OFFICIAL USE ONLY IDA/R2007-0039/1 March 1, 2007 Streamlined Procedure For meeting of Board: Tuesday, March 20, 2007 FROM: Vice President and Corporate Secretary Burundi - Community and Social Development Project Project Appraisal Document Attached is the Project Appraisal Document regarding a proposed grant to the Republic of Burundi for a Community and Social Development Project (IDA/R2007-0039). This project will be taken up at a meeting of the Executive Directors on Tuesday, March 20, 2007 under the Streamlined Procedure. Distribution: Executive Directors and Alternates President Bank Group Senior Management Vice Presidents, Bank, IFC and MIGA Directors and Department Heads, Bank, IFC and MIGA 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 Group authorization. Documentof The World Bank FOR OFFICIAL USEONLY ReportNo: 38738 PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDGRANT INTHEAMOUNT OF SDR26.9 MILLION (US$40 MILLIONEQUIVALENT) TO THE REPUBLIC OF BURUNDI FORA COMMUNITY AND SOCIAL DEVELOPMENT PROJECT February22,2007 SustainableDevelopment-CentralAfrica CountryDepartment02 AfricaRegionalOffice This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective 01/3 1/2007) Currency Unit BurundiFranc 1,048 BF US$l USs1.48945 SDR 1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Loan APSD Decentralizedservices o f the DGDMAD BURSAP BurundiSocialAction Project cc Communal Council CCDC Communal Community Development Committee CDA Communal Development Agent CDD Community DrivenDevelopment CDP Communal Development Plan CSA Communal Social Agent DGDMAD Department ofDecentralizationand Self-Development DRRP Demobilization, Reinsertion and Reintegration Program FA Facilitation Agency FMR FinancialMonitoring Report IDA InternationalDevelopment Association IEC Information, Education and Communication IFAD UnitedNations InternationalFundfor Agricultural Development I S N InterimStrategy Note NOSC National Orientation and Steering Committee P I M Project Implementation Manual PIU Project Implementation Unit PRADECS Community and Social Development Project PRASAB Agricultural Rehabilitationand Support Project PRSP Poverty Reduction Strategy Paper PSR Public Sector Reform SDR Special Drawing Rights SOE Statement o f Expenditures Acting Vice President: Hartwig Schafer Country ManagedDirector: Pedro Alba Acting Sector Manager: Franqois L e Gall Task Team Leader: Valerie Layrol FOROFFICIAL USEONLY CONTENTS A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 8 1. Country and Sector Issues................................................................................................... 8 2. Rationale for Bank Involvement....................................................................................... 10 3. Higher Level Objectives to Which the Project Contributes.............................................. 12 B . PROJECT DES'CRIPTION ............................................................................................... 12 Lending Instrument................................................................................................................... 12 1. Project Development Objective and K e y Indicators......................................................... 13 2. Project Components.......................................................................................................... 13 3. Lessons Learned and Reflected inProject Design............................................................ 16 4. Alternatives Considered and Reasons for Rejection......................................................... 17 C . IMPLEMENTATION ........................................................................................................ 18 1. Partnership Arrangements................................................................................................. 18 2. Institutional and ImplementationArrangements .............................................................. 19 3. Monitoring and evaluation o f outcomesh-esults................................................................ 23 4. Sustainability..................................................................................................................... 24 5. Critical risks and possible controversial aspects............................................................... 24 6. Loadcredit Conditions and Covenants ............................................................................ 26 D . APPRAISAL SUMMARY ................................................................................................. 27 1. Economic Analysis ........................................................................................................... 27 2. Technical........................................................................................................................... 27 3. Fiduciary ........................................................................................................................... 27 4. Social................................................................................................................................. 29 5. Environmental................................................................................................................... 31 6. Safeguard Policies............................................................................................................. 33 7. Policy Exceptions andReadiness...................................................................................... 34 Annex 1.Country and Sector or ProgramBackground ........................................................ 35 Annex 2 .Major RelatedProjectsFinancedby the Bank and/or Other Agencies ...............41 Annex 3 .ResultsFramework and Monitoring ....................................................................... 43 This document has a restricted distribution and may b e used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Annex 4 DetailedProjectDescription . ...................................................................................... 52 Annex 5 .ProjectCosts .............................................................................................................. 61 Annex 6.ImplementationArrangements ................................................................................ 62 Annex 7 .FinancialManagementand DisbursementArrangements .................................... 69 Annex 8 .ProcurementArrangements ..................................................................................... 92 Annex 9 .SafeguardPolicyIssues ............................................................................................. 98 Annex 10.Project Preparationand Supervision .................................................................. 101 Annex 11.Documents in the ProjectFile .............................................................................. 103 Annex 12.Statementof Loansand Credits ........................................................................... 104 Annex 13: Country at a Glance ............................................................................................... 106 Annex 14: Map .......................................................................................................................... 108 BURUNDI COMMUNITY AND SOCIAL DEVELOPMENT PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTS3 Date: February 22, 2007 Team Leader: Valerie Marie Helene Layrol Country Director: Pedro Alba Sectors: Other social services (100%) Sector ManagerDirector: Franqois L e Gall Themes: Conflict prevention and post-conflict reconstruction(P);Decentralization (S);Other social development (S);Other rural development (S) Project ID: PO95211 Environmental screening category: Partial Assessment Lending Instrument: Specific InvestmentLoan [ ] Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 40.00 Proposed terms: Borrower: Ministry o fFinance PO Box: 1830 Tel. (257) 222775 Bujumbura Burundi ResponsibleAgency: MinistryofInterior anc Public Security C/O Executive Secretary Tel.: (257) 254498 Email: gahungu2003@yahoo,fr Bujumbura Burundi Estimateddisbursements (Bank FY/US$m) 8 10 11 12 ~ ~ ~ ;Y 9 0 0 0 0 h u a l 6.00 9.00 12.00 10.00 3.00 0.00 0.00 0.00 0.00 hmulative 6.00 15.00 27.00 37.00 40.00 0.00 0.00 0.00 0.00 Project implementation period: Start July 2007 End: July 2012 Expected effectiveness date: June 30, 2007 Expected closing date: December 12, 2012 Does the project depart from the CAS incontent or other significant respects? Re$ PAD A.3 []Yes [XINO Does the project require any exceptions from Bank policies? Re$ PADD.7 [ ]Yes [XINO Have these beenapproved by Bank management? [ ]Yes [XINO I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [XIYes [ ] N o Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ]No Project development objective Re$ PAD B.2, TechnicalAnnex 3 The project development objective is to establish and operationalize a decentralized, participatory, and transparent financing mechanism that empowers local governments and communities to provide better and equitable local service delivery. The project would achieve its objective through community empowerment, capacity building (planning, managerial, financial, and technical), investmentsin socioeconomic projects, and social cohesion activities. Project description[one-sentence summay of each component] Re$ PAD B.3.a, Technical Annex 4 The Project has three main components: 0 Capacity Building-US$6 million. This component would empower the stakeholders for the decentralization. It would focus on strengthening the capacities o f communes and communities to: (i) facilitate local development and (ii) augment social cohesion and inclusion. FinancingSubprojectsfor Local Development-US$30 million. This component would finance collective interventions as identified in communal development plans or arising from the participatory planning process of the communes and communities if no communal development plan i s yet inplace. 0 Project Management, Monitoring and Evaluation, and Communication- US$3.4 million. The project would finance spending related to technical, administrative, and financial management; strengtheningthe capacity o f the structures that would coordinate project implementation. An integrated M&E system would be set up. The project would also implement communication and informative strategies. Which safeguard policies are triggered, ifany? Re$ PAD D.6, TechnicalAnnex 10 Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/CP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, beingrevised as OP 4.11) [ ] [XI InvoluntaryResettlement (OP/BP 4.12) [XI [ I Indigenous Peoples (OD 4.20, beingrevised as OP 4.10) [XI [ I Forests (OP/BP 4.36) [I [XI Safety o fDams (OPBP 4.37) [I [XI Projects inDisputedAreas (OP/BP/GP 7.60)* [ I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI Significant, non-standard conditions, if any, for: Re$ PAD C.6 Boardpresentation: N O Loadcredit effectiveness: 1. Recipient has appointed external auditors with qualifications and experience satisfactory to IDA. 2. Recipient has adopted the Project Implementation Manual (PIM), the Administrative, Financial and Accounting Manual, and the Monitoring and Evaluation Manual in form and substance satisfactory to IDA. 3. Recipient has completed the recruitment o f the Executive Secretariat including (i) a capacity building specialist, (ii)a civil works specialist, (iii)a socioenvironmental specialist, and (iv) a Monitoring and Evaluation specialist, under terms o f reference acceptable to IDA. 4. Recipient has established a financial management system in form and substance satisfactory to IDA. Covenants applicable to project implementation: YES * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas A. STRATEGIC CONTEXT AND RATIONALE 1. Countryand Sector Issues 1. Burundiis a landlocked country o f 7.2 million inhabitants (2003), inwhich 91 percent o f the population lives in rural areas. The country is emerging from more than a decade of civil conflict that started with the 1993 coup d'Ctat against its first elected government. The last decade o f civil war resulted inthe killingo f an estimated 300,000 people and the displacement o f 1.2 million (16 percent o f the population) during the conflict. 2. Burundi is one of the poorest countries inthe world due to the devastating effects of the war on its economy and living conditions o f the population, particularly in rural areas. GDP per capita has fallen by almost 40 percent from US$l80 in 1994 to US$110 in2003. The percentage o f people living on less than one dollar a day has nearly doubled, from 35 percent overall to 68 percent in 2005. The country's social indicators remain among the weakest in Sub-Saharan Africa. The Arusha Peace Agreement o f August 2000 initiated a peace process that was successfully concluded with the installation o f a democratically elected government in August 2005. The demobilization o f soldiers and excombatants has been satisfactory, and the country has made good initial progress in stabilizing the economy, implementing financial and structural reforms, and beginningto restore social services. 3. The main constraints and issues identifiedare the following: Insecurity, Social Instability, and Depleted Social Capital 4. Following the country's tragic cycle o f poverty and conflict, insecurity i s still omnipresent. Poverty made the population more receptive to ethnic-based mobilization; and conflict gradually destroyed human, physical, and social capital. The conflict created a growing population o f vulnerable groups. Sources o f insecurity and social instability within the country are still numerous: lack o f physical, food, social, and environmental security; extreme land scarcity; unequal access to services; return o f refugees and internally displaced persons; strong population growth (2.7 percent annually in 2003); and unequal access to resources related to gender, regions, and vulnerable groups. Exclusion and inequity reinforce poverty. Rebuilding social capital at the community level i s critical to restore adequate delivery o f social services, and to consolidate the peace process. Improving social conditions i s critical to ensure that communities are supportive ofthe peaceprocess. Limited Public Infrastructure and Socioeconomic Services 5. Communities alack basic social services due to limited access and poor geographical distribution o f infrastructure and services inall main sectors such as education, health, and water. 8 0 Health. Many years o f conflict have destroyed most o f Burundi's health care system due to the lack o f resources to the sector and o f adequate health care personnel. Under- funding the system has resulted in understaffed facilities, common drug stock outages, and large financial barriers to access health services. Most o f the qualified health care personnel are located inBujumbura. Resulting from the lack o f health services, major causes o f morbidity and mortality are preventable infections, communicable diseases and traumas, malaria, acute respiratory infections, tuberculosis, diarrhea, and malnutrition. Infant mortality i s high at an estimated 169 per 1,000. Maternal mortality i s relatively high as well with 800 per 100,000 live births. Life expectancy dropped by nearly 20 percent from 51 years (1993) to 42 years (2005). HIV/AIDSprevalence i s 11.5 percent. As peace and stability increase, the new health authorities are confronted with the challenge o f responding to emergency needs, including those o f returning refugees and the internally displaced, while ensuring the sustainable development o f the system. 