Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16428 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NICARAGUA SOCIAL INVESTMENT FUND PROJECT (Credit 2434-NI) March 28, 1997 Central America Department Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = C6rdoba (C) Average Exchange Rates 1991 C$4.3534=US$1.00 1992 C$5.0000 = US$1.00 1993 C$6.1206 = US$1.00 1994 C$6.7245 = US$1.00 1995 C$7.5315 = US$1.00 1996 C$8.2356 = US$1.00 1995 SDR 1.00 = US$1.5758 FISCAL YEAR OF BORROWER July I - June 30 ACRONYMS AND ABBREVIATIONS COSUDE Swiss Development Corporation FISE Social Emergency Investment Fund (Fondo de Inversion Social de Emergencia) GDP Gross Domestic Product GON Government of Nicaragua ICR Implementation Completion Report IDA International Development Association IDB Inter-American Development Bank IMF International Monetary Fund INAA Nicaraguan Institute for Water and Sewerage INEC National Institute of Statistics and Census INIFOM Nicaraguan Institute for Municipal Development KfW German Credit Institute for Reconstruction LCB Local Competitive Bidding LSMS Living Standards Measurement Survey MED Ministry of Education MIFIN Ministry of Finance MINSA Ministry of Health NGO Nongovernmental Organization SIDA Swedish International Development Agency SIF I Social Investment Fund Project, Credit 2434-NI SIF II Second Social Investment Fund Project, Credit 2767-NI UNDP United Nations Development Programme USAID United States Agency for International Development Vice President Shahid Javed Burki Director Donna Dowsett-Coirolo Country Sector Leader Ana-Maria Arriagada Staff Member Willem Struben FOR OFFICIAL USE ONLY Contents Page PREFACE EVALUATION SUMMARY ii PART ONE: PROJECT IMPLEMENTATION ASSESSMENT .................................................1 INTRODUCTION .1 PROJECT OBJECTIVES ............................................... 1 ACHIEVEMENT OF PROJECT OBJECTIVES .................................................2 Poverty Reduction ................................................................................................. ......................... .................2 Project Results ...........3 Institutional Development .......................................... 4 Private Sector Development ...........................................5 Living Standards Measurement Survey (LSMS) ...........................................6 Project Design ..........................................6 MAJOR FACTORS AFFECTING THE PROJECT ........................................7 Faactors Not Generally Subject to Government Control ................7........................... Factors Generally Subject to Government Control .......8...................................8 Factors Generally Subject to FISE Control .......................................... 8 PROJECT SUSTAINABILITY .........................................8 IDA PERFORMANCE ..........................................9 Identification ..................................................9 Preparation Assistance ............................ , ..9 Appraisal .............................9 Supervision .............................9 BORROWER PERFORMANCE ..0......................... l Prreparation .JO............................ Implementation ............................ 10 ASSESSMENT OF OUTCOME ........................... 13 FuTTURE OPERATION ........................... 13 KEY LESSONS LEARNED ........................... 13 PART TWO: STATISTICAL DATA ........................... 15 Appendixes: A. Mission's aide memoire B. FISE Contribution to the ICR This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NICARAGUA SOCIAL INVESTMENT FUND PROJECT (Credit 2434-NI) Preface This is the Implementation Completion Report (ICR) for the first Social Investment Fund Project in Nicaragua, for which Credit 2434-NI in the amount of SDR17.3 million (US$25.0 million equivalent) was approved on January 21, 1993, and made effective on June 18, 1993. The Credit was closed on September 30, 1996, compared with the original closing date of December 31, 1995. As of January 31 1997, an amount equivalent to US$25.1 million had been disbursed, and the remaining balance of US$184,000 equivalent was canceled as of that day. Cofinancing for the project was provided by the Federal Republic of Germany through the German Credit Institute for Reconstruction (KfW), the Government of Sweden through the Swedish International Development Agency (SIDA), the Government of Switzerland through the Swiss Development Corporation (COSUDE), the Inter-American Development Bank (IDB), the U.S. Agency for International Development (USAID), and the Government of Nicaragua (GON) and municipalities. The ICR was prepared by Mr. Willem Struben, Task Manager, LASHD, of the Latin America and the Caribbean Regional Office, with the help of Ms. Anna Webb and Mr. Kevin Rost (consultants), and was reviewed by Ms. Eleanor Schreiber, LASHD, and Ms. Kreszentia Duer, Lead Operations Specialist, LADCN. The borrower provided commnents that are included as an appendix to the ICR. Preparation of this ICR was begun during IDA's completion mission, in early September 1996. It is based on material in the project file, in addition to discussions with the borrower. The borrower contributed to the preparation of the ICR by presenting views reflected in the mission's aide-memoire, compiling statistical data, preparing an evaluation of the project's implementation, and commenting on the draft ICR. The major cofinancing agencies (IDB, KfW, and COSUDE) reviewed the draft document, and their comments have been incorporated. Evaluation Summary SOCIAL INVESTMENT FUND PROJECT (Credit 2434-NI) REPUBLIC OF NICARAGUA Introduction Since 1991, following a decade of civil strife, the Government of Nicaragua (GON) has implemented a comprehensive stabilization and adjustment program. The Emergency Social Investment Fund (FISE) was established by the Government in November 1990, as a temporary social safety net program to help protect and improve the standard of living of marginal social groups during the period of economic adjustment through the provision of employment and social and economic infrastructure and services. FISE has been directly supported by the International Development Association (IDA) under the first and second Social Investment Fund (SIF) Projects and by other multilateral and bilateral donors. Project Objectives The objectives of the first Social Investment Fund Project (SIF I), Credit 2434-NI, were to help GON sustain its poverty alleviation efforts, and maintain social cohesion during the period of economic adjustment, until line ministries could strengthen their institutional capacities, and complete policy reform programs. To the extent feasible, the methods of operation, procedures, and experience of FISE would be transferred gradually to social ministries to help them improve efficiency and equity of service delivery. The IDA Credit was also intended as a channel to mobilize further international assistance. The project had four components: (a) the financing, through FISE, of a range of small-scale subprojects in social and economic infrastructure and social services; (b) technical assistance to the National Institute of Statistics and Census (INEC) to implement a Living Standards Measurement Survey (LSMS); (c) technical assistance to strengthen the capacity of the Ministry of Health (MINSA) and Ministry of Education (MED) to prepare subprojects; and (d) technical assistance to help the Government, through the Ministry of Finance (MIFIN), to improve budgeting and financial management capacity in the social ministries. At appraisal, the total project cost was estimated at US$68 million; the operating costs of the executing agencies were estimated at 5.9 percent of total project cost.' The project objectives were consistent with the country assistance strategy to help alleviate poverty in Nicaragua, and the project complemented other IDA-financed projects directed at poverty reduction. The project design was appropriate to achieving project objectives; it incorporated the standard features of social investment funds, which are well-tested. The technical assistance components were complementary to the principal subproject investment component. Based on percentage of committed funds. This was later changed to percentage of disbursed funds, which increased the operating cost to about 10 percent. ii Implementation Experience and Results The project objective of helping the GON sustain its poverty alleviation efforts was achieved. FISE met the geographic and sectoral targets for poverty interventions that were established at appraisal. From 1991 to July 1996, FISE committed resources of US$119.6 million to each of the country's 143 municipalities according to population size and a poverty index. Municipalities with extreme poverty received 22.3 percent of resources, compared to the appraisal estimate of 20 percent. Municipalities with high poverty were allocated 58.3 percent of resources, compared to the 57 percent target. Municipalities with medium poverty, which are eligible for FISE financing due to the presence of poverty groups, received 19.4 percent of resources, compared to the appraisal estimate of 23 percent. For the same time period, FISE financed 3,792 subprojects in the amount of US$106.6 million. At appraisal, the sectoral allocation for social infrastructure was estimated at 55 percent; for economic infrastructure at 23.5 percent; for social services subprojects at 20 percent; and for community training at 1.5 percent. Actual allocations amounted to 62.3 percent, 19.6 percent, 17.4 percent, and 0.6 percent, respectively. The larger proportion of social infrastructure financing reflected health and education sector demand. The smaller than expected investment in economic infrastructure, social services, and community training was due mostly to difficulties regarding subproject preparation on the part of municipalities and non-governmental organizations (NGOs), as well as health and education rninistry delays. FISE's investment in social infrastructure made an important contribution to meeting the needs of the poor by improving the coverage and conditions for social services delivery. It financed 1,454 subprojects, including the repair or remodeling of 969 primary and pre-primary schools, 77 secondary schools, 250 health posts, and 51 health centers. In addition, 1,612 social services subprojects included education equipment, health equipment, and latrine subprojects. FISE accounted for 54 percent of the country's education and 28 percent of its health expenditures. Approximately 6.3 million persons benefited from FISE-financed subprojects.2 The share of women beneficiaries was estimated at about 50 percent in education subprojects and 65 percent in health subprojects. FISE-financed subprojects generated 184,706 months of temporary employment.3 FISE's institutional development was substantial. Procedures and systems (financial, administrative, auditing, contracting, data management, planning) were improved. FISE helped municipalities to improve their skills in subproject identification, preparation, and contracting. MINSA and MED benefited from institutional strengthening through the project's two technical assistance components. However, the achievement of the project objective to transfer FISE experience and its methods of operations and procedures to the social ministries to help them improve their efficiency and equity of service delivery was orny partially successful. This transfer was largely limited by personnel turnover in both ministries and the absence of a detailed arrangement between those ministries and FISE.4 However, the LSMS component was successfully completed in 1993, and survey results have 2 Many persons benefited from more than one project. 3 Direct employment only. 4 Mis arrangement came only recently. iii been used to assist the GON, IDA, and other donors to refine and strengthen the design of poverty reduction programs and policies. The project made a substantial contribution to private sector development in terms of investment, growth, and human resources development in the construction, private banking, and insurance sectors. However, it did not exploit the full potential of available and competent NGOs. The ability of FISE to obtain donor funding substantially affected the achievement of the project's major objective. FISE mobilized external funding of US$86.1 million for the period January 1993 to September 1996. At appraisal, the target for external funding was US$58.6 million, including IDA financing. In fact, FISE received US$91.9 million in multi-lateral and bilateral support from IDA, four co-financiers, and two additional funding sources. The projected GON contribution was US$6.3 million, compared to the actual contribution of US$15.1 million through September 1996. At appraisal, the FISE project cost was estimated at US$64.5 million. The project cost through September 1997 was US$102.4 million, including part of the cost of the Second Social Investment Fund (SIF II) Project, Credit 2767-NI. Additional resources led to an increase in subproject financing from US$60.5 million to US$91.7 million. The Credit was to be disbursed over a period of two and one-half years, to be completed by June 30, 1995. The Credit became effective in June rather than March of 1993, as anticipated, because of a change in Chairman of the Board of FISE, and delays in getting the Subsidiary Agreement and the legal opinion. Initial disbursements were slower than expected because of the delay in effectiveness; subproject sponsors had limited experience with ICB, and FISE's supervision department did not sufficiently pressure contractors to complete subprojects on time. The closing date was extended twice: from December 31, 1995 to June 30, 1996, and then to September 30, 1996, to allow for the commitment and payment of the final US$349,052. As of January 31, 1997, an amount equivalent to US$25.1 million had been disbursed, and the remaining balance of US$184,000 equivalent was canceled as of that day. Project implementation complied with the Credit Agreement in its fundamental aspects, and compliance with special covenants, which were mainly limited to procedural issues, was satisfactory. Apart from the quarterly audits, all conditions were met substantially without undue delays. Continued support for FISE and sustainability of the project are likely, given the GON's commitment to poverty