Documentof The World Bank FOROFFICIALUSEONLY ReportNo: 41867-BO PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OFSDR 10.9MILLION (US$17 MILLIONEQUIVALENT) TO THE REPUBLIC OF BOLIVIA FORTHE INVESTING INCHILDRENAND YOUTH PROJECT February7,2008 HumanDevelopmentSectorManagementUnit Bolivia,Ecuador,PeruandVenezuelaCountry ManagementUnit LatinAmerica andthe CaribbeanRegion This document has a restricteddistributionand may be usedby recipientsonly in the performanceof their official duties. Its contents may not otherwisebe disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: January 2008) Currency Unit = Bolivian Bolivianos (Bs) 1Bs = US$O.13 US$l.OO = 7.55 BS FISCAL YEAR January 1 - December31 ABBREVIATIONSAND ACRONYMS AAA Analytical and Advisory Services AMN Social Protection Area for Mothers and Children inthe PlanningUnit (MOH) APL Adjustable ProgramLoan AU Administrative Unitswithin the Ministry of Health and Sports AUTAPO Fundaci6n Apoyo a las Universidades de Tarija y Potosi CCT Conditional CashTransfers CEA Communities in Action StrategyEstrategia de Comunidades en Accion CFAA Country Financial Accountability Assessment CR ReciprocalCommunities StrategyEstrategia de Comunidades Reciprocas cs Solidarity Communities StrategyEstrategia de Comunidades Solidarias CONAN National Council for Food and Nutrition CONAPES National Council for Economic and Social Policy DILOS Local Health Boards DOFEP Departmental Office for the FirstEmployment Program EDIMO Labor Intensive Decent Job Program FA0 UnitedNations FoodandAgriculture Organization FCF Fortified Complementary Food FEP M y FirstDignifiedJob FirstEmployment Program GAIN Global Alliance for ImprovedNutrition GDHI General Direction of Health Insurance IDA InternationalDevelopment Association IDH Direct Tax on Hydrocarbons ICAP Training Institute ICY Investing in Children and Youth Project IEC Information and Education Campaigns IFR InterimUnaudited Financial Report IPP Indigenous People's Plan IRR Internal Rate of Return IT Information Technology JPP Juancito Pinto Program LAC Latin America andthe Caribbean M O H Ministry of Health and Sports M C A Mother and Child Area inPlanningUnit (MOH) MCP Social ProtectionProgramfor Mothers and Children MIS Management Information System M O L Ministry of Labor MDP Ministryof DevelopingPlanning MDRI The Multilateral Debt Relief Initiative 11 FOROFFICIAL USE ONLY M O U Memorandum of Understanding NUFEP National Coordination Unit within the Ministry of Labor NDP National Development Plan of Bolivia OM Operational Manual PAHO Pan American Health Organization PASS Payment agencies PHRD Policy and HumanResource Development JapaneseGrant for Project Preparation PLANE National Employment Plan POA Annual OperationalPlan PROPAIS Community Driven Small-scale Infrastructure Program RINN Rural Integral NutritionalNetworks RPS-DIC Social Protection and Integrated Community Development Network SEDES Departmental Health Service SIGMA Bolivian IntegratedFinancial System SNIS National Health Information System SUM1 Maternal and Infant Universal Insurance System sus Seguro Universal de Salud (Universal Health Insurance) TCU Technical Coordination Unit within the Ministry of Developing Planning M C A Mother and Child Area within the Ministry of Health and Sports UDAPE Economic and Social Policy Analysis Unit UDPE DepartmentalUnitsfor Employment Promotion UNFPA UnitedNations PopulationFund UNI Integral Nutrition Unit UNICEF UnitedNations Children's Fund VAM Food Security andNutritionalVulnerability Index VIPFE Vice-Ministry of Public Investment and External Finance WFP UnitedNations World Food Program WHO World Health Organization ZMP Zero Malnutrition Program Vice President: Pamela Cox Country ManagedDirector: Carlos Felipe Jaramillo Sector Director Evangeline Javier Sector Manager: HelenaRibe Sector Leader Omar Arias Task Team Leader: Manuel Salazar a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. BOLIVIA INVESTING INCHILDREN AND YOUTH PROJECT TABLE OF CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ............................................................................... 1 1. Country and sector issues................................................................................................................. 1 2. Rationale for Bank involvement ...................................................................................................... 5 3. Higher level objectives to which the Project contributes ................................................................. 7 B. PROJECT DESCRIPTION ............................................................................................................... 7 1. Lending instrument .......................................................................................................................... 7 2. Project development objective and key indicators .......................................................................... 8 3. Project components ....................................................................................................................... 10 4. Lessons learned and reflectedin the Project design...................................................................... 14 5. Alternatives considered andreasonsfor rejection.......................................................................... 17 C. IMPLEMENTATION ...................................................................................................................... 20 1. Partnership arrangements............................................................................................................... 20 2. Institutionaland implementationarrangements............................................................................. 20 3. Monitoring and evaluation of outcomeshesults............................................................................. 24 4. Sustainability .................................................................................................................................. 26 5. Critical risks and possible controversial aspects............................................................................ 28 6. Loan conditions and covenants...................................................................................................... 33 D APPRAISAL SUMMARY . ............................................................................................................... 33 1. Economic and financial analysis.................................................................................................... 33 2. Technical........................................................................................................................................ 34 3. Fiduciary........................................................................................................................................ 38 4. Social.............................................................................................................................................. 39 5. Policy Exceptions and Readiness................................................................................................... 43 Annex 1: Country and SectorBackground ............................................................................................. 44 Annex 2: Major Related Project s Financedby the Bank and/or other Agencies .............................. 58 Annex 3: Results Framework and Monitoring ....................................................................................... 60 Annex 4: DetailedProjectDescription .................................................................................................... 68 Annex 5: Project Costs ............................................................................................................................. 82 i v Annex 6: ImplementationArrangements ............................................................................................... 83 Annex 7: FinancialManagement andDisbursementArrangements ................................................... 93 Annex 8: ProcurementArrangements .................................................................................................. 105 Annex 10: SafeguardPolicy Issues ........................................................................................................ 123 Annex 11: ProjectPreparationand Supervision ................................................................................. 136 Annex 12: Documentsinthe ProjectFile ............................................................................................. 137 Annex 13: Statement of LoansandCredits .......................................................................................... 138 Annex 14: Countryat a Glance .............................................................................................................. 140 Annex 15: IBRDMap 33374 .................................................................................................................. 141 V BOLIVIA BO: INVESTING INCHILDRENAND YOUTH PROJECT APPRAISAL DOCUMENT LATINAMERICA AND CARIBBEAN LCSHS-DPT Date: February 7,2008 Team Leader: Manuel Salazar Country Director: Carlos Felipe Jaramillo Sectors: Other social services (100%) Sector ManagerDirector: Evangeline Javier Themes: Other human development (P) Project ID: P101084 Environmental screening category: Not Required Lending Instrument: Specific Investment Loan Project Financing Data [ ]Loan [XICredit [ ]Grant [ 3 Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing (US$m.): 17.00 Borrower: Republic of Bolivia ResponsibleAgency: Ministry of Development Planning Graciela Tor0 Ibaiiez Av. Mariscal St. Cruz esq. Oruro Piso 5 L a Paz Bolivia Tel: (591) 2 2330704 Fax: (591) 2 2312641 Estimated disbursements(Bank FY/US$m) FY 2009 2010 2011 2012 2013 0 0 0 0 Annual 1.75 5.35 5.20 2.97 1.73 0.00 0.00 0.00 0.00 Cumulative 1.75 7.10 12.30 15.27 17.00 0.00 0.00 0.00 0.00 Project implementation period: Start: June 30,2008 End: December 31, 2013 Expected effectiveness date: June 30,2008 vi Expectedclosing date: December 31, 2013 Does the project depart from the CAS incontent or other significant respects? Ref. PAD A.3 [ No Does the project require any exceptions from Bank policies? Ref. PAD 0.7 [ ]Yes [XINO Have these been approvedby Bank management? [X ]Yes [INo [s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risksrated "substantial" or "high"? Ref. PAD C.5 [XIYes [ ]No Does the project meet the Regional criteria for readiness for implementation? Ref. PAD 0.7 [XIYes [ ] N o Project development objective Ref. PAD B.2, TechnicalAnnex 3 The proposedProject seeks to assist the Government of Bolivia instrengthening the effectiveness of its social protection systemby supporting the design, financing and implementation of two flagship interventions of the social protection network strategy, while enhancing its capacity to coordinate and monitor programs that are part of the social protection network. Inthis context, the development objectives of the proposed Project are to: (i) contribute to a reduction inthe prevalenceof chronic malnutrition inchildren ages 0-2 years old living inthe most vulnerable rural areas of the country; (ii)improve the management and operation of a skills development program for low income youth to enhance its effectivenessin increasingtheir ability to find and maintaina good quality job; and (iii) Government improve capacity to design and manage a coherent, measurable, and effective social protection network inthe mediumterm. Project description [one-sentence summary of each component] Ref. PAD B.3.a, Technical Annex 4 The Project comprisesof three components: Component 1- Implementing and scaling up the Social Protection Program for Mothers and Children to combat chronic malnutrition. The Social ProtectionProgramfor Mothers and Children (MCP) i s part of the Zero Malnutrition Program and will be implementedinthe 164municipalities targetedby the ZMP using the vulnerability index. The Project will support the Government to implementthe MCP inthe 52 most vulnerable municipalities where the programwill benefit about45,000 of the poorestfamilies inthe country Component 2 -Improvingand expanding a skills development program for low income unemployed youth living inurbanandperi-urban areas. The primary objective of this component is to improve the effectiveness the existing FirstEmployment Program as an intervention to increasethe employability of low income youth living inpoor urbanandperi- urbanareas that havecompleted at least the second year of secondaryeducation. Component 3 - Institutional strengtheningof the Social ProtectionNetwork (RPS-DIC). The component will helpthe Government meet the long-term objective of the RPS-DIC, which i s to builda sustainableandintegrated social protection system. vii Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 10 A summary of the Social Assessment, the major findings fromthe Social Assessment and how the Project addresses them, and this document are published on the webpage of UDAPE. Significant, non-standard conditions, if any, for: Ref. PAD C.7 Boardpresentation: There are no conditions of Board Presentation. Loadcredit effectiveness: Noconditions of effectivenss Covenants applicable to project implementation: None ... VI11 A. STRATEGIC CONTEXT AND RATIONALE 1. Country andsector issues 1. The Government of Bolivia (GOB) faces the challenge of improving the welfare and opportunities of the most vulnerable and poorest groups of the population in a sustainable manner. According to the National Development Plan (NDP) social policies are aimed to eradicate poverty and all forms o f exclusion and marginalization, and will be developed together with economic policies and the participation of stakeholders. Under the NDP the GOB i s investing in the implementation of strategies, programs and interventions to meet the needs of the most excluded groups: children, women, indigenous populations, the elderly, rural residents, the disabled, and the working youth. A core aspect of this strategy is the GOB'Seffort to break the intergenerational transmission of poverty by accelerating human capital accumulation through a social policy focused on children and youth. This strategy aims to address the risks associated with poverty from the earliest years of life, and to enhance individuals' capacity to take advantage of the opportunities offered by economic growth. This approach implies that the Government must expand and sustain social protection programs that complement structural social policies in education and health; in particular, the latter must be accompanied b y interventions to ensure that young children have the capacity to learn and the means to attend school, and that young people have opportunities to enhance their skills when they leave the basic education system. Focusing social protection on the poorest and most vulnerable children and youth will complement Government efforts to improve the quality and supply of education and health services and will provide the greatest leverage for human capital investment. Country and sector issues 2. Bolivia ranks among the poorest and most unequal countries in Latin America. In 2006 poverty incidence in Bolivia reached close to 60 percent, with 38 percent o f the population living under the extreme poverty line.' Although this represents a decrease from poverty levels in 1999, when national poverty reached 65 percent and extreme poverty was at 43 percent, continuing this positive trend in poverty reduction remains an urgent priority.' At the same time, inequality in Bolivia i s among the highest in Latin America and the world, and the gap may be increasing. This i s reflected in the vast disparities between the richest and poorest deciles -the richest ten percent of households receive 47 percent of total income, whereas the poorest decile receives less than one percent. These disparities are larger inrural areas. 3. Children and youth are particularly vulnerable to social risks. Nearly 60 percent o f the Bolivian population i s under 25 years of age. The poverty rate for this group i s well above the national average, and reaches over 80 percent among children under the age of 5 years in rural areas. In general, children and youth are more vulnerable to economic shocks and associated risks, particularly malnutrition, school drop outs, child labor, unemployment, and inactivity. In rural areas between 1993 and 2004, the reduction in childhood malnutrition rates has stagnated, especially among the poor. Primary enrollment among the poorest children fell 'Poverty lines based on per capita income. In 2006 the poverty line was equal to 339 bolivianos (US$42) and extreme poverty *189 bolivianos (US$23). Although there i s a slight overlap in the 95 percent confidence intervals for these estimates, they strongly suggest that a positive trend inpoverty outcomes has been re-establishedsince 2002. 1 from 84 percent in 2000 to 80 percent in 2004 and attendance from 84 percent to 79 percent during the same period; and open unemployment among individuals under 25 grew from less than 5 percent in 1996 to more than 14 percent in 2005. 4. The lack of access to quality health and nutrition services increases vulnerabilities among poor, rural and indigenous children. Access to health services i s difficult for poor families, not only because o f the lack of providers and specialized staff, but also because of income barriers, which prevent poor families from reaching services. For example, in 2003,7 out of 10 women reported lack of money as the most important problem in accessing health services when needed (80-88 percent among those from the two lowest income quintiles). Furthermore, more than 30 percent of rural poor pregnant women received no antenatal care, while 70 percent of babies younger than 1year had no postnatal check-ups, one of the lowest coverage rates inthe Latin America and the Caribbean Region (LAC). Less than 30 percent of the rural poor and indigenous women gave birth in health institutions and were attended by health professionals. The share o f the poor with health insurance i s estimated at six percent, less than a third o f the national average, while it i s estimated that less than 60 percent o f the poorest have access to the Maternal and InfantUniversal Insurance (SUMI) - the supposedly universal health service. 5. Chronic child malnutrition undermines efforts to reduce infant mortality, tackle poverty, and sustain economic growth. In 2003, chronic malnutrition affected one-third of Bolivian children under 5 years of age (42 percent in rural areas and over 50 percent among indigenous groups). Apart from the cost to the health system, chronic malnutrition leads to significant loss of life. It i s estimated that 50 percent of under-five mortality in developing countries i s related to malnutrition; moreover, severely malnourished children have more than a five times higher risk o f childhood death than healthy children. In Bolivia infant mortality reached 86 per one thousand live births in rural areas and 94 among indigenous communities in 2003. Even among survivors, malnutrition causes irreparable neural and physical damage, which can have severe long-term consequences for individual development and productivity, and can affect the economy as a whole.3 6. Malnutrition and poverty limit future opportunities. As a result of poor nutritional status, as well as low quality and insufficient basic and secondary education, a considerable proportion of youth do not reach tertiary education and enter the labor market at a disadvantage. On average, one in four Bolivians enrolls in tertiary education (only 3 percent among the lowest quintile). According to Government estimates, in the largest cities each year four out o f ten students completing secondary education enter the labor market, as they are not enrolled in tertiary or other post-basic education. In the 12 largest cities, where at least 1,000 students complete secondary education annually, more than 20,000 are expected to enter the labor market every year.4 7. Unemployment is particularly high among poor urban youth. As in other countries, a high share of youth unemployment i s linked to limited opportunities for new labor market entrants. Given their age, insufficient skills, and lack of job experience, poor youth experience higher rates of unemployment. This i s also coupled with a tendency for young people who do Alderman, H, J. Hoddinott, andB. Kingsley(2003) "Long Term Consequencesof EarlyChildhoodMalnutrition." It i s estimatedthat six percent enter the army and about 55 percent enroll in a university or a technical institution (UDAPE and Ministry of Education,2006). Estimatesincludepublic schoolsonly. 2 obtain employment to change jobs more frequently as they experiment with alternatives. While overall urban unemployment was 8 percent in 2005, unemployment for youth aged 18-24 reached more than 18 percent, and as much as almost twice that level among the poorest, at 34 percent. Unemployment can lead to a higher incidence of inactivity (youth out of school, out of work, and not seeking a job) and thus exacerbate the gap between skills and labor market demand, creating a vicious circle that makes it more difficult for young people to be integrated into the workplace and find productive employment. Youth between 15-25 years old who suffer from unemployment and inactivity in the early years of their working life (about 20 percent of poor youth in Bolivia) are more likely to be unemployed as older adults. Although unemployment i s higher among youth with complete secondary education, inactivity incidence especially affects those with incomplete secondary education. Social Protection in Bolivia 8. Spending on social protection programs in Bolivia is not high, given the level of need. Total social protection spending in 2006 was distributed as follows: (i) cash and in-kind transfers (including contributory pensions); (ii) community and local development; and (iii) programs for expanding access to social services, amounting to US$693 million, or 6.3 percent of GDP. Incontrast, the poverty gap, or total cost of bringing all households inBolivia up to the national poverty line in 2005, was 10.4 percent in 2005, and 2.7 percent for extreme poverty. In comparison with other countries in the region, Bolivia falls in the mid-range of spending on social program^.^ 9. The impact of the main social protection programs on poverty is mixed. In2006,48 percent of social protection spending6was allocated to the two largest cash transfer programs: Bonosol and Juancito Pinto. While the Bonosol program' has a significant impact on poverty among the elderly, especially in rural areas, the Juancito Pinto Program (JPP), which i s given to all children in public schools to increase enrollment, has low benefit levels and is universally targeted. GovernmentStrategy 10. Social protection is a priority for the Government. The Morales Administration has made poverty and inequality reduction through social protection interventions a core element of its National Development Plan (NDP). The GOB'Sapproach aims to accelerate progress toward the reduction of poverty, inequality and exclusion through greater emphasis on the community's own capacity to identify, prioritize, execute and monitor integrated development projects, and is based on a multisectoral and interinstitutional approach to service delivery. The Ministry of Development Planning recently finalized the design of its Red de Proteccidn Social y Desarrollo Integral Comunitario (WS-DIC) under the umbrella of the NDP. Including education, health andsocial protection. 'Excludingpensions.transfer Bonosoli s a cash programprovided to all persons aged 65 years old or older, equivalent to Bs. 1,800 (about $200) and paid out once a year. In November 2007 the Congress voted to replace the Bonosol with the Renta de Dignidad. The changes include reducingthe age for eligibility from 65 to 60, andincreasingthe level of the benefit from Bs. 1,800 (approximately$232) to Bs, 2,400 (approximately$309)per year. There has also beenan attempt to improvetargetingby excludingbeneficiariesof the contributory pension system. Also, the funding source was changed from the proceeds of capitalized firms to IDH resources, essentially changingthe distributionof funds betweendifferent levelsof government. 3 11. According to the Government decree creating the RPS-DIC, its objectives are to: (i) contribute to eradicating the structural causes of poverty and extreme poverty, reduce inequality gaps and eliminate all forms of exclusion; (ii) recover and strengthen the rights and capacities of communities; and (iii) strengthen community values, direct social control and transparency, the own organization practices of the local populations, and cultural and territorial identities through the sub-strategies of Comunidades en Acci6n (inrural areas); Comunidades Reciprocas (inurban areas); and Comunidades Solidarias (for vulnerable groups). RPS-DIC policies are designed along the following six principles: (i) integrality, (ii) territoriality, (iii) community-based a approach, (iv)poverty reduction, (v) self-management, and (vi) a multisectoral approach. The implementation of the RPS-DIC will be carried out considering the following three sub- strategies: (i) opportunitiesand social assets, including: (a) the inter-governmental Zero MalnutritionProgram (ZMP) which includes the Social Protection Program for Mothers and Children Program(MCP), a conditional cash transfer program aimed at preventing malnutrition through targetedinterventions for pregnant andlactating women and childrenunder the age of 5 years; (b)M y FirstEmployment Program (FEP), a new skills developmentprogram to increase the employability of youth living inpoor urbanand peri-urban areas; and (c) Juancito Pinto, acashtransfer program intendedto increase enrollment and reduce drop-out rates inprimary public schools. (ii) integratedcommunitydevelopment,includingthreenewinitiativesComunidadesen Accibn (CEA)a rural development strategy targeted to the 186poorest municipalities in the country, involving 19percent of the total population and 31 percent of the poor; Comunidades Recl'procas,the companion strategy for urban areas, which will be implemented inthe 17 poorest pen-urban areas; and Comunidades Solidarias, a set of programs directed at specific groups including the disabled, children-at-risk (including street children, child laborers, and children in prison), and the elderly. (iii) short-termtransitionprogramstogeneratetemporaryincome,includingPROPAIS,a community development programfocusing on small-scale infrastructure; and the Labor Intensive Decent Job Program (EDIMO), a new workfare program to be implemented in areas affected by natural disasters. 12. The implementation of these three sub-strategies lies on a number of government agencies. The Ministry of Development Planning i s responsible for the overall direction, coordination and monitoring of the opportunities and social assets strategy, which comprises programs under the responsibility of the Ministries of Education, Health and Labor (including those supported by this Project). The FPS (Social Fund) has a key role in the implementation, coordination and monitoring of the integrated community development and short-term transition programs only, and has no role in the opportunities and social assests strategy, which is the one supportedby the Project. 4 2. Rationale for Bank involvement 13. The Bank has been working closely with the GOB on socialprotection over the last several years, and the current operational work is a key part of this partnership. Since 2003, the Bank has supported the GOB'S efforts to consolidate social protection (SP) interventions through analytical work, particularly the Poverty Assessment and the Public Expenditure Review in2004 and 2005, respectively. Between 2003 and 2005 the Bank supported the GOB's SP strategy through programmatic operations, which included social protection components to strengtheninterventions and consolidate a mid-term strategy in an environment of political instability. The current Bank strategy for supporting the GOB in implementing its new social protection strategy involves a programmatic AAA in social protection, and the lending operation describedinthis document. 14. The Investing in Children and Youth (ICY) Project responds to Government priorities and is consistent with the three pillars of the Bank's Interim Strategy Note (ISN) for Bolivia for FY07-OS. The Bank and the GOB agreed to continue their collaboration through a work program comprising analytical and operational work to: (i) improve good governance; (ii) foster job creation; and (iii) promote social inclusion. The Project i s expectedto directly improve social inclusion by implementing and increasing the effectiveness of GOB priority programs targeted to both ends of the human capital formation chain -- children and youth. The operation will also have secondary benefits for the other two pillars. 15. The ICY Project supports the Government's social protection strategy through the implementation and scaling up of two flagship programs -The Social Protection Program for Mothers and Children (MCP) to support a reduction in chronic childhood malnutrition in rural areas, and the youth employment intervention M y First Employment Program (FEP), a program that is part of the GOB'S national employment strategy aimed at supporting low-income unemployed youth incities. The FEP is a component of the GOB's employment creation strategy launched in May 2007, while both programs are expected to support good governance through more efficient and transparent management. 16. The Project is closely coordinated with the Bank's analytical and operational human development program in Bolivia. The Social Protection AAA program, initiated in FY07, has been proceeding in parallel with Project preparation. The AAA i s a program of dialogue and evidence-based analysis which aims to support the implementation of the Bolivian social protection network (RPS-DIC), and is contributing analytical inputs and international experience to the Project's design. The first stage of the AAA program focused on diagnostic analysis of poverty, exclusion and vulnerability, including nutrition, and a stocktaking of existing social protection policies and programs. The second stage includes analysis of the potential of local institutions, including traditional indigenous structures, to contribute to service delivery; urban social protection; and international experience on community involvement in social protection. 17. The proposed Investing in Children and Youth Project will complement the Bank's Health Adaptable Programmatic Loan (APL) series to improve the country's health system. The 5 third phase of the APL series, prepared and approved in parallel and in close coordination with the I C Y Project , will be targeted to the same municipalities. The APL will finance complementary activities to enhance benefits to targeted families. Both operations will support the ZMP (see Annex 1 for details o f this program) by strengthening the supply o f basic health services through consolidation of the primary care network and enhancing affiliation to SUMVSUS, while the ICY Project will address demand-side (income-related) barriers to facilitate access of poor households to basic services and improve their nutritional status. Given the complementarity of the programs, the APL and the MCP will share and co-finance the management information system and the impact evaluation for the MCP. 18. The Project supports policy areas in which the Bank has acquired substantial expertise and can provide significant value-added. The operation will support the GOB in implementing, institutionalizing and increasing the effectiveness of two priority social protection interventions to enhance the human capital of children and youth. The Bank has acquired significant expertise on youth development programs, including skills training linked to internships. Since 2005 the Bank has approved and is supporting implementation of skills development programs linking vocational training and practical internships in Honduras, the Dominican Republic, and Argentina. Recent operational and analytical work, especially in Latin America, has produced valuable recommendations for the successful implementation o f these programs,8 and improvements for their effectiveness. 19. The Bank has significant experience in designing, implementing, and improving the operational arrangements and management of conditional cash transfer (CCT) programs to increase utilization of social services, and improve social indicators among the poorest. Although most CCTs in LAC have been in middle and upper-middle income countriesg, there are also valuable experiences in low-income (IDA) countries, such as Nicaragua and Honduras. Furthermore, the Bank has been very involved in CCT projects in low-income countries in other regions, including Cambodia, Bangladesh, Pakistan, and several Projects and pilots in Africa. Similarly, there are useful lessons from CCT programs linked to nutrition outcomes and outputs in low- and middle-income countries inLAC. Rigorous impact evaluations of Mexico's ProgresdOportunidades, Nicaragua's Red de Proteccio'n Social and Colombia's Familias en Accidn have shown that CCT programs have a positive impact in reducing chronic malnutrition (stunting), while the programs inEcuador's Bono de Desarrollo Hurnano, Mexico's Oportunidades, Brazil's Bolsa Alimentacao and Nicaragua's Red de Proteccion Social have significantly increased household food consumption". Other experiences involving CCTs and nutrition-related outcomes in which the Bank has provided technical assistance and/or financial resources include El Salvador's Red Solidaria, Panama's Red de Oportunidades and Peru's Juntos. In these and other experiences, the Bank has played a key role in the design and implementation of those programs and has learned valuable lessons to assist governments in linkingthese CCTs to standards on monitoring and counseling and achieving nutrition outcomes. Including the 2007 World Development Report; The Promise of Youth: Policy for Youth at-risk in Latin America and the Caribbean, Chief Economist Office, LAC, 2007; or Global Inventory of Interventionsto Support Young Workers, World Bank, 2007. Brazil, Chile, Colombia, Ecuador, El Salvador, Mexico, Panama, Peru. 10 Schady, N., and A. Fiszbein (2007) "Ayudando a reducir la pobreza en el corto y mediano plazo: Los programas de transferenciasmonetariascondicionadas(TMC) ", ppt., September. 6 3. Higher level objectives to which the Project contributes 20. The Project is expected to make a significant contribution to achieving the Government's social protection objectives articulated in the National Development Plan. One of the key pillars of the NDP is to improve the health status and educational attainment of the population, and increase the quality of employment opportunities (Bolivia saluduble y fomadu con empleo digno y pemunente). The GOB'S priority social policies are focused on eradicating poverty and promoting economic inclusion, through an integrated approach with sustainable efforts to create and enhance welfare and human development. The proposed Project's main themes -- child malnutrition, youth unemployment, and institutional strengthening--fully support these objectives, as they tackle three critical aspects of prevailing social policies. The component for reducing child malnutrition will contribute to improving the health status of pregnant mothers and children less than two years in selected poor rural areas, while the component on youth employment will improve the chances of poor young people in urban areas of obtaining permanent, decent jobs. The third component will contribute to improving the design and implementation of social policies by strengthening coordination among the various actors inthe public sector. 21. Interventions focused on pre- and post-school age children, combined with structural policies to improve the quality and coverage of education, offer the greatest potential for human capital formation. Therefore, children and youth are the most important targets for sustainable poverty reduction efforts within social policy. Investments in these groups seek to combine a long-term path to strengthenhuman development and tackle extreme poverty, with measures to address short term welfare needs and prevent further exclusion. The Project directly supports the three pillars of the NDP noted earlier. If successful, the Project will contribute to Government efforts to reduce risks faced by young children and the population aged 18-24 years, by strengthening their chain of human capital and skills attainment. 22. The Bank's Interim Strategy Note includes analytical and operational support to the GOB for the reform of its social protection strategy. As noted previously, the main goals established in the ISN are to enhance good governance and transparency; foster jobs through growth; and increase social inclusion by providing better services to the poor -- key aspects of the social protection strategy included in the Morales administration's National Development Plan. Specifically, the Project, along with the programmatic AAA, supports the GOB through investments in young children and low-income urban youth as an integral part of the RPS-DIC, but it also focuses on improving the operation and monitoring of the overall SP system. It is expected that in the mid-term, Bolivia will have a consolidated social protection strategy with strengthenedinstitutional, decision-making, and supervision arrangements. B. PROJECTDESCRIPTION 1. Lending instrument 23. The chosen lending instrument to support Bolivia's Social Protection Strategy is a Specific Investment Loan (SIL). The Project will support the GOB with the implementation of two flagship programs of its social protection policy and strengthen the management, 7 coordination and monitoring of its social protection network through a S I L for $17 million, plus GOB counterpart funds equivalent to $2.55 million. The Project will finance implementation and scaling up of the Social Protection Program for Mothers and Children (MCP), a conditional cash transfer program; a skills development program for low-income youths (FEP); and support for enhancingthe GOB'Scapacity to expandsuch programsnation-wide. 24. A SIL is considered the most adequate instrument to support the GOB at this stage. An Adaptable Program Loan (APL) was considered and rejected, since this type of instrument typically supports an already-defined strategy where it i s possible to envision the long-term evolution o f the phased operation, while inthis case the Government i s still formulating its social protection strategy. In addition, a SIL is an appropriate instrument to support a specific sector operation in the current Bank-Government collaboration transition period, as articulated in the Interim Strategy Note. Progress in Project implementation and preliminary results of the intervention will contribute to the preparation of a full Country Partnership Strategy (CPS) and the selection of a longer term systemic approach to social protection. 25. The SIL i s complemented by two other instruments: a PHRD grant which supported Project preparation, and the previously mentioned programmatic AAA in Social Protection to provide the analytical underpinnings for the design of these two key social programs. 2. Project development objective and key indicators 26. The proposed I C Y Project seeks to assist the Government in strengthening the effectiveness o f its social protection system by supporting the design, financing and implementation of two flagship interventions of the Morales administration's social protection strategy, while enhancing its capacity to coordinate and monitor programs that are part o f the social protection network. In this context, the development objectives of the Project are to: (i) contribute to a reduction in the prevalence of chronic malnutrition in children ages 0-2 years old living in the most vulnerable rural areas of the country; (ii) improve the management and operation of the skills development program to enhance its effectiveness in increasing low- income youths' ability to find and maintain a good quality job; and (iii) improve Government capacity to design and manage a coherent, measurable, and effective social protection system in the medium term, and develop instruments to improve inter-institutional coordination and monitoring. 27. Project progress will be tracked b y a comprehensive set of indicators found inAnnex 3, the most salient of which are: (i) The Project will contribute to reducing chronic malnutrition rates of children ages 0-2 years inthe poorest rural areas by boostingdemand for maternal and infant health and nutrition services. To this end, the Project will support the implementation of the MCP, as well as the strengthening of the Ministry of Health and Sports (MOH) to carry out, monitor and supervise the program. If the Project succeeds, it i s expected that pregnant mothers and children under 2 years of age inthe targeted municipalities will receive adequatepre-natal and post-natal assistance and support to monitor and, if 8 appropriate, correct, the growth and development of young children. The program, through the cash benefit, i s also expected to increase access to food among beneficiary households. Key indicators of progress towards this objective include: I Target values Key indicators for Objective 1 Baseline Pro.ect Endof Percentageof 2-year old children participating in the program with a height for age over 22 scores 38 percent 22 percent Proportion of children under 2 years old participating inthe program with percent complete bi-monthly check-ups percent (ii) To increasethe effectiveness of the FEP in enhancing the employability of low-income youth living intargeted cities, the Project will support improvements in mechanisms to target, register and follow up beneficiaries; measure their employability; select andcertify trainers; administer contracts with providers; and improve oversight and monitoring of educational courses and internships. Inaddition, the Project will partially finance the first phase of the program on the basis of a thorough evaluation which will inform improvements in the targeting, registration, and follow-up of beneficiaries. Ifthe Project achieves its objectives, the GOB will have the capacity to expand an integrated strategy to support unemployed poor youth, and the first round of training courses will be completed according to a set of indicators including: Target values Key indicators for Objective 2 Baseline Pro.ect Endof Targeting mechanism to select low-income youths is designed, tested and None Yes applied The Monitoring Information System i s designed and operational. I None Yes (iii) To improve the capacity of the Ministry of Development Planning to coordinate implementation and monitor programs in the social protectionnetwork, the Project will provide support to achieve specific goals inthe short and mediumterm. Inthe short term, the Project will finance technical assistanceto design, test and implement aregistry of beneficiaries of the RPS- DIC which will be the core of the social protectionmonitoring system. The Project will also finance technical assistance to help the Government define a mid-term social protection strategy. To follow up achievement of these objectives, the Project will monitor the following indicators: 9 Target values Key indicators for Objective 3 Baseline Pro.ect Endof Registryof Beneficiariesdesignedandtested, andbeneficiariesof the ZMP, FEP, PROPAIS, andJPPprogramsregistered None Yes Mid-termsocial protectionstrategy completedanddiscussedby I CONAPES". None Yes 28. Annex 3 provides additional details on these and other indicators, the sources of information for their monitoring, and the agenciesresponsible for their collection. 3. Project components 29. The $19.55 million Investing in Children and Youth Project, including $2.55 counterpart funds, will be implemented over 5 years and will consist of the following components: 30. Component 1 Implementing and scaling up the Social Protection Program for - Mothers and Children (MCP) to combat chronic child malnutrition ($12.4 million IDA funds; $2.5 million Government counterpart funds) The Project will contribute to the Government's strategy to reduce chronic malnutrition by implementing and scaling up a conditional cash transfers to families with pregnant women and/or mothers of children younger than two years of age. The objective of this intervention i s to create an incentive for very poor families to invest inthe health and nutritional status of young children and to provide monetary support to increase the food consumption of beneficiary households. The Social Protection Program for Mothers and Children (MCP) will be implemented in the 164 municipalities targeted by the ZMP. The Project will finance implementation of the MCP in the 52 most vulnerable municipalities, benefiting roughly about 45,000 families belonging to the poorest segment of the Bolivianpopulation. 31. The Investment in Children and Youth Project will be implemented in close coordination with the Health APL I11operation approved by the Board on January 24, 2008, including (i) of the municipalities supported by the Project through this most component are also part of the area of intervention of the APL I1and I11to strengthen supply of maternal and infant health services; (ii) implementation arrangements the within the Ministry of Health and Sports are similar for both projects (through the Planning Direction) to ensure not only adequate coordination between the projects, but also full institutionalization within the Ministry's administrative organization; (iii) the Management Information System for the Social Protection Program for Mothers and Children will be fully embedded in the SNIS (National Health Information System) which i s being fully updated by the APL I1and 111; and (iv) the impact evaluation of both projects will be developedjointly and financed by the APL 111, allowing a unique 11CONAPES, a ministerial level body, is the highest decision-making level within the executive branch of the Government. 10 opportunity to measure the impact of supply and demand interventions both combined and independently. This componentcomprisesthree sets of activities: 32. Sub-component 1.1Benefits for Mothers and Children to combat chronic malnutrition ($9.5m IDA, $2.0m GOB) - The Project will finance cash transfers, and associated administrative costs (the latter estimated to be roughly 3 percent of the total amount o f transfers) to beneficiaries during the first three years o f Project implementation. The MCP will provide cash transfers to mothers of beneficiaries o f the program subject to regular utilization of maternal and infant health services. 33. To ensure sustainability of the intervention the Project will finance the complete cycle of cash transfers to families; that is, the project will finance families registered in the program during the first three years of implementation, and will finance the transfers for the complete cycle of pregnancy and the first two years after birth. From 2011 on, GOB funds will increasingly finance cash transfers. Counterpart funds will complement financing for families registered until 2010, and additional funds will be allocated to start registering families from 2011.Annex 4 details the program's expansion plan. 34. Sub-component 1.2 Information, Communication and Education (ICE) Strategy ($0.3m IDA) - The Project will provide support to design and implement a comprehensive public information campaign to promote the program's goals and benefits, reinforce its messages and objectives, raise awareness among communities and eligible households, and improve understanding of the program among beneficiaries The Project will finance: (i) communication campaigns to promote the MCP and strengthen the public health messages of the program; (ii) training and workshops for beneficiary mothers to ensure that the program's lessons on maternal and infant health and nutrition are well understood; (iii)training and technical assistance to health staff involved in the MCP; and (iv) designing specific protocols for the counseling of individual beneficiaries. 35. Sub-component 1.3Management and Monitoring of the MCP ($2.5m IDA; $0Sm GOB) This sub-component is aimed at strengthening the technical unit within the MOH responsible for administering the MCP. The Project will enhance the operational capacity of staff, providing mechanisms to monitor, follow up, and oversee the program, and fund costs to administer the credit. Specifically, the subcomponent will: Stren&hen the Management Information System (MIS) for the MCP - The Project will support the GOB in designing and carrying out MIS instruments to administer the program, follow up physical and financial progress, and overseethe cash transfers cycle. Design and imulement social control and accountability mechanisms - The Project will strengthen governance of the MCP through improved oversight and accountability systems, in order to improve the program's operational features and to ensure that beneficiary rights, particularly those of indigenous groups, are respected. Process evaluation of the MCP Program - In order to help the MCP management team improve programexecution, the Project will finance a processevaluation once the MCP is fully operational in the first ten municipalities incorporatedinthe program. 11 Imuact Evaluation (E)-The results and outcomes of the MCP program will be rigorously measured through an independent impact evaluation, jointly conducted and financed by the Health APL I11 operation. Given the complementarity of both Projects, it was decided that ajoint impact evaluation would be the most useful alternative to measure the results on maternal and infant health of both projects. This will also allow a unique opportunity to measure the impact of supply and demand interventionsbothcombinedandindependently. Strengthening the Mothers and Children Area (MCA) at the MOH - The Social Protection Program for Mothers and Children will be administeredby the Mothers and Children Area created within the MOH administrative structure. The Project will support the consolidation of the MCA not only for coordinating the MCP Project, but also for enhancingits capacity to manage a portfolio of programs under responsibility of the MOH. Beneficiarv survew - The content of the previous activities will be adjusted, improved, and informed by beneficiary surveys designed and developed in the 2ndand4" years of the program, which will be carried out by the MCA in coordination with Unit of Analysis of Social and Economic Policies (UDAPE). 36. Component 2 -Improving and expanding a skills development program for low- incomeunemployedyouth livinginpoor urbanand peri-areas ($3.6m IDA; $0.05m GOB). The primary objective of this component i s to improve the effectiveness the existing First Employment Program as an intervention to increase the employability o f low-income youth living in poor urban and peri-urban areas who have completed at least the second year of secondary education. The FEP is a skills development program for poor youth, comprising a vocational in-class training session coupled with internships in private and public sector firms, in such a way that disadvantaged youth gain practical experience in a formal occupation and acquire life skills that help them succeed in the workplace. The GOB will scale up the FEP in three phases - first, the program will be launched by the Ministry of Labor (MOL) as a pilot in four cities (La Paz, El Alto, Santa Cruz, and Cochabamba) benefiting about 2,800 poor youth and financed by the Government. The second stage, financed by the Project, will comprise the operational and process evaluation of the pilot, and the required adjustment o f the model and its basic parameters, as well as the institutional and implementation arrangements. The third stage will include the expansion of the program in the previous cities and at least two additional mid- size ones, to benefit about 13,000 youth. After the second phase has been fully accomplished and the institutional and implementation arrangements reviewed and, where appropriate adjusted, the Project will also fund the first round of training courses and internships, benefiting roughly 4,000 low-income youths. 