0 Sanitation and potable water. Sanitation services inrural areas are quite limited. Only 22 percent o f the population have access to functional facilities; 90 percent o f these are traditional pit latrines. In rural areas, only 43 percent o f the population has access to potable water. Forty percent o f the rural water supply i s derived from the existing 22,000 improved spring facilities, the bulk o f which are nonfunctional. This situation can be explained by the lack o f maintenance o f water-related infrastructure. Furthermore, the distances to traditional potable water sources are long. 0 Education. The decision in September 2005 to eliminate "school fees" has resulted in a huge increase in first grade enrollment. Thus, the primary school enrollment rate has significantly increased and surpassed the pre-crisis level, with a gross enrollment close to 100 percent in 2005-06. Even though the number o f children o f school age attending school has never been so high, the quality o f education has severely deteriorated due to the conflict and insecurity. In 2003-04 only 40 percent o f the schools in Burundi were built o f hard or in semihard materials with adequate roofs. Electricity and safe water are almost nonexistent in Burundi's schools--only 5 percent and 31 percent, respectively. Sixty-six percent o f the schools are fenced and have a school garden, and 79 percent have toilet facilities. Education at all levels suffers from a lack o f qualified teachers. Shortcomings o f infrastructure and teaching materials further constrain educational performance. As a result, less than half o fthe population i s literate. Transport. The prolonged lack o f maintenance and the destruction o f the country's road network by warring factions have placed the network in a "nonmaintainable" status. In the absence o f a proper planning strategy, the very limitedresources allocated to the road sector are being spread over dispersed and under-coordinated interventions. The sector also has been depleted o f its skilled and professional staff. Most are reported to have fled the country as refugees. As a small landlocked country, Burundi depends on its road network for transport. The enhancement o f the road network including secondary roads would greatly improve food security and access to health services. 9 Limited Capacity of Local Governments 6. Local governments are characterized by limited capacity. Much o f the public sector's human resource base has been destroyed, and capacity building at the local level i s an ongoing process. Lack o f transparency and predictability inpublic resource management as well as over- centralization also has become major concerns. Financial transfers are not effective because mechanisms for financial transfers to communes are not in place. Decentralization i s a recent phenomenon. The Communal Law (Loi communale) was proclaimed in April 2005. Commune elections were organized in June 2005 and were followed by community elections in September 2005.' The distribution o f responsibilities between the state and local governments i s not finalized, and the regulatory framework for fiscal decentralization and transfer o f human resources and responsibilities still needs to be completed. Capacity building needs among communes and communities are severe for financial management, governance, and planning. 7. The Poverty Reduction Strategy Paper (PRSP) lays down the foundations for the country to address some o f the above constraints. The paper i s articulated around four main pillars: (i) improving governance and security, (ii) promoting sustainable equitable growth, (iii) developing human capital, and (iv) fighting HIV/AIDS. The government would improve governance and security through (i) negotiating a permanent global cease-fire, (ii) pursuingthe implementation o f the demobilization programs, (iii) staffing the defense and security army with professional soldiers, and (iv) disarming the civil population and combating light weapons proliferation. The government would address human capital development issues by improving the quality o f socioeconomic services in cooperation with beneficiaries' communities and has identified priority actions in the health, education, water and sanitation, and housing sectors. Concerning HIV/AIDS, the government i s pursuingprevention, access to treatment, and support to the most affected families to meet their basic needs. 8. In working on its decentralization policy, the government is committed to take into consideration pre-existing local development institutions. The two main ones are the Community Development Committees, which were set up under previous development projects before the Communal Law, and the Poverty Reduction Communal Committees/Poverty Reduction ` Provincial Committees, which were set up democratically by communities themselves as a mandatoryrelay for the country's socioeconomic development. 2. Rationale for Bank Involvement 9. The Africa Action Plan supports scaling up support to enhance the development o f local governments to improve service delivery, accountability and participation. The plan also backs the increase in the number o f projects with community-driven development (CDD) funding, because it has proved to be an effective means to rebuild societies emerging from war and conflicts. I InBurundi, ``community'' refers to a "village." 10 10. CDD approaches help to both address urgent local needs and restore the trust and relationships that collapsed as a result o f conflict. The project also would contribute to improve donors' coordination with regard to interventions at the communal level as it would lay the foundations for long term communal development, which would pave the way for additional donor contributions later. The project would ensure local transparency and accountability to improve the effective use o fresources at the local level. 11. Following the installation o f the democratically elected government in August 2005, the Bank approved an Interim Strategy Note (ISN) for Burundi to set up a road map for Bank support to the country for FY06-FY07. The I S N has two main objectives. The first i s to consolidate the achievements o f the past three-year transition period, and, inparticular, to ensure that communities and population have access to basic services and are supportive o f the peace process and economic reform agenda. The second objective i s to lay the bases for sustained economic recovery and growth. 12. The Community and Social Development Project (PRADECS) comes at a critical time for the country because socioeconomic services delivery have been greatly weakened. The proposed project i s a key element o f the I S N and supports three o f the main pillars o f the upcoming PRSP: (i) improving governance and security, (ii) promoting sustainable equitable growth, and (iii) developing human capital. It supports the achievement o f the first objective o f the I S Nby increasing communities' access to basic socioeconomic services as well as enhancing social stability. 13. This project is a key instrumentto support economic and social recovery in the country and rebuild social capital. Given its extensive involvement in CDD in other post-conflict settings, the Bank has a clear comparative advantage in this area. CDD has translated into the achievement o f quick and tangible results on the ground when communes are giventhe financial resources to undertake activities that respond to their own priorities. Rebuildingsocial capital has a sustainable and positive impact-both directly on community well-beingand instrumentally on buildinglong-termpeace. 14. The proposed project would draw on the Bank's previous experience in implementing community-driven projects inthe country, such as the Burundi Social Action Project (BURSAP) Iand11.BURSAPsupportedthecreationofCommunityDevelopmentCommittees. Italso contributed to the effective participation o f populations in planning and sustainably implementing socioeconomic infrastructure projects. PRADECS would be able to capitalize on BURSAP's accomplishments, while empowering more communes and communities. The proposed project also would complement other operations in the country, such as the activities already undertaken under the Demobilization, Reinsertion and Reintegration Program (DRRP). PRADECS would buttress and sustain the results obtained under DRRP, because security, social stability, and service delivery are closely interlinked. A successfully implementedPRADECS could reduce the prospects o f future conflicts. It also would complement the activities o f the Agricultural Rehabilitation and Support Project (PRASAB). The latter directly improves food security by revitalizing and diversifying agricultural production and establishing sustainable land management, 11 15. The proposed project would both address constraints to poverty reduction and community well-being that PRASAB does not address, and reinforce and increase PRASAB's development achievements. 16. Furthermore, the project would develop strong linkages with other sectoral WB projects such as the ongoing Roads Sector Development Project and Education Support Project, as well as the Health Support Project under preparation. Local demands would arise through the participatory mechanism set up under PRADECS and would be relayed to the sector ministries. PRADECS could finance local infrastructure, but the project would draw on the sector ministries' technical expertise concerning consistency with national standards and with sector policies. 17. The Bank's involvement has facilitated close donor collaboration during project preparation. It i s anticipated that PRADECS would foster cooperation and coordination among bilateral and multilateral donors during its implementation. In this way, the project would help government to leverage additional fundingto implement its decentralization strategy. 3. Higher Level Objectivesto Which the Project Contributes 18. The proposed Community and Social Development project would improve the livelihoods of communities and therefore would contribute to five Millennium Development Goals: (i) eradicate extreme poverty and hunger; (ii) achieve universal primary education; (iii) reduce child mortality; (iv) improve maternal health; and (v) combat HIV/AIDS, malaria, and other diseases. PRADECS would improve the quality o f socioeconomic infrastructure and its access, improve accountability and governance at the local level, and rebuild social capital and social cohesion. 19. The project is fully consistent with Burundi's PRSP (under preparation) and is aligned with its priorities. PRADECS addresses 3 o f the PRSP's 4 pillars in that it seeks to empower communes and communities to improve local governance and social cohesion, and to improve access to socioeconomic infrastructure and services. 20. The proposed project would contribute to the decentralization launched by the government by strengthening capacities o f communes and communities. They would be empowered with increased planning, managerial, financial, and technical responsibilities and capacities. B. PROJECT DESCRIPTION LendingInstrument 21. The proposed Community and Social Development Project would be supported through a grant. 22. Implementation period: 5 years 12 1. ProjectDevelopmentObjectiveand Key Indicators 23, The project development objective is to establish and operationalize a decentralized, participatory, and transparent financing mechanism that empowers local governments and communities toprovide better and equitable local sewice delivery. The project would achieve its objective through community empowerment, capacity building (planning, managerial, financial, and technical), investmentsinsocioeconomic projects, and social cohesion activities. The project would monitor progress toward achieving its outcome through the following key outcome indicators, to be assessed as o f the closing date. These indicators would be disaggregated by gender/age grouphulnerable groups whenever possible and would be measured by a combination o f quantitative and qualitative approaches: 0 At least 430 Community- and Commune-level Subprojects have been completed; 0 At least 70 percent o f the infrastructure financed under Subprojects is maintained and operational two years after completion o f the respective Subproject; 0 At least 70 percent o f the targeted Communes show an increase in access to and use of primary health, primary education, and water services, as compared with that at the time of conclusion o fthe respective Subproject GrantAgreement; At least 15 percent o f the targeted Communes have obtained funding for Communal Development Plan activities from outside the Project; At least 50 percent o f the targeted Communes have integrated the concerns o fVulnerable Groups intheir Communal Development Plans. 2. ProjectComponents * 24. Additional details are provided inappendix 4. Component A: Capacity Building-US$6 million (International Development Association, or IDA) 25. This component would empower the stakeholders for the decentralization. It would focus on strengthening the capacities o f communes and communities to (1) facilitate local development and (ii)augment social cohesion and inclusion. 13 26. To achieve these objectives, this component would be dividedintwo subcomponents: Subcomponent 1.1:Facilitationfor local development (US$m 4.8) 0 The project would recruit Facilitation Agencies (FAs) to assist communities and communes that are undertaking participatory planning and initiating, preparing, implementing,managing, and monitoring subprojects. These FAs (NGOs or consulting firms) would be recruited through a national bidding process with performance- and results- based contracts. Each would set up local facilitation teams to work at the commune and community levels. They would strengthen the local technical and fiduciary skills at the different decentralized levels to implement local development activities. The teams would cover (i) participatory assessment, planning, and monitoring, (ii) financial management and procurement for local investment activities, and (iii) safeguards issues. Institutional support also would strengthen the capacities o f the Department o f Decentralization o f the Ministry o f Interior, at the central and decentralized levels. This support would focus mainly on M&E o f facilitation activities implemented at the commune and community levels. Subcomponent 1.2:Strengthening social inclusion and cohesion (US$m 1.2) 0 The project would finance a wide range o f capacity-building activities designed to strengthen social inclusion and cohesion. In particular, the project would support and finance activities on information, education, and communication (IEC) on the vulnerable groups, including training, sensitization and organizational support. The vulnerable population groups targeted by the project are orphans, households affected by HIV/AIDS, destitute women, the Batwa people, displaced and returnedpeople, handicapped people, and youth. 27. These activities would be deployed at three levels by: 1. Local governance actors, such as members o f the communal councils and communal administrators, for the vulnerable groups to be better understood and better supported through local planning and decision-making, and through the implementation o f development subprojects. 2. Organizations that represent or support the vulnerable groups (such as NGOs and grassroots committees) to strengthen their support and assistance activities toward the vulnerable population groups. 3. Associations o f vulnerable groups to strengthen their own organizational capacities, their participation, and their responsesto their specific problems. 