatively af- fected project preparation and mobilization of co:mmunity contributions processes. - Community priority projects in the health sector invariably conflicted with sector norms, and very often priority projects did not get selected. However, the Ministry of Health and Population has agreed to be flexible in the application of norms because of the lower costs of infrastructure supported by MASAF compared to the costs of infrastructure imple- mented by the ministry. * Communities submitted projects for construction of police units. These are implemented through community self-help in Malawi. During project negotiations, the World Bank considered them outside its scope of financing and declined to finance them. Following these misunderstandings, the management unit arranged five-minute programs on the radio to clarify, among other things, that MASAF was not an emergency fund and that it did not finance income-generating activities or commercial or institutional enterprises, such as private secondary schools or clinics. Implementation has led to the emergence of one major stakeholder, the members of parlia- ment. In view of the negative influence that partisan politics could have on MASAF, politicians were excluded by design. Experience has shown, however, that at least members of parliament need to play a role. All the projects in the pilot phase were implemented without the involve- ment of members of parliament or any politician because of negative pronouncements made about self-help work during the transition to multiparty democracy. However, after the suc- cessful pilot phase, members of parliament and all other politicians developed an interest in the project, leading to considerable interference in the project cycle processes. As a result, work- shops for all members of parliament and traditional authorities were organized throughout the country to explain their respective facilitative roles. Members of parliament, as legislative rep- resentatives of the people, and traditional authorities, as hereditary custodians of the same, together became another outreach tool to ensure that all corners of the country, including the remotest areas, would hear and learn about MASAF. More project requests and more compre- hensive application forms were received at MASAF zone offices. Information Systems, Outreach, and Communication of Social Funds 223 While members of parliament have been useful as outreach channels, they also have tried to tamper with project procedures. Such indulgences have been effectively checked by project com- mittees who were mandated by the entire community to manage projects on their behalf. These committees have come to firmly embrace the principles of independent management and decisionmaking as fundamental tenets that give them ownership and control to work on projects of their choice without being subjected to undue pressure from elites or political leaders. The following are some of the challenges faced and lessons leamed in the outreach program: * In demand-driven projects, target audiences or clientele need to be well informed about the opportunities before them. If the demand is not defined, tremendous pressure may be brought to bear on the size of the fund and the delivery capacity of the management unit. * The project allowed communities to propose a facilitator of their choice to assist them in project formulation and implementation. Currently most projects are being facilitated by politicians, community development assistants, and headmasters. However, this is the aspect that members of parliament have wanted to manipulate, and conflicts have arisen in instances where they have wanted to be the sole facilitators. * To avoid conflicts and ensure smooth project implementation, facilitators chosen by the community should undergo project management training with the members of the project committee. The best facilitators have been those that are closest to the people, especially during project implementation. * It was found that most communities preferred to keep application forms for their use at the district commissioners' offices or traditional authorities' offices, not with members of parliament. * The application forms had to be revised several times before communities and facilita- tors could accept them as user friendly. The forms have been translated into vernacular languages for the same reasons. * Widespread information can lead to the oversubscription of a social fund, and MASAF is likely to be pressured to increase allocations in accordance with demand. MASAF had 60 percent of its resources committed seven months before the project was effective. The challenge now is the management of demand in districts and communities that are lag- ging behind, not because of lack of commitment or will on their part, but because of other factors such as inability to provide up-front community contributions. * Because of the project's popularity and the likely exhaustion of funds within the first two years of the planned five-year project life, the project steering committee has resolved that the approval of new projects should only be for those areas with fewer projects ap- proved so far. Between the close of the current project and the proposed MASAF II, new approvals will be on a replacement basis, as originally conceived in the design, that is, by matching approvals with implementation capacity. * Depletion of resources is occurring when communities in the country are gearing up to start new projects in their areas. The backlog of project requests may never be eliminated, and the credibility of the highly acclaimed project could be at risk. Communication Extensive publicity has given rise to the challenge of constantly updating the public on the progress and performance of the project. People have raised a significant number of questions about ac- countability at the community level and management unit level, as well as about geographic and population distribution. The most important communication channel for both publicity and feedback has been the coverage of launch ceremonies through radio bulletins that publicize zone officers actually delivering first checks to project committees. Often members of parliament or government ministers have been guests of honor at these functions. This has demonstrated to 224 Original Workshop Papers the nation that irrespective of political differences, the country can unite to achieve common development aspirations. Special features in national papers, as well as news supplements on special occasions, have also been an important elemenl: of communications. Apart from radio coverage, the Malawi News Agency reports substantially on MASAF's field activities. Within the management unit, a published fact-file updates the numbers of projects approved each time the project steering committe has met. Newsletters called MASAF News and Commu- nity News are also published in English and some of the vernacular languages. The analysis of data collected during a recently concluded beneficiary assessment will suggest ways to im- prove operational procedures as well as design the proposed MASAF II project. Project Management Structure Despite the odds in the project's design stages, rigorous scrutiny has allowed the project con- cept and its management system to excel and attract prominence and admiration in the eyes of the general public. Being a people-centered fund and one that would involve a variety of insti- tutions at various levels of society, the foundations for its success could not be anywhere but in stakeholder consultation and participation. Indeed, as the project fosters a new approach to development based on participatory empowerment, the project preparation process needed to move in the same direction to marshal the necessary institutions, processes, and possible proce- dures to establish a project management system to deliver at the end of the day. For this system to function efficiently