Report No. PIC3995 Project Name Sierra Leone-Recovery and ro) N Reintegration Project Region Africa Sector Multi-Sector Project ID SLPA40649 Borrower Republic of Sierra Leone Beneficiaries Ex-combatants, internally displaced persons and refugees Implementing Agency Ministry of National Reconstruction, Resettlement and Rehabilitation (MNRRR) Date initial PID prepared June 24, 1996 Date of this PID January 13, 1997 Projected Appraisal Date January 27, 1997 Projected Board Date April 1997 1. Background and Impact of the Civil War. After five years of civil unrest, Sierra Leone is undergoing a transition from war to peace. On March 29, 1996, following free and fair elections, a civilian President assumed took over power from the previous military rulers. At about the same time, the principal rebel group (RUF) announced a cease - fire and began direct negotiations with the Government of Sierra Leone (GOSL). Subsequent to talks in Yamoussoukro, held under the auspices of the UN and the Ivory Coast Government, GOSL and RUF signed a comprehensive Peace Agreement on November 30, 1996. Both sides agreed to a total cessation of hostilities and since have set up a broad- based Commission for the Consolidation of Peace to supervise and monitor implementation of the Peace Agreement. The Government is currently making good progress in re-establishing its administration in rural areas previously not accessible, and the prospects for lasting peace are positive. 2. The social disruption and the economic costs caused by the unrest have been tremendous. The conflict has claimed the lives of several thousand citizens. Out of a total population of 4.7 million, up to 2 million have been internally displaced in the course of the conflict, and approximately 350,000 are refugees in neighboring countries. Substantive damage has been caused to the productive sectors, in particular agriculture and mining, thereby greatly reducing the Government's revenue earning capacity. Significant public infrastructure has been destroyed, or has deteriorated due to lack of maintenance. Delivery of basic social services has largely ceased in rural areas outside the Western Province. 3. Government and Donors' Response. The GOSL has clearly recognized that demobilization and the resettlement and subsequent social and economic reintegration of ex-combatants, internally displaced persons (IDPs) and refugees, are crucial for achieving lasting peace, stability and economic growth. The GOSL, with support from the UNDP Resident Representative / UN Humanitarian Coordinator, has prepared and submitted in September 1996 a Program for Resettlement, Rehabilitation, Reconstruction and Recovery, which was submitted to the international community at a Roundtable Conference in September 1996. The Peace Agreement builds on that program and recognizes 'that there is a socio- economic dimension to the conflict which must also be addressed in order to consolidate the foundation of peace. 4. On-going donor assistance is currently focusing focussing mainly on maintaining food security (USAID, WFP), strengthening the institutional capacity of the MNRRR which is mandated to coordinate reconstruction and resettlement activities (UNDP), and supporting efforts to demobilize ex- combatants. ODA has approved a Pilot Demobilization and Re-Integration Program for up to 3,000 ex-combatants and their families. However, any failure within the immediate post conflict period of (about 2-3 years) to make rapid progress on economic recovery and reconstruction, as well as and social reintegration, could contribute to a renewed cycle of violence and destruction. 5. Post-conflict transition is to be the central theme of the Bank's Country Assistance Strategy (CAS) over the next few years. (see 1/) To this end the proposed ERC would be but one vehicle tofor addressing this issue. At the same time, the existing portfolio has been reviewed and the lending program modified to provide additional resources for reconstruction and reintegration. Thus, the Agriculture Sector Support Project (Cr.15010 Xxxx-SL) is will being formally restructured to provide additional resources to address the needs of the returnees, while the transport (Cr.28950 XXXX-SL) and health sector (Cr.28270 XXXX-SL) projects are flexible enough to take account of the changing situation. The preparation of a the proposed education project will be accelerated. 