14 ComponentB: FinancingSubprojectsfor Local Development-US$30 million(IDA) 28. This component would finance collective interventions as identified in communal development plans or arising from the participatory planning process o f the communes and communities ifno communal development plan i s yet inplace. It has two subcomponents. e Subcomponent 2.I:Financingpublic subprojects (US$m 27) 29. The project would provide financial support to the communes and communities to implement demand-driven public subprojects. The financial support would beprovidedthrough a grant and complemented by a contribution from the beneficiaries. The commune would be in charge o f the implementation o f the subprojects, although it could delegate implementation and management responsibilities to a community when the subproject would benefit that community. All subprojects would be approved by the Communal Council. However, relevant technical services must give their clearance beforehand to ensure the consistency o f the project with sectoral policies and national quality standards, as well as the availability o f human resources and equipment if needed. Communes and communities would have an open menu o f activities, including capacity-building activities, so long as they do not belong to the negative list (as detaled in the Project Implementation Manual). The subprojects could fall into the following sectors: health, education, transportation, water and sanitation, culture and sport support, and collective economic infrastructure (markets, slaughterhouses, bus stations). More details such as subprojects eligibility criteria, contributions o f beneficiaries, subproject cycle are described in the PIM. 9 Subcomponent 2.2: Financing subprojects to strengthen social inclusion and cohesion (US$m 3) 30. This subcomponent would strengthen social inclusion and cohesion through implementingdemand-driven subprojects that would benefitvulnerable population groups inthe participating communes and communities. The vulnerable population groups targeted by this subcomponent are the same as for subcomponent 1.2: orphans, households affected by HIV/AIDS, destitute women, the Batwa people, displaced and returned people, handicapped people, and youth. These are the most vulnerable people inthe Burundi's social context and they are also the most critical groups to augment social inclusion and cohesion at the community level. Their demands would be identified during the participatory assessment (subcomponent 2.1), and subprojects would be prepared by the vulnerable groups with the support o f the facilitators. 31. The project would finance two major types o f subprojects: (i)subprojects targeted to specific needs o f vulnerable groups. Potential subprojects are schooling, housing, professional and vocational training, and alphabetization programs; and (ii) provision o f community services for counseling and assistance, particularly juridical assistance and psychosocial counseling destined principally to the vulnerable groups. 15 32. For these subprojects, no local contribution would be requested, because vulnerable groups require adequate methods, approaches, and sufficient operative legitimacy. Inmost cases, the communes would contract specialized organizations or consultants to implement the subprojects, such as NGOs, local associations, or specialists, depending on the types o f case. Project preparation identified good practices and technical experiences, such as in housing. These would be replicatedwhen relevant. Component C: Project Management, Monitoring and Evaluation, and Communication- US$3.4 million(IDA) 33. The project would finance spending related to technical, administrative, and financial management; strengthening the capacity o f the structures that would coordinate project implementation. An integrated M&E system would be set up. The project also would implement communication and informative strategies. 3. LessonsLearnedandReflectedinProjectDesign 34. The following lessons have been learned from recent projects in Burundi (Social Action Project Iand 11, Demobilization, Reinsertion and Reintegration Program) and in other post- conflict countries including Afghanistan, Liberia, and Sierra Leone; and from CDD projects in Benin,Cameroon, andRwanda. 35. Empowerment of communities. Making grassroots communities responsible for the identification, preparation, and implementation o f subprojects helps reduce costs, enhance community ownership, and provide a solid base to ensure the sustainability o f infrastructure. The following factors are necessary: (i) community organizations representative o f the community and functioning in a transparent way, (ii) effective transfer o f responsibility and resources to communities. 36. Equity. Social sector projects must be sensitive to the needto redress ethnic and regional imbalances and must incorporate indicators to measure the distributional impact o f development assistance. It also i s important to avoid fueling social inequalities and increasing insecurity causedby directing most assistanceto already advantaged geographic areas. 37. CDDand social cohesion. Broadeningintergroup interactions through inclusive decision- making processes increases a society's resilience to conflict by creating social capital. Engaging community members in interactions with one another and with local institutions can start the reestablishment o f social and institutional relationships, networks, and interpersonal trust. Attention must be paid to vulnerable groups to ensure that they have the means and space to express their priorities. If traditional institutions do not permit such participation, new vehicles, and mechanisms would be required. Strong emphasis should be given to buildingthe capacity o f these groups intraining, communication, organization, literacy, and advocacy. 16 38. Links needed with sector ministries. The development o f socioeconomic infrastructure- roads, schools, and health facilities-promotes local development, but alignment with strategic priorities i s essential. Local investments must be consistent with social sector strategies and national norms. Therefore, an efficient collaboration between with line ministries i s necessary. The Government also needs to give attention to maintenance issues through the establishment o f a fundingmechanism and management entities. 39. EfJicient design. The project must be based on a simple design for quickly delivering needed support, taking into account the local capacity for project execution. Inparticular, flow o f funds must be efficient to avoid long delays between subproject approvals and first financial transfers. 40. Capacity building through learning by doing. The establishment o f decentralized implementation arrangements takes time. The incentive to provide rapid results on the ground should not take precedence over capacity building, which may be the condition for sustainable and cost-effective delivery of subprojects in the medium and long terms. However, experiential learning i s an effective means to develop capacity and achieve sustainable results. Thus, the project would adopt "learning by doing" throughout the project's activities, and it would finance, for example, subprojects even before plans are finalized ("catalyst subprojects"). 4. AlternativesConsideredand Reasons for Rejection 0 A follow-up operation of the Burundi Social Action Project I1was discussed. However, inthe context of a post-transition elected government as well as a new legal framework for the decentralization (new Communal Law) and newly elected local governments, it was considered that a CDD operation fully grounded in the communal law and implemented directly by the government would be more appropriate. The new project would empower communes as well as communities to lay the groundwork for a successful decentralization. An Adaptable Program Loan (APL)could have been chosen. Due to the (i) size of small the country as well as the (ii)readiness o f the communities for a demand-driven approach, a phased approach would not have been necessary. Inaddition, decentralization i s at its early stages, and the Ministry o f Interior and Public Security's decentralization strategy i s underway, making difficult the design o f a long-term program. The strategy would be adjusted with the first lessons learned from the project as well as from other community development initiatives. 17 0 Income-generating activities could have been financed. Income-generating subprojects have been rejected (see Quality Enhancement Review, or QER) because (i)such activities target different beneficiaries (producer organizations vs. communities) and require that different mechanisms be designed for their implementation; (ii) i s not inthe it mandate o f communal councils to approve public financing o f income-generating activities; (iii)several other interventions do and would support income-generating activities in the country, particularly, the WB-funded PRASAB; and, (iv) support to income-generating activities for vulnerable groups i s complex due to their weak capacity and social capital. Instead, the project would look for efficient linkages with PRASAB, and the Emergency Demobilization, Reinsertion and Reintegration Program, as well as with other projects that support Burundi's productive sectors. As an example, the project would focus more on regions inwhich PRASAB i s active. C. IMPLEMENTATION 1. PartnershipArrangements 41. The project is highly complementary to the "Good Governance Project," which the European Commission i s financing (19.75m Euros). The latter has been approved and i s expected to start inearly 2007. It would focus on buildingthe institutional capacity o f communes (Communal Councils/communal staff) (traininglequipment) as well as on governance issues at the central and regional levels. The Swiss Agency for Development and Cooperation (SDC) i s supporting a similar project inthe province o fNgozi. 42. PRADECS also would closely coordinate its activities with three other international projects involved inlocal development: Governance Project (UNDP) has supported the preparation o f a regional database and some communal development plans by end 2006. Follow-up activities are under preparation. 0 Reconstruction Project in the Rutana Province (UNDP/UNCDF) has just started and would support the preparation o f communal development plans as well as a regional development plan and finance subprojects at the local level. 0 Reconstruction Projects (IFAD) (PRDMR and PTRPC) support local participatory planning and finance on-demand local investments, with a strong focus on income- generating activities. 18 43. During preparation, the Bank's involvement has fostered cooperation and coordination among bilateral and multilateral donors. A national workshop on decentralization was organized on October 23-24, 2006. It enabled the government, specifically the Ministry o f Interior and Public Security (MIPS), to strengthen its leadership in coordinating all activities relating to decentralization and local development-related interventions. The workshop was the occasion for (i) Governmenttospelloutitsvisionfordecentralizationalongwithitsmainconstraintsand the needs, and (ii) development partners to describe their assistance strategies. The preparation o fthe Letter o f Policy was one o f the activities agreed during the workshop and reflects its discussions and recommendations. 2. Institutionaland ImplementationArrangements 44. The project would be implemented over five years. MIPS, and, in particular, the Department o f Decentralization and Self-Development (Direction Ge'ne'rale de la De'centralisation et de la Mobilisation pour 1'Auto-De'veloppement, or DGDMAD), i s in charge o f decentralization. DGDMAD would assume overall responsibility for coordination and implementation o f the project. The institutional and implementation arrangements o f the project have been designed based on the Project Concept Note (PCN), QER review meetings, several studies including an institutional assessment, a study on decentralized financial management mechanisms, and a capacity assessment o f service providers. It i s grounded within the framework o f the decentralization policy, particularly the new Communal Law (enacted in April 2005). 45. As a background, Burundi's administrative structures are: a116ruralCommunes, subdividedinzones,thencommunities(setforvillages) inBurundi). Communes are led by an elected Communal Council (CC), managed by a communal administrator (from among the CC) with its staff. The staff includes a communal development agent (CDA), a communal social agent (CSA), and an accountant. The CC benefits from guidance from a consultative body, the Communal Community Development Committee (CCDC). Community Councils also are elected at the community level and the CC relies on them to interact with the communities. ~ 1 Provinces (apart from Bujumbura), led by designated Governors with their 6 staff. 3 Centrallevel ProjectManagement 46. Project management arrangements have been designed based on the following guiding principles: Necessity to build the country's institutional capacity and to enable a greater integration o f the project's management inthe country's existing institutions and systems; 19 0 Necessity to strengthen the capacity o f the new Department o f Decentralization and Self- Development (one year oldhot enough staff/fairly decentralized) within the Ministry o f Interior and Public Security 0 Urgency to show results on the ground inthe post-crisis atmosphere 0 Multisectoral dimension o f the project. 47. A National Orientation and Steering Committee (NOSC) would be chaired by the first vice-president and would comprise 11 Ministers: o f Interior and Public Security; Good Governance, Inspection and Local Administration; Planning andReconstruction; Finance; Public Works and Equipment; Land Management, Environment and Tourism; Energy and Mines; National Education and Culture; Public Health; Youth and Sports; and National Solidarity, Rights and Gender. NOSC would be responsible for (i)supervising the overall orientation, coordination, and M&E o f project implementation; and (ii) approve the project's annual work programs andbudgets.NOSC would meet twice a year. 48. A Technical Execution Monitoring Committee (TEMC) would be responsible for (i) reviewing the project's annual work programs and budgets, (ii)monitoring the project's operations and providing guidance, (iii)and approving the project's manuals (Project Implementation Manual, Financial and Administrative Manual, Monitoring and Evaluation Manual). TEMC would be chaired by the Minister o f Interior and Public Security or hidher delegate, and composed o f representatives from the key sectoral ministries, local governments, and civil society. TEMC would meet every quarter. 49. An Executive Secretariat (ES) would be attached to the DGDMAD. It would have the following specific functions: (i)in collaboration with the technical directorates o f the DGDMAD, oversight, of all technical, social, and environmental matters related to project implementation; (ii) planning o f project activities and preparation o f the annual work program jointly with the directorates; (iii) M&E of all activities with the technical directorates; (iv) financial management o f IDA resources; (v) all procurement related to these funds; and (vi) all financial agreements to be signed by the ES with the communes. The ES would be led by an Executive Secretary. It would be a small team recruited through an open competition and comprised o f a capacity-building specialist (Component A), civil works specialist (Component B), M&E specialist, safeguards specialist, financial management specialist, procurement specialist, accountant, and treasurer. The ES would be strengthenedwith several comptrollers provided by a fiduciary firm to review andmonitor fiduciary activities at the commune level. 50. Existing decentralized services of the DGDMAD (APSD) at the provincial level would be responsible for: (i)diffusion o f information on project activities; (ii) reception, analysis, and diffusion o f activity reports coming from the communes; and (iii) technical monitoring o f the Facilitation Agencies (FAs). The services would receive training from the project to strengthen their capacities to take over more andmore M&Eresponsibilitiesbythe end ofthe project. 20 Main implementationresponsibilities 51. Communities. Communities would be responsible for conducting a participatory needs assessment that would lead to the preparation o f the Communal Development Plan (CDP) and to the identification and preparation o f priority subprojects to be financed by Component B. Technical support would be provided by multidisciplinary teams set up by the FA. After the Communal Council has approved the subprojects, some would be implementedat the communal level; and those that benefit the community only, at the community level if they. Inthis case, the commune would sign an agreement with the community to delegate management responsibility. 