alleviation, maintenance of the social safety net during continuing adjustment, and protection of social spending from fiscal austerity. The follow-on SIF II project became effective on April 30, 1996. However, subproject sustainability is still problematic. Nevertheless, this is expected to improve under SIF II, particularly because of the establishment of a maintenance fund with the help of the IDB. SIF II also contributes to sustainability through community capacity building and stronger cooperation between FISE and the line ministries and agencies. External factors that partially affected subproject implementation included the variable supply of construction materials, poor quality materials, adverse weather conditions, the presence of irregular, armed groups in subproject areas, and municipalities' initially weak capacity to participate in iv subprojects. During part of 1993, subproject implementation was partially affected by the failure of the GON to provide counterpart financing; since then, the Government has met its commitments. The performance of IDA was generally highly satisfactory. However, a transition period between project task managers contributed to several months' delay in responding to FISE's request to adjust aggregate limits for different methods of procurement, which slightly affected subproject implementation. Also, over time IDA advice was not always consistent. Overall, FISE's implementation performance was satisfactory. FISE project administration was efficient, management was effective, and operational efficiencies were attained in the subproject cycle. A few shortcomings were found, but these did not affect the overall achievement of development results. Summary of Findings, Future Operations, and Key Lessons Learned The most important finding of the project implementation experience was that FISE met the poverty intervention targets established at appraisal, and surpassed these targets in terms of resource allocations due to the mobilization of additional external resources. At the same time, FISE maintained efficient project administration. Administrative costs were about 10 percent of total disbursements, in keeping with administrative costs of other social investment funds. Expected improvements in the subproject menu, subproject processing time, the incorporation of social objectives, and new work areas in the subproject cycle, and the use of local competitive bidding were not fully realized. These will be further addressed during the implementation of SIF II. As regards future operations, the SIF II project continues to support FISE's investment program, an institutional strengthening component, and a LSMS component to assist the GON in implementing a second round of the survey. Under SI II, FISE has an agreed program and budget for 1995-1997, and a complete set of key performance indicators by which the project can be monitored and evaluated. Four main lessons were learned that are applicable to future social investment fund projects. First, FISE succeeded through the effective and efficient application of standard SIF procedures and methods, which are well-tested and proven, and owes its success to good management and the ability to attract donor financing. Second, the successful implementation of social objectives and new work areas depends on institutional commitment, effective technical assistance that responds to FISE's special needs (e.g., rapid execution), productive partnerships with the social ministries, and the correct assessment of the impact of additional considerations on institutional capacity. Both FISE and donors should give more attention to the impact of added responsibilities on the institution. Third, the transfer of FISE's experience and methods of operation and procedures to social ministries to help them improve their efficiency and equity of service delivery was only partially achieved, because of uncertainties regarding the transfer and inadequate analysis of the objectives of the ministries with regard to how FISE could be of assistance. This objective can be better achieved with the help of specific sector operations. And fourth, NGOs have to play a substantial role in facilitating community involvement throughout the project cycle. Even though Nicaragua's recent history may have created some sensitivities regarding the role of some NGOs, a more substantial effort to exploit the knowledge and experience of NGOs would have been advisable. Part One: Project Implementation Assessment INTRODUCTION 1. Since 1991, following a decade of civil strife, the Government of Nicaragua (GON) has implemented a comprehensive stabilization and adjustment program.5 The Emergency Social Investment Fund (FISE) was established by the Government in November 1990, as a temporary social safety net program to help protect and improve the standard of living of marginal social groups during the period of economic adjustment through the provision of employment and social and economic infrastructure and services.6 Originally scheduled to end in December 1995, the Government extended FISE's life by two years to help meet Nicaragua's persisting social and economic problems. FISE has been directly supported by the International Development Association (IDA) under the first Social Investrnent Fund (SIF I) Project through Cr. 2434-NI of US$25.0 million equivalent in 1992, and the Second Social Investment Fund (SIF II) Project through Cr. 2767-NI of US$30.0 million equivalent in 1995. IDA's support of FISE is consistent with its strategy of helping alleviate poverty in Nicaragua and complements other IDA-financed projects directed at poverty alleviation. The social sectors have received, and continue to receive, considerable IDA support to help improve the poor social indicators of the country." PROJECT OBJECTIVES 2. The objectives of the first Social Investment Fund Project (SIF I), Credit 2434-NI, were to help GON sustain its poverty alleviation efforts and maintain social cohesion during the period of economic adjustment until line ministries would strengthen their institutional capacities and complete policy reform programs. To the extent feasible, the methods of operation, procedures, and experience of FISE would be transferred gradually to social ministries to help them improve their efficiency and equity of service delivery. The IDA Credit was also intended as a channel to mobilize further international assistance. 3. The project had four components: (a) the financing, through FISE, of a range of small-scale subprojects in social and economic infrastructure and social services (US$60.5 million, 89.0% of total 5 The adjustment program was supported by the International Monetary Fund (IMF) Stand-by arrangement and two IDA Economic Recovery Credits (ERC I and II) approved in September 1991 and June 1994, respectively. 6 The other GON social safety net programs are the Social Action Ministry (MAS) Integrated Basic Services Program (PROSERBI), which supports the provision of basis social services in poor communities, and the National Institute for Municipal Development (INIFOM), which operates a program to finance investments on basic economic and social infrastructure directed to municipal governments. 7 Social sector support was and is provided by the Health Sector Reform Project (Cr. 2556-NI) of US$15 million equivalent in 1993; the Basic Education Project (Cr. 2689-NI) of US$34 million equivalent in 1995; and the Rural Municpalities Project (Cr. 2918-NI) of US$30.0 million in 1996. 2 project cost); (b) technical assistance to the National Institute of Statistics and Census (INEC) to implement a Living Standards Measurement Survey (LSMS; US$0.9 million, 1.3%); (c) technical assistance to strengthen the capacity of the Ministry of Health (MINSA) and Ministry of Education (MED) to prepare subprojects (US$1.8 million, 2.6%); and (d) technical assistance to help the Government, through the Ministry of Finance (MIFIN), to improve budgeting and financial management capacity in the social ministries (US$0.8 million, 1.2%). The operating costs of the executing agencies (US$4.0 million, or 5.9% of total project cost) were to be financed by the Government, IDB, and UNDP. ACHIEVEMENT OF PROJECT OBJECTIVES Poverty Reduction 4. The achievement of the project objective to help GON sustain its poverty alleviation efforts was substantial, based on (a) the extent to which planned interventions in the staff appraisal report were met, using geographic, and sectoral targets for resource allocation to subprojects; (b) project results; and (c) resource mobilization. FISE's contribution to poverty reduction was significant in terms of improving access to and the conditions of social services delivery, but it cannot address the underlying causes of poverty. 5. Geographic Targeting. From 1991 to July 1996, FISE committed resources of US$119.6 million to each of the country's 143 municipalities according to population size and a poverty index that was composed of displaced population, child malnutrition, and water supply indicators. Municipalities were grouped in three categories: extreme poverty (39 municipalities and 14.7% of population), high poverty (95 municipalities and 52.9% of population), and medium poverty (9 municipalities and 32.4% of population, including Managua with 20% of population). Poorer municipalities were assigned larger allocations on a per capita basis than other municipalities. Municipalities with medium poverty were eligible for FISE financing due to the presence of poverty groups. 6. Geographic targeting worked well. FISE met the resource allocation targets established at appraisal (Table B1). As of July 31, 1996, municipalities with extreme poverty received 22.3 percent of resources, compared to the appraisal estimate of 20 percent (Tables B2 and B3). Municipalities with high poverty received 58.3 percent (US$69.8 million), compared to the appraisal estimate of 57 percent. Municipalities with medium poverty received 19.4 percent (US$23.5 million), compared to the appraisal estimate of 23 percent. In addition, FISE agreed not to commit more than 18 percent of resources to Managua and 7 percent to other medium poverty municipalities. Managua received 10.8 percent (US$12.9 mnillion) of resources, and the other medium poverty municipalities, 8.6 percent (US$10.2 miUion). In July 1996, the investment per capita by poverty category was US$39.93 in extreme poverty municipalities, US$32.55 in high poverty municipalities, and US$15.99 in medium poverty municipalities, compared to less that US$5 for each category in 1991. 7. Sectoral Targeting. At appraisal, sectoral allocations were estimated in four broad categories: social infrastructure, 55 percent; economic infrastructure, 23.5 percent; social services, 20 percent; and community training, 1.5 percent. From 1991 through July 1996, FISE financed 3,792 subprojects in the amount of US$106.6 million (Table B4). Investment by category amounted to: social 3 infrastructure, 62.4 percent (US$66.5 million); economic infrastructure, 19.7 percent (US$21.0); social services, 17.4 percent (US$18.5 million); and community training, 0.6 percent (US$0.61 million). 8. The larger proportion of social infrastructure financing reflected health and education sector demand. With regard to economic infrastructure subprojects, the capacity of municipalities to prepare subprojects was over-estimated; however, FISE continues to provide technical assistance to improve their skills in this and other areas. The smaller than expected investment in social services subprojects was due to delays in subproject preparation and international bidding for health facility equipment and school text and library books, and difficulties surrounding non-governmental organization (NGO) participation.8 NGO participation difficulties also contributed to low investment in community training, along with FISE's inadequate attention to this subject. 9. Resource Mobilization. The achievement of the project objective was substantially affected by FISE's resource mobilization efforts. FISE mobilized external funding of US$86.1 million for the period January 1993 to September 1996. At appraisal, the target for external funding was US$58.6 million, including IDA financing. FISE received commitments of US$91.9 million in multi-lateral and bilateral support from IDA, four co-financiers, and two additional funding sources (Table A6b).9 The projected GON contribution was US$6.3 million, compared to the actual contribution of US$15.1 rillion through September 1996. At appraisal, the FISE project cost was estimated at US$64.5 million (Table A6a). The project cost through September 1996 was US$102.4 million, including part of the cost of SIF II. Additional resources led to an increase in subproject financing from US$60.5 million to US$91.7 million. Project Results 10. FISE's investment in social infrastructure made an important contribution to meeting the needs of the poor by improving the coverage and conditions of social services delivery. FISE financed 1,454 subprojects, including the repair or remodeling of 969 primary and pre-primary schools, 77 secondary schools, 250 health posts, and 51 health centers; other subproject types were homes for the elderly and shelters, child centers, potable water, and sewerage (Table B5). FISE financed 1,612 social services subprojects, including 757 for education equipment, 364 for health equipment, and 320 latrine subprojects. Financing was also provided for 450 community training subprojects. In econornic infrastructure, FISE financed 261 subprojects, including 198 road improvement and 31 drainage subprojects, as well as slaughterhouses, municipal markets, and bridges. 8 The difficulties include identifying NGOs with experience in subproject types (training), the fact that NGOs which formulate subprojects cannot execute them, and until recently, the lack of an approach to enhance NGO participation. 9 The principal sources of external financing included: (a) IDA Credit 2434-NI of US$25.1 million and Credit 2767-NI of US$5.3 million; (b) co-financing of US$34.3 million from IDB, the equivalent of US$13.8 million from the Government of Germany (KfW), the equivalent of US$7.5 million from the Govemrnent of Switzerland; and (c) US$5.8 million from the Government of Sweden and USAID. The initial Swiss contribution of the equivalent of US$3.5 million was financed pari pasu with the credit, and managed by IDA. 4 11. FISE's participation in social sector spending was significant. Between 1991 and July 1996, FISE's participation rose from US$10.5 million to US$31.7 million, averaging 17 percent of total social sector investment (Table B6). FISE accounted for 54 percent of education and 28 percent of health expenditures. 