6. Therefore, the proposed ERC is part of a phased strategy, which is summarized in the following table: Phases of Intervention in Sierra Leone Targets Programs Instruments Events 1 Ex-Combatants Demobilization ODA and other Bilateral donor assistance assistance, ongoing 2 Returnees Reintegration Portfolio Re- UNDP Round /Reconstruction structuring/ ERC Table, IDA pre-appraisal mission 3 The Poor Development/Poverty Investment CG/CAS Reduction projects The first phase is focusing on creating the preconditions for resettlement, notably through demobilization of ex-combatants, starting with the RUF rebels. It is being financed primarily through an ODA pilot operation, the restructuring of bilateral programs and UN resources. Donor involvement in this phase is being solidified through an on-going consultation process in Sierra Leone. The second phase would focus on the reinsertion and reintegration of returnees (ex- - 2 - combatants, the internally displaced, and refugees), based on the GOSL's Resettlement, Rehabilitation, Reconstruction and Recovery Program. This will require additional funding of about US$ 231 million from donors (including the Bank) and was fully pledged at the Geneva Roundtable meeting. The proposed ERC and the funding coming from restructuring our existing portfolio would constitute the Bank's contribution to the financing of this short-term quick action phase. Finally, the third phase would effect a transition from short-term, transitional programs to longer-term development and poverty reduction. This transition will be the focus of the next CAS and could be financed through standard investment projects. 7. Rationale for IDA Involvement. With the signing three weeks ago of a peace agreement signaling the end of the civil war in Sierra Leone, it is our feeling that a unique 'window of opportunity' has opened up for the Government to get Sierra Leone's economic and social development back on track. But this development has also raised expectations about the Government's ability to tackle the enormous post-war reconstruction effort facing the country and to achieve some early successes quickly in (a) resettling much of the large refugee population encamped largely in and around Freetown, (b) repairing on at least a preliminary basis key elements of the country's rural infrastructure, (c) restoring some semblance of rural health care services and educational instruction, and (d) providing material inputs as well as financial and other incentives to Sierra Leonean farmers sufficient to induce them to return to their fields and to resume their agricultural growing activities. 8. If, inter alia, because of lack of timely and commensurate donor assistance, early successes cannot be achieved, we fear that the current high expectations for and overall confidence in the Government will be replaced by cynical skepticism and sullen lethargy on the part of rank and file Sierra Leoneans. Thus, the 'window of opportunity' will have passed. And the ability of the Kabba government to effect a key element in the country's recovery and long term economic potential, namely, motivating the Sierra Leonean people to put the civil war behind them, and to rebuild their local institutions/communities and their productive assets will have been made much more difficult, if not impossible. This is the context in which the Bank's intervention should be seen. 9. IDA is a leading player in Sierra Leone in the agriculture, education, health and infrastructure sectors, and has ongoing credits in all these sectors (with the exception of education where a PPF advance is in place). Furthermore, IDA is also supporting macro-economic reform in Sierra Leone with a Structural Adjustment Credit. IDA is therefore uniquely positioned to support the Government's demobilization and resettlement effort with the proposed Reconstruction and Poverty Reduction Project. Also, IDA involvement is favored by the amount of resources required at short notice, the poverty focus and the need to monitor the macro-economic impact of the process. 10. Program Objectives. The centerpiece of the GOSL's Resettlement, Rehabilitation, Reconstruction and Recovery Program is a two-year Quick Action Program (QUAP) that focuses essentially on demobilization and reintegration of ex-combatants, resettlement of IDPs and refugees, and restoration of basic social infrastructure. Other important elements of - 3 - the QUAP are peace-building and reconciliation, enhancement of security measures, sound macro-economic management and support programs that foster and enabling environment for overall social and economic stability. 11. Project Objectives. The ERC would support the Government's Resettlement, Rehabilitation, Reconstruction and Recovery Program. The project would thereby help those most affected by the rebel war to return to normal productive life. 12. Project Description. The project is expected to have the following components: Support to returnees (ex-combatants, IDPs and refugees) to assist their resettlement and reintegration through the establishment of a temporary safety net (food security) coupled with support for starting economic production and rehabilitation (inter alia, inputs to farmers such as seeds, tools and training and support for rehabilitation of housing, physical and community infrastructure); Restoration of basic social services through labor-intensive small works to restore critical social infrastructure and the provision of medicine, vaccines, books and other needed public health and education supplies; Support for administration, particularly at the regional level most affected by civil war, notably through assistance to MNRRR in efficiently carrying out its mandate. This would include the establishment of a temporary implementation unit with the necessary technical expertise for coordinating and managing all resettlement and reconstruction activities. Additional support may also be provided to the GOSL to reestablish administration at the District level. 