52. Communes. The Communal Law defines the roles o f communes as well as their structure. Communes would play a major role inthe project. They would be the contracting authority o f all subprojects, although they would delegate the contracting authority to communities for small subprojects that benefit only one community. The commune would have six responsibilities: (i) consulting with communities to prepare a participatory Communal Development Plan, (ii) approving the CDP, (iii)preparing and approving subprojects to be submitted to the ES for financing, (iv) signing contractual agreements with the ES to receive funding for the approved subprojects, (v) signing contractual agreements with communities to delegate implementation and management of community-level subprojects, and (vi) monitoring operation and maintenance (O&M) o f the infrastructurebuilt under the project. 53. According to the Communal Law, the following communal structures would be involved inthe project's implementation: 0 The Communal Council (CC), which is the elected body that rules the commune, would approve the CDP, the communal budget, and all subprojects with their financing plans; andwould oversee the implementationo fthe CDP. 0 The CC is assisted by the Communal Community Development Committee (CCDC) for the participatory preparation o fthe CDP and the M&Eo fits implementation. The CC is a consultative body that comprises representatives from the communities, civil society, and the decentralized technical services. 0 Communal staff would be in charge o f the implementation o f the CDP, including its fiduciary aspects. The staff includes a communal administrator (elected from within the Communal Council), an accountant, a development agent (CDA), and a social agent (CSA). The development agent would be particularly involved inthe facilitation activities jointly with the FA. They would facilitate the participatory preparation o f the CDP, its implementation, and its M&E. The social agent would play a major role in the interactions betweenthe project and marginalized groups, facilitating the implementation o f subcomponents 1.2 and 2.2. 54. For each subproject, a management committee would be set up (usually from among beneficiaries) that would closely monitor its implementation and would be incharge o f O&M. 21 55. Line ministries. They include the ministries in charge o f education, health, civil works, water, transport, youth, and any other sector, depending on the subproject chosen by the commune. Through their decentralized officers, the line ministries would (i) provide technical advice to communes and communities on sector strategies and quality norms; (ii) give technical clearance on the CDP as well as on the subproject proposal; (iii) ensure provision o f staff and equipment when the subproject requires it; (iv) develop and update rosters o f qualified contractors, suppliers, and technical assistance (TA); and (v) provide T A to ensure that infrastructure achieves expected quality standards. 56. To mitigate risks o f lack o f inputs for subprojects and inconsistencies with national strategies and standards, (i)each line ministry would sign formal agreements with the project; (ii) linkagesbetweentheprojectandthedecentralizedlineministrieswouldbedeveloped strong at the provincial level through the (APSD); and (iii)formal clearances from respective line ministryrepresentative wouldberequestedbythe commune prior to approval of subprojects. 57. Civil society. NGOs, particularly those with specialized expertise, could be promoters o f ideas and/or executors o f specific training and subprojects, with due endorsement by communities and communes. The following keyroles for NGOs inPRADECS can be identified: 0 Support to the preparation of CDP and subprojects. Most o f Component A would be subcontracted at the provincial level to Facilitation Agencies (FAs) (NGOs or consulting firms). These agencies would be recruited through a national bidding process and performance- and results-based contracts. The ES would coordinate their activities and oversee that they respect the project's key principles and strategy. FAs would be responsible for all animation activities at the local level for each stage o f the plan and subproject cycles. FAs would set up multidisciplinary teams to work with communities and communes, including competent technicians to assist marginalized groups. The FAs also would make sure that requisite disbursement documents (agreements, reports on civil works) pertaining to subprojects are provided to the ES on a timely basis to avoid delays inpayments. To avoid inconsistent approaches, the ES would ensure (i) and regular workshops initial to agree on a common approach and to share experiences and lessons during project implementation, (ii)preparation of a specific guide for facilitation, (iii) submission bythe FAs of reports on their activities and on their annual work program for review and approval, (iv) their evaluation by an external agency, and (v) a performance-based contract renewable on an annual basis. FAs would be held accountable for performance against outputs, but with some flexibility in the choice o f specific facilitation methods and work planning. An External Evaluation Agency would be recruited to evaluate their performance against outputs. 0 Construction and engineering sewices. Local entrepreneurs would be recruited by communes or communities (according to community-based procurement guidelines) to implement the subprojects (primarily civil works). Civil works experts would be also associated to ensure quality control o f infrastructure and achieve expected quality standards. 22 58. More details can be found in the Project Implementation Manual (PIM). Its adoption would be a condition o f effectiveness. Project coverage 59. The project would cover the 16 rural provinces, but it would not be implemented everywhere with the same intensity. 0 Strong support would be provided to the 8 provinces o f Bubanza, Cankuzo, Kirundo, Makamba, Muramvya, Muyinga, Mwaro, and Ngozi (50 communes). Inthe first year, the project would start in three communes in each province. Selection o f the initial three would be made founded on basic infrastructure needs. All other communes would be covered during the second year o fthe implementation o f the project. 0 Light support would be provided to the eight other provinces inwhich other projects are already giving similar support. The project would supplement their support during the thirdyear o fimplementation, ifneeded. 3. Monitoringand evaluation of outcomes/results 60. The M&E system o f the project would be critical for its implementation. Appendix 3 outlines the indicators for measuring the achievement o f the project's development objective and intermediate outcomes. The project M&E system intends to (i)inform stakeholders o f the progress made by the project in achieving its objectives; (ii) provide information to evaluate the efficiency in the implementation o f the overall project; and (iii) M&E capacity within build MIPS,particularlywithin the Department ofDecentralizationand Self-Development, to evaluate progress made inimplementingthe decentralization policy and disseminate lessons learned from the project. Before effectiveness, the project will conduct a baseline survey to establish the value o f the main indicators. The project will contract technical auditors to conduct annual evaluations to assess the performances o f the project and its impacts. Participatory monitoring techniques would be mainstreamed into the project by strengtheningcapacity at the communal level to lead a process o f consultation with local communities. 61. The M&E activities would occur at the national, provincial, and local (communal and community) levels. At the national level, the PRADECS ES would include a M&E specialist in charge o f the (i) management o f M&E system; (ii) management o f PRADECS database; (iii) organization o f studies related to M&E system; (iv) capacity buildingo f actors involved inM&E at all levels, including DGMAD; (v) organization o fM&E external activities; (vi) exploitation o f study results; and (vii) establishment and maintenance o f collaboration with the structures in charge o f monitoring local development and poverty. To strengthenparticipatory evaluation, the ES would ensure continuous dissemination o f lessons learned and best practices among beneficiaries. 23 62. At the provincial level, APSD would have three functions: (i) consolidating data coming from the communes; (ii) producing and diffusing M&E reports; and (iii) strengtheningcapacities o f actors involved inM&E.APSD would work closely with the provincial unit o f the Ministryo f Planning, which monitors local development inthe province. At the communal level, the project would (i) help develop capacity at community and commune levels and (ii) develop a functional mechanism to transmit the collected data from bottom to top. The commune would be responsible for the general M&E o f activities undertaken on its geographical zone. The CDA jointly with the CCDC would ensure M&E o f implementation o f the CDP and report to the CC. The project would strengthen their capacity to do so. Reports would be produced by the CDA The community would be responsible for activities in its geographic areas based on an agreement signed with the commune. A Community Council would be responsible for M&E within its community but would set up an M&E technical committee to do so. It i s foreseen that members o f the former CDC may be part of these committees 4. Sustainability Governmentcommitment 63. The Government i s strongly committed to decentralization: (i)recent Communal Law a was enacted inApril 2005; (ii) a final PRSP (JSAN) was approved on March 8,2006 with a clear message on decentralization; and (iii) key line ministries are strongly participating in project preparation. Sustainability 64. The project would rely on sustainable existing authorities for its implementation at the central level (Department o f Decentralization and Self-Development instead o f an external project implementation unit, or PIU) and local level (communes with their CC and CDC/communities with their councils and community-based organizations, or CBOs). 65. Sustainability o f investmentsand infrastructure financed by the project would be ensured by the (i)actual participation o f beneficiaries in the decision and their financialhn-kind contributions and (ii) participation o f line ministries in the identificatiodimplementation o f the investments for ensuring good quality and providing the necessary staff and/or equipment. To facilitate their involvement, (i) the Ministry o f Interior and Public Safety would sign formal agreements with each line ministry; (ii) strong linkages between the project and the decentralized line ministries would be developed at the commune level; and (iii)formal clearances from respective line ministry representative would be requested by the commune prior to approval o f subprojects. In addition, the FA would pay particular attention to strengthening the capacities o f local communities to maintain the investments well. 5. Criticalrisks and possiblecontroversialaspects 66. Table 1. identifies the key risks that project management may face and provides a basis for determining how management should address these risks. 24 Table 1. Project risks ratings with mitigation measures Ri s h Risk mitigation measures Risk rating with mitigation Toproject development objective Geographic areas that havebetter Allocations would bepredeterminedfor M infrastrkture and more experienced each commune based on fundamental staff inplace may be "favored" locations for the project, unintentionally exacerbating local ethnic and class tensions. Political interference in the project's Setup o fthe ES. Formal adoption o f the S implementation. Project ImplementationManual and the Administrative, Financial and Accounting Manual before effectiveness. Misappropriation o fproject funds Specific requirements will be agreed S & m a l audits will be conducted. To components' results Implementationcapacity remains Strong capacity building activities S limited,with weak technical and would be financed by Component A. financial capacity inthe communes Facilitation agencies would have and communities, resultinginpoor performance-based contracts and would outcomes be evaluated annually. Project would liaise with other projects incharge o fcomplementary capacity buildingo fcommunes. Exclusion o fvulnerable groups 10% o f financial resources would be M earmarked for marginalized groups' subprojects. Specific indicators would monitor integration o fmarginalized groups' inputsindevelopment plans. Awareness activities would be 1conducted under Component A. Communities would self-select vulnerable groups; groups would propose strategies of how they would participate incommunity decision- makin 25 rensions within communities Several subprojects can be financed per S associatedwith competition for community. access to these resources. Participatory planning process would promote inclusion and consensus on the use o f funds. Arrangements would be made for transparency and improved communicationover project decisions. A grievance mechanism wouldbeset UD . Risk o f elitelgroup capture o f Improve community participation inthe M resource allocation at the local levell selection, financing, and management governance issues o f subprojects. Buildcapacity o fcommunities to which resources are allocated. Ensurethat communes have established accountability mechanisms to ensure transparency inthe use o f funds (frequencylregularity o fthe availability of information about financed activities). Incapacityto sustain outputs and For each subproject, it would be S outcomes obtained underthe project mandatory to set up a management committee and present maintenance arrangements. Stronger linkages would be developed with sector ministries: formal agreements, formal endorsements o f subprojects, facilitation o f line ministries staff movements, rehabilitation rather than building new infrastructure. Overall rating S 6. Loadcredit Conditions and Covenants 67. Before effectiveness: 5. Recipient has appointed external auditors with qualifications and experience satisfactory to IDA. 6. Recipient has adopted the Project Implementation Manual (PIM), the Administrative, Financial and Accounting Manual, and the Monitoring and Evaluation Manual in form and substance satisfactory to IDA. 26 7. Recipient has completed the recruitment o f the Executive Secretariat including (i) a capacity building specialist, (ii)a civil works specialist, (iii)a socioenvironmental specialist, and (iv) a M&E specialist, under terms o f reference acceptable to IDA. 8. Recipient has established a financial management system in form and substance satisfactory to IDA. D. APPRAISAL SUMMARY 1. Economic Analysis 68. The project does not lend itselfto cost-benefit analysis because: 0 All investments would bedemand driven, and their nature can not beknownbeforehand. 0 All eligible subprojects would be nonproductive. Economic benefits o f capacity-building are difficult to quantify. 69. Economic sustainability criteria for subprojects are included inthe PIM. 2. Technical 70. The guiding premise o f the project is that there is considerable latent technical and managerial capacity at the local level that could be released through a participatory strategic planning process, followed by a predictable investment envelope to finance activities. Furthermore, because the anticipated investments likely would be simple infrastructure, local artisans and entrepreneurs have sufficient technical knowledge and experience to implement and manage them. 71. The technical quality o f the subprojects would be ensuredby the (i) eligibility criteria in the PIM to appraise the technical quality o f subproject proposals and (ii) involvement o f decentralized technical ministries. To ensure technical quality and consistency with national standards, technical ministries such as Health, Education, and Public Works would be involved in the entire process, including community planning and approval of communal development plans and subprojects, Relevant technical ministry clearance would be mandatory before subprojects could be approved by Communal Councils. 