12. Beneficiaries. Based on ex-ante subproject appraisal data, FISE estimated that about 6.3 million persons benefited from 3,792 subprojects through July 1996.10 Also, beneficiaries' contribution to subprojects was estimated at US$3.1 million. However, FISE did not monetize contributions, which included donations of land and materials. A recent evaluation found that beneficiaries were generally pleased with subprojects, but while beneficiary participation was relatively high in subproject identification, it was absent for the most part during subproject execution and maintenance, reflecting a lack of commitment on the part of the communities."1 FISE is in the process of developing a social communication strategy to increase beneficiary participation in the full subproject cycle and to establish community subproject maintenance committees. 13. Employment Generation. Based on ex-ante subproject appraisal data, a total of 184,706 months of temporary employment was generated by FISE-financed subprojects. Estimated average monthly earnings per worker on a FISE-financed subproject were US$70. 14. Gender Concerns. Significant resources were directed to women. Women's participation was estimated at above 50 percent in education subprojects (74% of social infrastructure investment), and 65 percent in health subprojects (13% of investment). An estimated 5 to 10 percent of subproject contractors were women. 15. Environmental Considerations. FISE has applied environmental impact criteria to subprojects, as required by the Operational Manual approved by IDA. Recently, FISE approved the creation of an environmental unit within the Evaluation Department. Under SI II, supported by technical assistance, the coverage of subprojects requiring environmental assessments will be expanded, procedures will be simplified; and the menu of environmental subprojects will be enhanced. Institutional Development 16. FISE. FISE's institutional development was substantial. Institutional development followed three distinct phases. In the first phase (1991-1992), the principal concern was rapid subproject financing and disbursement for employment creation due to post-war conditions, in addition to resource mobilization. The second phase (1993-1994) was a period of institutional capacity-building, coupled with an increase in subproject financing due to additional external resource mobilization. FISE improved procedures and systems (financial, administrative, auditing, contracting, data management, planning). In the current phase (1995-1997), FISE is consolidating institutional gains, while seeking to improve monitoring and evaluation; poverty targeting; social sector coordination; municipal, NGO, and local government participation; subproject maintenance and sustainability; and environmental actions. 10 FISE calculated that various persons benefitted from two or more subprojects. 11 M. Goodman and V. Blum. "Evaluaci6n Ex Post del Fondo de Inversi6n Social de Emergencia (FISE) de Nicaragua, Prestamo 729/OC-NI," IDB, June 1996. 5 17. Ministries of Health and Education. The project included two technical assistance components to the Ministries of Health (MINSA) and Education (MED) to strengthen their capacity to plan and prepare subprojects and to support general institutional strengthening toward sector reform. As of August 31, 1996, the Credit had disbursed US$1.2 million to M1NSA and MOE for technical assistance (Table B7). MINSA benefited from help with sector modernization, project preparation, strengthening of its monitoring and evaluation system, decentralized financing, and legalization of health facility properties, among others. MED was strengthened through assistance in the design of a supervision system, educational materials, and facility maintenance manuals; support for the Basic Education Project (Cr. 2689-NI), including the project preparation unit; and legalization of education facility properties. Sixty percent of education facilities obtained legal titles under the component. 18. However, the achievement of the project objective to transfer FISE experience and its methods of operations and procedures to social ministries to help them improve their efficiency and equity of service delivery was somewhat disappointing. MED appears to have profited more than MINSA. MED uses FISE's poverty map and cost system, is connected by modem to FISE, and received training in the FISE subproject cycle. The transfer of FISE experience was limited by personnel turnover in both ministries, which also caused delays in some FISE-financed activities, and by the absence of a detailed agreement on how to achieve the transfer of experience, including whether this was an objective of the ministries. The fact that FISE was originally scheduled to end in December 1995 also impeded the transfer of experience. 19. Municipalities. FISE helped municipalities to improve their skills in subproject identification, preparation, and contracting through promotion activities, seminars, and training. Municipalities' experience with FISE norms and procedures was particularly useful in the areas of costs and efficiency. In the 1995-1997 period, FISE will further assist capacity-building in municipalities. Private Sector Development 20. While not a stated project objective, private sector development was one of FISE's objectives, and its achievement was substantial. FISE invested approximately US$0.5 million in the private sector on a weekly basis. Its contribution to the construction, private banking, and insurance sectors was significant in terms of investment, growth, and human resources development. FISE investment in infrastructure was about 19 percent of GDP for construction from 1991 to 1996 (Table B8). It approved financing of US$97.7 million (82% of total) for 2,956 subprojects executed by 116 construction firms and 951 independent contractors (Table B9). When FISE began operations, there were few qualified contractors due to the reduction of the private sector under the previous regime; the first contractors were schoolteachers, drivers, metal workers, etc. Over time, FISE refined contractor and subproject eligibility criteria. Through experience with FISE, contractors' technical and administrative skills improved. In September 1996, 2,600 contractors were registered with FISE, and 400 were executing subprojects. FISE's external subproject supervisors also come from the private sector. 21. FISE stimulated private sector manufacturing through the demand generated for construction materials by FISE-financed subprojects. In 1991, the sole source of street paving stones and bricks was the state. Today, private sector manufacturers produce needed construction materials (paving 6 stones, brick, floor tiles, tubing), with the exception of cement production which is a state-owned enterprise. FISE-financed subprojects have also influenced the growth of transport. 22. FISE had a significant impact on private banking and insurance companies. FISE's own accounts are held in private banks.'2 Required contractor construction guarantees purchased from private banks and insurance companies were 2.5 percent of total approved subproject costs, or about US$3.0 million, substantial by Nicaraguan standards. In September 1996, FISE planned to make contractor payments directly to private banks through transfers, contributing to further financial sector development, as well as to contractor financial management experience. 23. FISE has had a relatively small impact on the non-profit sector, although non-governmental organizations (NGOs) sponsored, executed, and formulated social services subprojects. From 1991 to July 1996, FISE approved financing of US$3.6 million (3% of total) for 535 subprojects executed by NGOs and financing of US$8 million (7% of total) for 120 subprojects sponsored by NGOs (Table B10). In August 1995, NGOs had formulated 615 subprojects in the amount of US$1 million. NGO participation was limited for a variety of reasons;"3 however, FISE continues to make efforts to increase their participation, and organized a special FISE-NGO seminar in October 1996. Living Standards Measurement Survey (LSMS) 24. The project included a component to provide technical assistance to INEC to implement a LSMS program and analyze its results.'4 The LSMS was successfully completed in 1993. Survey results have been used to assist the GON, IDA, and other donors to refine and strengthen the design of poverty reduction policies and programs. FISE is using survey data to revise its geographic targeting.15 SIF II will finance a complementary second round survey to help further institutionalize LSMS work in the GON. Project Design 25. The project design was appropriate to achieving project objectives; it incorporated the standard features of social investment funds, which are well-tested. The technical assistance components were complementary to the principal subproject investment component. FISE has functioned well, and has met the targets established at appraisal. But the question of future absorptive capacity arises not only in relation to FISE's institutional capacity, but also with respect to FISE-generated demand for 12 Prior to Credit 2434-NI, FISE accounts were held in a state bank. 13 For example, NGOs that formulate subprojects are not eligible to execute them, even though they may have comparative advantages given their technical expertise and knowledge of and experience in communities in a specific geographical area. In addition, Nicaragua's recent history may have created some sensitivities regarding the role of some NGOs, which were closely associated with the earlier regime. 14 In addition to IDA, the survey was supported by SIDA, UNDP, UNICEF, USAID, and the GON. 15 See Gustavo Arcia, Hector Mendoza, and Ronaldo lachan. "Mapa de Pobreza Municipal de Nicaragua, Informe presentado al Fondo de Inversion Social de Emergencia," February 1996. 7 contractors and construction materials should external financing continue to increase. Subproject financing pressures may account in part for shortcomings in project implementation (paras. 42-44 and 47). MAJOR FACTORS AFFECTING THE PROJECT Factors Not Generally Subject to Government Control 26. Subproject implementation was partially affected by the variable supply of construction materials, poor quality materials, adverse weather conditions, and the presence of irregular, armned groups in subproject areas. FISE-generated demand for wood, concrete blocks, and bricks often exceeded local manufacturing capacity. The absence of a regulatory entity for construction materials resulted in the use of poor quality materials in some subprojects. 16 The 1995 rainy season washed out access roads in areas where subprojects were located; materials could not be transported, and subproject execution was halted for a period of about three months. The rains also affected brick manufacture which delayed construction of schools and health facilities. Irregular, armed groups in the central and northem areas of the country menaced laborers, assaulted contractors, threatened FISE personnel, and detained and bumed vehicles, with the result that laborers stopped working; subprojects were halted until the groups moved to a different area. All subprojects in these areas were variously affected. 27. In the early years, the municipalities' weak capacity to identify, sponsor, prepare, and supervise subprojects caused delays. FISE continues to provide technical assistance to municipalities, and their performance has improved. Although not a major factor, the fact that some contractors' poor planning and financial management abilities delayed subproject execution is cited because of the potential impact of contractor capacity on future FISE subprojects.'7 FISE might profit from a closer look at overall contractor absorptive capacity in relation to future demand. 28. Project implementation was partially delayed from February to August 1994, while FISE waited for a response to its request to adjust aggregate limits for different methods of procurement under the IDA Credit.'8 The delay coincided with the lack of a project task manager from May to August 1994. An amendment to the Credit was approved in August 1994. 16 Prior to 1972, the Ministry of Construction set standards and certified the quality of materials. The ministry was closed in 1972, and its regulatory functions were not transferred to another government agency. 17 Some contractors who did not have sufficient resources purchased required insurance with money borrowed at high interest rates from informal lenders. The initial 20 percent FISE contract advance was used to repay the lender; consequently, subproject execution began with an estimated 60 percent of the advance, which was inadequate to purchase needed materials. 18 In February 1994, FISE was close to reaching the thresholds for IDA direct contracting and local shopping amounts, and requested approval to adjust aggregate limits (increase direct contracting from US$3.4 million to US$7.0 million and local shopping, from US$3.5 million to US$7.8 million; as well as decrease public bidding from US$17.5 million to US$10.0 million). 8 Factors Generally Subject to Government Control 29. From August to December of 1993, project implementation was partially affected by the failure of GON to provide counterpart funding of US$0.9 million to FISE.19 Approved subproject execution was delayed for lack of financing. Since 1993, the Government has met its commitment of 10 percent of project costs. Factors Generally Subject to FISE Control 30. The ability of FISE to attract donor funding had a substantial, positive effect on the achievement of the project objective; the increase in external financing led to a 265 percent increase in approved subproject financing for the period January 1993 through July 1996. 31. Factors that partially constrained FISE's operational efficiency included overlapping Executive Director and Chairman of the Board activities, which could be overcome by greater clarity of functions. Coordination among departmental directors was distant; closer communication is needed. The use of technical assistance was uneven, and could be improved by interdepartmental evaluation of expected results against planned inputs. In addition, the deterioration in FISE's vehicle pool caused delays in subproject supervision by FISE supervisors. This problem was solved by contracting external supervisors and through the purchase of new vehicles. 