37. Sub-component 2.1. Improving the effectiveness of the FEP ($0.3m IDA). The objective o f this sub-component i s to support the Government in defining the most adequate model of intervention to increase the effectiveness of the FEP, by financing a process evaluation of the pilot program to inform program managers of necessary adjustments in design and operations. A key aspect to be reviewed during the pilot phase and the process evaluation is the targeting mechanismto select low-income youths. While the pilot phase, fully financed by the GOB, will target youths from public schools living inpoor areas o f selected cities, the Project will provide funds and technical assistance to identify and test other variables and adjust the mechanismto ensure that only the most needed are registered inthe program. 12 38. Sub-component 2.2. Strengthening the institutional capacity and implementation arrangements of the Ministry of Labor to administer and monitor the FEP ($1.05m IDA; GOB $0.05) - This sub-component will finance the refinement of the model and the strengthening of institutional and implementation arrangements based on the process evaluation carried out under the previous sub-component. In addition, it will support the development of management tools and monitoring and evaluation mechanisms. In particular, this component will provide support for the following activities: Management Information System (MIS) - The Project will support the MOL in the design, testing and implementation of the MIS to follow up financial and physical progress, measure outputs and results, and administer contracts with training providers. Strenahenine; the supply of training; services and certifvinv suppliers - The Project will strengthen the capacity of suppliers to: design training courses following demand from private and public firms; maintain a dialogue with the private sector; and incorporate skills-oriented training activities targeted to this particularly difficult segment of the population. Information, Education and Communication (ICE) strategy - Implementation of the FEP will be accompanied by an information and communication strategy focused on three aspects of the Project: (i)promoting, disseminating and supporting the program among potential beneficiaries, training institutions and employers, through workshops to enhance knowledge and understanding of the program, socialization workshops, focus groups, and mass media promotion at the local and regional levels, (ii)facilitating alliances between training providers and firms; and (iii)designing and implementing a training strategy directed to public servants involved in the administration and implementation of the program at the national and sub-national levels; Institutional support -The Project will strengthen the institutional arrangements of the M O L at the national level and incities where the programoperates. 39. Sub-component 2.3. Providing opportunities for skills training and a first labor market experience to low-income youth ($2.08m IDA. Building on the refinement of the program supported by the previous two sub-components, the Project will finance the expansion of the training and internship program to additional targeted cities. This sub-component will finance three sets of activities: (i)a beneficiary registry; (ii)training courses; and (iii)trainee allowances for transport and meals. 40. Sub-component 2.4. Supporting the M O L to define a mid-term strategy for youth unemployment ($0.23m IDA). The Project will also support the GOB in strengthening its institutional capacity to consolidate a system for training youth and improve their possibilities for labor market insertion. The Project will finance activities to enhance GOB capacity to implement the program, provide orientation to training institutions, monitor program results, supervise training providers, and measure the FEP's impact. This component will also fund activities to support the M O L to design a strategy for youth at-risk inthe transition from school to work. With this purpose, the Project will finance the provision of technical assistancein the following areas: (i) sustainability of the program, including mid-term coordination and merging of the Government's program with other similar youth training and employment interventions; (ii) ofthemodelofinterventiontosub-nationalGovernments,whichareexpectedtobe transfer responsiblefor the execution and financial sustainability of the program; and (iii) definition of a comprehensive mid- and long-term strategy to support youth at-risk in the transition from school to work underdecent conditions. 13 41. Component 3 - Institutional strengthening of the RPS-DIC ($l.Om IDA) - This component will build the GOB'Scapacity to manage, coordinate, and monitor the RPS-DIC, starting with the MCP and FEP programs. The component will help the Government improve planning and policy making related to the RPS-DIC; facilitate coordination across involved agencies; and define, test, and implement mechanisms that will allow for better coordination and monitoring of program progress andimpact. 42. Subcomponent 3.1. Strengthening the Technical Coordination Unit o f the Social Protection Network and Developing a mid-term Social Protection Strategy ($0.46m IDA) -The Project will support the creation and consolidation of the TCU within the MDP to enhance its capacity to formulate strategies regarding the RPS-DIC, and coordinate and monitor the programs in the Social Protection Network through technical assistance in the form of consultancies, training, and workshops, as well as the consolidation of tools to track programs' progress and indicators. To achieve this purpose, the sub-component will finance: (i) technical assistance focused on the TCU's coordination and monitoring roles and associated administrative and operational functions; (ii) support to the TCU in developing medium- and long-term strategies for the continual evolution of the RPS-DIC, through technical assistance that will focus on second-generation issues of social protection systems. 43. Sub-component 3.2. Designing and testing a Registry o f beneficiaries and a monitoring and evaluation system for the RPS-DIC ($0.22m IDA) -The Project will also support the Ministry of Developing Planning to strengthen the TCU of the RPS-DIC through developing and testing a registry of beneficiaries if the RPS-DIC programs and a monitoring and evaluation system, as the main tool to inform policy making, coordination and monitoring. The registry and monitoring systems will be administered under the RPS-DIC Programs Management Area of the TCU. 44. Subcomponent 3.3 Evaluation o f selected programs of the social protection network ($0.32m IDA). The Project will support UDAPE to evaluate the impact of at least three programs of the social protection network, including the pilot of the FEP and the initial expansion of the MCP to the first 10municipalities. 4. Lessonslearned and reflected inthe Project design Lessons learned regarding conditional cash transfers programs 45. The size of the benefit for the MCP intervention - Experience with and impact evaluations of CCTs in Latin American countries have not produced definitive answers on the most effective size of the benefit (Le., the monetary transfer to families); however, ex-ante and ex-post evaluations have shown that the size of the benefit does matter for creating incentives to change family behavior -- e.g., to send children to school and/or use health services regularly-- as well as reducing the poverty gap. Additional research on this question i s required. General practice of other programs in the LAC Region has been to set the size of the transfer high enough to be both a real incentive for households to invest inthe humancapital of their children and to have a poverty mitigation effect, while at the same time, low enough to avoid interfering 14 with labor and income generation-related decisions and to serve as a mechanism for self- targeting. The GOB i s following these successful experiences by setting the MCP nutrition benefit equivalent to about ten percent of the average mean consumption of households in the lowest income quintile, which is expected to meet the above-mentioned criteria. 46. Conditioned vs. non-conditioned cash transfers - Experience in other regions has raised the debate about whether the transfer should be conditioned. Complying with co- responsibilities has been a common feature in most CCT programs in Latin America. However, a recent evaluation in Ecuador demonstrated that the CCT program there (known as Bono de Desarrollo Hurnano) had a significant impact on improving usage of education and health services in the country, even though the program did not explicitly require families to comply with a set of conditions, and the program did not have a system to verify compliance.'2 In Africa, recent evaluations of pilot CCT programs have suggested similar results. Apart from that, enforcing compliance with conditions may impose additional costs on beneficiary families, and a proper system to verify completion with co-responsibilities is usually expensive for Governments. 47. On the other hand, there are several reasons why conditioning transfers can be a useful component of cash transfer programs that creates incentives to change household behaviors, which otherwise would not occur because of lack of kn~wledge.'~From the Government perspective, conditioning transfers i s key to gaining political support for the program. Even more importantly, recent research for Brazil and Mexico - including ex-ante simulations and ex-post evaluation studies- has shown that enforcing conditions for human capital accumulation can significantly enhance the impact of cash transfers on the utilization of social service^.'^ While additional researchmay be needed to define in which circumstances conditionality is an essential requisite feature of a CCT program, the monetary transfer to prevent chronic malnutrition in Bolivia will condition transfers on families complying with a set of co- responsibilities. 48. Exit Policy - A major issue regarding CCT programs has been whether such interventions should be temporary, and if so how and when an exit policy to graduate families should be enforced. Despite some attempts to set a defined period after which beneficiaries should leave the program, it has proven difficult to enforce these cut-offs. In an intervention like the Social Protection Program for Mothers and Children to support the reduction of chronic malnutrition, the main challenge of implementing an exit strategy is preventing the perverse effect of a decrease in the utilization of basic services for regular check-ups monitoring children's growth and development once families have left the program. Inintegrating the MCP program into a comprehensive strategy involving demand and supply interventions, the GOB will be able to provide families with a temporary cash transfer and, once the child i s 2 years old, the household will graduate from the CCT, but will still be assisted by other components of the 12Schady, N. and M.C. Araujo (2006): "Cash transfers, conditions, school enrollment and child work: Evidence from a randomizedexperimentin Ecuador", World Bank Policy ResearchWorking Paper3930, The World Bank. l3de Janvry, A., andE. Sadoulet(2006), "Making conditionalcash transfers more efficient: Designingfor the maximumeffect of the conditionality." World Bank Economic Review 20(1): 1-29. 14 Bourgignon, F. F. Ferreira and P. k i t e (2003) "Conditional Cash Transfers, Schooling and Child Labor: Micro-Simulating BolsaEscola". Hoddinott,J. and A. de Braw (2007) "Must ConditionalCash Transfer Programs be conditionedto be effective? The impact of conditioningtransfers on school enrollmentin Mexico", IFPRIppt. 15 ZMP strategy (Le., fortified complementary food, sprinkles, vitamin A, iron, andother nutrients needed by older children). As the M C P seeks to foster the utilization o f health services focused on preventing chronic malnutrition, the rationale for setting such a graduation time i s that once children pass the age of two years, they are past the critical window for nutrition interventions and will need other types of support/services that are available as part of the ZMP and the health system. 49. Strengthening supply of basic services is a key element to a successful CCT intervention - As with other programs in the region, the Bolivia MCP seeks to improve utilization and effectiveness of basic health and nutrition-related services. A CCT program can be a very useful instrument for improving regular visits and check ups at health services providers, but only if adequate supply i s accessible to poor households. Unless such supply i s readily available, demand-driven benefits will not succeed and therefore, will not facilitate the goal of reducing malnutrition. The ZMP, of which the Social Protection Program for Mothers and Children i s an integral part, alongside the GOB'S health strategy, involves specific measures to extend availability of services and improve the quality of health providers. Scaling up the MCP program as part of the ZMP will ensure that efforts to boost the demand for basic social services will be accompanied by interventions to strength supply in the same targeted municipalities. Therefore, the Bank's APL I1and I11operations will support the MOH's efforts to strengthen basic service supply. 50. Avoiding negative incentives - There i s scant empirical evidence that transfer programs provide incentives for women to have additional ~hildren,'~and in the case o f the MCP this riskmight be even more latent as the main goal of the program i s registering pregnant women as early as possible to prevent malnutrition and illness during pregnancy and thereby increase the likelihood o f healthy children. However, the GOB has fully identified this risk and has taken several measures in the Project design to minimize it. These measures are described inAnnex 4, and the risk will be closely monitoredduringimplementation. Lessons learned regarding youth training programs 51. Separation of financing and the provision of training. Provision of training to increase skills among low-income youth has evolved over the last two decades. In several LAC countries, public vocational and educational traininginstitutions targeting adults were created to determine, based on the best information available, the content, opportunity, and method o f delivery o f training programs. Inreality, these institutions monopolized public programs aimed at improving the skills o f low-income populations (e.g., SENA in Colombia, SEFOR in Brazil, SENCE inChile, SENATIin Peru, or INFOCAL in Bolivia). They proved unable to adequately respond to the growing needs of the market, so since the early 1990s policies towards partnerships between the State, enterprises, and non-public training institutions have increased, with promising results. Once again, Bolivia i s following this trend by outsourcing training to specialized firms (public and private) that will be selected competitively, and which are more agile and can more easily maintain an ongoing dialogue with the private sector, adjust training courses, and provide services effectively. l5Grosh, M, C. del Ninno, E. Tesliuc, and A. Ouerghi (forthcoming) From Protection to Promotion: The Design and Implementation of Ejfective Social Safety Nets. 16 52. The natureof the trainingis demand-driven. Part of the reasonfor involvingprivate training providers was the need to respond to private sector priorities by focusing on relevant skills. Lessons from other programs in Latin America have shown that in many cases training providers need to adjust their supply of courses, or even design new ones to meet market demand. InBolivia, the FEP has incorporated this approach, and it is expected that the supply of training courses will be preceded by consultation and arrangements between training providers and potential employers, to ensure responsiveness to needs. Consequently, only those courses with a formal link to a firm intending to hire graduates of the training program will be eligible. 53. Comprehensive training beyond work skills. Young people with incomplete secondary or no post-basic education face the labor market at a disadvantage. Low-income youth not only have insufficient skills to perform in a competitive environment and are consequently less productive, but they have no previous experience in a formal job. The latter implies that they are less likely to find a good job than older or less poor individuals with similar skills, because of their lack of familiarity with, and/or perceived poor behavior in the workplace. Therefore, training focused only on skills for a specific job may not be enough to improve the employability of these youth. Successful experiences in other countries, including Colombia, the Dominican Republic and Honduras, have included training not only on specific job skills but also on life skills and behavioral training to improve workplace behavior ("soft skills"), including appropriate attire, punctuality, interpersonal skills, and so on. 5. Alternatives considered and reasons for rejection 54. Institutionally-basedapproach vs. Project ImplementationUnits (PIUs) - Using separate implementation units to carry out projects has been a common practice in Bolivia. However, the current administration is committed to strengthening existing Government institutions, particularly fiduciary units, and implementingwithout a separate PIU. This approach i s consistent with preferred Bank practice. Nevertheless, moving from PIU-based implementation arrangements to Government institutions i s a process which requires on-going support and technical assistance. In order to meet Government guidelines for diminishing reliance on a separate PIU, it was agreed that the Project will implement a twofold strategy to strengthen the institutional arrangements of implementing agencies. First, a significant proportion of Project funds focus on strengthening fiduciary units within the administrative organizations of the three implementing agencies. This task was initiatedusing the PHRD grant. Second, the Government has created within each administrative organization specific technical units responsible for Project implementation but not separated from the institutional arrangements of the correspondent Ministry. These new units- the Technical Coordination Unit (TCU) at the Ministry of Development Planning, the Social Protection Area for Mothers and Children (MCA) in the Ministry of Health and Sports, and the National Unit for M y First Employment Program (NUFEP) in the Ministry of Labor- will be strengthened by the Project and institutionalized as part of the administrative organization within each Ministry during Project implementation. 55. Implementation arrangements - Faced with a decision to centralize Project management or divide it among relevant Ministries, the GOB team chose to separate 17 implementation responsibilities among the three Government agencies according to component. Although this will imply three implementing agencies and three Special Accounts, the decision was made to allow for greater flexibility b y the Government in managing day-to-day operations and addressing specific sectoral issues related to the components. Experience in other countries has shown that where several Bank projects are managed by one implementation agency and there i s a problem in financial management or other fiduciary aspects, it infects all projects and leads to a domino effect where every operation experiences delays and bottlenecks in execution. On the other hand, the Bank has had positive experience in splitting implementation responsibility (and Special Accounts). In these cases, it sometimes happens that one component may experience delays, but other components progress well, because they are managed by separate agencies. However, to ensure adequate coordination, the Project has a champion in the Ministry of Development Planningwho will ensure adequate coordination with the other two implementing agencies. 56. Enhancingthe current transfer programin education or carrying out a separate interventionto prevent chronic malnutrition. Before defining the MCP program to support Government efforts to combat malnutrition, several alternatives were assessed, particularly regarding the existence of an education transfer program (Juancito Pinto) and its potential enhancement to involve nutrition co-responsibilities. However, it was agreed that having two separate programs would be more effective for the following reasons: (i) the objectives and target population of the program are different: the JPP i s nationwide, targeting children older than 5, while the MCP in nutrition i s targeted to the 52 poorest municipalities, targeting pregnant women and children younger than 2; and (ii) each intervention i s based on different mechanisms, including targeting and criteria for beneficiary selection, size and frequency of the benefit, system to deliver the benefit, and exitlgraduation policy strategy. It was agreed that as part of Component 3 below, technical assistance will support analysis to assess the feasibility of integrating the two programs in the mid-term and, if appropriate, define an implementation plan to do so. The beneficiary registry of the RPS-DIC will also cover both programs, facilitating information sharing and any future merging of the programs. 57. Cash vs. in-kindtransfers to poor families - As in other countries in the region, the design o f the conditional cash transfer intervention involved the debate of whether the transfer should be an in-kind or a monetary benefit. The in-kind transfer was rejected on the following grounds: (i) The problem of chronic malnutrition is related to behaviors, not lack of food. Evidence across Latin America and Bolivia demonstrates that chronic malnutrition occurs before children reach 18-24 months, after which the neural and physical damage i s irreversible. Duringthis period, effective alternatives to prevent chronic malnutrition are through exclusive breast feeding until six months of age, and practices like better home hygiene, water usage, hand washing, feeding practices and child care. Regular and frequent monitoring of children's development (weight and height) accompanied by individual counseling andgroup talks have been demonstrated to be cost-effective interventions to prevent chronic malnutrition inlow-income countries inCentral America and Africa. These practices usually have been complemented by micronutrient supplements involving the provision of essential vitamins and minerals. Lack of food may be an issue in specific circumstances (such as droughts or floods) andinthese cases 18 in-kindtransfers shouldbe treated as a temporary intervention inthe context of a cross- sector approach alongside mid-term interventions. (ii) Conditional cash transfers have been shown to have a significant impact in reducing chronic malnutrition, provided that the supply of services i s adequate (see section D.2 - Technical of the Appraisal Summary). (iii) A cash transfer is expectedto have greater impact on family consumption as experience in other countries has demonstrated that mothers usually spend the transfer on the most needed things (e.g. adequatefood for the children, -specifically more protein) (see section D.2- Technical of the Appraisal Summary). (iv) Feeding programs in Latin America have been shown to be less progressive than cash transfers. While on average feedingprograms (not including school feeding interventions) allocate less than 60 percent of their benefitsamong the poorest 40 percent of the population (quintiles 1and 2), CCT programs allocated more than 75 percent inthe same grOUp.16 (v) Distribution and storage problems have been a common feature of food distribution and in-kindtransfers, complicatingtransportation and delivery of the benefit andsignificantly increasing administrativecosts." 58. Implementing a collective conditional cash transfer. The Project considered implementing the conditional cash transfers in two modalities. Individual conditional cash transfers to eligible families, subject to compliance with a set of co-responsibilities following other experiences in LAC, and an innovative collective benefit (a cash transfer) awarded to communities after the achievement of previously defined outcome targets. Given that collective benefits would be awarded upon completion of pre-defined outcomes (e.g., proportion of malnourished children in the community, proportion of children with full immunization packaged), the rationale of this incentive was raising accountability at the community level. The Bank and the GOB decided not to include this alternative in the Project, as doing so would have entailed implementation arrangements similar to a social fund which would have delayed Project preparation. 59. Pay wage subsidies vs. internshipsin the FEP- An alternative discussed during the design o f the FEP was to provide Government-financed wage subsidies for beneficiaries once they completed the training phase. Althoughthis measure may have the potential to improve the employability of unskilled workers, who tend to be those who have more difficulty finding a job and usually earn lower wages, this alternative was rejected on the grounds of three effects that wage subsidies may generate: (i) as wages are paidby the Government, they may create an incentive for firms to fire paid employees to hire subsidized workers; (ii) they may create l6Lindert, K., E. Skoufias, and J. Shapiro (2006) "Redistributing Income to the Poor and the Rich: Public Transfers in Latin America and the Caribbean", SP DiscussionPaper No. 0605, The World Bank. Lindert et. al., 2006; Grosh, M.,C. del Ninno, E. Tesliuc and A.Ouerghi (forthcoming) From Protection to Promotion: The Design and Impementation of Effective Social Safety Nets, The World Bank. 19 disincentives for training institutions to provide, and beneficiaries to acquire, skills, as the institutions may view the internship period inprivate and public firms as guaranteed; and (iii) a wage subsidy would create a double subsidy for firms, both through the subsidy itself, and through the effort to tailor the training to market demand. Even though the Bolivian program will not implement a wage subsidy as part of the FEP, it was decided that at least during the first stages of the program, firms will not be requiredto formally contract beneficiaries. During the pilot program the GOB will test increasing the daily allowance and asking participant firms to complement it with an additional payment. This aspect of the program will be assessed during the evaluation and, if required, revised for the expansion phase. The experience of a similar pilot program financed by the Dutch cooperation has demonstrated that after a three- or four-month apprenticeship, during which beneficiaries receive only a stipend for meals and transportation, about 70 percent o f program beneficiaries receive a formal contract. 60. A Youth Entrepreneurship sub-component of the FEP - Initially the youth employment program envisioned two main strategies. Apart from skills training linked to labor market experience, eligible beneficiaries would have had the option to apply for a grant to create their own business (i.e., micro-enterprises). The international experience with low- income youth entrepreneurship programs has demonstrated that, although most youth are eager to initiate their own business -- especially as an alternative to unemployment -- there are significant barriers to success, including a lack o f vocational and entrepreneurial skills, as well as financial constraints to business growth and job creation. Moreover, the survival rate of micro-enterprises led by low-income youth entrepreneurs i s low. The GOB has decided to start implementation of the FEP focused just on increasing employability. Only at a later stage will the alternative to introduce a young entrepreneurship strategy be explored. C. IMPLEMENTATION 1. Partnershiparrangements 61. The Project involves no formal co-financing or partnership arrangements with other donors or multilateral agencies. Nevertheless, the Project is part o f a comprehensive social protection strategy with considerable international donor participation. The Ministry of Development Planning has been leading donor coordination and has been in the process of deciding which international agencies are asked to finance the different programs and interventions of the Social Protection Network. The Bank was assigned to co-lead, together with the Netherlands, the Mesa Bolivia Digna, which deals with social sector issues, including the Social Protection and Integrated Community Development Strategy, within the framework of the dialogue process held by the Government. The MDP has requested the Bank's support for the ICY Project, and although other donors are also interested in funding the operation, the Government has asked these donors to finance other programs o f the Social Protection Network. 2. Institutionaland implementationarrangements 62. The Project will support the Government's social protection strategy and the RPS- DIC by contributing to the effective implementation of key programs. Inthis context the 20 Project will be implemented through three separate agencies under the general coordination of the MDP which will be the Bank's Government main counterpart during implementation and supervision. Such coordination will be done through the Technical Coordination Unit (TCU) for administrative and financial issues, and through UDAPE for the technical aspects of the project. The TCU, recently created as part of the institutional structure of the MDP, will be responsiblefor the implementation of Component 3 of the Project inclose coordination with the MDP's General Direction of Administrative Issues. The unit will also coordinate with the Ministry's Systems Unit to develop the Management Information System and the RPS-DIC Beneficiary Registry. The Project will be entirely implemented, monitored and evaluatedby the three Ministries, and fiduciary and technical coordination will be under the responsibility of the TCU in the MDP and UDAPE, respectively18. 63. The Technical Coordination Unit (TCU) and UDAPE will articulate and coordinate the activities implemented under the Health and Labor Components. These two bodies will provide the support to the MDP in its its responsibility for the global implementation of the Project and attainment of results, and the strategic coordination with sector ministries in charge of Components 1(Health) and 2 (Labor). The following are some of the TCU's main functions in relation to the Project : a) coordinate and monitor Project administrative and financial aspects as a whole and serve as Bank's counterpart for such issues; b) support and monitor the MOH and MOL inthe registration of budgets and the attainment of operational plans as well as intermediate and results indicators; c) follow-up on operational plans related to each of the Project components; d) consolidate sector Project reports (health, labor and RPS-DIC); and e) elaborate and provide progress reports on physical and financial aspects of the Project to the Bank. Although the TCU will be supportedby the fiduciary units of the MDP, it will have specialized staff to consolidate the financial reports from the Ministries of Labor and Health and Sports. UDAPE will be responsible for the following activities related to the project: a) coordinate and monitor Project's technical aspects; b) coordinate all supervision missions with the Bank, VIPFE and sector ministries involved in the Project; c) identify issues that might require special attention from the Government or the Bank during the implementation of the Project: d) propose and process any amendment related to the Credit Agreement; and e) ensure the compliance with operational manuals in coordination with sector ministries. Implementation arrangements for Component 1 -Implementing and scaling up the Social ProtectionProgramfor Mothersand Childrento combat Chronic Malnutrition 64. The Government has designated responsibility for the implementation of this component to the Ministry of Health and Sports. This is the appropriate institution to carry out the MCP, given that the MOH is also responsiblefor the comprehensive ZMP, has the legal mandate to implement the program and the political support to carry out the activities included inthis component. These institutional andimplementation arrangements improve coordination betweendemandand supply of basic maternal and infant health services, a crucial aspect for the success of a conditional cash transfer program. The MOH has been committed to strengthening the supply of basic maternal and infant health services over the previous several years and '*Althoughthe FPS has a centralrole in implementingand monitoringthe RPS-DIC's Comunidades en Accidn and Comunidades Reckrocas, it has no role in the Investingin Childrenand Youth Project. 21 currently this effort i s supported and funded by the health APL operations and the GAIN program. The APL 11, under implementation until June 2008, i s supporting the expansion of the benefit package o f the SUMUSUS in order to provide greater coverage o f health services to pregnant women and children less than five years o f age, taking into consideration cultural distinctions and other access barriers faced by indigenous populations. Under the third operation, currently negotiated, the APL emphasizes strengthening the health supply through the health network in the targeted municipalities. The GAIN program aims to improve fortification of all wheat flour, vegetable oil and milk products designated for consumption by the Bolivian population in order to generate demand for quality-assured fortified food. The achievement o f GAIN'S proposed goals is expected to have a significant health impact by reducing the total prevalence of iron deficiency anemia which affects 81.9 percent of children from 6 to 24 months and 30 percent of women in reproductive age by reducing the prevalence of vitamin A deficiency and by reducing neural tube defect rates by 20 percent between 2007 and 2011.Thus, the Ministry of Health and Sports has the instruments to strengthen the supply of maternal and infant health services, while this Project will provide funds and technical assistanceto carry out a program to boost demand. 65. The Ministry of Health and Sports will implement the Component through the Area de Proteccio'n Social para la Mujer y el Niiio (MCA), recently created as part of the Planning Unit of the Ministry. The MCA is institutionalized part of the administrative organization of the MOH and responsible for those projects and programs financed by donors. The execution of the program will be in close coordination with and active participation of the Area responsible for the Health APL I1and I11operations, as well as the Service Network Unit, dependent of the GDHI. At the local level the Health Units will coordinate with municipalities and prefectures to undertake processes of affiliation, registry, condition controls, incentive delivery, complaints and information updating. The M C A will supervise the local coordination units,createdfor the monitoring of 5 to 7 municipalities. 66. All administrative and financial aspects of the program will be managed directly by the General Direction of Administrative Issues o f the MOH, where an Administrative Unit (UCOFI) for externally funded programs will be adapted, as part of the same structure. The UCOFI will operate in close coordination with and will support the MCA. The Payment Agencies (PA) are external financial institutions to the Ministry and provide payment services to the beneficiaries based on reports that will be generated and delivered by the MCA. The Program's administrative and financial unit will be responsible for transferring funds to the PAS.The municipal local committees will provide social control during the implementation o f the program. 22 Implementation arrangementsfor Component2 -Youth Employment Program(FEP) 67. T o comply with the activities required to implement the FEP, the Government has created a set of institutional arrangements at the central level of Government and in the cities where the program will operate. At the national level, the Ministry of Labor has created an internal unit to coordinate the Project (National Unit for M y First Employment -NUFEP) attached to the General Employment Direction, responsible for the overall administration and supervision of the program. The unit will receive technical assistance to carry out the following activities: (i)coordinating, planning, monitoring and overseeing the program in coordination with municipal offices in the targeted cities; (ii)selecting training providers; (iii) administering a national registry of service providers and the training providers certification process; (iv) administering and coordinating the provision of technical assistance to strengthen training providers; and (v) promoting the program through workshops, communication campaigns and, particularly, through an ongoing dialogue with the private and productive sector. This unit was created to implement the Pilot and i s currently well staffed. The NUFEP will be supported by the General Administrative Direction regarding administration of contracts with training providers, as well as all other procurement and financial management issues. Similarly, the Information System unit will support the NUFEP in the administration of the Management Information System. 68. At the departmental level, the program will strengthen the Ministry of Labor's local offices located in each of the cities in which it will be scaled up to coordinate the overall implementation and follow up of the program. For the purpose of the FEP, the Ministry of Labor will create Departmental Offices for the First Employment Program (DOFEP) in each of the cities where the programs is operating. These offices will be responsible for promoting the program in the cities, receiving and checking applications from youth, providing information and orientation to beneficiaries and training providers and supervising the training courses in their two phases - in-class and the internships.These units will also support the ongoing dialogue with private firms, and support program management through supervising program progress inkey phases of the training andinternship phases. 69. The Project will evaluate the pilot program of the FEP. As a result of the evaluation the model will be both assessed and, if appropriate, adjusted, and also scaled up. The main institutional arrangements set to carry out the pilot and summarizedin the following paragraphs will be subject to a process evaluation that the Project will finance through Sub-component 2.1. (Annex 4), and therefore may be changed or adjusted according to the recommendations of the process evaluation. All changes to such arrangements will be consulted with, and will be put in place acceptable to the Bank. Implementation arrangements for component 3 -Institutional strengthening of the Social Protection Network 70. The Ministry of Development Planning will not only be responsible for the coordination of the overall implementation of the Project but also for the direct implementation of component three. The GOB has created and is in the process of strengthening the Technical Coordination Unit (TCU) for the RPS-DIC. The TCU is attached 23 to the MDP and will be the main body to support the MDP to carry out the activities included in component 3 of the Project. The TCU will be headedby a Coordinator and its objectives will be the: (a) overall coordination of programs implemented under the RPS-DIC; (b) monitoring of progress and evaluation of impacts of these programs; and (c) formulation of social policies and long-term strategies that will define the future development of the RPS-DIC. To comply with its function the TCU has two Areas: The Area of Management of RPS-DIC Programs, responsible for administering the registry of beneficiaries and the monitoring system of the RPS-DIC, and the Implementation of MDP projects, responsible for monitoring and administering those programs directly implemented by the Ministry of Development Planning. As explained in Annex 4, the Project will pay special attention to institutionally strengthening the TCU and to enhance its capacity to serve as the technical arm of the MDP to coordinate and monitor the programs of the social protection network. Indoing so, the project will support the MDP through partially financing consultants to support bothAreas of the TCU, two consultants to support the fiduciary units of the MDP and the design and testing of the registry of beneficiaries and the monitoring system. The TCU will not have specific administrative duties related to the implementation of individual RPS-DIC programs, but rather that each program will be carried out by the relevant line Ministry, with the TCU serving as coordinator for the overall network. All fiduciary aspects related to this component of the Project will be carried out by the correspondent procurement and financial management offices in the Ministry of Development Planning. 3. Monitoringand evaluation of outcomedresults 71. The Project 's physical and financial progress, as we1 as the impacts of the programs will be monitored and measured through a series of instruments to be designed under the Project, as well as through the APL 111.Specifically, the Project will monitor progress through a management information system, process evaluation, and regular operational and financial audits for both the MCP and FEP programs. Additionally, the Social Protection Program for Mothers and Children will include two beneficiary surveys, social audits and feedback mechanisms, and a rigorous impact evaluation. Finally, the Project will consolidate the monitoring responsibility that the MDP has for the RPS-DIC by supporting the design and implementation of a registry of beneficiaries for the network. Some of these instruments are under implementation, and inall cases the Project will provide technical assistanceand support to enhance Government capacity to monitor and evaluate outcomes and results of the programs. 72. Management Information Systems (MIS) -The interventions supported by the Project have developed specific information systems to monitor and follow up program progress. The MIS of each will be the most important tool to provide information to track progress and follow-up on implementation bottlenecks. Inthe case of the MCP, the MIS i s fully embedded in the SNIS, while for the FEP it i s a stand-alone system. The design of both systems was completed using funds from the PHRD grant and the Project will support implementation, adjustment and some IT-related equipment to put them in place. The MIS will provide managementteams updatedinformationto authorize and reconcile payments. For the MCP, the MIS systemwill involve the required modules for a CCT program, including census, registry of beneficiaries, verification of information and co-responsibilities, authorization of payments and conciliation, and complaints and feedback mechanisms.In the case of the FBP, the MIS will 24 also include a registry of beneficiaries and supervision, evaluation and certification of training providers. The information systems, which will be under the responsibility of the Ministries o f Health and Sports (Social Protection Program for Mothers and Children) and Labor (First Employment Program), will be able to provide information about program progress in real time ifrequired, andregular(monthlyorbi-monthly)reports.Specificinformationprovidedbythe MIS i s mainly related to progress indicators and results and outputs of the program, as explained inAnnex 3. 73. Process Evaluation - Process evaluations to adjust operational aspects and correct functional problems of each program supported by the Project will be carried out at different stages of implementation. In the case of the MCP a process evaluation will be conducted after the first year of implementation when the first ten municipalities have been incorporated and households and communities are receiving the benefit. In the FEP, a process evaluation will be conducted during the first year o f Project implementation to evaluate the pilot and inform the adjustment and, if required, redesign of the implementation model. In both cases, process evaluations will provide information for the full scaling up o f the interventions. These process evaluations will be under the responsibility of the MOH and MOL but their implementation will be outsourced to specialized firms. Both evaluations will be funded through the Project. 74. Beneficiary surveys - Inorder to assess beneficiaries' perceptions and experience with the MCP, the proposed Project will support the Ministry o f Health and Sports to finance two beneficiary surveys after the first and third years o f implementation. These surveys will serve to adjust, if required, the communication and information strategies, the types o f co- responsibilities linked to the cash transfer, the supply of health and nutrition services, and the approach of the Project towards indigenous populations. The surveys will be taken at two key moments of Project implementation - the first being when the initial ten municipalities have received transfers for a reasonable period of time, and the second one a year after the full scale up of the program has been achieved. The beneficiary surveys will be a key instrument for improving the Project's effectiveness at reaching and meeting the needs of beneficiaries, especially indigenous groups. These surveys, administered by the Ministry of Health and Sports, will be contracted out to specialized firms. 75. Impact Evaluation of the MCP - As explained in Annex 4, a rigorous impact evaluation of the Social Protection Program for Mothers and Children will be carried out through the APL I11operation by contracting a specialized firm. The evaluation will provide information on key outcomes and the targeting of the program, and both Projects (APL I11and Investing in Children and Youth), at three points: (i) before implementation starts through the baseline report; (ii)a mid term report after the second year o f implementation; and (iii)final a report. The methodology will provide information not only regarding the outcomes and impact of the program on welfare and poverty, but also about the sustainability of interventions, as a specific follow up survey will gather information after a reasonable period once families have graduated from the program. The M O H will be responsible for administering the contract, which will be financed from the APL I11operation. 76. UDAPE is responsible for the monitoring and evaluation of RPS-DIC programs. The ICY project will provide financing for at least three evaluations to be conducted using a non experimental design. These will include: (i) evaluation o f the pilot of the FEPprogram; (ii) 25 a process evaluation of the first 10 municipalities included in the MCP; and (iii) additional an evaluation of another program included in the RPS-DIC - to be selected duringimplementation. These will be based on household surveys to be financed by the Project and the analysis will be conductedby the Sub-Direction for Policies inUDAPE. 77. Social Audit and local control mechanisms of the MCP - The Social Protection Program for Mothers and Children will include mechanisms to receive feedback from beneficiaries and communities as well as complaints on the program's processes. Such feedback and complaints will be systematized and a process to resolve questions and provide timely answers will be put in place. These mechanisms will serve to strengthen the social control of the program, improve transparency and enhance the program's credibility. The M O H will be responsible for the implementation and operation of these mechanisms using funds from the Project. 78. Financial and Operational Audits - The Project will have regular audits throughout the implementation period. In addition to the financial audits carried out annually, the Project will finance operational audits of the MIS system and the registry of beneficiaries of the Social Protection Program for Mothers and Children. 4. Sustainability 79. The RPS-DIC i s a key element of the current Bolivia National Development Plan and i s a flagship strategy of the Morales administration. The RPS-DIC and the social protection programs and interventions are at the core of the strategy to tackle poverty and have solid political support among the executive branch o f government. A recently issued Supreme Decree (No29246 from August, 2007) legally establishes the RPS-DIC and the interventions under its umbrella, including those supported by the Project (see Annex 4). Beyond the legal aspects, the Government has defined clear institutional responsibilities and each of the programs has a champion to ensure adequate political and financial support. The Ministry of Development Planning, responsible for the consolidation of the RPS-DIC and for monitoring and coordinating social protection programs, has been strengthened with technical and financial mechanisms to ensure that programs of the RPS-DIC are sustainable. 80. The programs supported by the Project have been entirely identified by the GOB which has demonstrated strong ownership and commitment for implementation and sustainability. While the Bank has informed program design and shared knowledge with the GOB counterparts regarding international best practices and lessons learned throughout project preparation and with the AAA, the Ministry o f Development PlanningKJDAPE with the Ministries of Health and Sports and Labor led the conceptualization of the Social Protection Program for Mothers and Children and the First Employment Programs, respectively. Therefore, these interventions constitute clear priorities o f the current administration. Both interventions were conceived as part of the strategy to consolidate social protection interventions, tackle poverty, promote human capital formation and ensure sustainability of results. From this perspective, the Project will finance two programs that will provide long-term benefits by improving children's health so they can learn better in school, and increasing youth skills so they are better equipped to enter the labor force. 