3. Fiduciary 72. The financial and procurement assessmentswere carried out duringthe appraisal mission. The issues and risks related to procurement and financial management were identified accordingly. The overall fiduciary risk i s considered high. 27 3.1. Procurement 73. At the commune level, the procurement risks are related to (i) limited capacity to very carry out procurement activities; (ii) political influence in the procurement processes; and (iii) lack o f proper procurement filing to enable the ES, external auditor, and Bank to review and supervise procurement activities. At the ES, provided the staff recruited by the ES has the qualifications and experience required, no significant difficulty i s expected. 74. To mitigate these risks, the following measured shouldbe observed: 1. Before negotiations, the ESwould recruit its procurement specialist. 2. Duringthe first months o f the project's execution, the ES and Facilitation Agencies (FAs) would develop an intensive procurement training based on the practical procurement tools included inthe PIM. 3. The Bank would subject the project to intensive supervision on at least two supervision missions, including ex post review o f a selection contracts. 75. The project's overall procurement risk is high. However, experience in Burundi has shown that, whenthe above mentionedmeasures are taken, no major difficulty i s encountered. 3.2. Financialmanagement 76. The financial management risks are related to (i)weak capacity for implementing adequate financial management arrangements at both national and regional levels; (ii) o f alack strong financial management system at the ES level; (iii) timely availability of funds for Project implementing agencies; and (iv) safety o f project assets and resources. The financial management assessmentidentifies HighRisk for the project. 77. To mitigate these risks, four measures should be observed: (1) recruitment o f a financial management specialist, 2 accountants and 6 regional comptrollers; (b) regular Bank supervision missions, including SOE reviews and timely follow-up o f management issues; (c) implementation o f proper planning and budgeting o f project activities; and (d) timely production o f financial statements followed by the production o f the external audit reports and the implementation o f auditor's recommendations. 78. Subject to the improvements foreseen after the implementation o f the Financial Management Action Plan (annex 7), the financial management arrangements would enable the project to meet the minimumrequirements for financial management as defined in OP/BP 10.02. The action plan contains the areas that require strengtheningas identifiedby the assessment. This planhas been agreed betweenIDA and GOB. 28 79. By effectiveness, the project would not be ready for report-based disbursements.Thus, at the initial stage, transaction-based disbursement procedures would be followed as described in the World Bank Disbursement Handbook, that is, direct payment, reimbursement, and special commitments. However, after project implementation begins and the borrower requests conversion to report-based disbursements, IDA would perform a review to determine whether the project is eligible. 4. Social 80. Burundi is notably a rural country. Most of the population dwells in communities dispersed throughout most o f the territory. The country is in a post-conflict phase, which is characterized by (i) widespread social development needs and (ii) challenge o f reconstructing the peace and civil coexistence. Given the large-scale social development needs and challenge o f reconstructing the social tissue, local governance emerges as a crucial process. Accordingly, decentralization represents a very appropriate mechanism to accelerate social development at the grassroots, simultaneously catalyzing local planning and engaging the population in reconstruction and development. 81, Recently, Burundi experienced a difficult period in which ethnic and social differences were exacerbated. The violent conflict and the growing impoverishment o f the population have created tensions and insecurity, fragmented family structures, and weakened community values. 82. During project preparation, it became obvious that specific targeting of the most vulnerable population groups was needed to maximize the effects o f the development investments in social cohesion and social inclusion. Subcomponents 1.2 and 2.2 were proposed with the objectives o f targeting capacity building and some investmentsthat would benefit the most vulnerable groups. During project preparation, the Government commissioned a specific report, "Analysis o f Vulnerable Groups and Social Cohesion in Burundi," to better examine and define such subcomponents.* The report is comprehensive and contains a good assessment o f vulnerability and social cohesion and inclusion, as well as specific operative propositions for the project. 83. The seven criteria o f vulnerability employed to identify the marginalized population groups to be specifically targeted by the project were: 1. Absence or lack o fproductivemeans, including land, livestock, and tools 2. Unmet basic needs, such as food, housing, and clothing 3. Very low access to heath, education, and potable water services 4. Physical limitations related to disease or handicaps 5. Minority status that entails a dynamic o f social exclusion and/or social autoexclusion 6. Destitution, lack o f links with family or social milieu, discrimination, and lack o f hope 7. Threats posed to social cohesion by certain social groups ifignored or excluded. 29 84. As mentioned above, the project's objectives are decentralization and strengthening social cohesion and inclusion. On the basis o f these objectives and the seven criteria, the following marginalized population groups were selected for the targeted actions o f the project under subcomponents 1.2 and 2.2: Orphans; Households affectedby HIV/AIDS; Destitute women, includingwomen victims o fviolence; Batwapopulation; Internally and externally displaced and returnedpopulations; Handicapped persons; Youth. 85. Orphans in Burundi are estimated at 650,000 children (17 percent o f children below age 15). AIDS orphans number approximately 230,000 children. War orphans number approximately 25.000 children. 86. . Burundi has a relatively high prevalence o f HIV/'IDS. Affected households are often found in conditions o f marginalization, which result from both social stigma and the effects of the disease. (This disease reduces their productive capacities as well as their domestic economies.) Their targeting by the project i s justified on the grounds o f their progressive impoverishment and their discrimination. 87. Many women are very vulnerable in Burundi due to inequalities linked to gender and to discrimination in social participation and in access to production means. Women also suffer sexual and domestic violence. Many cases o f rape are unfortunately confirmed, affecting women and girls and leaving them with severe physical and psychological sequels. 88. The Batwa population constitutes a minority and autochthonous group in Burundi. They represent nearly 1percent o f the national population (70,000 people) and are located all around the territory, with a larger concentration inthe provinces o f Bujumbura Rural, Cibitoke, Gitega, Kayanza, and Ngozi. They live under conditions o f extreme poverty and significant stigmatization and discrimination. 89. Displaced and returned peoples are a relevant portion o f the population who risk discrimination. The repatriation process continues, since approximately 500,000 Burundian refugees still live out o f the country, principally inTanzania (90 percent) as well as inCongo and Rwanda. The internally displaced population i s approximately 116,000 distributed in 71 sites across Burundi. Furthermore, approximately 240,000 people suffered severe losses due to war and have urgent housing needs. 90. According to available data from the Ministry o f Solidarity, there are approximately 700,000 handicapped people, including 10,577 children. War was the major cause. 30 91. InBurundi, youth constitutes the population inthe segment 15-30 years approximately. The youth are important due to their large number and their vulnerability (they are particularly vulnerable to becoming engaged in small crimes and rebel groups). The youth represent a valuable economic force. They also are a potential force for change and innovation, for social mobilization. Their aspirations and hopes should be taken into account for their effect on social cohesion-to avoid tensions and gaps across generations ,that could cause a resurgence o f violence. 92. Burundi has a national policy devoted to the consideration and reintegration of the most vulnerable population groups. Three ministries are devoted to these issues: (i) Ministry for National Solidarity, Human Rights and Gender; (ii) Ministry to Combat HIV/AIDS; and (iii) Ministry of Youth and Sports. Sectoral policies also have beenelaborated, includingpolicies on the youth, on orphan and vulnerable children, and on the fight against HIV/AIDS. Despite the efforts o f the authorities, state projects and services show multiple capacity weaknesses- technical, financial and institutional alike-to effectively support vulnerable population groups. 93. Decentralization and the emergence o f local governance (at both the political participation and investment levels) offer excellent opportunities to strengthen social cohesion and inclusion at the grassroots inBurundi, mainly through well-targeted and continued support to the most vulnerable groups. 94. Duringproject implementation, a thematic workinggroup on vulnerablegroups wouldbe established under the coordination o f the PRADECS ES, to guide and facilitate the implementation o f the subcomponents devoted to the vulnerable groups (subcomponents 1.2. and 2.2). This thematic working group likely would be composed of, among others, representatives o f the Ministry o f Solidarity, Ministry to Combat HIV/AIDS, Ministry o f Youth, National Council on AIDS, Association o f Legal Expert Women, Uniproba (body representing the Batwa people), and pertinent UnitedNations agencies, 95. The report, "Analysis on Vulnerable Groups and Social Cohesion inBurundi," which was elaborated during project preparation, would guide social actions and considerations throughout project implementation. Furthermore, the project has prepared an Environmental and Social Management Framework, which takes care o f the most sensitive social concerns likely to emerge duringimplementation. 5. Environmental 96. The project is not expected to have negative environmental impacts. The minor potential negative environmental impacts may result from the implementation o f certain subproject activities, particularly community infrastructure (schools, small-scale health canters, rural road segments) and the activities related to such construction. Negative environmental impacts may include land erosion, water and air pollution, and pollution from medical waste. The Environmental and Social Management Framework provides the project with due analysis, recommendations, and operative guidance to prevent the environmental impacts, and to mitigate them ifpreventionis not possible. 31 97. Subprojects would undergo an environmental assessment (EA). The EA defines three categories o f environmentalrisks, with specific actions to follow ineach case (table 2). Table 2. Environmental categorization of subprojects Category Description Actions The project has a substantial negative Elaboration o f Environmental Impact Study environmental impact, for example, risk o f degradationo fnaturalhabitat, (EW impacts on water or risks o f pollution. Project application with EIS approved by the A appropriate environmental authorities Ingeneral, this type o fimpact is not expected to occur with the type o f Specific monitoring by specialized civil micro projects proposed under servants o f decentralized services or PRADECS. consultants Presentationo f environmental and social The project presents some minor risks evaluation form B for the environment or human health. Approbation o f environmental and social There are risks, which canbe easily evaluation form prevented or mitigated. Inclusion o f environmental indicators for monitoring C No effect on the environment 98. All subprojects would have to complete an environmental and social evaluation form, which would be part o f the subproject application. Based on the environmental analysis conducted during project preparation, it appears that the most requested subprojects would be classified in the environmental categories B (moderate risk) or C (no risk). To prevent or mitigate these risks, some measures have been proposed in the Environmental and Social Management Framework. These measures would be taken into consideration at 3 levels: (i) duringpreparation o f subproject applications, (ii) monitoring the subproject execution; and while (iii)throughout the entire PRADECS management. For subprojects classified as category A, an environmental impact study would be conducted, but this type o f project would be unlikely under PRADECS. 99. For the environmental monitoring, the project would rely on the environmental personnel o f the Burundian government at the provincial level. Every province i s assigned personnel fi-om the Ministry of the Environment, whether specialists on forestry, protected areas, or rural engineering. They would very competent resource persons to participate in the environmental monitoring o f the project. For every province, the Ministry o f the Environment and the project's ES, in consultation with the governor, would select an environment officer for project environmental monitoring purposes. These officers would receive adequate training and would be providedwith per diemtravel costs duringfield visits. 32 100. In addition, PRADECS would contract a senior environmental consultant for 2 months per year (2 interventions o f 1month at least in years 1-3) to (i) the ES socioenvironmental train specialist and other staff involved with environmental aspects; (ii)prepare and disseminate guides and other tools for the environmental evaluation o f communal subprojects, and set up prevention and mitigation measures for negative impacts; (iii) in the field the quality o f verify environmental considerations under PRADECS, suggesting improvements; and (iv) prepare activities and materialsnecessary for the environmental training o f communes. 6. Safeguard Policies Table 3. Safeguard policies triggered by PRADECS Safeguard Policies triggered by theproject Yes No EnvironmentalAsscssincnt (OPlBP/CiP 4.01) [ XI [I Natural Habitats (OP/BP4.04) [I [X 1 Pest Management (OP 4.00) [I [X 1 Cultural Property(OPN 11.03, beingrevisedas OP 4.11) [I [X 1 Involuntary Resettlement(OPII3P 4.12) [ XI [I IndigenousPeoples (OD 4.20, beingrevisedas OP 4.10) [X 1 [I Forests (OP/BP 4.36) [I [X 1 Safety ofDams (OP/BP 4.37) [I [X 1 ProjectsinDisputedAreas (OPIBPIGP7.60)' [I [X 1 Projectson InternationalWaterways (OP/BP/GP 7.50) [X 1 Note: " = By supportingthe proposedproject,the Bankdoes not intendto prejudicethe final determinationof the parties'claims to the disputedareas. 101. The project would support communities and communes to elaborate community development plans and to realize some subprojects identified in these plans. To avoid, mitigate, or minimize negative environmental and social impacts on the population, the Bank encourages the counterpart to prepare instruments to help implement, monitor, and evaluate the micro projects for the sustainability o f the project. 102. For this purpose, 3 safeguard policies o f the World Bank are triggered: Environmental Assessment (OP 4.01), Indigenous Peoples (OP 4. lo), and Involuntary Resettlement (OP 4.12).3 Accordingly, the government prepared the following implementation plans: 1. Environmental and Social Management Framework (inresponse to OP 4.01) 2. Plan concerning the Batwapopulation (inresponse to OP 4.10) 3. Framework for Involuntary Resettlement and Compensation (inresponse to OP 4.12). 3 http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/EXTPOLICIES/EXTSAFEPOL/O,,contentMDK:2054 3978-menuPK: 1286647-pagePK: 64168445-piPK:64 168309-theSitePK:5 84435,OO.html 33 103. The Environmental and Social Management Framework classifies the project as category B. This comprehensive report provides the project with the following analysis and implementation guidance: (i) analysis o f the project risks in terms o f environmental and social sustainability; (ii) proposition o f prevention and mitigation measures for the identifiedrisks; and (iii)detailed institutional and operative mechanisms to ensure that the project remains sustainable and equitable, from both environmental and social viewpoints, throughout implementation. 