Page 1 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB2859 Project Name Additional Financing for Colombia Social Safety Net Project (Ln. 7337) Region LATIN AMERICA AND CARIBBEAN Sector Other social services (100%) Project ID P104507 Borrower(s) REPUBLIC OF COLOMBIA Implementing Agency Environment Category [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) Date PID Prepared December 5, 2007 Estimated Date of Appraisal Authorization December 1, 2006 Estimated Date of Board Approval March 15, 2007 1. Key development issues and rationale for Bank involvement Colombia’s recent history requires a re-thinking of the Government’s role in the provision of social services. For decades, Colombia sustained positive growth rates, with declining poverty rates despite ongoing violence. At the same time, social insurance and safety net programs emerged in an ad hoc manner to address specific needs of certain segments of the population, leading to fragmentation of programs, poor targeting of services, competing incentives, and general inefficiency. Economic growth was largely considered as sufficient to meet most social demands. When the economic crisis hit in 1999, the government was not well prepared to meet the emerging social demands and was unable to quickly build a response mechanism due to fiscal constraints. Persistent shortfalls in human development. Two million school-age children and youth, primarily from poor families, are out of school. More than two million poor citizens are not insured, and inefficient hospitals providing inadequate care continue to fight for existence. Violence has eroded human capital by limiting access to education and health care in affected areas. Family life has been seriously disrupted with women and children being the most vulnerable. Government response and reforms. By 2003, when Colombia began to emerge from the economic crisis, the Government of Colombia (GOC) had already initiated an aggressive agenda to reform its social protection and insurance system in order to improve efficiency in social spending, while expanding coverage to the most needy and excluded and creating a crisis response system: a) To provide immediate response to the crisis, a temporary five-year Red de Apoyo Social (Social Safety Net, RAS) pilot was created in 2000 including the Familias en Accion, Empleos en Accion , Jovenes en Accion programs. b) To improve the supply of social services, the decentralization law 715 passed in 2001, linked federal transfers to states and municipalities to outputs. c) The National Development Plan for 2002-2006 devotes two of its four main lines of actions to these social development objectives. d) To reduced the cost of hard-to-employ workers, GOC enacted the labor reform law 789 in late 2002, which also introduced other social protection and assistance provisions; and e) To consolidate the actions of the health and labour ministries, in 2003, the Ministry of Social Protection (MSP) was created. Page 2 2 Bank support for the reform agenda. This reform measures have received sustained support from the Bank through lending and sector work, including initial funding for the RAS program (Human Capital Development Project; Community Works Project), sustaining the reform agenda during the transition of GOC administrations (Social Sector Reform Loan (SECAL), and broadening the effort, First, Second and Third Programmatic Labor Reform and Social Structural Adjustment Loan, PLaRSSAL I, II, and III, and a companion Technical Assistance Loan (TAL). The initiatives supported by the Bank are impressive, but they are only the beginning of a broader effort to reform Colombia’s social protection and insurance schemes. While the ongoing TAL has begun to support diagnostic studies and institution building for a social protection system, GOC has requested further technical and financial support from the Bank and IDB both to expand the Familias en Acción program and to accompany the reforms. Since 2004, on the side of economic growth, employment and poverty reduction, there have been sizeable gains. Still, Colombia faces very high levels of poverty and, despite recent progress, income inequality remains pervasive. Importantly, the country has advanced in meeting its Millennium goals (but not all), providing the poor with a more extensive safety net, and expanding access by the poor to key social services, such as low cost transport services, education and health insurance coverage. There has been a substantial shift in spending towards the social sectors, US$1 billion per year, or roughly 3.4 percent of total spending. The quality of this spending has improved via targeting. The Rationale for Additional Financing. The additional resources are needed in order for the Government to scale-up further the Familias en Accion Conditional Transfer Program to enhance development impact, starting early next year, sooner than had been envisaged when the Original Project was prepared and negotiated. When the Colombia Social Safety Net Project was negotiated in mid-2005, the amount of financing reflected the decision of the Government not to assume that the Program would necessarily continue after the 2006 elections. In any event, the Government of President Uribe won reelection and has decided to expand the Program. The goal for the scale-up is about 1.2 million beneficiary families by mid-2007, including displaced (200,000) and those targeted with SISBEN (1 million), an increase of roughly 70%. This expansion would broaden the Program’s demonstrated impact and development effectiveness. The World Bank and the IDB are working with the Colombians on the development of a Program to support the implementation of a broader Government strategy to alleviate extreme poverty, (Program for Extreme Poverty – PEP) which is likely to build upon the base of Familias en Accion, but further work is needed on the design of that intervention. Also, more experience with ongoing pilot programs time is needed before deciding on possible changes in design for Familias en Accion which should be incorporated when the