26 81. The Government and the Bank will co-finance both components to ensure a smooth transition once the project i s fully implemented. Although there i s no requirement for Bolivia to ensure counterpart funds to approve the Project, the GOB has decided to co-finance key and recurrent costs generated by the Project to ensure a smooth transition when project implementation i s completed. In this context, IDA funds are focused on strengthening institutions and enhancing capability of involved agencies precisely to ensure not only adequate implementation o f the project but capacity to sustain the interventions. The GOB counterpart funds will finance current administrative expenditures of both programs on an increasing basis, an increasing the proportion of the cash benefits to families registered inthe MCP program, and the pilot round as well as the second and sub-sequent rounds o f the FEP. Regarding funds to scale up the programs, the Government will use IDA funds to benefit full cohorts and ensure that beneficiaries in these cohorts receive full benefits during the program. Inthe case of the MCP, IDA funds will be used to finance the full cycle of up to 33 months for families registered in the program during the first three years of implementation (about 45,000 families); in the case of the FEP, IDA resources will finance both vocational training and internships in the terms explained in Annex 4 for the first cohort of beneficiaries following the pilot phase. In both programs, the Government will seek to involve financing from departments and municipalities once the project is under implementation. 82. For the MCP, several aspects bode well for the program's long-term sustainability. First,it was decided to design the program as a cash transfer, rather than an in-kindvoucher or food distribution. This decision was made after a lengthy technical debate within the GOB and represents an overall agreement among relevant government agencies. This debate served to extensively inform central government agencies involved about the conditional cash transfers program and to unify government vision around the Benefit for Mothers and Children, as a cash transfer. Even more important it resulted in a clear government commitment and ownership of the program. To support sustainability, the GOB has decided to commit counterpart funds to start financing the transfers on an increasingbasis startingin 2011. 83. Moreover, the MCP program seeks not only to boost demand for specific services, but equally importantly, to enhance knowledge and change behaviors regarding infant health and nutrition among beneficiary households. Changingbehaviors involves domestic public health measures including hand-washing, child care, nutrition at home and so forth, but also ensuring that families know the importance of using specific social services. As a result of the combination of cash transfers, individual counseling, and collective workshops to beneficiaries, it i s expected that in the future mothers would rely less on the cash incentive to comply with regular check ups when pregnant or to take their children for growth monitoring. Therefore, it i s expected that in the medium term the impact of the project (reducing chronic malnutrition) will be sustained even after project implementation has been completed''. This expectation i s underpinned by the type of support that the Zero Malnutrition Program i s 19International experience has demonstrated not only that conditional cash transfer programs can have a positive impact on chronic malnutritionoutcomes (as in Mexico, Colombiaor Nicaraguawhere the CTTs are responsible for reducingthe proportion of malnourished children in more than two percentagepoints per year on average) (Schady and Fiszbein (2007). but also that such impact is sustainedafter transfer programsend (as in Nicaragua) (Maluccion,J.A., andR. Flores(2004) "Impact Evaluation of a ConditionalCashTransfer Program: the NicaraguanRed de Proteccidn Social, IFPRI, FCND DiscussionPaper No. 184. ). 27 providing in the targeted municipalities; in this case, the community-based approach provided by the outreach teams and health units involves both individual counseling and group workshops to send specific messages regarding household behaviors and raising the relevance of regular visits to health providers. Nevertheless, if the cash benefits for mothers and children are maintained after the Project completes implementation, the additional fiscal burden for the Ministry of Health and Sports would be less than 8 percent o f its annual budget. 5. Critical risks and possible controversial aspects. 84. The Project involves supporting to a conditional cash transfer program. Lessons learned from other countries suggest that proper implementation of CCTs presents considerable challenges and risks in technical and fiduciary aspects. Project preparation emphasized improving the project's implementation arrangements to scale up the CCT program. Component 1 of the Project will involve a comprehensive set of activities to improve CCT's effectiveness and transparency of processes to mitigate those risks inherent to these types of projects, including a comprehensive management and information system involving all aspects of the CCT cycle (e.g., registry of beneficiaries, compliance with co-responsibilities, payments), social audit and complaints mechanisms, beneficiary surveys, and a rigorous impact evaluation*'. In addition, the implementation plan o f the CCT component has been carefully designed to ensure a gradual expansion, preceded by a process evaluation after the program has incorporated only ten municipalities; this evaluation will inform the project's management about aspects to improve operational and functional aspects o f the program before it i s fully scaled up. 85. Finally, the proposed Project involves innovative interventions for the Bolivian context and two of the three implementing agencies have no previous experience with Bank's operations. Therefore, the project's implementation arrangements have been carefully designed to ensure that implementation of each component i s fully under responsibility of the relevant ministry (involving no other agencies, such as the FPS); moreover, implementation arrangements have been planned to make sure that the Social Protection Program for Mothers and Children, the First Employment Program and the Technical Coordination Unitfor the RPS- DIC are fully institutionalizedinthe administrative structure o f the respective ministries. 86. The Project will be implemented in a complex political environment in the country, given the recent approval of the new constitution and the process of dialogue between the Government and the prefects, which may modify the central government-subnational authorities' administrative arrangements. This context may affect implementation speed and future sustainability o f the interventions supported by the Project. The implementation and institutional arrangements for the project have been designed to mitigate these risks, Despite the mitigation measures under implementation and described in the risk matrix, the overall risk for the project is still Substantial. The main risks and the proposed mitigation measures are described in the RiskMatrix below. 2oControl and AccountabilityMechanismsin ConditionalCashTransfer Programs. 28 Riskfactors Description of risk Rating" Mitigation measures Rating of risk of residual risk I.Countryand Macroeconomic - M framework to failure to control path of Government's economic team to external and internal debt. chart a projected path of fiscal discipline that is economically, socially and politically feasible. Governance There is a conflict of roles H Efforts are being made to clarify M between the National and local roles, responsibilities and fiscal administration. Slow process of regulations among different actors decentralization. and measuresare being taken to strengthen local governments. Systemic Patronage and corruption persist H Strengthen oversight capacity of M corruption despite National and local civil society participation and other elections. 1 institutions. S The Ministry of Planning and M Development, which will oversee institutional arrangement that may the overall implementation of the prove to be complex and Project, i s an inter-institutional adversely affect implementation. body, and the arrangements for Project execution follow the institutional structure of the RPS- DIC. In addition, the GOB has created a Technical Coordination Unitwithin the MDP that will be responsible for the overall management of the RPS-DIC, including the MCP and FEP momams. ic Risks Overall Design H S Design The RPS-DIC is part of the Project preparation was based on National Development Plan and i s extended consultation, always led by the responsibility of the Minister MDP and UDAPE, and facilitated of Planning and Development. dialogue to reach a unified vision of Nevertheless, some differences in the RPS-DIC and the scope of the views remain among the Project. The ongoing work of the implementing agencies regarding MDPand UDAPEwith the line basic program design issues. ministries responsible for the RPS- DIC programs, and particularly with the Ministries of Health and Labor for this Project, has achieved a unifiedvision about social protection within the Government. 21Risks are rated on a four-point scale (high, substantial, moderate, and low) according to the probability of occurrence and magnitudeof adverse impact. 29 Preparation provided government with sound analytical information about Project design and lessons from international experience. Project implementation is being coordinated by MDPand UDAPE as well. CashBenefitsto pregnant M L women Duringproject preparation, special Targeting pregnant women and attention was paid to a set of children less than two years old to measures to maximize women's receive conditional cash transfers reproductive health, including, may create incentives to increase among others: (i) defining a benefit fecundity among beneficiary small enough to avoid being a families. negative incentive that might induce families to have more children; (ii) putting in place mechanisms to strictly verify compliance with co- responsibilities; (iii)targeting families with children younger than 2; (iv) maintaining a flat single benefit regardless of the number of children; (v) declaring ineligible women who do not space pregnancies at least two years and nine months apart. Implementation 1. The Project is implementing H 1. The Ministry of Health and Sports S capacity and two new interventions and the (MOH) which will implement the sustainability institutional and implementation MCP, has ample experience in capacity has to be built. managing World Bank credits through the Health APL operation, 2. Participation and commitment now inits third phase. The Project of municipalities and prefectures i s closely coordinated with the APL during Project implementation I11intervention. Project preparation may be weak. focused on the main gaps regarding institutional and implementation 3. Insufficient coordination among arrangements. Bolivian institutions to monitor and achieve results on Project 2. The Project includes funds to indicators. strengthen institutional arrangements of implementing agencies. 3. --Government is financing pilot programs before full expansion of interventions to identify and put in place adequate implementation and coordination arrangements. --From the outset, Project will emphasize and disseminate objectives and targets to relevant municipalities and prefectures. --The Project involves activities to design and improve monitoring and evaluation systems for the specific interventions as well as for the 30 RPS-DIC. --The project includes funds for carrying out a strategy to dialogue and negotiate with municipalities and prefectures their participation and, in the mid-term, co-financing the MCP and FEP programs. S The Project will take into account management which based on regional the lessons and best practices inFM experience, are inherently risky for CCT programs described in the programs from a FMperspective. recent study, "Control and Accountability Mechanisms in CCT 2. A sound MIS has not yet been Programs in Latin America and the developed. Caribbean." Inthis regard, a significant amount of funds will be 3. Two of the three implementing used to improve the institutional agencies do not have experience in capacity o f GOB to manage and external financial management. implement the MCP appropriately with all required controls, including a comprehensive MIS, beneficiary surveys, complaint and feedback systems, social accountability, and control mechanisms. These tools, along with the process evaluation and the impact evaluation, will serve to raise red flags in time to make required corrections. The third implementing agency, the MOH, has experience managing Bank funds, and this knowledge will be transferred to the other two implementing entities. The Project will finance activities to increase the FMcapacity of all three Ministries. Procurement 1. Two of the proposed three H 1. Procurement action plans implementing agencies have little describing necessary design reforms experience with Bank operations have been agreed for each of the and might lack adequate three implementing agencies. capabilities to carry out procurement-related processes and 2. The Project would ensure the: (i) to establish and monitor intensive and continuous training in procurement performance procurement during Project indicators. This may delay Project implementation; and (ii) backup implementation. ftom Bank missions and procurement specialists. Social and 1. Reaching the most vulnerable M 1. The Project will support environmental groups in the areas of intervention implementation of two targeting safeguards may be difficult given the lack of mechanisms the MCP component targeting mechanisms and the will select the poorest extended implementation of municipalities (classified according universal programs in Bolivia. to a recently developed food insecuritv index). where the 31 2. The MCP program i s an proportion of the poor population is innovative intervention which proportionally much higher than the combines social assistance with national average, ensuring that the promoting health and nutrition most vulnerable will benefit by the practices in very poor program. The FEP will target the municipalities. Given the features poorest from selecting students of the CCT component, its from public schools and poor urban implementation may be slower and peri-urban areas. than expected. 2. The CCT component will be tailored to beneficiaries in a socially and culturally appropriate manner through a detailed social assessment prepared on the basis of wide participation and consensus. These activities will informProject design and be incorporated in its Operational Manual. Furthermore, these activities will complement actions developed in the ZMP and the Health APL I11operation framework. Other Private sector involvement in the M FEP 1. The participation of the private . The programemphasizesbeing sector in offering internships to demand-driven following private beneficiaries of the Youth sector requirements. The GOB will Training program is not implement and evaluate a pilot prior established. to starting implementation. 2. Lack of interest from the private 2. Preparation of the Pilot of the sector to finance the internships FEP involved work with national without a clear incentive. and sub-national governments on the design of specific incentives to attract and ensure active private sector Darticiuation in the Droeram. Sustainability of interventions S Financial sustainability of the 1. During pilot phasesboth Programs supported by the Project programs will have adequate i s not guaranteed and may Government funds. jeopardize scaling up and 2. Financial support to scale up the institutionalization. interventions will be designed on a decreasing basis to ensure growing government financial commitment. 3. The Project involves funds to design and carry out a strategy to increasingly involve sub-national authorities in the management and financing of FEP and MCP in the mid-term IV. Overall Rir S 32 6. Loan conditions and covenants 87. The Project has no conditions of effectiveness. 88. The following documents were ready at negotiations: Operational Manual, Procurement Plan, and Annual Operation Planfor the first 18 months of Project Implementation. 89. The following are conditions o f disbursement: (i)for Subcomponent 1.1 (cash transfers), (a) the M O H has established and implemented to the satisfaction of the Association the management information system to administer and monitor the Cash Transfers; and (b) contracted the financial agency or agencies to pay the Cash Transfers to beneficiaries o f the Program following the Procurement methods in Annex 8; and (ii)for Component 2, the Ministry of Labor has established and operated to the satisfaction of the Association a financial management system for the implementation of the Project. D. APPRAISAL SUMMARY 1. Economic andfinancial analysis. Poverty Effect of the Social Protection Programfor Mothers and Children 90. This section presents the analysis of the impact of the Social Protection Program for Mothers and Children (MCP) on income poverty. The MCP is geographically targeted to the 52 most vulnerable municipalities, measured in terms o f food insecurity. Within these municipalities, there i s categorical targeting since the program benefits pregnant women and mothers with children under the age of two. The benefits are not means-tested, as the incidence of poverty i s above 90 percent inthese areas. 91. The main objective of the program i s to reduce the prevalence o f chronic malnutrition in children less than two years old, therefore the program i s expected to have a lasting impact on the growth and development o f children. Nevertheless, as a monetary benefit, it i s also expected to have an immediate effect on the income of beneficiary households. 92. The poverty effect o f the cash transfer can be modeled based on data from household surveys. Analysis proceeded in two phases: first, household surveys were merged to get an adequately representative sample of beneficiaries; and second, the effect of the benefit on poverty was modeled. Quantifying the poverty effect is complicated due to data constraints. First, the sample of the surveys is relatively small. Inresponse, three different sets of databases (household surveys from 2003-2004, 2005 and 2006) were pooled to increase the sample o f potential beneficiaries and to be able to disaggregate results -by rural areas and by department. Samples of the surveys are independent, although it i s possible for a household to be surveyed more than once. Once the databases were merged, the poverty effect was modeled b y simulating the poverty rate before and after receipt of the benefit. The transfer simulated for each household was valued at 65.6 Bs. per month, which corresponds to a total of 1,902 Bs. for the 29 months o f the program. The amount of the benefit was added to household income of eligible households -thosewithpregnantwomenandchildrenunder2yearsofage. 33 93. The poverty headcount rate and gap were calculated ex ante and ex post, using the new household income estimates, using both the poverty and extreme poverty lines.** Expansion factors were used for the calculation of poverty rates to maintain the population structure. These simulations assume no behavioral change - in other words, that increased income would not change household earning patterns. 94. As anticipated, the project will have the greatest impact on the extreme poverty rate among potential beneficiaries in rural areas with the largest reductions in Pando (8 percentage points), Santa Cruz (7 percentage points) and Potosi (6 percentage points). Similarly, the M C P benefit will have a substantial impact on the extreme poverty gap - the distance o f beneficiaries from the poverty line. Cost Benefit Analysis Results 95. Annex 9 of the PAD shows the estimated Project costs and benefits used for the cost- benefit analysis. CCT amounts and trainee allowances for transportation and meals are included inboth costs andbenefits -they are a cost for the project but they are also a benefit for its participants. These flows result in an Internal Rate of Return (IRR) close to 20 percent, which i s higher than the standard discount rate used in the Bank's project evaluation of ten percent. Moreover, it i s worth noting that, in accordance with the WHO standard, a 3 percent discount rate is generally used with income streams received by people whose premature death has been averted due to the The breakeven point occurs after 26 years of implementation considering a discount rate o f ten percent. However, if transfers are excluded from the benefits the project's IRR falls under ten percent, though it remains over 3 percent. Please see Annex 9 for more details. 2. Technical. 96. The Project will support implementation and scaling up of CCTs and skills development for youth, two types of interventions with generally successful outcomes. In both cases, experiences in other countries offer valuable lessons that have helped the Government to adapt the programs to the Bolivian context. 97. Conditional Cash Transfer Programs - Over the last decade, CCTs have become a very popular intervention to address extreme poverty and boost demand for social services, especially, but not restricted, to education, health and nutrition. By providing a cash transfer to poor families, these programs contribute to mitigate short-term issues of income poverty, through cash incentives to regularly attend social services, which contributes to human capital formation in the mid-term and mitigating poverty in the future. The number of CCT programs around the world has increased impressively over the past ten years. Latin American and the Caribbean has been a pioneer region in expanding this type of program and introducing innovations. After Brazil, Mexico and Chile, other countries including Argentina, Colombia, '' 22Annual poverty lines corresponding to each year of the household survey were used, rather than calculating an aggregated overty rate. Murray,C. andLopez, A. 1994. Quantifyingdisability: data, methodsand results. In: Murray,C.J.L. andLopez, A.D., Editors, 1994.Globalcomparative assessmentsin the healthsector: diseaseburden, expenditures, and interventions.Bulletin of the World HealthOrganization,World HealthOrganization, Geneva(Switzerland). 34 Jamaica, and Nicaragua have implemented and rigorously evaluated CCT programs, showing positive results. More recent experiences with promising results are in El Salvador, Panama, Costa Rica, and the Dominican Republic. 98. International experience shows that conditional cash transfers programs have been a very successful instrument to LAC- CCT programsPoverty reductionestimates (+) improve the welfare of the most Incidence Poverty Gap disadvantaged groups of the Nicaragua 2o01 -10.2*** -13.8*** population. CCTs programs have Nicaragua 2o02 -6.7 -9.8*** resulted in poverty reduction, Mexico 1996/99 -0.6 -4.5 *** increased access to basic services -2.1 ** -7.9*** and better outcomes in education, Mexico 1999/oo Colombia (rural) 2006 -5.4*** -6.6** and nutrition, and increased Colombia (extreme 2006 -17.4*** consumption, food* Recent Source: Schady, Fiszbein, & Grosh (forthcoming), except Colombia(source IFS) of conditional cash (+)Differences betweencontrol andtreatment groups transfer programs have shown that this kindof program has proven to be more effective than other transfer programs in reaching the poorest populations. On average about 70 percent o f the transfers reach the two lowest consumption quintiles of the population, compare with less than 50 percent of other transfers, such as school feeding food distribution or scholarship^.^^ Accordingly, impact evaluations of CCT programs inthe Latin America region have demonstrated that they have a positive impact in reducing poverty incidence and the poverty gap. This is closely related to a significant improvement in household consumption. In Latin America, CCT programs have had a significant income effect on beneficiary families, which has led to increased consumption, especially of food and proteins. Spending on these kinds o f products has increased more than proportionally as a share of total household cons~mption.~~ 99. CCT programs have also been an effective instrument to increase beneficiaries' utilization o f basic health and education services. Recent evaluations have shown significant improvements regarding regular monitoring of children growth and development (up to 30 percent), visits to clinics (up to 30 percent), and pre-natal check ups (up to 20 percent) (Mexico, Nicaragua, Honduras, and Colombia). In education, the most significant impact attributable to CCTs has been increases in secondary school enrollment rates when the program has targeted this age group (e.g., Mexico, Colombia, and Costa Rica). Inprimary education, impact has been modest, especially because inLatin America, coverage of primary education was generally high when the CCT programs started. CCTs programs have also shown significant impact on reducing school drop out rates (Nicaragua, Mexico and Honduras). Although less common, CCTs programs have also demonstrated significant positive impacts in reducing chronic malnutrition; in Mexico, Colombia and Nicaragua, a reduction in chronic malnutrition (height by age) of up to 7 percentage points is attributable to the implementation of conditional cash transfers. 100. However, CCTs programs are only a part of comprehensive strategies focused to reduce poverty from a multi-sector approach. Successful experiences o f CCTs programs in 24 Lindert, Skoufias and Shapiro (2006) op. cit. 25 Schady and Fiszbein(2007) op. cit. 35 Latin America have been the result of a cross-sector strategy to address supply- and demand- side barriers. The experience in the region has demonstrated that the success of CCTs largely depends on the existence of adequate supply of social services. From this perspective, CCTs serve as an instrument to boost demand for education, health and nutrition services, and the absence of adequate supply will likely undermine the impact of the transfers. Using CCTs to contribute to reducing chronic malnutrition will certainly require specific interventions as part of the basic health services to address it. 101. From an operational perspective, Bolivia is following lessons learned from the region in order to improve the impact of the intervention, and the main features of the MCP are consistent with international practice. Project design, which will provide support to the GOB to implement and scale up the MCP has followed basic parameters which have proven to be a key element of successful programs, but adapted to the Bolivian context. Some of the most important aspects regarding Project design include the following: (i) the MCP will be well targeted to the poorest municipalities using only geographical targeting mechanisms; given that poverty incidence in the area of intervention in all cases is over 90 percent, using a single geographical targeting mechanism i s fully justified26; (ii) the program will develop a comprehensive MIS system to track program progress; this not only will support management of the program in the whole program cycle, but also will provide more transparency; (iii) the MCP will verify that families comply with co-responsibilities before the cash transfers are transferred to beneficiaries; experience in other countries have shown that enforcing compliance with co-responsibilities has a significant impact in using social services and having better outcomes; (iv) the program will design and implement social audit and control mechanism, as well as beneficiary surveys in order to receive feedback, resolve bottlenecks and improve transparency and credibility of the intervention. (v) The MCP i s part o f an integral strategy led by the Ministry o f Health and Sports to prevent chronic malnutrition, In this regard, the implementation of the MCP i s accompanied b y parallel efforts to complement the monetary incentive through micronutrients as well as an adequate supply o f health services involving specific protocols for preventing malnutrition. 102. The MCP will introduce some innovations, which will be rigorously evaluated. Project design involves two aspects which depart from common practices in the region. The program has determined a very particular group o f the population as eligible; given the specific purpose of the monetary incentive, only families with pregnant women andor children younger than two can be registered in the MCP. This approach seeks to take advantage of the window of opportunity to prevent chronic malnutrition and provide a benefit which is self sustained; this is, healthy children at two years of age will be more likely to start the learning process on time and have adequate learning capacity when enrolled in school. Also, the previous feature of the program provides a natural exit policy for families when their children reach two year of age. 103. Skills Development Program for Low-income Youth - The experience of programs to - support unemployed low-income youth through vocational training linked to practical experiences in formal firms i s long in Latin America (e.g., Chile, Argentina, Peru, Colombia, Dominican Republic, Honduras and Uruguay among others). Since the 1990s several countries 26As opposedto the common two-step targeting methods used in middle-income countries based on geographical targeting and proxy meanstest mechanisms. 36 have implemented the so called programas jdven, based on interventions to support low-income youth (between 15 and 29 years of age living in poor areas of major cities). The programs are based on the following premises: (i) in-class training is linkedto in-work practices in firms; (ii) as a result, training design requires previous consultation with firms in order to ensure that beneficiaries are adequately trained in duties related to the correspondent industry; and (iii) training providers are competitively selected, in fact separating financing from provision of training courses. The purpose of these programs is to increase employability of beneficiaries, understoodas the capacity to find andmaintain ajob. 104. Skills development programs are targeted to vulnerable youth. These programs usually target unemployed and inactive youth (those not studying, working, or seeking a job), most of them without complete secondary education, or those that failed to enroll in a tertiary education institution. As a result, there i s a considerable proportion of youth who face the labor market at an early age in disadvantaged conditions; that is, youth with insufficient skills and abilities, with little or no experience, and usually discriminated against because of their age or socio-economic level. This segment of the population usually lives in the poorest areas of the cities. Experience in LAC has shown that longer periods of unemployment usually lead youth to be engaged in risky behavior, including participation in gangs, crime and other illegal activities; enlargestheir productivity gap; and eventually transmits poverty 105. Successful skills development programs have been part of comprehensive strategies focused on improving basic and post-basic education. Recent interventions in Latin America are focused on long-term strategies seeking to create human capital to reduce the risk of low productivity, insufficient education and unemployment and inactivity among youth. These strategies seek to promote early education through well nourished children and early childhood development programs, and basic education through efforts to increase enrollment and completion of secondary, as well as improvements in quality. Long-term interventions are complemented with short term measures to help already affected youth, including equivalent education programs as well as interventions to increase employability. Recent evaluations results of these interventions are summarizedin the table below. Employment Formality Earnings Argentina 0-11percent(10-30 percentfor <21) 0-3 percent (6-9 percentfor the 10percent youngest) Chile 12-18 percent (18-22percentfor the 15-23 percent (higher for the 20-25 percent youngest) youngest) Dominican R. 3 percent(9 percentfor the youngest) 9 percentinhealth insurance 17 percent (19 percent among men) Mexico 12-30percent (on-the-job training) 10-12percent Panama 10-12percent only amongwomen 38 percentonly women Colombia 6percent 15 percent 20 percent Peru 13 percent(women 20 percenthigher 11percent (14 percent for women) 13 percent than men) Source: IDB, World ank 37 106. The FEP has followed other experiences in the region, but will be adjusted to the Bolivian context. The GOB has decided to implement a skills development program for low- income youth living in poor areas of the cities following lessons learned and successful experience from other countries in Latin America. However, in order to adjust the model to the Bolivian context, the GOB decided to launch the program as a pilot, evaluate it and, on the basis of evaluation results, adjust the model before scaling it up. In particular, the evaluation will pay attention to the following issues: (i) feasibility and administrative burden of the program in mid-size cities; (ii) general features and parameters of the model (see Annex 4 for more detail); and (iii) implementation in cities where similar interventions are in place and possible coordination mechanisms. 3. Fiduciary. 1. Financial Management Assessment 107. As part of the preparation of the project, a Financial Management Assessment (FMA) for the Investing in Children and Youth Project was carried out on site from November 5 to 9, 2007, and updated during appraisal from January 15 to 17, 1008. The FMA was carried out in accordance with OP/BP 10.02 and the FMManual "Financial Management Practices in World Bank Financed Investment Operations" approved by the Financial Management Sector Board and published on November 3,2005. 108. The Investment in Children and Youth project will have three implementing agencies. Component 1, which will finance benefits for mothers and children (CCTs) to reduce chronic malnutrition, will be implemented by the Ministry of Health and Sports (MoH). Component 2, which will finance activities to improve the effectiveness of the skills training program for low- income unemployed youth inurban and peri-urban areas, will be implemented by the Ministry o f Labor (MOL).And, component 3, which will finance the institutional strengthening of the Red de Protecci6n Social (RPS-DIC), will be implemented by the Ministry of Development Planning (MDP). The MDP as the highest decision makingagency regarding social protection policies andprograms will also be responsible for the overall coordination of the Project. 109. On the basis of the assessments performed, the financial management team presents the following conclusions: (9 The FM capacity assessment has identified project-specific actions in order to strengthen the FMcapacity of the various implementing agencies and enable them to carry out the financial activities of the proposed project effectively. (ii) Specifically, the FMA identified specific conditions necessary for the implementation of the project: (i) the CCT information system should be designed and implemented, and the payment mechanism contracted and operational before disbursements can be initiated for the related sub-component (sub-component 1.1) and (iii) theMinistryofLaborshouldhaveimplementeditsFMinformationsystembefore disbursements can start for the related component (component 2). 38 (iv) The FMA also includes an action plan for each agency. Once the various agencies have carried out the proposed action plan presented in this assessment, they would have in place adequate FM arrangements that meet the Bank's minimumfiduciary requirements to manage the specific financial activities of the proposedproject. 2. Procurement Capacity Assessment 110. Project procurement will be carried out by the three implementing agencies, MDP, MOH and MOL, under the coordination and general oversight of the MDP. An assessment of the procurement capacity of the three implementing agencies (administrative units) has been completed, indicating a high risk rating. An action plan was preparedto address the risks that were identified. It is expectedto be fully implemented between negotiations and loan signature. The Bank's supervision plan addresses these risks by proposing biannual procurement ex-post reviews of the entire Project for the first year. The Project will also be subject to annual independentprocurement reviews to be contractedby the MDP. 4. Social. 111. The Project didnot require an Indigenous Peoples Plan as the overwhelming majority of its beneficiary population i s indigenous and therefore, the Project as a whole i s considered an indigenous peoplesproject.*' 112. Project preparation has complied with the requirements of the Bank's policy on indigenous peoples, OP 4.10, inthe following manner: a. Screening to identify whether Indigenous Peoples are present in, or have collective attachment to, theproject area. 113. The main component of the Project (Component 1, Implementing and Scaling up the Social Protection Program for Mothers and Children to combat chronic child malnutrition) will be carried out in 52 of the poorest municipalities in the country, where indigenous people represent the majority of the population (in areas where consultation took place, the proportion of indigenous population as a share of the total population in those municipalities is over 90 percent inhalf of the municipalities; andbetween 80 and 90 percent inanother 40 percent). b. Majorfindingsfrom the Social Assessment and how the Project addresses them. 114. A social assessment was carried out as part of Project preparation (a summary including socioeconomic context, legal framework, methodology, results and recommendations is in Annex 10). Recommendations resultingfrom this analysis and how the project addressedthem include the following: 21 As the FirstEmploymentProgram(Component2 of the Project) focuses exclusively on urbanyouth this componentdoes not requirean IPP. 39 115. Incorporate a strong social marketing program. Information about the programs i s very limited, particularly with regard to the MCP. A comprehensive communications campaign incorporating media and other forms of communication most used by potential beneficiaries: e.g., through local radio stations and NGOs will be particularly crucial in this regard. Indigenous languagesmustbe usedwhere appropriate, and localleaders should be involved. 116. Sub-component 1.2 of the project will fund the design and implementation of a strategy to communicate the goals of the MCP. Through this strategy, the Project aims to achieve three goals: improve program understanding among all stakeholders at national and sub-national levels, particularly with regard to its relevance as part of GOB efforts to tackle chronic malnutrition in rural areas, improve transparency, and boost and maintain credibility of the proposed model of intervention; complement cash benefits with a pedagogic message linked to program co-responsibilities, outcomes, social control, and accountability; and informing beneficiary communities about the program's goals and beneficiary rights and responsibilities. 117. The communication strategy will be focused on, but not restricted to, messages adapted to different stakeholders (e.g., beneficiary families, other members of the community, municipal and departmental authorities, and health and nutrition service providers). This will involve community instruments (radio programs, posters, outreach teams and health units, booklets and other non-written media), taking into account low literacy rates and indigenous languages, and ensuring in all cases appropriate adaptation to specific cultural and social contexts. 118. Bringlocal organizations into the programs immediately. Coordination with local organizations can help build local ownership of the programs, strengthen communication and outreach, and embed the programs into the local social networks. 119. The project involves specific activities to create and strengthening social control and accountability mechanisms in order to improve the program's operational features and ensure that beneficiary rights, particularly those of indigenous groups, are respected. These systems include mechanisms to receive, systematize and opportunely respond to complaints, appeals, and feedback from communities - beneficiary and non-beneficiary groups, to inform the program management team about program activities from independent sources, and to control program activities through social and technical audits. The following activities will support the achievement of these objectives: (i) complaint and appeals mechanisms with follow up systems, including, community-based feedback through beneficiary committees and health outreach teams and units, and systems to ask questions and report irregularities; (ii) social audits; (iii) technical audits carried out by outsourced independent firms; regular and (iv) financial audits. 120. Ensure that quality local services are available and accessible in order that participants can fulfill their individual and collective co-responsibilities. This i s the single most important condition for this program, and in the absence or faulty operation of health and education services at the local level, compliance and support for the project will be impossible. The Social Assessment carried out for the Expanding Access to Reduce Health Inequalities - APL I11(Report No: 41498-BO, December 20, 2007), presents a detailed description on how the intercultural health approachcuts across most of the project components and activities. 40 121. Incorporate capacity building and health education into the MCP. An enhanced family planning program will be very important in this regard. Beneficiaries strongly emphasized that they need both the financial support and the additional information on reproductive health andfamily planning. 122. The project involves culturally appropriate measures to address this recommendation. First, as part of the strategy to prevent chronic malnutrition, the basic services providedby the outreach teams and health units include (i) bimonthly monitoring of growth and development of children including weight and height of infants less than two months accompanied by individual counseling to mothers or caretakers; (ii) at least four pre-natal check ups to pregnant mothers and one post-natal health check; (iii) supplementation and fortification including food micronutrient supplementation, iron, and vitamin A for children 6-23 months; and (iv) a pedagogic approach through talks and workshops to change behaviors among beneficiary mothers regarding child care; illness recognition; home hygiene; food intake; and cooking and hand washing practices, among others. The last measure involves family planning and reproductive health counseling. 123. Additionally, the cash transfers will be complemented by specific messages provided during individual counseling sessions during the regular bimonthly check ups as well as through group workshops. The latter will focus on the program's messages about child care at home, personal hygiene, hand-washing, and diet, among other aspects. These workshops will be provided by, or incoordination with, outreach teams and health units during payment days, and will be reinforced during bimonthly visits by health services providers. These workshops will also serve as a mechanism to receive feedback from beneficiary families about program operation and benefits received. 124. Finally, the project involves beneficiary surveys. The contents and messages involvedin the previous activities will be informed by beneficiary surveys designed and developed in the second and fourth year of the program, and will be carried out under the responsibility of the Ministry of Health and Sports incoordination with UDAPE. 125. Programs must be culturally and linguistically appropriate. The importance of this factor in rural areas is evident and well-accepted. The entire strategy, regarding the cash transfers process and the strengthening of supply involves culturally and linguistically appropriate measures to ensure that indigenous communities take full advantage of the benefits provided by the program. 126. Initiate a process of cultural awareness among health care professionals, and incorporate traditional professionals in systems of practice and referral. Despite earlier attempts, traditional health care professionals, especially traditional birth attendants, have not been adequately recognized or brought into the system. As this aspect i s related to strengthening the supply of health services, this measure has been taken into account by the measures comprised by the HealthAPL I11operation. 127. Build in a strong monitoring and evaluation component. Participants and local leaders should be part of the teams for monitoring of the program. The MCP involves both aspects. 41 128. First, the Project will support the GOB in implementing the Management Information System (MIS) to administer the program, follow up on physical and financial progress, and oversee the cash transfers cycle. The MIS system for the MCP and all its required modules (registry of beneficiary and management, monitoring of co-responsibilities, payment system and conciliation, program process and product monitoring and feedback mechanisms) will be part of the Ministry of Health and Sports' Management InformationSystem (SNIS, the national health information system), currently under implementation with support from the APL I1and 111operations. The MOH will complete the full design and testing of the MIS system by the time the Project is effective. 129. Second, the results and outcomes of the MCP program will be rigorously measured through an independent impact evaluation process. The impact evaluation of the MCP will be jointly conducted and financed with the APL 111. The MCP evaluation will involve a baseline survey and two follow-up surveys with a control and treatment group. The treatment group will be randomly identified from the 52 municipalities covered by the first phase of the ZMP, while the control group will be similarly selected from the 112 municipalities of the second phase of the ZMP. The PHRD grant financed a consultancy to support the Government in defining the impact evaluation methodology, completing the terms of reference to contract a specialized international firm to carry out the evaluation, and accompany the M O H in evaluating technical proposals. Contracting for this task, estimated to cost roughly $1 million, will follow international competitive biddingprocesses, and will start once the APL I11Project i s effective. c. Process of prior and informed consultation with the affected indigenous peoples' communities to f i l l y identify their views and ascertain their broad community supportfor theproject 130. Between October-December 2007 a process of informed consultation with indigenous groups took place. For Component 1, the Social Protection Program for Mothers and Children, these consultations occurred in eight municipalities in eight of Bolivia's nine departments. Focus group discussions were used as the primary method; the focus group is a planned exercise that is designedto elicit perceptions, opinions, and ideas from a set of individuals who share at least one relevant characteristic (for example, gender or socioeconomic status). It provides a safe, neutral environment, in which all participants are encouragedto contribute. The focus group setting thus represents a natural environment where the topic of conversation i s directive, but at the same time, perceptions and ideas are expressed in the participants' own terms rather than forced into categories imposedby standard survey techniques. 131. Key informant interviews were conducted to provide further information in the selected communities and to confirm, validate, or modify findings derived from the focus group discussions. The following table provides the municipalities and departments where the social assessment was carried out. 42 Department Municipality Ethnicity - La Paz Santiago de Callapa Aymara 95% Oruro Choro Quechua 87% Chuquisaca Tarabuco Quechua 92% SantaCruz GutiCrrez Guarani 80% Potosi Betanzos Quechua 95% Tarija Yunchara Espaiiol95% Beni Loreto Mojeiio 48% Cochabamba AvoDava Ouechua 92% d. Preparation of an Indigenous Peoples Plan or an Indigenous Peoples Planning Framework 132. The Project does not require a stand alone Indigenous Peoples Plan, as it follows IPP requirements statedinOP 4.10, paragraph 12, which reads: "When Indigenous Peoples are the sole or the overwhelming majority of direct project beneficiaries, the elements of an IPP should be included in the overall project design, and a separate IPP is not required. In such cases, the Project Appraisal Document (PAD) includes a brief summary of how theproject complies with thepolicy, in particular the IPP requirements." e. Disclosure of the draft Indigenous Peoples Plan 133. A summary of the Social Assessment, the major findings from the Social Assessment and how the Project addresses them, and this document are published on the webpage of UDAPE. Safeguard policies. 134. The Project has an Environmental ratingof "C." Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [I [XI Natural Habitats (OP/BP 4.04) [I [ XI Pest Management (OP 4.09) [I [X 1 Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I [ XI Involuntary Resettlement (OP/BP 4.12) E l XI Indigenous Peoples (OP/BP 4.10) [XI [I Forests (OP/BP 4.36) [I [X 1 Safety of Dams (OP/BP 4.37) [I [X 1 Projects inDisputed Areas (OP/BP 7.60)" [I [X 1 Projects on InternationalWaterways (OP/BP 7.50) [I [XI 5. PolicyExceptionsand Readiness No exceptions requested. * By supporting theproposed Project, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputedareas 43 Annex 1: Country and Sector Background BOLIVIA INVESTING INCHILDREN AND YOUTH Country Context 1. Bolivia ranks among the poorest and most unequal countries in Latin America. In 2006 poverty incidence in Bolivia reached close to 60 percent, with 38 percent of the population living under the extreme poverty line.28While this i s a decrease from poverty levels in 1999, when national poverty reached 65 percent and extreme poverty was at 43 percent, inequality in Bolivia i s among the highest in Latin America and the world, and the gap may be increasing. This is reflected in the vast disparities between the richest and poorest deciles -the richest 10 percent of households receive 47 percent of total income, whereas the poorest decile receives less than one percent. These disparities are larger inruralareas. 2. Poverty i s particularly high in rural areas and among indigenous groups. In 2006 the poverty rate for indigenous Bolivians was 69 percent, compared with 46 percent for the non- indigenous; and extreme poverty rates were (respectively) 49 percent and 21 percent. A particular area of concern i s rural indigenous communities and households in the western highlands, who are excluded from the benefits of renewed growth and unable to respond to the opportunities available elsewhere in the economy, due to low human capital endowments that reduce their potential gains from migrating to urban areas or the eastern lowlands. Another area of concern is vulnerable groups - especially youth - inthe marginal urban sectors of fast-growing cities such as Santa Cruz de la Sierra. Table 1:Trends inPoverty and Extreme Poverty, 1999-2006 I 1999 2000 2001 2002 2005 2005 (a) 2006 UDAPE I I 1 I 1 I Extreme Poverty Bolivia 42.8 45.8 38.8 41.3 36.7 38.2 37.7 Urban 24.3 28.7 26.2 25.7 20.5 24.3 23.4 Rural 74.2 75.6 59.7 66.8 65.6 62.9 62.2 Poverty Bolivia 64.8 66.9 63.1 65.1 59.6 60.6 59.9 I Urban 52.3 55.1 54.3 53.9 48.2 51.1 50.3 Rural 86.1 87.4 77.7 83.4 80.0 77.6 76.5 Note: Differences between World Bank and NDP numbers for 2005 are due to differencein the treatment of outliers. Sources:MECOVIdata 1999-2002;Encuestade Hogares, 2005-2006 (a) National Development Plan (2007, Decreto Supremo 29272, September 2007) ChildrenandYouth inBolivia 3. Children and youth are particularly vulnerable to social risks. About 60 percent of the Bolivian population i s under 25. The poverty rate for this group i s well above the national average, and reaches over 80 percent among children under 5 years o f age in rural areas. In general, children and youth are vulnerable to economic shocks and risks including malnutrition, 28Poverty lines based on per capitaincome. In 2006 the poverty line was equal to 339 bolivianos (US$42) and extreme poverty 189bolivianos(US$23). 