32. The Credit became effective in June instead of March 1993, as anticipated, because of a change in Chairman of the Board of FISE and, delays in obtaining the subsidiary agreement and the legal opinion. PROJECT SUSTAINABILITY 33. The continued existence of FISE and sustainability of project investments are likely, given the GONs commitment to poverty alleviation, maintenance of the social safety net during continuing adjustment, and protection of social spending from fiscal austerity. Project sustainability is also supported by the follow-on SIF II project, which became effective on April 30, 1996. This project contributes to sustainability through institutional strengthening activities and subproject investment (para. 52). A study to deternine whether to continue FISE beyond December 1997 concluded that the most viable option would be to continue FISE as a five-year, renewable term institution that would maintain its standard operating procedures and norms, poverty targeting for resource allocation, and would strengthen and transfer experience to social ministries and municipalities through programmed actions.20 19 FISE became part of the GON budget for the first time in 1993; the delay in counterpart funding was caused by a programming problem. 20 Ema Budinich B. and Rodrigo Ubilla M. "Rol Futuro del FISE, Informe de Termino de la Consultoria," Managua, February 1996. 9 34. Subproject sustainability is still problematic. FISE did structure investments with a view toward low recurrent costs (e.g. school desks, rehabilitation of existing social infrastructure), and sought guarantees from the social ministries to cover recurrent expenditures. The mid-term review did not report on subproject sustainabiity problems, but noted that FISE was taking the first steps to ensure water and sewerage subproject sustainability.21 Nonetheless, subproject sustainability, including operations and maintenance, is a serious issue, which was initially underestimated. Efforts currently underway include the establishment of local commnittees to maintain and help run schools and health centers and financing of committee training and the preparation of maintenance manuals for committee use. Also, a maintenance fund is currently being established with the support of IDB. Subproject sustainability depends not only on FISE, but also on the social ministries, municipalities, and communities. In this regard, FISE should provide strong leadership supported by concrete actions equal to those applied to subproject financing. IDA PERFORMANCE Identification 35. IDA performance in project identification was highly satisfactory. The project was consistent with both IDA's country assistance strategy to help alleviate poverty through a lending program directed at the social sectors and targeted at the poor, and the GON strategy to alleviate poverty and improve living conditions through, among others, maintaining social safety net programs. Preparation Assistance 36. IDA performance in assisting FISE with project preparation was highly satisfactory. Appraisal 37. IDA performance in project appraisal was highly satisfactory. Correct appraisals were made with respect to government commitment, FISE's implementing capacity, and recognition of project risks. Eighteen key performance indicators were defined for the monitoring and evaluation of subproject promotion, appraisal, and supervision; these were subsequently refined and expanded (Table A5a). The indicators were useful for both FISE monitoring and IDA supervision purposes. From appraisal through Board approval, total staff weeks numbered 129. Supervision 38. IDA supervision was satisfactory. Project implementation progress was adequately reported. However, IDA advice was inconsistent on two subjects. First, FISE was advised to publish the periodically adjusted subproject unit costs and complied; subsequently, FISE was informed that this action was in violation of the agreed procurement guidelines. Second, FISE was advised to include depreciation costs in administrative costs; this advice was later changed. IDA follow-up on FISE's request to adjust aggregate limnits for different methods of procurement was delayed by the transition 21 World Bank. Mid-Term Review, Nicaragua, Social Investment Fund Project, December 5, 1994. 10 between task managers. FISE's view was that IDA supervision improved over time, and that continuity in IDA staff and consultants is very important. Total staff weeks for supervision numbered 109, partly overlapping with the preparation, appraisal, and supervision of SIFII) averaging some 26 staff weeks per year. BORROWER PERFORMANCE Preparation 39. FISE's performance in project preparation was highly satisfactory. The quality of technical, financial, institutional analyses, and other inputs was very high, and FISE management showed an unequivocal commitment to the project. Implementation 40. Overall, FISE's implementation performance was satisfactory. Implementation complied with the Credit Agreement in its fundamental aspects. FISE's project administration was efficient, management was effective, and operational efficiencies were attained in the subproject cycle. A few shortcomings were found with respect to expected improvements in the subproject menu, subproject processing time, the incorporation of social objectives, and the application of contracting procedures for local competitive bidding, as well as technical assistance funded under the credit. However, these did not significantly affect the overall achievement of development results. 41. Subprojects. Subproject status and average cost were satisfactory. From 1991 through July 1996, FISE approved 4,791 subprojects in the amount of US$120.8 million (Table B 1l). Sixty-nine percent of subprojects were completed, 17 percent were under execution, 13 percent were in the process of being contracted, and 1 percent were canceled. In 1991, the average subproject cost was US$39,074 (social infrastructure, US$35,660; economic infrastructure, US$73,167; social services, US$8,397). Through July 1996, the cumulative average cost was US$33,627 (social infrastructure, US$45,705; economic infrastructure, US$75,942; social services, US$11,507; community training, US$1,355). Excluding community training, the average cost was US$44,384. 42. The standardized subproject menu consisted of 28 subproject types. FISE expanded the social services subproject menu, as agreed at the mid-term review, but subproject preparation and execution were troublesome due to difficulties surrounding NGO participation, a delay on the part of MED in approving a list of school text and library books, and a delay in purchasing health facility equipment. The latter two delays were overcome, and FISE will hold a seminar for NGOs in December 1996 to further their participation. The new nutrition program subproject type has yet to be implemented. Also agreed at the mid-term review was increasing investment in water and sanitation subprojects, which were one percent of total amount for social infrastructure subprojects under contract through July 1996 (Table B12). FISE delayed starting a program of detailed feasibility studies; there was a scarcity of qualified water and sanitation specialists to conduct such studies, and the Nicaraguan Institute for Water and Sewerage (INAA) and FISE were unable until recently to reach agreement on key issues regarding subprojects in dispersed, rural areas, where the need is greatest. Social infrastructure investment was skewed toward education (74% of total); and it is suggested that FISE review sector demand. 11 43. Subproject Cycle. FISE made several improvements in the subproject cycle, in particular in planning, promotion, and supervision. It has sought mechanisms to establish a formal role for communities in the subproject cycle, especially subproject identification.22 This process is ongoing. Subproject appraisal has improved, as evidenced by the decrease in the difference between subproject appraisal costs and contract amounts from 13 percent to 7 percent since 1994, compared to the target of 10 percent or less. In this regard, FISE's system of standard unit regionalized prices has worked well.23 To ensure both subproject completion and quality, FISE established the additional criterion that price quotations and bids must cover at minimum the appraisal amount for subproject direct costs. Through 1995, subproject supervision was conducted by the subproject sponsor and FISE supervisors. Supervision was deficient because sponsor supervisors changed frequently, and FISE supervisors were overburdened. In 1995, FISE began to contract external supervisors; a quick assessment indicated that subproject supervision is satisfactory.24 In August 1996, the ratio of FISE supervisors to the number of subprojects was 1 to 25. Average subproject execution time was 125 days, which parallels that of other social investment funds. The average time for subproject processing (promotion to completion) was 401 days, which indicates that bottlenecks in the subproject cycle are a continuing problem that needs to be addressed. 44. The incorporation of social objectives and new work areas in the subproject cycle was slower than expected, and the impact of these added responsibilities on FISE's institutional capacity was not fully taken into account. While maintaining the original emphases on operational efficiency and securing additional financing, other considerations were added: subproject quality, maintenance, and sustainability; environment; greater attention to community, NGO, and local government participation; and impact evaluation. FISE lacked the specialized knowledge to address certain areas (e.g., environment, water and sanitation), and required technical assistance. The contribution of the social ministries, with far greater knowledge of and experience in social programs, was constrained by their own problems and focus on reform efforts. The result was that FISE's institutional capacity was strained. 45. Administration. FISE-financed subprojects were implemented efficiently. Total administrative costs represented about 10 percent of total disbursements, in keeping with other social investment funds (Table B 13). FISE administration and operations improved through the acquisition of additional office space and the purchase of computers, equipment, and vehicles. .46. Management and Staff. The high quality and continuity of the management team, and FISE staff in general, has been an essential factor in FISE's success, to the extent that FISE has served as a 22 See Felix Jimenez and Flor de Maria Monterrey. "Consultoria sobre la Participaci6n de los Beneficiarios en los Proyectos del FISE, III Taller: Sintesis de Mecanismos de Participaci6n Comunitaria en los Proyectos del FISE, Memoria," Managua, June 1996. 23 Updated regularly, the FISE cost system is based on prices in each of 17 departmental capitals, a Nicaragua Construction Council cost study, and on-site cost analysis. The system is revised inunediately upon currency devaluation and changes in fuel costs. 24 Gloria Elizabet Urquia B. "Informe de Consultoria, Misi6n de Supervision AIF, Proyectos Fondo de Inversi6n Social de Emergencia I y 11, Creditos 2343 y 2767-NI," September 9, 1996. 12 model for other SlFs. FISE has hosted study tours for several Latin American SlFs, as well as those in Mongolia, Cambodia, and Vietnam. Uneven team coordination has detracted somewhat from this success. In July 1996, FISE had a total of 146 staff (12 management, 72 professional, 62 support), which compared favorably with that of other SIFs (Table B 14). 47. Procurement. Simplified procurement procedures helped expedite subproject approval and disbursements.25 From 1993 to August 1996, direct contracting26 and local shopping were 57 percent of total contract amounts (31% and 26%, respectively), compared to the appraisal estimate of 37 percent (Table B15).27 National competitive bidding (NCB) was 43 percent, compared to the appraisal estimate of 67 percent. The sizable use of direct contracting was due mostly to the fact that FISE transferred the responsibility of NCB to subproject sponsors in September 1993. This change resulted in significant contracting delays because sponsors were not familiar with FISE's NCB procedures. In response, FISE strengthened its contracting department, and provided technical assistance to subproject sponsors. Direct contracting was expedient, but did not convey transparency of FISE operations as did local shopping and NCB. FISE's projections for 1996 are that direct contracting and local shopping will be 44 percent (14% and 30%, respectively) and NCB will be 56 percent of total contract amounts. 48. Disbursements. The Credit was to be disbursed over a period of two and one-half years, to be completed by June 30, 1995. Total FISE disbursements from 1991 through July 1996 were US$116.92 million, compared to total approved financing of US$119.6 million. Initial disbursements were slower than expected, because of the delay in effectiveness; subproject sponsors had lirnited experience with NCB; and FISE's supervision department did not sufficiently pressure contractors to complete subprojects on time. As of September 30, 1995, all of the funds available for subprojects were fully committed. The closing date was extended from December 31, 1995 to June 30, 1996, and again by three months from June 30, 1996 to September 30, 1996, to allow for final commitment and payment of the Credit. 49. Use of Technical Assistance. FISE obtained technical assistance of US$130,373 for various institutional strengthening activities, including the re-design of the financial accounting system, the preparation of a contracting manual, and the development of a strategy for the implementation of water and sanitation subprojects in dispersed, rural areas (Table B16). FISE reported that 25 percent of planned technical assistance did not materialize due to delays in developing terms of reference, the lack of an institutional locus for technical assistance, and disparate views on whether planned technical assistance could effectively meet institutional needs without unduly burdening FISE. 25 By law, FISE is exempt from the standard state system of purchasing goods and services for subprojects financed by FISE; purchases are regulated in accordance with the FISE Procurement Manual which follows IDA procedures. 