Program moves to a greater extent into large cities. The Bank’s sustained support for the Government’s reform agenda. The proposed activities are aligned with the current Country Assistance Strategy (CAS) for Colombia, approved in December 2002, and with t he CAS update, presented to the Bank’s Board in September 2005. In particular, the expanded activities would contribute by (i) sharing the fruits of growth by providing a strengthened social safety net to those who are not benefiting from the renewed growth; and (ii) contributing to further economic growth by investing in the education and health of today’s poor children; and (iii) the fourth pillar added in the CAS update of building the foundations of peace, through support for the expansion of the Familias en Accion Program to displaced persons. Page 3 3 2. Proposed objective(s) The proposed expansion of the number of families participating in the Familias en Accion Program is consistent with the Original Project development objective of strengthening the coun try’s social safety net by consolidating and expanding the successful Familias en Accion Program. The Additional Financing would support the Familias en Acción program to expand from nearly 600,000 to 1 million families largely (84%) in municipalities where the Program is already operating and to build up the successful pilot of arranging for banking services in nearby towns in 167 municipalities without banking facilities themselves. 3. Preliminary description The Additional Financing would finance cash transfers (grants) to poor families linked to compliance with key human development conditionalities. Under the current Familias program these include: a) assuring that children 0-5 have all vaccinations and growth monitoring controls, according to the MSP protocols; and b) assuring that children 6-17 years of age are enrolled in schools and regularly attending classes. The goal of expanding to nearly1.0 million beneficiary families targeted using the SISBEN is made up of the following: (1) in 220 municipalities, the continued participation of 222,000 families who have been registered over 2005-2006, already using the updated SISBEN; (2) in 640 municipalities, the continued participation of 205,000 families who were registered for the Program using the older version of the SISBEN, but who have maintained their eligibility using updated information, as well as an estimated 460,000 new families qualifying based on the updated SISBEN; and (3) the extension of the successful pilot of arranging for banking services in nearby towns in 167 new municipalities without banking facilities themselves, where about 100,000 families would benefit. In addition, Familias intends to double the number of displaced families participating in the Program from the current level of 100,000. This extension would be financed by government funds only. All of the additional resources requested will go to finance all or part of the estimated bimonthly payment cycles of April, June, August, and October 2007, after which the funds would be exhausted. The Project would continue to be implemented according to procedures defined in its Operational Manual. Implementation Arrangements for the Additional Financing : All implementation arrangements would continue to be the same as under the Original Project. The implementing agency for Familias en Accion would continue to be the Administrative Departmentt of the Presidential Office in charge of the Investment fund for Peace (DAPR-Accion Social – FIP). The agency has the capacity to manage the larger Program. First, this scale-up continues, albeit at an accelerated rate, the expansion of the Program which has been taking place since the pilot started in 2002. Second, 84 percent of the expansion would take place in municipalities where the Program is already operating. Third, since payments are handled through the banking system, an increase in the number of beneficiaries is not expected to pose problems. Page 4 4 In fact, the banks will gain as the agreements set a fee per payment. Fourth, the rules for municipal participation in the program will not be changed. Municipalities must guarantee the availability of the pertinent health and education services before entering the Program. In addition, they must provide the appropriate number of staff to coordinate the Program (set by a formula based on the number of families in the locality) and guarantee the necessary working conditions for them. Safeguard policies that might apply . The expansion of the coverage of the Program would not raise the environmental category of the Original Project which was classified as C. There are no unresolved safeguard problems. The original project triggered the safeguard policy relating to indigenous peoples. The October 2006 supervision mission reviewed progress on the action plan. The management of the Program has transmitted to the Bank municipal data containing information regarding indigenous participants in Familias en Accion. In addition, the planned study to identify the specific needs of ethnic populations, promotion strategy, identification of training needs and promotion of more cooperation with health facilities, has been contracted and results are expected to be available by mid-2007. The Bank team reiterated in the aide-memoire prepared at the end of the October 2006 supervision visit, the recommendation of the action plan that the new registration form incorporate a question regarding the beneficiary’s ethnicity. The additional financing would not lead to any new safeguard issues beyond those of the ongoing project, but in the new areas of project expansion (167 municipalities), the new Indigenous Peoples Policy (OP 4.10) would apply. There are 28 municipalities which contain indigenous communities for which OP 4.10 would apply. In addition, the scale-up would expand Program coverage in Afro-Colombian populated areas as 53 municipalities have a majority of Afro-Colombian population. The Government has decided to expand the planned study intended to develop a program strategy for ethnic populations