44 school drop outs, child labor, unemployment and inactivity. Of particular concern in rural areas has been the stagnation in the reduction of childhood malnutrition rates, especially among the poor. Changes in school enrollment and attendance are also troubling; between 1994 and 2003; primary enrollment among the poorest children fell from 84 percent (in 2000) to 80 percent (2004), and attendance from 84 percent to 79 percent during the same period. Open unemployment among individuals under 25 grew from less than 5 percent in 1996 to more than 14 percent in 2005. 4. Progress achieved on child malnutrition in the early 1990s appears to have stagnated. While the stunting rate improved markedly duringthe eighties and the first half o f the nineties, it has been almost flat, at 27 per cent, since 1994. Chronic malnutrition is much higher in rural areas (42 percent), and among indigenous groups (over 50 percent using the former World Health Organization definition). As a result, Bolivia has one of the highest rates of malnutrition in Latin America, higher than Peru and Ecuador. There is also substantial variation in malnutrition across regions, for example, the under-five stunting rate was 32 percent in the highland regions of L a Paz, Potosi and Oruro, while in the plains o f Santa Cruz, Beni and Pando it was 16percent in 2005. 5. Chronic child malnutrition undermines efforts to reduce infant mortality, tackle poverty, and sustain economic growth. In 2003, chronic malnutrition affected one-third of Bolivian children under 5 years of age. Apart from the cost to the health system, chronic malnutrition leads to significant loss of life. It i s estimated that 50 percent o f under-five mortality in developing countries i s related to malnutrition; moreover, severely malnourished children have more than a five times higher risk of death in comparison with healthy children. Infant mortality reached 86 per one thousand live births in rural areas and 94 among indigenous communities in 2003. Even among survivors, malnutrition causes irreparable neural and physical damage, which can have severe long-term consequences for individual development and productivity, and can affect the economy as a whole.29 6. The poorest children are most vulnerable. While child mortality rates have improved on the aggregate, there are large differences between the poor and the non-poor. In 2003, the under- five mortality rate for the bottom quintile was 94 deathsA000 live births, whereas for the top quintile was 31 deaths/1000 live births. Malnutrition in Bolivia shows a similar pattern of inequality, with a much higher probability of malnutrition for indigenous, poor and rural children. Indigenous children have a stunting rate of 42 percent, almost twice the rate reported for the non-indigenous. 7. The lack of access to quality health and nutrition services contributes to vulnerabilities among poor, rural and indigenous children. Access to health services i s difficult for poor families not only because o f the lack of providers and specialized staff, but also because o f income barriers, which prevent poor families from reaching the services, especially in rural areas. For example, in 2003,7 out of ten women reported lack o f money as the most important problem in accessing health services when needed (80-88 percent among those from the two lowest income quintiles). Furthermore, more than 30 percent o f rural and poor (quintile 1) pregnant women received no pre-natal care, while 70 percent of children younger than 1 year had no postnatal *'Alderman, ~~~~ Hoddinottand Kingsley (2003) op. cit. 45 check-ups, among the lowest coverage rates in the region. Less than 30 percent of the rural poor and indigenous groups gave birthinhealth institutions and were attended by health professionals. The share of the poor with health insurance i s estimated at 6 percent, less than a third of the national average, while it i s estimated that less than 60 percent o f the poorest have access to SUMI-the supposedly universalhealth service. Problems to accesshealth No ante- Place of birth Attention at birth No post- facilities Health MDInursd Natal Don't know natal care facility Home mid-wife Other care Income where to go Any Q1 37.3 21.5 77.5 34.4 62.6 78.9 88.1 52.6 96.7 Q2 27.7 45.1 53.9 57.3 40.5 69.2 82.3 40.3 95.1 43 18.9 65.5 32.9 77 21.5 78.7 76.7 32.4 93.1 Q4 9.1 85.5 13.4 91.4 7.5 72.4 66.5 27.9 90.8 Q5 1.7 97.9 1.4 98.9 0.8 NIA 42.2 18 77 Avg 20.4 57.1 41.8 66.8 31.4 75.4 68.5 32.2 89.5 8. The table above shows that although the basic health service system has failed to reach universal coverage, especially among the rural poor, income-related factors are still the most important reason for not using available health services when required. This phenomena demonstrates that, even though additional coverage of the basic infant maternal health service package i s required through the SUMI, targeted interventions to support families from the demand side perspective are also required. The current government strategy involves a balance of both supply and demand side interventions. As explained above, the MOH has targeted the most under-served municipalities in order to strengthen the supply o f health services (an intervention which i s being supported by the Bank health APL operations). At the same time, the MCP program, also under the responsibility of the MOH, i s mounting a conditional cash transfers program to help families access existing services. 9. The nutritional status of children gets markedly worse during the first years of life - especially between 6 and 24 months, when inadequate complementary feeding i s widespread. During these critical months, babies are typically breastfed exclusively, depriving them of necessary nutrients found in solid foods. Mothers must be educated on the need for complementary foods and other nutritional needs of their children; indeed, studies have shown that the mothers education plays a key role in her child's nutritional status (and a household's resources have a positive association with nutrition). While altitude has a strong inverse association, possibly linked to diet, the evidence suggests that mothers' knowledge and expectations regarding their child's nutritional state i s a key factor associated with stunting, and i s especially important among indigenous mothers. These findings demonstrate the need for policy interventions focused on pregnancy and the first years o f life, and should aim to change mothers' expectations for their children's size by popularizing growth standards, to monitor children's growth regularly, and counseling mothers on adequate complementary feeding. 10. The window o f opportunity to prevent chronic malnutrition is small. The permanent damage of malnutrition occurs from conception through age two and i s largely irreversible. Malnourished children at two years of age will have lower learning capacity and concentration 46 problems, affecting school achievement, skills development as adolescents, and capacity to find better jobs as adults. Critical interventions need to be targeted to pregnant mothers and children younger than 24 months through preventive and pedagogic measures. Although supply side barriers - including insufficient provision of essential services - may be part of the cause of low access to health services, parallel demand-side interventions targeting mothers and children and supportingthem to reach those services are needed. 11. Tackling urban poverty i s a central challenge for the GOB. Given rapid urbanization and growth of cities in Bolivia - including Santa Cruz de la Sierra and ElAlto - urban poverty issues have taken on a new urgency. Youth are particularly vulnerable, as they are at greater risk of unemployment, and face particular challenges including child labor and school drop-outs, especially at the secondary level. As a result of poor nutritional status, as well as low quality and insufficient basic and secondary education, a considerable proportion of youth do not reach tertiary education and enter the labor market at a disadvantage. On average, only one in four Bolivians enrolls in tertiary education (only 3 percent among the lowest quintile). According to Government estimates, in the largest cities each year four out o f ten students completing secondary education enter the labor market as they are not enrolled in tertiary education or other post-basic education. In the 12 largest cities, where at least 1,000 students complete secondary education annually, more than 20,000 are expected to enter the labor market every year.30 12. Unemployment is particularly high among poor urban youth. For youth entering the labor market, unemployment i s a severe issue. As in other countries, a high share of youth unemployment 2: Urban youth - i s linked to limited opportunities for new labor andinactivity Unemploy' market entrants. Given their age, insufficient skills, Ages 18to 25 -ment Inactivity and lack of work experience, youth experience Complete Secondary 137 12 4 Incomplete Secondary 9 2 174 higher rates of unemployment when they enter the Average 13.1 13 I labor market. This is coupled with a tendency for 4 1 33.7 15.0 young people to shift more frequently betweenjobs, 42 14 7 21 5 4 3 19.0 as they try out alternatives. Urban unemployment 12 6 Q4 11 5 11.0 among young people aged 18-24 reached more than Q5 10.5 6.3 18 percent in 2005, and as much as almost twice that Source: Encuesta de Hogares, 2005 level among the poorest, at 34 percent, in comparison with an overall urban unemployment rate of less than 8 percent. Unemployment can lead to persistent joblessness and a higher incidence o f inactivity (youth out of school, out of the work and not seeking a job) and thus exacerbate the I I gap between skills and labor market demand, creating a ArErage Paaro.. 9Yl"tlIS , 0 Tat POP <2003>I18-24 (2005, dangerous cycle that makes it more difficult for young people to be integrated into the workplace and find productive employment. Those who suffer from unemployment and inactivity in the early years of their working life (about 20 percent of poor youth in Bolivia) are more likely to be unemployed as adults. Although unemployment is 30It is estimatedthat 6 percent enter the army and about 55 percent enrollin a university or a technical institution(UDAPE and Ministry of Education, 2006). Estimatesincludepublic schoolsonly. 47 higher among youth with complete secondary, inactivity incidence affects especially those with incomplete secondary education. 13. Work experience is necessary for young people to acquire skills and overcome the barriers they face in the labor market. A long term policy to reduce youth vulnerability requires reforms in the health and education systems, including coherent strategies to tackle chronic malnutrition, improve the quality of education and increase enrollment and completion rates, especially in secondary school. At the same time, however, Bolivia faces the immediate challenge of a considerable proportion of low-income young people with little or no options to enroll intertiary education and insufficientqualifications to enter the formal labor market. Inthe long term, this may create a labor force that i s not receivingthe training and skills it requires and a generation of young people without adequate occupational experience. Therefore, in conjunction with structural reforms in health and education, there i s a need for short term interventions targeted to low-income youth who fail to enter post higher education and enter the labor market. Social Protection inBolivia Issues in the social protection sector 14. Spending on social protection programs in Bolivia is not high, given the level of need. Total social protection spending in 2006 fell into the following categories: (i) and in-kind cash transfers (including contributory pensions); (ii) community and local development; and (iii) programs for expanding access to social services amounted to US$693 million, or 6.3 percent of GDP (including pensions). Incontrast, the poverty gap, or'total cost of bringing all households in Bolivia up to the national poverty line in 2005 was 10.4 percent in 2005, and 2.7 percent for extreme poverty. Incomparison with other countries in the region, Bolivia falls in the mid-range of spendingon social programs.31 15. The effectiveness of SP programs has been limited. Despite the fact that Government expenditures on social protection have grown over the last few years, the allocation of public funds and benefits has failed to prioritize key groups and effective interventions, reducing the efficiency of the use of public funds. In 2004, apart from resources allocated through Bonosol, the non-contributory pension program,32 about half of central Government spending in social assistance involved social funds-related expenditures, including social infrastructure (Le., education, health, water, and sanitation) and workfare programs. The remaining 60 percent had been fragmented into a myriad of small programs, many following no clear strategic guidelines. Despite the influx of fiscal resources from hydrocarbon royalties and taxes (which have more 3'Including education, health andsocial protection. 32 InNovember 2007 the Congress voted to replace the Bonosol with the Rentade Dignidad.The changes include reducingthe age for eligibility was reducedfrom 65 to 60, increasing the level of the benefit from Bs. 1,800 (approximatelyUS$232) to Bs, 2,400 (approximately US$309) per year. There has also been an attempt to improve targetingby excludingbeneficiariesof the contributory pension system. Also, the source of funding was changed from the proceeds of capitalized firms to IDHresources (changingthe distributionof funds betweenthe different levels of government). 48 than doubled in the last five years, reaching 12 percent of GDP in 2006) social protection programslack a stable planning framework andface volatile revenue streams. 16. The impact of the main social protection programs on poverty is mixed. None of Bolivia's social protection programs uses poverty targeting at the household level, but the targeting of programs to groups such as the elderly and children has made several of the main programs progressive. The health insurance program, SUM1i s the best targeted program, with over 60 percent of its beneficiaries in the bottom two quintiles of the per capita household income distribution, while Juancito Pinto, the School Breakfast Program and Bonosol are all slightly progressive.The new programs of the RPS-DIC -including ZMP andFEP -incorporate elements of geographic and categorical targeting to poor areas and vulnerable groups that have the potential to improve the allocation of resources andhave measurable impacts on welfare. The Universal Maternal and Child Health Insurance Program (SUMZ) plays a critical role in reaching mothers and children up to 5 years of age. The Government now plans to extend coverage to the population under 21 years of age, to be financed by departmental Governments from hydrocarbons direct tax (IDH).Issues related to the financing and coverage of services will needto be addressedinthe context of this reform. Bonosol has an important impact on poverty, especially in rural areas. In the absence of the benefit, the extreme poverty rate among the population over 65 would be 19.5 percentage points higher, and 31 percentage points higher in rural areas. The level of the benefit at Bs. 1,800 (approximately US$ 225 per year) represents 25 percent of total household income for the poorest quintile, this proportion falls to 5 percent for the next quintile. The Juancito Pinto Program's objective is to promote school attendance and discourage drop- outs. The program has no measurable impact on poverty, due to the low level of the benefit (approximately US$ 25 per child per year), made necessary by the wide scope of the program (all children in public schools up to 4' grade). Given the high cost of the program (US$ 31 million per year, or over 12 percent of social protection spending), its impact on its stated objective of school retention should be evaluated carefully. 17. Insufficient data availability for managing and analyzing social protection programs (coverage, targeting, and adequacy) limits the effectiveness of programs. The household surveys only include questions on a handfulof programs. The introduction of the RPS-DIC will involve the creation of an integrated MIS,with a single beneficiary registry. Companion efforts should be made to expand the number of programs on which data is collected in household, demographic andhealthsurveys. Government Strategy 18. Social protection is a priority for the current Government. The Morales Administration has prioritized social protection to tackle poverty and reduce inequality as a core element of its National Development Plan (NDP). The GOB'S approach aims to accelerate progress toward the reduction of poverty, inequality and exclusion through greater emphasis on the community's own capacity to identify, prioritize, execute and monitor integrated development projects; and i s based on a multisectoral and interinstitutional approach to service delivery. The Ministry of Development Planning recently finalized the design of its Red de Protecci6n Social y Desarrollo Integral Comunitario (RPS-DIC) underthe umbrella of the NDP. 49 19. According to the Government decree creating the RPS-DIC, its objectives are: Contribute to the eradication of the structural causes of poverty and extreme poverty, reduce inequality gaps, eliminate all forms of exclusion, and reduce risk and vulnerability factors in the population through the targeting of productive and social investments in the poorest rural areas, the most excluded periurban areas and the most vulnerable population groups. 0 Contribute to the recovery and strengthening of the rights and capacities of the population (economic, physical, human, natural and social), particularly rural residentsand indigenous populations. 0 Strengthen the community values, direct social control and transparency, the own organization practices of the local populations, and cultural and territory identities through the substrategiesof Comunidades en Acci6n (in rural areas); Comunidades Reciprocas (in urban areas); and Comunidades Solidarias (for vulnerable groups). 20. The RPS-DIC's policies are designed along the following six principles: 0 integrality, to contribute to developing the multiple capacities of individuals, families, social groups and communities in a equitable approach, through multisectoral interventions, as well as short, mediumand longrunprograms. 0 territoriality, interventions will consider the community, municipality, region or national scope, acknowledging social and cultural relations established in territories, strengthening their reconstruction and generating greater equity among them and new dynamics for their interaction. 0 community-based approach, strengthens identity and organization and self-management of local communities, either rural, indigenous, or productive, in the design, implementation, monitoring and evaluation of programs and projects. 0 poverty reduction, programs are oriented to eradicate the structural causes of poverty, extreme poverty, marginality, and to prevent and reduce all aspects of vulnerability. 0 self-management, aimed to strengthen self-management capacities and sustainable development of local rural, indigenous and productive communities, mainly through cash and in-kindtransfers. 0 multisectorality, both multisectoral and territorial processes are considered to ensure a coherent and integrated development strategy. 21. The implementation of the RPS-DIC will be carried out considering the following three sub-strategies: (i) short-termtransitionprograms,includingPROPAIS,acommunity development program focusing on small-scaleinfrastructure; andthe Labor Intensive Job Program (EDIMO), a new workfare program to beimplementedin areas affected by natural disasters: (ii) opportunitiesandsocialassets,including:(a)theinter-governmentalZeroMalnutrition Program (ZMP), aimed to prevent malnutrition and tackle malnutrition through targeted interventions for pregnant and lactating women and children under the age of 5, this includes the 50 programof cash transfers supported by the InvestinginChildren and Youth (ICY) Project; (b) Mi Primer Empleo Digno, a new youth training programto increase youth employability, also supported by this Project; and (c) the Juancito Pinto Program, a cash transfer intended to increase enrolment and reduce drop out rates in primary public schools; and (iii) integrated community development, including three new sub-strategies Comunidades en Accio'n, ComunidadesRec@rocasand ComunidadesSolidarias: Comunidudes en Accidn (CeA) i s a rural development and social protection strategy targeted to the poorest municipalities in the country. The approach aims to combine traditional social protection measures with efforts to stimulate productive activities and i s based on a collective focus, rather than around individuals. Phase one of the program will involve 37 of the poorest municipalities, with a total population of 0.51 million people. This will amount to 6.2 percent of the population and 10.2 percent of the poor in the country. The second phase will extend the program to 148 additional municipalities, involving 1.6 million people, or 19 percent of the total population and 31 percent of the poor. The Social Fund(FPS) will implement this program. Communidades Rec@rocas i s the CeA companion strategy for urban areas, which will be implemented in 17 peri-urban centers around the country. The content of the strategy i s being developed and pilot activities are underway in El Alto, based upon a community-driven development model. Comunidades Solidarias i s the umbrella heading for a set of programs which are directed at specific population groups including the disabled, children-at-risk (including street children, child laborers, and children in prison), and the elderly. 22. The implementation of these sub-strategies lies on a number of government agencies. The Ministry of Development Planning has responsibility for the overall direction, coordination and monitoring of the opportunities and social assets strategy, which comprises programs under the responsibility of the Ministries of Education, Health and Labor (including those supportedby this Project). The FPS (Social Fund) has a key role in the implementation, coordination and monitoring of the integrated community development and short-term transition programsonly, and has no role in the opportunities and social assets strategy, which is the one supported by the Project 23. The new strategy is more comprehensive than past approaches. It makes a greater effort to integrate social assistance programs and productive sector interventions, identify priority groups, and emphasize geographic targeting and social inclusion through community driven projects. Sub-strategy Programs Status (i) Short-termtransitionprograms PROPAIS, community driven 0 Since 2004 infrastructureprograms; EDIMO, workfare in disaster- * New program, based on PLANE affected areas. experience. (ii) Opportunities and social assets Zero Malnutrition Program, CCT New program, launched July as part of national nutrition 2007; 51 Sub-strategy Programs Status program for mothers and children under 5; New program, to be launched in Mi Primer Empleo Digno, youth 2008; employment program; New program (launched October Juancito Pinto, annual cash 2006). transfer to primary school students; (iii) Integratedcommunity Comunidades en Accio'n, rural New program, to be defined; development development; Comunidades Reciprocas, urban development; New program, to be defined; Comunidades Solidarias, programs for vulnerable groups 0New program, to be defined. e.g. children, elderly, disabled. 24. The GOB'S new strategy puts substantial emphasis on programs to invest in children and youth, who face risks including malnutrition (for young children); school drop- outs; and unemployment (for youth). The strategy involves a cross-sectoral approach with policies to strengthen the supply and quality of education and health, complemented by social protection interventions targeted to improve the welfare of vulnerable groups. To achieve this goal, under the umbrellaof the RPS-DIC andundercoordination of the Ministry of Development Planning, the Government has launched two comprehensive strategies and has asked the Bank to support their implementation and scaling up - the Zero Malnutrition program (ZMP) and the FirstEmployment Program(FEP). 25. The Zero Malnutrition Program (ZMP) is a flagship program of the current Administration, formally launched in July 2007. Its objective i s to meet the nutritional requirements of children under 5 years old, with emphasis on those under 2 years old, and pregnant and lactating women, contributing to the eradication of malnutrition in the most vulnerable areas of the country. 26. The ZMP's main activities include: (i) establishment of a massive consumption of the Fortified Complementary Food (FCF) for children between 6-23 months and pregnant and lactating women, this also aims to promote the participation of small local agriculture producers and small and medium enterprises in the elaboration process of FCF; (ii) carrying out literacy and Information, Education and Communication (IEC) activities to strengthen the knowledge and practices of rural households; (iii) the development of Rural Integral Nutritional Networks (RINN) based on apreventive approach in coordination with health networks; and (iv) expanded access to drinking water and sanitation. The ZMP program i s being supported both by the ICY Project (through the MCP), as well as through the World Bank Health Project APL 111, which will strengthen the supply of health services in the target 52 areas. This complementarityof efforts to strengthen the supply and demand for nutrition services will be critical for the program's success. 27. First Employment Program (FEP). The second program aims to expand employment opportunities of low-income young people in urban and peri-urban areas. This program implemented by the Ministry of Labor in partnership with the Ministry of Development Planning, includes two components targeted to youth with complete secondary education, consistent with the Government's efforts to promote secondary completion rates. However, over the course of implementation, the Government will assess the possibility of including beneficiaries 18-29 year olds with incomplete secondaryeducation. 28. The Ministry of Development Planning has responsibility for the RPS-DIC, with analytical and policy support from UDAPE. The MDP has also created a Technical Coordination Unit to coordinate and monitor the programs included in the Social Protection Network. The creation of the Social Protection Network (RPS-DIC) may involve consolidation, and/or coordination of institutions and agencies involved in social protection, and represents an opportunity to support integration and coordination of program administration for efficiency gains, for example, through linking information systems of programs administered by different agencies. 53 ANNEX 1A THEZERO MALNUTRITIONPROGRAM 1. The Zero Malnutrition Program (ZMP) i s one the priority programs of the Morales administration. The objective of the program i s to enable children under 5 years old, with emphasis on those under 2 years old and pregnant and lactating women, to meet their special nutrition-related needs, contributing to the eradication o f malnutrition in the most vulnerable areas of the country. 2. Description. The program's main activities include: (i) establishment of a massive the consumption of Fortified Complementary Food (FCF) for children between 6-23 months and pregnant and lactating women, which will also promote the participation o f small local agriculture producers and small and medium enterprises; (ii)carrying out literacy and Information, Education and Communication (IEC) activities to strengthen households' nutritional knowledge and practices; (iii) the development o f Rural Integral Nutritional Networks (RINN) based on a preventive approach coordinated with health networks; and (iv) expanded access to drinking water and sanitation. In addition, a conditional cash transfer (CCT) will be implemented in the 52 most vulnerable municipalities, those prioritized under Phase 1 o f the Program. This transfer constitutes a demand-side intervention aimed at increasing the utilization o f health services to prevent chronic malnutrition in children under 2 years. The ICY Project will support the design and implementation o f this CCT. The provision o f health services in these municipalities will be strengthened through the Familiar, Community and Intercultural Health Strategy, which i s being designed by the MOH. This supply-side strengthening intervention will be supported by Bank's Health APL 111. 3. Target GroupsBeneficiaries. The program i s expected to be implemented in two phases in four and a half years, from 2007 to 2011. Beneficiaries of the first phase include children under 5 and pregnant and lactating women in the 52 most vulnerable municipalities. The second phase will comprise interventions in the next 114 most vulnerable municipalities. Targeting criteria for the first phase require that: (i) the municipality should be the most vulnerable interms of food security; (ii) the municipality must be eligible under the social protection program named Cornunidudes en Accidn; and (iii) municipality had to be selected in the ZMP sample the baseline. 4. Financing. The total cost of the program i s estimated to reach US$ 106 million. The program i s being supported by a multi-donor project (US$lO million), involving mainly UN agencies-WFP, UNICEF, PAHO, UNFPA and FAO. The Government expects that most of the resources will come from municipal Governments. There is a Supreme Decree establishing that municipalities should assign resources from the IDH for the acquisition and distribution of complementary food to children 6 to 23 months. Additionally, the Bank will provide financial support (as well as technical assistance) for the MCP program, approximately US$ 7.5 million through the Investing in Children and Youth Project; while the Health APL I11i s expected to allocate US$9.7 million to the MOH's Familiar, Community and Intercultural Health Strategy to strengthen service provision inthe municipalities targeted by the ZMP. 54 5. Znstitutional Responsibilities. Given the multi-causal nature of malnutrition, an inter- institutional committee known as CONAN (National Council o f Food and Nutrition), under the office of the President, was reactivated for the implementation o f the program. While the ZMP i s under the technical leadership of the Ministry of Health and Sports (MOH), other institutions participating in the CONAN include the ministries of the Presidency, Development Planning, Finance, Education, Production and Micro-enterprise, Rural Development, Agriculture and Environment, as well as representatives from civil society. To ensure adequate implementation andfinancial sustainability, municipalitiesas well as NGOswill be involved. 6. Implementation Arrangements. The program will be implemented in four and a half years, from the beginning of 2007 through the end of 2011. It will be encompass two phases, the first one will focus its interventions in 52 municipalities VAM 4 and 5, and the second one will extend its interventions to the remaining 112 municipalities VAM 4 and 5, with a possible expansion to municipalities VAM 3. 7. Program implementation is under the political responsibility of the CONAN, led by the President of the Republic, and under the technical leadership o f the Ministry of Health and Sports. Coordination and management will be centralized by the Feed and Nutrition Unit, which i s under the General Direction of Health in the MOH. At the departmental level, the technical team of each SEDES will be in charge of implementing the activities o f the Program. At the municipal and health network levels, the Network Manager, technical teams and staff of health facilities are responsible for implementing the Program's activities at the three levels of the health system. The DILOS and communities will support and oversee the implementation of the Program. An Integral Nutrition Unit (UNI)will be created in at least one of the health facilities of each Health Network, whose technical team will lead activities aimed at preventing malnutrition and promoting adequate feeding practices in its area of influence. In addition, the UNI team will provide technical assistance to health staff. 55 Extreme Global Infant Municipality Population Population Vulnerability Poverty poverty Mortality Fecundity less than 5 Index group incidence incidence Preva'ence rate rate ~~~~~~~~~~~~~~~~~ Oruro ElChoro I 8.187 I 0.965I 5 I 99.2I 80.4I 15.38I 81I 3.7 Potosi 56 Exaltacih 12.206 2.029 4 94.7 40.4 26.78 56 7.3 Loreto 0.673 3.908 4 96.4 53.1 15.22 78 6.8 Puerto Siles 0.987 0.15 4 97.1 23.6 16.79 70 5.4 57 Annex 2: Major Related Projects Financedby the Bankand/or other Agencies BOLIVIA INVESTING INCHILDRENAND YOUTH 1 Kprojects: Amount Financier DOAPRatings Sector Issue Satisfactory Program of dialogue and evidence-based (Phases 1and analysis which aims to support the implementation of the social protection network, and is contributing analytical inputs and international experience to the Bolivia ICY Project's design. Program is in its second stage and includes an analysis of the potential of local institutions, to contribute to service delivery; urban social protection; and international experience on communal involvement in social protection. Health Sector US$18.5 IDA Not rated yet Project's objective is to (a) increase ReformProject, million coverage and quality of health services ThirdPhase (APL equivalent and related programs to improve the 111) population's health (specifically mothers and children) and to empower communities to improve their health status; and (b) strengthen national, regional, and local capacities to respond to health needs. US$10 IDA Not rated yet The project development objective is to Education million support the Municipal Government's Transformation equivalent education strategy, by (i)increasing access to secondary education for adolescents and young people and improving their permanence in the education system; (ii)improving quality and relevance o f primary and secondary education; and (iii)strengthening the decentralized education management capacity of the Municipality of La Paz. Global Alliance For US$2.69 Trust Fund To support the Government's national ImprovedNutrition million food fortification program to reduce Trust Fund nutritional deficiencies in the population, particularly for pregnant and lactating women and children under five years of 58 Relatedprojectsb jther internationalagencies: Agency or Amount Implementation Sector Issue Program Date Hygieneand 880,000 Eu. Nov. 2007-March Institutional strengthening focused on link BasicHealth 2008 between innovation processes at a regional Care Program level and development of health policies and (PROHISABA) the national level. UnitedNations USD 16,000 On-going Strengthening the PopulationFund formulatiodimplementation monitoring, and (UNFPA) evaluation capacity of health policies and sexual and reproductive rights to promote equitable access to sexual and reproductive health. UnitedNations USD56,900 On-going Prevention plan for adolescent pregnancy. PopulationFund Available health services for teenagers, (UNFPA) youth, and women in the context of SUSALUD. Appropriate age registry of specific health care provision of services applying the SNIS tools. 59 Annex 3: ResultsFrameworkand Monitoring BOLIVIA INVESTING INCHILDRENAND YOUTH Annex 3: Indicators PDO Outcome indicators Use of Project Outcome Information Contribute to reduce the Percentage of 2 year old children with a height for age Assess prevalence of chronic over 22 scores in the intervention areas. effectiveness of malnutrition among the MCP program children younger than 2 in Percentage of mothers with children younger than 2 living the 52 most vulnerable inthe targeted municipalities receiving transfers (as a Assess extend to municipalities share of estimated total number of mothers with children which the MCP younger than 2 in the targeted municipalities) reachesthe targeted Proportion of children participating in the program with population anemia. Assess extent to Percentage of beneficiary women who know their rights to which the MCP access services and co-responsibilities to participate in the provides the poor program with sufficient incentives to access health and nutrition services Increase the Percentage of beneficiaries with an employment contract Assess extent to employability of low- four months after the end of the internship phase (as a which the FEP income youth aged 18-24 share of all beneficiaries who completed the internship reachesthe living in urban and peri- every year) poorest youths urban areas Proportion of beneficiaries enrolled during the expansion Assess extent to of the program that are poor which the FEP enhances employability of registered youth. Enhance GOB capacity of Annual reports on RPS-DIC programs' progress submitted coordinate, monitor and to CONAPES including analysis of indicators, programs' evaluate the RPS-DIC harmonization, and implementation. and design a mid-term SP strategy 60 Outcomes 1 Monitoring - Percentage of target population enrolled in the Measure readiness of the MCP program maternal and infant project areas. health services - Number of municipalities with adequateIT- - related equipment and connected with the MIS. - MIS system completed and operational. Proportion of children under 2 years old who Assess extent to which the MCP participate in growth monitoring sessions in the provides the poor with sufficient I - areas of intervention. incentives to access health and nutrition Proportion of pregnant women living in the services - targeted areas with comolete ore-natal controls. Proportion of women receiving post natal care - within seven days of delivery Proportion of women participating in the program Monitor the effectiveness o f the MCP with sufficient knowledge about child care, food - consumption, home hygiene. Proportion of bi-monthly reports on compliance with co-responsibilities systematized through the - MIS Proportion of payment agencies with enough - funds to oav beneficiaries on time. - Proportion of complaints resolved by the program Proportion of indigenous women satisfied with - the program Proportion of registered women participating in Measure coverage of the MCP - IEC activities Number of municipalities with signed agreements - to enter the MCP. Proportion of registered woman receiving transfers regularly. Component 2: - National Technical Unit for FEPfully staffed and Measure improvements in the FEP Develop skills of low- operational (as described in the operational income youth manual). =Number of departmental Unitsfor Employment Promotion with adequate staffing, operating and connected to the MIS. (as described in the - operational manual). Monitoring Information System designed and --operational Processevaluation designed and implemented System to certify providers tested and - operational. Targeting mechanism to select low-income - youths designed and tested. Proportion of youth enrolled in the program and fifth completing the in-class phase of the program. Component 3: - RPS-DIC National coordination unit fully staffed Monitors improvements of the Ministry Enhance government and operational with adequate equipment as of Development Planning to coordinate capacity to described in the Operational Manual and monitor the RPS-DIC and coordinate, monitor coordinate the Project 61 Intermediate Intermediate Outcome Indicators I Use of Intermediate Outcome Outcomes Monitoring and evaluatethe RPS- DIC. -Registry of Beneficiaries and MonitoringSystem -designed. Annual reports on RPS-DICprograms' progress submittedto CONAPES includinganalysis of indicators, programs' harmonization, and -implementation. At least 3 RPS-DICprogramsevaluatedby Increasethe evaluation of RPS-DIC UDAPE using non-experimentalapproaches, and programs reports disseminated 62 5 + S .Cci S.r tt nE 8 C 0 F L 9. 0 8 9. vl r4 ,m vl 0000 - 0 t Q - 0 z 3 3 m i Y- 000 kkk i0 000 LLL L - - 3; ! a be, - `13 1 z JZ 83 5 W e, Q 0Y z 5 W e, Q3 * Arrangement for Results Monitoring 8. The results monitoring of this Project will depend on data from various institutions at the central Government level. However, as part of its role as stewardship of the Social Protection Network, the Ministry of Development Planning with UDAPE's support, will coordinate with relevant agencies the provision of timely information to track Project progress. The Ministry of Health and Sports (MOH) and the Ministry of Labor (MOL) will be the primary agencies responsible for ensuring that information to follow up components 1 and 2 is readily available. These mechanisms to ensure that the Project as well as the programs that it supports- the Social Protection Program for Mothers and Children and the First Employment Program- are well tracked and/or adjusted with the support of the proposed IDA credit. These will involve systems to follow up on inputs and results of physical and financial progress, evaluations to assess processes and operations and to measure the impact of the MCP; surveys to provide insight on beneficiaries' knowledge and perceptions about programs, and social audit and local controls. 9. The main source to monitor Project results will be Management Information Systems. Two systems will be administered by the Ministries of Health and Labor for the Social Protection for Mothers and Children and First Employment programs, respectively. In both cases the MIS will collect information and generate reports regarding the progress of the programs. In the case of the MCP, most of the information will be gathered by local units of the Ministry of Health and Sports (outreach teams and health units) and from the payment agencies responsible for disbursing transfers to beneficiaries. The M I S for the FEP will collect information from supervision reports generatedby local M O L offices inpilot cities. It i s expected that both MIS's will be able to provide bi-monthly reports on basic indicators and semi-annually on more complex outputs. The Ministries of Health and Labor are responsible for tracking the programs in a very detailed manner. The Ministry of Development Planning and UDAPE will define the frequency, content and methodology of reports that both Ministers should furnish in order to consolidate and monitor progress. The basic design of these systems has been completed using preparation funds, and the Project will finance their full implementation. 10. Process evaluations for the MCP and FEP will help Project management to understand operational aspects and possible implementation bottlenecks of both programs. Each program supported by the Project will be subject to an evaluation to assess the efficiency of the implementation arrangements and the quality of the management information systems and benefit delivery. Inboth cases, process evaluations will be carried out after the first stage of the program. The MCP's processes will be evaluated when the first ten municipalities have been incorporated in the program and families are regularly receiving benefits. The evaluation will inform the program's expansion to the remaining 42 municipalities scheduled for the first phase of the Program. The FEPprogram will evaluate the pilot intervention to provide inputs to adjust the model before its expansion. Such evaluations will be contracted out to specialized firms by the respectiveMinistries. 11. The MCP will have two additional tools to monitor results - a beneficiary survey and an impact evaluation. A beneficiary survey will be carried out about one year after the full expansion has been reached (about two years after effectiveness). The beneficiary survey will provide information about registered mothers' perceptions, knowledge and understanding of the 66 program, including its rules and objectives. These arrangements will be important not only to provide valuable information to monitor results, but also to adjust key instruments to support beneficiaries, particularly the communication and education strategies. The MCP's impact on household welfare will be measured through a rigorous evaluation, financed by the Health APL I11operation. The impact evaluation will includeboth quantitative and qualitative elements. The quantitative part of the impact evaluation will be of experimental design using control and treatment groups, a baseline and two follow up surveys. The baseline, which will be collected before the intervention starts inthe treatment group, will include a targeting analysis. The follow up surveys will track outcome indicators to measureprogram impact and assess the sustainability of the interventions. The quantitative aspect of the evaluation will be complemented by qualitative assessment at the community level using focus groups. This aspect of the evaluation will provide more detailed information on the functioning of the program from the perspective of beneficiary communities (including both households that were and were not included in the program). The impact evaluation will provide information on outcomes related to nutrition and the healthstatus of mothers and children. Both the beneficiary surveys and the impact evaluation will be contracted out to specialized firms by the Ministry of Health and Sports. For the impact evaluation, firm selection will follow international competitive bidding (ICB) procedures. 12. UDAPEis responsiblefor the monitoringand evaluation of RPS-DICprograms. The ICY project will provide financing for at least three evaluations to be conducted using non experimental design. These will include: (i) evaluation of the pilot of the FEP program; (ii) a process evaluation of the first 10 municipalities included in the MCP; and (iii) an additional evaluation of another program included in the RPS-DIC - to be selected during implementation. The surveys will be financed by the Project and the analysis will be conducted by the Sub- Direction for Policies inUDAPE. 67 Annex 4: DetailedProjectDescription BOLIVIAINVESTINGINCHILDRENAND YOUTH Projectdescription 1. The Investing in Children and Youth Project is aimed at supporting the social protectionpolicy of the BolivianGovernment. Specifically, the Project will contribute to the GOB'S efforts to tackle chronic malnutrition in rural areas, support unemployed and inactive youth in urban and peri-urban areas, and strengthen overall monitoring and supervision of the social protection network.The IDA Credit for US$17 million equivalent will contribute to the design, implementation and consolidation of interventions to prevent chronic malnutrition in the 52 most vulnerable municipalities, benefiting about 45,000 families, and to the improvement of the effectiveness of a skills development intervention to increasethe ability of about 14,000 low- income youth living in poor urban and peri-urban areas to find and maintain a decent job. Additionally, the IDA credit will provide funds to support the MDP in the monitoring and supervision of the social protection network (RPS-DIC). The IDA Credit will be complemented by Government counterpart funds equivalent to US$2.55 million and the funds will be disbursed over a five-year time period. ProjectComponents 2. Component 1 Implementing and scaling up the Social Protection Program for - Mothers and Children to combat chronic malnutrition ($12.4 million IDA funds; $2.5 million Government counterpart funds) The Project will contribute to the Government's strategy for reducingchronic malnutrition by implementing and scaling up a program of cash transfers to families with pregnant women and/or mothers of children younger than two years of age. The objective of this intervention is to create an incentive for very poor families to invest in the healthand nutritional status of young childrenandto provide financial support to increase the food consumption of beneficiary households. The Social Protection Program for Mothers and Children (MCP) i s part of the Zero Malnutrition Program and will be implemented in the 164 municipalities targeted by the ZMP using the vulnerability index.33The Project will support the Government to implement the MCP in the 52 most vulnerable municipalitieswhere the program will benefit about 45,000 of the poorest families inthe country. 3. The Investment in Children and Youth Project will be implementedin close coordination with the Health APL I11operation approved by the Board on January 24, 2008, including: (i) most of the municipalities supported by the Project through this component are also part of the area of intervention of the APL I1and I11to strengthen supply of maternal and infant health services; (ii) implementation arrangements within the Ministry of Health and Sports are the 33The vulnerability index results from the combination of 16 indicators - two indicators of risk to food insecurity (percentage of surface with livestock use at risk o f drought or very high flood) and 14 indicators to the response capacity o f the population (access road, number of markets, per capita income, extreme poverty, number o f activities in which i s occupied the population, deliveries attended by specialized personnel deliveries served in health facilities, access to sources of drinking water, dwellings with connection to sewerage, rate of illiteracy o f men, rate o f illiteracy of women, school assistance for men from 4 to 19 years old, school assistance for women from 4 to 19 years of age, use o f electric power). Mapa de Vulnerabilidad a la Inseguridad Alimentaria por Organizaciones Comunitarias, MACMSINSAAT - PMA, 2003. This index classifies municipalities in 5 categories -category 1 the least vulnerable and category 5 the most vulnerable. The index classified 314 out o f the 327 Bolivian municipalities. The ZMP targets all municipalities in category 4 and 5. 68 similar for both projects (through the Planning Direction) to ensure not only adequate coordination between the projects, but also full institutionalization within the Ministry's administrative organization; (iii) the MIS system for the Social Protection Program for Mothers and Children will be fully embeddedinthe SNIS (National Health InformationSystem) which i s beingfully updatedby the APL I1and 111; and (iv) the impact evaluation of both project will be developedjointly and financed by the APL 111. 4. This component comprises three sets of activities: (i) financing the cash transfers for eligible households; (ii)developing and implementing an information, education and communication (IEC) strategy, and (iii) supporting the Ministry of Health and Sports (MOH) to administer and monitor the program. 