104. The second instrument triggered i s OP 4.10, Indigenous Peoples. For all investment projects in which indigenous peoples are beneficiaries, a plan i s elaborated to be sure that their concerns are taken into account inthe development o f the project. For this, a plan concerning the Batwa population assesses the situation, needs, and problems that are specific to the Batwa communities in Burundi, as well as their priority development challenges. The plan proposes operational considerations and specific actions for the Batwa to fully benefit from project opportunities. 105. For the project, a Frameworkfor Involuntary Resettlement and Compensation i s required. For this Bank project with multiple subprojects, a resettlement policy framework is requested because the nature and the zone o f impacts o f the subprojects are not yet known. This framework examines mitigation actions and compensation measures to implement in case a project causes losses o f property or resources to people. Although the project does not envision any resettlement issues except on rare occasions, the framework takes them into account inthe event that they happen. 106. These documents have been disclosed in Burundi and at Infoshop on November 20 and November 27,2006, respectively. 107. These different plans are implemented, monitored, and evaluated by the PRADECS ES, training structures, socio organizations o f Batwa, and Ministry o f National Solidarity, Human Rights and Gender. From the Bank side, the supervision mission would ensure that the borrower's complies satisfactorily with the environmental and social issues. If necessary, independent auditors would be hiredto do the monitoring. 7. PolicyExceptionsandReadiness None. 34 Annex 1 Countryand Sector or ProgramBackground - BURUNDI: Community and Social DevelopmentProject 108. Burundi is a landlocked country o f 7.2 million inhabitants (2003), where 91 percent of the population lives in rural areas. It i s emerging from more than a decade o f civil conflict that started with the 1993 coup d'ktat against its first elected government. The last decade o f civil war resulted in the killing o f an estimated 300,000 people and the displacement o f 1.2 million (16 percent o fthe population). 109. Burundiis one o f the poorest countries inthe world due to the devastating effects o f the war on its economy and the living conditions of the population, particularly in rural areas. GDP per capita has fallen by almost 40 percent from US$180 in 1994 to US$110 in 2003. Economic growth and poverty reduction are hindered by (i) strong demographic growth, (ii) arable limited land, (iii) predominance o f subsistence agriculture, (iv) insufficient productive infrastructure, and (v) lack of savings and investments. 110. The economy i s based primarily on agriculture, which brings inmore than 80 percent o f export earnings. The percentage o f people living on less than $1 a day has nearly doubled, from 35 percent overall to 68 percent in 2005. Regional disparities in poverty rate are acute: from 41 percent in Bujumbura to 72 percent in Bururi to 90 percent in Kirundo, Kayanza, Gitega, and Ruyigi(1998). The country's social indicators remain amongthe weakest inSub-SaharanAfrica. According to the United Nations Development Program (UNDP) HumanDevelopment Index, in 2005 the country's social indicators ranked 173 out o f 177 countries. 111. The Arusha Accord o f August 2000 initiated a peace process that was successfully concluded with the installation o f a democratically elected government in August 2005. The implementation of the demobilization o f soldiers and ex-combatants has been satisfactory, and the country has made good initial progress in stabilizing the economy, implementing financial and structural reforms, and beginningto restore social services. Constraints and issues Insecurity, social instability, and depletion of social capital 112. Following the country's tragic cycle o f poverty and conflict, insecurity i s still omnipresent. Poverty made the population more receptive to ethnic-based mobilization for war; and war gradually destroyed human, physical, and social capital. The conflict created a growing population o f vulnerable groups, among the most vulnerable o f whom are excombatants, displaced persons, youth, vulnerable children, households affected by HIV/AIDS, women, the elderly, the disabled, and the Batwapopulation. 35 113. Sources o f insecurity and social instability within the country are still numerous: lack o f physical, food, social, and environmental security; extreme land scarcity; unequal access to services; return o f refugees and internally displaced persons; strong population growth (2.7 percent annually in 2003); and unequal access to resources related to gender, regions, and vulnerable groups. 114. Exclusion and inequity reinforce poverty. Rebuilding social capital at the community level i s critical to restore adequate delivery o f social services and to consolidate the peace process. Improving social conditions i s critical to ensure that communities are supportive o f the peace process. Improving social conditions also is critical to take into consideration such key groups as (i) youth (15-30 years old), who represent 60 percent o f the population and are a the major player if social cohesion i s to be rewoven; (ii) women, who are extremely vulnerable and are more frequently affected by poverty than men (76 percent vs. 64 percent for men) because they have limited access to land, capital, and opportunities; (iii) Batwa, who constitute a the minority indigenous group in the country (1 percent o f the national population) and are particularly vulnerable as they live in extreme poverty and are discriminated against; and (iv) 500,000 displaced persons (60 percent o f whom are women and children) who still live outside the country. Limitedpublic infrastructure and socioeconomic services 115. Communities lack basic social services due to limited access to social services and poor geographical repartition o f infrastructure and services in all main sectors such as health, water, and education. 116. Health. Many years o f conflict have destroyed most o f Burundi's health care system due to the lack o f resources flowing to the sector and the lack o f adequatehealth care personnel. Very little resources are allocated to drugs, supplies, and especially to maintenance o f facilities and equipment. The underfundingo f the systemhas resultedinunderstaffed facilities, common drug stock outages, and large financial barriers to access health services. Most o f the qualified health care personnel are located in Bujumbura; therefore, one issue i s to find ways to send available personnel away from the main urban centers where they are concentrated. The deficit o f qualified doctors and midwives i s really critical. A facility with adequate personnel, drugs, and supplies in rural areas could offer services to large population catchments due to the high population densitywithin the country. 117. Due to the .lack o f health services, major causes of morbidity and mortality are preventable infections, communicable diseases, traumas, malaria, acute respiratory infections, tuberculosis, diarrhea, and malnutrition. Infant mortality i s high, it i s estimated at 169 per 1,000, and maternal mortality i s relatively high as well with 800 per 100,000 live births. Life expectancy dropped from 51 years (1993) to 42 years (2005). HIV/AIDS prevalence i s 11.5 percent. Burundi's high levels of malnutrition, especially among children, are o f great concern because they are among the highest in SSA and inthe world. As peace and stability increase, the new health authorities are confronted with the challenge o f responding to emergency needs, including the needs o f returning refugees and the internally displaced, while ensuring the sustainable development o fthe system. 36 118. Sanitation and potable water. Sanitation services inrural areas are very limited. Only 22 percent o f the population has access to functional facilities, 90 percent o f which are traditional pit latrines. With limitedaccess to improved sanitation facilities, the households do not have the capacity to protect themselves against the spread o f waterborne diseases. Inrural areas, only 43 percent o f the population has access to potable water. Meanwhile, 40 percent o f the rural water supply i s derived from the existing 22,000 improved spring facilities, the bulk of which are nonfunctional. This dire situation can be explained by the lack o f maintenance o f water-related infrastructures. The distances to traditional potable water sources also are long. 119. Education. The decision in September 2005 to eliminate "school fees" has resultedin a huge increase in first grade enrollment. The primary school enrollment rate has significantly increased and in 2005-06 surpassed the pre-crisis level, with a gross enrollment close to 100 percent. Nevertheless, education reaches only a limited fraction o f the population; only 43 percent o f adults are literate (53 percent males vs. 32 percent for females). Disparities in educational outcomes among gender and regions are huge: (i) females comprise only 45 percent o f the students at primary level, 41 percent at secondary level, and 25 percent at university level; and (ii) enrollment rate goes from 130percent inthe city o f Bujumbura to 50 percent inthe gross provinces o fNgozi and Muyinga. 120. However, even though the number o f children o f school age attending school has never been so high, the quality o f education has severely deteriorated due to the conflict and insecurity. To bring in more pupils, a double-shift system was put in place (60 percent o f children participate in double-shift), but that cut teaching time per pupil by 20 percent. Repetition rates are more alarming: 28 percent for years 1-4 o fprimary, 37 percent for year 5, and 44 percent for year 6. Teacher allocation i s hugely inefficient and there are serious shortages o f trained teachers insome regions. Due to the surge in first grade enrollment, the infrastructureneeds would take several years to give all studentsat a reasonable studentkeacher rate. 121. In2003-04 only 40 percent of the schools inBurundiwere built of hard or in semihard materials with adequate roofs. Electricity and safe water are almost nonexistent in Burundi's schools-only 5 percent and 31 percent, respectively. Sixty-six percent o f the schools are fenced and have a school garden, and 79 percent have toilet facilities. 122. Transport. The prolonged lack o f maintenance and the destruction by warring factions o f the country's road network have placed the network in a "nonmaintainable" status. In the absence o f a proper planning strategy, the very limitedresources allocated to the road sector are being spread over dispersed and under-coordinated interventions. Road infrastructure maintenance resources have dropped dramatically from U S $ l l.O million in 1993 to US$1.2 million in 2003. The sector also has been depletedo f its skilled and professional staff, most o f whom are reported to have fled the country as refugees. A good number o f the remaining staff continue to leave for more attractive jobs elsewhere in the country or abroad. As a small landlocked country, Burundi essentially depends on its road network for transport, The enhancement o f the road network including secondary road would improve food security and access to health services. 37 123. Limited capacity of local governments. Local governments are characterized by limited capacity, as much o f the public sector's human resource base has been destroyed and capacity building at the local level still needs to be completed. Lack o f transparency and predictability in public resource management and over-centralizationalso have become major concerns. Financial transfers to communes are not effective because the mechanisms for them are not yet in place. Decentralization is only a recent phenomenon resulting from the April 2005 Communal Law (Loi communale) and the commune elections organized in June 2005, followed by the community elections in September 2005. The distribution o f responsibilities, such as fiscal decentralization and transfer o f human resources and responsibilities, between the state and local governments i s not finalized. Its regulatory framework still needs to be completed. Poor governance and corruption are major issues in the country and have led to further exclusion and marginalization o f the population. Among communes and communities, capacity buildingneeds for financial management, governance, and planning are severe. Governmentpolicies 124. The PRSP lays down the foundations for the country to address some o f the above constraints. The strategy i s articulated around four main pillars: (i) improving governance and security, (ii)promoting sustainable equitable growth, (iii) developing human capital, and (iv) fighting against HIV/AIDS.The government would improve governance and security through (i) negotiating a permanent global cease-fire, (ii)pursuit o f the implementation o f the demobilizationprograms, (iii)defense and security army staffed with professional soldiers, (iv) a disarming the civil population and fighting against light weapons proliferation. Under the project, the government would address human capital development issues by improving the quality o f socioeconomic services in cooperation with communities' beneficiaries. Priority actions already have been identified in the health, education, water and sanitation, and housing sectors. With regard to fighting HIV/AIDS, the government funds prevention, access to treatment, and support to most affected families to meet their basic needs. 125. In working on its decentralization policy, the government is committed to take into consideration pre-existing local development institutions. The two main ones are the Community Development Committees, which were set up under previous development projects before the Communal Law; and the Poverty Reduction Communal CommitteesPoverty Reduction Provincial Committees, which were set up democratically by communities themselves as a mandatoryrelay for the country's socioeconomic development. 126. Improving access to and quality o f education i s a priority for the government. The Ministry o f National Education and Culture has prepared a strategic policy plan, "Options and Priorities for Education and Training," which aims to reach the goals o f Education For All (EFA). The main objectives o f this policy are to (i) access at the primary level and expand diversify the services offered at the secondary level (technical and vocational education); and (ii) improve quality through reforming pre-service teacher training, enhancing in-service training, implementingnew curricula, and strengtheninginstitutions. 38 127. The government strategy for the road sector is to privatize the execution of all roadworks and create an enabling environment that places small and medium-sized enterprises (SMEs) and Community Development Associations at the center o f road maintenance; promote greater involvement o f road users in road maintenance financing; and establish a framework for road sector planning and management that eliminates dispersion, integrates all interventions in the sector, and enhances efficiency and synergy. Rationale for Bank involvement 128. The Africa Action Plan supports the scaling up o f support to enhancethe development o f local governments to improve service delivery, accountability, and participation. The plan also backs the increase in the number o f projects with community-driven development (CDD) funding. CDD has proved an effective means to rebuild societies emerging from war and conflicts. CDD approaches help to both address urgent local needs and restore the trust and relationships that collapsed as a result o f conflict. The project also would improve donor coordination on interventions at the communal level, as it would lay the foundations for long- term communal development, thus paving the way for additional donor contributions later. The project would ensure transparency and accountability for an effective use o f resources at the local level. 