Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD1189 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 36.3 MILLION (US$50 MILLION EQUIVALENT) TO THE REPUBLIC OF CÔTE D’IVOIRE FOR A PRODUCTIVE SOCIAL SAFETY NET PROJECT May 6, 2015 Social Protection and Labor Global Practice Africa Region 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 (Exchange Rate Effective March 31, 2015) Currency Unit = Francs CFA (FCFA) FCFA 610.761 = US$1 US$1 = SDR 0.72490558 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ABWP Annual Budgeted Work Plan AFD French Development Agency, Agence Française de Développement AFS Annual Financial Statement BCEAO Central Bank of West African States, Banque Centrale des Etats de l’Afrique de l’Ouest CBTP Capacity Building and Training Plan CNPS National Fund for Social Prevoyance, Caisse Nationale de la Prévoyance Sociale CPAR Country Procurement Assessment Report CPF Country Partnership Framework CPS Country Partnership Strategy CQS Consultant Qualification Selection DA Designated Account DAF Directorate of Financial Affairs EOI Expression of Interest EU European Union FCFA Franc of the African Financial Community, Franc de la Communauté Financière Africaine FGT Foster-Greer-Thorbecke Poverty index FM Financial Management GDP Gross Domestic Product GPN General Procurement Notice GRS Grievance Redress Service IBRD International Bank for Reconstruction and Development IC Individual Consultant ICB International Competitive Bidding ICT Information, Communication and Technology IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report INS National Institute of Statistics, Institut National de la Statistiques IPR Independent Procurement Review IT Information Technology JSDF Japan Social Development Fund LCS Least Cost Selection M&E Monitoring and Evaluation MDG Millennium Development Goals MEF Ministry of Economy and Finance, Ministère de l’Economie et des Finances ME-MEASFP Ministry of State, Ministry of Employment, Social Affairs and Vocational Training, Ministère d’Etat, Ministère de l’Emploi, des Affaires Sociales et de la Formation Professionnelle MIS Management Information System MoF Ministry of Finance NCB National Competitive Bidding NGO Non-governmental Organization NSPS National Social Protection Strategy PDO Project Development Objective PEJEDEC Youth Employment and Skills Development Emergency Project, Projet d’Urgence de Création d’Emploi Jeunes et de Développement des Compétences PEMFAR Public Expenditure Management and Accountability Review PFM Public Financial Management PIM Project Implementation Manual PIU Project Implementation Unit PPR Post Procurement Review PRSP Poverty Reduction Strategy Paper QCBS Quality and Cost-based Selection RFP Request for Proposal RAF Administrative and Financial Manager, Responsable Administratif et Financier SBD Standard Bidding Documents SDR Special Drawing Rights SOE Statement of Expenditures SSS Single Source Selection TTL Task Team Leader UGP Implementation Unit; Unité de Gestion du Projet UHC Universal Health Coverage UNICEF United Nations Children’s Fund US$ United States Dollar WAEMU West African Economic and Monetary Union WB World Bank WDR World Development Report WFP World Food program Regional Vice President: Makhtar Diop Country Director: Ousmane Diagana Senior Global Practice Director: Arup Banerji Practice Manager: Stefano Paternostro Task Team Leaders: Azedine Ouerghi / Heba Elgazzar CÔTE D’IVOIRE Productive Social Safety Net Project TABLE OF CONTENTS Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 2 C. Higher Level Objectives to which the Project Contributes ........................................ 10 II. PROJECT DEVELOPMENT OBJECTIVES ..............................................................11 A. PDO............................................................................................................................. 11 B. Project Beneficiaries ................................................................................................... 12 C. PDO Level Results Indicators ..................................................................................... 12 III. PROJECT DESCRIPTION ............................................................................................13 A. Project Components .................................................................................................... 13 B. Project Financing ........................................................................................................ 21 C. Project Cost and Financing ......................................................................................... 21 D. Lessons Learned and Reflected in the Project Design ................................................ 22 IV. IMPLEMENTATION .....................................................................................................25 A. Institutional and Implementation Arrangements ........................................................ 25 B. Results Monitoring and Evaluation ............................................................................ 26 C. Sustainability............................................................................................................... 26 V. KEY RISKS ......................................................................................................................27 A. Overall Risk Rating and Explanation of Key Risks [SORT] ...................................... 27 VI. APPRAISAL SUMMARY ..............................................................................................28 A. Economic and Financial Analysis ............................................................................... 28 B. Technical ..................................................................................................................... 30 C. Financial Management ................................................................................................ 30 D. Procurement ................................................................................................................ 32 E. Social (including Safeguards) ..................................................................................... 32 F. Environment (including Safeguards) .......................................................................... 33 G. World Bank Grievance Redress .................................................................................. 33 Annex 1: Results Framework and Monitoring .........................................................................35 Annex 2: Detailed Project Description .......................................................................................41 Annex 3: Implementation Arrangements ..................................................................................51 Annex 4: Implementation Support Plan ....................................................................................67 Annex 5: Economic and Financial Analysis ..............................................................................69 Annex 6: Detailed Sectoral Context (Human Capital) .............................................................83 MAP ............................................................................................................................................87 List of Table Table 1: Poverty and human capital indicators by region............................................................... 8 Table 2: Estimated project costs ................................................................................................... 22 Table 3: Overview of Implementation Plan .................................................................................. 43 Table 4: Operating budget of MEMEASP and MSFWC (MSFFE) local structures, 2014 .......... 52 Table 5: Disbursement Categories ................................................................................................ 58 Table 6: Financial Management Action Plan................................................................................ 60 Table 7: Procurement Action Plan ................................................................................................ 62 Table 8: Procurement and Selection Review Thresholds Procurement and Review Thresholds . 64 Table 9: Summary of implementation support and key activities planned ................................... 67 Table 10: Poverty rate by region, 2008 ......................................................................................... 70 Table 11: Household size by poverty line..................................................................................... 71 Table 12: Extreme poverty rate by region, 2008 (percent) ........................................................... 71 Table 13: Population headcount by poverty line, 2008 ................................................................ 72 Table 14: Distribution of population headcount by region and urban versus rural regions, 2008 72 Table 15: Rural population by poverty line and by region, 2008 ................................................. 73 Table 16: Urban population by poverty line and by region, 2008 ................................................ 73 Table 17: Estimated cost break-down for social safety net system development within the proposed project ............................................................................................................................ 74 Table 18: Cost-efficiency analyses over project cycle ................................................................ 75 Table 19: Transfer Size with Respect to Poverty Line and Extreme Poverty line ....................... 77 Table 20: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators....................................................................................................................................... 78 Table 21: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators with Varying Geographical Scope ............................................................................... 80 Table 22: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators: Various scale-up scenarios for Program with Monthly Household Payments of 12,000 FCFA................................................................................................................................. 81 List of Figures Figure 1: Subnational Poverty Rates and Distribution of the Poor, 2008 ....................................... 3 Figure 2: Poverty Incidence in Rural and Urban Areas, 1985-2013............................................... 4 Figure 3: Poverty rate by household size (percent) ........................................................................ 4 Figure 4: Poverty Rates and Education of Household Head........................................................... 5 Figure 5: Shared Prosperity Index for Sub-Saharan African Countries, 2006-2011 ...................... 6 Figure 6: Poverty Rates across different Occupational Categories, 2008 ...................................... 6 Figure 7: Types of Employment by Education Levels in Côte d’Ivoire ......................................... 7 Figure 8: Institutional organization of implementation agency, ME-MEASFP ........................... 52 Figure 9: Geographic distribution of social centers by zone, 2014 .............................................. 53 Figure 10: Geographic distribution of social workers by regional directorates, 2014.................. 53 Figure 11: Overview of project institutional framework .............................................................. 54 Figure 12: Overview of implementation arrangements ................................................................ 56 Figure 13: Overview of flow of funds .......................................................................................... 59 Figure 14: Evolution of poverty rates between 1985 and 2008 (percent) ..................................... 69 Figure 15: Poverty rate in urban versus rural regions, 2008 (percent) ......................................... 70 Figure 16: Cost-transfer ratios over project cycle......................................................................... 76 Figure 17: Program effects on poverty indicators, by target group ............................................. 79 Figure 18: Health and education indicators versus GNI in Côte d’Ivoire and West African region ....................................................................................................................................................... 84 PAD DATA SHEET Cote d'Ivoire CI- Productive Social Safety Net (P143332) PROJECT APPRAISAL DOCUMENT AFRICA Report No.: PAD1189 . Basic Information Project ID EA Category Team Leader(s) P143332 C - Not Required Azedine Ouerghi Lending Instrument Fragile and/or Capacity Constraints [ ] Specific Investment Loan Financial Intermediaries [ ] Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 28-May-2015 30-Oct-2020 Expected Effectiveness Date Expected Closing Date 01-Oct-2015 30-Oct-2020 Joint IFC No Practice Senior Global Practice Regional Vice Country Director Manager/Manager Director President Stefano Paternostro Arup Banerji Ousmane Diagana Makhtar Diop . Borrower: Ministry of Finance Responsible Agency: Ministry of Employment, Social Affairs and Vocational Training (ME- MEASFP) Contact: Mr. Koné Kipéya Brahima Title: Director, Cabinet Telephone No.: 22507806444 Email: kkipeya@yahoo.fr . Project Financing Data(in USD Million) [ ] Loan [ ] IDA Grant [ ] Guarantee [X] Credit [ ] Grant [ ] Other Total Project Cost: 50.00 Total Bank Financing: 50.00 Financing Gap: 0.00 i . Financing Source Amount BORROWER/RECIPIENT 0.00 International Development Association (IDA) 50.00 Total 50.00 . Expected Disbursements (in USD Million) Fiscal Year 2016 2017 2018 2019 2020 2021 Annual 5.80 9.40 11.20 11.20 12.40 0.00 Cumulative 5.80 15.20 26.40 37.60 50.00 50.00 . Institutional Data Practice Area (Lead) Social Protection & Labor Contributing Practice Areas Cross Cutting Topics [ ] Climate Change [ ] Fragile, Conflict & Violence [ ] Gender [ ] Jobs [ ] Public Private Partnership Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits Co-benefits % % Health and other social services Other social services 100 Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) ii Major theme Theme % Social protection and risk management Social Safety Nets/Social Assistance 100 & Social Care Services Total 100 . Proposed Development Objective(s) The project development objective (PDO) is to provide cash transfers to poor households in selected regions and develop the foundations of a social safety net system. . Components Component Name Cost (USD Millions) Cash Transfer "Plus" Program Targeted to Poor Households 38.00 Developing the Foundations of a Social Safety Net System 8.00 Project Management, Monitoring and Evaluation 4.00 . Systematic Operations Risk- Rating Tool (SORT) Risk Category Rating 1. Political and Governance Substantial 2. Macroeconomic Moderate 3. Sector Strategies and Policies Moderate 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Sustainability Substantial 6. Fiduciary Substantial 7. Environment and Social Moderate 8. Stakeholders Moderate OVERALL Moderate . Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects? Does the project require any waivers of Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ ] iii Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for Yes [ X] No [ ] implementation? . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Legal Covenants Name Recurrent Due Date Frequency Steering Committee 30-Sep-2015 Description of Covenant In order to ensure the proper oversight of the Project and coordination among the Recipient’s Ministries and agencies responsible for the Project, the Recipient shall, not later than September 30, 2015, establish and maintain, throughout the period of implementation of the Project, with membership, functions and resources satisfactory to the Association, the Project Steering Committee, which shall be chaired at the ministerial level. Name Recurrent Due Date Frequency Project Implementation Unit 30-Sep-2015 Description of Covenant The Recipient shall, not later than September 30, 2015, establish and maintain, throughout the period of implementation of the Project, within the Ministry of State, Ministry of Employment, Social Affairs and Vocational Training (Ministère de l’Emploi, des Affaires Sociales et de la Formation Professionnelle, ME-MEASFP), the Project Implementation Unit, to be responsible for (i) day-to-day implementation of the Project; (ii) managing all Project activities; (iii) coordinating Project activities, including with existing ME-MEASFP district and community structures; (iv) maintaining Project accounts and producing financial reports; (v) monitoring, evaluating and reporting on Project implementation and impacts; and (vi) organizing Project Steering Committee meetings (the PIU). iv Name Recurrent Due Date Frequency Financial and Technical Staff 30-Sep-2015 Description of Covenant Without limitation upon the foregoing, the Recipient shall, in accordance with the provisions of Section III of this Schedule 2, ensure that the PIU at all times during implementation of the Project maintains adequate resources and staff to implement the Project, satisfactory to the Association, including at a minimum the following staff to support the Project, whose qualifications, experience and terms of reference shall be satisfactory to the Association: (i) not later than September 30, 2015, a Project coordinator, a financial management specialist, a procurement specialist, and an accountant; (ii) as soon as possible thereafter, an internal auditor, a monitoring and evaluation specialist, and a communications specialist; and (iii) such other technical specialists and functions as needed Name Recurrent Due Date Frequency Mid Term Review 01-Oct-2018 Description of Covenant Not later than three (3) years after Effectiveness, and if possible prior to the second phase of Cash Transfers, undertake, through an independently recruited entity acceptable to the Association, as well as the Association’s Project team, a comprehensive mid-term review and evaluation of the Project to assess and exchange views on all matters relating to the progress of the Project, the Recipient’s performance of its obligations under the Financing Agreement, and the performance of the various implementation bodies at the central, district and community levels. Name Recurrent Due Date Frequency Mid Term Review 01-Oct-2018 Description of Covenant Following the mid-term review, promptly and diligently take any and all corrective measures necessary to remedy any shortcoming noted in the implementation of the Project, or to implement such other measures as may be required in furtherance of the Project’s objective. Name Recurrent Due Date Frequency Accounting Software 01-Dec-2015 Description of Covenant Within two (2) months following the Effective Date, acquire and install accounting software for the Project and provide training for its users. Name Recurrent Due Date Frequency Public Accountant and Financial 01-Jan-2016 controller appointment Description of Covenant Within three (3) months following the Effective Date, cause the Ministry of Finance to assign one public accountant and one financial controller to the Project in compliance with Instruction 192. v Name Recurrent Due Date Frequency Internal Audit Function 01-Jan-2016 Description of Covenant Within three (3) months following the Effective Date, cause the ME-MEASFP to enter into a written agreement with the Inspection Générale des Finances (IGF) to manage the internal audit function of the Project and conduct periodic reviews of Project transactions. Name Recurrent Due Date Frequency External Auditor 01-Mar-2016 Description of Covenant Within five (5) months following the Effective Date, appoint an external auditor for the Project. . Conditions Source Of Fund Name Type IDA Disbursement Disbursement Description of Condition Notwithstanding the provisions of Part A of Section 2, Schedule 2 of the Financing Agreement no withdrawal shall be made: (a) with respect to Eligible Expenditures under subpart (a) of Category (1), unless the principal elements for establishing the foundation of a national social safety net system using Cash Transfers as basis have been completed in a manner satisfactory to the Association, including (i) a targeting system for Cash Transfers; (ii) a household registry; (iii) a payment system; and (iv) a management information system. Source Of Fund Name Type IDA Disbursement Disbursement Description of Condition Notwithstanding the provisions of Part A of Section IV, Schedule 2 of the Financing Agreement, no withdrawal shall be made: (b) With respect to Eligible Expenditures under subpart (b) of Category (1), unless principal aspects of Phase 1 have been reviewed and any relevant adjustments thereto made in a manner satisfactory to the Association. Team Composition Bank Staff Name Role Title Unit Azedine Ouerghi Team Leader (ADM Program Leader AFCF2 Responsible) Maurice Adoni Procurement Specialist Senior Procurement Specialist GGODR vi Jean Charles Amon Kra Financial Management Senior Financial Management GGODR Specialist Specialist Andrea E. Stumpf Counsel Lead Counsel LEGCF Faly Diallo Team Member Financial Officer WFALA Hebatalla Elgazzar Team Member Senior Economist, Human GSPDR Development Oumou Coulibaly Team Member Team Assistant AFCF2 Patrick Premand Team Member Senior Economist GSPDR Peter Ivanov Pojarski Team Member Senior Social Protection Specialist GSPDR Lydie Anne Billey Team Member Program Assistant GSPDR . Locations Country First Location Planned Actual Comments Administrative Division Cote d'Ivoire Vallee du Vallee du X Bandama Bandama Cote d'Ivoire Zanzan Zanzan X Cote d'Ivoire Worodougou Worodougou X Cote d'Ivoire Denguele Denguele X Cote d'Ivoire Bafing Bafing X . Consultants (Will be disclosed in the Monthly Operational Summary) Consultants Required? Consulting services to be determined vii CÔTE D’IVOIRE Productive Social Safety Net Project I. STRATEGIC CONTEXT A. Country Context 1. The proposed project is designed to lay the foundations and initiate implementation of a national social safety net system for Côte d’Ivoire for promoting poverty reduction. The project will be financed by an IDA credit in the amount of US$50 million and will be implemented over a five year period, from 2015-2020. The project is intended to support implementation of the government’s poverty reduction and growth objectives in line with its National Development Plan (NDP) for 2012-2015 and its new National Social Protection Strategy (NSPS), adopted during May 2014. The project design reflects lessons learned from productive social safety net systems in other countries such as in Brazil, Ethiopia and Burkina Faso, and includes a social safety net with accompanying measures to encourage investment in human capital and livelihoods. 2. A scaled-up, well-targeted social safety net system would be affordable and could be financed directly through governmental revenues in Côte d'Ivoire in the long-term based on the positive economic outlook anticipated. A potential future, scaled-up program covering all 507,477 extreme poor households in rural regions would cost US$136 million annually, or 0.58 percent of Gross Domestic Product (GDP) (as described in detail in the rest of this document). Such a program would reduce the extreme poverty headcount by 25.4 percent, the extreme poverty gap by 35 percent and the severity of extreme poverty by 42.2 percent. Alternatively, a program covering all 608,201 extreme poor households in the entire country (including urban and rural regions) would cost US$163 million annually (0.7 percent of GDP). This program would be expected to lead to a 30.5 percent reduction in the incidence of extreme poverty, a 41.1 percent reduction of the extreme poverty gap and 49.1 percent of the severity of extreme poverty. This level of public spending on a scaled-up program, the coverage and transfer amount would be in line with well-performing programs elsewhere in the world, such as Brazil's Bolsa Familia. 3. After decades of strong economic growth, from 1999 to 2011 Côte d’Ivoire experienced a series of violent political and economic crises which culminated in the post- election crisis of November 2010. The crises combined with poor governance led to a widespread deterioration of living standards. Economic growth has been among the lowest in Sub-Saharan Africa (SSA) (on average -1.6 percent between 1999 and 2003; 1.3 percent between 2004 and 2008, and -0.8 percent from 2009 to 2011). The GDP growth rate declined sharply (- 4.7 percent in 2011). The most recent crisis followed the presidential election of November 2010 and lasted until April 2011. It took a heavy toll on lives and on the domestic economy. Although comparable micro-data on employment are lacking, there are indications that the informal sector has gained increased prominence with the share of the modern wage sector in the economy decreasing in the last decade. However, since mid-2011, the country has regained political stability and is now taking the opportunity to tap its considerable social and economic potential. 1 4. Economic recovery is proceeding at a rapid and sustained speed. The country has embarked on an ambitious and comprehensive program of reforms and investments aimed at leveraging its considerable endowments of human capital, natural resources, and infrastructure to spur robust, broad-based and sustainable economic growth, with the active engagement of the international donor community. Major reform efforts including key policy and institutional changes in the cocoa sector boosted producers’ incomes and enabled the country to attain Heavily Indebted Poor Countries (HIPC) Completion Point and as a result obtain significant debt relief in June 2012. Since the end of the post-election crisis in 2011, economic growth has resumed through sound macroeconomic management combined with public and private investments. The GDP growth rate was 10.7 percent in 2012 and decreased to 9.2 percent and 8.5 percent, respectively, in 2013 and 2014. Public investment in infrastructure (transport, energy, health, and education) and private investment in mining, agriculture, energy and housing have boosted domestic demand. The agricultural sector which accounts for 22 percent of the GDP remains one of the key drivers of the economic recovery. Inflation has remained low, stable and resilient to global price volatility. Now, consumer price inflation stands at 1.6 percent, below the West African Economic and Monetary Union (WAEMU) target of 3 percent. Fiscal outcomes have continually improved since 2011 as a result of sustained improvements in revenue collection and tight expenditure control. The overall fiscal deficit remained at 2.3 percent of GDP in 2014 and 2013, down from 3.2 percent of GDP in 2012 and 5.6 percent of GDP in 2011. 5. Reforms are also improving overall governance and the business environment for attracting private investments. In 2014, Côte d’Ivoire was among the top 10 reformers in the world in this area according to “Doing Business”. Macroeconomic prospects for 2015 are considered positive and real GDP growth is expected to again reach 8.0 percent in 2015 and 8.0 percent in the medium-term. Efforts need to continue to transform strong growth rates into widespread income generation, poverty reduction, improvements in social indicators and reduction in the high levels of unemployment. 