5. Sub-component 1.1 Benefits for Mothers and Children to combat chronic malnutrition ($9.5m IDA, $2.0m GOB) - The Project will finance the cash transfers and associated administrative costs (estimated to be roughly 3 percent of the amount of the transfers34) to beneficiaries registered in the MCP during the first three years of Project implementation. It i s estimated that the Project will benefit about 45,000 families with cash transfers. The MCP will provide cash transfers to eligible beneficiaries subject to regular utilization of maternal and infant health services. The main features of the Program that will be supported by the Project are summarizedbelow: 6. Eligibility criteria. Given that poverty incidence inthe selected municipalities is over 90 percent on average (2001 estimates -see table in Annex l), MCP will rely on geographic the targeting to select beneficiary families. Eligible families will be those with pregnant women and children younger than 2 years of age living in the targeted 52 municipalities, without any additional mechanism to select beneficiaries. Beneficiary families will receive the transfer for up to 33 months. 7. Co-responsibilities. Activities with which eligible women and children should comply are as follows: (i) least three-natal check-ups for pregnant women; (ii) scheduledpost-natal At the control; and (iii) bimonthly visits to health service providers (outreach teams or health units) to monitor growth and development of children until they reach 24 months of age, to receive individual counseling on child care, health, and sexual and reproductive health, and to attend regular workshops and training (during payment days) on common issues related to home hygiene, food consumption, and hand-washing, among others. 8. The Program was designed to optimize the reproductive health of mothers3? (i) the program will provide additional information about reproductive and sexual health through bimonthly individual counseling sessions, as well as group workshops; (ii) the benefit i s set low enough to avoid encouraging women to get pregnant in order to receive the benefit; and (iii) the program has established that women can re-enter only if pregnancy intervals are at least 33 months. 34This i s slightly higher than other programs in the LAC Region; this i s due to the size of the Program and the geographical distances of target populations. 35Evidence on the demographic effects of transfer programs is scant and inconclusive. The Project's impact evaluation will examine this issue. 69 9. Benefits to Mothers and Children and frequency - The cash transfer to eligible families will be equivalent to about 10 percent of average household consumption for up to 33 months. The incentive will be transferred preferably to mothers, although the household may decide who can receive it. The monthly transfer amount will vary depending on the condition of the mother - during pregnancy mothers will receive the equivalent of up to three transfers of about Bs. 70 each. The total amount received b y each mother will depend on her attendance at pre-scheduled pre-natal check ups. Once the child i s born, mothers will receive a bimonthly transfer o f Bs. 135 every two months for up to 24 months. The mother will receive an additional incentive of Bs. 70, provided that she complies with the scheduled post-natal control. 10. Registry and re-entering in the program - Municipal and household participation in the MCP i s voluntary and subject to signing an agreement with the program. After a municipality has been incorporated in the MCP, the initial registry o f beneficiaries will include pregnant women and mothers with children younger than 1year of age, given that the "graduation" age i s 24 months and registering beneficiaries may take a few months in the initial stages of the program. After the initial registry i s compiled, outreach teams and health units will register new pregnant women every two months and will schedule pre-natal check ups for them. A mother can re-enter the program once her child has graduated and a new birth i s scheduled at least 9 months after graduation o f the previous child. 11. Phasing in o f the M C P in eligible municipalities - The MCP is an innovative intervention adapted to the Bolivian context and designed following lessons learned from existing CCT programs in other L A C countries. For this reason, the Government has decided to scale it up gradually. A first stage will involve ten municipalities to test, adjust and fine tune the operational aspects o f the program. The criteria used to select the initial set of municipalities were to: (i) be part of the 52 municipalities comprising the phase one of the ZMP; (ii) an have adequate supply of health services, (iii)demonstrate receptiveness of the local health administration; and (iv) have adequate transport and accessibility. The second stage will involve the 42 additional municipalities targeted in Phase Iof the ZMP and will be carried out based on the assessment o f the experience from the first 10 municipalities. Phase I1of the ZMP will incorporate the remaining municipalities to complete the 164targeted by the ZMP. The Project is not expected to provide financial support to the expansion of Phase 11. 12. To ensure sustainability of the intervention, the Project will finance the first three years of transfers to registered mothers during pregnancy and the first two years after birth. From2010 on, GOB counterpart funds will increasingly finance the cash transfers for families registered in the program until that year inclusive. To finance additional families (Le., those registered from 2011 on, the GOB will appropriate additional funds. However, in addition to the direct impact that the program i s expected to have on children registered in the program in terms o f height and cognitive skills development, it i s also expected that changing behaviors and additional knowledge of nutrition and infant health there will be a positive effect on siblings born after the last registration. 13. Verification that beneficiaries of the program comply with co-responsibilities - Cash benefits to families are subject to compliance with co-responsibilities. Therefore, the program has designed a process to systematically verify that registered households and participant communities are doing so. Information on compliance will be collected by outreach teams and 70 health units during bi-monthly check ups, and directly entered into the M I S at the municipal level. The program has designed a set of rules to determine when cash benefits should be suspended and under which circumstances families can receive the transfers again. 14. Payment system to disburse transfers to beneficiaries of the programs - The payment system to transfer cash transfers to beneficiary families will involve a combination of financial agencies. The Government has grouped the 52 targeted municipalities according to their geographical location and presence of commercial financial andbanking institutions. Contracted institutions will be responsible for delivering cash to families every two months according to an authorized list sent by the Ministry of Health and Sports. Funds will be transferred directly from the Ministry of Finance to each of the payment agencies according to M O H authorization. Payment institutions will establish temporary offices and/or posts during payment days in pre- specified places. 15. Supply of maternal and infant health services in the areas of intervention of the MCP - One of the most important criteria for participating in the MCP is an adequate supply o f basic maternal and infant health and nutrition services. As part of the ZMP, the GOB has a solid strategy to provide an adequate supply of health services inthe targeted municipalities, supported by the health APL operations. The S U M I health services comprise a protocol o f 547 interventions for pregnant women and children less than 5 years o f age in five areas: pregnancy; neonatology; pediatrics; oral health; and laboratory and blood services. As part of the strategy to prevent chronic malnutrition, the basic services provided b y the outreach teams and health units include: (i) bimonthly monitoring o f growth and development of children including weight and height o f infants less than two months accompanied by individual counseling to mothers or caretakers; (ii) at least four pre-natal check ups to pregnant mothers and one post-natal health check; (iii)food supplementation and fortification including micronutrient supplementation, iron, and vitamin A for children 6-23 months; and (iv) a pedagogic approach through talks and workshops to change behaviors among beneficiary mothers regarding child care; illness recognition; home hygiene; food intake; andcooking and hand washing practices, among others. 16. The Health APL I1and I11IDA operations are supporting the MOH to strengthen the supply of infant and maternal healththrough the SUMIinthe targeted municipalities. Specifically, for the 52 municipalities to be incorporated in the M C P in 2008 and 2009 (Phase 1 of the ZMP), the MOH i s using APL I1funds to strengthen maternal and infant health and nutrition services in the first group of 10 municipalities. Once the APL I11 i s approved and effective (estimated effective date i s the first semester of C Y 2008), the M O H will support the supply in an additional 26 out of the remaining 42 municipalities targeted in Phase 1. During the first year o f Project implementation the Government i s committed to ensuring adequate financing to strengthen the supply of basic services in the remaining 16 municipalities, after a thorough analysis of the needs andrequirements ineach of them. 17. Sub-component 1.2 Information, Communication and Education Strategy ($0.4m IDA)- The Project will provide support to design and implement a comprehensive campaign to accompany the MCP, reinforcing the program's messages and objectives, raising awareness among communities and eligible groups, and improving beneficiaries', staff of the MOH, and civil society's understanding of the MCP. In achieving these aims the Project will finance four sets of activities: (i)communication campaigns to complement the MCP and strengthen the 71 messages that the program intends to send; (ii) and workshops for beneficiary mothers to training ensure that the program's messages about maternal and infant health and nutrition are well understood; (iii)training and technical assistance to health staff involved in the MCP; and (iv) designof specific protocols for individualcounseling. 18. Communication strategy - The Project will fund the design and implementation of a strategyto communicate the goals of the MCP. Through this strategy, the Project aims to achieve three goals: improve program understanding among all stakeholders at national and sub-national levels, particularly with regard to its relevance as part of GOB efforts to tackle chronic malnutrition in rural areas, improve transparency, and boost and maintain credibility of the proposed model of intervention; complement cash benefits with a pedagogic message linked to program co-responsibilities, outcomes, social control, and accountability; and informing beneficiary communities about the program's goals and beneficiary rightsand responsibilities. 19. The communication strategy will be focused on, but not restricted to, messages adapted to different stakeholders (e.g., beneficiary families, other members of the community, municipal and departmental authorities, and health and nutrition service providers). This will involve community instruments (radio programs, posters, outreach teams and health units, booklets and other non-written media), taking into account low literacy rates and indigenous languages, and ensuring in all cases appropriate adaptation to specific cultural and social contexts. 20. Workshops for beneficiary mothers - Cash transfers will be complemented by specific messages provided during individual counseling sessions duringthe regular bimonthly check ups as well as through group workshops. The latter will focus on the program's messages about child care at home, personal hygiene, hand-washing, and diet, among other aspects. These workshops will be provided by, or in coordination with, outreach teams and health units during payment days, and will be reinforced during bimonthly visits by health services providers. These workshops will also serve as a mechanism to receive feedback from beneficiary families about program operation andbenefits received. 21. Technical assistance and meetings for health staff. The program will also provide workshops, training and regular meetings with health personnel involved in the implementation of the MCP to disseminate and discuss the program's characteristics, provide feedback on operational aspects as well and the supply of health and nutrition. Technical assistance and training to health staff will be coordinated and/or provided by the unit responsible for the program in the Ministry of Health and Sports, in coordination with sub-national health system offices. 22. Designing and adiusting specific health protocols for individual counseling - The Project will support the Ministry of Health and Sports in regular evaluations of the protocol for individual counseling, which has proven to be a key element of strategies to prevent chronic malnutrition in other countries. This involves the development of specific protocols, including sexual and reproductive health, specially tailored to local culture and social practices. The protocols will be reviewed periodically by a specialized team of the ZMP and adjusted as needed. Accordingly, the program will provide adequate training and re-training to personnel responsiblefor providing individual counseling. 72 23. Sub-component 1.3 Management and Monitoring the MCP ($2.5m IDA; $0Sm GOB)- This sub-component i s aimed at strengthening the technical unit within the Ministry of Health and Sports responsible for administering the MCP. The goal is to enhance the implementation capacity of its staff, providing mechanisms to monitor, follow up, and oversee the program, and funding costs to administer the credit. The following activities are envisaged: 24. Strengtheningthe Managing Information System for the MCP. The Project will support the GOB in implementingthe Management Information System (MIS) to administer the program, follow up on physical and financial progress, and oversee the cash transfers cycle. The MIS system for the MCP and all its required modules (registry of beneficiary and management, monitoring of co-responsibilities, payment system and conciliation, program process and product monitoring and feedback mechanisms) will be part of the Ministry of Health and Sportss' Management Information System (SNIS, the national health information system), currently under implementation with support from the APL I1and 111operations. The M O H will complete the full design and testing of the MIS system by the time the Project i s effective. The Project will support the MOH in implementing the system through procuring the required IT-related system and software Project, and financing additional consultant services and training. 25. Social control and accountability mechanisms. The Project seeks to strengthen the governance of the MCP through improved oversight and accountability systems, in order to improve the program's operational features and ensure that beneficiary rights, particularly those of indigenous groups, are respected. These systems include mechanisms to receive, systematize and opportunely respond to complaints, appeals, and feedback from communities - beneficiary and non-beneficiary groups, to inform the program management team about program activities from independent sources, and to control program activities through social and technical audits. The following activities will support the achievement of these objectives: (i)complaint and appeals mechanisms with follow up systems, including, community-based feedback through beneficiary committees and health outreach teams and units, and systems to ask questions and report irregularities; (ii)social audits; (iii) technical audits carried out by outsourced regular independentfirms; and (iv) financial audits. 26. Processevaluation of the MCP Program. In order to help the MCP managementteam to improve the intervention during implementation, the Project will finance a process evaluation once the first ten municipalities are incorporated into the program to inform the full scale up of the intervention. Using quantitative and qualitative instruments, the process evaluation will review the efficiency of Project implementation, targeting, and the program's ability to reach proposed outcomes. Specifically, the process evaluation will look at program organization, adequacy of funds for administration and monitoring, effectiveness of the payment system from the beneficiaries' perspectives, actual service delivery vis-&vis planned, among other aspects. The process evaluation will allow program management to detect operational bottlenecks affecting the efficacy of the program and to correct them in a timely manner. 27. Impact Evaluation - The results and outcomes of the MCP program will be rigorously measuredthrough an independent impact evaluation process. The impact evaluation of the MCP will be jointly conducted and financed with the APL III.The MCP evaluation will involve a baseline survey and two follow-up surveys with a control and treatment group. The treatment group will be randomly identified from the 52 municipalities covered by the first phase of the 73 ZMP, while the control group will be similarly selected from the 114 municipalities of the second phase o f the ZMP. The evaluation will also incorporate a comprehensive qualitative study. The PHRD grant financed a consultancy to support the Government indefiningthe impact evaluation methodology, completing the terms of reference to contract a specialized international firm to carry out the evaluation, and accompany the M O H in evaluating technical proposals. Contracting for this task, estimated to cost roughly $1 million, will follow international competitive biddingprocesses, and will start once the APL I11Project i s effective. 28. Beneficiary surveys - The contents and messages involved inthe previous activities will be informed by beneficiary surveys designed and developed in the second and fourth year of the program, and will be carried out under the responsibility of the Ministry o f Health and Sports in coordination with UDAPE. Such surveys will be contracted out to specialized firms. 29. Strengthening the Mothers and Children Area (MCA) at M O H - The Project and the MCP will be administered by the M C A created within the M O H administrative structure. This unit will be responsible for all of the projects under the responsibility of the MOH including the MCP. The Project will support the consolidation of the M C A not only for coordinating the Project, but also for enhancing its capacity to manage a portfolio o f programs under the responsibility o f the MOH. In doing so, the Project will provide funds for technical assistance and training, IT-relatedequipment and goods and, on a decreasing basis, some key staff. The unit will be responsible for the overall administration of the program, including the MIS. The fiduciary aspects of the program will be handled by the administrative units of the MOH, which will be supported by the Project to handle the additional tasks that the MCP involves. 30. Component 2 -Improving and expanding a skills developmentprogramfor low- income unemployed youth living in urban and peri-urbanareas ($3.6 million IDA; 0$.05 million GOB) - The primary objective of this component is to improve the effectiveness the existing First Employment Program as an intervention to increase the employability o f low- income youth living in poor urban and peri-urban areas who have completed at least the second year of secondary education. The FEP i s a skills development program for poor youth, comprising a vocational in-class training session coupled with internships in private and public sector firms, in such a way that disadvantaged youth gain practical experience in a formal occupation and acquire life skills that help them succeed in the workplace. The GOB will scale up the FEPinthree phases-first, the program will be launched by the Ministry of Labor (MOL) as a pilot in four cities (La Paz, El Alto, Santa Cruz, and Cochabamba) benefiting about 2,800 poor youth and financed by the Government. The second stage, financed by the Project, will comprise the operational and process evaluation of the pilot, and the required adjustment o f the model and its basic parameters, as well as the institutional and implementation arrangements. The third stage will include the expansion of the program in the previous cities and at least two additional mid-size ones, to benefit about 13,000 youth. After the second phase has been fully accomplished and the institutional and implementation arrangements reviewed and, where appropriate adjusted, the Project will also fund the first round of training courses and internships, benefiting roughly 4,000 low-income youth. 31. The program i s based on the following features: (i)training courses will be market demand-driven following private sector requirements; therefore it i s expected that supply of training courses will be preceded b y consultations and arrangements between training providers 74 and potential employers of trainees; (ii) training courses are linked to a period of full-time practical working experience in an industry directly related to the training received in the classroom phase, to ensure that, only those courses with a formal commitment from a firm intending to receive as interns a number o f successfully graduated trainees will be eligible; and (iii) suppliersareselectedthroughacompetitiveprocessofaccreditedpublicandprivate training training providers which will design and carry out courses targeted to low-income youth including the practical phase. In addition to financing training institutions that will provide the courses, the program will fund a daily allowance for participating beneficiaries. 32. Youth aged 18-24 years living in selected marginalized urban and peri-urban areas who have completed at least the second grade of secondary education (with no tertiary education) are eligible for the program. Eligible youth can apply to participate in the program through the specific agencies that the MOL is establishing in each o f the cities in which the program will be implemented ( the Departmental Offices for the First Employment Program - DOFEP). The selection of beneficiaries will be made by the management information system (registry of beneficiaries), based on data provided by the candidate. Besides age, criteria to select beneficiaries will involve aspects to ensure that candidates live in poor neighborhoods of cities, have studied basic education in a public school, as well as other proxy variables (e.g., size of the family, education o f parents, and utility bills) to foster participation of poor youths. The Project will support the GOB to define targeted mechanisms for the expansion o f the program, 33. The MIS will randomly assign beneficiaries to a training course that has been previously selected and that matches a demand for skills with the trainingpreference of the beneficiary. The ICAPs responsible for providing the courses will be in charge of the final selection of beneficiaries based on their quotas. ICAPs will be previously selected through a competitive bidding process. Supply of training courses will be preceded by an arrangement between the ICAP and firms that intend to hire a number of successfully graduated trainees. Trainingcourses are expected to be comprehensive in that they will provide skills for a particular occupation as well as life-skills needed to thrive in the workplace, including behavior, punctuality, attire, labor rights and others. The training phase is expected to last two to three months and the internship phase another three months. 34. In the above-mentioned framework, the Project seeks to support the Government in evaluating the pilot program to improve operational features and the design of the FEP, strengthen institutional and implementation arrangements of the program at the Ministry o f Labor and field offices in targeted cities, and fund the first round of training courses and internships of the program's expansion. 35. Sub-component 2.1. Improving the effectiveness of the First Employment Program ($0.3mIDA) -The objective of this sub-component i s to support the Government in defining the most effective model for supporting skills development o f low-income youth. The Project will finance a process evaluation of the pilot which will inform program management and allow for adjustments to the FEP's design and operation, including the: (i) targeting mechanism for selecting eligible youth and its effectiveness in reaching the most needy; (ii) appropriateness o f the link between vocational training courses and internships; (iii) assistance provided by the Ministry of Labor to beneficiaries to help them make decisions on course selection, and to training providers to orient them on how the program works best; (iii)amount of the 75 beneficiaries' stipend and its proposed structure in terms of its role as an incentive to maintain attendance and finance basic daily expenditures; (iv) program's incentives and mechanisms to maintain firms in the program; (v) program's incentives and mechanisms to ensure adequate supply o f training courses and institutions; (vi) administration of contracts with training providers and payments scheme; (vii) supervision of courses and internships, and following up with beneficiaries; and (vii) program costs. 36. This evaluation will also compare the outcomes achieved by the pilot with similar programs implemented in the same cities (e.g., the technical training for youth with complete secondary education implemented by an NGO in four cities), as well as evaluate the results of the program in urban areas where labor supply i s restricted by the size of the productive sector. The methodology of the evaluation will be developed by a consultancy financed by the PHRD grant. 37. As a result of the process evaluation it is expected that when appropriate the FEP adjusted in several areas, including: improving mechanisms for selection and registration of beneficiaries; linking training providers with private sector demands; institutional arrangements for efficiently administering and supervising contracts; results-based disbursement schemes for paying training providers; the allowance level for interns; and an incentives scheme to maintain high turnout of training providers and firms willing to provide internships. A key aspect to be reviewed during the pilot phase and the process evaluation i s the targeting mechanism for selecting low-income youths. While the pilot phase, fully financed by the GOB, will target youths from public schools and living inpoor areas o f the selected cities, the project will provide funds and technical assistance to identify and test other variables and adjust the mechanism to ensure that only the most needed are registered in the program. 38. The Project will finance a consultancy to define the methodology of the process evaluation, prepare the terms of reference to receive proposals, and define the criteria for evaluating proposals and firm selection. The process evaluation will be contracted out using an international competitive bidding process. In addition, this sub-component will also finance consultancies and technical assistance services to make appropriate adjustments to the model of intervention and its basic parameters following the recommendations o f the process evaluation, as well as advisory services to support the Government management team responsible for the program. Some operational expenditures and key staff will be financed by IDA funds on a decreasing basis. 39. Sub-component 2.2. Strengthening the institutional capacity and implementation arrangements of the Ministry of Labor to administer and monitor the First Employment Program ($1.05m IDA; $0.05m GOB) - This sub-component will finance the refinement of the model of intervention and the strengthening of institutional and implementation arrangements based on the operational evaluation carried out under the previous sub-component. In addition, it will support the development of management tools and monitoring and evaluation mechanisms. Specifically, this component will provide support for the followingactivities: 40. Management information system - Even though a basic information system i s being prepared and will be under implementation during the pilot phase, design of a full M I S will be completed during Project implementation, and refined once the pilot has been evaluated. The 76 Project will support the Ministry of Labor to design, test and implement the management information system. The system will include the following modules (i) selection and registration of eligible youth, (ii)allocation of eligible beneficiaries to training providers, (iii) implementation and monitoring of the in-class training phase, (iv) implementation and monitoring of internships, (v) monitoring the transition of program participants to formal jobs, and (vi) the managerial module. The Project will finance further consultancies to develop the MIS, software, pilot tests, some IT-related equipment and training for staff responsible for operating and maintaining the system. 41. SupDorting training services and certifying suppliers - The Project will assist the Government in improving the capacity of training suppliers to design courses that meet private sector demands, maintain a dialogue with them and incorporate skills-oriented training activities targeted to a particularly vulnerable group of the population. Apart from that, the M O L will provide orientations, guidelines and standards to training institutions to provide adequate life skills training. To achieve this objective, the Project will support the Government in defining a strategy and carrying out activities to provide guidance, advice and support to eligible training suppliers, including a process for certifying them. Activities will consist of workshops and orientation sessions at different stages of the project cycle: (i) orienting eligible suppliersprior to presenting proposals for training courses to ensure that the program's requirements are met; (ii) guiding selected suppliers prior to the implementation of the classroom phases; and (iii) supporting suppliers during the implementation of training courses. The Project will fund the design, software, and IT-related equipment needed to complete the system for certifying training institutions, as amodule of the MIS. 42. Information, Education and Communication strategy - Implementation of the First Employment program will be accompanied by an information and communication strategy focused on three aspects of the Project: (i) promotingthe program among potential beneficiaries, training institutions and employers, involving among other activities, socialization workshops, focus groups, mass media promotion at the local and regional level, leaflets and booklets; (ii) promotingand facilitating alliances between training providers and firms; and (iii) designing and implementing a training strategy for public servants involved in the administration and implementationof the program at the national and sub-national levels. 43. Institutional support -The Project will strengthen the institutional arrangements of the Ministry of Labor at the national level and in the cities where the program operates. Specific activities to achieve this goal include consultancies to support and train staff directly related to the program, and support to enhance the financial management and procurement capacity of the Ministry of Labor to administer and supervise contracts with the training providers. Finally, the Project will support the NUFEP at the Ministry of Labor with some operating costs and required IT-related equipment. 44. Sub-component 2.3. Providing opportunities for skills training and afirst labor market experience to low-income youth ($2.08 million IDA) - Building on the refining of the program supported by the previous two sub-components, the Project will finance the expansion of the training and internshipprogram to targeted cities. Therefore, disbursements to finance this sub- component will be subject to the full implementation of sub-component 2.1, including the results of the process evaluation of the pilot-phase and the adoption of the correspondent 77 recommendations. Particular attention will be paidto the feasibility o f implementing the program inmid-size cities, adjustment and adoption of targetingmechanisms, parameters of the model of interventions (e.g., size of the allowance for classes and internships, a results-based system to pay the ICAPs, eligibility criteria for selecting ICAPs and specific training course) and monitoring and evaluation of ICAPs. It i s also expected that as a result of the evaluation o f the pilot phase, adjustments to the institutional and implementation arrangements for this component will be required. Accordingly, disbursements to this sub-component will be conditioned on adopting such adjustments acceptable to the Bank. 45. This sub-component will finance three sets of expenditures: selection and registration of beneficiaries, training courses and a trainee allowance. 46. Registry and orientation of beneficiaries -The Project will finance the register of beneficiaries and the orientation for eligible candidates before they are enrolled in specific training courses, involving information about the program, requirements and benefits; preliminary guidance about labor market rules and operations; and assistance to make decisions about the specific courses they want to follow. 47. Training courses -This sub-component will finance the first round of training courses and internships, and is expected to reach approximately 4,000 beneficiaries over a period of two years at a unit cost of roughly US$ 540 per beneficiary in the manufacturing sector and US$440 per beneficiary in the service sector, which compares favorably with similar programs in other countries. These unitary costs include the cost of the training to ICAPs and a daily stipend to beneficiaries. To be eligible, training courses must be presented by certified public or private traininginstitutions and be based on the following principles: (i) two phases - vocational include in-class training and an internship in a firm related to the training course; (ii) the classroom phase would include three types of skills instruction - a training course aimed at attaining a semi- skilled level in specific areas linked to the industry where the beneficiaries will complete their internships; a life skills learning component to help beneficiaries in specific behavior, psycho- social andremedial-related activities; and a labor market regulations and policies component. 48. Beneficiary allowances -The Project will finance a daily stipend equivalent to Bs. 200 per month during the training phase and Bs. 300 per month during the internship phase (approximately $26 and $39 per month, respectively) per beneficiary. This should be sufficient to cover subsistence andtransportation costs. Women participating in the program who are heads of households would receive a larger stipendequivalent to additional Bs. 8 per day. The program will pay these stipends through the institutions that provide the training. 49. Payments to training institutes (including both the cost of the training, the allowances and insurance against job-related accidents for trainees) will be results-based depending on the number of successful training graduates and the number o f beneficiaries who complete the internship phase and end up being hiredby a private andpublic firm. 50. Sub-component 2.4 Supporting the MOL to formulate a mid-term strategy for youth unemployment ($0.23m IDA) The Project will also support the GOB to strengthen its institutional capacity to consolidate a system for training youth and improve their possibilities for labor market insertion. The Project will finance activities to enhance the GOB'S capacity to implement 78 the program, provide orientation to training institutions, monitor program results, supervise training providers, and measure impact. This component will also fund activities to support the MOL to design a strategy for youth at-risk in the transition from school to work. The Project will finance the provision of technical assistance in the following areas: (i)sustainability of the program, including mid-term coordination and merging of the Government's program with other similar youth training and employment interventions; (ii) of the model of intervention to transfer sub-national Governments, which are expected to be responsible for the execution and financial sustainability of the program; and (iii)definition of a comprehensive mid-and long-term strategy to support youth at-risk inthe transition from school to work. 51. Component 3 - Institutional strengthening of the RPS-DIC ($l.Om IDA) - This component will build the GOB'S capacity to manage, coordinate, and monitor the RPS-DIC, starting with the MCP and FEP programs. The component will help the Government meet the long-term objective of the RPS-DIC, which i s to build a sustainable and integrated social protection system. Activities will include improving planning and policy making related to the RPS-DIC, facilitating coordination across involved agencies, and defining, testing, and implementing mechanisms that will allow for better coordination and monitoring of programs' progress and impacts. This component will also support UDAPE to evaluate selected programs of the RPS-DIC. The Project will support achieving these goals through two subcomponents. 52. Subcomponent 3.1 Strengthening the Technical Coordination Unit of MDP and Developing a Mid-term Social Protection Strategy ($0.46m IDA) -The Project will support the creation and consolidation of the TCU to enhance its capacity to formulate strategies regarding the RPS-DIC, and coordinate and monitor its programs through technical assistance in the form of consultancies, training, and workshops, as well as the consolidation of tools to provide insight on programs' progress and indicators. To achieve this, the sub-component will finance technical assistance focused on the TCU's coordination and monitoringroles and associatedadministrative and operational functions, and elaboration of the goals and timeframes of the TCU. The component will also finance information technology (both goods and services) to improve the design and execution of RPS-DIC programs and, on a decreasing basis, some key staff of the unit. 53. (Sub-component3.2. Designing and testing a Registry of beneficiaries and a monitoring and evaluation systemfor the RPS-DIC ($0.22 IDA) -The Project will also support the Ministry of Developing Planning to strengthenthe TCU of the RPS-DIC through developing and testing a registry of beneficiaries if the RPS-DIC programs and a monitoringand evaluation system, as the main tool to inform policy making, coordination and monitoring. The project will support the MDP in the first stage to develop a comprehensive Monitoring and Evaluation system for the RPS-DIC as the main tool to inform policy making, coordination and monitoring. To this end, the Project will finance the development and testing of a beneficiary registry, as well as the design of a comprehensive monitoring system. Under the responsibility of the TCU at the Ministry of Development Planning, the registry of beneficiaries should be effective, cost efficient and useful to all key stakeholders involved in the RPS-DIC. The Project will support the elaboration of a manual of procedures that makes it possible to handle different qualities of information, cleaning data coming from more than one source, and resolving data discrepancies. The registry of beneficiaries will start with the consolidation of the databases of the Solidarity programs of the social protection network including the first expansion to 10 municipalities of 79 the MCP, FEP and Juancito Pinto programs. To this end, the subcomponent will support the following: (a) Review and consolidation of the various beneficiary databases currently used by programs and line Ministries; definition of interfaces of various actors in the RPS-DIC; development of web pages; and acquisition of licenses andhardware. (b) Development of a manual of procedures to define how to manage different qualities of information, and database cleaning processes when inconsistencies are found. This manual will include key beneficiary criteria. In addition to the manual, the Project will develop the guides and other necessarymaterials for the system's operation (c) Designof a single beneficiary information system, which would include developing a registry from all the beneficiary databases of various programs and line Ministries, and elaborate the system's decentralization plan, for both adding and use of databases, as well as preparation of a maintenance andupdate planfor the system. (d) Support to the initial implementation of the system, including a plan for its gradual introduction to participatingentities, and makingnecessary adjustments to its design and operation as part of the buildingprocess. (e) The Project will also support the design of the monitoring and evaluation system of the RPS- DIC, ensuring its link with the registry of beneficiaries. The monitoring system, as well as the full implementation of the registry of beneficiaries will be carried out by the Ministry of Development PlanningusingGovernment funds. 54. This sub-component will also support the TCU in developing medium- and long-term strategies for the continual evolution of the RPS-DIC, through technical assistance that will focus on second-generation issues of social protection systems. Such issues include the review and rationalization of all programs and expenditures under the RPS-DIC; evaluation of social protection needs of beneficiaries in the CCT programs to ascertain whether this type of intervention i s the best tool to provide them the support they need; exploring and testing linkages with complementary programs to provide a full, integrated range of opportunities for poor and vulnerable households; articulating graduation and exit strategies for RPS-DIC programs; and the institutionalization of the Comunidades Reciprocas y Comunidades en Accion strategies. The long-term strategy would also include the evolution of the M I S system, to ensure a positive correlation between outcome indicators and budget allocation in the RPS-DIC; strengthening the TCU's institutional capacity to evaluate RPS-DIC programs by implementing a strategy and process for Government-civil society interactions, and improving transparency by creating a process for public dissemination of spending andresults. 55. Subcomponent 3.3 Evaluation of selected programs of the social protection network ($0.32m IDA)-The Project will support UDAPE to evaluate the impact of up to three programs of the social protection network, including the pilot of the FEP using non-experimental approaches. The evaluations will be carried out directly by UDAPE's staff using primary data from control and treatment group and following a non-experimental methodology. This component will finance surveys for data collection, as well and key specialized consultants to support the process. It will 80 finance surveys to assess the results of the pilot phase of the First Employment Program and the expansion of the MCP inthe first 10municipalities. 81 Annex 5: Project Costs BOLIVIA INVESTINGINCHILDRENAND YOUTH 3.2 Beneficiary Registry of RPS-DIC 0.12 0.02 0.07 0.02 0.00 0.22 0.23 3.3 Evaluation of selected programs of the RPS-DIC 0.01 0.10 0.10 0.10 0.01 0.32 0.32 Subtotal Component3 0.27 0.22 0.25 0.18 0.07 1.00 1.00 TOTAL PROJECT COST 1.75 535 0.48 5.20 0.68 2.97 1.29 1.73 2.55 17.00 19.55 Components Project Cost Summary (US$ '000) Local Foreign Total 1Implementingandscaling uptheMCP 1.1Benefitsfor Mothers and Children 11.49 0.01 11.50 1.2 Information, Communication and Education 0.38 0.02 0.40 1.3 Management and Monitoring of the MCP 2.43 0.57 3.00 SubtotalMCP 14.30 0.59 14.90 2 ImprovingandexpandingFEP 2.1 Improving the effectiveness of the FEP 0.28 0.02 0.30 2.2 Strengthening the institutional capacity 0.93 0.12 1.os 2.3.Providing opportunitiesfor skills training 2.08 0.00 2.08 2.4. Supporting the MOL to define a mid-term strategy 0.21 0.02 0.23 SubtotalFEP 3.49 0.16 3.65 3.0 Institutionalstrengthening of the RPS-DIC 3.1 Strengthening the TCU of the RPS-DIC 0.39 0.08 0.47 3.2 Beneficiary Registry of RPS-DIC 0.19 0.04 0.23 3.3 Evaluation of selected programs of the RPS-DIC 0.24 0.06 0.30 Subtotal3.0 Institutional strengtheningof the RPS-DIC 0.82 0.18 1.00 TotalPROJECT COSTS 18.61 0.93 19.55 82 Annex 6: ImplementationArrangements BOLIVIA INVESTING INCHILDRENAND YOUTH 1. The Project addresses Government's request for support for its social protection strategy and strengthening the recently created social protection network, under the coordination of the Ministry of Development Planning. The GOB, through the Supreme Decree 29246 (August 2007) created the Red de Proteccidn Social y Desarrollo Integral Comunitario (FPS-DIC). The social protection strategy is the Government's flagship program to combat poverty and reduce vulnerability. The policy i s based on two sets of mid-tern strategies: first the integrated community development strategy to promote local development through programs and interventions in rural and poor urban areas (including physical and social infrastructure, income generation and environmental programs, among others); and the generation of opportunities and social assets and second, targeted interventions to specific vulnerable groups, including the youth employment (FEP) program, targeted to low-income youth in urban and peri-urban areas, the Zero Malnutrition program to help households with pregnant mothers and children younger than 2 in the most vulnerable rural municipalities, and the Juancito Pinto program, a cash transfer to create an incentive for poor families to send their children to school regularly. These strategies are complemented with short-term programs aimed at temporarily creating employment and income - PROPAIS (a program to combat poverty and support solidarity investment), a community-driven development (CDD) program supporting very small projects, and EDIMO (the Labor Intensive Program), a workfare program based on the experience of PLANE (the National Employment Plan, a workfare intervention implemented between2003 and 2006), in areas affected by natural disasters. 2. The social protection network is the Government's main mechanism to improve institutional coordination to design, implement and monitor social protection policy. The highest decision making authority regarding social protection policy is the CONAPES (National Council for Economic and Social Policy), a Ministerial level body responsible for defining and approving economic and social policy in the country. The Ministry of Development Planning i s the highest level social protection coordination body, and i s responsible for: (i) presenting social protection policies and programs to CONAPES; (ii) defining strategic planning and providing guidelines to formulate social protection programs; (iii) supporting implementingministries to design operational mechanisms; and (iv) proposing mechanisms to harmonize budgetary appropriations regarding social protection policy, among other functions. Line Ministries will be responsible for designing and implementing social protection programs and interventions under the coordination of the MDP. Three bodies attached to the MDP will be responsible for coordinating implementation: the social investment fund (FPS), will monitor and evaluate RPS- DIC programs under its re~ponsibility~~;and the Vice Ministry of Finance (VIPFE) - the Vice- ministry responsible for public investment and external funding, and the TCU in coordination with UDAPE will coordinate andevaluatethe implementation of the RPS-DIC programs 3. The Project will support the Government's social protection strategy and the RPS- DIC by contributing to the effective implementation of key programs. In this context the Project will be implemented through three separate agencies under the general coordination of 36Such programs do not include the two programs financed by this project - the Social Protection Program for Mothers and Childrenandthe First EmploymentProgram.Therefore the FPS has no role inthe ICY Project. 83 the MDP which will be the Bank's Government main counterpart during implementation and supervision. Such coordination will be done through the Technical Coordination Unit (TCU) for administrative and financial issues, and through UDAPE for the technical aspects of the project. The TCU, recently created as part of the institutional structure o f the MDP, will be responsible for the implementation of Component 3 of the Project in close coordination with the MDP's General Direction of Administrative Issues. The unit will also coordinate with the Ministry's SystemsUnit to develop the Information System and the RPS-DIC Beneficiary Registry. 4. The Technical Coordination Unit (TCU) and UDAPE will articulate and coordinate the activities of the Health and Labor Components. These two bodies will provide the support to the MDP in its role as responsible for the global implementation of the Project and attainment of results, and the strategic coordination with sector ministries in charge of Components 1 (Health) and 2 (Labor). The following are some o f the TCU's main functions in relation to the Project: a) coordinate and monitor Project's administrative and financial aspects as a whole and serve as Bank's counterpart for such issues; b) support and monitor the health and labor ministries in the registration of budgets and for the attainment o f operational plans as well as intermediate and results indicators; c) follow-up on operational plans related to each of the Project components; d) consolidate sector Project reports (health, labor and RPS-DIC); and e) elaborate and provide progress reports on physical and financial aspects of the Project to the Bank. Although the TCU will be supported by the fiduciary units of the MDP, it will have specialized staff to consolidate the financial reports from the Ministries of Labor and Health. UDAPE will be responsible for the following activities related to the project: a) coordinate and monitor Project's technical aspects; b) coordinate all supervision missions with the Bank, VIPFE and sector ministries involved in the Project; c) identify issues that might require special attention from the Government or the Bank during the implementation of the Project: d) propose and process any amendment related to the Credit Agreement; and e) ensure the compliance of the operational manuals incoordination with sector ministries. 