and effectively, the following critical factors had to be in place: Political will and commitment at the highest level of government Appreciation and agreement among key actors on the goals and objectives of the project - Existence of apolitical, autonomous, and responsive management structure An information system that allows review, quick decisionmaking, and feedback. Management Information Systems The Malawi Social Action Fund is founded on five working principles, namely: * Quick disbursement of funds directly to community project accounts * Effective community participation in all project cycle stages * Independent project management by a popularly elected committee * Transparency and accountability at all functional levels of the project management structure * Partnership among all stakeholders. For all these principles to be applied, the project operates an MIS that derives its legitimacy and direction from a comprehensive Project Implementation Manual, which includes, among other handbooks, the following: * Community Sub-Projects (CSP) Implementation Handbook * Community Project Management Handbook * CSP Orientation Handbook * Financial Handbook. The MIS is designed to support effective management of the project cycle processes and to reinforce the basic principles of the project to ensure timely control and management of activities. The volume of information processed in MASAF is so vast that, without an effective MIS, the management unit would not be able to review operational performance and take appropriate management decisions, as well as satisfy reporting requirements for all MASAF stakeholders. The MIS has a computerized project tracking program and its associated databases, as well as an Information Systems, Outreach, and Communication of Social Funds 225 automated accounting system. The data from the zone offices capture trends in the physical progress of projects, as well as their financial performance. To process, preserve, and access this data, a local area network using Microsoft Access Basic has been installed. This package enables flexible linking of documents or data across databases, spreadsheets, and word processors. Project Tracking System Under this system, four major databases are maintained as follows: * A database that records generic information on each project at different stages of imple- mentation as it advances. Various reports can be generated from this database to detect time lags between different project cycle stages, tranche movements, and the relation- ship between expenditure and physical progress. * A database that helps the management unit to automatically create the relevant sub- project documentation, for example, project steering committe approval sheets, project agreement forms, bank introductory letters, and subprojects' bank accounts, and names of signatories. * A unit cost database captures prices of building and construction materials that commu- nities procure directly, using guidelines provided in the CSP Implementation Handbook. This database assists the management unit in updating the standard price list and track- ing adherence by community project committees to procurement guidelines, justifica- tion of tranches, and costing of new projects. - A stakeholder database preserves information on all active stakeholders that work in partnership with MASAF. The information is used partly to track complementary activi- ties and partly to distribute IEC materials. Automatic Accounting System The design and implementation of the automated accounting system was taken very seriously to satisfy the demands for a high level of transparency and accountability in MASAF. It oper- ates on the Sun System software package, a dynamic system that allows the user to produce reports in a user-friendly way. The MIS has specific controls to help implement community subprojects successfully. While the project tracking system follows a project from the date of submission of application at the zone office, the automated accounting system joins the tracking process after each project has been approved by the steering committee. From this point onward, each project is tracked by two systems with the automated accounting system emphasizing financial details. To facilitate proper management follow-up and accountability of funds by the project committee, funds for each project approved by the project steering committe are released to communities in four segments of 25 percent, 40 percent, 25 percent, and 10 percent, respectively. The system has a security feature called Audit Trail that tracks each action taken by an operator of the system, safeguarding the integrity of accounting records as well as reports issued by the system. Reportsfrom the Automated Accounting System The efficiency of the automated accounting system is measured by the quality and timeliness of rmanagement reports, because a report produced and presented late is as good as having no report at all. The main reports produced monthly in the form of the monthly digest include the following: * Summary of Projects Funded by MASAF-This report gives total funds committed to various projects at the close of each month. It helps management to clearly determine the 226 Original Workshop Papers amount of funds to be set aside in order to implement various projects approved by the project steering committe, and it helps determine the pace of disbursements. * Receipts and Payments Report-The report highlights funds received from each donor every month, as well as on a cumulative basis. It highlights payments made according to disbursement categories in the development credit agreement. Management is able to relate the inflow of funds from donors to amounts disbursed to projects through progress reports on physical works from the project sites. * Balance Sheet-The report enables management to gauge the status of affairs at any particular date. * Operating Costs Summary-This report analyzes the operating costs of each division and compares actual expenditures by line item to the budgeted amounts. Variances are calculated and highlighted for management action where necessary. * Work in Progress-This report analyzes the amounts of funds from various projects that have been justified by the management unit, and helps management relate the physical work done at project sites to funds disbursed for the projects. * Advances to Projects-This report gives information on all projects that have received funds and are implementing projects with them. This information helps management in assessing the speed of project implementation. Management is able to identify slow- moving projects and make the necessary follow-up through zone officers. * Disbursement of Funds by Donor-This reports analyzes all commitments and disburse- ments made by each category and by each donor. * Cash Flow Projection-This is a crucial report, because it determines the speed at which projects can be implemented. The report shows the plan for disbursements based on ongoing projects and newly approved projects and assists in the timely communication of resource requirements to donors so that implementation is not derailed. * Statement of Expenditures-This report is used to replenish funds from the World Bank's account to the MASAF bank account. The automated report speeds the application processes, because it captures all disburse- ment ratios for each donor. Conclusion An IEC strategy can be a good outreach mechanism, but it needs to be handled with care. The particular sociopolitical environment and poverty conditions of a country should determine the conceptual and implementation framework of the social fund, on which the design of an IEC strategy should be based. The experience from Malawi shows that the spirit of self-help among the people had been dormant but was roused in an environment with the right incentives at the right time for people to help themselves. Participatory and demand-driven approaches