26 Direct contracting below US$30,000 was applied for the execution of subprojects in remote locations, where no more than one contractor was expected to show interest; this was later raised to US$50,000. 27 Based on actual data for the period January 1993 through August 1996, and projections for the period August to December 1996. Data not available for 1991-1992. 13 50. Covenant Compliance. Compliance with special covenants was satisfactory. Special covenants were mainly limited to procedural issues: (a) minimum allocation of counterpart funds, (b) FISE to carry out municipalities targeting plan, (c) FISE not to approve subprojects in Managua with cost exceeding 18 percent of total funds available and subprojects in other medium poverty municipalities with cost exceeding seven percent of total funds available, (d) FISE to furnish to IDA no later than six months after the end of each fiscal year a copy of annual audit report, and (e) FISE to furnish to IDA no later than two months after the end of each quarter a copy of quarterly audit report (Table A7). Apart from (e), which has still not been met, all conditions were met substantially without undue delays. ASSESSMENT OF OUTCOME 51. As detailed in the preceding paragraphs, the overall project outcome was satisfactory. The achievement of the major objectives was substantial, with only a few shortcomings. Subject to further progress on subproject sustainability, project sustainability is likely. FUTURE OPERATION 52. SIF II supports the FISE investment program for the period 1995-1997, as well as an institutional strengthening component to improve its capacity to help prepare water and sanitation subprojects and to improve its environmental assessment procedures, and a LSMS component to assist the GON in implementing a second round of the survey conducted under the first project and to further institutionalize LSMS within the GON.28 FSE has an agreed program and budget for 1995-1997. The indicators by which the project can be monitored and evaluated include a full set of performance and impact indicators that cover the efficiency and quality of FISE subprojects, the administration and financial efficiency of FISE, the focus of FISE investments, and the impact of FISE subprojects (Table A5b). The issues discussed in this report will be further addressed during the implementation of SIF X. KEY LESSONS LEARNED 53. FISE has succeeded through the effective and efficient application of standard SIF procedures and methods, which are well-tested and proven, and owes its success to good management and the ability to attract donor financing. This has been helped by the introduction of an excellent planning mechanism. 54. Successful achievement of social objectives and implementation in new work areas depend on institutional commitment, effective technical assistance that responds to FISE's special needs (e.g., rapid execution), productive partnerships with the social ministries, and the correct assessment of the impact of additional work on institutional capacity. Both FISE and donors should give more attention to the impact of added responsibilities on the institution. This could be accomplished by planning for the achievement of social objectives in the context of overall operations and goals, and conducting an annual review of institutional impact and progress toward social objectives. 28 In addition, IDB loan 935/SF-NI provides financing for FISE subprojects, institutional strengthening in the areas of internal management and subproject promotion, and a preventive maintenance fund component for health and education subprojects. 14 55. The transfer of FISE's experience and methods of operation and procedures to social ministries to help them improve their efficiency and equity of service delivery was only partially achieved because the transfer was not defined, and the objectives of the ministries were not sufficiently analyzed as to how FISE could be of assistance. Given FISE's six years of experience, it is now opportune for FISE, the ministries, and the municipalities to begin to concretely define and plan for the transfer of experience. This would signal a further evolution in social investment funds. IDA and other multilateral and bilateral donors may wish to support this effort through their sector work, in addition to social investment fund projects. 56. And finally, NGOs have to play a substantial role in facilitating community involvement throughout the project cycle. Even though Nicaragua's recent history may have created some sensitivities regarding the role of some NGOs, a more substantial effort to exploit the knowledge and experience of NGOs would have been advisable. 15 Part Two: Statistical Data A. General Statistical Data Table Al: Summary of Assessments Table A2: Related IDA Loans/Credits Table A3: Project Timetable Table A4: Credit Disbursements: Cumulative Estimated and Actual Table A5a Key Indicators for Project Implementation (Credit 2434-NI) Table A5b: Key Indicators for Project Implementation (Credit 2767-NI) Table A6a: Project Costs Table A6b: Project Financing Table A7: Status of Legal Covenants Table A8: IDA Resources: Staff Inputs Table A9: IDA Resources: Missions B. FISE Project Data Table B 1: Comparison between Planned and Committed Resources by Municipal Poverty Category, 1991 through July 1996 Table B2: FISE Approved Subproject Financing by Municipal Poverty Category, 1991 through July 1996 (US$ million) Table B3: FISE Approved Subproject Financing by Municipal Poverty Category, 1991 through July 1996 (percent) Table B4: FISE Disbursements by Sector, 1991 through July 1996 Table B5: Number of FISE Subproject Beneficiaries, Employment Generated, and Average Subproject Cost, 1991 through July 1996 Table B6: FISE Participation in Social Sector Expenditures, 1991 through July 1996 Table B7: Technical Assistance to the Ministries of Health and Education Table B8: FISE Participation in the Gross Domestic Product (GDP), 1991 through June 1996 Table B9: Distribution of Number and Amount of Approved Subprojects by Type of Executing Agency, 1991 through July 1996 TableBIO: Distribution of Number and Amount of Approved Subprojects by Type of Subproject Sponsor, 1991 through July 1996 Table BI 1: Number and Amount of Approved Subprojects by Subproject Status, 1991 through July 1996 Table B12: Types of Subprojects under Contract by Number and Amount, 1991 through July 1996 Table B 13: Amount and Uses of Funds by Year, 1991 through July 1996 (US$ million) Table B14: FISE Staffing, 1991 through July 1996 Table B 15: FISE Procurement Methods by Type, 1993 through 1996 Table B16: Studies and Technical Assistance Included in the Project 16 NICARAGUA SOCIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table Al: Summary of Assessments A. Achievement of Ves.;t;Lev Subqrantial PaYrtial Ni*gIi.ible Nnt applicahle Macroeconomic policies X Sector policies x Financial objectives X Institutional development Xa Xb Physical objectives X Poverty reduction X Gender concerns x Other social objectives x Environmental objectives X Public sector management X Private sector development X B. PrL lctIsust.Uinabili e._ain ! x I !__ _ _ _ _ _ C . IDAMSerfunmancc tHighlSattstaeton j Satisfacctrv Deficient Identification X Preparation assistance X Appraisal X Supervision X X D. RnrroAcrjielf(rnEnc. H,1.aifcni- D__etsat_ __tric enit Preparation X Implementation X Covenant compliance X i. Assessment nf nutecinmc ! i1±h1 Sanisaitorf :nsaisractar Highly -..~~~~~~~~~~~~iL 1L. x a -For FISE b - For MED and MINSA 17 NICARAGUA SOCIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table A2: Related IBRD Loans and IDA Credits 0vilit ML and Project PurpiS Year(sf of.Apprval Status Health Sector Reformn (Cr. Health sector reform FY93 Ongoing 2556-NI) Basic Education (Cr 2689- Basic educatioii FY95 Ongoing NI) strengthening Second Social Investment Continuation of FISE FY96 Ongoing Fund (Cr. 2767 - NI) activities Rural Municipalities (Cr. Reduction of rural poverty FY97 Ongoing 2918-NI) 18 NICARAGUA SOCLIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table A3: Project Timetable - _wL se in l'jeojL SLeI Pli_iied Dae_ Actual Date Identification April 1992 April 1992 Preparation April 1992 April 1992 Appraisal June 1992 June 1992 Negotiations October 1992 October 1992 Board Presentation November 1992 November 1992 Signing January 1993 January 1993 Effectiveness March 1993 June 1993 Midterm Review February 1994 April 1994 Project Completion December 1994 September 1996 Loan Closing December 1995 September 1996 Table A4: Credit Disbursements: Cumulative Estimated and Actual . ..... . .......... ._ _._ i _.1993 1994 j 1995 ! 199 Appraisal Estimate 5.0 18.0 25.0 (USSM) Actual (US$M) 0.0 8.8 19.0 23.4 25.1 Actual as % of 0.0 48.8 74.8 93.9 100.0 estimate Date of final Dec. 6, 1996 disbursement 19 NICARAGUA SOCIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table 5A: Key Performance Indicators for Project Implementation (Credit 2434-NI) FISE Work Program January 1993 to December 1994 Indicator OhjecMive i argen Actual f 'M, I J n n 9wJon D9tlec 94 kDc 94 1. Number of Determine actual demand 2,000 3,727 186 subproject requests for FISE's financing and estimate FISE's promotion capacity 2. Number of Determine FISE's appraisal 1,600 3,045 190 subprojects appraised capacity 3. Number of Assure that FISE has 10 12 83 evaluators enough professionals 4. Number of Determine FISE's marginal 160 253 159 subprojects appraised evaluation capacity by evaluator 5. Number of Determine relationship of 1,569 2,448 156 subprojects approved projects approved to projects appraised _ 6. Total cost of Determine FISE's project US$60 million US$50.20 million 84 subprojects approved processing capability 7. Percentage of total Ascertain FISE's reaching 20% 18% 90 cost of projects targeting objectives approved in municipalities with extreme poverty 8. Percentage of total Ascertain FISE's reaching 57% 62% 108 cost of projects targeting objectives approved in municipalities with high poverty 9. Percentage of total Ascertain FISE's reaching 23% 20% 88 cost of projects targeting objectives approved in municipalities with medium poverty 10. Percentage of total Ascertain FISE's reaching 16% 12% 72 cost of projects targeting objectives approved in Managua (part of medium poverty municipalities) 20 Indicator T Ohjctive Target Actual .Ja*n 93 Ito bee 94 O ..s.9g 11. Number of Deternine possible 0.70 0.67 96 subprojects with bottlenecks in procurement financing procedures contract/Number of subprojects approved 12. Time span (days) Determine possible 5 15 293 between contract bottlenecks in the signing and first supervision or disbursement administration department 13. Number of Determine FISE's 1,133 2,177 188 subprojects started production capacity 14. Total cost of Determine FISE's US$40 million US$40.67 million subprojects started production capacity 15. Number of Ascertain how close <10% of total 587 357 subproject contracts appraisal cost estimates are subproject above the appraised to reality (see indicator No. contracts (N164) cost base 19) 16. Accumulated Determine execution levels, US$40 million US$36.02 million 90 disbursements for the balance to be disbursed and period general FISE capacity to disburse in a given time period 17. Percentage of total Determine execution levels, 53% 91% 172 disbursements to total balance to be disbursed and commitments general FISE capacity to disburse in a given time period 18. Number of Determine FISE's capacity 30 22 73 subprojects in actual to handle its current execution/Number of commitments (see supervisors indicators Nos. 21, 22, 23) 19. Percentage of total Ascertain how close total <10% 13% 129 cost of subprojects cost estimates are to reality contracted over appraised cost base 20. Percentage of Determine % of modified <10% 17% 168 subproject contracts contracts because of cost modified because of overruns due to exogenous cost overruns variables or under estimated appraisal cost 21. * Number of Determine how close 450 330 73 subprojects in actual FISE's installed capacity for execution subproject supervision is to reality 21 Indicator Objective Target Actual | Jan 93 tit Ikc 94 D 94 22. * Total cost of Determine how close total US$14.85 million US$10.89 million 73 subprojects in actual cost estimates of execution subprojects handling capacity are to reality 23. * Percentage of Determine possible <10% 74% 742 subprojects in actual bottlenecks in supervision execution w/original department subprojects on contracted execution critical path time overdue 24. Number of Deternine the relationship 908 1,302 143 subprojects completed of subprojects completed to subprojects started that should have been completed as scheduled 25. Total cost of Determine total cost of US$30 million US$28.61 million 95 completed subprojects completed subprojects 26. Average execution Determine possible 95 84 89 time of finished bottlenecks in supervision subprojects (days) departments * Does not include 34 subprojects canceled with a total cost of US$1.4 million. Note: The key performance indicator format used by FISE states the database by which each indicator is verified. 22 NICARAGUA SOCIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table A6a: Project Costs January 1993 - September 1996 -. | I Appraisal Esiimafte Actal (I:Ss million) (KISS miltim) ! §te1m =_ = = --- --------------r - -- ---_ 1, iA1K;I F ioreign i lolal L local Foreign Total j c {t j Ct' C i Ctsti Cohts _ - I. FISE A. Subprojects 1. Social infrastructure 23.3 10.0 33.3 61.8 0.0 61.8 2. Economic infrastructure 11.4 2.8 14.2 8.4 0.0 8.4 3. Social Services 10.3 1.8 12.1 19.7 0.0 19.7 4. Community Training 0.5 0.4 0.9 1.9 0.0 1.9 Subtotal 45.5 15.0 60.5 91.7 0.0 91.7 B. Operating Costs 1. Salaries and social benefits 2.2 0.0 2.2 5.7 0.0 5.7 2. Travel and per diem 0.0 0.3 0.3 0.0 0.1 0.1 3. Office expenses 0.7 0.0 0.7 2.8 0.0 2.8 4. Transport 0.2 0.2 0.3 0.3 0.3 0.6 5. Rent, maintenance, etc. 0.2 0.1 0.5 0.4 0.2 0.6 6. Utilities 0.0 0.0 0.0 1.0 0.0 1.0 Subtotal 3.5 0.5 4.0 10.1 0.6 10.7 TOTAL FISE 49.0 15.5 64.5 101.8 0.6 102.4 II. LSMS and FISE 0.7 0.2 0.9 0.2 3.1 3.3 Impact Evaluation III. Technical Assistance for MOH 0.4 1.4 1.8 0.0 1.4 1.4 and MOE IV. Technical Assistance for Social 0.2 0.6 0.8 0.0 0.0 0.0 Sector Reform Management Total (1) 50.7 17.7 68.0 102.0 5.0 107.0 (1) Net of taxes and duties. Source: FISE Direcci6n Financiera Administrativa, 01/24/97. Note: Totals may not add due to rounding 23 NICARAGUA SOCIAL INVESTMENT FUND PROJECT (CREDIT 2434-NI) Table A6b: Project Financing January 1993 - September 1996 1. } Appraisal Estimate Actual/LateNt.4utimate j(US millioln) j (USM inilliun) I: ij Seuree 1 i II, fAtIcal Foreign liotal I Ioai bnreig0n Tlotal I[ L Cus I C osms , C asts .