5. Despite the relatively complex institutional arrangements involving three implementing agencies, they are appropriate. Institutional arrangements to implement the Project will be divided across the three implementing agencies under the coordination of the Ministry of Development Planning. In addition, the arrangements are considered appropriate for the following reasons: (i) organizing institutional and implementation arrangements in three implementing agencies under the umbrella of the MDPmirrors the arrangements set for the RPS- DIC; (ii) separating special accounts and implementing agencies will allow greater flexibility for each component to follow its pace without delaying the other components unnecessarily; and (iii) having the MDP as the main counterpart of the Project improves accountability, coordination and sustainability o f the Project. Implementation arrangements for Component 1-Implementing and scaling up the Social Protection Program for Mothers and Children to combat Chronic Malnutrition 6. Component 1of the Project will contribute to preventing chronic malnutrition in Bolivia by implementing and scaling up a cash transfer intervention in the most vulnerable 52 municipalities. The program, based on similar principles of other conditional cash transfer in other countries of the region, is part of the comprehensive ZMP (see Annex 1A) led and 84 coordinated by the Ministry of Health and Sports. The intervention i s part of the Government's social protection policy and therefore i s under the umbrella o f the Social Protection Network led by the Ministry of Development Planning. Improving the nutritional status of pregnant women and children under two will involve a combination o f strategies which will include: (i)a comprehensive protocol to improve the nutritional status of pregnant and lactating women, newborns and children between 6-24 months; (ii) an information, education and communication strategy to strengthen households' nutritional knowledge and practices; (iii) a strengthened supply of basic health services under the universal insurance service (SUMI); and (iv) expanded access to drinkingwater and sanitation. 7. The Government has designated responsibility for the implementation of this component to the Ministry of Healthand Sports. This is the appropriate institution to carry out the MCP, given that the MOH i s also responsible for the comprehensive ZMP, has the legal mandate to implement the program and the political support to carry out the activities included in this component. These institutional and implementation arrangements improve coordination between demand and supply of basic maternal and infant health services, a crucial aspect for the success o f a conditional cash transfer program. The MOH has been committed to strengthening the supply of basic maternal and infant health services over the previous several years and currently this effort i s supported and funded by the health APL operations and the GAIN program. The APL 11, under implementation until June 2008, i s supporting the expansion of the benefit package o f the SUMVSUS in order to provide greater coverage of health services to pregnant women and children less than five years of age, taking into consideration cultural distinctions and other access barriers faced by indigenous populations. Under the third operation, currently negotiated, the APL emphasizes strengthening the health supply through the health network in the targeted municipalities. The GAIN program aims to improve fortification of all wheat flour, vegetable oil and milk products designated for consumption by the Bolivian population in order to generate demand for quality-assured fortified food. The achievement of GAIN'Sproposed goals is expected to have a significant health impact by reducing the total prevalence o f iron deficiency anemia which affects 81.9 percent of children from 6 to 24 months and 30 percent of women inreproductive age by reducing the prevalence of vitamin A deficiency and by reducing neural tube defect rates by 20 percent between 2007 and 2011. Thus, the Ministry of Health and Sports has the instruments to strengthen the supply of maternal and infant health services, while this Project will provide funds and technical assistance to carry out a program to boost demand. 8. The Ministry of Health and Sports will implement the Component through the Area de Proteccio'n Social para la Mujer y el Niiio (MCA), recently created as part of the Planning Unit of the Ministry. The MCA is institutionalized part of the administrative organization of the M O H and responsible for those projects and programs financed by donors. The execution of the program will be in close coordination and active participation of the Area responsible for the Health APL I1 and I11 operations, as well as the Service Network Unit, dependent o f the GDHI. At the local level the Health Units will coordinate with municipalities and prefectures to undertake processes of affiliation, registry, condition controls, incentive delivery, complaints and information updating. The MCA will supervise the local coordination units,created for the monitoring of 5 to 7 municipalities. 85 9. All administrative and financial aspects of the program will be managed directly by the General Direction o f Administrative Issues of the MOH, where an Administrative Unit (UCOFI) for externally funded programs will be adapted, as part o f the same structure. The UCOFI will operate in close coordination with and will support the MCA. The Payment Agencies (PA) are external financial institutions to the Ministry and provide payment services to the beneficiaries based on reports that will be generated and delivered by the MCA. The Program's administrative and financial unit will be responsible for transferring funds to the PAS.The municipal local committees will provide social control during the implementation of the program. E Cash benefts to rndhen '/ Supply of maternaland infant healthservices, / registry,and verificationof co-responsibilities. 10. The Project implementation arrangements involve the following steps: 11. Registry of Municipalities - Before the program starts implementation in the targeted municipalities, the Ministry of Health and Sports will register municipalities through a two-fold process: first, verification that eligible municipalities have the required supply o f basic health services, and signing o f an agreement between the municipality and the program to implement and support the MCP. Second, to verify the supply o f maternal and infant health services, the Ministry through the network services will collect the information and identify areas where the program can start implementation. In those municipalities where the supply i s adequate, the 86 M O H and local authorities will sign agreements defining responsibilities to implement the program. The MOH will focus its efforts and investments to strengthen the supply of the universal health insurance program in those municipalities with insufficient services identified by the verification process. The registry of municipalities i s voluntary and participating in the program i s a decision of the correspondent local authorities. 12. Registry of beneficiaries - Once municipalities have agreed to participate in the MCP, health outreach teams and health units from the MOH will identify the eligible population (pregnant women and children younger than 1 year of age for the initial registry o f beneficiaries of the program and pregnant women in subsequent registration). Health staff will collect the information and enter it in the management information system (SNIS - currently under implementation and funded by the APL I1and II137). During the process of data collection, the health staff will inform families about the program and will set a date for a community meeting (probably during their next scheduled visit) where they will explain the program, beneficiaries' rights and responsibilities, and will proceed to register individuals through signing an agreement with the MCP. During these meetings the health staff will explain how the program works, the way in which activities are followed up and responsibilities verified, and how and when the cash benefit can be received in both cases. Thereafter, the mother, or in exceptional cases, the person selected by the family to receive the benefit,38 and the program will sign a participation agreement including family's co-responsibilities and benefits. To comply with this process the M O H will train and assist staff of the outreach teams and health units. Registering in the program i s voluntary. The beneficiary registry will remain open in order to capture pregnancies from the early stages to prevent malnutrition and ensure adequate care. 13. Verification that families and communities comply with their co-responsibilities - Authorization to transfer cash benefits to beneficiary families will be subject to prior verification that families and communities have complied with the co-responsibilities according to the signed agreement. The outreach teams and health units are responsible for such verification; they will collect the required data to verify that families comply with program's conditions during the bimonthly programmed visits. During those visits any change in the family status (deathhewborn) i s recorded and the M I S updated. The program receives this information through previously defined forms and the M I S at the municipal level. 14. Transfer of cash benefits - The MIS will generate the authorization payments database on the basis of the information collected during the process o f verifying that families comply with their co-responsibilities. Beneficiary mothers will receive their cash transfers every two months, provided that they have complied with their co-responsibilities. To do so, the program, through the M C A at the MOH will authorize the transfers and the M I S will generate the lists of beneficiaries and transfer amounts in each municipality and community. Once the payments have been completed, the M C A will transfer the information to the agencies responsible to directly disburse transfers to beneficiaries. 37The full SNIS and the specific modules of the MIS for the cash transfer programs will be under implementation when the registryof municipalities,communities andbeneficiariesstarts. 38For example, when the motheri s deceased. 87 Implementation arrangements for Component 2 - Youth Employment Program (FEW 15. Component 2 of the Investing in Children and Youth Project is aimed at supporting the social protection strategy to help low-income and unemployed youth living in the major cities of the country. The Project will provide funds and technical assistance to improve the effectiveness and scaling up of the First Employment Program to increase the employability of low-income youth living in urban and peri-urban areas. As part of the social protection network, the FEP is also part of the employment strategy of the Morales administration. The implementing agency for this component of the Project i s the Ministry o f Labor. Given that the Ministry o f Labor i s the central agency responsible for the coordination and partial implementation o f the employment strategy and has the legal mandate to promote employment generation activities, this i s the appropriate institution to carry out the FEP. As the Ministry of Labor requires considerable support to strengthen its institutional capacity and its experience in this type of intervention i s limited, the Project will focus on building capacity to scale-up and consolidate the program. Moreover, the full expansion of the program will be preceded by a process of strengthening institutional and implementation arrangements and enhancing capacity of the Ministry of Labor. 16. To comply with the activities required to implement the FEP, the Government has created a set of institutional arrangements at the central level of Government and in the cities where the program will operate. At the national level, the Ministry of Labor has created an internal unit to coordinate the Project (National Unit for M y First Employment - NUFEP) attached to the General Employment Direction, responsible for the overall administration and supervision of the program. The unit will receive technical assistance to carry out the following activities: (i)coordinating, planning, monitoring and overseeing the program in coordination with municipal offices in the targeted cities; (ii) selecting training providers; (iii)administering a national registry of service providers and the training providers certification process; (iv) administering and coordinating the provision of technical assistance to strengthen training providers; and (v) promoting the program through workshops, communication campaigns and, particularly, through an ongoing dialogue with the private and productive sector. This unit was created to implement the pilot and is currently well staffed. The NUFEPwill be supported by the General Administrative Direction regarding administration o f contracts with training providers, as well as all other procurement and financial management issues. Similarly, the Information System unit will support the NUFEP in the administration of the Management Information System. 17. At the departmental level, the program will strengthen the Ministry of Labor's local offices located in each of the cities in which it will be scaled up to coordinate the overall implementation and follow up of the program. For the purpose of the FEP, the Ministry of Labor will create Departmental Offices for the First Employment Program (DOFEP) in each of the cities where the programs is operating. These offices will be responsible for promoting the program in the cities, receiving and checking applications from youth, providing information and orientation to beneficiaries and training providers and supervising the training courses in their two phases - in-class and the internships. These units will also support the ongoing dialogue with private firms, and support program management through supervising program progress inkey phases o f the training and internship phases. 88 I Ministryof La& '0 E m Cooperatlves,labor and labor ------ 18. The Project will evaluate the pilot program of FEP. As a result o f the evaluation the model will be both assessed and, if appropriate, adjusted, and also scaled up. The main institutional arrangements set to carry out the pilot and summarized in the following paragraphs will be subject to a process evaluation that the Project will finance through Sub-component 2.1. (Annex 4), and therefore may be changed or adjusted according to the recommendations of the process evaluation. All changes to such arrangements will be consulted with, and will be put in place acceptable to the Bank. 19. Registry of training institutions (ZCAPs)- Selection of the ICAPs will be conducted on a departmental basis b y a committee comprising the Ministry of Labor (NUFEP), the Ministry of Education and the corresponding Departmental Unit for Employment Promotion. The committee will select only accredited private or public training providers to carry out courses targeted to low-income youth including the internships. Only those proposals comprising a classroom phase followed by a period of full-time practical working experience in an industry directly related to the training received in the classroom phase will be eligible. The proposals will include proof from a firm committing to receive as interns those youth who have completed the vocational phase of the course. 89 20. Therefore, proposals of training courses will comprise a vocational and a practical phase according to the standards provided by the MOL. The vocational training phase will contain 3 parts. Inadditional to the main specialized training course designedaccording to marketdemand, the vocational part will involve two other modules: first, a life skills and work behavior training to support beneficiaries on three sets of topics; (i)pertinent life skills, such as self-esteem, parenting skills, sexual and reproductive health and other topics that ICAPs can provide according to their assessment; (ii)behavior in the job place, including team work, communication skills, presentational aspects and others specific to the internshipphase; and (iii) job search skills. The second part involves labor rights and regulations according to Bolivian laws and policies. The M O L will create a registry of training institutions. 21. Technical Assistance to Training Providers (ICAPs)-The M O L will be responsible for providing regular training and workshop sessions to ICAPs inorder to improve the quality of the training proposals and standardize the content of specific components of the courses, including life training and work behavior, and labor rights and regulations. These activities will consist of workshops and orientation sessions at different stages: (i) orienting and guiding eligible suppliers to establish contact with specific industries and acquire commitment letters for the practice phases of the service; (ii) orienting and guiding selected suppliersprior to the implementation of the classroomphases; and (iii) supporting suppliers during the implementation of trainingcurses. 22. Registry of beneficiaries - The Ministry of Labor, through the offices in each city, will evaluate applications received from youth living in targeted cities. To apply, the candidate should be older than 18 andyounger than 25 years of age, have completed at least the 2"dyear of secondary education, live in a poor area of the city and not have benefited from other employment programs. The offices in the cities will register potential beneficiaries. After validating the information, the M O L will group the list of candidates in each city according to the training courses previously approved and send all candidates to the corresponding ICAPs. The training institutions will select the final set of candidates to be enrolled inthe courses. 23. Contracting the ZCAPs -The General Administrative Direction at the Ministry of Labor will be responsible for issuing and administering the contracts with the selected ICAPs according to the approved proposals. The ICAPs will be responsible for training the proposed number of beneficiaries inthe approved course, ensuringthat all beneficiaries who approved the course start their internship and follow up their performance during the internship period as well as six months after the internshiphas finished. Contracts will ensure that payments are results-based;in doing so, apart from an initial lump sum to ensure that the training courses can start adequately equipped and conditioned, the MOL will make payments to ICAPs according to their performance in terms of the number of registered beneficiaries, the number of beneficiaries who approved the training session, the number of trainees who complete the internships and the numberof youth who after six months of completing the internship have ajob. The contracts will include the provision of training according to the criteria described above and daily beneficiary allowances to finance their transport and meals. This allowance will not only serve as support to beneficiaries but also i s an incentive to keep attendance. 24. Supervision of contracts and evaluation of courses - Supervision of training courses will be carried out by the Departmental Offices for the FEP, during several crucial steps of the training process: (i) initial visit to ensure that the ICAP is adequately equipped for the an 90 proposed course and to authorize the go-ahead of the course and the first payment; (ii) visit a during the vocational training session; (iii) a third visit once the course has finished and to supervise the transition to the internship; (iv) a fourth supervision vision will take place at the end of the internship.These supervision visits will serve not only to authorize further payments to ICAPs, but also to evaluate their performance and enter adequate information into the ICAPs certification process which will affect their future ranking if they decide to present proposals again. The M O L will administer the certification system and will design the supervision forms to ensure that the informationenteredinthe systems i s accurateenough to provide objective results. 25. Phasing in of the FEP - Currently a Dutch NGO i s implementing a skills training program based on principles similar to the FEP, but restricted to four cities and youth with complete secondary ed~cation.~'Therefore, the GOB will implementthe FEP in three phases. In the first phase the FEP will comprise a pilot intervention in four cities to support about 2,800, poor youth; this pilot will be evaluated using IDA funds through the Project (Subcomponent 2.1. in Annex 4). It is expected that the pilot and the evaluation will be completed by June 2009. Based on the evaluation results, the GOB will implement the second phase to scale up the program in cities where the Dutch financed program -AUTAPO - is not operating, aiming to reach 13,000 youth between 2008 and 2011. By the time the third phase of the program is launched (from 2011 on) it i s expected that a youth employment strategy to carry out a single intervention will havebeen agreedand will be underimplementation. Implementationarrangements for component 3 -Institutional strengthening of the SocialProtectionNetwork 26. The Ministry of Development Planning will not only be responsible for the coordination of the overall implementation of the Project but also for the direct implementation of component three. The GOB has created and i s in the process of strengtheningthe Technical Coordination Unit (TCU) for the RPS-DIC. The TCU i s attachedto the MDP and will be the main body to support the MDP to carry out the activities included in component 3 of the Project. The TCU will be headed by a Coordinator and its objectives will be the (a) overall coordination of programs implemented under the RPS-DIC; (b) monitoring of progress and evaluation of impacts of these programs; and (c) formulation of social policies and long-term strategies that will define the future development of the RPS-DIC. To comply with its function the TCU has two Areas: The Management of RPS-DIC Programs Area, responsible for administering the registry of beneficiaries and the monitoring system of the RPS-DIC, and the Implementation of MDP projects, responsible for monitoring and administering those programs directly implemented by the Ministry of Development Planning. As explained in Annex 4, the Project will pay special attention to institutionally strengthening the TCU and to enhance its capacity to serve as the technical arm of the MDP to coordinate and monitor the programs of the social protection network. In doing so, the project will support the MDP through partially financing consultants to support both Areas of the TCU, two consultants to support the fiduciary units of the MDP and the design and testing of the registry of beneficiaries and the monitoring system. The TCU will not have specific administrative duties related to the implementation of individual RPS-DIC programs, but rather that each program will be carried out by the relevant 39The Program de Formacidn Tkcnica para Jdvenes Bachilleres i s under implementationsince 2006 by the Fundacidn AUTAPO (Foundationto Support UniversitiesinPotosiand Tarija). 91 line Ministry, with the TCU serving as coordinator for the overall network. All fiduciary aspects relatedto this component of the Project will be carried out by the correspondent procurement and financial managementoffices inthe Ministry of Development Planning. Managementand Monitoringk e a ImplementationArea I 1 RPSI- DIC Programsand Proje+ 27. The coordination functions of the TCU will be underpinned by analytical work of UDAPE, a technical unit also attachedto the MDP which is charged with policy formulation for the RPS-DIC and the design of its monitoring and evaluation mechanisms. Together, the TCU and UDAPE will work on "second generation" issues related to the RPS-DIC (Subcomponent 3.1). The TCU will be supported by the Administrative Units of the Ministry of Development Planning regarding financial management andprocurement issues of the Project. 92 Annex 7: FinancialManagementand Disbursement Arrangements BOLIVIA INVESTINGINCHILDREN AND YOUTH CountryIssues 1. According to the CFAA published in January 2006, Bolivia's country Public Financial Management (PFM) risk rating i s substantial. The advances reached towards improving the PFM have been offset by several weaknesses found in the uneven application of the legal framework, particularly with regard to financial reporting and the internal control environment. Even though the legal framework i s relatively sound, particularly concerning the use of public resources and the role of both the internal audit and the general comptroller, the government informationsystems do not provide adequateinformation to assure accountability. RiskAssessment Summary 2. The FMrisk for this project has been assessed at Substantial and once there i s evidence that the mitigating measures have been implemented and are working as intended, the level of FMriskfor this project will bere-assessed andrevised accordingly. The following table presents the risk assessment, as well as the risk mitigating measures incorporated into the design of the project and the financial managementimplementation arrangements. Risk Risk RiskMitigating Measures Condition of Rating Incorporated into Project Design NegotiationdJ3oard or Effectiveness(Y/N)? Country Level (Inadequate S Inspite of havingthree implementing salaries in the public sector, agencies, project design i s due to wage reductions, limit straightforward with activities for each the capacity to attract and implementing entity being clearly maintain qualified staff) defined. In addition, strong coordination among the implementing agencies has been included in the design of the project (with M D P having the coordinating role). Entity Level (This will be the S Ministry of Health and Sports has some Negotiations: TORSto first Bank project where experience with externally financed receive Bank N o Objection financial management will be project and will establish a unit within (included in the Operational institutionalized within the its own structure. The hiring of Manual). MOH, as previous projects specialized consultants that would have been managed through a undertake specific FMtasks under the PCU, limited experience of project has been contemplated. M O L and MDP) Ministries of Labor and of Development Key FMstaff selected Planning have relatively little experience before project with externally financed projects. implementation. However, existing capacity within these Ministries will be used to the extent possible, as well as being strengthened as needed. The hiring of specialized consultants that would undertake specific FMtasks under the project has beencontemdated. 93 Risk Risk RiskMitigating Measures Condition of Rating Incorporated into Project Design NegotiationdBoard or Effectiveness (Y/N)? Project Level (The project S Giventhe CCT component of the Requirement for semi includesa CCT component project,the projectwill take into account annual operational audits which is a new initiative for the lessons learnedand best practices for for the CCT component MOHand whichrepresentsa FMinCCT programs,including a (covenant). risk for the project. In comprehensiveMIS,beneficiary addition, the project will surveys, complaintand feedback CCT informationsystem require strongcoordination systems, and social accountability and designedand implemented amongthe three participating control mechanisms. However, this before Disbursementsstart entities) component still represents arisk for the on CCTs (conditionof project,especially as it will be a new disbursement). initiative in Bolivia. Control risk Budgeting, Accounting, M Specific Fh4processes and procedures Negotiations:Draft InternalControl(Each entity are being designedinorder to guarantee Operational Manual will incorporatethe projectinto that project funds are usedeconomically reviewedby the Bankand its own budget. Inthe past, for and efficiently. These processes and final OM as a conditionof the MOH, budgets have been procedureswill be reflectedinthe OM. effectiveness. overestimated,and implementation has been Implementingentitieswill be CCT informationsystem delayeddue to reprogramming) strengthened with the contractingof designedand implemented qualified staff. before Disbursementsstart on CCTs (conditionof A single complementaryintegrated disbursement). informationsystem which would enable the automatic preparation of financial reports is beingdesignedand will be implementedin the three entities. The implementationof an information systemfor CCTS. FundsFlow (The projectwill S Inthe framework of the proceduresset Negotiations:designof use the new CUT inUSD. For by SIGMA and the Single Treasury customizedSOE format for the CCT component, the MOH Account, funds flow arrangementshave the CCT component. will needto implement a robust beendefined for differentcomponents. paymentmechanism) Those proceduresavoid unnecessary Design, implementation, layers. As the specific regulations for contractingand operation of the operation of the Single Treasury the payment mechanismfor Account in US dollarsare issued, the the CCT component flow of funds would needto be adjusted (conditionof disbursement) accordingly. A customized SOE format for CCTs will be developed. FinancialReporting, Auditing M The format of the IFR is being Negotiations:Agreed (The MDPwill be responsible developed (single format for each of the format for the IFR. for contracting the audit work three components). Eachentity will and will furnishto the Bank a prepareits respective IFR, submit it to Negotiations:Audit TORS consolidatedreport. Each the MDP, which will consolidatethem agreedwith the Bank and component will be audited and for presentationto the Bank. included in Operational will individually submit their Manual respectivereports to the Bank) Externalfinancial and operational audits An acceptable audit firm will be contracted. selected six monthafter effectiveness. FMRisk S 94 Weaknessesand Action Plans 3. Key actions have been defiend and agreed with each of the participating entities to strengthen FM arrangements and are detailed below. FM processes and procedures have been reviewed in the draft Operational Manuals, which final review and adoption is a condition of effectiveness. Action Responsible Entity Completion Date4' Ministry of Health and Sports (MOH) 1. Implementationof the complementary systemandfinalization of MOWMDP April 30,2008 the chart of accounts for the project. 2. Incorporationof commentsand finalizationof the OM and IMOH IJanuary 22,2008 processes. 3. Finalizationof the format of unauditedfinancialreports (IFRs), in MOWMDPI IJanuary 22,2008 coordinationwith the other Ministries. 4. Finalizationof the specializedSOE statement for the CCT MOH Completed component. 5. Providingof training in FM,Procurementand disbursementto World Bank April 30, 2008 MOH. 6. Finalizationof the proposedarrangementsfor the CCT MOH April 30, 2008 component(including proposedMIS,payment scheme and reconciliation) 7. Incorporationof projectexpenditures for 2008 into the 2008 MOH July 30, 2008 budget 8. Formalizationof the creation of UCOFIthrough the Resoluci6n MOH Completed Ministerial. 9. Incorporationof comments, finalizationand sendingto the Bank MOH January 22,2008 for no objectionof the terms of referenceof requiredincremental staff. 10. Identificationand incorporationof required incremental staff. MOH April 30,2008 Ministry of Labor (MOL) 1. Implementationof the complementary system and finalization of MOLMDP April 30,2008 the chart of accounts for the project. 2. Incorporationof comments and finalizationof the OM and MOL January 22,2008 processes. 3. Finalizationof the format of unauditedfinancial reports (IFRs), in MOLMDP January 22,2008 coordinationwith the other Ministries. 4. Providingof trainingin FM,Procurementand disbursementto - - IWorld Bank IApril 30,2008 MOH. 5. Incorporationof projectexpendituresfor 2008 into the 2008 MOL July 30, 2008 budget 6. Incorporationof comments, finalizationand sending to the Bank MOL January 22,2008 for no objectionof the terms of referenceof required incremental staff. 7. Identificationand incorporationof required incremental staff. MOL April 30, 2008 Ministry of Development Planning (MDP) 1. Implementationof the complementary system and finalization of MDP April 30, 2008 the chart of accounts for the project. This column solely presents the estimatedcompletiondate, not an indicationof legalconditions. 95 ImplementingEntity,OrganizationalArrangementsand Staffing Ministry of Health and Suorts (MoH) 4. The Ministry of Health and Sports, through the Health Reform PCU, has the most extensive experience with project implementation and management of donor-financed projects - it is currently working with a Bank financed project (APL II) is preparing another Bank and financed project (APL 111). The Ministry of Health and Sports, as such, has relatively little experience with externally-financed projects. However, some systems and staff from the Health Reform PCU may be absorbed by the Ministry, which would put it in a better position to administer the fiduciary aspects of the Investing in Children and Youth Project. Within the Direccio'n General de Asuntos Administrativos (DGAA), the Ministry i s planning on consolidating existing capacity and establishing a unit (Unidad de Coordinacio'n Operativa Financiera de Programas y Proyectos - UCOFI) directly responsible for managing the administrative and financial aspects of donor-financed projects (starting with the two projects under preparation by the Bank). As such, for component 1 of the project, the UCOFI will be directly responsible for: (i) budget formulation and monitoring; (ii) flow management cash (including processing payments and submitting loan withdrawal applications to the Bank); (iii) maintenance of accounting records, (iv) preparation of in-year and year-end financial reports, (v) administration of underlying information systems, and (vi) arranging for execution of operational audits. The Ministry will put in place the required staffing in the UCOFI which would be eligible for project financing (it is expected that the project would finance a total of 2 to 3 individuals inthe UCOFI). 5. The UCOFI will work in close coordination with the technical unit being established within the Ministry for the implementation of the conditional cash transfer program. 96 Ministry of Labor (MOL) 6. The Ministry of Labor i s the least experienced o f all the three ministries with respect to project implementation and management of donor-financed project and this project represents the Ministry's first program implementation partnership with the Bank. However, to the extent possible, the project will utilize existing capacity, while offering administrative and financial management capacity development where needs have been identified. Within the Ministry, the Direccidn General de Asuntos Administrutivos (DGAA) will be directly responsible for managing the administrative and financial aspects of the project. As such, for component 2 of the project, the DGAA will be directly responsible for: (i) budget formulation and monitoring; (ii) flow management (including processing payments and submittingloan withdrawal cash applications to the Bank); (iii)maintenance of accounting records, (iv) preparation of in-year and year-end financial reports, and (v) administration of underlying information systems. In order to address the prospective increase in demand generated b y the project and strengthen the DGAA's capacity, the DGAA will be provided with 2 additional staff at the beginning of the project and another 2 once the pilot program i s ready to be expanded, which would be eligible for project financing. Ministn, of Develoument Planning (MDP) 7. The Ministry of Development Planning will be responsible for the implementation of the smallest component of the project (component 3); however, as the MDP i s the highest decision making agency regarding social protection policies and programs, it will also be responsible for the overall coordination of the project (reflected in a tripartite agreement or MOU signed by the three participating entities). The Ministry of Development Planninghas limited experience with project implementation and management of donor-financed project. However, as with the Ministry of Labor, to the extent possible, the project will utilize existing capacity, while offering administrative and financed management capacity development where needs have been identified. Within the Ministry, the Direccidn General de Asuntos Administrativos (DGAA) will be directly responsible for managing the administrative and financial aspects of the project. As such, for component 3 of the project, the DGAA will be directly responsible for: (i) budget formulation and monitoring; (ii) flow management (including processing payments cash and submitting loan withdrawal applications to the Bank); (iii)maintenance of accounting records, (iv) preparation of in-year and year-end financial reports, and (v) administration o f underlying information systems. In its coordinating role, MDP will also be responsible for: (i) consolidating IFRs, and (ii) contracting the auditors for the project. In order to address the prospective increase in demand generated by the project, the DGAA will be provided with 2 additional staff, which would be eligible for project financing. 97 Planning, BudgetingandFinancialReporting Planningand Budgeting The preparation of the annual program and budget will follow local regulations established by the Ministry of Finance4', and specific regulations and instructions that may be issued b y the implementing institutions, through their General Administrative Units. 8. The Credit Agreement and project cost tables will be the main inputs for project budgets and counterpart funding estimates. Each implementing entities will prepare its annual POA and budget to be included in the national budget. The procedures established for the preparation of the annual program (POA) and budget provide for a clear identification of project goals, responsible party and resources required. 9. During the second quarter of each year, each implementing entity will prepare its tentative investment program for the next year (including the investment program for the proposed project) and submit it to the Ministry of Finance for review and approval. The program should be consistent with the budget policy provided by the Ministry o f Finance, and be incorporatedinto the national budget for its submittal to Congress inOctober/November. 10. On the basis of the approved budget, each implementing entity will adjust as needed its project annual work (POA) and procurement plan, which will be reviewed by the WB. AccountingPolicies andProcedures 11. The implementing entities will have to comply with the Governmental Accounting Standards. Therefore, the project would use the Chart of Accounts established b y the Accountant's General Office, followed by SIGMA (Government's integrated financial management system). This chart of accounts will need to be complemented with a more functional classification including project components/sub-components and cost categories. Project transactions and preparation of financial statements will follow the cash basis of accounting. 12. The main FM regulatory framework for the project will consist o f (i) Bolivia's laws governing budget andfinancial management; and (ii) each entity's operating manuals and norms. 13. Project-specific FM arrangements that are not contemplated in the documents cited above will be documented in a concise FM section of the project's operational manual. Among others, specific reference will be made to: (i) the internal controls appropriate for the project; (ii) the formats o f project financial reports and (iii) auditing arrangements. Information Systems 14. The project will benefit from the use of SIGMA to monitor the financial activities o f the project (especially budget and budget execution) and the Single Treasury Account (CUT). In addition, to respond to the project's reporting requirements, and ensure that financial information can be monitored according to project components and cost categories, each entity will utilize 4'Law No. 2042, Supreme Decree No. 27849datedNovember 12,2004 -Regulationsfor BudgetaryModification. 98 the single complementary information system currently being designed. Since the contracting process for the design and implementation of the single system has just been initiated, it i s not expected that this system will be ready by negotiations. However, at the time of appraisal, both the Ministry of Health and Sports and the Ministry o f Development Planning have in place a system which would enable the monitoring o f information according to project components and cost categories. Although, the existing systems have some limitations, they could be used at least initially, if the new system currently being designed cannot be implemented before effectiveness. The Ministry o f Labor does not currently have a complementary system, which is why the implementation of such as a system in the MOL i s a condition of disbursement for component 2. Financial Reports 15. On a quarterly basis, each entity will prepare for its respective component an unaudited interim financial report (IFR) containing at least: (i) a statement of sources and uses of funds and cash balances (with expenditures classified by subcomponent); (ii)a statement o f budget execution per subcomponent (with expenditures classified by the major budgetary accounts). The Ministry of Development Planning will be responsible for consolidating the information and submit the consolidated interim reports to the Bank not later than 45 days after the end of each quarter. 16. On an annual basis, each of the entity will prepare for its respective component project financial statements including cumulative figures, for the year and as o f the end o f that year, o f the financial statements cited in the previous paragraph. The financial statements will also include explanatory notes in accordance with the Cash Basis International Public Sector Accounting Standard, and the entity's assertion that credit funds were used in accordance with the intended purposes as specified in the Loan Agreement. These financial statements, once audited, will be submitted to the WB not later than six months after the end of the Government's fiscal year (which equals the calendar year). 17. Working papers for the preparation of the quarterly and annual financial statements will be maintained in the Unit's premises, and made easily accessible to WB supervision missions and to external auditors. Flow of Funds Disbursement - Ministn, of Health and Suorts (MOH) WB DisbursementMethods 18. Considering the results of the assessments, the following disbursement methods may be used by the M O H to withdraw funds from the credit: (a) reimbursement, (b) advance, and (c) direct payment. WB DesignatedAccount 19. Under the advance method and to facilitate project implementation, the MOH will have access to a Designated Account (DA) inU S dollars which will be managed by the DGAA. Funds 99 deposited into the DAs as advances, would follow Bank's disbursement policies and procedures, as described inthe Disbursement Letter and Disbursement Guidelines. 20. Following the Bolivian Government issuance o f a Supreme Decree42that establishes the operation of a Single Treasury Account inUS dollars (CUT-ME) in the Central Bank of Bolivia, the Designated Account would be the Libreta in the CUT-ME, exclusively opened for credit funds for the project. Credit proceeds would be directly deposited in this account, and similar to the CUT in Bolivianos, MOH will have direct access to funds advanced by the Bank to be used for project eligible expenditures. 21. Under the arrangement described above for the CUT-ME, the MOH will be able to process payments in US dollars from the Libreta in the CUT-ME when required; however, to process payments inlocal currency, funds would still need to be transferred from the CUT-ME to the corresponding LibretainBolivianos. 22. The ceiling for advances to be made into the M O H DA would be $1,500,000. The reporting period to document eligible expenditures paid out o f the DA i s expected to be on a quarterly basis. 23. Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices) for payments for consultant services against contracts valued at $100,000 or more for firms, and USD25,OOO or more for individuals; for payments for goods against contracts valued at $200,000. For all other expenditures below these thresholds, supporting documentation for documenting project expenditures will be Statements of Expenditures (SOEs). A customized SOE will be used for the benefits (Cash transfers) to eligible beneficiaries (Le. mother andchild). 24. All consolidated SOEs documentation will be maintained for post-review and audit purposes for up to one year after the final withdrawal from the credit account. 25. Direct Payments supporting documentation will consist o f records (e.g.: copies of receipts, supplier/ contractors invoices). The minimumvalue for applications for direct payments and reimbursements will be USD 200,000. Payments of Benefits 26. The Payment mechanismfor CCTs has not been fully defined yet by the MOH, which i s currently completing an analysis. Therefore, a critical action will be the design and implementation of the payment mechanism, which will have to be operational before disbursements on CCTs can be initiated (sub-component 1.1). 27. The payment terms of CCTs will be detailed in the project's operational manual. In brief, it is expected that according to a bi-monthly payroll, the Ministry of Health and Sports would advance the amounts to the designated contracted payment agent (e.g., banks or other financial institution), who upon completion o f the payment process will present the supporting 42Supreme Decree No 29236.dated August 22,2007 100 documentation to the Ministry of Health and Sports to "clear" the advances. Only payments actually made to beneficiaries will be considered documented expenditures. During implementation, the Ministry of Health and Sports will be responsible for carrying out reconciliations between the payment information presented by each respective payment agent and the beneficiary database. 28. A critical action will be the development of the CCT management information system within the Ministry of Health and Sports, and the linkages between the underlying beneficiary and conditionality control databases and the production of payrolls, which would be monitored and cleared following the established proceduies. Ministry of Labor (MOLL WB DisbursementMethods 29. Considering the results of the assessments, the following disbursement methods may be used by the MOL to withdraw funds from the credit: (a) reimbursement, (b) advance, and (c) direct payment. WB DesignatedAccount 30. Under the advance method and to facilitate project implementation, the MOL will have access to a Designated Account (DA) in U S dollars which will be managed by the DGAA. Funds deposited into the DAs as advances, would follow Bank's disbursement policies and procedures, as described inthe Disbursement Letter and Disbursement Guidelines. 31. Following the Bolivian Government issuance o f a Supreme Decree43that establishes the operation of a Single Treasury Account inUS dollars (CUT-ME) in the Central Bank of Bolivia, the Designated Account would be the Libreta in the CUT-ME, exclusively opened for credit funds for the project. Credit proceeds would be directly deposited inthis account, and similar to the CUT in Bolivianos, MOL will have direct access to funds advanced by the Bank to be used for project eligible expenditures. 32. Under the arrangement described above for the CUT-ME, the M O L will be able to process payments in US dollars from the Libreta in the CUT-ME when required; however, to process payments inlocal currency, funds would still need to be transferred from the CUT-ME to the corresponding Libreta inBolivianos. 33. The ceiling for advances to be made into the M O L DA would be $550,000. The reporting period to document eligible expenditures paid out of the DA i s expected to be on a quarterly basis. 34. Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies o f receipts, invoices) for payments for consultant services against contracts valued at $100,000 or more for firms, and $25,000 or more for individuals; for payments for goods against contracts 43SupremeDecree No 29236.dated August 22,2007 101 valued at $200,000. For all other expenditures below these thresholds, supporting documentation for documenting project expenditures will be Statementsof Expenditures (SOEs). 35. All consolidated SOEs documentation will be maintained for post-review and audit purposesfor upto one year after the final withdrawal from the credit account. 36. Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/contractors invoices). The minimumvalue for applications for direct payments and reimbursementswill be USD 100.000. Ministry of Development Planning (MDP) WB Disbursement Methods 37. Considering the results of the assessments, the following disbursement methods may be used by the MDP to withdraw funds from the credit: (a) reimbursement, (b) advance, and (c) direct payment. WB DesignatedAccount 38. Under the advance method and to facilitate project implementation, the MDP will have access to aDesignated Account (DA) in US dollars which will be managedby the DGAA. Funds deposited into the DAs as advances, would follow Bank's disbursement policies and procedures, as describedinthe Disbursement Letter and DisbursementGuidelines. 39. Following the Bolivian Government issuanceof a Supreme Decree4 that establishes the operation of a Single Treasury Account inU S dollars (CUT-ME) in the Central Bank of Bolivia, the Designated Account would be the Libreta in the CUT-ME, exclusively opened for credit funds for the project. Credit proceeds would be directly deposited in this account, and similar to the CUT in Bolivianos, MDP will have direct access to funds advancedby the Bank to be used for project eligible expenditures. 40. Under the arrangement described above for the CUT-ME, the MDP will be able to process payments in US dollars from the Libreta in the CUT-ME when required; however, to process paymentsinlocal currency, funds would still needto be transferred from the CUT-ME to the corresponding LibretainBolivianos. 41. The ceiling for advances to be made into the MDP DA would be $120,000. The reporting period to document eligible expenditures paid out of the DA i s expected to be on a quarterly basis. 42. Supporting documentation for documenting project expenditures under advances and reimbursement methods would be records evidencing eligible expenditures (e.g. copies of receipts, invoices) for payments for consultant services against contracts valued at $100,000 or more for firms, and $25,000 or more for individuals; for payments for goods against contracts 4.1Supreme Decree No 29236.dated August 22,2007 102 valued at $200,000. For all other expenditures below these thresholds, supporting documentation for documenting project expenditures will be Statements of Expenditures (SOEs). 43. All consolidated SOEs documentation will be maintained for post-review and audit purposes for up to one year after the final withdrawal from the credit account. Direct Payments supporting documentation will consist o f records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursements will be $25,000. DisbursementDeadline Date 44. Four months after the closing date specified in the Loan Agreement. Expenditure CreditAmount % of Expenditures Category (US$) to beFinanced 1.a. CashTransfers and Operating Costs for Component 1.1 of the Project $9.92 M 100% 1.b. Goods, Consultant Services, Trainingand OperatingCosts for $2.49 M 100% Components 1.2 and 1.3 of the Project. 2. Goods, Consultant Services, Training and Operating Costs for $3.59 M 100% Component2 of the Project. 3. Goods, Consultant Services, Trainingand Operating Costs for $1.00 M 100% Component3 of the Project. 