to community development can be meaningful and effective only when communities receive and have control of finances and when they are enabled to manage implementation of projects independently. Annexes Annex 1: Workshop Program Day 1: May 27 Morning: Plenary Presentations 8:00 Registration (Lobby of the World Bank H Building Auditorium) Chair: Ishrat Husain, World Bank 9:00 Opening Remarks Sven Sandstrom, Managing Director, World Bank 9:15 Overview of Seminar Goals, Structure and Objectives Vinod Thomas, Director, Economic Development Institute, World Bank Ishrat Husain, Principal Advisor, Poverty Reduction and Economic Management, World Bank 9:30 Social Funds, Issues and Challenges from the Constituencies' Perspectives Eduardo Diaz Uribe, Chairman, La Red Social de America Latina y el Caribe Magatte Wade, President, AFRICATIP Manuel Chiriboga, Co-Chair, NGO-World Bank Committee 10:30 Questions and Answers 11:00 Coffee Break Chair: Benno Sander, Director, Social Development, Organization of American States 11:30 Keynote Address: Macroeconomic Policies, Poverty and Social Funds Joseph Stiglitz, Senior Vice President and Chief Economist (DEC), World Bank 12:00 World Bank Portfolio Improvement Program: the Social Funds Review Prem Garg, Director, Quality Assurance Group, World Bank Soniya Carvalho, Review Task Manager, PREM, World Bank Christine Kessides, Principal Economist, TWUDR, World Bank 12:30 Inter-American Development Bank's Report on Social Funds: Findings Samuel Morley, Senior Advisor, Social Programs Division, IDB Margaret Goodman, Senior Evaluation Officer, Evaluation Division, IDB 1:00 Lunch (participants' own arrangements) 229 230 Annexes Afternoon: Parallel Thematic Sessions 2:30 Introduction to Parallel Thematic Sessions by Session Leaders 1. Social Funds: From Responses to Emergency and Crisis to Development Marco Camacho, Director, FIS, Bolivia 2. Financial Resource Mobilization for Social Funds Hussein El Gammal, Director, Social Fund, Egypt 3. Role of NGOs in the Design. Management, and Implementation of Social Funds Jane Covey, Executive Director, Institutefor Development Research, USA 4. Decentralization. Local Governments, and Social Funds Patricia de lager, Director, Federation of Municipalities of Central America, Guatemala 5. Social Funds. Private Sector Development, and Microenterprises Lamine Ben Barka, Director, AGETIPE, Mali 2:45 Discussion (coffee will be available in the meeting rooms) 5:30 Summary of Discussion and Recommendations by Session Leaders 6:00 Reception Hosted by the Economic Development Institute (MC Lobby) Workshop Program 231 Day 2: May 28 Morning: Parallel Thematic Sessions 9:00 Introduction to Parallel Thematic Sessions by Session Leaders 6. Designing Components of Social Funds: Sectors. Themes. and Access Scarlette Gillings, Director, Social Fund, Jamaica 7. The Monitoring and Evaluation of Social Funds Robert van der Lugt, Principal Evaluation Officer, OED, World Bank 8. Sustainability of Subprojects. Maintenance. and Operations Werner Neuhauss, Sector Economist, Social Policy Department, KFW, Germany 9. Appraisal and Environmental Assessment of Social Fund Subprojects Abebaw Alemayehu, Deputy Director, Social Fund, Ethiopia 10. Information Systems. Outreach. and Communication of Social Funds Sam Kakhobwe, Social Action Fund, Malawi 9:15 Discussion (coffee will be made available in the meeting rooms) 12:30 Summary of discussion and recommendations by Session Leaders 1:00 Lunch (participants' own arrangements) Afternoon: Plenary Presentations and Discussion Chair: Steen Jorgensen, Sector Leader, Social Protection Board, World Bank 2:00 Reports to Plenary by the Session Leaders of Parallel Sessions 1 to 5 3:00 Plenary Discussion 3:45 Coffee Break 4:15 Reports to Plenary by the Session Leaders of Parallel Sessions 6 to 10 5:15 Plenary Discussion 5:45 Summary of Session Issues and Debate Steen Jorgensen, Session Chair 6:00 End of Day Two 232 Annexes Day 3: May 29 Morning: Parallel Constituencies' Consultations 9:00 Introduction to the Parallel Consultations by Session Leaders Social Fund Directors: The Future of Demand-Side Financing Eduardo Diaz Uribe, La Red Social, and Magatte Wade, AFRICATIP NGO Representantives: The Role of Civil Society in Social Development Manuel Chiriboga, NGO-World Bank Committee Central and Local Goverments: Decentralization and the Social Sector Patricia de Jager, Federation of Municipalities of Central America International Development Agencies: Support to Social Funds Azita Berar-Awad, Head of Unit, Development Policies Department 9:15 Discussion (coffee will be made available in the meeting rooms) 12:30 Summary of Discussion and Recommendations by Session Leaders 1:00 Lunch (participants' own arrangements) Afternoon: Final Plenary Session Chair: Robert Holtzman, Director, Social Protection Board, World Bank 2:00 Report to Plenary by Chairpersons of Constituencies' Consultations Eduardo Diaz Uribe, Magatte Wade Manuel Chiriboga Patricia de Jager Azita Berar-Awad 3:30 Questions and Answers 4:00 Coffee Break 4:30 Development. Equity. and Social justice H. E. Aminata Mbengue Ndiaye, Minister of Family Welfare, Senegal 5:00 Questions and Answers 5:30 Workshop Conclusion and Introduction to Regional Consultations Ishrat Husain, Povery Reduction and Economic Management, World Bank 6:00 Reception Hosted by the World Bank NGO Unit (MC Lobby) Workshop Program 233 Day 4: May 30 Following the International Workshop, four regional consultations discussed the possible strat- egies to mainstream the workshop recommendations into the current and future work of social funds. Participants from the six constituencies-social funds directors, representatives of cen- tral governments, municipalities, NGOs, civil society, and intemational development agencies- attended these regional consultations, as well as a broader group of observers. The Afrca Regional Consultation on Social Funds Partner institutions: AFRICATIP, African Development Bank, World Bank Africa Region Participants: 80 to 100 VYenue: J Building, World Bank (701 18th Street, NW), Washington, D.C. Schtedule: 9:00 AM to 5:00 PM with a lunch break Organizers: Lamine Ben Barka (AFRICATIP), Cesaltina Abreu (Angola Social Fund), Alberto Harth, Laura Frigenti (World Bank). T'he Latin America and the Caribbean Regional Consultation on Social Funds Partner institutions: La Red Social, Organization of American States, World Bank Latin America and the Caribbean (LAC) Region, Inter-American Development Bank Participants: 50 to 80 Vernti: Organization of American States Auditorium (17th and Constitution Ave., NW) Schedule: 8:30 AM to 4:00 PM with a lunch break Organizers: Eduardo Diaz Uribe (Red Social), Benno Sander, Roy Thomasson (Organization of American States), Alain Colliou, Willem Struben (World Bank), Samuel Morley (Inter- American Development Bank) The Eastern Europe and Central Asia, Middle East and North Africa ECA-MENA Regional Consultation on Social Funds Partner institutions: World Bank Europe and Central Asia (ECA) and Middle East and North Africa (MENA) Region Participants: 30 to 50 Venue: H Building, Room H-1-200, World Bank (600 19th Street, NW) Schedui: 9:00 AM to 5:00 PM with a lunch break Organizers: Alexander Marc, Betsy McGean, David Steel (World Bank) I I Annex 2: List of Participants Social Funds' Directors and Staff Algetia Mr. Jose Antonio Ferreira Martins Benin Director Mr. Mohamed Ayache Post Conflict Social Recovery Mr. Lambert Koty Social Action Fund Project Directeur General P.O. Box 2746 Ministry of Social Assistance AGETUR Algiers, Algeria and Reintegration 01 B.P. 2780 Recette Principale Tel: (213) 33 38 35/33 01 91 Luanda, Angola Cotonou, Benin Fax: (213) 33 38 35 Tel: (244-2) 34 14 44 Tel: (229) 31 28 30 Fax: (229) 31 26 73 Mr. Bachir Boulahbal Social Action Fund NMr. Noel Emilien Mele P.O. Box 2746 Argentina Manager Algiers, Algeria Ms. Ana Maria Etchegaray Agence de Gestion de la Tel: (213) 33 38 35/33 01 91 de