6. The Government recognizes the need to accelerate economic growth and promote shared prosperity to increase investment in human capital for the neediest populations. Increases in cocoa and coffee international market prices have benefited Ivoirian farmers through Government measures to apply a farm-gate price and civil service salaries were increased in 2014. A rebound in economic growth as well as public investment in basic social services was estimated to have impacted on poverty reduction. Poverty levels were estimated to have come down to the 2008 level after a spike in 2011 following the post-election crisis. Although urban poverty may have decreased somehow due to the recovery of the services sectors, rural poverty may have worsened in line with the performance of the agriculture sector. A household survey currently under implementation will provide updated information of household welfare and poverty profile and its determinants. Preliminary results are expected by July 2015. B. Sectoral and Institutional Context 7. Poverty in Côte d’Ivoire is predominately rural and marked by wide regional disparities. In terms of the share of the poor, rural regions accounted for 68 percent of the poor as of the most recent survey data for 2008, down from 72 percent in 1985 (see Box 1 regarding data availability). Although the share of the poor in urban regions has increased and was 32 percent as of 2008, the poor still remain concentrated in rural regions and poverty varies widely 2 across regions (Figure 1). Overall, poverty in the southern regions is on average one third the rate found in the northern regions, or 25 percent as compared to 69 percent, respectively. 8. Larger and younger Ivoirian households are more generally poorer. The likelihood of being poor increases as the number of young children increases, the lower the educational level of the head of the household, among the elderly and among persons with disabilities. No observable differences have been found between male and female- headed households; however, widows and divorced females who are household heads are generally poorer than their male counterparts. The incidence of poverty among divorced female-headed households is almost twice as high as for single female-headed households, consistent with trends over time (Figures 2 through 4). Figure 1: Subnational Poverty Rates and Distribution of the Poor, 2008 Source: World Bank (forthcoming), Côte d’Ivoire Systematic Country Diagnostic (SCD); Staff estimates based on Household Budget Survey (ENV) (2008). 3 Figure 2: Poverty Incidence in Rural and Urban Areas, 1985-2013 Source: Source: World Bank (forthcoming), Côte d’Ivoire Systematic Country Diagnostic (SCD); World Bank Poverty Assessment, 2011, and staff estimates. Figure 3: Poverty rate by household size (percent) 0.8 Poverty Headcount Ratio 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 1985 1993 1998 2002 2008 1 to 4 5 to 9 10 to 14 15 and above Source: World Bank staff estimates, Household Living Standards Survey, Institut National de la Statistique (INS), 2008 4 Figure 4: Poverty Rates and Education of Household Head .4 .3 .2 .1 0 0 5 10 15 20 Years of education of HH head 1985 1993 1998 2002 2008 Source: World Bank Poverty Assessment, 2011; World Bank staff estimates. 9. Welfare among poorer households has been more negatively affected by recent shocks than that of the general population. In Côte d’Ivoire, average consumption per capita among the bottom 40 percent of the income distribution has been decreasing at an annualized rate of -2.6 percent between 2002 and 2008, a rate almost three times greater than that of the general population (a rate of -0.9 percent). Furthermore, the growth incidence curve for this period indicates that the bottom decile has experienced the greatest losses to consumption. As a result, Côte d’Ivoire is a lagging performer in Africa with respect to the shared prosperity index (Figure 5). 10. Poverty is exacerbated by Côte d’Ivoire’s employment profile in low-productivity self-employment. Most of Côte d’Ivoire’s employment is found in low-productivity occupations, notably agricultural and non-agricultural self-employment, which also bears the highest poverty rates (Figure 6). Labor-force participation is high and formal unemployment relatively low1. In February 2014, 76.8 percent of the adult population was in the labor force and only a small share of the labor-force was unemployed (6.7 percent). Overall, the vast majority of adults in the labor force are engaged in some type of work, although mostly in low-productivity occupations. Indeed, only 17.4 percent of employed individuals hold wage jobs, more than half of these wage jobs remain informal with salaries below the formal minimum wage. By contrast, 46.9 percent of the employed population is self-employed in agriculture, and 29.3 percent is self- employed in non-agricultural activities. The latter also tend to be the least educated (Figure 7). This high concentration of employment in low-productivity occupations comes with low earnings, yields a high vulnerability to shocks, and provides little opportunity to alleviate poverty or promote shared prosperity. 1 Employment statistics are presented based on the International Labor Organization (ILO) norms that allow comparisons of trends over time. 5 Figure 5: Shared Prosperity Index for Sub-Saharan African Countries, 2006-2011 Source: World Bank Systematic Country Diagnostic (SCD), 2015. Global Database of Shared Prosperity and calculations based on PovcalNet (October 2014) for Côte d’Ivoire. Figure 6: Poverty Rates across different Occupational Categories, 2008 0.600 0.500 0.400 0.300 0.200 0.100 0.000 1985 1993 1998 2002 2008 Professionals Service & sales Farmers craft trade Source: World Bank staff estimates, Household Living Standards Survey, Institut National de la Statistique 2008. 6 Figure 7: Types of Employment by Education Levels in Côte d’Ivoire 60.0% 40.0% 20.0% 0.0% No education Primary Primary Lower Upper Post-secondary incomplete complete secondary secondary complete complete Self agriculture Self non-agriculture Wage non-agriculture Source: World Bank staff calculations, 2013 National Employment Survey. Box 1 Data availability in Côte d'Ivoire The preparation of the proposed project builds on a range of available data sources, including household expenditure surveys, demographic and health surveys, employment surveys, as well as census data. Availability of recent data has suffered from the period of crises in Côte d’Ivoire and recent disaggregated data on poverty and population are not yet available at the time of project preparation. Specifically, household expenditure survey data for the use of poverty analysis are available for the years 1985, 1993, 1998, 2002 and 2008. As such, poverty data is available only through 2008. A new household expenditure survey was conducted during February and March 2015 and results are expected to be made available by July 2015. In addition, the latest disaggregated population census data available for Côte d’Ivoire is from 1998. The 1998 census has been the basis on which population projections were made, including the analysis of regional poverty statistics. New census data was collected in 2014. While preliminary general results were released in December 2014, disaggregated data and additional analysis will not be available until July 2015. Given data availability, the project appraisal document for the proposed project, including the economic analysis, has been prepared based on 2008 household survey and detailed population projections from the 1998 national census. Analysis of this data already provides some clear information on a range of project design parameters, relative magnitudes and trends which are assumed to have remained largely constant. As part of the system-building activities to be undertaken in the first year of project implementation, a detailed targeting manual will be produced. As part of this manual, the economic analysis will be updated based on the 2015 household survey data and 2014 national census. A detailed geographical targeting approach and household targeting formula will also be prepared. As such, the final targeting decisions will be made on the latest available data and will define the optimal geographical targeting to maximize the potential poverty impact of the project. Employment surveys were collected in 2013 and 2014 (including with World Bank support), and these data provide a recent overview of the employment situation as described in the country context. The context description also builds on recent data on human development from the 2012 DHS and MIC surveys. Source: World Bank staff compilation. 7 11. Demographic pressures also contribute to elevated poverty in Côte d’Ivoire in terms of a rapidly growing and young population, similar to neighboring countries. The population is young, with 41 percent younger than the age of 15. Nearly half of the population is urban, with Abidjan housing close to 39 percent of the total urban population. Côte d’Ivoire’s annual population growth rate is estimated to be 2.5 percent per year according to the 2014 population census. This high growth rate is due to the combined effect of a declining infant mortality rate (68 per 1000 birth as of 2012), high fertility rate (an average of 5 children as of 2012) and a high level of international migration (24.2 percent of the population was not Ivorian based on the 2014 population census). Due to the young structure of the population, the dependency rate is high and estimated to be 78.6 percent. With one out of two females being of childbearing age, the population is expected to continue to grow and remain young over the coming decades, increasing the burden on Côte d’Ivoire’s social and economic infrastructure. For example, at least 1,000 new classrooms a year will need to be created to keep pace with the increase in the number of school-age children. 12. Côte d’Ivoire will not be able to achieve most of the Millennium Development Goals (MDGs) by 2015, particularly in terms of education and health in rural regions and across gender (Table 1). Côte d’Ivoire will need to significantly improve access to and quality of education and health services including family planning and water and sanitation as well as gender parity. Malnutrition is also higher in rural regions; 35 percent of children in rural regions are stunted as compared to 21 percent in urban regions as of 2011. Table 1: Poverty and human capital indicators by region Regions Zones Chronic Malnutrition, Net primary Share of food- poverty height-for-age enrolment rate insecure rate (% less than (%) households (%) -2 SD*) Girls Boys (%) NORTH North (Korhogo) 77.2 39.3 49.9 50.8 24.0 Northwest (Odienné) 57.8 31.8 52.6 68.8 22.0 Northeast 54.7 39.3 66.4 64.9 30.0 (Bondoukou) WEST West (Man) 63.2 34.2 64.7 76.1 23.0 CENTER Center 56.0 30.2 62.3 65.9 15.0 (Yamoussoukro) Center-North 57.0 28.5 66.8 72.1 8.0 (Bouaké) Center-West (Daloa) 62.9 29.7 63.1 68. 12.0 Center-East 53.7 24.6 65.2 69.1 4.2 (Abengourou) SOUTH South 44.6 29.0 72.3 81.5 21.0 Abidjan 21.0 17.9 73.1 80.4 4.9 Southwest (San 45.5 29.2 54.1 72.9 25.0 Pedro) NATIONAL Rural 62.5 34.9 61.1 68.2 Urban 29.5 20.5 69.3 77.8 National 48.9 29.8 61.0 66.1 18.2 Sources: Poverty data: INS Household Living Standards Survey, 2008; health and education data: UNICEF MICS, 2011-2012. Food insecurity: National Food Security Survey (EASA), 2009. *SD = standard deviations points; 8 malnutrition defined as percentage of children under age 5 whose height for age (stunting) is more than two standard deviations below the median for the international reference population ages 0-59 months. 13. Despite public investment in basic services, economic barriers remain a major constraint to accessing education and health services. High cost and distance to schools have a strong impact on enrollment and dropout, with household spending on education fees reaching as high as 34 percent of household expenditure2. For maternal health services, recent survey data indicate that 67 percent of respondents cited cost as the major barrier3. This figure rises to 83 percent in rural regions as compared to 64 percent in urban Abidjan. Unless alleviated through both income support and increased public investment, these disparities are likely to constrain intergenerational mobility across the welfare ladder. 14. A limited number of social protection programs exist in Côte d’Ivoire which have had a marginal impact on poverty reduction, and there is no social safety net system in place. The largest social protection programs are contributory programs, i.e., pensions and other related, limited social insurance schemes falling under the national pensions fund for private formal sector workers (National Fund for Social Prevoyance, Caisse Nationale de la Prevoyance Sociale, CNPS) and the Fund for Civil Servants (Caisse Generale de Retraite des Agents de l’Etat, CGRAE). The pension funds have very limited coverage at about 10 percent of the population as of 2014, benefiting only civil servant workers and workers in the formal private sector. Prior to 2012, the CNPS system had been running a structural deficit of US$630 million due to the high statutory payouts and limited revenues. Since the implementation of largely parametric reforms in 2012, the CNPS is no longer running a deficit as of 2014, with a boost in reserves. These measures included an increase in the retirement age for the private sector from 55 to 60 years, an extension in the minimum length of service to receive a standard pension from 10 to 15 years, gradual increases in the contribution rate from 8 percent in 2012 to 13 percent in 2013, and a shift in employer-employee financial risk-sharing whereby the risk shared by employers fell from 60 to 55 percent while that of employees increased from 40 to 45 percent. The Government also adopted additional measures related to the contribution rate to the pension fund from civil servants. The Government aims to further reforms on pensions regarding capitalization and coverage, targeting to reach 30 to 50 percent of the population by 2020. 15. Non-contributory social assistance measures are limited. Interventions have been generally prompted by temporal events, largely driven and funded by donors and tend to use a varied number (and often inconsistent) of administrative delivery instruments (e.g. identification and eligibility criteria, and targeting methods). Furthermore, several institutions dealing with social service delivery such as health and education use a different set of instruments to target the poor. This includes subsidized healthcare services and school feeding and education bursary, etc. With the exception of two emergency Bank funded labor intensive public work programs and a diminishing World Food program (WFP) school feeding, there are no well-designed nationally known and functional non-contributory safety net programs per se. The Government runs a social assistance program, called “les Secours Sociaux”. Started in 1967, the program provides needy persons a one-time financial assistance. Procedures are highly centralized in Abidjan and the program covers a very limited number of persons (only 220 persons in 2011). 2 Country Status Report, 2009. 3 UNICEF (2011). Demographic and Health Survey (DHS): Côte d’Ivoire. 9 16. As a result, the lack of social protection risk-mitigating mechanisms in Côte d’Ivoire leaves most poor households highly vulnerable to shocks. In sum, Côte d’Ivoire has a narrow social protection framework comprised mainly of contributory social insurance schemes (primarily pensions and health insurance), which covers less than 10 percent of the population and does not reach the poorest. Côte d’Ivoire does not have a system of non-contributory safety net programs at the institutional level which routinely collect information on poor households in a single, unified household database, target interventions systematically in a clear and transparent manner using well-defined eligibility criteria, or delivers income support or productive benefits to the extreme poor for supporting consumption and, in the long-term, improving living conditions. Most Ivoirians therefore only rely on informal safety nets, such as “mutuelles” and various types of associations, or just family and neighbors; a system that tends to collapse in times of covariant shocks. As a consequence, existing mechanisms have a marginal impact on poverty reduction, do not contribute to shared prosperity and can hardly be counted on in case of crises. 17. Therefore, building a social safety net system can help lay the foundations for channeling much-needed resources to the poorest households. International experience has demonstrated that targeted, well designed social safety net systems can mitigate poverty, reduce inequality, encourage investments in human capital and improve productivity or livelihood diversification. Cash transfer programs in countries as diverse as Brazil, Ethiopia, and Bangladesh have demonstrated positive impacts these programs have on poverty and human capital in the short-term, while also mitigating the intergenerational transmission of poverty4. As a global leader in social safety net systems, the World Bank is well positioned to assist the Government of Côte d’Ivoire in implementing a cost effective and well-targeted safety net system. C. Higher Level Objectives to which the Project Contributes 18. The project is fully aligned with the World Bank Group’s twin goals of reducing extreme poverty and boosting shared prosperity. The project is also in line with the Country Partnership Strategy (CPS) progress report, the Bank's new Social Protection and Labor Strategy 2012-2022 and the Africa Strategy. The Progress Report of the CPS (April 2013) recommends that the Bank strengthens its engagement in the regions of jobs, social service delivery, demography and disability and development. The currently under preparation Systematic Country Diagnosis (SCD) lists as part of the second main pathway to attaining inclusive growth the need to build human capital by increasing allocations and efficiency in education and health spending and social protection. 19. The project is also well coordinated with the Bank engagements in the social sectors and service delivery. In the health sector, the Government, with support from a Bank-financed 4 For a review of evidence, see: Fiszbein and Schady (2009). Conditional Cash Transfers; Reducing Present and Future Poverty. Washington DC: World Bank, and IEG (2011). Evidence and Lessons Learned from Impact Evaluation of Social Safety Nets. Washington DC: World Bank. 10 project, is developing results-based financing mechanisms for service delivery and Universal Health Coverage (UHC). The health project will rely on the proposed safety net project to develop a national targeting system to be used to reach the poor with services such as the UHC. Similarly, Côte d’Ivoire is participating in a regional Bank funded project aimed at empowering women and accelerating the demographic dividend. This project includes components of direct relevance to the social protection agenda e.g. promoting girls education and youth income generation as well as maternal health and family planning. The proposed Safety Net Project will also have direct links to the income generation and skill development components of the Bank funded youth employment project. 20. The proposed project is also in line with the Bank’s Social Protection and Labor Strategy and the Africa Strategy in terms of reducing vulnerability, building resilience and promoting productive opportunities. Providing cash transfers to improve basic household consumption and address demand-side financial barriers to access social services is also consistent with the World Bank's global and regional social protection strategies, as well as the Africa strategy in terms of reducing vulnerability and improving resilience for the poor. 21. The NDP calls for increasing access to social services for vulnerable groups, including women, youth, and persons with disabilities. The NSPS aims to improve social protection for the most vulnerable to mitigate against economic shocks and to improve their resilience in the long term. The NSPS is organized around four main strategic pillars: (a) improving living standards for poor and vulnerable households; (b) improving access to basic social services and investing in human capital; (c) strengthening social action against violence, abuse, exploitation, discrimination and exclusion; and (iv) extending contributory, formal social insurance. The Government has particularly noted Brazil’s Bolsa Familia model as an example for implementing the NSPS in terms of reducing inequality by promoting investment in human capital, increasing consumption among the poor and supporting livelihoods. The proposed project is directly linked to the first two pillars of the NSPS which focus on the improvement of living standards and human capital investment through the establishment of a social safety net system. 22. Furthermore, the proposed project is well coordinated with activities supported by several donors. In addition to Government, several donors, notably United Nations Children’s Fund (UNICEF) (which supported the development of the NSPS) and WFP as well as specialized Non-Governmental Organizations (NGO), are also supporting the social protection sector: UNICEF through actions to improve access to education, health, water and sanitation, and the WFP with school feeding and cash/food for work programs. The proposed project will lay the foundation for consolidating and coordinating relevant social safety net interventions under a national system moving forward, including establishing a national registry and improving targeting mechanisms to reach the poor and vulnerable. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 23. The Project Development Objective (PDO) is to provide cash transfers to poor households in selected regions and develop the foundations of a social safety net system. 11 24. Specifically, the project will support the establishment of key operational instruments to be used to provide regular and predictable cash transfers to poor households. This will include an objective targeting system with a registry, a reliable payment mechanism, and a sound monitoring and evaluation system as well as relevant implementation manuals. These instruments will be tested on a first batch of 5,000 households, evaluated, adjusted as needed and applied to the remaining households to be covered by the project. B. Project Beneficiaries 25. Primary beneficiaries of the proposed project are poor households with children less than 15 years of age and those with pregnant women in selected regions (meaning selected departments and districts) located in the central, western and northern regions of Côte d’Ivoire who will receive income support in the form of cash transfers and accompanying measures. Secondary beneficiaries are households in beneficiary villages who will not receive cash transfers but will benefit from accompanying measures 26. It is expected that the project will benefit a total of approximately 35,000 primary beneficiary households who would receive cash transfers, accompanying measures and a unique identification number for the national household registry, or 210,000 individuals based on an average household size of 6. Secondary beneficiary households are households who would benefit only from accompanying measures and also receive a unique identification number for the national household registry (e.g. 105,000 households). C. PDO Level Results Indicators 27. The main indicators that will be used to monitor progress in reaching the PDO are the following: (a) Number of beneficiaries of safety net programs (core sector indicator): number of households receiving cash transfers (target: 35,000); (b) Number of individual beneficiaries of cash transfers, of which female (target: 210,000; 50 percent); (c) Number of households registered with a unique identification number in national registry (target: 105,000); (d) Number of individuals receiving accompanying measures on productivity related to human capital and livelihoods, of which female (target: 210,000; 50 percent). 12 III. PROJECT DESCRIPTION A. Project Components 28. The proposed Project has three components: (a) Cash Transfer “Plus” Program targeted to poor households combined with accompanying measures; (b) Developing the foundations of a Social Safety Net System; and (c) Project management, monitoring and evaluation. 13 Component 1: Cash Transfer “Plus” Program targeted to poor households (estimated US$38 million equivalent from IDA). 29. This component will support instituting the main benefits package as part of a national social safety system. This component finances cash transfers, goods and consultant services for building this program, comprising two sub-components: (a) cash transfers to targeted poor households; and (b) accompanying measures to promote investments in human capital and livelihoods. Sub-Component 1.1: Cash Transfers targeted to poor households 30. Enrollment. Households will be enrolled in phases over the course of the project to allow for testing the cash transfer delivery system and adjusting as needed prior to broader roll- out to more households. The following phases of cash transfer payments will be adopted: (a) Phase 1 with pilot cohort. It is expected that the first group of beneficiaries (i.e., 5,000 households) would start receiving transfers over the second year of the project. (b) Evaluation of pilot cohort. Prior to further enrolment, key aspects of the first phase of implementation would be reviewed and adjustments made as needed prior to roll-out. The main regions that will be evaluated include: (a) whether the household registry is providing complete information on beneficiaries or whether adjustments to data collection are needed; (b) whether the targeting protocol is being followed or whether adjustments are needed to improve implementation; and (c) whether cash transfer payments are reliable and predictable on a quarterly basis or whether contracts with payment agencies need to be adjusted. (c) Phase 2 for roll-out. Enrolment of the second and remaining group of beneficiaries (30,000 households) would then start during the third year of the project. 31. Targeting approach. A new social safety net targeting approach for the Ivoirian context will be developed, tested and refined as a core component of the project. The process for targeting will be piloted, tested and complemented by comprehensive training prior to roll-out, particularly with regards to survey materials and communication with communities and policy makers about the process. 32. The targeting approach will be based on three complementary types of targeting. This approach includes: (a) geographic targeting to select the main target regions with the highest poverty rates and the highest barriers to access to basic social services; (b) a simplified proxy-means testing at the household level to identify the poorest households within each community; and (c) community-based validation with stakeholders representative of the broad range of social, ethnic, religious, and economic groups to inform the list of target beneficiaries and to ensure that the process will not lead to exacerbating possible conflicts at the community level. A manual will define the specific geographical, household and community-level targeting process based on testing and validation and will be supported by extensive training and an information campaign. 14 33. Program coverage. The cash transfer program will target the poorest households in predominately rural regions in the central, northern and western regions of Côte d’Ivoire. These regions have been chosen as they are characterized by: (a) higher-than-average poverty rates; (b) weak access to basic services in terms of health and education, as indicated by poor use and high cost barriers to maternal health services, low school enrolment, and high illiteracy; and (c) poor child malnutrition in terms of height-for-age. Within these regions, the departments and communes to be targeted will be determined based on available data using a transparent procedure to be detailed in the targeting manual. 34. Based on key assumptions, the project is expected to reach approximately 35,000 households over the course of its implementation period. This target is based on the estimated cash transfer amounts and a budget envelope for cash transfers of approximately US$33 million (out of a total of 38 million under component 1). The first year of the project will be devoted to developing the core building blocks of the implementation instruments, mainly the registry, payment system and targeting protocols. The cash transfer program will be implemented in two phases over the remaining 4 years. Each beneficiary household is expected to participate in the program either for 4 years (for the first cohort of households) and 3 years (for the second cohort of households). Assuming that for every household enrolled, 3 households would likely need to be registered and eligibility evaluated to identify the target household, a total of approximately 105,000 households would be provided a unique identification number within the program’s registry. Out of all 105,000 households registered, approximately 35,000 are estimated to be selected to receive cash transfers. 