__. IBRD/IDA (Cr. 2434-NI) 18.2 6.8 25.0 22.4 2.7 25.10 IBRD/IDA (Cr. 2767-NI) 5.2 0.1 5.3 Cofinancing Institutions IDB (1) 10.4 5.6 16.0 33.8 0.5 34.3 Government of Germany-KfW (2) 9.0 4.0 13.0 13.0 0.8 13.8 Government of Switzerland (3) 2.5 1.0 3.5 7.2 0.3 7.5 UNDP 0.3 0.1 0.4 0.0 0.0 0.0 Govemment of Japan 0.5 0.2 0.7 0.0 0.0 0.0 Subtotal 40.9 17.7 58,6 81.6 4.5 86.1 Other External Resources SIDA (4) 2.1 0.0 2.1 USAID (5) 3.7 0.0 3.7 Subtotal 5.8 0.0 5.8 Domestic Contributions Government of Nicaragua 6.3 0.0 6.3 14.5 0.6 15.1 Beneficiaries (6) 3.1 0.0 3.1 0.00 0.00 0.00 Subtotal 9.4 0.0 9.4 14.5 0.6 15.1 Total 50.3 17.7 68.0 102.0 5.1 107.0 (1) ATN/TF-3599-NI and Loan Agreements 729/OC-NI and 935/SF-Nl. (2) Agreements 9266157, 9266164, and 9567009. (3) COSUDE I and COSUDE II. (4) Agreements I and II. (5) PL-480 generated funds. (6) An estimated US$3.1 million in beneficiary contributions was not monetarized and reported. Source: FISE Direcci6n Financiera Administrativa, 01/24/97. 24 Table A7: Status of Covenants Agmcemcnt ection I PreXnt 1Original Rcised 1 I T'ypae Status Fuliilimenut I FuitFiliment I)eicription( of Co"Cmant . . .... - .o t. 1 Dae. ..... . .. Credit 3.u - 4 Complied Annually Annually Minimum allocation of counterpart funds 3.08(a) 5 Complied 3/31/93 3/31/93 SIF to carry out Municipalities Targeting Plan 3.08(b) 5 Complied 3/31/93 3/31/93 SIF not to approve subprojects in large municipalities based on Municipalities Targeting Plan 4.01(b) 1 Complied Annually Annually SIF to furnish IDA not later than 6 months after the end of each fiscal year, a copy of annual audit report 4.02(b) I Not Quarterly Quarterly SIF to furnish to IDA not later than 2 months after the end of Complied each quarter, a copy of the quarterly audit report Table A8: IDA Resources: Staff Inputs ....... .. Stage of Project Cycle Weeks US$(000) Preparation to Appraisal 68.4 220.1 Appraisal 59.5 125.8 Negotiations through Board Approval 0.9 0.2 Supervision 108.8 241.0 Completion 8.5 13.9 Total 246.1 601.0 25 Table A9: IDA Resources: Missions _ . .. ........ ................ ....... ... .. . . . ... . . _ .......... P..r................. ...... ...................................... . .. Peufonnanc Rating Stage of Pmject .Uonth/ Number Days in Specialited Implementation lDevelopment TFypes of Cycle Year Of Field Staff Skills Status Objctines Prnblkms Per.wns _ tpCCtd .................... _. , _ _ ._ .................. ..............~~~~~~~~~.................. ........ ............... .................... . . . . . . Through 6/92 8 106 A,B,C,D,E,F S n.a. Appraisal Appraisal 12/92 2 2 A,D S n.a. Through Board Approval Supervision 1 7/93 1 4 G S S Minor procurement procedures Supervision 2 2/94 1 4 A S S Contracting bottlenecks/insuff icient supervision personnel Supervision 3 4/94 6 A,B,C,E,F Supervision 4 2/95 2 4 A,B HS HS MIS not integrated Supervision 5 8/95 2 4 A,B S S Supervision 6 10/95 4 5 A,C,D,G HS HS Supervision 7 3/96 4 5 A,C,D,G HS HS Contracting, concurrent auditing Completion 9/96 3 5 A,C,D S S W A=Human Resources Specialist; B=Financial Analyst; C=Engineer; D=Administrator; E=Credit Specialist; F=Economist; G=Procurement Analyst bI 1=Problem Free; 2=Moderate Problems; HS=Highly Satisfactory; S=Satisfactory Note: Various supervision activities also took place in late-1994/early-1995 in the context of the preparation of the next FISE project (Cr. 2767-NI) 26 Table B1: Comparison between Planned and Committed Resources by Municipal Poverty Category 1991 through July 1996 Povery CaOegvr Numher of Percent or Plaitwed % Actual % M1unicipaities Tntal (January 1993) (JuLy 1996) Population . ._._._._._l Extreme 39 14.7 20.0 22.3 High 95 52.9 57.0 58.3 Medium 9 32.4 23.0 19.4 Total 143 100.0 100.0 100.00 Managua (1) 20.0 <18.0 10.8 (1) Part of medium poverty municipalities. Source: FISE Direcci6n General de Estadistica, 09/03/96. 27 Table B2: FISE Approved Subproject Financing by Municipal Poverty Category 1991 through July 1996 (US$ million) Extreme 14.7 Amount approved 1.48 2.49 2.84 4.99 7.62 7.23 26.66 Number of subprojects 39 103 103 303 349 238 1,139 High 52.9 Amount approved 5.33 8.02 8.23 15.44 19.19 13.51 69.75 Number of subprojects 127 254 187 1,067 700 363 2,798 Medium 32.4 Amount approved 3.72 2.12 3.31 4.22 4.88 4.87 23.15 Number of subprojects 48 36 207 250 155 117 813 Total 100.0 Amount approved 10.54 12.65 14.39 24.67 31.70 25.61 119.58 Number of subprojects 214 397 597 1,620 1,204 718 4,750 Managua (1) 20.0 Amount approved 3.27 0.91 1.60 2.00 2.21 2.91 12.91 Number of subprojects 35 13 147 137 69 77 478 Exchange rates used: 4.85 5.00 6.12 6.72 7.53 8.12 6.33 US$ 1.00 = C6rdoba (1) Part of medium poverty municipalities. Source: FISE Direcci6n de Planificaci6n, 08/30/96. 28 Table B3: FISE Approved Subproject Financing by Municipal Poverty Category 1991 through July 1996 (percent) Extreme 14.7 Amount approved 14.07 19.71 19.76 20.24 24.03 28.22 22.30 Number of subprojects 18.22 26.95 17.25 18.70 28.98 33.14 23.97 High 52.9 Amount approved 50.56 63.48 57.21 62.61 60.54 52.75 58.33 Number of subprojects 59.34 63.97 48.07 65.86 58.13 50.55 58.90 Medium 32.4 Amount approved 35.36 16.79 23.01 17.13 15.41 19.03 19.36 Number of subprojects 22.42 9.06 34.67 15.43 12.87 16.29 17.11 Total 100.0 Amount approved 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Number of subprojects 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Managua (1) 20.0 Amount approved 31.04 7.25 11.13 8.11 6.97 11.36 10.80 Number of subprojects 16.35 3.27 24.62 8.45 5.73 10.72 10.06 (1) Part of medium poverty municipalities. Source: FISE Direcci6n de Planificaci6n, 08/30/96. 29 Table B4: FISE Disbursemcnts by Sector 1991 through July 1996 _ ~~ ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~E I~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. . . . . . . . . . . |Social Infrastructure EAmount (US$ million) 3.14 4.76 11.32 15.43 21.96 9.85 66.46l lPercent 29.76 37.66 79.00 66.08 69.89 68.93 62.36l |Economic Infrastructurel Amount (US$ million) 7.17 4.57 1.34 3.36 3.88 0.64 20.96 |Percent 67.96 36.16 9.35 14.39 12.35 4.48 19.67 Social Services Amount (US$ miillion) 0.24 3.31 1.62 4.38 5.21 3.79 18.55l Percent 2.27 26.19 11.32 18.76 16.58 26.52 17.40l Community Trainingl Amount (US$ million) 0.00 0.00 0.05 0.18 0.37 0.01 0.61 lPercent 0.00 0.00 0.35 0.77 1.18 10.07 10.57 |Total Amount (US$ million) 10.55 12.64 14.33 23.35 31.42L 14.29 106.58J Source: FISE Direcci6n Financiera Admninistrativa, 09/03/96. 30 Table B5: Number of FISE Subproject Beneficiaries, Employment Generated, and Average Subproject Cost, 1991 through July 1996 . *,'X:: .... . . . . .. . . .. . * Social Infrastructure Amount (US$ million) 3.14 4.76 11.32 15.43 21.96 9.85 66.46 Number of subprojects 88 130 290 401 396 149 1,454 Number of beneficiaries 96,375 125,787 303,878 773,425 705,641 163,914 2,169,020 Employment generated 2,966 5,699 23,656 28,440 51,746 23,372 135,909 Average subproject cost (US$) 35,660 36,611 39,034 38,475 55,449 66,112 45,705 Economic Infrastructure Amount(US$million) 7.17 4.57 1.34 3.36 3.88 0.64 20.96 Number of subprojects 98 47 19 44 54 14 276 Number of beneficiaries 328,937 35,769 26,845 705,229 391,855 35,675 1,524,310 Employment generated 4,298 2,137 1,929 5,955 7,770 1,899 23,988 Average subproject cost (US$) 73,167 97,328 70,578 76,298 71,937 45,485 75,942 Social Services Amount (US$ million) 0.24 3.31 1.62 4.38 5.21 3.79 18.55 Number of subprojects 28 220 236 491 471 166 1,612 Number of beneficiaries 0 8,487 188,229 1,103,208 812,994 199,437 2,312,355 Employment generated 330 360 5,197 5,561 6,741 3,923 22,112 Average subproject cost (US$) 8,397 15,055 6,859 8,921 11,058 22,837 11,507 Community Training Amount (US$ million) 0.00 0.00 0.05 0.18 0.37 0.01 0.61 Number of subprojects 0 0 30 139 278 3 450 Number of beneficiaries 0 0 19,422 207,215 58,305 1,293 286,235 Employment generated 0 0 60 1,180 1,445 12 2,697 Average subproject cost (US$) 0 0 1,815 1,300 1,317 1,676 1,355 Total Amount (US$ million) 10.55 12.64 14.33 23.35 31.42 14.29 106.58 Total No. of Subprojects 214 397 575 1,075 1,199 332 3,792 Total Beneficiaries 425,312 170,043 538,374 2,789,077 1,198,795 400,319 6,291,920 Total Employment 7,624 8,196 30,842 41,136 67,702 29,206 184,706 Source: FISE, 08/30/96. 31 Table B6: FISE Participation in Social Sector Investment 1991 through June 1996 (US$ million) |Social Sector Investmentl Education 0.14 7.44 8.30 15.29 8.99 7.45 47.60l |Health 1.90 3.88 13.85 13.43 13.68 5.53 52.27l |Others (2) 35.44 69.98 149.09 144.17 105.04 39.66 543.38l | ~~~~~~Total 37.48 81.31 171.23 172.89 127.71 52.63 643.25l |FISE Investmentl Education 2.61 5.46 . 10.60 11.90 19.58 6.74 56.89l Health 0.53 2.24 0.78 6.51 6.14 4.43 20.63l Others (3) 7.40 4.95 3.01 4.93 5.98 3.14 29.41l Total 10.54 12.64 14.33 23.35 31.42 14.29 106.58 |FISE Investment (percent)(4) 28.12 15.56 8.40 13.51 24.60 27.15 16.57| Exchange rates used: 4.85 5.00 6.12 6.72 7.53 8.12l US$ 1.00 = Cordoba (1) Preliminary. (2) Others include INIFOM, INATEC, INAA, FONIF, INS, and general government. (3) Others include water and sanitation, street paving, roads, municipal markets and slaughterhouses, and reforestation. (4) In the early 1990s, the Ministries of Education and Health only counted investments funded internally and excluded donor-funded investments. Consequently, the comparison in those early years lacks relevance. Source: FISE, 09/06/96. 32 Table B7: Technical Assistance to the Ministries of Health and Education I ___ ______lriee Amount (C.SS) Ministry of Health 1. Modernization of health sector 35,242 2. Legalization of property titles for health facilities 76,900 3. Legal support in the areas of health career law, collective agreement with 96,677 unions, and preparation of general health law 4. Strengthening of project preparation for primary health care investment 58,668 5. Strengthening organization and management of drugs and medical supplies 42,773 at the facility level 6. Strengthening MOH monitoring and evaluation system 23,122 7. Community health and hygiene education 71,820 8. Health sector analysis 27,465 9. Health communication 9,000 10. Monitoring and control system for programs with external financing 11,760 11. Hospital administration development 9,000 12. Basic sanitation 1,500 13. Strengthening of health ministry decentralized financing 6,500 14. Institutional strengthening of the design and implementation of health 11,750 investment system Subtotal 482,177 Ministry of Education 1. Legalization of property titles for education facilities (first project) 98,521 2. Legalization of property titles for education facilities (second project) 81,658 3. Preparation of basic education project 68,500 4. Coordinating unit for basic education project 90,420 5. Physical infrastructure component 28,108 6. Pre-school education component 8,958 7. Decentralization of education administration 111,920 8. Design of basic education project infrastructure prototypes 6,500 9. Design of basic education project infrastructure maintenance manual 12,628 10. Design and implementation of supervision system for education facility 800 property title legalization 11. Dissemination of education democratization process 95,800 12. Study of school center location 8,100 13. Basic education project component design of educational materials (part 1) 8,485 14. Basic education project component design of educational materials (part 2) 19,894 15. Review and revision of primary school center maintenance operation manual 3,000 16. Management training 17. National Plan for Sustainable Development 1996-2000 300 18. Simulation model for education system 5,000 Subtotal 45,000 693,592 Total 1,175,769 Source: FISE Direcci6n Financiera Administrativa, 08/31/96. 33 Table B8: FISE Participation in the Gross Domestic Product (GDP) 1991 through June 1996 (US$ million) ........ .. .... Agriculture 565.26 545.42 417.92 441.79 426.62 460.59 2,857.60 Industrial Manufacture 883.27 812.76 664.30 610.81 561.80 529.80 4,062.74 Construction 105.24 110.52 91.66 98.28 102.05 104.61 612.36 Transport and Communications 190.97 187.90 147.49 133.66 125.40 122.38 907.80 Commerce Others (2) 676.23 665.34 530.84 490.89 460.05 448.99 3,272.34 1,316.66 1,318.52 1,110.99 1,012.48 924.61 885.43 6,568.69 Total 3,737.63 3,640.46 2,963.20 2,787.91 2,600.53 2,551.80 18,281.53 FISE Investment (approved) Amount 10.55 12.64 14.33 23.35 31.42 25.61 119.58 Percent of GDP 0.28 0.35 0.48 0.88 1.22 1.00 0.65 Exchange rates used: 4.85 5.00 6.12 6.72 7.53 8.12 6.33 US$ 1.00 = C6rdoba (1) Preliminary. (2) Others include fishing, mining, banking and insurance, housing, energy, other services, and general government. Source: FISE, 09/05/96. 34 Table B9: Distribution of Number and Amount of Approved Subprojects by Type of Executing Agency 1991 through July 1996 *Eacutin Agencv Number of oumberf % lotal % Construction firms 116 351 7.39 21.47 17.96 Independent 951 2,605 54.84 76.27 63.79 contractors NGOs 19 535 11.26 3.58 3.00 Others (1) 59 1,258 26.51 18.24 15.26 Total 1,145 4,750 100.00 119.58 100.00 (1) Others include construction foremen. Source: FISE, 009/03/96. Table BIO: Distribution of Number and Amount of Approved Subprojects by Type of Subproject Sponsor 1991 through July 1996 Stoliciting Azenc j iumber uf .'uEhier oIf i Total . Project Pret ' (Ui SS miltion) __- Spons r ___________J____ _ i _ _ _ Ministry of Education 136 1,688 35.54 25.97 21.72 Ministry of Health 25 1,615 34.00 18.20 15.22 Municipalities 143 1,220 25.68 57.06 47.72 NGOs 71 120 2.53 8.00 6.69 Other Govermment 11 107 2.25 10.35 8.66 Organizations Total 386 4,750 100.00 119.58 100.00 Source: FISE, 09/03/96. Table Bll: Number and Amount of Approved Subprojects by Subproject Status 1991 through July 1996 ~~~~~~~~~~ . ....... . ... .. .. . . ...... ...... . .... ... Statu'4 Number of Prnjects 'Ya Ii (IlS milli'.) Approved for execution 4,791 100.00 120.82 100.00 In process of contracting 1,010 21.08 15.73 13.02 Under execution 500 10.44 20.59 17.04 Completed 3,240 67.63 83.24 68.90 Canceled 41 0.86 1.26 1.04 Source: FISE, 08/30/96. 