Maurette Dimension Social du Fax: (213) 33 38 35 Coordinadora DB veloppement (AGDSD) Ms. Farida Kerkeb FOPAR B CooPo Be13 Social Action Fund ~Secretaria de Desarrollo Social Ctnu ei P.O. Box 2746 9 de Julio 1925 P 17 Tel: (229) 30 1305/3050 84 Algiers, Algeria Buenos Aires, 1332 Argentina Tel: (213) 33 38 35/33 01 91 Tel: (54-1) 381 0217 Fax: (213) 33 38 35 Fax: (54-1) 384 6154/383 8741 Bolivia Mr. Mohamed Tha Mr. Marco A. Camacho Pefia Director General Armenia Presidente I Social Safety Net Support Project Fondodenve Agence de Developpement Social Mr. Levon Dulyan Fiondo de Inversion Social Minist&re du Travail, de la Finance and Administration Manager B. Salinas esq Presbitero Medina Protection Sociale Finance and Administration La Paz, Bolivia Algiers, Algeria Department Tel: (591-2)41 2474 Tel: (213) 67 57 77 Armenian Social Fund Fax: (591-2) 41 31 24 Fax: (213) 67 57 77 Ulnetsu Street 31 Yerevan, 375037 Armenia Mr. Jose Jorge Duran Guillen Tel: (374-2) 25 70 03 Fund Raising Advisor Angola Fax: (374-2) 15 14 17 Social Investment Fund Mr. Cesaltina Cadete Basio de Abreu Mr. Gagik Khachatrian PCO. Box 10713 Executive Director Executive Director La. Pox Boiv3 Social Action Fund ~Social Investment Fund La Paz, Bolivia Social Action Fund Ulnetsu Street 31 Tel: (591-2) 41 24 74 P.O. Box 2746 Fax:ets91Street3131 Luanda, Angola Yerevan, 375037 Armenia Fax: (591-2)41 31 24 Tel: (244-2) 33 38 35/33 01 91 Tel: (374-2) 28 54 39 Mr . Jose Marcelo Komadina Fax: (244-2) 33 38 35 Fax: (374-2) 15 14 17 Office Department Chief at Cochabamba Gerencia Operaciones Region 3 Fonde de Inversion Social Ave. Ayacucho # N-127, Piso 7 Cochabamba, Bolivia Tel: (591-2) 53328 Fax: (591-2) 53329 235 236 Annexes Burkina Faso Ms. Maria Mantilla de los Angeles The Gambia General Coordinator Mr. Seydou Kabore Social Investment Fund of Mr. Bye Lamin Lobe Directeur General Ecuador (FISE) Director General Agence Faso Baara (AGETIP) Calle el Sol y G. Villaroel (Esq.) Gameworks Agency 01 B.P. 6633 Quito, Ecuador 19 Kairaba Avenue Fajara Ouagadougou, Burkina Faso Tel: (593-2) 25 19 11 PO. Box 2642 s/k Tel: (226) 31 31 85/31 36 40 Fax: (593-2) 25 39 59 Fajara, The Gambia Fax: (226) 31 36 42 Tel: (220) 37 53 41 Fax: (220) 37 53 44 Cambodia Egypt Mr. Mohamed Mokhles Abou-Seida Georgia Mr. Chum Bun Rong Director General General Director Public Works Program Mr. Shalva Kokochashvili Social Fund of the Kingdom Social Fund for Development Micro-Project Manager, Deputy Director of Cambodia 1, Wadi El-Nil Street Micro-Project Division 113, Street 214 Boeung Prolit Mohandseen Cairo Georgian Social Investment Fund 7 Makara No. 1119 Cairo, Egypt 39 Chavchavadze Avenue Phnom Penh, Cambodia Tel: (20-2) 303 0892 Tbilisi, 380062 Georgia Tel: (855-23) 36 25 93 Fax: (20-2) 303 0891 Tel: (995-32) 23 07 79/23 06 74 Fax: (855-23) 36 25 94 Fax: (995-32) 23 01 03 Mr. Aziz Mohamed El Bendary Director General Mr. Irkali Koplatadze Comoros Community Development Program Executive Director Social Fund for Development Georgian Social Investment Fund Mr. Soulaimana Mohamed 1, Wadi El-Nil Street 39, I. Chavchavadze Ave. Directeur Executifdu FADC Cairo, 12711 Egypt Tbilisi, 380062 Georgia Community Development Tel: (20-2) 303 0893/4 Tel: (995-32) 23 06 47 Support Fund Fax: (20-2) 303 0891 Fax: (995-32) 23 01 03 Route Itsandra Mr. Hussein Mokhtar El Gammal B.P. 1122 Managing Director Moroni, Comoros Office of the Prime Minister Guatemala Tel: (269) 73 28 82 Social Fund for Development Mr. Alvaro Colom Caballeros Fax: (269) 73 28 84/73 31 46 1 Hussein Hegazi Street Director Ejecutivo Cairo, Egypt FONAPAZ Tel: (20-2) 354 0077/355 9877 5 Ave. 8-50 Zona 9 Costa Rica Fax: (20-2) 355 0628 Guatemala, 1009 Guatemala Ms. Rose Marie Ruiz Bravo Mr. Ezzeldin Shawkat Tel: (502) 331-8474 Presidente Ejecutiva Manager Fax: (502) 332-3394 Instituto Mixto de Ayuda Social International Cooperation Affairs 25 Norte Casa Italia and Information San Jose, 6213 Social Fund for Development Guinea-Bissau 1000 Costa Rica 1 Hussein Hegazi Street Tel: (506) 225 0813 Cairo, Egypt Ms. Ilda Carvaleo Mateus Dos Santos Fax: (506) 253 3047 Tel: (20-2) 354 0077/355 9877 Directora Nacional Fax: (20-2) 355 0628 Unidad de Coordinacion Projecto de Sector Social Ministerio do Plano e Coopera,cao Ecuador Internacional Mr. Carlos Caicedo Alarcon Bissau, C GP. No. 6 National Director Mr. Abebaw Alemay Blssau, Gu(5 ea-B1ssau Fondo de Inversion Social de Deputy Director Tel: (245) 2124 24 Emergencia (FISE) Social Rehabilitation and Fax: (245) 20 11 88 Calle el Sol y G. de Villarroel (Esq.) Development Fund Mr. Raul Mendes Fernandes Quito, Ecuador P.O. Box 30006 Director Tel: (593-2) 25 19 11 Addis Ababa, Ethiopia Fundo de Ac ,o Social Fax: (593-2) 25 39 59 Tel: (251-1) 55 24 76 Ministerio do Plano e Cooperacao Fax: (251-1) 55 11 94 Intermacional Bissau, Guinea-Bissau Tel: (245) 21 24 24 Fax: (245) 20 11 88 List of Participants 237 Mr. Gino Mendez Mr. Marcial Maier Mexico Administrative Director Executive Advisor AGEOPPE Programming and Planning Ms. Blanca Lihia Garcia Lopez Rua Gen. Omar Torrijos Department Coordinator P.O. Box 754 Honduran Social Investment Fund Department of International Affairs Bissau, Guinea-Bissau Edif. Ahprocafe Secretaria de Desarrollo Social Tel: (245) 20 22 61 P.O. Box 3581 (SEDESOL) Fax: (245) 20 22 62 Tegucigalpa, Honduras Ex-hacienda Belen de la Flores Tel: (504) 36 81 97 Colonia Belen C.P. 01110 Mr. Domingo Fernandez Gomes Fax: (504) 36 62 54 Mexico, 01110 Mexico Administrator Tel: (525) 273 6302 AGEOPPE Fax: (525) 273 8329 Rua General Omar Torrijos P.O. Box 754 Malawi Mr. Jaime Alvarez Henandez Bissau, Guinea-Bissau Mr. Charles Elias Mandala Director Tel: (245) 20 22 61 Head of Field Operations Direccion General de Programas Fax (245) 20 22 62 Community Sub-Projects de Desarrollo Regional Malawi Social Action Fund Secretaria de Desarrollo Socal Red Cross House, Area 14 (SEDESOL) Guyana Private Bag 352 San Antonio Abad 124, Col. Lilongwe, 3 Malawi Transito Mr. Harry Narine Nawbatt Tel: (265) 73 26 66 Mexico, 06820 Mexico Executive Director Fax: (265) 7323 39 Tel: (525) 740 6534 Social Impact Amehoration Fax: (525) 740 6534 Programme (SIMAP) Mr. Carlos Cortizo Martinez 237 Camp Street, South Mali Jefe de Departamento t_umnungsburg Direcdon de Organismos Georgetown, Guyana Mr. Lamine Ben Barka Financieros Internacionales Tel: (592-2) 52058 Manager Secretaria de Hacienda y Credito Fax: (592-2) 73600 AGETIPE Pubhco Avenue de Lisere Insurgentes Sur 826 4 Piso Quartier du Fleuve Mexico, 03100 Mexico Haiti B.P. 2398 Tel: (525) 228 1664 Bamako, Mali Fax: (525) 228 1685 Ms. Monique Pierre-Antoine Tel: (223) 22 09 60/22 67 43 Executive Director Fax: (223) 22 09 71 Mr. Disraeli Femandez Mojica Fonds d'Assistance Economique Coordinador de Desarollo Institucional et Sociale (FAES) Mr. Mahmoud Dicko Direccion de Programas Especiales Delmas 75, No. 1 Vice President Secretaria de Desarrollo Social B.P. 13286 AGETIPE (SEDESOL) Port-au-Prince, Haiti B.P. 2398 San Antonio Abad 124 Tel: (509) 46 11 77 Bamako, Mali Mexico, 06820 Mexico Fax: (509) 57 86 28 Tel: (223) 22 09 60 Tel: (525) 740 6534 Fax: (223) 22 09 71 Fax: (525) 740 6534 Honduras Mr. Juan Ramon Elvir Mauritania Mongolia Director de Proyectos Mr. Abdoul Fatah Ba Ms. Sodov Onon Direccion de Proyectos General Director Director Fondo Hondurefio de Inversion AMEXTIPE Poverty Alleviation Program Office Social Ilot "0" 72 Khuvsgalchdyn Avenue 38 Edif. Ahprocafe Nouakchott, Mauritania Ulaanbaatar, Mongolia Tegucigalpa, Honduras Tel: (222-2) 57511/12 Tel: (976-1) 32 8107 Tel: (504) 36 64 47 Fax: (222-2) 57513 Fax: (976-1) 32 81 07 Fax: (504) 36 62 54 - ~~~~Mr. Khil1 Mr. Omar Cema Garcia Directeur Financier Director Direction Administrative et Nicaragua Programma de Apoyo al Sector Financiere Mr. Carlos LjQV Informal AMEXTIPE M r Fondo Hondurenio de Inversion Ilot "0" 72 Director de Planificacion y Promocion Social Nouakchott, Mauritania Fondo de Inversion Social - FISE Edif. Ahprocafe Tel: (222-2) 57511 