129. Following the installation o f the democratically elected government in August 2005, the Bank approved an InterimStrategy Note (ISN) for Burundito set a road map for Bank support to the country for FY06-07. There appears to be strong demand from civil society and government for active support to decentralize. Throughout the consultations with national stakeholders in preparing the ISN, demands for community support were omnipresent. The ISN has two main objectives: (i)consolidate achievements o f the past three-year transition period, and inparticular, to ensure that communities and populationhave access to basic services and are supportive o f the peace process and economic reform agenda and (ii)lay the bases for sustained economic recovery. The proposed project come at a critical time for the country as socioeconomic services delivery had been largely weakened. The proposed project i s in line with the objectives o f the I S N and the upcoming PRSP. The project would be a planned lending operation under the ISN and would support the first objective o f the I S N by increasing communities' access to basic socioeconomic services and enhancing social stability. The proposed project would empower communities and would be a key support to ensure effective decentralization. 130. This project is a key instrument to support economic and social recovery in the country and to rebuild social capital. Given its extensive involvement in CDD in other post-conflict settings, the Bank has a clear comparative `advantage in this area. This comparative advantage has translated into the achievement o f quick and tangible results on the ground when communes are given the financial resources to undertake activities that respond to their own priorities. Rebuildingsocial capital has a sustainable and positive impact both directly on community well being and instrumentally onbuildinglong-termpeace. 39 131. The project would draw on Bank's previous experience in implementing community- driven projects in the country such as closed projects Burundi Social Action Project Iand 11. PRADECS also would complement other country operations. By developing public socioeconomic services, the proposed project would strengthen the activities already undertaken under the Demobilization, Reinsertion and Reintegration Program. Since issues of security, social stability, and service delivery are closely linked, PRADECS also would help sustain the achievements obtained under DRRP. A successfully implemented PRADECS could help reduce the prospects o f future conflicts. The proposed project also would complement the activities o f the Agricultural Rehabilitation and Support Project (PRASAB), which directly improves food security by revitalizing and diversifying agricultural production and establishing sustainable land management. Thereby, the proposed project would not only address constraints to poverty reduction and community well-being not addressed under PRASAB but also reinforce and increase the impact o f PRASAB. 132. Finally, the project would support the newly designed policies o f the various sectoral ministries to reach out to the rural poor by putting them at the center o f the daily management o f the basic social infrastructurethat benefit them. This beneficiary-based approach is now a strong orientation found in all ministerial strategies, in line with the approach supported by the PRADECS. For water and sanitation, the project would directly support the ministry's specific objectives to maximize access to drinking water in rural areas and reenergize beneficiary associations for rural water infrastructure management. For health, the ministry intends to reach its objective o f improving the quality o f services and health care through the construction, rehabilitation, and equipment o fhealth facilities with a special focus on remote areas. PRADECS would directly support this objective. In the education sector, the ministry would reach its 100 percent enrollment goal by having a primary school for each community and the promotion o f active participation by beneficiaries inmanagingthe schools. The project would support this goal through its participatory approach to construct new primary schools. 133. The Bank's involvement would foster coordination among bilateral and multilateral donors. Building such coordination would help government leverage additional funding from themto implementits decentralization strategy and would deepentheir support to communes. 40 Annex 2 Major RelatedProjectsFinancedby the Bankand/or Other Agencies - BURUNDI: Community and Social DevelopmentProject Sector issue addressed Project Latest supervision (public sector review) ratings (Bank-financed projects only) World BanWIDAJinanced Implementation Development progress (IP) objective (DO) BurundiSocialAction S S Project I(Cr-2494 ) Closed BurundiSocialAction S S Project I1 (Grant H0330)-Ongoing Social Public Works and S S Employment Creation Project (Cr. 3460 and Grant 1980)-Ongoing BurundiEducation Support Project- Ongoing Rural development Agriculture S S Rehabilitationand Support Project (Grant H117) Ongoing Demobilization and Demobilization, S S reinsertionand Reinsertion and reintegration ReintegrationProgram (TF53856)-Ongoing Transport and Roads Sector S S Infrastructure Development Project (Cr. 3874)-Ongoing Multisector InfrastructureProject- To be appraised Other DevelopmentA Iencies Governance/ EUGood communal Governance Project development (to start early 2007) 0 Swiss cooperation Project (Province o f Ngozi) 41 Zommunal LJNDP Governance ievelopment Development Project (ongoing) ieconstruction and LJNDPKJNCDF :ommunal Reconstruction and ievelopment CommunalProject inthe Rutana Province (ongoing) Xural development IFADRural Development Project (Provinces o f Cibitoke, Karusi, Gitega, and Kayanza) Reconstruction IFADTransitory Post- Conflict Reconstruction Program (Provinces o f Ruyigi,Bururi, and Bujumbura) Reintegration UNDP Integrated Operational Plan for the Reintegrationfor Burundi's FivePriorities Provinces (Cankuzo, Karuzi, Makamba, Rutana, andRiyigi) Reintegration/ USAIDPost-Conflict - governance Program for the Development of Good Governance Note: IPDORatings:HS = Highly Satisfactory, S = Satisfactory, U= Unsatisfactory, HU= Highly Unsatisfactory. 42 Annex 3 ResultsFramework andMonitoring - BURUNDI: Communityand Social DevelopmentProject Results Framework PDO Project outcome indicators Use ofproject outcome information Establishand operationalize a At least 70 percent o fthe Determine whether project has decentralized, participatory, targeted Communes show an been effective at addressing and transparent financing increase inaccess to and use communities' priorities. mechanismthat empowers o fprimaryhealth, primary Provide opportunity to local governments and education, and water services, targeted communities to gauge communities for better and as compared with that at the improvement inlocal service equitable local service time o f conclusion o f the delivery intheir own terms delivery respective Subproject Grant Agreement. At least 70 percent o fthe Determine whether project infrastructure financed under results are sustainable Subprojects i s maintained and operational two years after completion o fthe respective Subproject. At least 15 percent o fthe Determine whether project targeted Communes have results are sustainable obtained funding for Communal Development Plan activities from outside the Project. At least 50percent o fthe Determine whether project has targeted Communes have been effective at enhancing integrated the concerns of social inclusion and cohesion, Vulnerable Groups intheir and contributingto Communal Development communities and vulnerable Plans. groups' empowerment. 43 Intermediate outcomes Intermediate outcome Use of intermediate outcome indicators monitoring Component A: Capacity Building Governance and At least 90 percent o fthe Indicatewhether managerial capacity o f targeted Communes have implementation capacity communes and developed or updated their building activities are communities have Communal Development effective. improved. Plans on a participatory basis. At least 90% o ftargeted Indicate level o f good communes have set up governance and transparency information mechanisms to o f communes provide access to CDP, budget, procurement, minutes o f CC deliberations Training plan o f DGDMAD Monitor strengthening o f has been finalized and DGDMAD implemented satisfactorily At least 80% oftargeted Monitor execution o f training beneficiaries have received activities ' training inplanning, financial management, procurement, and M&E), as plannedby project. Social cohesion and At least 80percent o fthe Indicate level o f commitment inclusion have improved targeted Communes have o f communes to improve developed a strategy to ensure participationo f vulnerable participation o f Vulnerable groups Groups intheir decision- makingprocess, notably with respect to Communal Development Plans. At least 10%o ftargeted Indicate whether training beneficiaries o f capacity effective inincreasing buildingactivities are vulnerable groups' representatives o f vulnerable participation groups at commune level. 44 Component B: Financing Subprojects for Local Development 0 Public subprojects At least 430 Community- and Document number o f Commune-level Subprojects communal subprojects on have beencompleted. ground. At least 80% ofproposed Determine quality o f subprojects are eligible. proposals. At least 80% of approved Determine efficiency o f subprojects were successfully subproject implementation implementedbyproject end. arrangements. At least 90% o ftargeted Determine whether communes have managed transparency has been financial resources according achieved inuse of funds at to appropriate procedures. local levels. Social cohesion and inclusion At least 80% ofcommunes Determine commitment o f subprojects have mobilized contributions beneficiaries to project. o fbeneficiaries intimeframe required. At least 70 Subprojects Document number o f targetingor relatingto vulnerable group subprojects Vulnerable Groups have been on ground. completed. At least 10%ofbeneficiaries' Assess level o f inclusion o f subprojects implementedalso vulnerable groups in benefitvulnerable group at communes. communal level. Component C: Project M&Esystem is inplace and Indicate whether management Management, Monitoring and provides regularly robust o fproject activities at national Evaluation, and social and economic data. and local levels i s effective. Communication At least 60 percent ofthe Use M&E as tool for planning targeted Communes provide and decision-making for all robust monitoring and stakeholders. evaluation information inan appropriate timeframe. 45 The ES produces periodic, Ensurethat technical and timely progress reports financial management i s (technical/financial). adequate and that mitigation measures are inplace for timely action. Everyannual audit opinion Ensurethat funds are managed has beenunqualified. according to the agreed procedures. A communication strategy targeting all Project stakeholders has been Ensure efficient developed and implemented. communication and knowledge-sharingas tools for planning and decision-making, innovation, and good governance. 134. The project's monitoring and evaluation (M&E) system would be critical for implementation. Appendix 3 outlines the indicators to measure the achievement of the project's development objective and intermediate outcomes. The project M&E system intends to (i) inform stakeholders o f the progress made by the project in achieving its objectives; (ii) provide information to evaluate the efficiency inthe implementation o f the overall project; and (iii) build M&E capacity within the Ministry of Interior and Public Security, particularly within the Department o f Decentralization and Self Development, to evaluate progress made in the implementation o fthe decentralization policy, and disseminate lessons learned from the project. 135. Before effectiveness, a baseline survey would be conducted to establish the value o f the main indicators. Annual evaluations would be conducted to assess the performance o f the project and its impacts. Participatory monitoring techniques would be mainstreamed into the project by strengthening capacity at the communal level to lead a process of consultation with local communities. The M&E activities would occur at the national, provincial, and local (communal and community) levels. 136. At the national level, the PRADECS Executive Secretariat (ES) would include a M&E specialist in charge o f the (i)management o f M&E system, (ii) management o f PRADECS database, (iii)organization o f studies related to the M&E system, (iv) capacity buildingo f actors involved inM&E at all levels, including DGMAD, (v) organization o f M&E external activities, (vi) exploitation o f results o f studies, and (vii) establishment and maintenance o f collaboration with structures incharge o f monitoring o f local development and poverty. The ES would ensure continuous dissemination o f lessons learned and best practices among beneficiaries to help participatory evaluation. 46 137. At the provincial level, APSD would have the following functions: (i) consolidation o f data coming from the communes, (ii)production and diffusion o f M&E reports, and (iii) strengthening capacities o f actors involved in M&E. APSD would work closely with the provincial unit o f the Ministryo fPlanning, which monitors local development inthe province. 138. At the communal level, the project would (i) develop capacity at the community and help commune levels, and (ii) develop a functional mechanism to transmit the collected data fi-om bottom to top. 139. The commune would be responsible for the general M&E o f activities undertaken on its geographical zone. The CDA jointly with the CCDC would ensure M&E o f implementation o f the CDP and report to the CC. The project would strengthen their capacity to do so. Reports would be produced by the CDA The community would be responsible for activities in its geographic areas based on an agreement signed with the commune. A Community Council would be responsible for M&E within its community but would set up an M&E technical committee to do so. It i s foreseen that members o f the former CDC may be part o f these committees. 47 ' 3E.^ 0 m F 0 F 3 E 0 F ;i 0m 0 F ;i 0m 0 F 0 F m 0 3 n 0 0 0 0 Q\ 2 8 W ri 3 n 0Q\ 0 0 0 o\ 03 W $: 3 0 m 0 0 In Q\ P 03 00 E: 3 m 0 0 0 0 o\ m 00 W s? 0 v, m 8 8 IS 0 W W 0 Q\ 0 0 0 W b 0 v, IH 0 W 0 1 % m 0w W 4 8 m0 w 0 v, Annex 4. DetailedProjectDescription BURUNDI: Community and Social DevelopmentProject ComponentA: CapacityBuilding-US$6 million 140. Component A would empower stakeholders to support the decentralization process. It would focus on enhancing the capacities o f communes and communities in the local development process and strengthening capacities to increase social cohesion and inclusion. To achieve these objectives, this component would be dividedintwo subcomponents. Subcomponent I.I Facilitationfor local development 141. The project would recruit Facilitation Agencies (FAs) to assist communities and communes undertaking participatory planning and initiating, preparing, implementing, managing, and monitoring subprojects. These FAs (NGOs or consulting firms) would be recruited through a national biddingprocess with performance- and results-based contracts. Each would set up local animation teams to work at the commune and community levels. The Executive Secretariat (ES) would coordinate their activities and oversee that they respect the project's keyprinciples and strategy. 