35 Table B12: Types of Subprojects under Contract by Number and Amount 1991 through July 1996 F Sec:or/Sttbpruject Type fNuwberg Peocfnt i Amount Percent jpbproje S TO j (15S millio) IfTotal _ ~~~~~~~~~~~~~~Subplrejects Aon Social Infrastructure 38.00 62.00 Primary and Pre-Primary schools 969 42.27 Secondary Schools 77 7.82 Vocational Training Centers 18 1.78 Health Posts 250 6.38 Health Centers 51 2.79 Hospital Areas 2 0.16 Old-Age Homes and Shelters 14 1.04 Child Centers 14 1.00 Potable Water 37 3.66 Sewerage 22 3.20 Subtotal 1,454 70.10 Economic Infrastructure 7.00 19.00 Drainage 31 3.63 Road Improvement 198 16.29 Bridges 7 0.78 Municipal Markets 6 0.51 Slaughterhouses 14 0.49 Other 5 0.39 Subtotal 261 22.09 Environmental Improvement <1.00 <1.00 Reforestation 15 1.31 Other 0 0.00 Subtotal 15 1.31 Social Services 54.00 18.00 Education Equipment 757 7.47 Health Equipment 364 0.52 Latrines 320 9.94 Preventive Health 87 1.16 Community Organization/Training 450 0.63 Water Committee Training 0 0.00 Feeding/Nutrition Programs 0 0.00 Other 84 0.19 Subtotal 2,062 19.91 Total 3,792 100.00 113.41 100.00 Source: FISE Direcci6n General de Estadistica, 09/06/96. 36 Table B13 Amount and Uses of Funds by Year 1991 through July 1996 (US$ million) . .. .....-. . . .. .... .... . .. .... .... .... 1'YI 192 * J3 19'4 1995 191 * I loal Approved funding 10.55 12.65 14.39 24.67 31.70 25.61 119.57 Project costs 10.55 12.64 14.33 23.35 31.42 14.29 106.58 Administration 0.50 1.23 2.80 2.96 3.24 1.67 12.40 Total disbursements 11.05 13.87 17.13 26.31 34.66 15.96 118.98 Source: FISE Direcci6n Financiera Administrativa, 09/02/96. Table B14: FISE Staffing 1991 through July 1996 C,a,, if, iatio.,, 1991 1992 1993 199 4 1 995 199(. Professiona .. .......... ............... . .. ...... ... ......... .. .. ...... ..... ........... . .. .. ... .. . . .. ....... ... ... .. ..... .. .. .... .. ......... .. .. .. . ... ....... Professional Management 11 12 12 12 12 12 Technical 17 29 49 62 67 72 Subtotal 28 41 61 74 79 84 Support 23 31 45 52 60 62 Total 51 72 106 126 139 146 Source: FISE, 09/05/96. 37 Table B15: FISE Procurement Methods by Type (1993 through 1996) Dirn:ct (:ontracting i .wal .Shupiipii, , Publwic l3idding Total r.-- r .- - T --- '-- --4 - - ---- --- -- - T T-- - Ye .r No or N! o. of munglill N' . orf % ou. uf i IiIoull j No. of Nu. (RI I :Anoi iI Nip. uf ! No. of I Arnomiui!i Projects | ontracts C Prnjectli Cnntrauct% CS Priijects Contractsi CS Projects i Contramth CS !_,_.,n_._i i iiioinis I .j iIlilliUiis milliOIII I t~~ -_..~... . . __._.. ._.i 1993 327 298 24.19 90 89 33.76 74 65 31.84 491 452 89.79 1994 877 564 70.52 53 53 21.04 99 94 69.50 1,029 711 161.06 1995 896 563 76.74 140 140 65.72 121 121 98.00 1,157 824 240.46 January- 146 144 27.77 183 179 46.72 93 73 74.78 422 396 149.47 August 1996 Projected 48 notknown 8.06 290 not 33.04 76 not 72.49 414 not 113.59 August- known known known December 1996 Projected 194 not known 35.83 473 not 79.76 169 not 147.27 838 not 262.86 Total known known known 1996 Medical 17.00 17.00 Equip. Total 2,294 1,569 207.28 756 461 200.28 463 353 363.61 3,515 2,383 771.17 Note: Procurement data was not computerized until 1993. Source: FISE Direcci6n General de Estadistica, 09/04/96. 38 Table B16: Technical Assistance Included in the Project Credit 2434-NI Study Purpabiw as defined afl Status impact - .-..--- . _ ~~~aippraisal/rederined -....-... 1. Coordination of technical Coordination of contracting consultancies identified in Concluded. Twenty-five percent of planned consultancies were assistance (consultants) IDA Credit 2434-NI and IDB loan for the period 08/01/93 contracted; standard procedures for consultant selection to 01/31194. (US$59,128) and contracting were defined; sample contract was approved. Also, terms of reference were established to contract the team leader for the MED and MINSA programs, 2 . Coordination of technical Coordination of other consultancies with the objective of Concluded. Five institutional strengthening consultancies were assistance (consultants) assisting the compliance of FISE's Executive Department completed for FISE; the MED technical assistance regarding the institutional strengthening components for coordinator was hired and five other team members were FISE, NED and M4INSA for the period 07/15/94 to seletctd; a MINSA coordinator was selected, and the 03/15/95. (US$38,400) remainder of the MINSA work team has contracts _____________________________________ __________pending. 3. FISE Accounting Systemn Re-design of the FISE accounting system. (US$2,963) Concluded. The accounting system was evaluated and completely re- ____________ ___________ ___________ ___________designed. 4. Contracting Manual Prepare FISE Contracting Manual. (US$9,500) Concluded. FISE Contracting Manual prepared and in use. 5. Study Tours Executive Department study tours. (US$1,125) Concluded. 6. Implementation of Establish a strategy for the implementation of dispersed, Concluded. Strategy defined for water and saniitation subproject Dispersed, Rural Water and rural water and sanitation subprojects. (US$16,257) implementation. Sanitation Subprojects 7. Municipal Strengthening Develop terms of reference for consultancies in Concluded. Terms of reference were developed. Program participatory mnicro-planning, project management, and automated monitoring and supervision, as part of muiipal strengthening. (US$3,000) Total US$130,373 Source: FISE Direcci6n de Planificaci6n, 09/23/96. FONDO DE INVERSION SOCIAL DE EMERGENCIA FISE AYUDA MEMORIA NICARAGUA Misibn de Cierre Credito AIF / 2434 - NI Managua, 06 de Septiembre de 1996 Entre el 02 y el 06 de Septiembre de 1996, se realizo la misi6n de" Cierre " del credito 2434 - NI integrada por los seniores Willem Struben y Rafael Flores funcionarios del Banco Mundial y la seniora Anna Kathryn Vandever Webb consultora del mismo Organismo. El objetivo de la misi6n fue realizar una evaluacibn retrospectiva sobre la implementaci6n lograda en la ejecuci6n del primer Proyecto de inversi6n social contenida en el credito, a traves de entrevistas, revision de- documentos y reuniones de trabajo. 2. En forma resumida se pueden mencionar los siguientes logros principales obtenidos por FISE: 2.1 La distribucion localizada de los recursos realizada en una forma justa y equitativa en base a los distintos niveles de pobreza existentes en el Pais. 2.2 Una alta capacidad de la Instituci6n para generar y captar recursos extemos en base a necesidades expresadas por la Comunidad, habiendo superado en un 75% al total del financiamiento previsto en el Documento de Proyecto elaborado para la justificaci6n del credito. 2.3 Aumento de la competitividad en los procedimientos de contrataci6n, al incrementar el nuimero de SubProyectos contratados mediante las modalidades de concurso de precios y licitacion puiblica. 2.4 Desarrollo y fortalecimiento del sector privado. 2.5 Administraci6n eficiente y transparente en el destino de los recursos obtenidos. 2.6 Fortalecimniento del proceso de inversion social del Pais, habiendo obtenido un 34% de participaci6n con relaci6n a la inversi6n total realizada en el Pais durante 1995. 3. Entre las debilidades detectadas en FISE alrededor de la ejecucion del credito, podemos mencionar lo siguiente: 1 3.1 Baja participacion de la Comunidad en la identificaci6n, ejecuci6n y sostenibilidad de las inversiones realizadas. Para superar este inconveniente, la Institucion esta inviertiendo en la formulaci6n de Proyectos que incorporen en un mayor grado a la Comunidad. Adicionalmente con el apoyo de Consultorias especificas se esta disefiando la mecanica operativa de un fondo de mantenimiento que ayude inicialinente con el patrocinio de fondos extemos a su formaci6n mas la contrapartida correspondiente del Gobiemo, de tal forma que se vuelva un procedimiento regular Institucional. 3.2 Pocaparticipaci6n de las ONG'S en la ejecucion de Proyectos. Al respecto se han hecho varios seminarios para aumentar la coordinaci6n y deterrinar procedimientos operativos con este tipo de Instituciones que ayuden igualmente a fomentar la relaci6n con las Comunidades. 3.3 Poca observaci6n y medici6n del impacto generado por los Proyectos en el medio ambiente. Sobre el particular con la ayuda de una Consultoria financiada por el cr&dito, se estableceran los prGcedimientos organizativos y operativos de manera que FISE funcione muy pronto en esta linea. 4. Como un logro altamente positivo de otro componente del Proyecto, se puede mencionar el alto grado de fortalecimiento Institucional obtenido en los Ministerios de' Salud y Educaci6n del Pals, ya que en ambas entidades se han logrado fortalecer sus capacidades de planificacion y normacion tecnica, lo que les ha permitido gestionar nuevas operaciones directas con los Organismos de financiamiento. 5. Esta misi6n agradece la cooperaci6n brindada por el personal de FISE, y se emitieron a FISE todas las indicaciones y lineamientos necesarios que le permitan elaborar su informe sobre la evaluaci6n del Credito a ser enviado al Banco Mundial el pr6ximo 13 de Septiembre de 1996. Jose Angel l ez IQRE'CcJo EJECUTJVA Anna Kathryn Vandever Webb Dci ecivo t I, S. E. Consultora Banco Mundial 2 40 Borrower's Contribution to the ICR (Translation) FINAL EVALUATION REPORT ON CREDIT PROJECT 2434-NI (IDA) OF THE NICARAGUAN EMERGENCY SOCIAL INVESTMENT FUND (FISE) (i) Evaluation of the Project's Objectives, Design, Implementation and Operational Experience In February 1992, a draft Social Sector Report was discussed by IDA and the GON. It was used to define the overall policy framework for poverty alleviation and sectoral strategies which would form part of the safety net and of broad reform programs, with special attention to improving quality and efficiency in the provision of primary health, elementary education and nutrition services. In October of that year the GON presented the Social Sector policy letter which summarized short- (1992-1995) and medium-term (1992-1998) policies and strategies as well as details on priority programs, implementation plans, focus and allocation of resources. Thus, the proposed IDA-FISE project (2434-NI) would help the GON in strengthening its poverty alleviation strategy during the adjustment period and assist line ministries in improving their institutional capacities and complete reform programs. In this context, the program to support FISE would complement the activities to be carried out by MED and MINSA. The project's objective was to support the Government in its effort to alleviate poverty and maintain social unity during the economic adjustment period, until line ministries were able to strengthen their institutional capacities and complete reform policies and programs. As far as possible, FISE's operating procedures, procedures and experiences would gradually be transferred to Social Ministries to aid and improve the efficiency and faimess of services delivered. During the project proposal evaluation phase, FISE and IDA agreed to introduce several changes to improve the project implementation phase for the purpose of ensuring consistency and better focus in the context of the overall framework of this reform's social strategy and ensuring greater social unity and support to the poor. It was necessary to avoid overallocation of resources in the city of Managua; to design a promotion campaign to register demands and support the formulation of subprojects in poorer, more distant municipalities, to correct the sectoral and territorial focus of investments (as of June 30, 1992, 52% of investments had been assigned to economic infrastructure), to improve the quality of subprojects, to design and implement the Management Information System and the implementation of subproject quality and social impact studies. In turn, IDA would support and coordinate the raising of sufficient grant funds from the intemational donor community to assist the GON in strengthening safety net programs. The project included four components, only the first of which dealt with direct action by FISE. The other three formed part of actions complementary to FISE and the project's macro objectives. (i) Subprojects totaling the equivalent of 89% of total project 41 cost defined as US$68 million. Subprojects would be distributed as follows: 55% for social infrastructure, 23.5% for economic infrastructure, 20% for social assistance, and 1.5% for training communities to maintain works; (ii) technical assistance to the Nicaraguan Institute of Statistics and Census (INEC) for implementation of the LSMS and an analysis of its results, for a total amount equivalent to 1.3% of total project cost. This survey of living standards would not only help to increase the GON's analytical capacity in the social policy decision-making process, particularly on targeting poverty alleviation efforts and monitoring social conditions, but would have particular benefits in targeting FISE's efforts and assessing their impact; (iii) strengthening of MED and MINSA's ability to plan and prepare subprojects that could be financed by FISE or other sources, with a total amount equivalent to 2.6% of total project cost. The most important result expected from this component was the creation of institutional capacity in both ministries to prepare, select and evaluate subprojects so that the long-term benefit extends beyond the institutional life of FISE; (iv) improvement of the financial management and budgetary aspects of MED and MINSA as well as the refinement of policies dealing with prioritization and planning of expenditures and investments, strengthening of accounting and budget units, improvement of control mechanisms for foreign aid and specific studies to refine the sectoral strategies of both ministries. The total amount allocated to the latter component was equal to 1.2% of total project cost. As one may note, various aspects that are essential to project design and objectives were conceived under the idea of designing FISE as an emergency social compensation instrument with a limnited institutional life, whose experiences, working methods, etc. would be transferred to line ministries when the latter completed their strengthening process. However, FISE's experience shows that this has been a focused social infrastructure process aimed at promoting economic growth with well-being, as a result of rehabilitated or expanded infrastructure, thereby