35. Cash transfer amount. An optimal cash transfer amount is needed to ensure a sufficient level of support to boost household consumption of food, goods and services, while avoiding disincentives to work or livelihood activities. International experience shows that social safety net transfers equal to approximately 15-20 percent of total household consumption can help achieve these aims. Based on the poverty profile in Côte d’Ivoire and transfer amounts used regionally, the amount of the transfer allocated to each household will be approximately 12,000 FCFA per month (allocated in tranches of 36,000 FCFA per quarter), regardless of household size to reduce implementation complexity during the project. 36. Cash transfer recipients. International experience shows that the recipient of the cash transfer on behalf of the household influences how the received funds will be used in particular when the transfers are unconditional. Women/mothers tend to spend the transfers on goods of primary necessity to the households such as food and basic services including health and education. Initial discussions during project preparation on the options of handing the transfer to the mother of the selected household raised several issues that need to be debated further. Among the issues raised are cultural barriers related to the authority of the head of household (men versus women) and the prevalence of polygamy in particular in the selected regions (such as which of the mothers should receive the transfer). Forcing one way or the other may alter household dynamics and generate conflicts, so a gradual approach has been adopted under the project to allow for learning and adjustment. In the first stage (involving the first cohort of 5,000 households), cash transfers will be made to an adult member of the household designated and nominated by the beneficiary household. Comprehensive information campaigns will be 15 developed prior to the enrolment process to raise awareness and understanding of the objectives and the intended use of the cash transfers. Monitoring during the first year of implementation will provide information to assess the targeting and delivery of cash transfers, which will allow the opportunity to adjust as needed before the second cohort. 37. Frequency of cash transfer payments. To maximize the amount transferred and reduce transaction costs, payments will be made on a quarterly basis. 38. Length of enrolment and exit strategies. Households enrolled in the program are expected to receive cash transfers for either approximately 4 years (if enrolled during Phase 1) or 3 years (if enrolled during Phase 2). To simplify implementation of this initial systems-building, exit strategies, recertification and graduation mechanisms will not be implemented among all households during the project, but will be developed and piloted among a small cohort of selected households as part of this project. This approach will allow the main focus to remain on introducing the overall elements of the social safety net system. Subsequently, lessons learned from the recertification pilot would be used to evaluate and design options for recertification procedures, exit strategies and graduation mechanisms for future scale-up as appropriate. 39. Payment mechanisms. Existing payment mechanisms include hand-to-hand payments, mobile money services, pension payments through bank accounts, and postal services. The project will use results from a 2015 study that reviewed digital payment mechanisms, costs and coverage by the International Finance Corporation (IFC)5 to determine the choice of payment mechanisms and providers within the context of the project as well as a potential scaled-up social safety net program in the future. Preliminary study results suggest that banking services, mobile money transfers, electronic payment mechanisms and postal services have varying degrees of feasibility and cost-effectiveness in Cote d’Ivoire, and a supplemental review is ongoing to provide information on these parameters by region and department in the target zones of the project. The findings of the IFC study will be used to inform the choice of payment mechanisms for the project. 40. Local community participation and grievance redress mechanism. Citizen engagement tools represent an important aspect of the project for improving targeting efficiency through community validation mechanisms, designing accompanying measures adapted to community needs, and improving accountability through grievance redress mechanisms. Grievance redress mechanism will be put in place for beneficiary feedback. Citizen feedback and grievances will be routinely collected and monitored through a network of state and non- state actors at the central and local level. This mechanism will also contribute to enhancing communication and understanding of the project and hence increased transparency. Sub-Component 1.2: Accompanying Measures to Support Investments in Human Capital and Livelihoods 41. This sub-component will support the development and implementation of two packages of accompanying measures to promote investments in human capital and 5 IFC, Review of Digital Payment Mechanisms in Côte d’Ivoire, February 2015, unpublished. 16 livelihoods for future graduation strategies. Participatory approaches will be used to design and implement these accompanying measures targeting two main areas: (a) human capital (awareness rising/training to the benefits of education and health especially for children, as well as the socioeconomic integration of persons with disabilities), and (b) livelihoods (training to existing initiatives e.g. cooperatives, women groups etc.). The development of the accompanying measures will rely on inter-sectoral coordination with existing programs operating in the same selected regions (delivered by local authorities, international agencies and donors, NGOs, etc.). 42. In addition to relying on existing initiatives, implementation of the accompanying measures will rely on private providers and NGOs based on performance-based contracts. The accompanying measures will focus on a range of community mobilization and sensitization targeted to both cash transfer beneficiaries as well as non-beneficiaries in the selected communities. Given that some of the barriers to improving nutrition, using health and education services and strengthening livelihoods are due to supply constraints in many regions, this component could also help generate the demand for such services and encourage local administration to increase the supply. The accompanying measures will also build on successful interventions that have been implemented in Côte d’Ivoire. It is expected that most of the households registered in the overall registry (beyond households who receive cash transfers) would benefit from accompanying measures.  Outreach to promote investment in human capital on nutrition, access to basic social services and socioeconomic integration of persons with disabilities 43. This package of services supports communication, training and community sensitization campaigns to encourage behavioral change for priority human capital-related needs. This package would target support to the following areas: (a) improving nutrition, (b) stimulating the demand for primary health and education services for children, as well as support to local priorities such as activities to prevent young girls pregnancy and early marriage, and (c) enhancing awareness of the needs to integrate Persons With Disabilities (PWD) to promote their social and economic inclusion. The set of modules for the accompanying measures will be based on a review of existing materials and finalized and validated during the first year of project implementation. This sub-component will also support activities to raise awareness of PWD, notably in terms of building knowledge and understanding among communities and policy- makers of their status, needs and opportunities to promote their social and economic integration. To facilitate implementation and avoid over-complicating project management, the measures will be implemented gradually and in a phased in approach as the project advances in implementation and gains experience.  Support to strengthening the productivity of livelihood activities for future graduation 44. This package of services supports outreach communication campaigns, training and coaching modules to enhance household financial understanding and potential for improving the productivity of livelihoods. It would target strengthening household financial literacy and provide business skills for improving the productivity of existing income-generating activities among self-employed individuals and cooperatives, including women groups. These 17 modules would therefore help build resilience and pathways for households to graduate out of poverty in the future. The set of modules for the accompanying measures will be based on a review of existing materials and lessons learned from relevant, best practice training modules within and outside of Côte d’Ivoire. The measures will draw upon existing World Bank- supported initiatives such as the basic entrepreneurship module for low-skilled individuals supported by the ongoing World Bank-financed Emergency Youth Employment and Skills Development Project and the World Bank and Japan Social Development Fund (JSDF)-financed Social Inclusion and Improvement of Livelihoods Project. Component 2: Developing the Foundations of a Social Safety Net System (estimated US$8 million equivalent) 45. This component supports the development of key elements for the foundation of a national social safety net system using the cash transfer as basis. This component finances goods, information technology and consultant services for developing and operationalizing these elements, including (a) targeting system for cash transfers; (b) household registry; (c) payment system; and (d) Management Information System (MIS). 46. These elements will initially be designed, applied and tested to support implementation of the cash transfer program initiated under Component 1. Based on the lessons learned from applying these tools under the project, they may be refined and adapted for potential use by other public programs in the future. This component will also help to enhance coordination and build bridges among social protection programs in the medium-term within the framework of the National Social Protection Strategy. The system will be designed to allow for: (a) modulating cash transfer amounts, (b) adjusting and recertifying the target profile and number of beneficiaries, and (c) enrolment and/or graduation of beneficiaries in complementary social protection program(s). Sub-Component 2.1: Targeting System for Cash Transfers 47. The targeting system forms the foundation of a modern social safety net system for Côte d’Ivoire. This sub-component will support the development of the targeting manual that will define the specific geographical, household and community-level targeting protocol for Component 1. It will also support the necessary consultations, evaluations, manual revisions and other procedures needed to formally validating and adopting the targeting procedure, rules and guidance for broader applications targeted to the poor. Sub-Component 2.2: Social Protection Household Registry 48. The national registry is a unique household database that will facilitate the pre- identification of households potentially eligible for social transfer programs, including social safety net, access to subsidized social services such universal health care, fee waivers, scholarships, training etc. This sub-component finances goods and services needed to set it up including information technology for creating the database, unique identification number, data security and privacy mechanisms; and consultant services for developing household questionnaires, protocols and manuals. 18 19 Sub-Component 2.3: Cash Transfer Payment System 49. The payment system will be designed to deliver timely and reliable cash transfer payments to the selected households. The system will be informed by an assessment by the IFC of existing payment systems in Côte d’Ivoire and the feasibility of other options from the latest developments in mobile payment processes and centrally managed information systems. The payment system will be designed to ensure predictable and reliable payments to targeted households while minimizing transaction costs and leakages for both the program and the beneficiaries to the extent possible. The payment system would be managed by a third-party service provider through a performance-based contract. Multiple payment modes may be used based on the availability of reliable options and the context of the selected regions. 50. The payment system will be integrated as part of the broader social safety net system and its operational processes, such as the identification, enrolment and registration of beneficiaries and accounts management through the management information system. Information technology will be routinely evaluated and optimized as needed over the course of project implementation as part of refining the social safety net system prior to future roll-out. Sub-Component 2.4: Management Information System and Capacity-Building 51. This component finances the development of a MIS that includes all of the tools for managing the household registry and delivering cash benefits under the social safety net system. 52. The main components to be designed and implemented as part of the MIS are: (a) beneficiary registration procedures and unique identification system; (b) payment systems and inter-operability for data collection on payments made; (c) budget management and financial reporting; (d) tracking indicators collected routinely on beneficiary payments and participation in accompanying measures; (e) functionalities to ensure inter-operability and coordination with other national databases and registries, and consistency with country statistical systems; (f) training and technical assistance for monitoring and evaluation; and (g) training and technical assistance for institutional capacity building, including roles, terms of reference and coordination among responsible departments and agencies. 53. The MIS would be designed based on best practice and an assessment of optimal approaches for the Ivoirian context. An initial assessment will provide the blueprint of the MIS architecture which will be financed by the project, including components, governance and organizational structure, information management, application management, and infrastructure. 20 54. For each MIS component, modules will be designed to facilitate and optimize social safety net system management while reducing transaction costs for the user. Beneficiary identification components will include modules to support targeting, registration and graduation strategies in the future. For the household registry, the MIS architecture will provide the underlying database and IT modules for validation, updates, and identification tools (such as smart cards). Modules for monitoring and evaluation of program activities and impact will support data collection and verification. For payment procedures and managing third-party service providers and agencies, modules will support eligibility verification, payment delivery, and reconciliation. Similar processes will be incorporated in the MIS for accompanying measures and managing service provider contracts. Finally, the MIS system will include modules for accountability and control processes, including grievance redress and process evaluations. Component 3: Project Management, Monitoring and Evaluation (estimated US$4 million equivalent) 55. This component finances consultant services and goods to support the implementation and monitoring of project-related activities and the evaluation of project outcomes. This component would entail support to ensure (a) all project activities and tasks are executed, (b) coordination among all actors involved in project implementation, (c) fulfilling and monitoring of procurement and fiduciary requirements and audits, (d) monitoring and evaluation of project outcomes and intermediary results, and (e) an impact evaluation to measure program effectiveness on beneficiary and household-level outcomes. B. Project Financing Lending Instrument 56. The proposed project is an investment project to be financed by an IDA credit in the amount of US$50 million equivalent. 57. The project closing date is October 30, 2020. C. Project Cost and Financing 58. A description of project costs and financing by component is shown below (Table 2). 21 Table 2: Estimated project costs Project IDA Other Co- % IDA Country Co- cost Financing Financing Financing Project Components Financing (US$ (US$ (US$ million) (US$ million) million) million) 1. Cash Transfer “Plus” Program 38 38 0 0 100 Targeted to Poor Households 2. Developing the Foundations of 8 8 0 0 100 a Social Safety Net System 3. Project Monitoring, 4 4 0 0 100 Management and Evaluation Total Components Costs 50 50 0 0 100 Total Project Costs 50 50 0 0 100 Front-End Fees 0 0 0 0 0 Total Financing Required 50 50 0 0 100 D. Lessons Learned and Reflected in the Project Design 59. The project design has been informed by lessons learned from prior experience within Côte d’Ivoire by state and international actors as well as elsewhere, particularly countries facing high poverty, fragility and a large informal, rural sector. In particular, the following lessons have been incorporated into the proposed project: (a) National social safety net systems can help proactively manage shocks in the short- to long-term, particularly in fragile contexts. Existing regional disparities in poverty have been exacerbated by a protracted period of successive crises in Côte d’Ivoire over 1999-2011. While growth-promoting measures are vital to reduce poverty, additional equity-promoting redistributive mechanisms are also necessary. Instituting a national system for managing and coordinating basic public services and non-contributory cash to the poorest households has proven to accelerate poverty reduction and promote stability over the long-term in fragile-prone contexts. The project has been designed therefore to institute a national system for long-term effectiveness as opposed to an emergency operation to address short-term shocks alone. (b) Safety nets programs such as cash transfers have had proven impacts on poverty, as well as access to education and health services. Evidence on the effectiveness of safety nets in raising welfare, reducing poverty and promoting access to education and health services has been documented for a range of programs worldwide. Cash transfer programs in countries as diverse as Burkina Faso, Malawi, Colombia, Ethiopia, Cambodia, and Bangladesh have demonstrated positive impacts on poverty and human capital6. For instance, this approach has contributed to Brazil’s impressive success in poverty reduction owing to Bolsa Familia’s conditional cash transfers. Cash transfers can work in two ways to reduce poverty: they boost purchasing power and consumption in the short-term while also facilitating households’ investments for the long-term. As such, 6 For a review of evidence, see: Fiszbein and Schady, 2009, Conditional Cash Transfers; Reducing Present and Future Poverty, Washington DC, World Bank. Or IEG, 2011, Evidence and Lessons Learned from Impact Evaluation of Social Safety Nets, Washington DC, World Bank. 22 cash transfers and accompanying measures to boost human capital and livelihoods can help to break the intergenerational transmission of poverty and raise productivity of the next generation, providing a key role for safety nets in an inclusive growth strategy for Côte d’Ivoire. (c) Improved access to health or education services has been achieved through both conditional cash transfers and unconditional cash transfers with accompanying measures. A growing body of evidence illustrates the importance of key elements that increase the effectiveness of safety nets. Evidence from Latin America has shown the effectiveness of cash transfers conditioned on school enrollment or health care visits 7. Unconditional cash transfers have also been documented as having positive impacts on participation in school and health centers, although these effects are not necessarily as strong as conditional cash transfer program. For instance, an impact evaluation of Burkina Faso’s conditional cash transfer program shows that nutrition, routine health visits and school attendance increased to a greater extent when conditions were included for receiving cash transfers8. However, in low-income settings in Sub-Saharan Africa, strict conditionalities are hard or costly to put in place, monitor and verify for a range of operational and practical reasons. In this context, a growing number of programs in West Africa rely on unconditional transfers with accompanying measures. The accompanying measures replace the hard conditions found in more advanced economies with a more sufficient supply of health and education services. Examples of such programs are currently operating in Niger, Mali, Burkina and Guinea. Project monitoring data from Niger, where cash transfers are unconditional and accompanied by such measures, shows that a large share of households (above 90 percent) participates in these accompanying programs. This data suggests that hard conditions may not be needed to enforce participation. In addition, a recent meta-review shows that cash transfers with soft conditionalities can be more effective that unconditional cash transfers, although all programs have positive impacts9. Examples of accompanying measures having positive impacts include growth and nutrition promotion sessions in Bangladesh10, as well as sensitization or social marketing campaigns delivered together with cash transfer programs in Mexico11 or Nicaragua12. Overall, the evidence shows that cash transfers combined with accompanying measures can be effective, even when not imposed as 7 Fiszbein and Schady, 2009, Conditional Cash Transfers; Reducing Present and Future Poverty , Washington DC, World Bank. 8 Akresh, R., D. de Walque, et al. (2013). Cash transfers and child schooling: evidence from a randomized evaluation of the role of conditionality. Policy Research Working Paper Series 6340, The World Bank. 9 Woolcock, M., B. Özler, et al. (2013). Relative Effectiveness of Conditional and Unconditional Cash Transfers for Schooling Outcomes in Developing Countries: A Systematic Review. 10 Ferre, Celine; Sharif, Iffath. 2014. Can conditional cash transfers improve education and nutrition outcomes for poor children in Bangladesh? Evidence from a pilot project. Policy Research working paper no. WPS 7077. Washington, DC: World Bank Group. 11 Duarte-Gómez, M., S. Morales-Miranda, et al. (2004). Impacto de Oportunidades sobre los conocimientos y prácticas de madres beneficiarias y jóvenes becarios. Una evaluación de las sesiones educativas para la salud. Evaluación externa de impacto del Programa Oportunidades. Cuernavaca, Instituto Nacional de Salud Pública. 12 Macours, Karen, Norbert Schady, and Renos Vakis. 2012. "Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment." American Economic Journal: Applied Economics, 4(2): 247-73. 23 conditions as in the proposed project. In particular, safety nets with accompanying measures can encourage households to use cash transfers to improve access to health and education services, as well as trigger overall change in the way cash transfers are utilized to increase investment in human capital. (d) Safety nets with complementary productive accompanying measures can contribute to improve productive investments and raise productivity among the poor. By explicitly targeting the poor, safety nets reach the core of the population engaged in low- productivity employment, particularly in agricultural and non-agricultural self- employment. A growing number of safety nets programs deliver complementary productive interventions, with the explicit objective of fostering productive employment by building pathways to raise productivity in the farming sector, diversify livelihoods, or facilitate entry into new non-agricultural self-employment activities. Complementary productive interventions delivered to safety nets beneficiaries can include the creation of saving groups, the provision of skills training or access to additional capital. A range of impact evaluations have documented the effectiveness of such productive accompanying measures. In Ethiopia, public works beneficiaries who were offered complementary interventions were more likely to be food secure, to borrow for productive purposes, use improved agricultural technologies, and operate nonfarm own business activities13. In Niger, cash transfer beneficiaries participating in savings groups have substantially higher livestock and agricultural productivity 18 months after the program has ended. In rural Nicaragua, cash transfer beneficiaries who received additional business grants or vocational training were much better protected against shocks 18 months after the end of the program14. In Bangladesh, a program that targets the ultra-poor by providing a basic stipend complemented with asset transfers and training was effective in inducing entry into self-employment in Bangladesh15. Given the high prevalence of employment in low- productivity occupations in Côte d’Ivoire, reducing poverty will also hinge on the ability of improving rural households’ ability to improve their productivity. The design of the productive accompanying measures to be included as part of the Côte d’Ivoire safety nets builds on international evidence quoted above. It also builds on evidence from Côte d’Ivoire, including an impact evaluation of a previous Labor Force Training Support Project in Côte d’Ivoire (1994-2002)16, which provided training and skills development for 100,000 informal sector workers. This project boosted revenue significantly in the agricultural sector and among women. It will also draw on lessons from the ongoing impact evaluation of the Public Works component of the Emergency Skills Development and Youth Employment Project, for which results will become available in 2015. 13 Gilligan, D. O., J. Hoddinott, et al. (2009). "The Impact of Ethiopia's Productive Safety Net Programme and its Linkages." The Journal of Development Studies 45(10): 1684-1706. 14 Macours, K., P. Premand, et al. (2012). Transfers, Diversification and Household Risk Strategies: Experimental Evidence with implications for climate change adaptation. Policy Research Working Paper Series. Washington DC, The World Bank. 15 Bandiera, O., R. Burgess, et al. (2012). Can Entry-level entrepreneurship transform the economic lives of the poor? UCL, mimeo. 16 World Bank (2005). Economic impacts of professional training in the informal sector: the case of the Labor Force Training Program in Côte d’Ivoire. World Bank Policy Research Working Paper. Report No. WPS3668. Washington DC: World Bank. 24 (e) A strong institutional framework for implementing and coordinating social protection programs is critical to the effectiveness of social safety net programs. The Ministry of Employment, Social Affairs and Vocational Training (Ministère d’Etat, Ministère de l’Emploi, des Affaires Sociales et de la Formation Professionelle, ME- MEASFP) runs, through a project Implementation Unit (PIU), a Skills Development and Labor Intensive Public Works Emergency Project (Projet d’Urgence de Création d’Emploi Jeunes et de Développement des Compétences PEJEDEC), which targets to reach approximately 27,000 youth by 2015 (with support by the World Bank)17. The project initially faced capacity constraints during the initial phase of implementation, however, it quickly enhanced its implementing track record and built strong operational experience in running Bank funded projects18. The Ministry is currently discussing a second phase of the PEJEDEC project. A closer alignment with other programs, such as the forthcoming universal health coverage by the Ministry of Health and Ministry in charge of Social Affairs, is needed. The proposed project will support the government in laying the foundations of a national social safety net system composed of consolidated and mutually supportive set of interventions that uses consistent and nationally adopted operational mechanisms. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 60. Implementing agency. The ME-MEASFP will be the implementing agency for the project. An Implementation Unit called “Unité de Gestion du Projet” (UGP) will be established within the ME-MEASFP. The UGP will comprise civil servant staff, with consultants to be recruited with the necessary qualifications to enhance its capacity to manage project coordination, fiduciary aspects and monitoring and evaluation. The UGP will include a project coordinator, a financial specialist, a procurement specialist, an accountant, an internal auditor, a monitoring and evaluation specialist and a communication specialist, as well as technical experts for supporting the implementation and supervision of key activities as needed. The UGP will be responsible for carrying out all project activities and managing procurement and disbursement related to the project in accordance with World Bank procedures. It would serve as the fund holder, managing the operational account of the project. Annex 3 describes the ME-MEASFP and implementation arrangements in detail. 61. The UGP will be established by official ministerial order (Arrêté) before the project becomes effective. To transfer and build capacity during the project, primary fiduciary responsibilities will be carried out by fiduciary consultants responsible for financial management and procurement recruited as part of the PIU managing both of the ME-MEASFP ’S Bank- financed PEJEDEC and JSDF-financed projects. The ministerial order will specify the roles, 17 World Bank (2011). Emergency Project Paper. Republic of Côte d’Ivoire Emergency Youth Employment and Skills Development Project. Report No. 63548-CI. Washington DC: World Bank. 18 World Bank (2014). Implementation Status and Results Report. Republic of Côte d’Ivoir e Emergency Youth Employment and Skills Development Project. Report No. ISR14543. Washington DC: World Bank. 25 responsibilities and lines of accountability between the fiduciary consultants of the PIU managing the PEJEDEC and JSDF projects and the UGP of the proposed project. 62. Steering Committee. A multi-sectoral steering committee (Comité Interministériel de Pilotage, COPIL) would be set up with the objective of providing strategic guidance and overseeing project implementation in an advisory and oversight role (including on financial management), but would not have direct implementation responsibilities or conduct day-to-day supervision. The COPIL will include relevant representatives of the Ministries of Finance and Budget, Social Affairs, Education, and Health and other agencies as needed. 63. Coordination between central and local levels. Project implementation will be executed in coordination with existing ME-MEASFP structures at the local levels (department and community levels). At the department level (départements), focal points associated with Regional Departments of Social Affairs will monitor and coordinate overall project activities with other associated ministries as relevant to key aspects of project implementation. At the community level, social workers and social worker assistants serving in local social centers will help support the implementation of specific project activities such as accompanying measures, beneficiary registration and facilitation, and other key activities. Côte d’Ivoire has an extensive network of social centers across the country. It is estimated that in 2014, about 730 social workers operated in 100 locations throughout the country’s 81 departments. In anticipation of project implementation, the Government has initiated a program to build technical capacity of social workers and to develop an integrated information system to collect and monitor welfare information. B. Results Monitoring and Evaluation 64. Results indicators. Progress towards the achievement of the PDO will be measured based on the PDO-level and intermediate results indicators as part of the project’s results framework (Annex 1). The project’s MIS and Monitoring and Evaluation (M&E) systems will be used to collect relevant data and information pertaining to measuring results, including project outcomes and quality of project execution. The UGP will be responsible for carrying out the main M&E functions, including the design and implementation of an impact evaluation with support from technical experts. Progress reports will be closely reviewed by the multi-sectoral steering committee. The UGP will provide quarterly monitoring tables and progress reports on results indicators, to the World Bank during routine implementation support missions. 65. Mid-term and end-of-project reviews. A project mid-term review and end-of-project review will be conducted. A mid-term review will be carried out to assess progress, draw lessons from project implementation and provide an opportunity to adjust any implementation protocols as needed to increase the likelihood that the project meets its development objectives. The mid- term review is estimated to take place during the third year of the project. An end-of-project review is estimated to take place during the final year of the project. An Implementation Completion Report (ICR) will be prepared upon project closing. C. Sustainability 26 66. The project and proposed national social safety net system are financially sustainable within the projected economic outlook for government financing. Setting up of a safety net system should allow for a more effective and efficient utilization of public expenditures, including those targeted to poor households, therefore creating the fiscal space needed to finance the national safety nets system. Given the expected positive economic growth, Côte d’Ivoire is expected to generate the necessary revenues to finance its rel atively affordable fiscal cost. Assuming a monthly transfer of up to 12,000 FCFA per household to all households in the poorest quintile (covering approximately 4 million people), such a program is estimated to cost less than 1 percent of GDP. Importantly, Côte d’Ivoire’s National Development Plan 2012- 2015 commits a strong political will at the highest level to institute targeted social safety net systems as a tool to reduce poverty and inequality, garnering inspiration from other countries particularly in the Latin American region. V. KEY RISKS A. Overall Risk Rating and Explanation of Key Risks [SORT] Risk Categories Rating 1. Political and governance Substantial 2. Macroeconomic Moderate 3. Sector strategies and policies Moderate 4. Technical design of project or program Moderate 5. Institutional capacity for implementation and sustainability Substantial 6. Fiduciary Substantial 7. Environment and social Moderate 8. Stakeholders Moderate Overall Moderate 67. The overall risk rating for the proposed project is deemed to be moderate and mitigating measures will be implemented to address key risks. Substantial risk categories include Institutional Capacity for Implementation and Sustainability as well as Fiduciary. Key risk ratings and associated mitigation measures are described below. 68. Institutional Capacity for Implementation and Sustainability. The implementing agency risk is substantial. This risk is related to the new institutional set up and implementation arrangements needed (at the central and local levels), cross-ministerial coordination, and capacity for a new system. However, strong political support, enhanced implementation capacity capitalizing on prior experience with Bank-financed operations, and continuing capacity- development built into the project life cycle will help address these risks. 69. Fiduciary. The fiduciary risk at this stage is deemed substantial taking into account the project design as well as the multiplicity of actors including the capacity constraints. Fiduciary standards in Côte d'Ivoire have suffered during periods of political instability, but they are stronger relative to those of other WAEMU countries, particularly in terms of budget preparation and financial management practices. Following the installation of the new government in May 2011, the authorities have resumed regular publication of budget-execution reports, clearance of 27 the backlog of outstanding transactions, draft budget-execution bills for submission to the Chamber of Accounts, and the implementation of procurement reforms. The Public Expenditure Management and Accountability Review (PEMFAR) update carried out in 2013 has confirmed the government's steady progress in this area. In 2013 Parliament approved the new Organic Budget Law and the Transparency Code for Public Financial Management, marking a significant step toward aligning Côte d’Ivoire’s legislative framework with the regional Public Financial Management (PFM) standards. Both of these laws are in line with the new WAEMU directives for PFM. The current priority is to ensure they get implemented. Furthermore, the Government has elaborated a strategic framework for PFM reform and an action plan for modernizing PFM systems and implementing additional regional guidelines. 70. Political and Governance. The current climate of political stability may be tested in the run-up to new presidential elections in late 2015. The Bank is working to mitigate security risks through its development policy lending in support of stability-enhancing measures, particularly employment creation in remote and impoverished regions vulnerable to conflict. The Government is also pursuing a reconciliation agenda with opposition parties. The design of the proposed operation further mitigates security risks by following the Bank’s good-practice guidelines for lending in fragile situations. 71. Macroeconomic. Macroeconomic risk is deemed to be moderate based on external economic risks and macroeconomic management risks. In terms of external economic risks, Côte d’Ivoire’s economy is vulnerable to price shocks in a range of international commodity markets, including cocoa and other agricultural products, as well as hydrocarbon fuels and gold. The Government’s focus on improving the investment climate and economic diversification is expected to mitigate these risks. In terms of macroeconomic management, the economy is projected to continue its rapid growth, albeit from a low base. However, macroeconomic management risks arise from the potential generation of contingent liabilities, particularly in the financial and electricity sectors. Contingent liabilities in the financial sector, particularly among publicly owned banks, are estimated at about 0.5 percent of GDP and are therefore considered low. Threats to debt sustainability are mitigated by the government’s observance of ceilings on non-concessional borrowing established with the International Monetary Fund. The potential risk to fiscal sustainability from public-sector wage increases has been contained by the Government’s recent adoption of a medium-term wage strategy. Côte d’Ivoire’s economy is also relatively vulnerable to the ongoing Ebola epidemic in neighboring Guinea and Liberia, although this risk has been mitigated by a strong surveillance and prevention system, supported by a recently-approved credit from the World Bank, and no Ebola cases have been declared in Cote d’Ivoire to date. 72. Climate change-related risk screening. The project has been screened for climate change and disaster risk and there are no risks related to project design or implementation. VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 72. The project’s investments are expected to yield relatively high returns in terms of equity and efficiency (see Annex 5 for the detailed economic and financial analysis). The 28 value of the project lies in the investment in developing the foundation of a social safety net system including targeting, registration, beneficiary payments, management information and monitoring and evaluation. As a result, the total cost-effectiveness of the project (US$50 million) needs to be measured in terms of the investment of the system itself towards long-term objectives of developing a scaled-up social safety net system, where the administrative cost diminishes over time and are relatively minor in comparison to the overall cost of a scaled-up program. 73. The cost-to-transfer ratio will decrease sharply over the project cycle and system set-up costs incurred upfront will yield efficiency gains in the delivery of cash transfers over time. The project will finance the fixed set-up costs to build a social safety net system which requires large investments, including in IT infrastructure. The total fixed costs for system set-up for the 5 years of the project is approximately US$6 million. The project will also finance the variable costs of rolling out and testing the system equal to approximately US$4 million, largely incurred during the first 3 years of project implementation. 74. Compared to the total costs of the transfers over the five years of the project, the ratio of system fixed set-up costs-to-transfer costs is estimated at 22 percent. However, most system-building costs will be frontloaded, with an estimated US$4.5 million dollars to be invested in the first two years, and US$1 million in year 3. By the end of year 3, the system will be fully in place and yearly maintenance costs are estimated at US$500,000 a year from that point onwards. In parallel, the number of beneficiaries will increase over the life of the project, starting with 5,000 beneficiaries and reaching 35,000 beneficiaries in year 3. Therefore, the ratio of system set-up costs to transfer costs will decrease sharply over the life of the project, from 112 percent in year 2 to 5 percent in year 5. Similar gains in cost-efficiency will take-place as measured by other cost-transfer ratios (see Annex 5 for detailed analyses). Cost-efficiency gains would also apply to potential program scale-up beyond the project. 75. In terms of the project’s welfare impact on the beneficiaries, a monthly household cash transfer of 12,000 FCFA would provide a boost to household consumption on average by an estimated 21 percent among extreme poor households. This transfer amount would therefore provide an important source of income to extreme poor households. The transfer amount is also considered generous with respect to the range recommended based on the international experience. It is important to note, however, that the generosity of the transfer amount may fluctuate with the cost of living. The ratio of 21 percent has likely decreased as of 2015 given the economic shocks and the increase in the cost of living witnessed in Côte d’Ivoire since 2008 (the year of the latest available household survey data). 76. In terms of the project’s impact on poverty indicators at the national level, the effects vary depending on whether all poor or extreme poor households are targeted; however, given that only a small number of households are included in this project, the effects are relatively modest. Overall, impacts on extreme poverty and the severity of poverty are maximized when targeting transfers to the extreme poor rather than the poor in general. Annex 5 illustrates detailed results, where the provision of a monthly transfer of 12,000 FCFA to 35,000 extremely poor households is expected to result in a 0.55 percent reduction in the overall poverty gap. It is also expected to lead to a 1.17 percent reduction in the severity of poverty, a 29 1.75 percent reduction in the incidence of extreme poverty, a 2.38 percent in the extreme poverty gap and a 2.84 percent reduction in the severity of extreme poverty. 77. In terms of a potential scaled-up national program that could take place on the basis of the system built during the project, simulations of poverty effects are obtained by relaxing the budget constraint for a hypothetical scenario in which full coverage of all the extreme poor households in the bottom 20 percent would be achieved. A program with 160,000 households could cover approximately a third of extreme poor households in rural regions for an annual budget of US$42.9 million, or 0.18 percent of GDP. Such a level of coverage would lead to an 8.7 percent decrease in extreme poverty headcount, 12 percent decrease in extreme poverty gap and 14.5 percent decrease in extreme poverty severity. 78. A potential future program covering all 507,477 extreme poor households in rural regions would cost US$136 million annually, or 0.58 percent of GDP (see Annex 5, Table 19). Such a program would reduce the extreme poverty headcount by 25.4 percent, the extreme poverty gap by 35 percent and the severity of extreme poverty by 42.2 percent. Alternatively, a program covering all 608,201 extreme poor households in the entire country (including urban and rural regions) would cost US$163 million annually (0.70 percent of GDP). This program would be expected to lead to a 30.5 percent reduction in the incidence of extreme poverty, a 41.1 percent reduction of the extreme poverty gap and 49.1 percent of the severity of extreme poverty. This level of public spending on a scaled-up program, the coverage and transfer amount would be in line with that of well-performing programs elsewhere, such as Brazil’s Bolsa Familia. B. Technical 79. The project is technically sound and directly supports activities led by the Government. The introduction of a cash transfer through a national social safety system, accompanying measures to encourage investments in human capital and productive activities, and the development of key operational instruments (such as the household registry, targeting system and payment mechanisms) are considered best practices from a number of countries that have introduced safety nets, as described in detail in the section on lessons learned above. The Government adopted its National Social Protection Strategy in May 2014 which provides the framework for introducing the social safety net financed by the project. The design has been discussed with the Government and international technical and financial partners such as UNICEF, the World Food Program, the United States Agency for International Development (USAID), The French Development Agency (AFD) and the United Nations Population Fund (UNFPA) and tailored to the local economic and political context and priorities, in terms of high poverty and health, nutrition and education indicators. The activities of the project have been adequately tailored to respond to the local economic, social and political context and support the government-sponsored strategy. C. Financial Management 80. Project implementation arrangements including financial management aspects build on the Ministry’s recent experience implementing Bank-financed operations. An assessment of the Directorate of Financial Affairs (DAF), which uses the public PFM system for ME-MEASFP resource management, was conducted during the project preparation to check 30 whether this directorate could manage the proposed project. The main findings arising from this assessment conducted in January 2015 were as follows: (a) lack of familiarity of the Financial management (FM) team with Bank-financed project procedures and requirements; (b) a lack of sufficient coordination among the various programs implemented by the ministry and inefficient use of the limited human resources available; (c) the computerized system in place for budget execution and financial reporting faces some challenges similar to those revealed in the PEMFAR II report. However, the assessment revealed that some donors-financed projects were already implemented by various specialized departments of the ME-MEASFP or stand-alone units; each program having its own FM arrangements; procedures including disbursement and financial reporting. 81. The second PEMFAR II and the Public Expenditure and Financial Accountability (PEFA II), undertaken in 2013, revealed significant improvements in Côte d’Ivoire’s PFM system over the past three years, but also highlighted critical areas of improvement. The assessments recommended further improving the following key areas: (a) the management of arrears; (b) controls and consolidation at different levels of Government; (c) the quality of the macroeconomic framework for forecasting the level of revenues; (d) the development of multi- year budgeting; (e) the quality of reporting on budget execution; and (f) the quality of internal and external controls. 82. Based on the findings of this assessment as well as the conclusions of various PFM diagnostic reports taking into account the key areas for improvement described above, this project’s FM assessment concluded that the DAF would have the capacity to manage the project assuming key measures are put in place to strengthen FM. The FM arrangements for the project have thus been designed with consideration for the country’s current PFM status while taking into account the OP/BP 10.00 which describes the overall FM Bank policies and procedures. 83. The DAF of the ME-MEASFP is composed of civil servant staff including a financial controller and a public accountant, both from the Ministry of Finance (MoF) as required by the country PFM Act. For purposes of the project, the FM team of the UGP will be set up with the recruitment on a competitive basis of an experienced financial management specialist and a principal accountant who are very familiar with IDA FM procedures. Implementation of the IDA-financed project will increase the demand for DAF capacity, which will require more sophisticated control systems and adequate staff, an effective internal audit function, a manual of procedures, and an integrated information system and software. During the first period of project implementation (e.g. 6 months) following effectiveness, the FM aspects of the project will be managed by the PIU of the Bank-financed PEJEDEC project. The assessment of the PIU managing PEJEDEC during the preparation of the additional financing for PEJEDEC during December 2014 as well as the report of the last supervision mission of the ongoing PEJEDEC project in January 2015, revealed that the PIU has acceptable FM systems in place to manage the funds of the proposed project. The overall FM performance was deemed moderately satisfactory and the FM risk rated substantial. Most of the actions plan derived from these assessment and supervision have been implemented. The modalities of the transfer of FM responsibility from the PEJEDEC unit to the newly created UGP of the proposed project will be detailed in the Project Implementation Manual (PIM). 31 84. Pending actions. As such, the DAF team will undertake the following additional measures prior to project effectiveness to mitigate foreseen risks: (a) appointment of an Administrative and Financial Manager (Responsable Administratif et Financier, RAF) and an Accountant, both familiar with the Bank FM procedures and requirements. D. Procurement 85. An assessment of the ME-MEASFP’s procurement capacity and its recent experience in managing the Bank-financed project (PEJEDEC) was carried out and was deemed adequate for project execution. The assessment evaluated the following: (a) experience in procurement, (b) staff capacity, (c) capacity of filing of procurement documents, and (d) the existence of an implementation manual on procurement. The assessment concluded that the ME-MEASFP capacity was acceptable to the Bank based on its implementation of PEJEDEC and as such will be responsible for project implementation, assuming a number of mitigation measures are in place to overcome some capacity constraints identified. 86. Guidelines. Côte d'Ivoire's procurement code and regulations generally do not conflict with IDA guidelines. However, certain provisions in Côte d’Ivoire’s code that diverge with IDA guidelines (related to the use of point systems and re-bidding when at least three bids have not been submitted) will not be permitted for national competitive bidding. The procurement for the proposed project will be carried out in accordance with the following World Bank guidelines summarized in the following sources: (a) Guidelines: Procurement of Goods, Works, and Non- Consulting Services under IBRD Loans and IDA Credits and Grants (January 2011) and (b) Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers (January 2011). 87. Procurement documents. Procurement would be carried out using the Bank's Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) for goods and works and for Standard Request for Proposal (RFP) for the selection of consultants through competitive procedures. The Recipient will develop standard documents based on the Bank's SBDs for National Competitive Bidding (NCB) for goods and works and the Bank's RFP for the selection of consultants through methods other than Quality and Cost Based Selection (QCBS), with modifications that will be submitted to the IDA for prior approval. 88. Pending actions. To enhance ME-MEASFP procurement capacity to implement the project, the ME-MEASFP will adopt the following recommendation in advance of project launch: the recruitment of one procurement specialist. As such, the following areas will be specified: the various procurement methods or consultant selection methods, any activities requiring pre-qualification, estimated costs of activities, prior review requirements, and procurement calendar. The procurement plan will be updated at least annually or more frequently as required to reflect actual project implementation needs and capacity. E. Social (including Safeguards) 89. The project is expected to have a positive social impact by improving household income and consumption, as well as encouraging investments in human capital and productive activities in targeted communities. On the basis of pre-determined criteria and 32 detailed targeting protocols, the project will target the poorest and most vulnerable communities, specifically by providing cash transfers as well as by providing accompanying measures for longer-term social benefits to adults and children. The project will not trigger any social safeguards policies. 90. The expected positive poverty and social impact of the project is high in terms of boosting consumption and access to services, especially for females and female-headed households who face particular disadvantages. The fraction of poor households who are female headed has also been growing, from 1 in 10 in 1985 to 1 in 7 in 2008, although in general Côte d’Ivoire appears to have very few female headed households compared to many African countries. Although overall poverty rates have not significantly differed by gender of the head of household between 1985 and 2008, consumption levels among female-headed households are lower than male-headed households. A lack of equitable access to economic resources is associated with this disparity. While access to financial services is low in Côte d’Ivoire with only 14.6 percent of all adults having an account at a formal financial institution (banks in Côte d’Ivoire)19, the rates are likely lower among females than males. Data by gender is unavailable for Côte d’Ivoire, but global data from neighboring countries demonstrates this trend. In Cameroon, 19 percent of males hold an account as compared to 11 percent among females, in Nigeria, it is 33 versus 26 percent, respectively, and in Uganda, it is 26 versus 15 percent, respectively20. The higher the country income level, the narrower the gender gap; among high income countries, where nearly 90 percent overall have accounts, the rate is 92 versus 87 percent among males and females, respectively. In this sense, the project will provide an important stepping stone to improving financial inclusion through the use of a reliable payment agency to deliver cash transfers systematically and accompanying measures for strengthening productivity and livelihoods, particularly for females. F. Environment (including Safeguards) 90. The project is a Category C project, because no civil works will be undertaken and no adverse environmental or social impacts are expected. The project does not require any land acquisition leading to involuntary resettlement and/or restrictions of access to resources and livelihood. No environmental safeguards policies are triggered. G. World Bank Grievance Redress 91. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project-affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non- compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has 19 Central Bank of Côte d’Ivoire data as of December 2013, IFC Report on Digital Financial Services in Côte d’Ivoire, February 2015, forthcoming. 20 Global Financial Inclusion Database (Global Findex), World Development Indicators, World Bank, 2015. 33 been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 34 Annex 1: Results Framework and Monitoring Cote d'Ivoire: Productive Social Safety Net (P143332) Results Framework . Project Development Objectives PDO Statement The Project Development Objective is to provide cash transfers to poor households in selected regions and develop the foundations of a social safety net system. These results are at Project level Project Development Objective Indicators Cumulative Target Values Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target Beneficiaries of Safety Nets programs (number of households receiving cash 0.00 0.00 5000.00 35000.00 35000.00 35000.00 35000.00 transfers) - (Core) Number of individual beneficiaries of cash 0.00 0.00 30000.00 210000.00 210000.00 210000.00 210000.00 transfers, Total Number of individual beneficiaries of cash 0.00 50.00 50.00 50.00 50.00 50.00 50.00 transfers, female (percentage) Number of households registered with a unique identification number in national 0.00 15000.00 105000.00 105000.00 105000.00 105000.00 105000.00 registry Number of individuals receiving accompanying measures on human capital 0.00 30000.00 210000.00 210000.00 210000.00 210000.00 210000.00 and livelihoods Number of individuals receiving accompanying measures on human capital 0.00 50.00 50.00 50.00 50.00 50.00 50.00 and livelihoods (female) (Percentage) 35 Intermediate Results Indicators Cumulative Target Values Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 End Target Share of cash transfer beneficiaries receiving payments in a timely manner 0.00 0.00 50.00 70.00 85.00 85.00 85.00 according to frequency specified in the PIM (Percentage) Communication platform and grievance redress mechanism designed and Not Protocol Validated Quality Quality Quality Piloted implemented, including quality assurance developed designed and adopted Assurance Assurance Assurance (QA) spot checks Validated Cash transfer payment system developed , Not Quality Quality Quality Quality Developed and including quality assurance (QA) developed Assurance Assurance Assurance Assurance adopted Validated Household registry developed including Not Quality Quality Quality Quality Developed and Quality Assurance (QA) developed Assurance Assurance Assurance Assurance adopted Piloted, Targeting system for the cash transfer Not Validated Quality Quality Quality Quality program developed including Quality Developed developed and Assurance Assurance Assurance Assurance Assurance (QA) adopted Management information system (MIS) Validated Not Quality Quality Quality Quality developed , including quality assurance Developed and developed Assurance Assurance Assurance Assurance (QA) adopted Project financial audits and monitoring and evaluation (M&E) reports are disclosed on No Yes Yes Yes Yes Yes Yes time Impact evaluation survey data collection Baseline Follow-up Impact Impact Pre-launch NA NA completed survey data data evaluation evaluation 36 collection collection report report completed completed completed completed . 37 Indicator Description Project Development Objective Indicators Data Source / Responsibility for Indicator Name Description (indicator definition etc.) Frequency Methodology Data Collection Beneficiaries of Safety Nets This indicator measures the number of Quarterly Project management UGP programs (number) individual beneficiaries covered by safety information system nets programs supported by the Bank. Safety (MIS) and monitoring nets programs intend to provide social and evaluation assistance (kind or cash) to poor and (M&E) Database vulnerable individuals or families, including those to help cope with consequences of economic or other shock. Number of individual Total number of individual beneficiaries of Quarterly Project MIS/M&E UGP beneficiaries of cash cash transfers, assuming average household Database transfers, Total size of 6 Number of individual Total number of female beneficiaries of cash Quarterly Project MIS/M&E UGP beneficiaries of cash transfers, assuming average household size of Database transfers, female 6 Number of households Number of households registered, assuming 3 Annual Project MIS/M&E UGP registered with a unique households are needed to identify 1 Database identification number in beneficiary household national registry Number of individuals Number of beneficiary household members Annual Project UGP receiving accompanying that participate in the minimum number of implementation measures on human capital sessions of accompanying measures as reports and livelihoods specified in PIM. Number of individuals Female percentage Annual Project UGP receiving accompanying implementation measures on human capital reports and livelihoods (female) 38 Intermediate Results Indicators Data Source / Responsibility for Indicator Name Description (indicator definition etc.) Frequency Methodology Data Collection Share of cash transfer Periodicity and reliability of payments as Bi-annual Project MIS/M&E UGP beneficiaries receiving specified in PIM Database payments in a timely manner according to frequency specified in the PIM Communication platform and Communication and grievance redress tools Annual Project UGP grievance redress mechanism and protocol developed, including routine Implementation designed and implemented, evaluation of their implementation Reports including quality assurance (QA) spot checks Cash transfer payment Protocol specifying payment mechanisms and Annual Project UGP system developed , including contracting with payment agencies is Implementation quality assurance (QA) available. Reports Household registry Registry, unique identifier system and Annual Project UGP developed including Quality associated manual on use and access is Implementation Assurance (QA) available. Reports Targeting system for the cash Targeting protocol validated and adopted. Annual Project UGP transfer program developed Implementation including Quality Assurance Reports (QA) Management information MIS designed and implemented as described Annual Project UGP system (MIS) developed , in PIM. Implementation including quality assurance Reports (QA) Project financial audits and M&E reports on project implementation and Quarterly Project UGP based on monitoring and evaluation results framework available and key results Implementation M&E system, audit (M&E) reports are disclosed publicly disclosed as described in PIM. Reports firm and survey 39 on time firm reports Impact evaluation survey Impact evaluation data collection and report Annual Project UGP data collection completed completed as described in PIM Implementation Reports 40 Annex 2: Detailed Project Description Côte d’Ivoire: Productive Social Safety Net Project Project Development Objective and Expected Results 1. The proposed project is designed to lay the foundations and initiate implementation of a national social safety net system for Côte d’Ivoire. The project will be financed by an IDA credit in the amount of US$50 million equivalent and will be implemented over a five year period, from 2015-2020. The project is intended to support implementation of the Government’s poverty reduction and growth objectives in line with its National Development Plan for 2012- 2015 and National Social Protection Strategy, adopted in early 2014. The project design reflects lessons learned from productive social safety net systems in other countries such as in Brazil, Ethiopia and Burkina Faso, including safety nets with accompanying measures to encourage investment in human capital and livelihoods, as well as World Bank operations in Côte d’Ivoire and neighboring countries. 2. The Project Development Objective (PDO) is to provide cash transfers to poor households in selected regions and develop the foundations of a social safety net system. Primary beneficiaries are poor households in rural regions in the central, western and northern regions with children less than 15 years of age, including households with pregnant women, who will receive cash transfers and accompanying measures to boost productivity in terms of human capital and livelihoods. Secondary beneficiaries are households in beneficiary villages who will not receive cash transfers but will benefit from accompanying measures. 3. It is expected that the project will benefit a total of approximately 35,000 primary beneficiary households who would receive cash transfers, accompanying measures and a unique identification number for the national household registry, or 210,000 individuals based on an average household size of 6. Secondary beneficiary households are households who would also receive a unique identification number for the national household registry and benefit from accompanying measures, but would not receive cash transfers (e.g. 105,000 households). 4. The expected results of the project have been chosen to demonstrate that the PDO has been achieved in terms of providing income support and accompanying measures to the poorest households, as well as operationalizing tools needed to establish the foundations of a social safety net system. 5. The main indicators that will be used to monitor progress in reaching the PDO are the following: (a) Number of beneficiaries of safety net programs (core sector indicator): number of households receiving cash transfers (target: 35,000); (b) Number of individual beneficiaries of cash transfers, of which female (target: 210,000; 50 percent); 41 (c) Number of households registered with a unique identification number in national registry (target: 105,000); (d) Number of individuals receiving accompanying measures on productivity related to human capital and livelihoods, of which female (target: 210,000; 50 percent). Project Components 6. The proposed Project has three components: (a) Cash Transfer “Plus” Program targeted to poor households combined with accompanying measures; (b) Developing the foundations of a social safety net system; and (c) Project management, monitoring and evaluation. Component 1: Cash Transfer “Plus” Program targeted to poor households (estimated US$38 million equivalent). 7. This component will support instituting the main benefits package as part of a national social safety system. This component finances cash transfers, goods and consultant services for building this program, comprising two sub-components: (a) cash transfers to targeted poor households; and (b) accompanying measures to promote investments in human capital and livelihoods. Sub-Component 1.1: Cash Transfers targeted to poor households 8. Enrollment. Households will be enrolled in phases over the course of the project to allow for testing the cash transfer delivery system and adjusting as needed prior to broader roll- out to more households. The following phases of cash transfer payments will be adopted (summarized in Table 3): (a) Phase 1 with pilot cohort: It is expected that the first group of beneficiaries (i.e., 5,000 households) would start receiving transfers over the second year of the project. (b) Evaluation of pilot cohort: Prior to further enrolment, key aspects of the first phase of implementation would be reviewed and adjustments made as needed prior to roll-out. The main areas that will be evaluated include: (a) whether the household registry is providing complete information on beneficiaries or whether adjustments to data collection are needed; (b) whether the targeting protocol is being followed or whether adjustments are needed to improve implementation; and (c) whether cash transfer payments are reliable and predictable on a quarterly basis or whether contracts with payment agencies need to be adjusted. (c) Phase 2 for roll-out: Enrolment of the second and remaining group of beneficiaries (30,000 households) would then start during the third year of the project. 9. Targeting approach. A new social safety net targeting approach for the Ivoirian context will be developed, tested and refined as a core component of the project. The process for targeting will be piloted, tested and complemented by comprehensive training prior to roll-out, 42 particularly with regards to survey materials and communication with communities and policy makers about the process. Table 3: Overview of Implementation Plan PROJECT ACTIVITIES YR1 YR2 YR3 YR4 YR5 COMPONENT 1: CASH TRANSFER PLUS PROGRAM Sub-component 1.1: Cash Transfers Communication, participatory and grievance redress tools in place Cash transfers to households - Phase 1 Pilot and evaluation Cash transfers to households - Phase 2 Rollout Targeting implementation costs and payment fees Sub-component 1.2: Accompanying Measures for Human Capital and Livelihoods Design, implementation by providers and communication COMPONENT 2: DEVELOPING THE FOUNDATIONS OF A SOCIAL SAFETY NET SYSTEM Sub-component 2.1: Targeting System for Cash Transfers Evaluation/Design of Targeting System Testing and roll-out Sub-component 2.2: Social Protection Household Registry Design of HH registry Delivery of HH registry Sub-component 2.3: Cash Transfer Payment System Design of payment system Delivery of payment system Sub-component 2.4: Management Information System and Capacity-Building Evaluation/design of MIS Delivery of MIS system Capacity-building on use and monitoring and evaluation COMPONENT 3: PROJECT MANAGEMENT, MONITORING AND EVALUATION Sub-Component 3.1 Project Implementation Unit (UGP) Support Sub-Component 3.2 Project Monitoring and Evaluation (M&E) Impact Evaluation (baseline and follow-up) Source: World Bank staff and ME-MEASFP . 10. The targeting approach will be based on three complementary types of targeting. This approach includes: (a) geographic targeting to select the main target regions with the highest poverty rates and the highest barriers to access to basic social services; (b) a simplified proxy-means testing at the household level to identify the poorest households within each community; and (c) community-based validation with stakeholders representative of the broad range of social, ethnic, religious, and economic groups to inform the list of target beneficiaries and to ensure that the process will not lead to exacerbating possible conflicts at the community level. A manual will define the specific geographical, household and community-level targeting process based on testing and validation and will be supported by extensive testing, training and information campaign. 11. Program coverage. The cash transfer program will target the poorest households in predominately rural regions in the central, northern and western regions of Côte d’Ivoire. These regions have been chosen as they are characterized by: (a) higher-than-average poverty rates; (b) weak access to basic services in terms of health and education, as indicated by poor use and high 43 cost barriers to maternal health services, low school enrolment, and high illiteracy; and (c) poor child malnutrition in terms of height-for-age. Within these regions, the departments and communes to be targeted will be determined based on available data using a transparent procedure to be detailed in the targeting manual. 12. Based on key assumptions, the project is expected to reach approximately 35,000 households over the course of its implementation period. This target is based on the estimated cash transfer amounts and a budget envelope for cash transfers of approximately US$33 million. The first year of the project will be devoted to developing the core building blocks of the implementation instruments, mainly the registry, payment system and targeting protocols. The cash transfer program will be implemented in two phases over the remaining 4 years. Each beneficiary household is expected to participate in the program either for 4 years (for the first cohort of households) and 3 years (for the second cohort of households. Assuming that for every household enrolled, 3 households would likely need to be registered and eligibility evaluated to identify the target household, a total of approximately 105,000 households would be provided a unique identification number within the program’s registry. Out of all 105,000 households registered, approximately 35,000 are estimated to be selected to receive cash transfers. 13. Cash transfer amount. An optimal cash transfer amount is needed to ensure a sufficient level of support to boost household consumption of food, goods and services, while avoiding disincentives to work or livelihood activities. International experience shows that social safety net transfers equal to approximately 15-20 percent of total household consumption can help achieve these aims. Based on the poverty profile in Côte d’Ivoire and transfer amounts used regionally, the amount of the transfer allocated to each household will be approximately 12,000 FCFA per month (allocated in tranches of 36,000 FCFA per quarter), regardless of household size to reduce implementation complexity during the project. 14. Cash transfer recipients. International experience shows that the recipient of the cash transfer on behalf of the household influences how the received funds will be used in particular when the transfers are unconditional. Women/mothers tend to spend the transfers on goods of primary necessity to the households such as food and basic services including health and education. Initial discussions during project preparation on the options of handing the transfer to the mother of the selected household raised several issues that need to be debated further. Among the issues raised are cultural barriers related to the authority of the head of household (men versus women) and the prevalence of polygamy in particular in the selected regions (such as which of the mothers should receive the transfer). Forcing one way or the other may alter household dynamics and generate conflicts, so a gradual approach has been adopted under the project to allow for learning and adjustment. In the first stage (involving the first cohort of 5,000 households), cash transfers will be made to an adult member of the household designated and nominated by the beneficiary household. Comprehensive information campaigns will be developed prior to the enrolment process to raise awareness and understanding of the objectives and the intended use of the cash transfers. Monitoring during the first year of implementation will provide information to assess the targeting and delivery of cash transfers, which will allow the opportunity to adjust as needed before the second cohort. 44 15. Frequency of cash transfer payments. To maximize the amount transferred and reduce transaction costs, payments will be made on a quarterly basis. 16. Length of enrolment and exit strategies. Households enrolled in the program are expected to receive cash transfers for either approximately 4 years (if enrolled during Phase 1) or 3 years (if enrolled during Phase 2). To simplify implementation of this initial systems-building, exit strategies, recertification and graduation mechanisms will not be implemented among all households during the project, but will be developed and piloted among a small cohort of selected households as part of this project. This approach will allow the main focus to remain on introducing the overall elements of the social safety net system. Subsequently, lessons learned from the recertification pilot would be used to evaluate and design options for recertification procedures, exit strategies and graduation mechanisms for future scale-up as appropriate. 17. Payment mechanisms. Existing payment mechanisms include hand-to-hand payments, mobile money services, pension payments through bank accounts, and postal services. The project will benefit from an ongoing review by the International Finance Corporation (IFC) of the feasibility and cost effectiveness of various possible payment mechanisms with a view of scaled up programs. The findings of the IFC study will be used to inform the choice of payment mechanisms for the project. 18. Local community participation and grievance redress mechanism. Citizen engagement tools represent an important aspect of the project for improving targeting efficiency through community validation mechanisms, designing accompanying measures adapted to community needs, and improving accountability through grievance redress mechanisms. Grievance redress mechanism will be put in place for beneficiary feedback. Citizen feedback and grievances will be routinely collected and monitored through a network of state and non- state actors at the central and local level. This mechanism will also contribute to enhancing communication and understanding of the project and hence increased transparency. Sub-Component 1.2: Accompanying Measures to Support Investments in Human Capital and Livelihoods 19. This sub-component will support the development and implementation of two packages of accompanying measures to promote investments in human capital and livelihoods for future graduation strategies. Participatory approaches will be used to design and implement these accompanying measures targeting two main areas: (a) human capital (awareness rising/training to the benefits of education and health especially for children, as well as the socioeconomic integration of persons with disabilities), and (b) livelihoods (training to existing initiatives e.g. cooperatives, women groups etc.). The development of the accompanying measures will rely on inter-sectoral coordination with existing programs operating in the same selected regions (delivered by local authorities, international agencies and donors, NGOs, etc.). 20. In addition to relying on existing initiatives, implementation of the accompanying measures will rely on private providers and NGOs based on performance-based contracts. The accompanying measures will focus on a range of community mobilization and sensitization 45 targeted to both cash transfer beneficiaries as well as non-beneficiaries in the selected communities. Given that some of the barriers to improving nutrition, using health and education services and strengthening livelihoods are due to supply constraints in many regions, this component could also help generate the demand for such services and pressure local administration to increase the supply. The accompanying measures will also build on successful interventions that have been implemented in Côte d’Ivoire. It is expected that all of the households registered in the overall registry (beyond households who receive cash transfers) would benefit from accompanying measures.  Outreach to promote investment in human capital on nutrition, access to basic social services and socioeconomic integration of persons with disabilities 21. This package of services supports communication, training and community sensitization campaigns to encourage behavioral change for (a) improving nutrition, (b) stimulating the demand for primary health and education services for children, as well as support to local priorities such as activities to prevent young girls pregnancy and early marriage, and (c) enhancing awareness of the needs to integrate Persons With Disabilities (PWD) to promote their social and economic inclusion. The set of modules for the accompanying measures will be based on a review of existing materials and finalized and validated during the first year of project implementation. This sub-component will also support activities to raise awareness of PWD, notably in terms of building knowledge and understanding among communities and policy- makers of their status, needs and opportunities to promote their social and economic integration. To facilitate implementation and avoid over-complicating project management, the measures will be implemented gradually and in a phased in approach as the project advances in implementation and gains experience.  Support to strengthening the productivity of livelihood activities for future graduation 22. This package of services supports outreach communication campaigns, training and coaching modules to build household financial literacy and provide business skills for improving the productivity of existing income-generating activities among self-employed individuals and cooperatives, including women groups. The set of modules for the accompanying measures will be based on a review of existing materials and lessons learned from relevant, best practice training modules within and outside of Côte d’Ivoire. The measures will draw upon existing World Bank-supported initiatives such as the basic entrepreneurship module for low-skilled individuals supported by the ongoing World Bank-financed Emergency Youth Employment and Skills Development Project and the World Bank and Japan Social Development Fund (JSDF)- financed Social Inclusion and Improvement of Livelihoods Project. Component 2: Developing the Foundation of a Social Safety Net System (estimated US$8 million equivalent) 23. This component supports the development of key elements for the foundation of a national social safety net system using the cash transfer as basis. This component finances goods, information technology and consultant services for developing and operationalizing these 46 elements, including (a) targeting system for cash transfers; (b) household registry; (c) payment system; and (d) management information system (MIS). 24. These elements will initially be designed, applied and tested to support implementation of the cash transfer program initiated under Component 1. Based on the lessons learned from applying these tools under the project, they may be refined and adapted for potential use by other public programs in the future. This component will also help to enhance coordination and build bridges among social protection programs in the medium-term within the framework of the National Social Protection Strategy. The system will be designed to allow for: (a) modulating cash transfer amounts, (b) adjusting and recertifying the target profile and number of beneficiaries, and (c) enrolment and/or graduation of beneficiaries in complementary social protection program(s). Sub-Component 2.1: Targeting System for Cash Transfers 25. The targeting system forms the foundation of a modern social safety net system for Côte d’Ivoire. This sub-component will support the development of the targeting manual that will define the specific geographical, household and community-level targeting protocol for Component 1. It will also support the necessary consultations, evaluations, manual revisions and other procedures needed to formally validating and adopting the targeting procedure, rules and guidance for broader applications targeted to the poor. Sub-Component 2.2: Social Protection Household Registry 26. The national registry is a unique household database that will facilitate the pre- identification of households potentially eligible for social transfer programs, including social safety net, access to subsidized social services such universal health care, fee waivers, scholarships, training etc. This sub-component finances the information technology goods for creating the database, unique identification number, data security and privacy mechanisms; and consultant services for developing household questionnaires, protocols and manuals. Sub-Component 2.3: Cash Transfer Payment System 27. The payment system will be designed to deliver timely and reliable cash transfer payments to the selected households. The system will be informed by an assessment by the IFC of existing payment systems in Côte d’Ivoire and the feasibility of other options from the latest developments in mobile payment processes and centrally managed information systems. The payment system will be designed to ensure predictable and reliable payments to targeted households while minimizing transaction costs and leakages for both the program and the beneficiaries to the extent possible. The payment system would be managed by a third-party service provider through a performance-based contract. Multiple payment modes may be used based on the availability of reliable options and the context of the selected regions. 