Apdo. 1849 Tegudigalpa, 3581 Honduras Fax: (222-2) 57513 Tel:a505-2 67ca1858 Tel: (504) 36 79 73 Fa:(2-)553Tel: (505-2) 67 18 58 Fax: (504) 36 72 67 Fax: (505-2) 67 3170 238 Annexes Mr. Carlos Antonio Noguera Santo Domingo Tanzania Executive Director Social Investment Fund 'Mr. Torres de Musa Mini Mr. Abdul Rwechungura Mohamed (FISE Projects I & II) Executive Director Katabaro Managua, Nicaragua Pro-Comunidad Finance Manager Tel: (505-2) 77 33 40 Mejico Esq. 30 de Marzo, Bloque B Department of Finance Fax: (505-2) 77 46 95 Santo Domingo and Administration Dominican Republic National Income Generation Tel: (809) 221 8623 Programme Niger Fax: (809) 221 8624 Samora Avenue Mission Street Mr. Roger Nignon Ms. Mejia de Silvestre Ginangela P.O. Box 1721 Directeur General MIS Manager Dar es Salaam, Tanzania NIGETIP Pro Comunidad Tel: (255-51) 249428 Immeuble Sonora 1 Mexico Esq. Dr. Delgedo Fax: (255-51) 11 55 36 B.P. 18715 Santo Domingo Naimey, 715 Niger Dominican Republic Mr. Awadhi Sadiki Mawenya Tel: (227) 74 12 26/74 10 51 Tel: (809) 221 8623 Executive Director Fax: (227) 74 18 23 Fax: (809) 221 8624 National Income Generation Programme (NIGP) Lehman's Building, 1st Floor Pakistan Senegal PO. Box 1721 Dar es Salaam, Tanzania Mr. Farooq Azam Mr. Magatte Wade Tel: (255-51) 24 94 28 Director Directeur General Fax: (255-51) 11 55 36 Welfare and Services Division AGETIP Overseas Pakistanis Foundation Bd Djily MBaye X Rue Berenger Shahrae Jamhuriyat, G-5/2 Ferraud Togo Islamabad, Pakistan B.P. 143 Tel: (92-51) 921 6358 Dakar, Senegal Mr. Essem Amelewonou Fax: (92-51) 921 1613 Tel: (221) 23 46 40 Directeur General Fax: (221) 2104 78 AGETUR Mr. Mutawakkil Kazi 152, Bd du 13 Janvier Chief Executive Officer B.P. 80267 Pakistan Poverty Alleviation Tajikistan Lome, Togo Fund (PPAF) Tel: (228) 22 46 84 World Bank Resident Mission Fax: (228) 22 46 53 20 A Shahrah-e-Jamhurivat Mr. Roustam Babadjanov Ramna 5, G-5/1 Manager Islamabad, Pakistan Planning, Monitoring and Yemen Tel: (92-51) 920 3615 Evaluation Department Fax: (92- 51) 921 5787 Tajik Social Investment Fund Mr. Abdulkarim Al-Arhabi (92-51) 921 5787/920 2704 Bokhtar Street 17 Managing Director Dushanbe, Tajikistan Social Fund for Development Tel: (7-3772) 21 60 23/21 87 53 P.O. Box 15485 Panama Fax: (7-3772)51 0042 Sana'a, Yemen Mr. IDamched Karimov Tel: (967-1) 24 04 17/24 31 73 Mr. Gerardo SoQli Diaz Executive Director Fax: (967-1) 24 31 73/24 70 58 Executive Director Tajik Social Investinent Fund Fondo de Emergencia Social Bokhtar Street 17 Calle Elyira Mendez Dushanbe, Tajikistan Zambia Edif. Interseco - 87-1479 Zona 7 Tel: (7-3772) 21 60 23/21 87 53 Panama, 87-1479 Panama Fax: (7-3772) 51 00 42 Mr. Cosmas Barnabas Mambo Tel: (507) 264 3874 Project Coordinator Fax: (507) 264 3044 Economic and Budget Division Ministry of Finance Social Recovery Project Rwanda RO. Box 50268 Lusaka, Zambia Mr. Joseph Mugenga Tel: (260-1) 25 25 19 Director Fax: (260-1) 25 25 22 National Program for Social Actions B.P. 89 Kigali, Rwanda Tel: (250) 73260 Fax: (250) 76024 List of Participants 239 Mr. Edward Esau Mwale Brazil Ethiopia Head of Field Operations Economic and Budget Affairs Dept. Ms. Wania Sant'Anna Mr. Jalal Abdel Latif Ministry of Finance and Economic Coordinator Executive Director Development The Brazil Network on Multilateral Inter-Africa Group (IAG) Social Recovery Project Financial Institution P.O. Box 1631 P.O. Box 50268 Rua Das Palmeiras 90 Addis Ababa, Ethiopia Lusaka, Zambia Rio de Janeiro, 22270-070 Brazil Tel: (251-1) 51 87 90/51 95 82 Tel: (260-1) 25 25 19/25 37 23 Tel: (55-21) 286 1441 Fax: (251-1) 51 75 54 Fax: (260-1) 25 25 22 Fax: (55-21) 286 1209 Germany Zimbabwe Canada Mr. Volker Kasch Mr. Ian Mashingaidze Mr. Michel Chaurette Policy Officer Project Preparation Manager Director Policy and Information Department Community Development Project Studies and Projects Program Protestant Association for Social Development Fund Canadian Centre for Intemational Cooperation in Development Ministry of Public Service Studies and Cooperation (CECI) (EZE) Labour and Social Welfare 180, Sainte-Catherine Street East Mittel Street 35 Private Bag 7707, Causeway Montreal, Quebec, H2X 1K9 Bonn, D 53175 Germany Harare, Zimbabwe Canada Tel: (49-228) 810 1212 Tel: (263-4) 79 45 64 Tel: (1-514) 875 9911 Fax: (49-228) 810 1160 Fax: (263-4) 79 45 68 Fax: (1-514) 875 6469 Mr. Sidney Gozho M4hishi Mr. Jean-Claude Desmarais Honduras Director Technical Advisor Social Development Fund Development Studies and Projects Ms. Eloisa Senovia Acosta Valdez Ministry of Public Service Program Directora Ejecutiva Labour and Social Welfare Centre d'Etude et de la Cooperation Federaci6n de Organizaciones Box 7707 Causeway 180 Ste. Catherine Est Privadas de Desarrollo de Harare, Zimbabwe Montreal, H2X 1K9 Canada Honduras (FOPRIDEH) Tel: (263-4) 79 45 64 Tel: (1-514) 875 9911 Col. Lomas de Guijarro Sur, Bloque Fax: (263-4) 79 60 80 Fax: (1-514) 875 6469 W Casa #12 Mr. Ranjit Kumar Tegicigalpa, M.D.C., 3348 Honduras Executive Director Tel: (504) 39 84 44 NGOs Foundation for Intemational Fax: (504) 32 83 64 Argentina Training 7181 Woodbine Avenue, Suite 110 Mr. Luis Perez Coscio Markham, L3R 1A3 Canada Italy Director del Programa FICONG Tel: (905) 305 8680 Area "Pobreza y Desarrollo Sodal" Fax: (905) 305 8681 Mr. Stefano Ofcg Instituto Intemacional de Medio UNA Ambiente y Desarrollo Via De Lemene 50 America-Latina Costa Rica Milan, 20151 Italy Av. Corrientes 2835 Tel: (39-2) 308 5057 Cuerro A 6 B Mr. Manuel 0. Chiribga Tl 3-)3855 Buenos Aires, Argentina Executive Secretary Fax: (39-2) 3340 3570 Tel: (54-1) 961 3050 Asociaci6n Latinoamerica de Fax: (54-1) 961 3050 Organizaciones de Promoci6n San Jose, Costa Rica Jamaica Tel: (506) 283 2122 Fax: (506) 283 5898 Mr. John Feldmann Armenia Executive Director Mir. Anush Bezhany Center for Ethics Chair El Salvador Ms. Laurell T. Fletcher Gayl The Development Group Coordinator 16 Safarian Street Mr. Luis Antonio Castio Rivas Association of Development Apartment 38 Director Ejecutivo Agencies (ADA) Yerevan, 375000 Armenia Dirrecci6n 12 Easton Avenue Tel: (374-2) 15 18 65 Fundaci6n Salvadorefia de Apoyo Kingston, 6 Jamaica Fax: (374-2) 15 18 65 Integral (FUSAI) Tel: (1-809) 927 5784 Calle Nueva No. 1 Fax: (1-809) 927 5784 Casa 3733 Colonia Escal6n San Salvador, 1773 El Salvador Tel: (503) 245 2611 Fax: (503) 224 3310 240 Annexes Mali Peru Ms. Jane Gibson Covey Executive Director Mr. Boureitla Allaye Toure Mr. Abelardo Sanchez-Leon Institute for Development Research President Chief 44 Farnsworth Street Comite de Cordination des actions Cooperation Area Boston, MA 02110-1211 des ONG au Mali Centro de Estudios y Promoci6n al United States Hypodrome Rue 220 Porte 119 Desarrollo Tel: (1-617) 422 0422 B.P. E3216 Le6n de la Fuente 110 - Magdalena Fax: (1-617) 482 0617 Bamako, Mali Lima, 17 Peru Tel: (223) 22 21 12/22 17 13 Tel: (511) 264 1316 Ms. Rudi Ieung Fax: (223) 22 23 59 Fax: (511) 264 0128 International Relations Associate The Asia Foundation 1990 M Street, N.W #610 Mexico Senegal Washington, D.C. 20008 United States Ms. Ma. Eugenia Mata Garcia Tel: (1-202) 223 5268 Coordinadora Area Mujeres Mr. Emmanual Seyni Ndione Fax: (1-202) 785 4582 Centro de Apoyo al Movirmiento Coordinator Popular Oaxaquefho ENDA-GRAAF Ms. Carolyn M. Long A.C. (CAMPO) B.P. 13069 Grand-Yoff Director Circuito Sur 112 Dakar, Senegal Development Policy & Practice Fraccionamiento La Cascada Tel: (221) 27 80 25 Interaction Oaxaca, 68 Mexico Fax: (221) 27 32 15 1717 Massachusetts Ave. Washington, D.C. 20036 Tel: (52-951) 51221 Mr. Mohamed Stoumar United States Fax: (52-951) 51221/30034 Coordinator Tel: (1-202) 667 8227 ext. 132 Mis. Emma Gonzalez Sarur Department of Urban Popular Fax: (1-202) 667 8236 Sub-director Economy (ECOPOP) Mr. Paul E McCleary Department of Programming P.O MPresident Fundacion Demos, I.AP. P.O. Box 3370Prsdn Minnesota #6 Dakar, Senegal For Chdren, Inc. Colonia Napoles Tel: (221) 25 32 00 P.O. Box 5554 Mexico, 03810 Mexico