playing an important Government role (fair and redistributive role), as in the provision of basic public services, particularly health, education, water and sanitation which are the bases of the development of a country's human capital. We believe that, in view of FISE's clear comparative advantages in relation to Social Ministries and of the current status of social and State reform programs, FISE's future role in social policy should be re-examined in order to incorporate substantial aspects of poverty alleviation policies, particularly the eradication of extreme poverty. In this sense, the project's initial view of returning to line ministries their instrumental role in social policy should be reviewed. With reforms, the policy-setting and regulatory role and the strategic formulation of policies and programs are essential aspects of social policy leaders and coordinators who should guarantee the consistency of policies and the integration of social programi with State reform programs that support social development and strengthen the ability to govern. Thus, FISE's experiences and its advantages/transparency and efficiency in targeting the territorial and sectoral allocation of resources, operational and administrative efficiency, accountability, participation of governments and local social development agencies in identifying, formulating, executing and maintaining subprojects, introduction of "market" signals through competitive procedures for contracting private enterprises, 42 operational manuals that document the systems, processes, mechanisms, procedures, ex- ante assessment methodology, as well as the introduction of systems to monitor the quality and social/economic impact of subprojects, ability to raise funds and administer management information systems, should be used as dynamic elements of public sector reform to implement (i) specific policies aimed at improving the quality, efficiency and impact of social investment programs; (ii) policies aimed at increasing the capacities of Municipal Governments for participatory micro-planning, administration, management and maintenance of social investments, to gradually transfer important duties and resources still be handled by Ministries and/or Central Government programs but which, if properly transferred to local governments, would increase governability and citizen participation; (iii) social policies for poverty reduction, particularly the eradication of extreme poverty. We believe that FISE could play an important future role in implementing these policies for the consolidation of a poverty alleviation program with long-term human capital development. This new approach would imply greater coordination with Municipal Governments in order to achieve greater impact on local-level social investment and the introduction of new elements to FISE's institutional mission, providing it with the political legitimacy to develop intervention strategies that would allow it, first, to increase the installed capacity both of private organizations and of public institutions dealing with local social issues, in order to strengthen the absorption of resources; second, to strengthen local technical capacity to analyze and use local data on the size, location and characteristics of poverty, as well socio-demographic and sectoral data that would allow the establishment of transparent mechanisms for sectoral and geographic allocation of resources at the local level, more efficient organization of social investment and monitoring of its social and economic impact; and third, to strengthen Municipal Governments' capacity to coordinate and become part of a planning system for municipal social investment in all social programs dealing with poverty alleviation, in order to strengthen their impact and achieve a greater multiplying effect than if they acted alone. This would enable the budgetary integration and streamlining of both local and Central Government resources. (ii) Evaluation of FISE's execution during project evolution and implementation, with special emphasis on lessons learned that may be pertinent in the future Since its start-up in July 1996, FISE's Administrative Council has approved 4,750 subprojects for a total of US$120.0 million, which shows that, out of an effective total demand of US$167.0 million for subprojects, the financing of 72% was approved. This means that FISE has responded efficiently to requests submitted by communities. Moreover, between 1993 and 1996, monthly approvals of subprojects by the Administrative Council totaled US$2.29 million compared to US$0.97 million between 1991 and 1992, which means that during the project's implementation phase, the approval rate was 136% in relation to the pre-project period. Since mid-1992, FISE has used the Poverty Map as the sole mechanism for allocating resources at municipal level. During project implementation, it was planned that 43 20% of investments would be located in municipalities classified as Extremely Poor, 57% in Highly Poor municipalities, and 23% in Less Poor municipalities. As of July 1996, approvals by the Administrative Council show a distribution of 22.30% for Extremely Poor municipalities, 58.33% for Highly Poor municipalities, and 19.37% for Less Poor municipalities. This means that in those municipalities with a greater relative incidence of poverty (extreme poverty) the Council approved US$33.0 per inhabitant, while in municipalities with a lower relative incidence, those classified as medium poor, it approved US$18.0 per inhabitant during the same time period. We believe that the new system of allocating and targeting resources (new World Poverty Map based on the LSMS), whose implementation is scheduled to begin in January 1997, will aid us in increasing the levels of "program incidence". FISE's efficiency and transparency in terms of geographic targeting and distribution of the Program's benefits is also consistent when we look at the spatial allocation of investments, in terms of both coverage and urban-rural location of subprojects: a) During the life of the program, FISE has covered 100% of the country's 143 municipalities. It is important to point out, however, that control mechanisms have been implemented that allow the stabilization of annual indices of coverage for 95% of all municipalities nationwide. b) Between 1995-1996, 65% of subprojects were located in "rural" poverty areas compared to the 1991-1994 period in which 42% of subprojects were located in "rural" poverty areas; we can state that during the past year and a half the strategy of ruralizing FISE's subprojects has been successful. As a result of agreements between FISE and IDA during the project appraisal phase, FISE also successfully made important modifications to its "sectoral investment focus": management reports show that from 1993-1996 FISE financed 20% of its investments in the area of economic infrastructure, compared to 53% between 1991-1992. Between 1995-1996 the education, health, water and sanitation sectors made up 90% of the contracted amounts. During project implementation, FISE has shown an ability to generate growing and - in relative terms - significant employment. With the exception of the special employment generation program for the Atlantic Coast, financed by USAID and managed by an independent executing unit, from 1991-1992 the average annual number of direct and indirect jobs created was 1615, from 1993-1994 it was 7348, and from 1995-1996 (July) it was 13,190. The operational expenses for generating one average job per year were US$536.0, US$392.0 and US$186.0 for each period, respectively. This shows a growing administrative and operational efficiency in FISE's execution. Moreover, in view of the array of subprojects financed by FISE, the amount of investment required to generate one average job per year (direct plus indirect) is US$2292.0. 44 As of June 1996, 71% and 29% of the total amount contracted were executed under the modality of bidding (public or private) and direct adjudication, respectively. It is expected that by December 1997 these overall averages will reach 80% and 20%, respectively, meaning that FISE continues to broaden its strategy of increasing market competitiveness. Accumulated disbursements for projects total US$106.0 million, and accumulated operating expenses total US$12.0 million, equivalent to a ratio of 11%. This is efficient if we compare it to the rest of the public sector and to other, similar institutions in the southern, central and Caribbean regions of Latin America. Moreover, 85%/o of total subprojects approved by the Administrative Council have been effectively delivered to communities. The US$132.26 million in domestic and foreign resources raised for the 1995-1997 period, compared to US$91.86 million for the 1991-1994 period, represents an effective increase of 91%. This means that, as a new government takes office, there is no risk of leaving the institution without sufficient financing since resources available for 1997 will be slightly more than US$65.00 million. Moreover, FISE has managed to consolidate an important institutional strengthening program aimed at line ministries and FISE itself It has also begun a pilot program aimed at increasing the capacity of municipal governments with respect to participatory micro-planning, administration, management and maintenance of education, health, water and sanitation subprojects. The pilot maintenance program, whose design will include the participation of the Central Government, sectors, municipal governments and the community, will at first be aimed at creating a Preventive Maintenance Fund for about 2200 establishments in the primary health care and education network financed by FISE. These inter-institutional development programs are allowing an increase in the program's efficiency and effectiveness and the fine-tuning of processes, systems, mechanisms and procedures in all phases of the subproject cycle, as well as the development and implementation of systems to monitor the quality and impact of subprojects, including new environmental impact assessment methodologies, a new Poverty Map as the sole mechanism for resource allocation, better inter-institutional coordination, new community participation mechanisms, better understanding of the roles of the Central Government, Ministries, municipal governments, beneficiaries and civil society in seeking more sustainable investment alternatives, improvements in the Ministry of Education and Health's sectoral planning and regulatory system, the performance of important processes of coordination, exchange and consultation with local and international social agents (including bilateral and multilateral financial sources) to identify the most important elements for defining FISE's future role in the context of Nicaragua's actual conditions. 45 iii) Evaluation of the performance of duties by IIDA and financial cooperation agencies during project evolution and implementation, including the effectiveness of the relationship among IIDA, FISE and financial cooperation agencies, with special emphasis on lessons learned. We believe that IDA's performance of its duties and the effectiveness of its relationship with FISE are represented by the Program's quantitative and qualitative results. One of the most difficult aspects during the project evolution and implementation phases has been the planning of criteria by the various financial cooperation agencies, in relation to hiring procedures, ex-ante subproject evaluation methodology, community participation, sectoral and territorial resource targeting and allocation, subproject quality and NGO participation. Nearly every agency has different procedures and viewpoints on these issues. In addition, the achievement of some objectives and goals is contradictory. For example, greater community participation in subproject execution is contradictory to the objective of increasing the quality of subprojects; an increase in hiring by means of bidding procedures is contradictory to the objective of streamlining responses or vice versa; an increase in hiring by means of direct hiring procedures is contradictory to the objective of increasing market competitiveness; the use of mechanisms to increase the fairness and distributive impact of the program is contradictory to the objective of quickly responding to excess demands for subprojects by municipalities with greater installed capacity to formulate subprojects; greater levels of sophistication in ex-ante methodologies imply an increase in subproject formulation requirements, which decreases even more the nearly nonexistent capacity for formulation by applicants; greater NGO participation in the formulation, execution and supervision of subprojects requires greater flexibility in hiring procedures, which would imply changes in FISE and IDA guidelines or greater training of NGOs to increase their competitiveness; the latter two are beyond FISE' s scope. During project implementation, the various financial agencies were on one end or another of the above-mentioned contradictions. However, the implementation of operating mechanisms, systems, processes, and procedures and their auditability, as well as the ability to negotiate the proper implementation of corrective measures by FISE, facilitated coordination with IDA and other banks, minimizing the levels of imbalance in the execution of this and other projects. Moreover, the support and high priority given to the FISE program by the GON were also an essential element in the project's success. MAP SECTION REGIONAL POVERTY (1 985) Percentage of households in poverty * Dmpolm 11111 50%- <60% [1 701 - ,80% rp,_ rtnionboundaries m Region boundaries [1111] 60% - 70% 11 >80% (1) Notional capitl Source: INEC bas.don Er-us Soci-D--ogrcdfice Nicra.giense, 1985. 0 Cities and towns The cavrt0 indeo used to clessifl households was baseBd on the presence of one or more riernat/ona' Bonais of he olbingconitons(i)ina qute un i..,o hosn drAmie by dir fl--r nnd/or -1hsJvr r H4R4 Intemational Bundaries rind cei lrgsd tin ovr waste manterials; (ii) crowding if four or more people sleep in the same room;- jA !t70 (ii)loweducation levlsifthereisatleastoneWschool-ge child cot attending school; endtin) high dependency ratio, if therre areatleant Puerto- Cabezo s hoe adindiduaus nenornicaly dependent on a head of hosehold C Ruzs t1 - who hasncot completed primary-school. 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