28. The payment system will be integrated as part of the broader social safety net system and its operational processes, such as the identification, enrolment and registration of beneficiaries and accounts management through the management information system. Information technology 47 will be routinely evaluated and optimized as needed over the course of project implementation as part of refining the social safety net system prior to future roll-out. 48 Sub-Component 2.4: Management Information System and Capacity-Building 29. This component finances the development of a Management Information System (MIS) that includes all of the tools for managing the household registry and delivering cash benefits under the social safety net system. 30. The main components to be designed and implemented as part of the MIS are: (a) beneficiary registration procedures and unique identification system; (b) payment systems and inter-operability for data collection on payments made; (c) budget management and financial reporting; (d) tracking indicators collected routinely on beneficiary payments and participation in accompanying measures; (e) functionalities to ensure interoperability and coordination with other national databases and registries, and consistency with country statistical systems; (f) training and technical assistance for monitoring and evaluation; and (g) training and technical assistance for institutional capacity building, including roles, terms of reference and coordination among responsible departments and agencies. 31. The MIS would be designed based on best practice and an assessment of optimal approaches for the Ivoirian context. An initial assessment will provide the blueprint of the MIS architecture which will be financed by the project, including components, governance and organizational structure, information management, application management, and infrastructure. 32. For each MIS component, modules will be designed to facilitate and optimize social safety net system management while reducing transaction costs for the user. Beneficiary identification components will include modules to support targeting, registration and graduation strategies in the future. For the household registry, the MIS architecture will provide the underlying database and Information Technology (IT) modules for validation, updates, and identification tools (such as smart cards). Modules for monitoring and evaluation of program activities and impact will support data collection and verification. For payment procedures and managing third-party service providers (payment agencies), modules will support eligibility verification, payment delivery, and reconciliation. Similar processes will be incorporated in the MIS for accompanying measures and managing service provider contracts. Finally, the MIS system will include modules for accountability and control processes, including grievance redress and process evaluations. 49 Component 3: Project Management, Monitoring and Evaluation (estimated US$4 million equivalent) 33. This component finances consultant services and goods to support the Project Implementation Unit (PIU) in managing the project and monitoring project-related activities and outcomes. This component would also entail support to ensure (a) all project activities and tasks are executed, (b) coordination among all actors involved in project implementation, (c) fulfilling and monitoring of procurement and fiduciary requirements and audits, (d) monitoring and evaluation of project outcomes and intermediary results, and (e) an impact evaluation to measure program effectiveness on beneficiary and household-level outcomes. 50 Annex 3: Implementation Arrangements Côte d’Ivoire: Productive Social Safety Net Project Project Institutional and Implementation Arrangements 1. Implementing agency and institutional framework. The Ministry of State, Ministry of Employment, Social Affairs and Vocational Training ((Ministère d’Etat, Ministère de l’Emploi, des Affaires Sociales et de la Formation Professionelle, ME-MEASFP) will be the implementing agency for the project. The ME-MEASFP was established by Decree in 2012 by merging the former Ministry of State, Ministry of Employment, Social Affairs and Solidarity and the Ministry of Technical Education and Vocational Training. The ME-MEASFP is mandated with social, vocational training and integration services for the promotion, development and protection of living conditions. Specifically, in the area of social affairs, the ME-MEASFP is mandated to design, implement, coordinate and supervise the National Social Protection Strategy in terms of social assistance, social security, and the promotion of persons with disabilities. Its mandate comprises vocational training, job creation and ensuring conditions of decent work, the fight against child labor and child trafficking, social dialogue, support to the most vulnerable in terms of protection, social promotion, technical support, education / training, information and awareness. Relatedly, the Ministry of Solidarity, Family, Women and Children (MSFWC) also provides family and children’s services, with which albeit limited coordination occurs. 2. Central and regional capacity. The ME-MEASFP overseas policy and implementation through a network of local structures at the department and community levels (Figure 8). The annual operating budget for regional and local structures amounted to approximately 830 million FCFA as of 2014, or the equivalent of US$37 million (Table 4). At the central level, the ME-MEASFP has four Directorates, which are the General Directorate of Employment, General Directorate of Labor, General Directorate of Social Affairs and General Directorate of Vocational Training. Implementation of the Government’s social policy is overseen by the General Directorate of Social Affairs. At the local (deconcentrated) level, the Ministry operates a network of regional directorates, social centers at the community level, and different categories of social workers (general social workers who comprise the largest group, followed by educational assistants, youth workers, etc.). As of 2014, there were 19 regional directorate offices, with an estimated 10 more offices planned to open over 2015. The MSFWC also comprises 14 regional directorate offices. 3. The ME-MEASFP regional directorates mainly manage and coordinate the work and activities of social centers and social workers at the community level. At the local community level, social centers and social workers provide the selected social services including surveillance of community health, psychosocial development of mothers and children less than five years of age, family planning and education targeting women and youth, case management for specific risks as they arise, and overall support to facilitating improvements in living conditions for vulnerable groups. In terms of geographic distribution, the southern zone accounts for the vast majority of social centers at 42 percent and social workers at 34 percent, leaving wide disparities in access elsewhere (Figures 9 and 10). As such, the project will be managed at a central level by the ME-MEASFP and in coordination with district and community structures (Figure 11). 51 Figure 8: Institutional organization of implementation agency, ME-MEASFP Source: World Bank staff and ME-MEASFP, Republic of Côte d’Ivoire. Table 4: Operating budget of MEMEASP and MSFWC (MSFFE) local structures, 2014 Structure Budget (FCFA millions) 67 CENTRES SOCIAUX DU ME-MEASFP DOTES POUR L'EXERCICE 2014 404 19 DIRECTIONS REGIONALES DES AFFAIRES SOCIALES DU ME-MEASFP 223 COMPLEXES SOCIO-EDUCATIF MSFFE (20) 108 DIRECTIONS REGIONALES DU MSFFE (14) 93 TOTAL 827 52 Source: World Bank staff and ME-MEASFP, Republic of Côte d’Ivoire. Figure 9: Geographic distribution of social centers by zone, 2014 Source: ME-MEASFP , Republic of Côte d’Ivoire. Figure 10: Geographic distribution of social workers by regional directorates, 2014 Source: ME-MEASFP , Republic of Côte d’Ivoire. 4. Information capacity. The ME-MEASFP has an operational Integrated System Collection and Data Management (SICGD) for social affairs for compiling and managing 53 quantitative and qualitative data for planning, monitoring and evaluation, and decision making. The information is collected through local social affairs offices, transmitted to regional offices and then captured and recorded in an Information Technology (IT) platform. The information is then transmitted via the Internet in the database. Each user of the database has an access code and a level of accreditation. The database is hosted by the National Development Company Computer (SNDI). Functional entities as well as the Ministry's partners can use to access information generated by the system. 5. Resource management. Budget management of the Ministry is in accordance with the requirements of the Public Finance Management System (SIGFIP). This system imposes two budget execution procedures, i.e. the regular procedure and the simplified procedure. The normal procedure has three phases: commitment, authorization and payment. The simplified procedure is characterized by the simultaneous realization commitment and scheduling. In accordance with the provisions relating to public procurement code, the Public Procurement Directorate (DMP) is the body responsible for the management of public procurement procedures. The primary mission of this structure is to ensure compliance of public procurement in the context of the implementation of budget appropriations allocated to legal entities or individuals subject to the public procurement rules and also ensure respect of obligation to spend market. 6. Similar to other governmental agencies, the ME-MEASFP has its Directorate of Financial Affairs (DAF) which is responsible for financial management and procurement. The focal point for procurement is responsible for managing the Public Procurement Management Integrated System (SIGMAP) to ensure the traceability of operations. Figure 11: Overview of project institutional framework Source: World Bank staff and ME-MEASFP 54 7. Project administration arrangements. An implementation unit (Unité de Gestion du Projet, UGP) will be established for the project within the ME-MEASFP comprising civil servant staff with consultants to be recruited with the necessary qualifications to enhance capacity on project coordination, fiduciary aspects and monitoring and evaluation (Figure 12). The UGP would be staffed by civil servants comprising a coordinator, a financial specialist, an accountant, a procurement specialist, an internal auditor and a monitoring and evaluation specialist, with other key technical staff and consultants to be recruited as needed to support implementation and supervision. The UGP team would be responsible for carrying out all project activities and managing procurement and disbursement related to the project in accordance with World Bank procedure. It would serve as the fund holder, managing the operational account of the project. 8. The UGP will be established by official ministerial order (Arrêté) before the program becomes effective. To transfer and build capacity during the project, primary fiduciary responsibilities will be carried out by senior fiduciary consultants responsible for Financial Management (FM) and procurement recruited as part of the Project Implementation Unit (PIU) managing both of the ME-MEASFP’s Bank-financed Youth Employment and Skills Development Emergency Project (Projet D’Urgence de Création d’Emploi Jeunes et de Développement des Compétences, PEJEDEC) and Japan Social Development Fund (JSDF)- financed projects. The ministerial order will specify the roles, responsibilities and lines of accountability between the fiduciary consultants of the PIU managing both the PEJEDEC and JSDF projects and the UGP of the proposed project. 9. Steering Committee. The Multi-Sectoral Steering Committee (Comité Interministériel de Pilotage, COPIL) would be set up to oversee project implementation in an advisory and oversight role (including on financial management), but would not have direct implementation responsibilities. The COPIL will include relevant representatives of the Ministries of Finance and Budget, Social Affairs, Education, and Health and other agencies as needed. The COPIL would be responsible for strategic guidance and advice to support project implementation, but would not be involved in day-to-day supervision. 10. Coordination between central and local levels. Project implementation will be executed in coordination with existing ME-MEASFP structures at the local levels (department and community levels). At the department level (départements), focal points associated with Regional Departments of Social Affairs will monitor and coordinate overall project activities with other associated ministries as relevant to key aspects of project implementation. At the community level, social workers and social workers and social worker assistants serving in nearly local social centers will help support the implementation of specific project activities such as accompanying measures, beneficiary registration and facilitation, which falls within the remit of social work in Côte d’Ivoire. Côte d’Ivoire has a fairly extensive set of social centers, at nearly 100 located throughout the country’s 81 departments, in which a total of approximately 730 social workers serve as of 2014. The Government has also recently launched a continuing education program to build technical capacity among social workers in advance of project implementation and the development of an integrated information system to collect and monitor welfare information provided by social workers. 55 Figure 12: Overview of implementation arrangements ADJUNCT COORDINATOR Source: World Bank staff and ME-MEASFP . Financial Management and Disbursement Overall summary 11. Project implementation arrangements including financial management aspects build on the Ministry’s recent experience implementing Bank-financed operations. An assessment of the DAF, which uses the Public Financial Management (PFM) system for ME- MEASFP resource management, was conducted during the project preparation to check whether this directorate could manage the proposed project. The main findings arising from this assessment conducted in January 2015 were as follows: (a) capacity shortage in the areas of human resources and lack of familiarity of the FM team with Bank-financed project procedures and requirements; (b) a lack of sufficient coordination among the various programs implemented by the ministry and inefficient use of the limited human resources available; (c) the computerized system in place for budget execution and financial reporting faces some challenges similar to those revealed in the PEMFAR II report. However, the assessment revealed that some donors- financed projects such WB, JSDF, AFD were already implemented by various specialized departments of the ME-MEASFP or stand-alone units; each program having its own FM arrangements; procedures including disbursement and financial reporting. 12. The second Public Expenditure Management and Accountability Review (PEMFAR II) and the Public Expenditure and Financial Accountability (PEFA II), undertaken in 2013, revealed significant improvements in Côte d’Ivoire’s PFM system over the past three years, but also highlighted critical areas of improvement. The assessments recommended 56 improvements to address the following key constraints: (a) the persistence of large arrears; (b) insufficient controls and consolidation at different levels of government; (c) an inadequate macroeconomic framework to forecast the level of revenues; (d) the absence of multi-year budgeting; (e) incomplete reporting on budget execution; and (f) weak internal and external controls. 13. Due to the overall fragility of the country, The Financial Management (FM) systems, particularly the key areas for improvement described above, this project’s FM assessment concluded that the DAF would have the capacity to manage the project assuming key measures are put in place to strengthen FM. The FM arrangements for the project have thus been designed with consideration for the country’s post-conflict situation while taking into account the OP/BP 10.00 which describes the overall FM Bank policies and procedures. 14. The DAF of the ME-MEASFP is composed of civil servant staff including a financial controller and a public accountant, both from the Ministry of Finance (MoF) as required by the country PFM Act. For purposes of the project, the FM team of the UGP will be set up with the recruitment on a competitive basis of an experienced financial management specialist as well as an accountant (as individual consultants recruited) who are familiar with IDA FM procedures. Implementation of the IDA-financed project will increase the demand for DAF capacity, which will require more sophisticated control systems and adequate staff, an effective internal audit function, a manual of procedures as part of the overall PIM for the project, and an integrated information system and software. The FM section of the draft PIM for the project prepared by the government team has been reviewed by the Bank team and deemed acceptable. 15. Pending actions. As such, the DAF team will undertake the following additional measures to mitigate foreseen risks: (a) acquire multi-projects accounting software; and (b) delegation of responsibility for internal audits of the project to the General Finance Inspector (Inspection Générale des Finances, IGF). Project resources will be allocated to the IGF to enhance its capacity to do so. Detailed FM arrangements 16. Use of country systems. The FM arrangements of the Bank-financed operations in Côte d’Ivoire are guided by the Instruction No 192/MEF/CAB/DGBF/DAS-SDSD signed by the Minister of Finance on September 22, 2008. These Instructions established a partial use of country FM systems. They allow for the assignment of public accountant to each IDA-financed project and a financial controller responsible for prior reviews of supporting documents for all payments related to the project. These project FM arrangements are considered acceptable to IDA, having been improved over time. The FM arrangements of the proposed project will follow the same approach as the FM arrangements in place for the ongoing Projects in the country. 17. Financial reports. Consolidated Interim unaudited Financial Reports (IFR) will be prepared every quarter in a format and content agreed with IDA and submitted to the Bank 45 days after the end of the quarter. The IFRs will report on the financial status of all activities of the project, i.e., components 1, 2 and 3. 57 18. Audits. The Chamber of Accounts (Supreme Audit Institution) faces some capacity constraints. Therefore, the project accounts will be audited by a qualified and experienced external auditor (audit firm) recruited on terms of references acceptable to IDA. The project accounts will be audited on an annual basis and the reports submitted to IDA and to the Chamber of Accounts not later than six months after the end of each fiscal year. The audit report will cover all expenditures for all components. Due to the capacity constraints of the Supreme Audit Institution, (Chamber of Accounts) a qualified external audit firm will be recruited under terms of references and procedures acceptable to IDA. The annual audited financial statements together with the auditor’s report and management letter covering identified internal control weaknesses will be submitted to IDA no later than six months after the end of each fiscal year. 19. Disbursement. Upon project effectiveness, transaction-based disbursements (replenishment and reimbursement) will be used during the first months of project implementation. Thereafter, the option to disburse against submission of Interim un-audited Financial Report (also known as the Report-based disbursement) will be considered subject to the quality and timeliness of IFR submitted to the Bank and the overall financial management arrangement as assessed in due course. The other options of disbursing the funds (reimbursement, direct payments and special commitments) will be available. 20. Disbursement categories. Table 5 below specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Financing (“Category”), the allocations of the amounts of the Financing to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Table 5: Disbursement Categories Category Amount of the Financing Percentage of Allocated Expenditures to be (expressed in SDR) Financed (inclusive of Taxes) (1) Cash Transfers under Part 1(a) (a) 1,500,000 100% [Component 1(a)] of the Project for (a) Phase 1 and (b) Phase 2 (b) 22,500,000 (2) Goods, non-consulting services, 11,200,000 100% consultants’ services, Training and Operating Costs under the Project, excluding Cash Transfers under Part 1(a) of the Project (3) Refund of Preparation Advance 1,100,000 Amount payable pursuant to Section 2.07 of the General Conditions TOTAL AMOUNT 36,300,000 Source: World Bank staff and ME-MEASFP. 58 21. Flow of funds. Two bank accounts will be opened: (a) one Designated Account (DA) denominated in FCFA (XOF) at the Central Bank (BCEAO) to receive funds for Component 1, 2 and 3; and (b) one Project Account (PA) in a commercial bank on terms and conditions acceptable to IDA (Figure 13). These PA will be managed by the FM team of the UGP as well as the Public Accountant assigned to the project. An initial deposit of XOF 1.5 billion equivalent to 5 months expenditures forecast will be released by IDA at the request of the project UGP upon effectiveness. Payments to partner implementing organizations (e.g. NGO, government specialized entities…), service providers, agencies and suppliers will be made in accordance with the payments modalities, as specified in the respective contracts and Memorandum of Understanding (MoU) as required. In the case of payments to Unites Nations Agencies, the special World Bank disbursement procedures will be used to establish a “Blanket Commitment”. The “Blanket Commitment” will be set up for the UN agency for the full amount to be transferred to the UN agency as an Advance. The grant will finance 100 percent of eligible expenditures of the project inclusive of tax. Figure 13: Overview of flow of funds AUDIT REPORTS Source: World Bank staff and ME-MEASFP. 59 22. Supervision. Due to the Substantial FM risk, FM supervision will be conducted at least twice a year during the first year of project implementation period. It will focus on the status of the financial management system to assess whether the system continues to operate well as agreed and provide support as needed. The supervision intensity will be adjusted over time taking into account the project FM performance and FM risk level. 23. Justification for the use of a ring-fenced financing mechanism. The World Bank and other donors’ assessments, notably the PEMFAR I and PEFA (Public Expenditure and Financial Accountability) completed in 2008, highlighted a number of shortcomings in the areas of human resources, economic governance and public expenditure management. With the support of the international community, the Government has undertaken a series of PFM reforms since 2009 that have begun to improve FM performance. The Government and the donors have prepared a general strategic plan for PFM reforms21 to follow up on the remaining PEFMFAR II recommendations and the other diagnostics completed. Given the fragility of the fiduciary environment, the Government has requested the use of a ring-fenced financing mechanism for the FM aspects of this project, similar to the other Bank-financed Projects in the country. There are no overdue audit reports and IFRs at the time of preparation of this project in the sector. During the first period of project implementation (e.g. 6 months) following effectiveness, the FM aspects of the project will be managed by the PIU of the PEJEDEC, a Bank-financed project. The assessment of the PIU during the preparation of the additional financing as well as the report of the last supervision mission of the ongoing project in January 2015, revealed that the PIU has acceptable FM systems in place to manage the funds of this new project. The overall FM performance was deemed moderately satisfactory and the FM risk rated substantial. Most of the actions plan derived from these assessment and supervision have been implemented. The modalities of the transfer of FM responsibility from PEJEDEC unit to the newly created PIU of the Safety Net Project will be detailed in the agreement between the two Units. 24. Risk assessment, mitigation and financial covenants. The country political situation has impacted governance and affected the corruption environment. The main weaknesses include the lack of familiarity and previous experiences of the staff of the DAF in Bank FM procedures. However, effective implementation of FM mitigation measures, effective oversight by COPIL and the involvement of national PFM actors and audit institutions will help mitigate overall risks identified at the country, project and control levels. The FM action plan has been developed to mitigate these risks (Table 6). Financial covenants are the standard covenants as described in the legal documents and are comprised of maintaining project accounts in accordance with sound accounting practices, audit requirements and records well-kept and secured. The dated covenants are detailed in the FM action plan. Table 6: Financial Management Action Plan Issue/Topic Remedial action recommended Responsible Completion date body/person Staffing Appointment of an experienced FM manager ME-MEASFP / By effectiveness (RAF) familiar with Bank FM procedures UGP 21 Strategic Framework for PFM reforms in Côte d’Ivoire (Schema Directeur de réformes des Finances Publiques en Côte d’Ivoire), April & June 2014 mission by World Bank, IMF, and AfDB. 60 Issue/Topic Remedial action recommended Responsible Completion date body/person Appointment of an accountant familiar with ME-MEASFP / By effectiveness Bank FM procedures UGP Assignment of a public accountant and a MEF 3 months after financial controller (civil servants within project MEF) as required by the Instructions 192 effectiveness (under revision) Information system (i) Acquisition and installation of accounting ME-MEASFP / two months after accounting software software for the project and training of the UGP effectiveness users Internal auditing Formal agreement with the Inspection General ME-MEASFP / 3 months after des Finances “IGF” to manage the internal UGP and MEF effectiveness audit function of the project and to conduct periodic reviews of the project transactions External auditing Appointment of the external auditor completed MSLS/UGP 5 months after and contract signed effectiveness Governance The steering committee should have at least 1 UGP/MSLS To be reflected in member having appropriate fiduciary skills the PIM and the and experiences to oversee the project FM and Arrêté creating the procurement status and report to steering Steering committee during meetings. Committee. Source: World Bank staff. 25. Budget execution planning. The FM team of the UGP will prepare a consolidated Annual Work Plan and Budget (AWPB) for implementing project activities. The work plan and budgets will identify the activities to be undertaken and the role of respective parties in implementation including the UGP and other implementing entities. The AWPB will provide detailed information on the amount allocated to each implementing entity per activity showing unit costs and quantities. The AWPB will be submitted to COPIL for approval, and thereafter to IDA for approval no later than 30 November of the year preceding the year the work plan should be implemented. 26. Accounting systems. An integrated financial and accounting system and associated software will be put in place and used by the FM unit of the UGP. The Project code and chart of accounts will be developed to meet the specific needs of the project and documented in the manual of procedures being drafted. The prevailing accounting policies and procedures in line with the West African Francophone Countries Accounting Standards (SYSCOHADA) currently in use in Côte d’Ivoire for ongoing Bank-financed operations will be applied. The accounting systems and policies and financial procedures used by the project will be documented in the project’s administrative, accounting, and financial manual. 