4. Unallocated Total $17.0 M Audit Arrangements Internal Audit 45. In the course of its regular internal audit activities vis-&vis the institutional budget, internal auditors from the implementing entities may include project activities in their annual work plans. If such audits occur, the implementing entity will provide the Bank with copies of internal audit reports covering project activities and financial transactions. External Audit 46. Each implementing entity will prepared the annual project financial statements for its respective component, which will be audited following International Standards on Auditing, by an independent firm and in accordance with terms of reference (TORS),both acceptable to the Bank. The audit opinion covering project financial statements will contain a reference to the eligibility of expenditures. A single audit firm will be hired by MDP which will audit each component of the project and provide separate reports, as well as a consolidated report (4 reports intotal). Each individual report will be required to include a section on the state of the internal control in each of the implementing entities. Each entity will submit its corresponding report to 103 the Bank no later than 6 months after the end of the fiscal year and the consolidated report will be submitted to the Bank by the Ministry of Development Planning no later than 6 months after the end of the fiscal year. 47. The audit work described above can be financed with loan proceeds. MDP will arrange for the first external audit within six months after Credit Effectiveness. The first audit engagement i s expected to cover at least two years of the project. 48. In addition to the annual financial audit, the Ministry of Health and Sports will contract a semi-annual operational audit on the preparation, payment and clearance of CCT payrolls. Audit Report Due Date 1) Project specific financial statements June 30 2) Specialopinions 3) SOE June 30 49. WB FM Supervision Plan. A WB FM Specialist may perform a supervision mission prior to effectiveness to verify the implementation o f the units and the FM system. After effectiveness, the FMSpecialist mustreview the annual audit reports, should review the financial sections o f the quarterlyIFRs, and should perform at least two supervision missions per year. 104 Annex 8: ProcurementArrangements BOLIVIA INVESTING INCHILDREN AND YOUTH PROJECT A. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, both versions updated in October 2006, andthe provisions stipulated in the Financing Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame, are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Procurementof Works: nocivil works are envisaged. 2. Procurement of Goods: Goods procured under this project would include IT and office equipment, office furniture, supplies for visits to pregnant women. Procurement of goods will be done using the Bank's SBD for all ICB procurement. For NCB or Shopping (S) methods, documents agreed with or satisfactory to the Bank will be used. 3. Procurement of non-consulting services: The project will include logistics for training activities and services for mass communication campaigns. The project will also hire: (i) public/private training institutions and special organizations for providing training to low- income unemployed youths living in urban and peri-urban areas, and (ii) financial institutions to support the program of cash transfers to families with pregnant women and/or mothers of children younger than two years of age. The procurement may follow the provisions of paragraph 3.3 and 3.4 of the Procurement Guidelines and will be carried out using the Bank's SBD for all ICB procurement. For NCB or Shopping (S) methods, documents agreed with or satisfactory to the Bank will be used. The procedures should be detailed in the Project Operational Manual (OM). N o other non-consulting services are to be procured under the project. 4. All procurement notices shall be advertised in the project website, the government website, and at least in one local newspaper of national circulation. ICB notices and contract award information shall be advertised in the UN Development Business online (UNDB online) and in the Development Gateway's dgMarket, in accordance with provisions of paragraph 2.60 of the Procurement Guidelines. 5. Selection of Consultants: Consulting Firms services will be contracted under this project in the following areas of expertise: (i) Technical assistance for the technical units; (ii) Design of a Managing Information System (MIS), (ii)Design of a comprehensive public information campaigns to promote the program's goals and benefits, (iii) management training activities, (iv) design and implementation of a certification mechanism o f ICAPs, (v) Impact 105 evaluation studies, and (vi) financial and procurement audits. The procurement of consulting firms will be carried out usingBank's standard Request for Proposals (RFP). International firms will have the opportunity to participate inabout all concourses above $100,000. 6. Selection of Individual Consultant Services: Individual consultant services will be contracted to provide a diagnosis of similar First Employment Programs, 7. A project website, a government website, and a national newspaper shall be used to advertise expressions of interest as the basis for developing short lists of consulting firms and individual consultants, and to publish information on awarded contracts in accordance with provisions o f paragraph 2.28 o f the Consultants' Guidelines and as mandated b y local legislation. Contracts expected to cost more than $100,000 shall be advertised in the UNDB online and in dgMarket. Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 8. Operating Costs: are related to Office supplies, travel and administrative personnel at the central executing office and municipal operative offices. These expenditures would be procured usingthe implementing agency's administrative procedures (shopping) and selection of individualconsultants which shouldbe detailedinthe OM. B. Assessment of the agency's capacity to implement procurement: 9. This section presents an assessment of the Ministry of Planning and Development (MDP), the Ministry of Health and Sports (MOH) and the Ministry of Labor (MOL), regarding the implementation of the procurement to be carried out under the proposed project, and an action plan to enhance their procurement activities. The assessment was carried out in October and November 2007. It reviewed the organizational structure o f (i) MDP Technical the Coordination Unit (TCU), (ii)the M O H MCA; (iii)the MOL National Coordination Unit (NUFEP) and (iv) the Administrative Units of the three ministries to carry out project procurement activities. It also reviewed the interaction among the procurement officers and implementing units within MDP, M O H and MOL. The assessment concluded that the three institutions have weak procurement units. Particularly, they lack enough people with the right skills to implement a program of radical improvement in their procurement functions, as well as the institutional framework to carry out procurement activities properly. To ensure proper coordination among the three institutions and effective involvement of their staff in the procurement activities, the project provides for: (i) subsidiary and implementation agreements between MDP and MOH, and MDP and MOL, as well as an inter-institutional agreement between MDP and MOH and MDP and M O L with respect to the role and responsibilities of MDP,M O Hand M O Lunder the project. These agreements shouldbe executed as a condition of effectiveness of the Financing Agreement; (ii)a project operational manual, detailing the procedures and guidelines for carrying out each o f the components o f the project and the coordination of all of them under MDP responsibility, to be adopted in a manner satisfactory to the Association, as a condition of effectiveness of the Financing Agreement; (iii) TCU, MCA and NUFEP units under the three institutions to be fully staffed and operational no later than 90 days after the effectiveness date of the Financing Agreement; (iv) MDP to establish its 106 procurement monitoring unit and M O H and M O L to strengthen the procurement units that will work with the TPU and NCUrespectively. 10. The Project i s to be implemented primarily by the MDP (component 3) through M O H and M O L which are responsible for the activities related to components 1 and 2. For this purpose, Inter-institutional Agreements will be signed among the different Government agencies. The three institutions will be working independently from one another, but in a closely coordinated manner by MDP, which will be the main counterpart during project implementation and supervision. MDP through its institutional structure has created a Technical Coordination Unit (TCU) with responsibility for the coordination of the social protection network's programs includingthis project. The M O Hdelegatedthe PlanningUnit to be responsible for those projects financed by international cooperation, and M O L has created an internal unit to coordinate its project component the National Coordination Unit (NUFEP). Te figure below synthesizes the arrangements. The project's administrative aspects will be responsibility of the TCU in the MDP, whose specific responsibilities and operational procedures will be detailed in the POM. The Project's manual will describe the flow of project coordination processes between the technical and the administrative units inside the MDP, as well as in the M O H and MOL. The following documents that govern the procurement aspects of the project provide the framework for the manual: (i)Financing Agreement; (ii)Procurement Guidelines; (iii)Consultant Guidelines; (iv) Anti-Corruption Guidelines, (v) Operational Manual; (vi) Procurement Plan, (vii) Special Provisions, and (viii) Audit provisions. Legal Aspects 11. The law that rules the Public Sector Procurement (Normas Bhsicas del Sistema de Administracih de Bienes y Servicios, SABS), was established by Decreto Supremo No. 29190, dated July 11, 2007, and its Reglamento del Subsistema de Contrataci6n de Bienes y Servicios, dated August 27, 2007, the law has been recently reviewed, and it applies to all government institutions. 12. The main shortcomings of the Procurement Law includes: (i) multiple exceptions for specific cases involved in the various procurement methods, and efforts to avoid open competition through ICB / NCB; (ii)authorization for government agencies to contract with other government agencies; (iii) an explanation of domestic preference that is in conflict with the text of Annex I1of Bank Guidelines; (iv) open competition for the selection of consulting firms instead of short listing; (v) request of bid and performance guarantees for consultants; (vi) inadequate time to prepare bids; (vii) lack of an independent agency to review and resolve disputes. This means that bidders will have to go to the Administrative Court, meaning long delays and unknown results. 13. Inview of the deficiencies of the national legal framework for procurement and lack of procurement experience in the agencies, all project procurement should be made following Bank Guidelines and agreedprocedures, includingthe Special Provisions detailed further down. 107 Organization and Staffing 14. MDP, MOH and M O L through their respective administrative units, whose specific responsibilities and operational procedures will be detailed in the OM, will nominate a procurement specialist under TOR agreed or satisfactory to the Bank, and will confirm at negotiations, the proposed structure at the central and departmental levels to be responsible of the supervision and / or implementation of procurement. 15. The responsibilities for implementing project procurement by the TCU unit include: (i) prepare and execute its own procurement, coordinate implementation within MDP, and with M O H and MOL, follow-up the implementation of the procurement carried out by MOH and MOL, follow-up the updating and implementation of the Procurement Plan, and to ensure compliance with MDP technical standards, particularly for training and technical assistance; (ii) prepare bidding documents and coordinate preparation o f terms o f reference and technical specifications; (iii)ensure the functioning of the Bid Evaluation Committees within the MOH and M O L follow Bank requirement; (iv) prepare the Committee's bid evaluation reports, coordinate contract awards and coordinate the preparation o f contracts; (v) establish and keep up-to-date the contract administration system to include contracts from all executing agencies; (vi) design a filing system to keep procurement records; (vii) prepare requests to the Bank for no objection; (viii) prepare and deliver a training action plan; and finally (ix) keep an information system for complaints and their resolutions. 16. At the central level, MOHand M O L will carry out certain procurement activities related to goods, consultant services and services as required by their own components. Both M O H and M O L will incorporate in its financial system a module for contract administration that will start with the procurement plan and supervision at different stages of the contracts. The system will be functioning before procurement starts. It will also establish, monitor, and supervise the filing system at all levels. Finally, MOH and MOL will send information to MDP on the assigned dates and other matters related to the procurement plan and its implementation, to be consolidated by MDPand included in the implementation reports to be sent to the Bank 17. The key issues and risks concerning procurement for implementation of the project have been identified and include delays and sub-standard services in the project implementation mainly due to: (i) poor procurement management capacity of MDP, M O H and M O L and lack of adequate capabilities to carry out project related procurement and to establish and monitor procurement indicators; (ii) uncertainty regarding the responsibility and accountability o f MDP, M O H and M O L for project activities; and; (iii)poor regulatory framework. In particular, the a risk assessment identified the following likely causes of said risks: (i) MCA and NUFEP TCU, staff lack experience in implementing substantive procurement following Bank's procedures, and have poor procurement planning and internal controls; (ii) the fractioning of contracts, late payments to contractors, and inefficient practices, fostered by the regulatory weaknesses and (iii) lack of a Control Systems within the MDP, M O H and M O L to monitor project implementation, and of an adequate system and procedures for filing procurement documents. 18. The overall project risk for procurement i s HIGH. The corrective measures that have been considered or implemented to mitigated the above mentioned risks include: (i) agreements to facilitate the carrying out of the project and ensure clarity in the responsibilities and 108 accountabilities of the different actors (MDP, M O H and MOL); (ii)project operational manual a under preparation, including, inter alia, procurement and contracting procedures, will be adopted; (iii) tostrengthenitsprocurementunitandMOHandMOLtocontractkeystaffforMCA MDP and NUFEP units, including a senior procurement specialist as a withdrawal condition of the Financing proceeds; (iv) the Financing Agreement to include additional provisions relating to Procurement practices; (v) close monitoring by the Association, particularly during the first year of project implementation. The following table presents a detailed plan to mitigate the risks and to improve the agencies implementationcapacity. Action By whom By when 1 Bank to review and comment To have the TCU, MCA and NUFEPestablished MDP/ MOH/ 90 days after I No Objectionto TORS and properlystaffed, and the Administrative MOL effectiveness for key staff including units structure and functionsto supervise/ the procurement executeprocurement, includinghiring a specialist procurement specialist Definefunctions, organization, and relationship MDP/ MOH/ F.A Subsidiary Agreements amongTCU, technical and administrativestaff, MOL effectiveness includethe Inter- and MOHand MOL institutional Arrangements To define the procurement work flow including MDP/ MOH/ F.A Procurementprocesses approvers and timetable following local MOL effectiveness and functions to be procedures (mappingof all steps), MDP, MOH includedin OM -I-- and MOL Finalizethe procurementsection of the OM, with MDP/ M0H-i F.A negotiations Draft of the OM detailed instructionon: (i) responsibilitiesand MOL relationships betweenthe various units involved inprojectprocurement (ii) individual responsibilitiesfor approval and processingof key procurement actions under the project;(iii) sending informationto IDA, and (iii) specific sectionto includeinstructionsand details of the process and responsibilitiesfor procurement files. Prepare a GeneralProcurementPlan (For the MDPto Negotiationsand Plan and updating first 18 months) and updating as necessary. consolidate the duringproject plan including implementation MOHand MOL plans Preparethe GeneralProcurementNotice MDP February 2008 ProposedNotice Prepare standardbiddingdocuments for NCB, MDP F.A Documentsas part of Shoppingand selection of consultants, and negotiations the draft POM Standardformats for bid evaluation. To design/ includeprocurement module inthe MDP/ MOH/ currentMDP, MOHand MOL projectMIS MOL system system, to monitorprocurementplans, contract implementation and producereports. Includeinthe Procurementpart of the Financing Bank Agreement and inthe OM: (i) the Special Provisions agreed for Boliviaand the explanationthat they should be used when following nationalcompetitiveprocedures;(ii) a 109 Action ~~ By whom By when Bank to review and comment ~ requirement for the use of standard bidding documents agreed in advance with the Bank, and (iii)allprojectprocurementwillbemade following Bank Guidelines and agreed procedures. Invitations for all contracts, expressions of MDP / MOH/ During project Invitations should interest and contract award will be advertised M O L implementation follow the Bank's through a government and project web page, and Standard format ina local newspaper. For consultant services above $100,000, the call for bids, the expressions of interest and contract award information should be also publishedinthe UNDB and dgMarket. Submit to the Bank Procurement Audit reports IIMDP Each March 31 Report carried out by Independent Auditors. starting in 2009 Special Provisions A. In addition to and without limitation on any other provision set forth in this Schedule or the Procurement Guidelines, the following rules shall govern all procurement of goods and works under NCB: 1. A meritpoint systemshall not beusedinthe pre-qualification of bidders. 2. The award of goods and works contracts shall be based exclusively on price and, whenever appropriate, shall also take into account factors similar to those referred to in paragraph 2.5 1 of the Guidelines, provided, however, that the bidevaluation shall always be based on factors that can be quantified objectively, andthe procedure for such quantification shall be disclosed inthe invitation to bid. 3. The Borrower shall open all bids at the stipulated time and place in accordance with a procedure satisfactory to the Bank 4. The Borrower shall use a single envelope procedure. 5. Whenever there i s a discrepancy between the amounts in figures and in words of a bid, the amounts in words shall govern. 6. There will be no prescribed minimum number of bids submitted for a contract to be subsequently awarded. 7. Foreignbidders shall be allowed to participate. 8. Foreign bidders shall not be requiredto legalize any documentation related to their bids with Bolivian authorities as a prerequisite for bidding. 9. No margin of preference shall be granted for any particular category of bidders. 10. Inthe event that a bidder whose bid was evaluated as the bid with the lowest evaluated price withdraws its bid, the contract may be awarded to the second lowest responsive evaluated bid. 11. Foreign bidders shall not, as a condition for submittingbids, be required to enter into a joint venture agreement with local bidders. 12. No other procurement rules or regulations of the Borrower's agencies or of any state-owned entity shall apply without the prior review and consent of the Association. 13. Government-owned enterprises may participle in bids only if they follow paragraph 1.8 (c) of the Guidelines. 110 B. Inaddition to and without limitation on any other provisions set forth inthis Schedule or the Consultant Guidelines, the following rules shall govern all procurement of consultant services referred to inthis Schedule: 1. As a condition for participating in the selection process, foreign consultants shall not be required to enter into ajoint venture agreement with local consultants, unless the conditions statedinparagraph 1.12 of the Consultant Guidelines are met. 2. As a condition for participating in the selection process, foreign consultants shall not be required to legalize their proposals or any documentation related to such proposals with Bolivian authorities. 3. Foreign consultants shall not be required to be registered in the Borrower's National Registry of Consultants (Registro Nacional de Consultoria). 4. Consultants (firms and individuals) shall not be required to present Bid and Performance securities as a condition to present proposals and sign a contract. C. ProcurementPlan 19. The MDP has prepared a procurement plan for the first 18 months of project implementation, based on the project existing information and envisaged implementation. This plan was discussed and agreed between the Borrower and the Project Team during Negotiations and i s available at MDP offices. The procurement plan includes the three components. I t will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated semi-annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. 20. Duringimplementation the MOH and MOL will develop a procurement plan for their components. MOH and MOL will send to MDP in the due dates its part of the procurement plan to be consolidated and send to the Bank. D. FrequencyofProcurementSupervision 21. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agencies has recommended semi-annually supervision missions, including field visits, to carry out post reviews of procurement actions. E. DetailsoftheProcurementArrangementsInvolvingInternationalCompetition 1. Goods,Works, andNonConsultingServices (a) List of contract packages to be procured following ICB and direct contracting (no Civil Works are envisaged): 1 2 3 4 5 6 7 8 9 Ref. Contract Estimated Procurement P-Q Domestic Review Expected Comments No. (Description) Cost Method Preference by Bank Bid- (yes/no) (Prior / Opening Post) Date 1 Financial $384,330 ICB NIA N Yes 04/01/09 Institutions Ref. Contract Estimated Procurement P-Q Domestic Review Expected Comments No. (Description) Cost Method 1 Preference 1by Bank 1Bid- 1 1 (yedno) (Prior / Opening I I I I Post) Date Services to pay stipends Training $485,000 ICB Providers Services in the manufacturing sector (b) ICB contracts for works estimated to cost above $3.0 million and ICB contracts for goods estimated to cost above $200,000 per contract and all direct contracting will be subject to prior review by the Bank. 2. Consulting Services (a) List of consultingassignments with short-list of international firms. 1 1 2 3 4 5 6 17 Ref. No. Description of Estimated Selection Review Expected Comments Assignment cost Method by Bank Proposals US% (Prior / Submission Post) Date N/A (b) Consultancy services estimated to cost above $100,000 per contract and all single source selection of consultants (firms) will be subject to prior review by the Bank. Individual consultants services to cost $25,000 or above per contract or single source, regardless of the amount, will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 112 F. THRESHOLDS FORPROCUREMENTM E T H O D S AND PFUOR REVIEW Expenditure Contract Value Procurement Method Bank Prior Review Category (Threshold) (US$OOO) 1 ::p 1. Works >3,000 ICB All 3.000>250 NCB Firsttwo eachvear I PSW (Price Firsttwo each year <250 Comparison) 2. Good; and Non Consultin services ICB All 200>50 NCB Firsttwo each year Shopping Firsttwo each year 3. Services I QCBS, QBS All QCBS, QBS, CQ, FBS, All TORs. Process Procurement Plan) reviewed twice yearly (Ex Post). All contracts 4. Individual Consultants >25 IC All e25 All TORs. Selection Process reviewed twice yearly (Ex Post). All contracts awarded under Total value of contracts subject to prior review: S$ 1.6 million (first 18 months) Notes: ICB = InternationalCompetitive Bidding NCB= National Competitive Bidding QCBS= Quality-Cost BasedSelection QBS=Quality Based Selection FBS=Fixed Budget Selection LCS=Least-Cost Selection CQS=Consultant Qualification Based Selection SSS= Sole Source 113 Annex 9: EconomicandFinancialAnalysis BOLIVIA INVESTINGINCHILDRENAND YOUTH 1. This annex presents the project's economic and financial analysis. It is organized in three parts. The first section presents an analysis of the estimated impact o f the proposed conditional cash transfer (CCT) program on poverty and extreme poverty incidence and gap for beneficiary households. The second section estimates the measurable benefits related to Components 1 and 2 (CCT to reduce chronic malnutrition, and improving skills training); economic benefits of institutional strengthening (Component 3) are not considered due to the difficulty to value them. The third section presents the costs of all project components as well as other costs triggered b y its implementation. The fourth section summarizes the benefits and costs and estimates the Internal Rate of Return (IRR) that is an indicator of the net benefits expected from a project. Finally, the last section assesses the project's impact on fiscal accounts. I.ExpectedBenefitsofaCCTProgramandthePovertyEffectoftheSocialProtectionProgramfor Mothersand Children(MCP) 2. The analysis in this section i s based on existing household survey data, and without the benefit of the baseline data that i s being collected for the project. Therefore the estimates of the impact of the MCP program may be conservative. This analysis will be updated with the baseline and through the M&E framework outlined inAnnex 3. 3. Over the past decade, numerous developing countries have implemented conditional cash transfers (CCTs) as main social sector interventions, with the goals o f reducing: (a) current poverty and inequality through the provision of cash transfers to poor families (redistributive effect); and (b) the inter-generational transmission o f poverty b y conditioning these transfers on beneficiary compliance with key humancapital investments (structural effect). 4. Impact evaluations of CCT programs show positive impacts on various outcomes such as school enrollment, poverty gap reduction and nutrition and health care attendance. These results sustain existing programs and have encouraged the design o f similar programs in other developing countries despite some concerns about budgetary impact45 and also operational questions about co-responsibility, target population, size of transfer and coordination with the supply of services. 5. According to the World Bank PPA 2006, CCTs better target the poor than most social programs including utility subsidies, social insurance and public spending on health and education. Inmost countries, their redistributive impacts are limited only by the relatively small size of the unit transfers (despite their effects on poverty sensitive measures such as poverty gap and severity of poverty). Different experimental and quasi-experimental evaluations suggest that on health and nutrition CCT programs contribute to (a) increased total and food expenditures (Brazil Bolsu Alimentupio (BA), Mexico, Honduras, Nicaragua); (b) increased calorie intake and improved dietary diversity (Brazil BA, Mexico, Nicaragua); (c) improved child growth (Mexico, Nicaragua, Brazil BA); (d) reduced health service costs; (e) increase in use o f prenatal care and 45They representa large share of public budgetsdedicatedto povertyreduction. 114 reduced maternal mortality (Mexico); (f) reduced incidence o f smoking and alcohol consumption (Mexico); and (g) improved treatment of diabetes (Mexico). Results for education show that CCT programs contribute to (a) improved primary enrolment among the poor (Nicaragua, Honduras, Brazil); (b) increased secondary enrolment (Mexico, Colombia); (c) reduced drop-out rates and repetition (Brazil, Mexico, Nicaragua, Honduras); and (d) reduced child labor (Mexico- boys, Nicaragua, Honduras-boys, Colombia, Brazil). 6. Short-run CCT effects on consumption may underestimate the true (medium-run) impact of the program on poverty. First, a fraction of the transfer can be saved or invested in productive assets as suggested by Gertler, Martinez, and Rubio-Codina (2006) with Mexico CCT program. Second, CCTs would also help smooth household consumption and/or protect them from negative economic shocks as posited by de Janvry et al. (2006) and Maluccio (2005) on the Nicaraguanprogram. The Poverty Effect of the Social Protection Programfor Mothers and Children 7. The following section presents the analysis of the impact of the Social Protection Program for Mothers and Children (MCP) on income poverty. The MCP i s geographically targeted to the 52 most vulnerable municipalities, measured in terms of food insecurity. Within these municipalities, there is categorical targeting since the program benefits pregnant women and mothers with children under the age of two. The benefits are not mean-tested, as the incidence of poverty is above 90 percent inthese areas. 8. The mainobjective of the program i s to reduce the prevalence of chronic malnutrition in children under two years old, therefore the program i s expected to have a lasting impact on the growth and development of children. Nevertheless, as a monetary benefit it i s also expected to have an immediate effect on the income of beneficiary households. 9. The poverty effect of the cash transfer can be modeled based on data from the household surveys. Analysis proceeded in two phases: first, household surveys were merged to get an adequately representative sample of beneficiaries; and second, the effect of the benefit on poverty was modeled. Quantifying the poverty effect i s complicated due to data constraints. First,the sample of the household surveys is relatively small. Inresponse, three different sets of databases (household surveys from 2003-2004, 2005 and 2006) were pooled to increase the sample of potential beneficiaries and to be able to disaggregate results -by rural areas and by department. Samples o f the surveys are independent, although it i s possible for a household to be surveyed more than once. Nevertheless, INE does not consider this as a regular situation. The increased sample for the simulation i s presented inthe following table: TableA9.1: Potentialbeneficiariesof the MCPProgram Potential beneficiaries Year % (pregnant women and mothers) 2004 2,600 54.98 2005 1,044 22.08 2006 1,085 22.94 Total 4,729 100 Source: MECOVIand EDHsurveys for 2003-2004,2005, and 2006. 115 10. Once the databases were merged, the poverty effect was modeled by simulating the poverty rate before and after receipt o f the benefit. The transfer simulated for each household was valued at 65.6 Bs. per month, which corresponds to a total of 1902 Bs. for the 29 months of the program. The amount of the benefit was added to household income o f eligible households - those with pregnant women andchildren under 2 years of age. 11. The poverty headcount rate and gap were calculated ex ante and ex post, using the new household income estimates, using both the poverty and extreme poverty lines.46 Expansion factors were used for the calculation of poverty rates to maintain the population structure. These simulations assume no behavioral change -in other words, that increased income would not change householdearning patterns. 12. Figures A9.1 and A9.2 below illustrate the reduction in the poverty and extreme poverty headcount rates among beneficiaries in rural areas by department. As anticipated, the project will have the greatest impact on the extreme poverty rate among potential beneficiaries in rural areas with the largest reductions in Pando (8 percentage points), Santa Cruz (7 percentage points) and Potosi (6 percentage points). Figures A9.1 and A9.2 Simulated Poverty and Extreme Poverty Rates among eligible MCP BeneficiariesinRural Areas Preand PostBenefits,2003-2006 ,UWithout benefit 8With benefit 8Without benefit 8Wnh benefit 13. Similarly, the MCP benefit will have a substantial impact on the extreme poverty gap - the distance of beneficiaries from the poverty line. 46Annualpoverty lines corresponding to each year of the household survey were used, rather than calculating an aggregated poverty rate. As a reference, in 2006 the poverty line was equal to 339 bolivianos (US$42) and the extreme poverty was at 189 bolivianos (US$23). 116 Figures A9.3 and A9.4: Simulated Poverty and Extreme Poverty Gaps among eligible MCP BeneficiariesinRuralAreas PreandPost Benefits, 2003-2006 I I E l Without benefu Wuh benelit OWdhout beneFn =With benefu 11. Project Benefits 14. BeneJt from the CCT to reduce chronic malnutrition (Component 1). Many developing countries have implemented CCTs for poor families, conditioning these transfers on beneficiary compliance with key human capital investments, to reduce poverty and inequality and to mitigate their intergenerational transmission. Regional experience (Brazil, Mexico, Honduras and Nicaragua) has showed that health and nutrition CCT programs contribute to reduce maternal and child mortality as well as stunting. This section will evaluate the economic benefits of the CCT component, according to the following steps: (i) identify a relation between variables changed by the project - such as breast feeding -, and their effect on child mortality and stuntingrates, to estimate the number of children saved from death and stunting; (ii) estimate the economic benefit of this component as the discounted incremental income flow received by these children over their working lives. (i) Estimation of thenumber of children saved.The effects of this component in terms of the number o f children saved from chronic malnutrition results from the project's objective to modify the prevalence of chronic malnutrition. Based on this information, the number of deaths avoided of children younger than 2 was estimated using a system dynamics model applied to the 52 municipalities targeted by the proje~t.~',~* This model estimates the number of children born based on birth and mortality rates, and total population in the intervention areas. Usingthis input, the model calculates the number of deaths avoided considering that increased breast feeding (for children younger than 5 months) and reduced malnutrition (for children older than 5 months) would diminish mortality, by way of reducing the propensity to Acute Diarrheal Diseases and Acute Respiratory Infections. The relation among these variables was built using evidence from the international literature: Malnutrition with child mortality: 69 percent of deaths caused b y diarrhea are related with malnutrition as well as 59 percent of deaths caused b y pneumonia;49 Exclusive breast feeding with child mortality: non- exclusive breast feeding increases child morbidity/mortality by 6.1 times in the case of 47The first year only 10municipalitieswill be benefitedand the other 42 municipalitieswill be added since the secondyear. 48Effectson maternalmortality have been excluded becauseit would be modest: only 23 deaths would de avoided. 49Caulfield L, Black R. 2002. Malnutrition and the Global Burden of Disease: Underweight and Cause-Specific Mortality. Geneva, Switzerland:World HealthOrganization. 117 Acute Diarrheal Diseases and by 2.9 times in the case o f Acute Respiratory infection^.^' According to this model, the project would avoid about 1,400 children deaths and save more than 21,300 children from stunting (Table A9.2). Table A9.2. Impacton childmortalityand malnutrition 2008 2009 2010 2011 2012 Total Child deaths avoided (0-23months) 8 97 309 461 544 1419 Children saved from stunting (0-23 months) 1294 4784 5843 4753 4661 21335 (ii) Estimationof theeconomicbenefit.Itisdifficulttoquantifyinmonetarytermsallsocial and economic benefits of CCTprograms due to conceptual and data constraints. Nevertheless, it i s possible to quantify the private benefits associated with improved nutrition and deaths avoided assessing the expectedadditional earnings of beneficiaries over their working life. However, several important benefits may not be valued, including: (i) the value of life as a consumption good; (ii) the social benefits associatedwith basic human capital investment like better learning environments, and health and nutritionalpractices over time; (iii) reduced family healthcare costs; (iv) unnecessaryhospital stays and mobility reduction; (v) the general equilibrium effects of greater human capital investments associatedwith higher future rates of economic growth and faster poverty reduction; and (vi) the economic value of poverty and inequality reductions. Inthis context, the project's benefits calculated usinglabor market-related income opportunities generatedby a better nutrition status and deaths avoided seema reasonablelower-bound estimation. 15. The benefits ofavoiding deaths are estimated as the discounted income flow received by children whose lives are saved by the project as they eventually become part of the working population. On the other hand, the benefit of reducing stunting i s estimated as the present value of the increased income-earning capacity of the persons whose nutrition status is irnpro~ed.~' In line with international literature, it i s additionally assumed that children that avoid stunting will have 0.6 years of additional schooling and an earnings premium of 10 percent during their working lives.52 16. These economic benefits were estimated using the 2005 household survey information, under the assumption that earnings and working profiles would not be changed: futures cohorts 50 WHO CollaborativeStudy Team on the Role of Breastfeedingin the Preventionof Infant Mortality: effect of breastfeedingon infant and child mortality due to infectious diseases in less developed countries: a pooled analysis, Lancet 355 (2000). Arifeen, S., Black, R. E., Antelman, G., Baqui, A., Caulfield, L.andBecker, S. 2001. ExclusiveBreastfeedingReduces Acute Respiratory InfectionandDiarrheaDeathsAmong Infantsin DhakaSlums. Pediatrics108. 5 1In both cases, the analysis does not take into account the benefitsfrom those people who are not working due to the difficulty to value the benefitsfor those who would not participateinthe labor market. 52 Evidence indicates that young children who suffer from chronic malnutrition earn significantly lower incomesthroughouttheir economicallyactive lives. Empirical studiesestimatethe negativeeffectsof stunting on worker productivity and adult earningsto be about 10 percent, controlling for other factors Alderman H., Hoddinott J.and Kinsey B. 2003. Long Term Consequences Of Early Childhood Malnutrition. The estimatedschoolingimpacts were calibratedon the findings of a recent impact evaluationof the Progresa program in Mexico which estimated that this program led to an increase of 0.66 years of schooling on average among eligible families (Schultz 2000); this effect couldbe underestimatedbecause targetedareas in Bolivia are startingat lower levels of educational attainment, than were seen in Mexico at the start of Progresa and thus incrementalgains may be accrue more readily. Schultz, T. 2000. Final Report: The Impact of PROGRESA on School Enrollments. April. International Food Policy ResearchInstitute,Washington. 118 will have the same income opportunities in their productive life than current ones.53 Within this context, Figures A9.5 and A9.6 shows the estimated age-earning and age-working profiles in Bolivia's rural area used to estimate the income generated b y avoiding children death. Figure A9.5 also shows the hypothetical age-earning profile considering an earnings premium of 10 percent and additional 0.6 years o f schooling that would benefit child saved from stunting. The monetary values of these earnings are shown inTable A9.3, Column Al. Figure A9.5. Age-earningprofilesinrural Figure A9.6. Age-working profiles inrural areas areas __-...... 0.9 0.8 0.7 e 0.6 1 -X 0.5 2 2 0 4 e 0.3 0 2 01 1 -Without project ......Wilh project 0 0 , , , , , , , , , , , , ,, , , . , ,, , , ,, , , , , , ~, , , , , ,I , I I , , , I I , I I I , , r " , z K % R % R ~ 2 z , % & ~ a Source: EDH2005 Source: EDH2005 17. Benefitsfrom improving skills training (Component2). Expected direct benefits of the program stem from increased earnings ability and employability because training can address skill-mismatches between job offer and demand. This outcome would generate important private and public benefits including: (i) reduction of labor underutilization; (ii) costs related to reduced crime as idle youth are at work; and (iii) accelerated poverty reduction and enhanced equity as the project i s targeting poor youth population in departments where no similar initiatives were implemented. However, the evaluation considers only benefits derived from increased earning capacity and employability taking into account regional experiences which show that youth trainingand labor market insertion programs generally have apositive impact on these variables. 53I t i s assumed income generation capacity will not growth because this improvement would require additional intervention. 119 Figure A9.7. Age-earning profiles in urban Figure A9.8. Age-working profilesin urban areas areas 3svn - 1 0 8 0.1 $ 0.6 & -c0.5 .D 0.4 t 0.3 0.2 500 j 0.1 Source: EDH Source: EDH 18. The economic benefits were estimated using the 2005 household survey. It i s assumed that, in the absence of the project, beneficiaries would have earnings and working profiles of people with 10-14 years of education in urban area (Figures A9.7 and A9.8).54The additional income flow generated with the project was estimated assuming that beneficiaries would have a permanent income premium of 5 percent and their probability of being employed would be increased by 6 percent duringfour years after the internships(Table A9.3, Column A2).55 111.Projectcosts 19. The analysis considers two basic elements in terms o f the costs: (i) total investmentthe costs of the World Bank-financed project and the government counterpart, adding up to US20 million over a five year schedule beginning in 2008 (Table A9.3, column Bl); (ii) education the cost of children saved from death and the cost to provide additional education to children saved of stunting (Table A9.3, column B2). This cost was estimated taking into account that educating a child in Bolivia costs Bs 2,200 per year, and assuming that children would complete only their primary education - in average, youth have 8 years of education in Bolivia's rural areas - and those saved from stuntingwill receive 0.6 years of additional education. The recurrent costs and investment costs financed by the Government of Bolivia to deliver additional health services to children who are saved from death are not included in this analysis due to lack of information, but on the other hand it is expected that improvement in nutrition status would reduce health services demand compensating those additional costs. 54These estimates assume that increases in youth employmentdo not crowd out adult employment. 55IADB estimatedthat the averagejob durationin Bolivia is close to four years. IADB. 2004. GoodJob Wanted: Labor Market inLatinAmerica. EconomicandSocialProgressReport. 120 IV. Cost-benefit synthesis 20. Table A9.3 summarizes the project's measurable benefits and costs developed in the previous sections. The benefits include the improvement in future income of beneficiaries that include children saved from death and stunting, as well as trained youth (Table 9A.3, columns A1 and A2). Costs include the direct project costs (Table A9.3, column B1) and the costs to educate children saved from death and stunting (Table A9.3, column B2) - child saved from stunting would demand additional education. In addition, the CCT amounts and trainee allowances for transport and subsistence are included in both costs and benefits - they are a cost for the project but they are also a benefit for the beneficiaries of the project (Table A9.3, column A3). 21. These flows result in a project's IRR close to 20 percent which i s higher than the standard discount rate used in Bank's project evaluation of 10 percent - the project could be considered economically positive, if its IRR i s higher than the standard discount rate. Moreover, it is worth noting that, in accordance with a WHO standard, a 3 percent discount rate is generally usedwith income streams received by people whose premature death has been averted due to the The breakeven point - when the benefits of the projects begin to surpass its costs - occurs after 26 years of implementation considering a discount rate of 10 percent. However, Table A9.3 also shows that if transfers are excluded from the benefits the project's IRR falls under 10percent, but remainingover 3 percent. Table A9.3. Project Costs, Benefits and Internal Rate of Return (USS~ i ~ ~andpercentages) i o n Social revenues A. Benefits B. Costs Stream Privateincomeimprovement Transfers and Direct project Othercosts, (Net benefit) Component 1 Component2 allowances cost education (A-B) (AI) (.w (A31 032) 2008-2010 -3,859 0 207 9,185 13,251 0 2011-2015 4,104 0 1,524 8,905 6,222 102 2016-2020 245 169 1,750 0 0 1,674 2021-2025 -724 2,246 2,218 0 0 5,188 2026-2030 11,473 9,296 2,419 0 0 241 2031-2035 24,753 22,403 2,350 0 0 0 2036-2040 39,981 37,908 2,072 0 0 0 2041-2045 52,714 5 1,041 1,673 0 0 0 2046-2050 60,068 58,821 1,247 0 0 0 2051-2055 61,129 60,256 873 0 0 0 2056-2060 56,320 55,726 594 0 0 0 2061-2065 47,110 46,730 380 0 0 0 2066-2070 35,708 35,514 195 0 0 0 2070-2075 24,489 24,423 66 0 0 0 Consideringtransfers as part of the benefits 30 yr IRR 17.9% 50 yr IRR 19.4% 40 yr IRR 19.2% 60 yr IRR 19.5% Not consideringtransfers as part of the benefits 30 yr IRR 50 yr IRR 8.6% 40 yr IRR 7.7% 60 yr IRR 8.9% Murray, C. andLopez, A. 1994. Quantifyingdisability: data, methods andresults. In: Murray, C.J.L. andLopez, A.D., Editors, 1994. Globalcomparativeassessmentsin the health sector:disease burden, expenditures,and interventions.Bulletin of the World HealthOrganization, World HealthOrganization, Geneva(Switzerland). 121 V. FinancialAnalysis andFiscal Impact 22. The central government would have enough resources to cover the new obligations triggered by this project inthe current fiscal situation. Tax revenues increasedfrom 26 percent of GDPin 2005 to 33 percent of GDP in 2006, mainly due to the new hydrocarbon policy, but also because of an increase in tax collection efficiency. Public expenditures were contained generating a fiscal surplus of 4.5 percent approximately in 2006. In 2007, a fiscal surplus is still expected, although probably smaller. In addition, Bolivia benefitedfrom the MDRI, reducing its external debt to below 20 percent of GDP. Recently, S&P has revised its outlook on Bolivia's B - rating to stable from negative. Moreover, it the overall fiscal situation deteriorates, the government could finance the recurrent costs triggered by the project due to their small amount - the CCT and training are the main recurrent costs triggered by the project but their amount is only about US$13 million inthe five years of implernentati~n.~~ 57 Itis worth noting that this section focus inthe specific effects of the costs directly related to the project implementation over the fiscal expenses and does not evaluate the overall fiscal situation or its macro risks. 122 Annex 10: SafeguardPolicy Issues5' BOLIVIA INVESTINGIN CHILDREN AND YOUTH 1.BACKGROUND 1. Among the most salient features o f contemporary Bolivian development are that: (i) indigenous identity remains a crucial factor in national and local organization, but it i s a complex, evolving, and flexible concept and (ii) Bolivia i s a heterogeneous country in the midst of dramatic social and demographic transformations. The first factor i s particularly germane to the Investing in Children and Youth program because a large proportion of potential beneficiaries of the MCP in particular belong to indigenous households and communities. The second i s a crucial contextual factor that shapes the youth employment program. 2. In1995, the Bolivian constitutionwas amended (Law 1585) to officially recognize the country's ethnic and cultural diversity. The social, economic and cultural rights of indigenous peoples were acknowledged and communal territories were recognized as were the rights to natural resources, ethnic identity, and traditional values, customs, and institutions. Specifically, traditional health beliefs and practices have been legally recognized; the legal corpus includes the Traditional Medicine Practice Regulation 198771-1984, Resolucidn Suprema 198771-84, and legal status (personeria juridica) of the Sociedad Boliviana de Medicina Tradicional. The practice of traditional medicine requires a license granted by the Ministry of Human Development, but only an estimated 500 traditional practitioners have this permit. Moreover, traditional health was incorporated into the Government's structure through the creation of the Vice Ministry of Traditional and Intercultural Medicine in February 2006. This office is responsible for assuring that traditional health care i s incorporated into public health services and that traditional beliefs and practices are respected. 3. Indigenous identity in Bolivia i s closely associated with the long and rich but contentious history o f a diverse group of peoples and the development o f ethnic-based (or at least -informed) social and political organization and practice. Nevertheless, a satisfactory definition for "indigenous" i s a polemical issue in Bolivia, even though it i s clear that however defined, indigenous people in Latin America face very serious economic, political, social, and health challenges. Moreover, indigenous identity remains a deeply ingrained part of Bolivian contemporary social and political structure. Two highland groups, the Aymara and Quechua, dominate much of contemporary social and political discourse; in addition, the eastern lowlands are home to some thirty other indigenous groups (the largest o f which i s the Guaranf), communities of mixedrace inhabitants (mestizos),whites, and afro-Bolivians. 4. Indigenous identity is relevant for two reasons. First, indigenous status i s closely related to poverty, poor health and education outcomes, and inadequate access to public services, employment, housing, the administration of justice, and essentially all sectors associated with social protection. Second, while some analyses argue that Bolivia i s really a country o f mestizos, most would agree that indigenous identity and culture are not only relevant, but are currently undergoing impressive processes of renewal and regeneration. Consequently, the centrality of indigenous culture inthe Investing in Children and Youth Project i s well founded. 58Bibliographic references are providedin the full text of the social analysis (Waters, 2008). 123 5. Indigenous identity has two components. Internally, to be indigenous is related to self- identification: how one defines oneself. While this definition seems like a stable and objective enough definition, it in fact can be subject to different interpretations and can change; an urban Bolivian professional, for example, might view herself as Aymara because of a perceived connection to past generationsthat might or might not have an historical basis. Conversely, a Quechua-speakingmigrant to Cochabamba might view himself as mestizo if he adopts new cultural traits such as clothing and language; his children, moreover, are very likely to identify themselves as mestizo or at least as not indigenous. 