13. Project Financing. The total in cost of the project over the next 24 months is are estimated to amount to US$ 16.5 million. The IDA Credit would provide US$ 15.0 million, with the Government and the beneficiaries providing the balance. The Government would contribute in the form of counterpart funding and provision of operational expenditures of the relevant ministries involved, while the communities' contribution would be exclusively in kind. 14. Project Implementation and Donor Coordination. The GOSL has given the newly created Ministry of National Reconstruction, Resettlement and Reconstruction (MNRRR) responsibility for coordinating all related activities. MNRRR is expected to have a finite life and operate mainly through contractual employees, and but will not be directly responsible for implementation. Given the emergency nature of the proposed project, maximum use will be made of existing implementation capacity. Therefore, implementation of sub-projects and specific activities will rest with the implementation partners, mainly non-governmental organizations (NGOs), but also existing project units and line ministries. 15. The project coordination unit (Resettlement and Reconstruction - 4 - Program Office (RRPO)) to be created would work under the guidance of the Ministry's Executive Director in close cooperation with the ODA-financed Demobilization Program Office (DPO), both under the guidance of the Ministry's Executive Director, and liaise closely with line ministries. The personnel of the implementation unit would be competitively recruited on performance based, fixed-term contracts. 16. Overall donor coordination would be provided by the Ministry's Relief Coordination Unit in cooperation with UNDP and UN-DHA. Overall responsibility for development planning would remain with the Ministry of Planning and Economic Development, and line ministries would maintain responsibility for sector policy. 17. Project Design and Sustainability. The MNRRR has been given Cabinet rank to demonstrate the Government's commitment and to give it political clout. However, the 'ministry' itself consists aost exclusively of contractual employees. The focus of MNRRR is the management and monitoring of the Government's Program for Resettlement, Rehabilitation, Reconstruction and Recovery, while implementation would rest with with the designated implementing partners. The rationale is that the GOSL has realized that its civil service does not have the institutional capacity to implement, on its own, a program which is time sensitive and of great logistical complexity. The successful implementation of the program will impact greatly on the confidence in the newly created Government to live up to expectations and, in particular, to honor the spirit of the peace accord. The capacity of the different line ministries to implement such an investment program within a short time period is limited (more so for education and health, less for agriculture and roads), bringing with it the danger that existing inequalities between sectors may be perpetuated. Finally, there is no need to build up permanent capacity within line ministries for what is expected to be a once in a lifetime exercise. 18. Lessons from Previous Bank/IDA Involvement. The project design is based on experience gained, and best practices developed, in a number of IDA financed demobilization and reintegration programs in Sub-Saharan Africa, most notably in Uganda, Mozambique, and Namibia. Successful programs are based on the understanding that demobilization, resettlement and reintegration are not distinct phases but rather a seamless continuum of transition from war to peace. Also, success depends not only on the target groups' financial and human capital, but also on the community's physical and social capital. Essential elements of a such a program include: (i) strong political will and leadership and a commitment to national reconciliation; (ii) classification of target groups to account for their different needs (for example: women and child soldiers, the disabled, IDPs, etc.); (iii) neutral international monitors during demobilization to facilitate trust and confidence building; (iv) a minimum transitional assistance package to provide a temporary safety net during reinsertion; (v) simplicity in delivery; (vi) central coordination by one agency with overall responsibility, balanced by decentralizing implementing authority to the communities and districts; (vii) timely availability of donor resources and close coordination between Government, donors, NGOs and communities; and (viii) a stable macro-economic policy. - 5- 19. Issues and Actions. Any large scale resettlement and reintegration exercise depends on close cooperation between the Government, NGOs, beneficiaries and all major donors. Both in preparing and implementing the proposed Resettlement and Reintegration Project IDA would link closely with other partners, in particular AfDB, EU, GTZ, ODA, UNDP, and UN-DHA, as well as with the NGOs. The identification/pre-appraisal mission, fielded in August 1996, was a joint mission and, similarly, the appraisal mission will comprise and/or collaborate with representatives of the above mentioned organizations. 