Fax: (221) 25 32 32 Arlington, VA 22205 United States Tel: (525) 536 1023 Tel: (1-202) 543 1990 Fax: (525) 669 0308 Sri Lanka Fax: (1-703) 538 5492 Ms. Carmen C. Monico Moldova Mr. Babarande Sarath Hewagama Program Associate Executive Director Development Policy and Practices Mr. Vasile Munteanu Sarvodaya Shramadana Movement InterAction Executive Director 98 Rawatawatta Road 1717 Massachusetts Avenue, N.W. Adsisto NGO Moratuwa, Sri Lanka Washington, D.C. 20036 31 August 1989 Street, No. 153 Tel: (94-1) 64 71 59/64 52 55 United States Chisinau, 2004 Moldova Fax: (94-1) 64 65 12/64 70 84 Tel: (1-202) 667 8227 ext. 138 Tel: (373-2) 23 72 10 Fax: (1-202) 588 9020 Fax: (373-2) 23 72 10 Mr. Widanelage Sathis Pemruwan de Mel Mr. Joe Muwonge Arthacharya Foundation World Vision 16/1, 1/1 Galle Road 220 I Street, N.E. Nicaragua Mount Layinia, Sri Lanka Washington, D.C. 20002 Mr. Edwin ZabLah Tel: (94-1) 73 71 43 United States Secretario General Fax: (94-1) 73 59 06/64 75 18 Tel: (1-202) 547 3743 Fundaci6n Augusto Cesar Mr. John E. Ruthrauff Sandino (FACS) Executive Director P.O. Box 2458 United States Center for Democratic Education Managua, Nicaragua 8403 Colesville Road, Suite 720 Tel: (505-2) 67 83 02 Mr. Iqbal Noor Ah Silver Spring, MD 20910-3368 Fax: (505-2) 67 56 70 Chief Executive Officer United States Aga Khan Foundation U.S.A. Tel: (1-301) 589 9383 Washington, D.C., United States Fax: (1-301) 589 3505 Pakistan Mr. Larry Casazza Director Ms. Sadiqa Salahuddin World Vision Director 220 I Street, N.E. NGO Resource Center Washirigton, D.C. 20002 D-77, Block 4, Clifton United States Karachi, 75600 Pakistan Tel: (202) 547 3743 Tel: (92-21) 586 5502/586 5501 Fax: (92-21) 586 5503 List of Participants 241 Yemen Ms. Patricia Duran de lager Zimbabwe Executive Director Mr. Tareek Sinan Abdulla Federaci6n de Municipios del Istmo Mr. Charles C. Katiza Abolohoum Centroamericano, Secretary General Chairman FEMICA IULA/C.A. IULA - Africa Section Charitable Society for Social 13 Calle 1-51 Zona 10 International Union of Local Welfare Edif. Clara II, Santa Apto. 801 Authorities P.O. Box 13254 Guatemala, Guatemala 108 Central Avenue Sana'a, Yemen Tel: (502) 32 59 47/362 5055 P.O. Box 6852 Tel: (967-1) 23 00 88 Fax: (502) 362 5056 Harare, Zimbabwe Fax: (967-1) 23 00 89 Tel: (263-4) 72 62 89 Fax: (263-4) 72 62 89 Mr. Abubaker Abdulla Oirbi Honduras Chairman People's Charitable Society Ms. Dina Guzman P.O. Box 11351 Municipality of Puerto Cortes Central Governments Sana'a, Yemen Alcaldia de Puerto Cortes Tel: (967-1) 24 74 41 Puerto Cortes, Honduras Argentina Fax: (967-1) 24 04 17 Tel: (504) 55 02 07 Ms. Viviana Friedman Fax: (504) 55 03 45 General Coodinator International Financing Unit Municipal Representatives Social Development Secretariat Mauritania Av. 9 de Julio 1925 17th Floor Burkina Faso Buenos Aires, 1332 Argentina Mr. Antoine Raogo SawadogQ Mr. Mohamed Mahmoud Ould Tel: (54-1) 383 3166 President Aghrabatt Fax: (54-1) 383 4439 Commission Nationale de Mayor Ms. Irene Novacovk D4centrasation Municipality of Nouakchott Secretaria de Desarrollo Social B.P. 7027 P.O. Box 5161 9 de Julio 1925 P. 17 Ouagadougou, Burkina Faso Nouakchott, Mauritania Buenos Aires, 1332 Argentina Tel: (226) 31 14 98 Tel: (222-2) 53242 Tel: (54-1) 381 0217 Fax: (226) 31 77 05 Fax: (222-2) 55609 Fax: (54-1) 384 6154/383 8741 Mr. Tito Siena Chile Nicaragua Coordinator Departnent of Administration Ms. Veronica Silva Villalobos Mr. Armando Agustin Rodriguez and Finance Directora Desarrollo Social Municipal Serrano Social Development Secretariat Direccion desarrollo comunitario Alcalde Av. 9 de Julio 1925 17th Floor Asociaci6n Chilena de Municipal Alcaldia del Municipio de Jinotepe Buenos Aires, 1332 Argentina Municipalidad de la Florida Jinotepe, Nicaragua Tel: (54-1) 384 9888 Santiago, Chile Tel: (505^41) 22341 Fax: (54-1) 383 7524 Tel: (56-2) 293 6316 Fax: (505-41) 22998 Fax: (56-2) 293 6316 BaI 221 3677/221 4348 razt Zambia - Mr. Jose Henrique PaimFecrnndes Vice Secretary Guatemala Mr. Andrew Mwanakulanga Special Secretariat of Funding and Town Clerk International Interests Mrs. Braulia Thillet de Solorzano Administration Department Porto Alegre City Hall Investigation Director Luanshya Municipal Council Andre Puente No.50 Federad6n de Municipios del Istmo P.O. Box 90140 Porto Alegre, Brazil Centroamericano, Luanshya, Zambia Tel: (55-51) 225 1417 FEMICA IULA/CA Tel: (260-1) 51 19 50 Fax: (55-51) 225 1417 13C11 1-51, Zona 10 Fax: (260-1) 51 06 50 Edif. Santa Clara II, Apto. 801 Guatemala, Guatemala Colombia Tel: (502) 362 5055/332 5947 Fax: (502) 362-5056 Mr. Jesus Hernando Duarte Agudelo Chief Social Development Unit National Planning Department 26th Street No. 13-19, Fifth Floor Bogota, Colombia Tel: (57-1) 341 9689 Fax: (57-1) 281 2786/281 3348 242 Annexes Ethiopia Nicaragua Zambia Mr. Abreha Aseffa Mr. Jose Castillo Osejo Mrs. Clare H. Barkworth Minister, General Manager Ministro-Presidente Training and Development Advisor Office of the Prime Minister FISE - Fondo de Inversion Social Economic and Budget Division Social Rehabilitation and de Emergencia Ministry of Finance Development Fund Planes de Altamira Social Recovery Project P.O. Box 30006 PO. Box 1849 P.O. Box 50268 Addis Ababa, Ethiopia Managua, Nicaragua Lusaka, Zambia Tel: (251-1) 55 31 03 Tel: (505-2) 67 34 90 Tel: (260-1) 25 25 19 Fax: (251-1) 55 20 94 Fax: (505-2) 78 16 73 Fax: (260-1) 25 25 22 Honduras Romania World Bank Mr. Manuel Zelaya Rosales Mr. Ionel Baragan Mr. Petros Aklilu Minister Inspector Senior Human Resources Economist Executive Directorate Department of Public EA2RS Social Investment Fund III (FHIIS) Administration World Bank Ed. Ahprocafe, Col. Lara Govemment of Romania 1818 H Street, N.W P.O. Box 3581 Piata Victoriei l Room MC 8-402 Tegucigalpa, Honduras Bucharest, Romania Room nMC 8 02 Tel: (504) 36 81 97/36 81 98 Tel: (40-1) 222 3658 TWsn go-202) 458 7340 Fax: (504) 36 62 54 Fax: (40-1) 222 3654 el: (1-202)w458-7340 E-mail: Paklilu@aworldbank.org Mr. Mihai Viorel Hanagic Mr. Anthony G. Bigio Jamaica Advisor Staff of the Prime Minister Urban Specialist Mr. Wesley George Hughes Govenmment of Romania EDIEN Director General Bucuresti-Piata Victoriei 1 World Bank Director General's Office Bucharest, Romania 1818 H St., N.W. Planning Institute of Jamaica Tel: (40-1) 311 3617 Room G5-111 8 Ocean Boulevard Fax: (40-1) 311 3619 Washington, D.C. 20433 USA P.O. Box 634 Tel: (1-202) 473-6304 Kingston, Jamaica E-mail: Abigio@worldbank.org Tel: (809) 967 3689 Senegal Ms. Soniya Carvalho Fax: (809) 967 1897 Ms. Aminata Mbengue Ndiaye Economist - PGP Ministre World Bank Moldova Femme-Enfant-Famille 1818 H Street, N.W. Govemement du Senegal Room S 10-125 Mr. Nicolae Micsanschi B.P. 4050 Washington, D.C. 20433 USA Head of Department Dakar, Senegal Tel: (1-202) 473-5705 Social Infrastructure Department Tel: (221) 23 82 75 Email:Scarvalho@worldbank.org Ministry of Economy and Reforms Fax: (221) 23 66 73 Piata Marii Adunari National 1 Ms. Susan Chase Chisinau, 2033 Moldova Poverty Analyst Tel: (373-2) 23 40 95 Suriname Institutional & Social Policy (AFTIl) Fax: (373-2) 23 40 64 Ms. Fidelia Grand-Galon Africa Region Ms. Fidlia Grad-GalonWorld Bank Mr. Mihail Moraru Senior Official 1818 H Street, N.W. Deputy Minister Department of Product Evaluation Room J 2-172 Ministry of Economy and Reforms and Monitoring Washington, D.C. 20433 USA Piata Marii Adunari National 1 Ministry of Planning and Tel: (1-202) 473-4984 Chisinau, 2033 Moldova Development Cooperation E-mail: Schase@worldbank.org Tel: (373-2) 23 41 22 Dr. S Redmond Street #118 Fax: (373-2) 23 40 64 Paramaribo, Suriname Mr. Alain Colliou Tel: (597) 47 36 28 Country Sector Leader Mr. Petru Veverita Fax: (597) 42 10 56 Latin America and Caribbean Director Region Budget Department World Bank Ministry of Finance Trinidad and Tobago 1818 H Street, N.W. Cosmonautilor 7 tif Washington, D.C. 20433 USA Chisinau, Moldova P ermnentSecretar Tel: (1-202) 473-4196 TFa: (373-2) 22 73 06 Ministry