6. The external component of indigenous identity has shifted over time, in terms of both census definitions and recognition by the State. The 1952 revolution and subsequent land reform essentially legislated indigenous identity out of existence; regarded by the reformist MNR (Movimiento Nacional Revolucionario) as backward remnants of the past, indigenous people were redefined as mestizos, rural producers, small land owners, and campesinos. Through education and other public policies that ignored local cultural, social, economic, and political norms, the rural population would be "modernized." Simultaneously, the State created a "proletarian" mining sector in the highlands and in the eastern lowlands, the several dozen ethnic groups which are today recognized were lumped together by the State as "jungle groups" and their lands, regarded as unused because they were not intensively cultivated, were declared public goods and transferred to new landed elites which evolved as modem agribusiness, ranching, and timber interests. Since then, as discussed below, ethnicity has evolved in the eyes of the State, through the 1994Law o f Popular Participation (LPP), which explicitly recognizes the highland ayllus and the lowland capitania, and defines the country as plurinacional and multicultural. 7. The second important feature of the contemporary Bolivian social formation i s that it i s increasingly urban. Largely a product of dramatic rural-urban migration since the mid-1970s, the growth of urban and peri-urban areas is such that at present, nearly two thirds of Bolivians live in urban places. Moreover, with the exception o f only three of the nine departments (Chuquisaca, Potosi, and Pando), over half o f residents in each department are urban. This change reflects not only the growth of the four largest cities with populations o f more than 500,000 (La Paz, El Alto, Cochabamba, and Santa Cruz), but also of the 21 intermediate cities with populations of between 20,000 and 250,000. The importance o f this transformation to the Investing in Children and Youth program i s that Bolivia now has a new and growing generation of urban and peri-urban youth, whose parents have deep rural and agrarian roots, but who now search for meaningful insertion into the urban economy through employment that can offer hope for job stability and reasonable remuneration. 8. Inorder to better understand how shiftingdefinitions of indigenous identity andrapid urbanization could affect the cash transfers and youth employment programs supported by the I C Y project, qualitative research was conducted in order to give voice to a wide variety o f stakeholders: potential beneficiaries, healthpromoters and other personnel, and local authorities. METHODOLOGY 9. Field-based qualitative research was conducted in eight municipalities in eight of Bolivia's nine departments for the MCP; all eight are among the 52 priority municipalities identified as priority by the government. In addition, field work was conducted in four pilot cities in which the FEP i s to be implemented. Focus group discussions were used as the primary 124 method; the focus group i s a planned exercise that i s designedto elicit perceptions, opinions, and ideas from a set of individuals who share at least one relevant characteristic (for example, gender or socioeconomic status). It provides a safe, neutral environment, in which all participants are encouraged to contribute. The group environment allows for interplay of ideas and comments that build upon one another, because individual perceptions and attitudes are shaped by their social context and are often best expressedin responseto the opinion of others. The focus group setting thus represents a natural environment where the topic of conversation is directive, but at the same time, perceptions and ideas are expressed in the participants' own terms rather than forced into categoriesimposed by standard survey techniques. 10. Key informant interviews were conducted to provide further information in the selected communities and to confirm, validate, or modify findings derived from the focus group discussions. These individual interviews are conducted with people in the communities who are prominent because of their influence, formal or informal leadership positions, or because they have information on the topic of interest by virtue of their position or occupation (for example, teachers or health care workers) or role in the community. Key informant interviews represent an excellent source of information about the community, its organization, history, members, and relations with the state and external agencies. 11. Focus group discussions are not based on an inflexible list of questions that are applied in a uniformmannerbut, rather, on question guidesthat shape the discussion while ensuringthat all required topics are addressed. The question guide for the focus group discussions on the monetary incentive program addressed the following issues: (i) knowledge about the program; (ii) perceptions regarding co-responsibilities; (iii) that could affect fulfilling the co- factors responsibilities (distance; access; availability; schedules; costs; respect for cultural and linguistic characteristics and traditional beliefs); (iv) use to which the cash transfers would be put; (v) health practices and beliefs, including use of traditional medicines and treatments; and (vi) other factors that could affect the program. 12. The following topics were discussed with key informants with respect to the MCP: (i) perceived advantages and disadvantages of the program; (ii) that should be taken into factors account with respect to program implementation (economic-including associated costs, logistics, cultural issues); and (iii) other factors that should be considered. 13. The question guide for the focus group discussions on the youth employment program addressed the following issues: (i)participants' employment experience and history; (ii) relevance of high school education in preparation for employment; (iii) knowledge about the FEP program; (iv) perceptions related to employment training offered by the program and its ability to prepareparticipants for the job market; and (v) employment aspirations andperceptions about the future. 14. The following topics were discussed with key informants with respect to the youth employment program: (i)factors that affect youth unemployment (human capital, cultural factors, availability of employment); (ii)factors that could affect the FEP; (iii) that should factors be taken into account with respect to program implementation (associated costs, logistics, cultural factors); (iv) perceptions on the potential effects on youth employment; and (v) other relevant points. 125 15. Using standard procedures, individual participants in each of the selected communities were screened and recruited by local counterparts to participate in the focus group discussions, and suitable venues (classrooms, health centers, or other places free of disturbances were secured). While the optimal number of participants in a focus group discussion i s about eight, actual participation varied from six to thirteen. In addition, one group interview was conducted usingthe focus group format but with an attendance of about 25 and in the presence of the local mayor, may have lacked some of the more inclusive elements o f the standard focus group but which still allowed local stakeholders to give their opinions on the topics listed above. 16. The focus group discussions and key informant interviews were conducted in the priority urban and peri-urban areas of L a Paz (two groups), El Alto, Cochabamba (two groups), and Santa Cruz. Participants included both males and females, and were either current high school students, dropouts in the target age range, or graduates. The focus group discussions related to the MCP were organized in sites indicated in the table below, which also shows the ethnicity of the municipalities as reported in the 2001 census. Three criteria were employed for selecting the municipalities. (i) one municipality was chosen in each department, with the exception of Pando, whose relevant characteristics are similar to those of the neighboring municipality o f Loreto in the department of Beni. (ii) municipalities were selected to reflect the country's ethnic and linguistic diversity and in particular, the strong indigenous presence in rural areas. (iii)selected municipalities had to be readily accessible to the researchers, in order to optimize the time and other resources available for field work. Table 1 shows that with the exception of Yuncharh, the selected municipalities are overwhelmingly indigenous as reflected by the self-identification variable. Moreover, their populations are overwhelmingly rural. The relevance of this indicator i s that municipal capitals are either extremely small (often composed of a half dozen buildings or fewer) or actually non-existent. Hence, infrastructure for the provision of centralized services, including health and education, are extremely limited when they are available at all. Table 1.Municipalities selectedfor inclusion in the social analysis of the monetary I Department incentive program 1 Municipality IEthnic self-identification (%)I Percentrural1 SOURCE:INE-CensoNacional de Poblaci6ny Vivienda (2001) 17. The focus group discussions lasted between one and two hours and were audio taped. The discussions were conducted by one or both members of the local field team contracted by UDAPE.The two basic roles are (i) facilitator or moderator who leads the discussion and (ii) the note taker, who also handled logistical matters, operated the tape recorder, and took notes. Due to time constraints, the cash transfers team divided in order to be able to reach all eight municipalities in the allotted time. Notes are used to ensure the accuracy o f the transcriptions and 126 to allow for the identification (using first name only) of individual participants in the discussion. Upon arrival, each participant was asked to fill out an individual demographic data sheet, which collected confidential, personal information for the purpose of characterizing focus group participants. At the beginning of the session, the facilitator or note taker thanked the participants for attending, explained the purpose of the discussion and the procedures that would be employed. Inparticular, it was emphasized that all opinions were valid and welcome, and that it was important that all participants freely express their opinions. The moderators and assistants were careful not to enter into the discussions or to give their opinions regarding the topics that were discussed. Refreshments were served, but participants received no compensation. 18. Transcriptions of the focus group discussions were developed from the audio tapes and supplemented by the discussion notes. The transcriptions and interview notes were analyzed by the author using a three-stage coding procedure. First, open coding was used to identify concepts and their properties and dimensions. This step often concentrates on response patterns to individual questions posed in the focus group discussions. Second, axial coding was used to relate the categories developed in the previous stage, further refine emerging categories, and link categories on the basis of properties and dimensions. Finally, selective coding was employed to integrate and refine the major themes and relationships among them. This process was supplemented by the use of the NVivo 7 qualitative data analysis package (QSL International; Victoria, Australia). RESULTS:PRINCIPALTHEMES SocialProtectionProgramfor Mothersand Children(MCP) 19. Two key factors inform the perceptions of rural women and men who are potential beneficiaries of the MCP-as well as those of local health personnel and authorities. First, the level of poverty experience by rural people both in the western highlands and in the eastern lowlands is nearly unfathomable in the 21'' century. While in many ways poverty in Bolivia, as elsewhere in Latin America, i s an increasingly urban phenomenon, rural poverty i s in a category apart and surely explains why the country i s the poorest in South America. Monetary incomes are often so low as to seem almost meaningless, and given the harsh agroeconomic conditions in both regions, opportunities to generate additional resources are also extremely limited.59 20. A second factor closely related to the first is the extraordinary isolation of much of the rural population. Highland rural communities are dispersed and the distances within and between communities are enormous. In addition, roads are very poor, and those in the intermontane valley region and those connecting the highlands and the lowlands are notoriously treacherous. For example, the road to Independencia, one of the municipal capitals selected for inclusion in the program, i s 140 km from the nearest paved highway along a road that drops from 2,500 meters to 400 meters above sea level. Inmuch o f the eastern lowlands, there are no roads at all and transportation i s chiefly by small boat or canoe. The municipalities of Loreto, for example, has 46 communities, only three of which are accessible by road. Access to even the most rudimentary public services, then, i s extremely limited or completely absent. When residents of these remote communities speak of public services, the urban sector, or different levels of 59 Inaddition, as exemplifiedby the wide scale and disastrous flooding in the eastern lowlandsin 2007, vulnerability to climatic conditionsis such that almost any interventioncanbarely hopeto providerespite. 127 government, the meaning of the term "gaps" i s truly revealed. In this context, for example, the use of traditional health services says as much about the absence o f alternatives as it does for cultural preferences. 21. Consequently, the major challenge of the MCP i s less to identify and enroll participating beneficiaries than it i s to ensuring that the services required for fulfilling co-responsibilities are available in such a way that they are reasonably accessible. Rural people want better services and will use them if they are available, but years (or lifetimes) of exclusion has created a sensation not of frustration, but rather of limitedexpectations. 22. Access to services. Focus group participants routinely reported traveling three or four hours (often by foot) in order to get to a health post that offers even basic services, and even there, services are generally very limited. A particular problem noted by focus group participants is that health care is not consistently available in health centers and posts; this is particularly problematic given the need to walk many hours to get to those places. The reason for this i s that the staff of health centers and posts not only work in these central locations, but also travel on a rotational basis to communities so that residents there can at least have occasional health services. While this i s very laudable, it means that during their absence, services are not available inthe health centers and posts. 23. Consequently, much of the care, including prenatal care and during childbirth i s provided by traditional health care providers and birth attendants (enferneras empi`ricas and parteras). In many cases, women may be able to travel for prenatal care but must necessarily resort to giving birth at home. The most reasonable alternative i s to use traditional health care professionals or family members (especially husbands duringchildbirth) in part, at least, because they are available, and so therefore have the confidence of local people. There are two principal reasons for using traditional health services, and to some degree they are intertwined. First, indigenous people believe in and trust local TBAs and other professionals. Practices related, in particular, to childbirth, are still deeply ingrained and are not easily dispensed with. Birthing position, disposition of the placenta, and the people who are in attendance (for example males who are not the woman's husband) are important considerations. 24. The inability or unwillingness of western health practitioners to respect these preferences represents a significant barrier to access. Language can present an additional breach between the health care provider and patient. 25. The second factor that explains the persistence of traditional health care i s that for many residents of remote villages, traditional health professionals are the only ones who are consistently available. Focus group participants and key informants report that many local people will use "western" health care if it i s available and i s culturally appropriate. However, in remote highland and lowland communities, this i s often not the case. 26. Perceptions of the MCP. Perceptions of the program as described vary but are in general very positive; from the perspective of people who have received little or nothing from the government, any program that would infuse resources into the community i s welcome. Furthermore, focus group participants perceive that poor rural communities should be given priority. 128 27. Several polemical issues were raised and in general, there was no clear-cut consensus on any of them.. First, how should the transfer be delivered? Since the government also intends to provide food aid, this was mentioned as a preferable alternative to monetary transfers. The principal reason for this was the sense that the money would be poorly spent, especially b y men, but also by women. Men, it was often stated, would use the money, and take it practically by force from women, for alcohol. Women, on the other hand, recognize so many needs, that they might not spend the money in a way that is clearly related to the program. On the other hand, it was widely perceived that with proper orientation, this problem could be resolved such that the monetary transfer can be successfully implemented. A related perception is that given the extremely poor living conditions characteristic of most potential beneficiaries this program should be less focused and should include women with children up to the age of 12or 15. 28. A second issue was whether the cash benefit might come to represent an incentive to having more children. While some participants thought that this might be the case, most potential beneficiaries and local health personnel thought not. One reason given i s that, ironically, families in the eastern lowlands are already so big that having more children is impossible. Conversely, health personnel have the perception that families are beginning to be smaller, as younger couples are better educated than their parents, understand family planning, and have a different view of the future. 29. In sum, there was a common perception that the cash transfers can be effective, particularly if accompanied by skills building in areas such as family planning programs, nutrition, and the like. 30. Compliance with co-responsibilities. While cultural preferences remain a barrier to the institutionalized health services required by the program, the greater barriers are geographic and logistic. For example, women might very well increase their use of prenatal and postnatal care, as well as institutionalizedbirths, if they reasonably could. Other programs have promoted this approach, and inaddition, most municipalities have dedicated some of their health funds for preventive health services o f different kinds. Youthemploymentprogram 31. This section discusses results obtained from key informant interviews and six focus groups (see table below) conducted for the youth employment project. A total of 65 persons participated, divided equally among males and females; the average age of participants in the groups ranged from 18 years in the two L a Paz discussions to 26 years in Santa Cruz. 129 Table 2. Participantsinurbanyouth employmentprogramfocus group discussions HIGHSCHOOL HIGHSCHOOL FocusGroup TOTAL GRADUATE INCOMPLETE* (municipality) Total Male Female Total Male Female Total Male Female ElAlto 12 9 3 8 5 3 4 4 0 Cochabamba I 12 3 9 6 1 5 6 2 4 Cochabamba I1 6 3 3 4 2 2 2 1 1 Santa Cruz 13 8 5 9 4 5 4 4 0 L a Paz I 9 4 5 3 2 1 6 2 4 La Paz I1 13 5 8 4 3 1 9 2 7 Total I 65 32 33 I 34 17 17 I 31 15 16 Percent I 100 49,23 50,77 I52,31 50 50 I 47,69 48,39 51,61 Note: Includes dropouts and current high school or technical secondary school students. 32. Experiencesof youth employment. Youth employment in urban Bolivia represents a series of paradoxes. Few poor children and youth do not work, but getting ajob, particularly the first one, i s extremely difficult because even more than academic preparation, employers require practical experience. All focus group respondents reported having worked as children or youths beginning as early as age seven or eight, 49 of 65 participants in six focus groups (75.4 percent) reported that they are presently unemployed, although it i s most likely that they are actually underemployed, working, that is, in temporary, mostly informal jobs. Working conditions (low or no pay andlong hours for temporary, often turnstile employment in menial positions unrelated to academic preparation or achievement of young people with limited skill sets) are a source of enormous frustration, because poor urban and peri-urban Bolivian youths (and children) work out of necessity andnot to gain life experience. 33. The situation i s even more compelling because many youths actually have had job training that i s available in high schools that provide technical training, in specialized technical institutes such as Don Bosco, or in other employment trainingprograms, such as AUTAP0.60In addition, youths often have had at least some job experience although ironically, the chief obstacle to youth employment i s lack of experience. On-the-job training begins early, as many respondents reported working at the age o f eight, and few had not worked by the time they were 14. Remarkably, many youths have worked in several different jobs in very different fields. For example, an 18-year-old male focus group participant in Santa Cruz reports having worked as a street vendor, auto mechanic, and mason, and a 21-year old male worked as a carpenter's assistant, plumber, assistant in an auto body shop, auto locksmith, and assistant in a print shop. Respondents reported working in informal sector sales (in streets or informal markets), small Don Bosco, an ecclesiastical organizationwith formal agreements with the government, operates 30 "popular schools" in the departments of L a Paz, Cochabamba, and Santa Cruz. It provides training in the humanities, administration, communications, electronics, electricity, accounting, fingerprinting, tourism, health, teaching, metalwork, construction, computers, and beauty. The AUTAPO Educationfor Development Foundation receives primary funding from the Netherlands as well as Spain and the United States. Its technicalemployment program trains high school students and graduates from 17 to 24 years of age who are consideredto be at "socioeconomic risk" in the departmentsof La Paz, El Alto, Santa Cruz, and Sucre through a combinationof formaljob trainingandinternship. 130 family businesses (both formal and informal), sales in small shops, washing clothes, domestic service, as minibus assistants and musicians, and in other lower-level service sector jobs as cash register operators and internet caf6 assistants. Nearly all jobs were reported to be temporary- often lasting only a few weeks or months--whether or not that was the original arrangement. 34. Focus group participants generally view child and youth employment in extraordinarily negative terms; for them, the scenario seems very bleak indeed. The term most commonly used by older respondents who are no longer in school to describe their experiences is "exploitation," which clearly reflects a perception of adverse working conditions that child and youth workers face. A point consistently raised i s that legal protections and benefits are not available to young workers. First, pay i s low even by Bolivian standards: often a dollar a day or less and rarely more than the equivalent of $25 to $40 per month for full time work. (The minimum wage in Bolivia i s currently Bs. 550 per month; roughly $70). Stipends for transportation or meals are normally not provided, and adults who perform the same functions are reported to be paid more because it i s thought that they need the money more to support their families, despite the fact that much of what children and youth earn i s given to their families. Additionally, as discussed below, youths may have already formed their own nuclear families. Moreover, young workers are often not paid at all, either because apprentices (often in an informal rather than a formal arrangement) are not paid during the two-to-three month period o f internship @ructicu), or because the employment relationship i s terminatedby the employer. 35. Focus group participants reported working long days of at least 12, and as many as 15, hours. In many cases, youth work seven days a week. Consequently, there may not be time to combine work and study, and some employers discourage their young employees from staying in school and in any case, the working schedules are certainly not conducive to regular school attendance and effective study. Conversely, some working arrangements are sporadic or temporary; some participants have worked only on weekends, before holidays (especially Christmas), or at other times of particular demand. 36. Employmentpreparationand training. There is broad consensus among focus group participants that high school education provides little benefit for securing employment. The widespread view i s that information that i s "theoretical" dominates "practical" skills training. That is, secondary education was viewed as marginal to real-world needs and conversely, useful and applicable skills (especially reading and elementary mathematics) were acquired before high school. Moreover, high school graduates are likely to qualify for the same jobs as non-graduates. On the other hand, it may be that training that is provided to secondary school students is not taken advantage of because students are not yet able to place developing knowledge in skills in the proper context. Nevertheless, the general perception of participants i s that job experience generally trumps formal education. 37. A second essential point is that there is wide consensus that training provided in short- term training programs i s potentially important because youth lack useable job skills. That is, especially if accredited, completion of a training program can be a valuable resource. On the other hand, some training programs are not accredited, so that the validity of the entire program may be questioned, and in any case, the ability to perform i s still crucial. Consequently, young people often enter the job market without the skills required by employers and hence, they often begin somewhere below the bottom rung o f the employment ladder, where they may be subject 131 to the ill treatment discussed above. In addition, skepticism over the ability to secure employment i s related to the perception that there can be strong competition for goodjobs, often from more qualified candidates. 38. The three month training period. A second perception reported by focus group participants is that the amount of information that can be learned in a three month period i s necessarily limited and likely to be relatively superficial. For example, in that time frame, participants thought that it would be difficult to go beyond general knowledge and skills inorder to enter deeply into specific areas. As one young man pointed out, for example, learning auto mechanics in three months would leave insufficient time to learn about specific systems (e.g., motors, brakes, electrical) indifferent types of autos. 39. As presently constituted, many training programs do not leave time to continue formal studies. A perception commonly voiced by high school dropouts was that graduating from high school i s an important complement to job training. Part of the reasoning is that program participants will have to compete for relatively scarce entry-level jobs with people who have had more formal technical training. Consequently, there i s a perception that the proposed training program might only train participants for lower-endjobs that will not substantially improve their lives. 40. Diagnosis of skills. A third important perception is that training programs should be based on an analysis of the capabilities of the participants, which may to this point not have been recognized. This perception i s related to views of high school education, which is seen as focused principally on rote memory, so that students have generally not had the opportunity to engage inhigher-level analysis that might reveal true aptitudes. 41. Areas of skills training. A fourth perception expressed by focus group participants i s that many training programs are built around traditional skills and areas o f employment, but that there may be greater opportunities in areas perceived to be relatively new and hence, more open to aspirants to entry-level positions. The areas most often mentioned in this regard are tourism and food service. These areas would, it was argued, take advantage of potential opportunities available inthe Bolivian labor market. 42. A related perception is that employment training programs should not prepare workers to enter a compressed job market largely limited to local small businesses, but should also include and promote entrepreneurship in starting up microenterprises, which would not only avoid sending more people to compete for jobs, but would also generate employment. 43. Heterogeneity of family situations. Focus group participants recognize that young people in general-and candidates for employment programs in particular -will come from a variety of family situations. Some live in relatively stable nuclear families with parents and siblings. But in these instances, young people frequently contribute significant proportions of total family resources - limited though their incomes may be, unstable though their jobs may be, and truncated though their futures may be. In contrast, other young people have been on their own for years; many in this category have begun their own families, or, particularly in the case of young women, may be single mothers. This group may be the most vulnerable of all because of low levels o f formal education andjob experience. 132 44. Expectations for the future. Previous studies indicate that poor people not only can identify causes and sources of poverty but can in addition envision realistic measures to overcome it. In discussion alternatives for the future, focus group participants similarly voiced realistic perceptions of employment. In brief, they do not expect to leap up the occupational ladder or to acquire great wealth. Rather, their more practical expectations are closely attuned to what the Bolivian government i s proposing. Inthis sense, participants talked in terms of what might be called "old fashioned" virtues of hard work and dedication that they hope will find resonance in jobs that have stability and decent working conditions, often thought of merely in terms of benefits provided for by law. On the other hand there i s also a recognition that the world i s changing and that new skills are likely to be required in a modern workforce. 45. How do focus group participants view the project? First, before being informed of the details, they had very little specific information about it. Provisions for covering expenses with a small per diem payment were seen as much more important that might even have been thought. As mentioned above, costs of transportation and food-small as they might be-represent an obstacle to accepting low-income employment or participating in informal internships. Second, young people often either contribute significant proportions of total household income or may be parts of independent households. 46. Second, many participants thought that three months of training, even if followed by internships, may be insufficient to provide the depth of information and practical experience, particularly in fields that are relatively complex and evolving. This may mean that in the context of a planned three-month experience, the content will have to be carefully thought out in order to optimize the time available. For example, participating enterprises will have to be carefully screened for their real ability to provide useful learning environments. Furthermore, an adequate analysis of participants' experience and aptitudes will improve the match between content and expected outcomes. Third, they suggest that new and evolving fields be included; here the potential for training in areas related to tourism seem particularly attractive to them. Similarly, many participants expressed interest in starting up their own micro-enterprises. Bolivian NGOs have a strong track record in this regard; for example, PROMUJER, which operates in El Alto and other urban areas, provides training and small loans on a revolving basis to lending groups. RECOMMENDATIONS 47. The Investing in Children and Youth Project in many ways reflects the priorities of the Bolivian government to directly address social, economic, and political exclusion and i s also consistent with most thinking and programming related to social protection. It i s focused on the most vulnerable segments of the Bolivian population: (i) poor urban and peri-urban youth, many the direct or indirect products of the dramatic socioeconomic change that has characterized the country in the past two decades and (ii) isolated rural, largely indigenous populations that are far removed from the economic and political mainstream. A. Incorporate a strong social marketing program. Information about the programs is very limited, particularly with regard to the MCP. A comprehensive communications campaign incorporating media and other forms of communication most used by potential beneficiaries: e.g. 133 through local radio stations and NGOs will be particularly crucial in this regard. Indigenous languages must be used where appropriate, and local leaders should be involved. 48. Sub-component 1.2 of the project will fund the design and implementation of a strategy to communicate the goals of the MCP. Through this strategy, the Project aims to achieve three goals: improve program understanding among all stakeholders at national and sub-national levels, particularly with regard to its relevance as part of GOB efforts to tackle chronic malnutrition in rural areas, improve transparency, and boost and maintain credibility of the proposed model of intervention; complement cash benefits with a pedagogic message linked to program co-responsibilities, outcomes, social control, and accountability; and informing beneficiary communities about the program's goals and beneficiary rights and responsibilities. 49. The communication strategy will be focused on, but not restricted to, messages adapted to different stakeholders (e.g., beneficiary families, other members o f the community, municipal and departmental authorities, health and nutrition service providers). This will involve community instruments (radio programs, posters, outreach teams and health units, booklets and other non-written media), taking into account low literacy rates and indigenous languages, and ensuring in all cases appropriate adaptation to specific cultural and social contexts. B. Bring local organizations into the programs immediately. Coordination with local organizations can help build local ownership of the programs, strengthen communication and outreach, and embed the programsinto the local social networks. 50. The project involves specific activities to create and strengthening social control and accountability mechanisms in order to improve the program's operational features and ensure that beneficiary rights, particularly those of indigenous groups, are respected. These systems include mechanisms to receive, systematize and opportunely respond to complaints, appeals, and feedback from communities; distinguish beneficiary and non-beneficiary groups; inform the program management team about program activities from independent sources; and to control program activities through social and technical audits. The following activities will support the achievement of these objectives: (i) complaint and appeals mechanisms with follow up systems, including community-based feedback through beneficiary committees and health outreach teams and units, and systems to ask questions and report irregularities; (ii) audits; (iii) social regular technical audits carried out by outsourced independent firms; and (iv) financial audits. C. Ensure that quality local services are available and accessible in order that participants can fulfilltheir individualandcollectiveco-responsibilities. This is the singlemost important condition for this program, and in the absence or faulty operation of health and education services at the local level, compliance and support for the project will be impossible. The Social Assessment carried out for the Expanding Access to Reduce Health Inequalities-APL I11(Report No: 41498-B0, December 20, 2007), presents a detailed description on how the intercultural health approach cuts across most of the project components and activities. D. Incorporate capacity building and health education into the MCP. An enhanced family planning program will be very important in this regard. Beneficiaries strongly emphasizedthat they need both the financial support and the additional information on reproductivehealthandfamily planning. 134 51. The project involves culturally appropriate measures to address this recommendation. First, as part of the strategy to prevent chronic malnutrition, the basic services provided by the outreach teams and health units include (i)bimonthly monitoring of growth and development of children including weight and height of infants less than two months accompanied by individual counseling to mothers or caretakers; (ii)at least four pre-natal check ups to pregnant mothers and one post-natal health check; (iii) food supplementation and fortification including micronutrient supplementation, iron, and vitamin A for children 6-23 months; and (iv) a pedagogic approach through talks and workshops to change behaviors among beneficiary mothers regarding child care; illness recognition; home hygiene; food intake; and cooking and hand washing practices, among others. The last measure involves family planning and reproductive health counseling. 52. Additionally, the cash transfers will be complemented by specific messages provided during individual counseling sessions during the regular bimonthly check ups as well as through group workshops. The latter will focus on the program's messages about child care at home, personal hygiene, hand-washing, and diet, among other aspects. These workshops will be provided by, or in coordination with, outreach teams and health unitsduring payment days, and will be reinforced duringbimonthly visits by health services providers. These workshops will also serve as a mechanism to receive feedback from beneficiary families about program operation and benefits received. 53. Finally, the project involves beneficiary surveys. The contents and messages involved in the previous activities will be informed by beneficiary surveys designed and developed in the second and fourth year of the program, and will be carried out under the responsibility of the Ministry of Health and Sports in coordination with UDAPE. E. Programsmust be culturallyandlinguisticallyappropriate. The importance of this factor in rural areas i s evident and well-accepted. The entire strategy, regarding the cash transfers process and the strengthening of supply involves culturally and linguistically appropriate measures to ensure that indigenous communities take full advantage of the benefits provided by the program. F. Initiate a process of cultural awareness among health care professionals, and incorporate traditional professionals in systems of practice and referral. Despite earlier attempts, traditional health care professionals, especially traditional birth attendants, have not been adequately recognized or brought into the system. As this aspect is related to strengthening the supply of health services, this measurehas been taken into account by the measurescomprisedby the Health APL 111operation. G. Build in a strong evaluation component. Participants and local leaders should be part of the teams for monitoring of the program. The MCP involves both aspects: (i) The Project will support the GOB in implementing the Management Information System (MIS) to administer the program, follow up on physical and financial progress, and overseethe cash transfers cycle. The MIS system for the MCP and all its required modules (registry of beneficiary and management, monitoring of co-responsibilities, payment system and conciliation, program process and product monitoring and feedback mechanisms) will be part of the Ministry of Health and Sportss' Management Information System (SNIS, the national health information system), currently under implementation with support from the APL I1and I11operations. The MOHwill complete the full design and testing of the MIS system by the time the Project is effective. 135 Annex 11: Project Preparationand Supervision BOLIVIA INVESTINGINCHILDREN AND YOUTH Planned Actual PCN review September 2007 Initial PIDto PIC September 2007 Initial ISDS to PIC September 2007 Appraisal January 14-18,2008 January 14-18,2008 Negotiations January 23 and 24,2008 January 24,2008 Board/RVP approval March 11,2008 Planned date of effectiveness June 2008 Planned date of mid-term review January 2011 Planned closing date June 2013 Key institutions responsible for preparation of Bank staff and consultants who worked on the Project included: Name Title Unit Manuel Salazar Task Manager LCSHS DenaRingold Sr. Economist LCSHS PatriciaAlvarez Operations Officer LCSHD Karla J. McEvoy Operations Analyst LCSHS Fabienne Mroczka Financial Management Officer LCSFM Maria Lucy Giraldo Sr. Procurement Officer LCSFT Fabiola Altimari Sr. Legal Counselor LEGLA Miriam CCspedes Procurement Specialist LCSFT Aracelly Woodall Costs specialist/Sr. ProgramAssistant LCSHD M6nica Claros Team Assistant LCCBO Maria Alejandra Velasco Consultant LCCBO Jorge C. Barrientos Consultant LCSHD William Waters Consultant, Social Assessment LCSHD Margaret Grosh Peer Reviewer HDNSP Wendy Cunningham Peer Reviewer LCSHS Daniel Dulitzky Peer Reviewer ECSHD Cornelia Tesliuc Peer Reviewer LCSHS Bank funds expendedto date on Project preparation: 1. Bank resources:$276,000.00 2. Trust funds: $200,000.00 3. Total: $476,000.00 EstimatedApproval and Supervision costs: 1. Remainingcosts to approval: US$O 2. Estimated annual supervision cost: US$90,000 136 Annex 12: Documentsinthe ProjectFile BOLIVIA INVESTING INCHILDRENAND YOUTH 1. Bolivia Expanding Access to Reduce Health Inequalities Project (APL III), 2007. Project Appraisal Document. Report No. 41498. The World Bank, Washington, DC. 2. Bolivia Second Health Sector Reform Project (APL II).2001. Project Appraisal Document. Report No. 22301. The World Bank, Washington, DC. 3. Bolivia Health Sector Reform Project (APL I). 1999. Project Appraisal Document. Report No. 18980. The World Bank: Washington, DC. 4. Bolivia Interim Strategy Note, 2006. Report No. 36095. The World Bank, Washington: DC. 5. Healthy Development: The World Bank Strategy for Health, Nutrition and Population Results. 2007. Report No. 39485. The World Bank: Washington, DC. 6. Hemani, W. JimCnez, W., and Vera, M.2007. "Social Safety Nets in Bolivia: An Overview of the Institutional Framework and Current Programs." Background paper prepared from the Social Protection AAA. The World Bank: Washington, DC. 7. Ringold, D., Velasco, A., and Monterrey, J. 2007. "Toward a Social Protection Network." Backgroundpaper prepared from the Social ProtectionM A . The World Bank: Washington, DC. 8. Walker, I., Maldonado, S., Monterrey, J. and Yokohama, E. 2006. "Poverty, Vulnerability and Exclusion." Background paper prepared from the Social Protection AAA. The World Bank: Washington, DC. 9. Waters, W. 2008. "Bolivia InvestinginChildren and Youth Project: Social Analysis." 10. Waters, W. 2007. "The Contribution of Local Organizations to Improved Social Service Delivery in Bolivia." Backgroundpaper prepared from the Social ProtectionAAA. The World Bank: Washington, DC. 11. Country Economist Report, Bolivia Country Profile. 2006. 12. Informe de Evaluacidn Ambiental, Bolivia Second Health Reform Project (APL 11). Banco Mundial. 13. Salud Ambiental. Villena Chavez, Jorge. October, 2007. 14. Plan Nacional de Desarrollo Sectorial. Ministry of Health and Sports. 2007. 137 Annex 13: Statement of Loansand Credits BOLIVIA INVESTINGINCHILDRENAND YOUTH Differencebetween expectedand actual Original Amount in US$ Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. ID Rev'd PO83979 2007 BO Urban Infrastructure Project 0.00 30.00 0.00 0.00 0.00 31.62 0.00 0.00 PO83051 2005 BO Rural Alliances 0.00 28.40 0.00 0.00 0.00 27.45 0.67 0.00 PO73367 2003 BO Decent Infras for Rur 0.00 20.00 0.00 0.00 0.00 19.17 16.35 4.79 Transformation PO68968 2002 BO RoadRehab.& Maintenance 0.00 77.00 0.00 0.00 0.00 38.70 23.49 0.00 Project PO74212 2001 BO-HealthSector ReformAPL 0.00 35.00 0.00 0.00 0.00 4.71 -1.04 0.00 I1 Total: 0.00 190.40 0.00 0.00 0.00 121.65 39.47 4.79 BOLIVIA STATEMENT OF IFC's HeldandDisbursedPortfolio Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1995 BISA 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.00 1998 BISA 0.00 0.09 0.00 0.00 0.00 0.09 0.00 0.00 2003 BancoLos Andes 6.60 0.00 0.00 0.00 6.60 0.00 0.00 0.00 2003 BancoSol 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 1999 CBTI 0.00 0.00 0.85 0.00 0.00 0.00 0.85 0.00 1994 COMSUR 0.00 0.00 1.30 0.00 0.00 0.00 1.30 0.00 1991 Central Aguirre 0.00 0.24 0.00 0.00 0.00 0.24 0.00 0.00 2001 Central Aguirre 1.69 0.00 0.00 0.00 1.69 0.00 0.00 0.00 1999 Electropaz 18.04 0.00 0.00 0.00 18.04 0.00 0.00 0.00 2003 FIE 1.25 0.00 0.00 0.00 1.25 0.00 0.00 0.00 1993 GENEX 0.10 0.00 0.00 0.00 0.10 0.00 0.00 0.00 1999 nlimani 3.84 0.00 0.00 0.00 3.84 0.00 0.00 0.00 Minera 0.00 3.40 0.00 0.00 0.00 3.40 0.00 0.00 2001 PQB 10.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 PRODEM 2.45 0.00 0.00 0.00 2.45 0.00 0.00 0.00 2003 TDE S.A. 12.72 0.00 15.00 0.00 12.72 0.00 15.00 0.00 TRECO 0.00 1.16 0.00 0.00 0.00 1.16 0.00 0.00 2001 Telecel Bolivia 3.33 0.00 5.00 1.43 3.33 0.00 5.00 1.43 2005 Transiena 45.35 0.00 0.00 86.05 45.35 0.00 0.00 86.05 Total portfolio: 109.87 5.43 22.15 87.48 99.37 5.43 22.15 87.48 138 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 139 Annex 14: Countryat a Glance BOLIVIA INVESTING INCHILDRENAND YOUTH L a t i n L o w e r - P O V E R T Y a n d S O C I A L A m e r i c a m i d d l e - ) e v e l o p m e n t d i a m o n d . B o l i v i a & Carib. i n c o m e 2 0 0 5 P opu1ation.m id-year (millions) 9.2 551 2,475 Life expectancy GNlpercapita (Atlasmethod,US$) 1.0 10 4.008 1,918 GNI(Atlasmefhod.US$ billions) 9.3 2210 4,747 T A v e r a g e a n n u a l g r o w t h , 1999-05 Population (%) 2.O 1.4 1.0 Laborforce (%) GNI Gross 3.0 2.2 1.4 per primary Y os1 r e c e n t e s t i m a t e (latest year available, 1999-05) capita enrollm ent Poverty (% ofpopulation belo wnationalpoverfyline) 63 Urban population (%of totalpopulation) 64 77 50 Life expectancyat birth (years) 65 72 70 I Infant mortality (per 1,000 live births) 54 27 33 Child malnutrition (%ofchildrenunder5) 6 7 12 Access to imoroved watersource Access to an improved watersource (%ofpopulation) 85 91 62 Literacy (% ofpopulation age E+) 87 90 89 Gross primary enrollment (%of school-age population) 113 I19 1i4 -Bolivia M ale 114 121 115 Lo wer-middle-income group Female 113 117 113 KEY E C O N O M I C R A T I O S a n d L O N G - T E R M T R E N D S 1985 1995 2 0 0 4 2 0 0 5 1E c o n o m i c ratios. GDP (US$ billions) 3.1 6.7 8.7 9.3 Gross capital form atio nlGDP 19.5 15.2 12.4 Trade Exports o f goods andservices/GDP 19.0 22.6 30.9 Gross domestic savingsiGDP 15.7 M.6 16.1 Gross national savings/GDP 9.1 10.6 ls.8 Current account balanceiGDP -13.9 -5.0 3.3 2.o Domestic Capital Interest payments/GDP 5.0 2.3 1.5 savings formation Total debtlGDP 153.9 78.5 70.0 Total debt serviceiexports 49.4 29.3 18.6 Present value o f debtiGDP 34.5 Present value of debt/exports M6.9 I indebtedness 1985-95 1995-05 2 0 0 4 2 0 0 5 2 0 0 5 - 0 9 I - (average annualgrowth) GDP 3.5 2.9 3.9 4.1 3.7 -Bolivia GDP percapita 1.2 0.8 1.9 2.1 2.0 Lower-middle-incomegroup Exports o f goods and services 9.5 4.7 16.1 S T R U C T U R E of t h e E C O N O M Y 1985 1995 2 0 0 4 2 0 0 5 (%of GDP) Agriculture 20.6 16.9 15.7 Industry 34.6 33.1 30.9 M anufacturing v.3 19.o 14.4 Services 44.6 50.0 53.4 Household final consumption expenditure 73.8 75.8 68.6 General gov't final consumption expenditure M.6 13.6 15.3 Imports of goods and services 22.8 27.2 27.2 1985-95 1995-05 2 0 0 4 2 0 0 5 G r o w t h o f e x p o r t s a n d i m p o r t s (%) (average annualgro wth) A gricuiture 2.7 2.5 0.3 20 Industry 4.3 2.3 5.8 10 Manufacturing 3.7 2.6 5.1 Services 2.9 3.4 2.9 0 5 Household final consumption expenditure 2.9 2.9 2.6 -10 General gov't final consumption expenditure 1.2 2.9 -0.6 -20 Gross capital formation 4.1 0.0 -10.1 -Exports Imports of goods and services -Imports 5.6 3.3 5.4 Note:2005 data are preliminaryestimates. This table was produced from the Development Economics LDB database. 'Thediamonds showfourkeyindicators in thecountry(in bo1d)compared with its income-groupaverage.If dataaremissing,thediamond will be inco mDlete. 140 IBRD 33374 70°W 65°W BOLIVIA SELECTED CITIES AND TOWNS B R A Z I L DEPARTMENT CAPITALS NATIONAL CAPITAL To RIVERS Porto Velho 10°S Abunã MAIN ROADS RAILROADS Miles PA N D O DEPARTMENT BOUNDARIES Riberalta Cobija Madre de Dios INTERNATIONAL BOUNDARIES Asunción Asunción 60°W This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Puerto Heath Yata Guaporé Group, any judgment on the legal status of any territory, or any Lago Lago endorsement or acceptance of such boundaries. Madidi Huaitunas Rogaguado P E R U Beni Magdalena Lago B E N I Rogagua Santa Ana Lago de Yacuma San Luis Reyes Apere amoré San Apolo M Trinidad Paraguá San Borja S an 15°S L A PA Z Puerto Miguel Blanco Martín 15°S Acosta Lago Nevada Caranavi Ascención Ascención Titicaca Ichoa To Illampu Puno (6,362 m) Guaqui Quiquibey Concepción Concepción LA PAZ AZ Nevada Las Petas Viacha Illimani pay) (6,462 m) Chapare Gran d e San Ignacio C O C H A B A M B A Ichilo Yapacaani (Gu Cochabamba Montero S A N TA C R U Z Desaguadero San José de Chiquitos José Oruro Santa Cruz To Nevada Sajama Arica (6,542 m) Cordiller O R U R O Banados del Lago C o rdiller Aiquile Roboré Roboré Izozog Puerto Poopo Sucre Santa Suárez Suárez Salar de o Ana Coipasa Potosí Potosí To 20°S Iquique O Central Tarabuco C h a c Salar de C Pilcomayo G r a n To Campo Grande Carniri 20°S na Uyuni H Uyuni U Q U I S PA R A G U AY ce Pila y a A C A P O T O S Í To O C H I L E ccidental Villa Montes Mariscal Estigarribia Pacific To Calama G ra n d eeLd Yucuiba Tarija ípez TA R I J A Viljazón iljazón To Tartagal To BOLIVIA Abra Pampa 0 50 100 150 Kilometers To San Ramón de la Neueva Orán 0 50 100 Miles A R G E N T I N A 70°W 65°W 60°W SEPTEMBER 2004