with special focus on the program's promotion activities, targeting procedures, training needs and payment procedures by adding a test of its recommendations in 3 pilot areas in order to develop a special annex for the operational manual. The scale-up does not involve any exceptions to Bank policies. The study described in the paragraph above would incorporate a consultation process around the overall approach and framework, to ensure that issues of culturally appropriate benefits and broad community support are included in the project activities. The Government and the Bank will update the ongoing project’s Indigenous Peoples Development Plan (IPDP) by disclosing a document containing the following information by mid-March: · The contents of the conceptual and technical elements of the terms of reference of the study to be undertaken, its principal activities, and schedule. · Criteria for the selection of the indigenous communities in which the pilots will be carried out and detailed analysis of the population composition of the 167 new municipalities. · In regard to the Afro-Colombian communities, a description of the promotion strategy as well as the progress on training which the program is currently carrying out. . The results of the consultations will be published in April prior to the initiation of the pilots. The Bank will supervise the process of access in the program for Afro-Colombian populations and will monitor the progress on the study and the application of the pilots in order to ensure the application of OP 4.10. Once the findings of the pilots are available, the IPDP will be updated and issued as an Indigenous Peoples Plan (IPP) as per OP 4.10. At the request of the Office of the Regional Vice-President for the Latin America Region, the adequacy of the control and accountability mechanisms in the Familias en Accion Program recently was reviewed along with other Conditional Transfer Programs in the Region supported by the Bank ( Control and Accountability Mechanisms in Conditional Transfer Programs: A Special Review of Programs in LAC, Page 5 5 August 2006). The findings were positive for the Program. Lines of authority and accountability are well-defined and aligned. Targeting results have been good, and there has been a recent recertification of eligibility according to the SISBEN, the results of which would be used in the expansion early next year. Appeals processes, as well as social accountability mechanisms are well established in the Program. Compliance with conditionalities is being verified sensibly and payment processes are subject to good controls. A regular program of operational audits is used by Program management to improve implementation. The findings of previous audit reports have been positive. The proposed expansion is not expected to substantially increase risks. One, the expansion will be based on a recertification of the proxy means instrument, the process of which benefited from technical assistance from the Inter- American Development Bank. Second, the expansion will continue the control and accountability mechanisms which have proven effective, in particular use of the SISBEN for targeting, explicit agreements between the Program and local government, and operational audits which would provide timely information on implementation experience. In order to ensure that fiduciary and accountability risks continue to be well managed in the scaled-up Program, during supervision the Bank would review the results of the periodic operational audits as well as the results of registration by municipality (i.e. the share of potential families registering), and other disaggregated Program indicators (% of families complying with conditions and % of families being paid), service indicators on payment processes (no. of payments returned, complaints about payments) and no. of appeals, and undertake spot checks of the experiences of the Citizen Oversight Committees at the municipal level. 4. Safeguard policies that might apply [Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project and in what ways? What actions might be needed during project preparation to assess safeguard issues and prepare to mitigate them?] Among the beneficiaries targeted by this project are the poor in Colombia's indigenous and Afro-Colombian communities. Currently in 30 of the municipalities where the program operates, there is a high share of indigenous population. The original project triggered the safeguard policy relating to indigenous peoples.A rapid social assessment (including consultations) was conducted in April 2005 in 3 communities, two with indigenous communities, and one with Afro-Colombian population, to identify ways in which the project design should be adjusted to ensure eligible indigenous and Afro-Colombian families are reached and served by the program in a culturally appropriate way. The assessment drew from the experience of ethnic beneficiaries already enrolled in the Familias en Accion program which proved to be a rich resource. Based on the assessment, an Indigenous People's Development Plan was elaborated and agreed with the Colombian authorities. Environmental safeguards do not apply to the project. The additional financing would not lead to any new safeguard issues beyond those of the ongoing project, but in the areas of expansion (the 167 new municipalities) the new Indigenous Peoples Policy (OP 4.10) would apply. While the majority of the project area would remain the same, this project would expand into additional Indigenous and/or Afro-Colombian areas. Among the 167 new municipalities, 45 contain indigenous people, in 23 the indigenous population exceeds 10 percent and 7 have a majority of indigenous population. There are 28 municipalities which contain indigenous communities for which OP 4.10 would apply. Page 6 6 5. Tentative financing Source: ($m.) Borrower 40.3 International Bank for Reconstruction and Development 105.0 Total 145.3 6. Contact point Contact: Theresa Jones Title: Lead Operations Officer Tel: (202) 473-5309 Fax: (202) 522 0050 Email: Tjones2@worldbank.org