of Social Development Email: Acolliou@worldbank.org Fax: (373-2) 22 86 10 1st Floor Salvatory Bldg. Frederick Street Port of Spain, Trinidad and Tobago Tel: (809) 623 2873 Fax: (809) 624 7727 List of Participants 243 Ms. Beth Anne Dabak Ms. Margaret Ellen Grosh Mr. Haeduck Lee Operations Analyst Senior Economist Economist LCSPR PRDPH LACEU World Bank World Bank World Bank 1818 H Street, N.W. 1818 H Street, N.W. 1818 H Street, N.W. Room I 7-068 Room N 8-033 Room I 8-362 Washington, D.C. 20433 USA Washington, D.C. 20433 USA Washington, D.C. 20433 USA Tel: (1-202) 458-5844 Tel: (1-202) 473-9249 Tel: (1-202) 473-6687 E-mail: Bhoffman@worldbank.org E-mail: Mgrosh@worldbank.org E-mail: Hleel@worldbank.org Mr. Anis A. Dani Mr. Alberto Harth Ms. Carmen Malena Social Development Specialist Technical Specialist NGO/Participation Specialist ECA/MNA Social Development AFTU2 West Africa Department Team World Bank African Development Bank MNSED 1818 H Street, N.W. Abidjan, Ivory Coast World Bank Room J 7-081 E-mail: c.malena@afdb.org 1818 H Street, N.W. Washington, D.C. 20433 USA Room H 4-187 Tel: (1-202) 473-4927 Mr. Alexandre Marc Washington, D.C. 20433 USA E-mail: Aharth@worldbank.org Human Resources Specialist Tel: (1-202) 473-2263 EC4MS E-mail: Adani@worldbank.org Mr. Ebrahim Mohamed Tasst World Bank Program Officer 1818 H Street, N.W. Ms. Ann Duncan AFMZW, Harare, Zimbabwe Room H 4-017 Principal Operations Officer World Bank Washington, D.C. 20433 USA AFTH1 1818 H Street, N.W. Tel: (1-202) 473-8403 World Bank Room E-mail: Amarc@worldbank.org 1818 H Street, N.W. Washington, D.C. 20433 USA Room J 10-051 Tel: (263-4) 730-967 Mr. Caroline Mascarell Washington, D.C. 20433 USA E-mail: Ejassat@worldbank.org Human Resource Manager Tel: (1-202) 473-5890 Social Protection Unit E-mail: Aduncan@worldbank.org Mr. Steen Lau lorgensen ECHSD Principal Public Sector Mgmt. Spec. World Bank Mr. Randa G. Flores HDDSP 1818 H Street, N.W. Consultant - LASHD World Bank Room H 9-097 World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA 1818 H Street, N.W. RoomS 10-039 Tel: (1-202) 473-0059 Room ! 7-178 Washington, D.C. 20433 USA E-mail: Cmascarell@worldbank.org Washington, D.C. 20433 USA Tel: (1-202) 473-4062 Tel: (1-202) 473-3630 E-mail: Sjorgensen@worldbank.org Ms. Betsy A. McGean E-mail: Rflores@worldbank.org Social Ecologist Ms. Shahnaz Kazi ECSHD Ms. Laura Frigenti Economist World Bank Social Scientist SA1PK 1818 H Street, N.W. AFTIl World Bank Room H 8-053A World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA 1818 H Street, N.W. Room 1 03, Islamabad, Pakistan Tel: (1-202) 458-5576 Room J 2-138 Washington, D.C. 20433 USA E-mail: Bmcgean@worldbank.org Washington, D.C. 20433 USA Tel: (92-51) 819-781 Tel: (1-202) 458-7229 E-mail: Skazi@worldbank.org Ms. Eileen MurraO E-mail: Lfrigenti@worldbank.org Opera.ons Officer Ms. Lucy H. Keough AFTH2 Mr. Paul Geli Senior Operations Officer World Bank Projects Advisor AFTH1 1818 H Street, N.W. AFTH2 World Bank Room J 0-031 World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA 1818 H Street, N.W. Room J 10-061 Tel: (1-202) 473-5068 Room J 9-026 Washington, D.C. 20433 USA E-mail: Emurray@worldbank.org Washington, D.C. 20433 USA Tel: (1-202) 473-4956 Tel: (1-202) 473-4628 E-mail: Lkeough@worldbank.org Ms. Maniza B. Naqvi E-mail: Pgeli@worldbank.org Consultant Ms. Christine Kessides ASTHR Ms. Gita Gopal Principal Economist, TWLUDR World Bank Senior Operations Officer Principal Economist 1818 H Street, N.W. AFTH4 World Bank Room H 3-132 World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA 1818 H Street, N.W. Room F 5K-108 Tel: (1-202) 458-1938 Room J 9-063 Washington, D.C. 20433 USA E-mail: Mnaqvi@worldbank.org Washington, D.C. 20433 USA Tel: (1-202) 473-3945 Tel: (1-202) 473-6835 E-mail: Ckessides@worldbank.org E-mail: Ggopal@worldbank.org 244 Annexes Ms. Deepa Narayan Mr. Willem Struben Ms. Juliana Weissman Senior Social Scientist Senior Operations Officer Senior Operations Officer ENVSP LASHD LASHD World Bank World Banlk World Bank 1818 H Street, NW. 1818 H Street, N.W. 1818 H Street, N.W. Room S 5-035 Room 1 7-017 Room I 7-001 Washington, D.C. 20433 USA Washington, D.C. 20433 USA Washington, D.C. 20433 USA Tel: (1-202) 473-1304 Tel: (1-202) 458-2532 Tel: (1-202) 473-2786 E-mail: Dnarayan@worldbank.org E-mail: Wstruben@worldbank.org E-mnail: Jweissman@worldbank.org Mr. Max B. Pulgar-Vidal Mr. Charles S. Szymanski Mr. Wijaya Wickrema Principal Operations Officer Economist Senior Program and Budgeting Officer AFTSA LCSHD EAPVP World Bank World Bank World Bank 1818 H Street, N.W. 1818 H Street, N.W. 1818 H Street, N.W. Room X 7-089 Room I 7-206 Room MC 9-131 Washington, D.C. 20433 USA Washington, D.C. 20433 USA Washington, D.C. 20433 USA Tel: (1-202) 473-4839 Tel: (1-202) 473-5733 Tel: (1-202) 458-1403 Emnail:Mpulgarvidal@worldbank.org E-mail: Cszymanski@worldbank.org E-mail: Ms. Marguerite Salah Mr. Philippe Tierney Wwickrema'worldbak.org Operations Officer Staff Assistant Ms. Lorene Y. L. Yp AFTH1 EDITA Division Chief World Bank World Bank SAlCO 1818 H Street, N.W. 1818 H Street, N.W. World Bank Room J 10-059 Room M 3-052 1818 H Street, N.W. Washington, D.C. 20433 USA Washington, D.C. 20433 USA Room T 8-101 Tel: (1-202) 473-8412 Tel: (1-202) 473-6486 Washington, D.C. 20433 USA E-mail: Msalah@worldbank.org E-mail: ptierney@worldbank.org Tel: (1-202) 458-0525 E-mail: Lyap@Dworldbank.org Ms. Ana Maria Sandi Mr. Robert J. van der Lugt Project Officer Principal Evaluation Officer WEClRO World BanD k Development Agencies 1818 H Street, N.W. 1818 H Street, N.W. Canada Room World Bank Blvd. Dacia 83 Room G 7-031 Bucharest, Romania Wasliington, D.C. 20433 USA Mr. George LeClerc Washington, D.C. 20433 USA Tel: (1-202) 473-1740 Senior Program Manager Tel: (40-1) 210-1804 E-mail: Rvanderlugt@worldbank.org West Africa Department Fax: (40-1) 210-2021 Ms. Julia Van Domele Canadian International Ms. Lynne D. Sherburne-Benz Economist Development Agency (CIDA) Economist LASHD 200 Promenade du Portage PGP World Bank Hull, Quebec, KIA OG4 Canada World Bank 1818 H Street, N.W. Tel: (1-819) 994 3762 1818 H Street, N.W. Room 1 7-061 Fax: (1-819) 953 5834 Room S 10-133 Washington, D.C. 20433 USA Mr. Michel PerrauL Washington, D.C. 20433 USA Tel: (1-202) 473-5736 Consultant Tel: (1-202) 473-8432 E-mail: Jvandomelen@worldbank.org West Africa Department E-miail: Cnda nentoa Lslierburnebenzworlcbank-org MOperations Specialist Development Agency (CIDA) Mr. David J. Steel LCSHD 200 Promenade du Portage Principal Operations Officer World Bank Hull, Quebec, K1A OG4 Canada MNSH-D 1818 H Street, N.W. Tel: (1-819) 994 3762 World Bank Room I 7-156 Fax: (1-819) 953 5834 1818 H Street, N.W. Washington, D.C. 20433 USA Room H 9-025 Tel: (1-202) 473-9777 Washington, D.C. 20433 USA E-mail: Dwarren@worldbank.org Tel: (1-202) 473-2522 Emi:Dsteelb3wor1dbanlc.org Ms. Elizabeth Waters E-mail: Dsteel~worldbank.org Country Officer Ms. Ellery T. Stokes Dominican Republic Consultant LCC3C AFTII World Bank World Bank 1818 H Street, N.W. 1818 H Street, N.W. Room 1 4-123 Room J 2-175 Washington, D.C. 20433 USA Washington, D.C. 20433 USA Tel: (1-202) 473-8881 TeL: (1-202) 473-4342 E-mail: Ewaters@worldbank.org E-mail: Estokes@worldbank.org List of Participants 245 Chile Germany Mr. Adrian Hadom Head Mr. Torsten Wetterblad Ms. Ruth Erlbeck Department of Policy and Research Senior Policy Advisor Head Swiss Development Regional Department for Policy Unit Corporation (SDC) Latin America German Development EDA/DEZA Swecish International Service (DED) Beme, 3003 Switzerland Development Cooperation Kladower Damm 299 Tel: (41-31) 322 3451 Agency (SIDA) Berlin, Germany Fax: (41-31) 324 9437 c/o CEPAL Tel: (49-30) 36 88 11 73 Casilla 179-D Fax: (49-30) 36 88 12 71 Mr. Seydou Idani Santiago, Chile Consultant Tel: (56-2) 210 2542 Mr. Weiner Neuhauss Development Policies Department Fax: (56-2) 208 0252 Sector Economist International Labour Social Policy Department Organisation (ILO) KFW 