27. Local taxes. Funds will be disbursed in accordance with project categories of expenditures and components, as shown in the Financing Agreement. Financing of each category of expenditure/component will be authorized at 100 percent inclusive of taxes as per the current Country Financing Parameters approved for Côte d’Ivoire. 61 Procurement 28. An assessment of the ME-MEASFP’s procurement capacity and its recent experience in managing the Bank-financed project (PEJEDEC) was carried out and was deemed adequate for project execution. The assessment evaluated the following: (a) experience in procurement, (b) staff capacity, (c) capacity of filing of procurement documents, (d) and the existence of an implementation manual on procurement. The assessment concluded that the ME-MEASFP capacity was acceptable to the Bank based on its implementation of PEJEDEC and as such will responsible for project implementation, assuming a number of mitigation measures are in place to overcome capacity-related risks identified, namely the lack of familiarity with Bank procedures among the UGP civil servant staff. 29. Mitigation measures. To enhance ME-MEASFP procurement capacity to implement the project, the ME-MEASFP will adopt the following recommendation in advance of project launch (Table 7): the recruitment of one procurement specialist. As such, the following areas will be specified: the various procurement methods or consultant selection methods, any activities requiring pre-qualification, estimated costs of activities, prior review requirements, and procurement calendar. The procurement plan will be updated at least annually or more frequently as required to reflect actual project implementation needs and capacity. Table 7: Procurement Action Plan Recommended Action Due Date Appoint one procurement specialist on Terms of Reference acceptable September 30, 2015 to IDA. Source: World Bank staff. 30. Procurement plan. The procurement plan will define the appropriate procurement methods or consultant selection methods for each activity or contract, the need for pre- qualification, estimated costs, the prior review requirements, and the time frame. The procurement plan was prepared during project appraisal in a manner satisfactory to the Bank. The procurement plan will be updated at least annually, or as required, to reflect the actual project implementation needs and capacity improvements. All procurement activities will be carried out in accordance with approved original or updated procurement plans. All procurement plans should be published on Bank website according to the Guidelines. 31. Guidelines. Côte d'Ivoire's procurement code and regulations generally do not conflict with IDA guidelines. However, certain provisions in Côte d’Ivoire’s code that diverge with IDA guidelines (related to the use of point systems and re-bidding when at least three bids have not been submitted) will not be permitted for national competitive bidding. The procurement for the proposed project will be carried out in accordance with the following World Bank guidelines summarized in the following sources: (a) Guidelines: Procurement of Goods, Works and Non- consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers (July 2014); (b) Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers (January 2011) and (c) Guidelines on 62 Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants (January 2011); revised July 2014. 32. Procurement documents. Procurement would be carried out using the Bank's Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) for goods and works and for Standard Request for Proposal (RFP) for the selection of consultants through competitive procedures. The Recipient will develop standard documents based on the Bank's SBDs for National Competitive Bidding (NCB) for goods and works and the Bank's RFP for the selection of consultants through methods other than Quality and Cost Based Selection (QCBS), with modifications that will be submitted to the IDA for prior approval. 33. Procurement of goods. The Goods to be financed by IDA would include: office furniture, equipment, and supplies; vehicles; and software, etc. Similar Goods that could be provided by a same vendor would be grouped in bid packages estimated to cost at least US$1,000,000 per contract and would be procured through ICB. Contracts estimated to cost less than US$1,000,000 equivalent may be procured through NCB. Goods estimated to cost less than US$70,000 equivalent per contract may be procured through shopping procedures. For shopping, the condition of contract award shall be the same process as described above for procurement of works. 34. Selection of consultants. The project will finance Consultant Services for activities such as: engineering designs and supervision of works surveys, environmental and social safeguards studies and supervision, technical and financial audits, etc. Consultant firms will be selected through the following methods: (a) QCBS; (b) selection based on the Consultant’s Qualification (CQS) for contracts which amounts are less than US$300,000 equivalent and are relative to exceptional studies and researches which require a rare and strong expertise; (c) Least Cost Selection (LCS) for standard tasks such as insurances and, financial and technical audits costing less than US$300,000; (d) Single Source Selection, with prior agreement of IDA, for services in accordance with the paragraphs 3.10 to 3.12 of Consultant Guidelines. Individual Consultant (IC) will be hired in accordance with paragraph 5.1 to 5.4 of Bank Guidelines; Sole source may be used only with prior approval of the Bank. 35. Short lists of consultants for services estimated to cost less than US$300,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines, if a sufficient number of qualified individuals or firms are available. However, if foreign firms express interest, they would not be excluded from consideration. 36. Procurement of other consulting services not covered by guidelines. These services may include designing, editing and printing project promotion supports; providing logistic support such as car rental for field visits, travel services and logistic support for workshop and the like. LCS or shopping will be used. 37. Training, workshops and conferences. Trainings (including training material and support), workshops and conferences, will be carried out based on a Capacity Building and Training Plan (CBTP) to be approved along the Project’s AWPB. Detailed Terms of References 63 will be prepared for each line of activity in the CBTP, providing information on the nature of activity (training, workshop, study tour, field missions etc.), the number of trainees/participants, of which women, duration, staff months, timing and estimated cost, and will be submitted to IDA for review and approval prior to initiating the process. The appropriate methods of selection will be derived from the detailed schedule. Project would be requested to include a brief in the quarterly PIU’s and Project’s Implementation Progress Report (IPR) summarizing completed activities under the CBTP and their outcomes as regards the attainment of the project development objective. 38. Operational costs. Operating costs financed by the project are incremental expenses incurred for implementing project activities by the PIU. They include facility services (electricity, internet, tap water…), vehicles operation and maintenance, maintenance of equipment, communication costs, supervision costs (i.e. transport, accommodation and per diem), and salaries of locally contracted staff. They will be procured using the procurement procedures specified in the Project Financial and Accounting Manual. 39. Procurement reviews and supervision. Bank’s prior and post reviews will be carried out on the basis of thresholds indicated in the following table (Table 8). The Bank will conduct six-monthly supervision missions and annual Post Procurement Reviews (PPR); with the ratio of post review at least 1 to 5 contracts. The Bank may also conduct an Independent Procurement Review (IPR) at any time until two years after the closing date of the project. Table 8: Procurement and Selection Review Thresholds Procurement and Review Thresholds Expenditure Contract Value Procurement Contract Subject to Category (Threshold) Method Prior Review US$ US$ 1. Goods ≥ 10.000,000 ICB All < 10.000,000 NCB The first contract quotation - no less < 100.000 than 3 quotation National quotation - < 500.000 no less than 3 quotation for vehicle and oils No threshold Direct contracting All 2. Consultants All contracts of US$ 300,000 and Firms No threshold QCBS; LCS; FBS more < 100,000 CQ All contract of US$ 100,000 and Individuals No threshold IC (at least 3 CVs) more No threshold Single Source All (Selection Firms & Individuals) All TORs regardless of the value of the contract are subject to prior review 64 Source: World Bank staff. 65 Environmental and Social (including safeguards) 40. The project is expected to have a positive social impact by improving household income, as well as encouraging investments in human capital and productive activities in targeted communities. The project is not expected to trigger any social safeguards policies. On the basis of pre-determined criteria and detailed targeting protocols, the project will target the poorest and most vulnerable communities, specifically by providing cash transfers as well as by providing accompanying measures for longer-term social benefits to adults and children. 41. The project is a Category C project, because no civil works will be undertaken and no adverse environmental or social impacts are expected. The project does not require any land acquisition leading to involuntary resettlement and/or restrictions of access to resources and livelihood. No environmental safeguards policies are triggered. Monitoring & Evaluation 42. Results indicators. Monitoring and evaluation of progress towards the PDO will be measured based on PDO-level and intermediate results indicators as part of the project’s results framework (Annex 1). The project’s Management and Information (MIS) and Monitoring and Evaluation (M&E) systems will be used to collect relevant data and information pertaining to measuring results, including project outcomes and quality of project execution. The UGP will be responsible for carrying out the main M&E functions, including the design and implementation of an impact evaluation with support from technical experts. Reporting and progress on M&E indicators will be closely reviewed by the multi-sectoral steering committee. The UGP will provide quarterly monitoring tables and progress reports on results indicators, which will be submitted to the World Bank during routine implementation support missions. 43. Mid-term and end-of-project reviews. A project mid-term review and end-of-project review will be conducted. A mid-term review will be carried out to assess progress, draw lessons from project implementation and provide an opportunity to adjust any implementation protocols as needed to increase the likelihood that the project meets its development objectives. The mid-term review is estimated to take place during the third year of the project. An end-of- project review is estimated to take place during the final year of the project. An Implementation Completion Report (ICR) will be prepared upon project closing. 66 Annex 4: Implementation Support Plan Côte d’Ivoire: Productive Social Safety Net Project Strategy and Approach for Implementation Support 1. The Bank’s technical assistance has been integral to the preparation of earlier analysis and the proposed operation. During implementation, the Bank will continue to draw upon national and global specialists to provide implementation support where necessary to ensure that the project achieves its intended objectives (Table 9). Implementation Support Plan 2. The World Bank’s implementation support to the project includes: Component 1. The Bank team may provide support as needed on key issues including the design and oversight of operational aspects related to the implementation of cash transfers and multi- stakeholder consultations where appropriate. Component 2. The Bank team may provide support to the implementation of key elements of the national social safety net system such as targeting protocols, management information systems and institutional capacity-building where appropriate. Component 3. The Bank team may provide additional capacity-building as needed to the Implementation Unit (Unité de Gestion du Projet, UGP) and guidance on Bank procedures related to project management, monitoring and fiduciary management guidelines. Table 9: Summary of implementation support and key activities planned Calendar Support Responsible Team Support development targeting manual to determine - Task Team Leader (TTL) geographical and household-level targeting protocols - Economists based on household surveys, national census and - Social Protection Specialist administrative databases; - Monitoring and Evaluation (M&E) Specialist - Social Protection Specialist Monitor design/implementation of national household - Information, Communication and registry Technology (ICT) Specialist - Operations Officer Year 1 Support and monitor design of training modules and - Economists manual for the accompanying measures - Social Protection Specialist Design Impact Evaluation Strategy and Baseline - Impact Evaluation Specialist survey for impact evaluation - Social Protection Specialist Monitoring the design and implementation of public - Communication Specialist communication, access to information and grievance - Governance Specialist redress - Operations Officer - Financial Management (FM) specialist Financial management and Procurement training - Procurement specialist Support application of targeting protocols and - TTL Year 2-3 oversight of targeting data collection and processing - Economists 67 Calendar Support Responsible Team - Social Protection Specialist - M&E Specialist Support and monitor implementation of the - Economists accompanying measures - Social Protection Specialist FM, disbursement and procurement support and FM and Procurement specialists review and report TTL, Economists, ICT, Social Protection Technical inputs Specialist, Operations Officer Monitoring and Evaluation (Mid-Term Review) TTL, M&E Follow-up data collection for impact evaluation Impact Evaluation Specialist Project implementation progress TTL, Operations Officer FM, disbursement and report FM specialist Procurement review Procurement specialist TTL, Economists, ICT, Social Protection Year 3-5 Technical inputs Specialist, Operations Officer Monitoring and Evaluation (Final Review) TTL, M&E Project implementation progress TTL, Operations Officer Source: World Bank staff. 68 Annex 5: Economic and Financial Analysis Côte d’Ivoire: Productive Social Safety Net Project A. Country Context 1. Poverty has risen strongly in Côte d’Ivoire since its first measurement in 1985. While the poverty rate was 10 percent in 1985, it reached 48.9 percent in 2008. Poverty increased sharply from 10 percent in 1985 to 36.8 percent in 1995 (Figure 14). While it decreased slightly to reach 33.6 percent in 1998, poverty rose again substantially over the next decade following a series of socio-political and military crises. Figure 14: Evolution of poverty rates between 1985 and 2008 (percent) 60% 50% 40% 30% 20% 10% 0% 1985 1995 1998 2002 2008 Source: World Bank staff estimates based on Household Budget Surveys (ENV), 1985-2008. 2. In 2008, the poverty headcount reached 48.9 percent, with a poverty line equivalent to consumption expenditures of FCFA 661 per day, or FCFA 241,145 per annum. The related poverty gap was 18.19, and severity of poverty 9.13. Poverty indicators are much higher in rural regions. Poverty increased particularly sharply in rural regions in recent years, going from 49 percent in 2002 to 62.45 percent in 2008 (Figure 15). The latest poverty data available for project preparation is from 2008. Key results of the new household survey are expected to be made available by July 2015, and will be the basis for an updated poverty analysis to finalize the geographical targeting procedures during the first year of project implementation. Projections calculated during the preparation of the Côte d’Ivoire Systematic Country Diagnosis suggest that poverty incidence increased to an estimated 45 percent in 2011 and then fell back to 2008 levels by 2013 as economic growth rebounded22. On that basis, the 2008 household survey numbers are expected to provide a good basis for economic analysis. 22 These estimates are based on sector-specific growth, where households are assigned the GDP per capita growth rates of the sector (primary, secondary, tertiary) associated with the main activity of the household head (as reported in the 2008 ENV household survey). 69 Figure 15: Poverty rate in urban versus rural regions, 2008 (percent) 80.0% 62.5% 60.0% 48.9% 40.0% 29.5% 24.5% 18.2% 20.0% 9.1% 12.6% 9.1% 4.1% 0.0% Urban Rural All Poverty Headcount (P0) Poverty Gap (P1) Poverty Severity (P2) Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 3. Poverty also varies widely by region. Poverty incidence is the highest in the North (77 percent), West (63 percent) and Center West (63 percent) (Table 10). Only in the South (45 percent), South West (46 percent) and in Abidjan (21 percent) is the poverty rate below 50 percent. The concentration of poverty is particularly marked in the rural regions of the North (85 percent), Center West (71 percent), West (68 percent), Center North (66 percent) and Center (66 percent). The incidence of urban poverty is lower in all regions. Poverty gap and poverty severity is also much higher in rural regions. These regional patterns of poverty incidence make a clear case for targeting the rural regions, as well as the regions of the North, West and Center. Table 10: Poverty rate by region, 2008 All Rural Urban Poverty Poverty Poverty Poverty Poverty Poverty Headcount Poverty Severity Headcount Poverty Severity Headcount Poverty Severity Region (P0) Gap (P1) (P2) (P0) Gap (P1) (P2) (P0) Gap (P1) (P2) Centre Nord 0.57 0.24 0.13 0.66 0.30 0.17 0.47 0.18 0.09 Centre Ouest 0.63 0.24 0.12 0.71 0.28 0.15 0.40 0.12 0.05 Nord Est 0.55 0.21 0.11 0.59 0.23 0.11 0.26 0.09 0.05 Nord 0.77 0.36 0.21 0.85 0.42 0.24 0.54 0.19 0.09 Ouest 0.63 0.25 0.21 0.68 0.28 0.14 0.48 0.17 0.08 Sud 0.45 0.15 0.21 0.51 0.17 0.08 0.25 0.07 0.03 Sud Ouest 0.46 0.13 0.21 0.50 0.15 0.06 0.27 0.08 0.03 Centre 0.56 0.20 0.21 0.66 0.25 0.12 0.36 0.10 0.04 Centre Est 0.54 0.20 0.21 0.63 0.25 0.13 0.30 0.09 0.04 Nord Ouest 0.58 0.26 0.21 0.60 0.28 0.15 0.46 0.17 0.09 Abidjan 0.21 0.06 0.21 0.21 0.06 0.02 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 4. Côte d’Ivoire does not have an official extreme poverty line. In this analysis, a consumption level of the bottom 20 percent of the population is used as a proxy for extreme poverty. The bottom 20 percent of the population has consumption expenditures of less than FCFA 138,630 per annum. Based on this measure, the extreme poverty rate is 28.2 percent in 70 rural regions, and 8.1 percent in urban regions. Household size varies between the poor and extreme poor; on average, 56.5 percent of the extreme poor households have 6 members of more (Table 11). Table 12 provides the regional break-down of extreme poverty. Extreme poverty is concentrated in the rural regions of the North (52 percent), Center West (34 percent) and West (33 percent), as well as in the Center West (34 percent) and North West (36 percent). The extreme poverty rate is below 20 percent in all urban regions, and lowest in Abidjan (4 percent). Table 11: Household size by poverty line All Households Poor Extreme Poor 1-3 42.7% 20.1% 16.1% 4-5 25.9% 29.1% 27.4% 6-8 19.7% 29.9% 30.8% 9-12 8.7% 15.1% 18.1% 13+ 3.1% 5.8% 7.6% Average Size 4.69 6.25 6.78 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Table 12: Extreme poverty rate by region, 2008 (percent) All Rural Urban Extreme Extreme Extreme Extreme Extreme Extreme Poverty Extreme Poverty Poverty Extreme Poverty Poverty Extreme Poverty Headcount Poverty Severity Headcount Poverty Severity Headcount Poverty Severity Region (P0) Gap (P1) (P2) (P0) Gap (P1) (P2) (P0) Gap (P1) (P2) Centre Nord 0.30 0.10 0.05 0.39 0.13 0.06 0.20 0.06 0.03 Centre Ouest 0.28 0.08 0.04 0.34 0.10 0.05 0.11 0.03 0.01 Nord Est 0.21 0.07 0.03 0.23 0.07 0.03 0.10 0.03 0.02 Nord 0.43 0.16 0.07 0.52 0.19 0.09 0.18 0.05 0.02 Ouest 0.29 0.08 0.03 0.33 0.10 0.04 0.16 0.04 0.02 Sud 0.15 0.04 0.02 0.18 0.05 0.02 0.05 0.02 0.01 Sud Ouest 0.11 0.02 0.01 0.12 0.02 0.01 0.07 0.02 0.00 Centre 0.23 0.06 0.02 0.31 0.07 0.03 0.09 0.02 0.01 Centre Est 0.22 0.07 0.03 0.27 0.08 0.04 0.07 0.02 0.01 Nord Ouest 0.33 0.10 0.05 0.36 0.11 0.05 0.19 0.06 0.03 Abidjan 0.04 0.01 0.00 0.04 0.01 0.00 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 5. In 2008, it was estimated that the population in poverty included 10,174,034 individuals, and the population in extreme poverty 4,154,011 individuals (Table 13). The average household size is 6.83 for households in extreme poverty, and 6.34 for households in poverty. Therefore, 608,201 households are estimated to live in extreme poverty, and 1,604,737 households in poverty. Table 13 provides the regional distribution of the population in poverty and extreme poverty. 71 Table 13: Population headcount by poverty line, 2008 Extreme Poverty Poverty Population Households Population in Headcount Headcount Population in in Extreme Households in Extreme Region 2008 (P0) (P0) Poverty Poverty in Poverty Poverty Centre Nord 1,347,170 0.57 0.30 767,860 398,318 121,114 58,319 Centre Ouest 2,740,529 0.63 0.28 1,725,136 765,046 272,103 112,013 Nord Est 1,011,062 0.55 0.21 553,364 216,327 87,281 31,673 Nord 1,328,343 0.77 0.43 1,027,048 575,026 161,995 84,191 Ouest 1,702,548 0.63 0.29 1,075,687 498,063 169,667 72,923 Sud 3,193,889 0.45 0.15 1,425,369 469,757 224,822 68,779 Sud Ouest 1,959,521 0.46 0.11 891,778 213,451 140,659 31,252 Centre 1,737,648 0.56 0.23 973,309 408,000 153,519 59,736 Centre Est 450,211 0.54 0.22 241,727 97,223 38,127 14,235 Nord Ouest 1,017,862 0.58 0.33 588,955 331,446 92,895 48,528 Abidjan 4,299,514 0.21 0.04 903,801 181,354 142,555 26,552 20,788,297 10,174,034 4,154,011 1,604,737 608,201 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 6. The latest official population projections for Côte d’Ivoire are based on the 1998 census. However, the projected shares of the population living in urban and rural regions do not match actual shares estimated from the latest household survey data. Table 14 presents the official population projection for 2008 by region, and then provides the break-down between urban and rural regions based on the share of urban or rural population in each region in the 2008 household survey. A new national census was collected in 2014 and results are expected to be available early in project implementation. These new census data will be the basis on which the geographical targeting procedures will be finalized. Table 14: Distribution of population headcount by region and urban versus rural regions, 2008 Rural Urban Popul ati on i n Popul ati on i n Popul ati on i n Regi on 2008 2008 2008 Centre Nord 1,347,170 684,223 662,947 Centre Ouest 2,740,529 2,045,766 694,762 Nord Est 1,011,062 876,206 134,856 Nord 1,328,343 1,000,947 327,396 Ouest 1,702,548 1,299,232 403,315 Sud 3,193,889 2,416,789 777,100 Sud Ouest 1,959,521 1,614,209 345,313 Centre 1,737,648 1,178,925 558,722 Centre Est 450,211 323,379 126,832 Nord Ouest 1,017,862 838,254 179,608 Abi djan 4,299,514 4,299,514 20,788,297 12,277,929 8,510,366 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 72 7. Tables 15 and 16 provide the regional distribution of the population in poverty and extreme poverty, separately for urban and rural regions. Overall, 75 percent of the population in poverty lives in rural regions, as well as 83 percent of the population in extreme poverty. Out of the 608,201 households in extreme poverty, 507,477 are estimated to live in rural regions. Table 15: Rural population by poverty line and by region, 2008 Extreme Rural Poverty Poverty Population Households Population in Headcount Headcount Population in in Extreme Households in Extreme Region 2008 (P0) (P0) Poverty Poverty in Poverty Poverty Centre Nord 684,223 0.66 0.39 453,954 264,124 71,602 38,671 Centre Ouest 2,045,766 0.71 0.34 1,447,093 686,436 228,248 100,503 Nord Est 876,206 0.59 0.23 518,398 203,446 81,766 29,787 Nord 1,000,947 0.85 0.52 851,786 515,508 134,351 75,477 Ouest 1,299,232 0.68 0.33 881,503 433,658 139,038 63,493 Sud 2,416,789 0.51 0.18 1,230,049 429,294 194,014 62,854 Sud Ouest 1,614,209 0.50 0.12 800,050 188,184 126,191 27,553 Centre 1,178,925 0.66 0.31 774,188 359,714 122,112 52,667 Centre Est 323,379 0.63 0.27 203,958 87,930 32,170 12,874 Nord Ouest 838,254 0.60 0.36 506,615 297,773 79,908 43,598 Abidjan - - - - 12,277,929 7,667,596 3,466,067 1,209,400 507,477 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Table 16: Urban population by poverty line and by region, 2008 Extreme Poverty Poverty Population Households Population in Headcount Headcount Population in in Extreme Households in Extreme Region 2008 (P0) (P0) Poverty Poverty in Poverty Poverty Centre Nord 662,947 0.47 0.20 313,912 134,200 49,513 19,649 Centre Ouest 694,762 0.40 0.11 278,030 78,619 43,853 11,511 Nord Est 134,856 0.26 0.10 34,974 12,884 5,516 1,886 Nord 327,396 0.54 0.18 175,265 59,511 27,644 8,713 Ouest 403,315 0.48 0.16 194,176 64,405 30,627 9,430 Sud 777,100 0.25 0.05 195,316 40,456 30,807 5,923 Sud Ouest 345,313 0.27 0.07 91,715 25,273 14,466 3,700 Centre 558,722 0.36 0.09 199,117 48,285 31,407 7,070 Centre Est 126,832 0.30 0.07 37,767 9,293 5,957 1,361 Nord Ouest 179,608 0.46 0.19 82,341 33,673 12,988 4,930 Abidjan 4,299,514 0.21 0.04 903,801 181,354 142,555 26,552 8,510,366 2,506,414 687,954 395,334 100,725 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008 . B. Project Development Impact 8. Based on this poverty profile, the project will primarily target the extreme poor located in rural regions. This is justified on two grounds. First, it is aligned with World Bank goal of eradicating extreme poverty. Second, as the cost-benefit analysis below will show, the 73 project is likely to have larger effects on extreme poverty indicators than on poverty indicators. The project will rely on geographical targeting to target the rural regions with the highest incidence of extreme poverty. The following section describes the economic analysis of the (a) project in terms of setting up the social safety net system, (b) project impacts on poverty and (c) a scaled-up program beyond the scope of the project. I. 9. The Project Development Objective is to develop the foundations of a social safety net system and to begin to deliver cash transfers gradually as part of setting up the system. Investments in system set-up are expected to yield efficiency gains in the delivery of cash transfer over time. 10. The project will finance the fixed set-up costs to build a social safety net system. The upfront fixed costs to set-up a social safety net system include the design of a targeting system, the design of a household registry and the design of a payment system. These building blocks require large investments, including in IT infrastructure. The total system set-up costs for the 5 years of the project are estimated to US$6 million, mostly to be incurred in the first 3 years of project implementation. Table 17 provides the estimated cost break-down over the project cycle. Table 17: Estimated cost break-down for social safety net system development within the proposed project Costs over project cycle Year 1 Year 2 Year 3 Year 4 Year 5 Total 1.1a Transfers - 1,341,007 9,387,048 9,387,048 9,387,048 29,502,151 1.1b Roll-out and operational costs of transfers (under Component 2) - 417,050 2,569,352 469,352 469,352 3,925,108 1.2 Accompanying Measures - 220,000 1,540,000 1,540,000 1,540,000 4,840,000 2. System Set-Up 3,000,000 1,500,000 1,000,000 500,000 500,000 6,500,000 3. Project management and M&E 978,100 978,100 978,100 978,100 978,100 4,890,500 4. Total Costs (1.1a+1.1b+1.2+2+3) 3,978,100 4,456,157 15,474,501 12,874,501 12,874,501 49,657,759 4. Total non-transfer costs (1.1b+1.2+2+3) 3,978,100 3,115,150 6,087,452 3,487,452 3,487,452 20,155,608 5. Total admin costs (1.1b+2+3) 3,978,100 2,895,150 4,547,452 1,947,452 1,947,452 15,315,608 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 11. The costs to transfer ratio will decrease sharply over the project cycle and system set-up costs incurred upfront will yield efficiency gains in the delivery of cash transfers over time. Compared to the total costs of the transfers over the five years of the project, the ratio of system set-up costs to transfer costs is estimated at 22 percent. However, most system- building costs will be frontloaded, with an estimated US$4.5 million dollars to be invested in the first two years, and $1million in year 3. 