20. The project design should be flexible to allow the project to respond to changing demand over time. Furthermore, the project should take account of existing institutional structures for implementation - without sacrificing efficiency - and be open for funding from additional donors. The latter issue is being discussed with ODA and AfDB who both are expected to actively participate at appraisal. It is anticipated that the project will be presented to the Board in April 1997, shortly after the CG meeting, and be effective in May 1997. 21. The detailed disbursement and contracting arrangements for the project - key to expeditious implementation - are remain to be determined at appraisal. In Sierra Leone, both the GOSL/EU Micro Projects Program (attached to the National Authorizing Office) and the Sierra Leone Roads Authority (SLRA) have been successful in monitoring and supervising a large number of small contracts, and both share key features such as a large degree of autonomy, professionalism, and private sector salaries. The question will be how to repeat that success: setting up an implementation unit within MNRRR with technical support from the Public Sector Management Support Project (Cr. 24350XXXX-SL) - the current arrangement for the administration of the PPF advance - or, contracting responsibility for disbursement and administration out to the SLRA, or some other arrangement. 22 Environmental Aspects. The proposed project is not expected to have any significant negative environmental impact. However, the return of a large number of IDPs and refugees to their former villages and farms will undoubtedly pose a challenge in environmental terms. As pointed out in Sierra Leone's National Environmental Action Plan (NEAP), an institutional framework for addressing environmental concerns is currently missing. Therefore, the project has been rated a Category A project and thus will require the preparation of an environmental assessment. The detailed requirements will be determined during appraisal. 23. Program Objective Categories (POC). The project falls under the poverty reduction POC. Since the proportion of the poor among the project beneficiaries would be greater than among the general population, and since it contains a targeted poverty reduction program (the support to returnees component), it would therefore also be part of the Program of Targeted Interventions. Women and child soldiers would receive particular attention. 24. Participatory Approach. Overall program framework is based on the results of a series of participatory needs assessments carried out by the Ministry of Planning and Economic Development. Micro-projects to be - 6 - financed under the project would be demand driven, and implementation would be delegated to NGOs to the extent possible. Project Benefits. Direct beneficiaries of the project would be an estimated 10,000 ex-combatants and their families, as well as up to 500,000 IDPs and refugees, whose resettlement will have been facilitated. These direct beneficiaries will also have been provided with assistance such as tools, seeds, materials and training, to increase their economic productivity and to facilitate their economic reintegration. Indirectly, via improved social infrastructure, it is expected that a much larger proportion of the population in the rural areas would benefit from the project. (see 2/) 26. Project Risks. Security is likely to remain an issue for some time, due both to the presence of armed 'bandits' and the possibility of 'spill-overs' from the armed factions in neighboring Liberia. To counter this threat project preparation will be coupled with discussions with other donors with a view to developing parallel security measures (the nature of which remains to be determined). Weak implementation capacity poses another risk, which will be countered to the extent possible by working with existing agencies with a good track record and by working through contractual employees under performance contracts. A third risk is that of poor coordination between actors. This risk is to be mitigated by working very closely with other agencies (notably UNDP and ODA). Finally, there is a risk that the peace process will collapse, in which case the project would be put on hold until the process gets back on track. 1/ The new CAS for Sierra Leone is scheduled for Board presentation on June 17, 1997 on February 18, 1997, together with the proposed Sierra Leone Structural Adjustment Credit II. 2/ Increased security and social stability resulting from this credit would have the additional benefit of permitting the resumption of onchocerciasis control operations in Sierra Leone. This is of regional importance because Sierra Leone is a major source of reinvasion of infected blackflies, and hence transmission of the disease, to other parts of the control program area, notably Guinea, Cote d'Ivoire and even Mali. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending January 24, 1997. - 7 -