4, Routes des Morillons ,8te d .Ivoire Frankfurt, 60325 Germany Geneva, 22 Switzerland Cote d Ivoire Tel: (49-69) 7431 2105 Tel: (41-22) 799 6139 Mr. Felix Nsom Bongjoh Fax: (49-69) 7431 3746 Fax: (41-22) 799 6489 Education Analyst Mr. M. Radwan Human Resources Division, Development Policies Department South Region Japan International Labour African Development Bank (AFDB) Organisation (ILO) B..V. 316 r. Shji Nambo 4, Route des Morillons 08 B.P. 1104 Economic Advisor 4 ot e oiln Abidjan, 08 Cote d'Ivoire Research Institute of Development Geneva, 22 Switzerland Tel: (225) 20 42 49 Assistance Tel: (41-22) 799 6906 Fax: (225) 20 49 02 Overseas Economic Cooperation Fax: (41-22) 799 6867 Fund of Japan Mr. Theophilus 0. Fadayomi 1-4-1 Ohtemachi Cayodaku Senior Demographer Tokyo, 100 Japan United States Environment and Sustainable Tel: (81-3) 3215 1892 Development Unit Fax: (81-3) 3215 4376 Mr. Carlos Gallego African Development Bank (AFDB) Organization of American States (OAS) P.B. 1387 1889 F Street, NW. Abidjan, C^te dIvoire TWashington, D.C. 20006 USA Tel: (225) 20 5368 The Netherlands Tel: (1-202) 458 3641 Fax: (225) 20 50 33 Ms. Jose Van Hussen Fax: (1-202) 458 3744 Head of Social Policy Division Ms. Goodman Social and Institutional Evaluation Division France Development Department Inter-American Development Bank Ministry of Foreign Affairs 1300 New York Avenue, N.W Mr. Lucien Cousin Bezuidenhoutseweg 67 Washington, D.C. 20015 USA Chef de Bureau P.O. Box 20061 Tel: (1-202) 623 2716 Departement de Developpement The Hague, Netherlands Fax: (1-202) 623 1558 Institutionnel Tel: (31-70) 348 5825 Ministere de la Cooperation Fax: (31-70) 348 5366 Mr. Alejandro Grinspun 20 rue Monsieur Special Advisor on Poverty Paris, 75007 France Social Development and Tel: (33-1) 53 69 43 92 Switzerland Poverty Elimination Division Fax: (33-1) 53 69 41 74 United Nations Development Mr. Azita Berar-Awad Programme Mr. Claude Praleaud Head of Unit 1 UN Plaza Room 2056 Chefde Bureau Development Policies Department New York, NY 10017 USA Bureau collectivites Locales et International Labour Tel: (1-202) 906 6094 Developpement Urbain Organisation (ILO) Fax: (1-202) 906 5313 M20st re de la Coopuration 4, Route des Morillons Paris,u75700 Foneur Geneva, CH-1211 Switzerland Mr. Peter Ide Paris, 75700 France Tel: (41-22) 799 6906 Project Officer Tel: (33-1) 53 69 41 52 ~ Fax: (41-22) 799 6867 Overseas Economic Cooperation Fax: (33-1) 53 69 41 64 Fund of Japan Mr. Eric de Vries 2100 Pennsylvania Avenue, N.W. Official Suite 535 Development Policies Department Washington, D.C. 20037 USA International Labour Tel: (1-202) 463 7492 Organisation (ILO) Fax: (1-202) 463 7496 4, Routes des Morillons Geneva, 22 Switzerland Tel: (41-22) 799 6139 Fax: (41-22) 799 6489 246 Annexes Mr. Sam Morley Ms. Elaine Zuckermann Mr. Meinc Pieter van Dijk Senior Consultant Consultant Senior Economist Social Programs Division International Development Urban Management Department Inter-American Development Bank Bank (IDB) Institute for Housing and Urban 1300 New York Avenue, N.W. 1443 S Street, N.W. Development Studies (ERASMUS) Washington, D.C. 20015 USA Washington, D.C. 20009 USA PB 1738 H 12-29 Tel: (1-202) 623 2716 Tel: (1-202) 623 3697 Rotterdam, 3000 DR Netherlands Fax: (1-202) 623 1558 Fax: (1-202) 623-1558/234 7722 Tel: (31-10) 408 2429 Mr. Ashok Nigam (home/fax) Fax: (31-10) 452 7986/404 56 71 Mr. Ashok Migam (oefx Economist Mrs. Despina Pascal Division of Evaluation, Policy Consultats and Obserers Consultant and Planning Training Department UNICEF International Center for 3 UN Plaza, TA - 27A Mr. Jeff Gates Entrepreneurial Studies New York, NY 10017 USA President c/o Bd. Dacia 83 Tel: (1-212) 824 6717 The Gates Group Bucharest, Romania Fax: (1-212) 824 6491 Tel: (40-1) 210 1804 Mr. Musunuru Rao Fax: (40-1) 211 2028 Mr. Benno Sander Consultant Director Mr. Jayampathy Charita Ratwatte Social Development and Education Mr. Bachir Oloude Managing Director Organization of American Chief Manager Business Development Center States (OAS) SERHAU - SEM 4-1/22 Sir Mohammed Macan 1889 F Street, N.W. 01 B.P. 2338 Marker Suite 320-R Cotonou, Benin Mawantha Washington, D.C. 20006 USA Tel: (229) 30 02 09 P.O. Box 2096 Tel: (1-202) 458 3438/3210 Fax: (229) 30 06 26 Colombo, 3 Sri Lanka Fax: (1-202) 458 3744 Mr. Harley Johnson Tel: (94-1) 72 44 52 7/44 66 67 Mr. Gabriel Siri Vice President of Development Fax: (94-1) 54 1170 Consultant C.A.C. International Mr. John Blaxall Social Programs Division 3575 Boul. St-Laurent, Suite 302 Consultant (Former Bank Chief Inter-American Development Montreal, H2X 2T7 Canada 1742 Abbey Oak Drive Bank (IDB) Tel: (1-514) 848-9993 Vienna, VA 22182 USA 1300 New York Avenue, N.W. Fax: (1-514) 982-6182 Tel: (1-703) 242 1496 Washington, D.C. 20577 USA Mr. Piet Goovaerts Fax: (1-703) 242 7666 Fax: (1-202) 623 1394 Civil Architect Mr. John Feldmann Fax.:k 1-202 623 3694 Consultant International Executive Director Mr. Peter Sollis 870 Les Vertes Campagnes Center for Ethics Inter-American Development Bank Gex, F-01170 France United States Washington, D.C. USA Tel: (33-4) 50 41 45 92 Fax: (1-202) 623-1429 Fax: (33-4) 50 41 78 16/50 4145 92 Mr. Mamadou Sedi Ambassador Mr. Roy Thomasson Mr. Nubar Goudsouzian Embassy of Senegal Principal Specialist Consultant 2112 Wyoming Avenue, NW. Unit for Social Development Georgia Washington, D.C. 20008 USA and Education Mr. Renato Nardello Tel: (1-202) 234 0540 Organization of American Programme Manager States (OAS) Development Researchers' Network 1889 F Street, N.W. via NIEVO 62 Room 320 Rome, 00153 Italy Washington, D.C. 20006 USA Tel: (39-6) 581 6074 Tel: (1-202) 458 3641 Fx 3-)5169 Fax: (1-202) 458 3744 Fx 3-)5169 Mr. Dorin Vakolovskij Mrs. Maria Eugenia Zavala Moldova Academy of Economrics Economist Moldova Office of the ControllerMooa Inter-American Development Bank Mr. Leo Sinke 1300 New York Avenue Infrastructure Advisor Washington, D.C. 20577 USA Private Consultancy Firm Tel: (1-202) 623 3693 Group 5 Consulting Engineers Fax: (1-202) 623 3739 Londensekaai 13 MNiddelburg, 4331 JG Netherlands Tel: (31-1186) 41632 Fax: (31-1186) 43322 Annex 3: International Workshop Credits Steering Committee Manuel Chiriboga, NGO-World Bank Committee Eduardo Diaz Uribe, La Red Social de America Latina y el Caribe Prem Garg, Quality Assurance Group, World Bank Ishrat Husain, Poverty Reduction and Economic Management, World Bank Tariq Husain, Learning and Leadership Center, World Bank Vinod Thomas, Economic Development Institute, World Bank Magatte Wade, AFRICATIP Task Manager Anthony G. Bigio, Economic Development Institute, World Bank Working Group Soniya Carvalho, PREM, World Bank Michael Eddy, EDI, World Bank Angela Gamez, EDI, World Bank Caroline Boyer de la Giroday, EDI, World Bank Jo Hindriks, EDI, World Bank Hoveida Nobakht, LLC, World Bank Najma Siddiqi, NGO Unit, World Bank Deepali Tewari, EDI, World Bank Panel of World Bank Advisors Supporting Agencies Jacob Bregman, South Asia T. 0. Fadayomi Tim Campbell, Latin America African Development Bank Christopher Chamberlin, East Asia Jane Touzel Laura Frigenti, Africa Canadian International Development Agency Margaret Grosh, Policy Research Azita Berar-Awad Alberto Harth, Africa International Labour Office Steen Jorgensen, Social Protection Benno Sander Christine Kessides, Transport, Water, Urban Organization of American States Alexandre Marc, Eastern Europe and Central Asia Khalid Siraj, Financial Sector Development External Advisor David Steel, Middle East and North Africa Willem Struben, Latin America Jane Covey, NGO-World Bank Committee 247 DOLOMBIA GERMANY ISRAEL Mundi-Prensa Mexico S.A. de C.V POLAND SWEDEN DiStributors of InfoenlaceUL[da. UNO-Vedag Yozmot Literature Ltd. c/Rio Panuco, 141-Colonia Cuauhtemoc Intemational Publishing Service Wennergren-Williams AB Iorld Bank Carrera6No.51-21 PoppelsdorferAlleeS5 PO. Box 56055 06500 Mexico, D.F Ul. Piekna 31/37 P0. 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