74  By the end of year 3, the system will be fully in place and yearly maintenance costs are estimated to $500,000 a year from that point onwards.  In parallel, the number of beneficiaries will increase over the life of the project, starting with 5,000 beneficiaries and reaching 35,000 beneficiaries in year 3.  Therefore, the ratio of system set-up costs to transfer costs will decrease sharply over the life of the project, from 112 percent in year 2 to 5 percent in year 5.  Similar gains in cost-efficiency will take-place as measured by other cost-transfer ratios (Table 18 and Figure 16).  Cost-efficiency gains will not be limited to the project cycle, but would also apply to potential program scale-up beyond the project cycle. Table 18: Cost-efficiency analyses over project cycle Cost-Efficiency over project cycle Year 1 Year 2 Year 3 Year 4 Year 5 Total Cost-Transfer Ratios Ratio of all non-transfer costs to transfers - 2.32 0.65 0.37 0.37 0.68 Ratio of all admin costs to transfers - 2.16 0.48 0.21 0.21 0.52 Ratio of set-up and management costs to - 1.85 0.21 0.16 0.16 0.39 transfers Ratio of project set-up costs to transfers - 1.12 0.11 0.05 0.05 0.22 - Beneficiary Households per year 0 5,000 35,000 35,000 35,000 Costs per household per year Total costs per household - 891 442 368 368 - Transfer per household - 268 268 268 268 - Cost of accompanying measures per - - household 44 44 44 44 Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 75 Figure 16: Cost-transfer ratios over project cycle Cost-transfer Ratios over Project Cycle 2.50 2.00 1.50 1.00 0.50 0.00 Year 2 Year 3 Year 4 Year 5 Ratio of all non-transfer costs to transfers Ratio of all admin costs to transfers Ratio of set-up and management costs to transfers Ratio of project set-up costs to transfers Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. 12. This section presents ex ante simulations that help to illustrate how best to design the cash transfer project to maximize its poverty-reduction potential. Overall, the potential effect of the project on poverty and extreme poverty over the project cycle is limited. This is expected as the project is a building block operation, which aims to set up a system that would later allow the rapid scale-up of cash transfers in a cost-efficient manner, as described the preceding section. In this context, the first objective of the simulations is shed light on a range of trade-offs in project design, and provide information to set optimal design parameters. 13. The analysis is based on simulations to measure the expected effects of the cash transfers on key poverty indicators. The simulations are performed based on 2008 household survey data. The program effects on poverty are simulated by drawing beneficiaries under different scenarios, assigning them program benefits, and estimating resulting changes in a range of poverty measures. For each scenario, 1000 iterations of the simulations are performed, and the analysis presents the average results in terms of relative reduction in the poverty headcount Foster-Greer-Thorbecke Poverty Index (FGT(0)), the poverty gap (FGT(1)), the severity of poverty (FGT(2)), as well as for the extreme poverty headcount (FGT(0)), extreme poverty gap (FGT(1)) and severity of extreme poverty (FGT(2)). 14. These simulations allow informing key design parameters and benchmarking the effects of the project on poverty. However, it is important to note that the simulations are simple arithmetic computations that do not account for potential behavioral responses 23 and are implemented under fully efficient targeting. Since 2008 is the latest year for which a household 23 In particular, it is assumed that all the transfers are consumed, and the different time paths of various consumption-savings ratio on poverty measures are not explored here. 76 survey can be used to perform detailed poverty analysis (as described earlier in this document in Box 1), the simulations are presented for that year. Population data for 2008 is obtained from the official projections based on the 1998 census. The economic analysis will be replicated in the project targeting manual as soon as the 2015 household survey data and 2014 national census become available. As such, the final targeting decisions will be made on the latest available data. Analysis of 2008 data already provides some clear information on a range of project design parameters. Transfer size 15. According to the 2008 household survey, a monthly household cash transfer of 12,000 FCFA would represent 9 percent of the national poverty line, and 15 percent of the extreme poverty line. Transfers of 12,000 FCFA would not add more than 15 percent to consumption of average poor households, and 21 percent of consumption of extreme poor households24 (Table 19). These are deemed appropriate transfer amounts in light of international experience. Table 19: Transfer Size with Respect to Poverty Line and Extreme Poverty line Average Estimated Monthly Average Estimated transfer size Generosity over Household transfer size Generosity over relative to average Transfer relative to average poor extreme extreme poor Amount poverty line households poverty line households 10,000 13% 8% 18% 12% 11,000 14% 9% 20% 13% 12,000 15% 9% 21% 15% 13,000 16% 10% 23% 16% 14,000 18% 11% 25% 17% 15,000 19% 12% 27% 18% Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Targeting the poor or the extreme poor 16. Simulations show that the program potential effects on most poverty and extreme poverty indicators are maximized if the project targets the extreme poor, as opposed to the poor in general. There is a well-known trade-off between targeting the poor to maximize reduction in poverty incidence, or targeting the extreme poor to maximize reduction in extreme poverty, as well the severity of poverty and extreme poverty. Indeed, targeting households that fall just below the poverty line is the strategy that would maximize the impact of a cash transfer 24 The poverty line is FCFA 241,145 per capita per annum. The average household size among poor households is 6.34 and the average consumption per capita per annum for poor households is FCFA 155,006. The extreme poverty line is FCFA 138,630 per capita per annum. The average household size among poor households is 6.83 and the average consumption per capita per annum for poor households is FCFA 98,510. 77 on poverty headcounts25, although this strategy is clearly not optimal to reduce the severity of poverty. 17. Table 20 presents simulations showing the effects on poverty of targeting 35,000 households under two different scenarios in Côte d’Ivoire: (a) selecting beneficiaries among all poor households, and (b) selecting beneficiary among extreme poor households only. Figure 17 illustrates the main results, where the provision a monthly transfer of 12,000 FCFA to 35,000 households selected among the extreme poor leads to a 0.55 percent reduction of the poverty gap, a 1.17 percent reduction in the severity of poverty, a 1.75 percent reduction in the incidence of extreme poverty, a 2.38 percent in the extreme poverty gap and a 2.84 percent reduction in the severity of extreme poverty. 18. The only indicator for which selecting the beneficiaries among the poor compares favorably to selecting the beneficiaries among the extreme poor is the poverty headcount (FGT(0)), which decreases by 0.35 percent if beneficiaries are selected among the poor. However, in order to maximize impacts on the severity of poverty or any extreme poverty indicators, selecting beneficiaries among the extreme poor is preferable. Table 20: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators Monthly Transfer Poverty Indicators Extreme Poverty Indicators Scenario (FCFA) ΔFGT(0) ΔFGT(1) ΔFGT(2) ΔFGT(0) ΔFGT(1) ΔFGT(2) 10000 0.25% 0.42% 0.56% 0.55% 0.77% 0.94% 11000 0.27% 0.46% 0.61% 0.59% 0.84% 1.01% 35000 randomly selected poor 12000 0.30% 0.49% 0.65% 0.67% 0.90% 1.07% households 13000 0.31% 0.53% 0.70% 0.70% 0.95% 1.13% 14000 0.33% 0.57% 0.74% 0.75% 1.01% 1.19% 15000 0.35% 0.60% 0.79% 0.80% 1.06% 1.24% 10000 0.00% 0.46% 0.99% 1.41% 2.05% 2.50% 11000 0.01% 0.50% 1.07% 1.59% 2.20% 2.65% 35000 randomly selected extreme 12000 0.01% 0.55% 1.17% 1.75% 2.38% 2.84% poor households 13000 0.01% 0.59% 1.25% 1.86% 2.51% 2.97% 14000 0.01% 0.64% 1.34% 1.99% 2.66% 3.14% 15000 0.01% 0.68% 1.41% 2.12% 2.78% 3.26% Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Simulations based on 1000 replications for each scenario, for a nationwide program with perfect targeting, no behavioral response and excluding administrative cost. 25 de Janvry, A. and E. Sadoulet (2006). "Making Conditional Cash Transfer Programs More Efficient: Designing for Maximum Effect of the Conditionality." The World Bank Economic Review 20(1): 1-29. 78 Figure 17: Program effects on poverty indicators, by target group 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Poverty Poverty Gap Poverty Severity Extreme Extreme Extreme Headcount Poverty Poverty Gap Poverty Severity Headcount Targeting All Poor Targeting Extreme poor Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Geographical scope of the project 19. The effect of the program on poverty indicators is larger when it targets the extreme poor in rural regions, and program effects on the severity of extreme poverty is maximized with targeting rural regions with the highest incidence of extreme poverty. Overall, there are gains in targeting the poor in rural regions, as opposed to attempting to cover both urban and rural regions. The only exception is the poverty headcount, for the same reason as discussed above. As described in the next section, Table 21 presents simulations illustrating how the effects of the program on poverty vary depending on its geographical scope. 20. Within rural regions, there are gains from further geographical targeting of the project to the 5 regions with the highest incidence of extreme poverty (Center-North/Centre Nord, Center- West/Centre Ouest, North/Nord, West/Ouest, Northwest/Nord Ouest), particularly in terms of poverty severity, extreme poverty gap and extreme poverty severity. The simulations illustrate clear gains in focusing the programs in rural regions. Results from the simulations are more sensitive to exactly define the optimal geographic concentrations within the extreme poor in rural regions. The targeting manual will update the analysis based on the 2015 household survey and 2014 census in order to define the optimal geographical targeting to maximize the potential poverty impact of the project. 21. As mentioned in the previous analysis of cost-efficiency, system set-up costs incurred upfront will yield efficiency gains in the delivery of cash transfers over time. Cost-efficiency gains will not be limited to the project cycle, but would also apply to hypothetical program scale- up beyond the project cycle. In this section, we illustrate the potential poverty effects of such a hypothetical program scale-up that could take place beyond the cycle of the proposed project. 22. Simulations of poverty effects of a program scale-up are obtained by relaxing the budget constraint for a hypothetical scenario in which full coverage of all the extreme poor households in the bottom 20 percent would be achieved. Table 22 presents these simulations with varying coverage of the extreme poor households. For instance, a program with 160,000 households could cover approximately a third of extreme poor households in rural regions for an 79 annual budget of US$42.9 million, or 0.18 percent of Gross Domestic Product (GDP). Such a level of coverage would lead to an 8.7 percent decrease in extreme poverty headcount, 12 percent decrease in extreme poverty gap and 14.5 percent decrease in extreme poverty severity. 23. A program covering all 507,477 extreme poor households in rural regions would cost US$136 million annually, or 0.58 percent of GDP (Table 22). Such a program would reduce the extreme poverty headcount by 25.4 percent, the extreme poverty gap by 35 percent and the severity of extreme poverty by 42.2 percent. 24. Finally, a program covering all 608,201 extreme poor households in the entire country would cost US$163 million annually (0.70 percent of GDP). This program would be expected to lead to a 30.5 percent reduction in the incidence of extreme poverty, a 41.1 percent reduction of the extreme poverty gap and 49.1 percent of the severity of extreme poverty. Table 21: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators with Varying Geographical Scope Monthly Targeted Poverty Indicators Extreme Poverty Indicators Transfer (FCFA) Households ΔFGT(0) ΔFGT(1) ΔFGT(2) ΔFGT(0) ΔFGT(1) ΔFGT(2) Nationwide Selection among the poor 12000 35000 0.30% 0.49% 0.65% 0.67% 0.90% 1.07% Selection among the extreme poor 12000 35000 0.01% 0.55% 1.17% 1.75% 2.38% 2.84% Rural areas only Selection among the poor 12000 35000 0.29% 0.57% 0.80% 0.82% 1.15% 1.40% Selection among the extreme poor 12000 35000 0.01% 0.61% 1.29% 1.91% 2.63% 3.16% Rural areas, excluding the South Selection among the poor 12000 35000 0.23% 0.55% 0.81% 0.79% 1.21% 1.51% Selection among the extreme poor 12000 35000 0.01% 0.59% 1.27% 1.68% 2.58% 3.22% Rural areas of 5 regions with higher incidence of extreme poverty (centre Nord, Centre Ouest, Nord, Ouest, Nord Ouest) Selection among the poor 12000 35000 0.21% 0.57% 0.88% 0.89% 1.35% 1.74% Selection among the extreme poor 12000 35000 0.01% 0.61% 1.31% 1.66% 2.65% 3.41% Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Simulations based on 100 replications for each scenario, under perfect targeting, with no behavioral response and excluding administrative cost. 80 Table 22: Simulations of Cash Transfer Program Effects on Poverty and Extreme Poverty Indicators: Various scale-up scenarios for Program with Monthly Household Payments of 12,000 FCFA Coverage Poverty Extreme Poverty Rural extremely Extreme Scenario Households poor Poor Annual Budget % GDP DFGT(0) DFGT(1) DFGT(2) DFGT(0) DFGT(1) DFGT(2) 40000 8% 7% 10,726,257 0.05% 0.0% 0.7% 1.5% 2.2% 3.0% 3.7% Targeting 80000 16% 13% 21,452,514 0.09% 0.0% 1.4% 3.0% 4.4% 6.0% 7.3% extreme poor 160000 32% 26% 42,905,028 0.18% 0.0% 2.8% 5.9% 8.7% 12.0% 14.5% households in 320000 63% 53% 85,810,056 0.37% 0.1% 5.6% 11.8% 17.4% 24.1% 29.0% rural areas 480000 95% 79% 128,715,084 0.55% 0.2% 8.2% 17.2% 25.4% 34.9% 42.1% 507477 100% 83% 136,083,218 0.58% 0.3% 8.3% 17.3% 25.4% 35.0% 42.2% Full national Coverage 608201 100% 163,093,006 0.70% 0.1% 9.6% 20.2% 30.5% 41.1% 49.1% Source: World Bank staff estimates based on Household Budget Survey (ENV), 2008. Simulations based on 1000 replications for each scenario, under perfect targeting, with no behavioral response and excluding administrative cost. C. Rationale for Public Sector Provision/Financing versus Alternatives 25. Given well-known market failures in delivering welfare services, the government’s role in establishing a safety net system in Côte d’Ivoire is justified. National social safety net systems intervene where smaller, local pilots can hardly be expected to substantively mitigate shocks and protect households from falling deeper into poverty. A scaled-up program based on the proposed project, assuming the same overall design and covering all l,608,201 extremely poor households in Côte d’Ivoire, would require a budget of US$163 million per year (i.e., 0.70 percent of GDP). This program would be expected to lead to a 30.5 percent reduction in the incidence of extreme poverty, a 41.1 percent reduction of the extreme poverty gap and 49.1 percent of the severity of extreme poverty. This level of spending is comparable to other countries’ spending on similar cash transfer programs such as in Brazil. Such an investment is expected to reduce the extreme poverty headcount by approximately 25 percent, which would not otherwise be necessarily achieved only by means of local pilot initiatives for fewer households or by public investment in infrastructure and basic services alone, which do not stimulate consumption or investment in human or physical capital. 26. Vertical, donor-funded social assistance programs, such as school feeding or emergency public works projects, have been introduced in Côte d’Ivoire but will not achieve more ambitious poverty-reduction goals without significant public investment in scaling-up and consolidating social safety net programs at a national level. Existing regional disparities in poverty have been exacerbated by a protracted period of successive crises in Côte d’Ivoire over 1999-2011, building on two preceding decades of economic downturn, resulting in a high level of poverty that will only harm consumption and purchasing power, which will retard inclusive growth targets. The project has been design therefore to institute a national system for long-term effectiveness as opposed to an emergency, pilot system to address short-term shocks alone. D. Value-Added of World Bank Contribution 81 27. The Bank, with a track record of having supported the establishment of national social safety net programs in multiple countries, brings a unique technical contribution to the design of the proposed project. The Government of Côte d’Ivoire has specifically requested the Bank’s technical and financial contribution to capitalize on over twenty years’ experience in the design and implementation of social safety net systems worldwide. The Bank brings its experience and knowledge of Côte d’Ivoire based on its long-standing engagement in- country on related sectors such as growth, employment, education, health and rural development. E. Summary: Project Justification 28. Overall, the economic analysis demonstrates the project design is economically viable and technically sound as compared to alternative options. Simulations show that the program effects on most poverty and extreme poverty indicators are maximized if the project targets the extreme poor, as opposed to the poor in general. The effects of the program on poverty indicators are larger when it targets the extreme poor in rural regions as opposed to both rural and urban regions. Also, program effects on the severity of extreme poverty are maximized with targeting rural regions with the highest incidence of extreme poverty. 82 Annex 6: Detailed Sectoral Context (Human Capital) Côte d’Ivoire: Productive Social Safety Net Project 1. Côte d’Ivoire is not on track to achieve most of the Millennium Development Goals (MDGs) by 2015, particularly in terms of education and health in rural regions. Population growth, combined with fast urbanization, puts high pressure on the capacity of basic social infrastructure to meet growing demands. For example, Côte d’Ivoire will need to create at least 1,000 new classrooms a year to keep pace with the increase in the number of school-age children. Côte d’Ivoire will also need to significantly improve access to and quality of education, family planning, and water and sanitation (particularly in urban regions). At the same time, improving gender parity in school, as well as halting the spread of HIV/AIDS and improving access to an improved source of water, may be possible with sustained investments. 2. The education sector in Côte d’Ivoire is characterized by significant disparities across region, social-economic status, income and gender. Despite increased numbers of students in schools, dropout and repetition rates are high. At the primary level, the number of pupils increased by 6 percent on average between 2009 and 2013 triggering a 10-point rise in gross enrollment ratio. The number of students in secondary level has also increased by 7.3 percent during the same period and reached over 1.2 million students in 2013. For nearly thirty years, dropout rates at the primary level have remained high in Côte d’Ivoire. In addition, the proportion of repeaters has been hovering around 20 percent between 1980 and 2014 (i.e., 20 percent in 1980, 24 percent in 1990 and 22 percent in 2014). For comparison, repetition rates for Mauritania, Senegal, and Niger are between 3 and 4 percent. These high and relatively stagnant repetition rates, especially at the primary education level, suggest that the issue is a structural feature of the system. 3. In terms of gender, wide disparities are seen in primary enrollment and completion, secondary and tertiary enrollment and literacy. School non-enrolment is rampant in rural regions, particularly for girls. The primary school enrolment rate among girls was 64 percent as of 2012, compared to 71 percent among boys and a national average of 68 percent. Despite a per capita income that is nearly half that of Côte d’Ivoire’s, primary school completion rates in Sierra Leone, Gambia, and Guinea are higher (Figure 18). According to the 2012 World Development Report on Gender, gender contributes more to inequality among school attendance in Côte d’Ivoire than in any other highly unequal country, and has a much greater impact than wealth on inequalities in access to education. At the primary level, whereas many other developing countries have achieved gender equality, the female/male enrollment ratio in Côte d’Ivoire is still a very low 0.81. Girls also finish primary school at a lower rate: 41 percent compared to 58 percent for boys. At higher levels of education, the most recent figures from the World Development Indicators show that in 2002 the ratio of females to males in secondary school was just 0.50 (i.e. boys are twice as likely to be enrolled), with the tertiary enrollment ratio at 0.55. Girls living in rural regions, in families with low income, are the least likely to achieve primary school. Only 38 percent of girls residing in rural regions and the poorest quintiles complete the first grade of primary school compared to nearly 90 percent of girls who complete primary school in urban regions and the richest quintiles. Violence against girls also persists and poses as a barrier to educational achievement. In the academic year 2013-14 there 83 were 1334 documented cases of pregnancy at the primary level and about 3,000 documented cases of pregnancy at the secondary level. Figure 18: Health and education indicators versus GNI in Côte d’Ivoire and West African region Under-5 Mortality rate by per capita GNI, 2011 200 Sierra Leone Mali Guinea-Bissau 150 Burkina Faso Guinea Niger Nigeria Côte d'Ivoire Togo Mauritania Benin Gambia, The 100 Ghana Senegal 50 400 600 800 1000 1200 1400 GNI per capita, Atlas method (current US$ ) Primary completion rate by per capita GNI, 2011 10 0 Ghana 80 Togo Sierra Leone Benin Mauritania Nigeria Guinea-Bissau Gambia Guinea 60 Côte d'Ivoire Mali Niger Burkina Faso 40 400 600 800 1000 1200 1400 GNI per capita, Atlas method (current US$ ) Note: 2010 numbers for Burkina Faso, Guinea-Bissau, Mauritania and Nigeria 84 Source : World Development Indicators, World Bank. 4. A combination of supply and demand constraints are among the most important factors in determining school attendance and achievement. In addition to challenges related to enrollment outlined above, the transition between levels of education is a significant challenge. A third of children abandon school before ending the primary education cycle. There is also a worrisome decline in retention rates of both the first and second cycle of secondary school. The first dropped from 55.3 percent in 2006-07 to 47.5 percent in 2012-13; and the latter witnessed a sharp deterioration by more than 20 percentage points (from 48.2 percent in 2006-07 to 20.6 percent in 2012-13). Basic education is limited by lack of infrastructure, which does not often allow for continuity between levels of schooling in rural regions. High repetition rates are particularly burdensome to the poorest families. However, high cost and distance to schools have a strong impact on enrollment and dropout, with household spending on education fees reaching as high as 34 percent of household expenditure26. 5. Likewise, health MDGs are largely off-track, notably under-five child mortality, maternal mortality and malnutrition. Under-five mortality in Côte d’Ivoire stands at 108 deaths per 1,000; however, it is 125 per 1,000 in rural regions as compared to 100 per 1,000 in urban regions. Maternal mortality is one of the highest in the region at 614 per 100,000 live births as of 2012, and only 59 percent of births are attended by skilled personnel. Among rural regions, 44 percent are attended by skilled personnel as compared to 84 percent in urban regions. Likewise, only 35 percent of births in the poorest quintile are attended, as compared to 91 percent for the richest. Malnutrition is also worse in rural regions; 28 percent of children in rural regions are stunted as compared to 16 percent in urban regions. Likewise, three times as many children in the poorest quintile are stunted as in the richest quintile (32 versus 12 percent, respectively). 6. Similar to educational constraints, Côte d’Ivoire faces considerable challenges related to income and regional inequalities in health services access, affordability and use. Access issues include where health facilities and staff are located, and whether health services are delivered in the community. In Côte d’Ivoire, less than 45 percent of the population lives within 5 kms of a health center, with a large share of the poor not having access to a health center (12 percent) or to a general hospital (26 percent) in 2008. The 2012 DHS indicated that 60 percent of women in the poorest quintile mentioned distance to health services as a major barrier to maternity care, compared to 25 percent for women in the wealthiest quintile. Issues of access are currently being partially addressed by the President’s Emergency Fund (PPU) and through development partners via interventions such as the World Bank’s Emergency Infrastructure Project, although funding for necessary equipment for these facilities has to date not been provided. 7. Affordability in the health sector is currently being addressed through initiatives such as “Targeted Free Services” and the proposed Couverture Maladie Universelle (CMU) program, which aims to improve pre-paid health insurance coverage. At the present time, 26 Country Status Report, 2009. 85 about 6 percent of the population is covered by health insurance. The groups covered are primarily in the formal sector and includes Government workers through the “Mutuelle Générale des Fonctionnaires et Agents de l’Etat de Côte d’Ivoire” (MUGEFCI); separate insurance funds for the military, the national police, and municipal workers; as well as the Social Health Insurance Fund for the private sector (“la Caisse Nationale de Prévoyance Sociale” (CNPS), and “Mutuelles” which have been set up by/for private companies. The mechanism for integrating those who already have coverage into a national pooled system is part of an ongoing discussion that has not yet been resolved. 8. Despite public investment in services, economic barriers therefore remain a major to accessing basic social services. For maternal health services, recent survey data indicate that 67 percent of respondents cited cost as the major barrier. This figure rises to 83 percent in the rural center as compared to 64 percent in urban Abidjan. Taken together, these disparities highlight that barriers to access to basic services for poor Ivoirians include awareness, cost and distance constraints. The proposed project seeks to lay the foundations of a social safety net system and productivity-enhancing measures to help these households overcome these challenges. 86 MAP 87