142. To avoid inconsistent approaches, the following measures would be taken: (i) and initial regular workshops to agree on a common approach and to share experiences and lessons during implementation o f the project, (ii)submission o f annual work program for approval, (iii) preparation o f a specific guide for facilitation, (iv) monitoring from the decentralized services o f DGDMAD, (v) performance-based contracting renewable annually. The FA would be held accountable for performance against outputs, but with some flexibility in the choice o f specific facilitation methods and work planning. The FA would strengthen the local technical and fiduciary skills at the different decentralized levels to implement local development activities. The FA cover, among others, the following: (i)participatory assessment, planning, and monitoring, (ii) financial management and procurement for local investment activities, and (iii) safeguards issues. Communities 143, Facilitators would support community councils to conduct the following activities: (i) identifytheir members, their assets, and their issues; (ii) understand their priorities; (iii) propose solutions under a list o f subprojects; and (iv) agree on a participatory M&E mechanism. Facilitators would make sure that the most vulnerable groups are identified and that their concerns, priorities, and specific action plans are addressed. Facilitators also would work jointly with communal development agents (CDAs) and communal social agents (CSAs), and under the supervision o f communal technical services. Communities would formulate strategies to ensure that the vulnerable groups participate in the decision-making. After subprojects have been approved at the communal level, if the implementation and management o f a specific subproject has been delegated by the commune to a community, facilitators would support communities in implementing them. 52 144. As many communities previously prepared development plans under other development projects, the project would build on them and avoid duplications. Jointly with the communities, CDAs, and CSAs, facilitators would assess the quality o f these plans, especially their participatory dimension. If necessary, they would conduct complementary actions, for example, to address the lack o f participation o f vulnerable groups or possible environmental concerns. To mitigate the risks o f possible tensions associated with competition for access to resources, the communities would agree on a grievance mechanism to be put in place. It i s foreseen that Bashingatahe (local wise people with an informal role in traditional justice system) may play a role. Facilitators then would provide technical support in the preparation o f community-level subprojects (technical documents, facilitation with decentralized line ministries agents, feasibility studies ifnecessary) and intheir implementation (procurement, M&E, management). Communes 145. Facilitators would work closely with CDAs, CSAs, and Communal Community Development Committees (CCDC). According to the Communal Law: 0 CDAs are in charge o f (i) collecting socioeconomic data for Communal Development Plan preparation, (ii) preparing and monitoring communal subprojects, (iii) supporting the elaboration o f M&E reports on the CDP implementation, and (iv) supporting the coordination o f development activities. CSAs are in charge of, among other things, (i) monitoring education and health issues and (ii) organizing support to vulnerable people. CCDCs are in charge o f providing technical expertise to the commune to prepare the Communal Development Plan (CDP). 146. According to the above tasks, facilitators would support all three groups to prepare the CDP, based on the communities' concerns and the commune's specific assets and issues. The project would make sure that the CDP includes a specific part on vulnerable groups. After the CDP has been approved by the Communal Council (CC), the project would provide support for its implementation: preparation o f subprojects to be approved by the CC, technical feasibility studies, and procurement. Strong support also would be provided by facilitators on M&E o f the implementation o f the CDP. When CCDCs are not in place or are not functional, facilitators would facilitate their establishment with a consultative and transparent process. It i s expected that the most active members o f former informal development committees ("CDCs" involved in BURSAF', among other things) would become membersof the CCDCs. 147. The project would provide some institutional support such as equipment, office rehabilitation, and training, but most o f the needs would be covered by other ongoing projects. Close linkages would be developed with these projects, which provide training and equipment for financial management, accounting, rule o f law, and decentralization, particularly the EU Good Governance Project and the Switzerland Governance Project. 53 Line Ministries 148. Strong support (mostly training and equipment) would be provided to decentralized services of the DGDMAD to play their role in the implementation of the project. Other line ministries would have to be involved as well. An information campaign and training would be organized to explain (i) project's content, (ii) partnership between the line ministries and the the the project, and (iii) mandate for local development. Consistency o f investments with sector their strategies i s critical for the success o f the project. Consistency can be attained only with the strong involvement o f line ministries' representatives during the entire process o f preparation and implementationo fplans and subprojects. Subcomponent 1.2:Strengthening social inclusion and cohesion 149. The objective is to strengthen social inclusion and cohesion within communes and communities, through sensitization, capacity-building and training on the conditions and needs o fthe vulnerable population groups. 150. The vulnerable population groups eligible for the project are as follows: orphans; households affected by HIV/AIDS; destitute women; the Batwa people; displaced and returned people; handicapped people; and the youth. These are the most vulnerable people in the current social context o f Burundi. Simultaneously, they are the most critical to augment social inclusion and cohesion at the community level. 151. Eligible activities would include information, education, and communication (IEC) on the vulnerable groups. These activities would be deployed at three levels: Actors in local governance, such as members o f the communal councils and communal administrators, in order for the vulnerable groups to be better understood and better supported through the local activities o f planning, decision-making, and implementing development subprojects. Organizations that represent or support the vulnerable groups, such as NGOs and grassroots committees, to strengthen their support and assistance activities for the vulnerable groups. Associations o f vulnerable groups, to strengthen their organizational capacities, their participation, and their responsesto their problems. The subcomponent is open to IEC activities according to local needs, as well as to replicate successful initiatives in the domain. Examples o f activities for this subcomponent are assembled infigure 1. 54 lure A4.1 Examples of activities to strengthen social inclusion and cohesion Examples of activities for strengthening social inclusion and cohesion (capacity-building, IEC) Sensitization on the issue of vulnerable groups: their identification, their problems and needs, and the modalities for their participation (national campaigns, workshops and other events); campaigns for social inclusion and to combat stigmatization (particularly in benefit of orphans, people living with HIV, handicapped people and the Batwa people) Diagnostics and practical studies on the vulnerable groups, in order to guide and better deploy specific activities Registries of vulnerable persons so to facilitate their targeting within community and communal activities Capacity-building for local governments on social inclusion and for the effective targeting of vulnerable population groups (training destined to administrators, communal councils, CCDCs, provincial services and opinion leaders locally) Organizational support and capacity-building for the vulnerable groups (including their associations and committees) Sensitization and training on vulnerable groups destined to teachers; training on "Peace Education" Activities for the prevention and management of community conflicts (awareness-raising, training, establishment of community mechanisms for conflict management) Awareness-raising on children's rights Awareness-raising on health, nutrition and hygiene destined to the vulnerable population groups Nutritional fairs with promotion of local produce Diffusion of texts and legislation regarding rights of minorities, sick people, handicapped people, returnees and children Programs for prevention of drug-addictions, alcoholism and petty crimes, targeted to children and the youth Training of psychosocial counselors at the community level 153. The implementation o f these activities preferably would be commissioned to specialized organizations or consultants, since vulnerable groups are not easy to target and demand adequate methods and approaches. Component B: Financingsubprojects for Local Development-US$30 million 154. This component would finance collective interventions as identified in CDPs or as arise from the participatory planning process by communes and communities if no communal development plan i s yet inplace. It has two subcomponents. 55 Subcomponent 2.1: Financingpublic subprojects 155. The project would provide financial support to the communes and communities to implement demand-driven public subprojects that are part o f the CDP or identified during the participatory planning process by communes and communities if no communal development plan i s yet inplace. The financial support would be provided through a grant and complemented by a contribution from the beneficiaries, as detailed below. According to the Communal Law, communes have the ownership and management responsibilities o f all socioeconomic infrastructures. Therefore, communes would be in charge o f the implementation o f the infrastructures. However, they would delegate implementation and management responsibilities to a community when the subproject would benefit only that community. All subprojects would be approved by the Communal Council, but prior to approval, the relevant technical services must give their clearances to ensure the (i) consistency o f the project with sectoral policies and national quality criteria and (ii) provision o f human resources and equipment whenrequired. Eligible subprojects 156. Communes and communities would have an open menu o f activities, including capacity- building activities, so long as the activities do not belong to a negative list, as detailed in the PIM. More details are described in the Project Implementation Manual (PIM). The subprojects could fall into the following sectors: health (health posts, HIV/AIDS prevention centers, personnel training), education (classrooms, teacher training, literacy), transportation (small road accesses, bridges), water and sanitation (wells, latrines), culture and sport, and collective economic infrastructure (markets, slaughterhouses, bus station). To mitigate the risk o f lack o f education and health staff and equipment due to lack of funds, the project would favor the rehabilitation and upgrading of existing infrastructure rather than buildingnew infrastructure. 157. Specific eligibility criteria are: The subproject i s consistent with the Communal Development Plan or has been identifiedduring a participatory process at the commune and community levels ifno CDP i s yet inplace. It i s not includedinthe negative list. The subproject's cost i s below US$lOO,OOO for the communal-level subproject plus US$25,000 for the community-level subproject. The subproject i s consistent with national standards and sector policies. It is consistent with the PRADECS safeguard policies. 56 0 Beneficiaries contribute to the investment: 0.5 percent-2.0 percent from the annual communal budget (depending on the budget, as detailed in the PIM), and 3 percent provided by the communities benefitingfrom the subproject inthe form o f cash, labor or materials. 0 A specific management committee has been set up, and specific arrangements (financial and humanresources) have beenmade to maintain the subproject. Resource allocation 158. A formula, based on population and the social services gap would be usedto determine grant allocation for each commune. To mitigate possible tensions due to competition for accessing resources, several subprojects can be financed per community. However, 10 percent o f the funds would be earmarked to grant extra bonuses to communes that have shown good governance performance, particularly infinancial management. Subcomponent 2.2: Subprojects to strengthen social inclusion and cohesion 159. This subcomponent would strengthen social inclusion and cohesion through the implementation o f demand-driven subprojects benefiting vulnerable groups in the participating communes and communities The vulnerable population groups eligible for this subcomponent are the same as for subcomponent 1.2: orphans; households affected by HIV/AIDS; destitute women; the Batwa people; displaced and returned people; handicapped people; and youth. In general terms, these are the most vulnerable people in Burundi's current social context. Simultaneously, to augment social inclusion and cohesion at the community level, these groups are the most critical to reach. 160. The project would finance two major types o f subprojects: Subprojects targeted to specijk needs of vulnerable groups. For example: a project to support the schooling o f orphans and Batwa children (including their identification and registration and sensitization, and the provision o f schooling kits); a project to support housing construction for Batwa families and/or returnees; a project for sports equipment for youth; a project for activities for/from the youth (theater, sport events, youth camps, exchange visits, cultural festivals, andor artistic activities); training programs to facilitate the professional abilities of vulnerable groups (to focus on construction, handicrafts, mechanics and other jobs o f community value, including bakery, cheese-making, and seed nurseries). Short, practical courses are recommended. These training subprojects may include financing for equipment and support to establish productive associations to optimize the socioeconomic integration effects o f the training. Furthermore, the project would finance alphabetization programs at community level, destined principally for the membersofthe vulnerable population groups. 57 2. Subprojects toprovide community servicesfor counseling and assistance. The project can finance services o fjuridical assistance and psychosocial counseling, destinedprincipally for the vulnerable groups. The goal i s to establish local mechanisms for social assistance, mainly legal and psychosocial, to advance the rights o f vulnerable groups as well as their reintegration and self-confidence. For instance, a commune could establish a legal counseling service for orphans, widows, women victims o f violence and Batwa communities to address issues such land restoration, identity cards, and legal defense. Communes and communities also could contract the services o f specialized psychosocial counselors, for instance, for weekly visits to support orphans, people living with HIV/AIDS, and women victims of violence and abuse. A few NGO-based initiatives would provide experiences and lessons learned for this type o f interventions. 161. Specific eligibility criteria are: 0 The subproject is consistent with the Communal Development Plan, or has been identified during a participatory process at the commune and community levels if no CDC i s yet inplace. It i s not included inthe negative list. 0 The subproject's cost is below US$lO,OOO, except for subprojects o f housing and for legal counseling benefiting various communities, for which the financing may reach US$15,000. 0 It is consistent with national standards and sector policies. 0 It i s consistent with PRADECS safeguard policies. 0 A specific management committee has been set up, and specific arrangements have been made (financial and humanresources) to maintain the subproject. 162. Vulnerable groups require adequate methods, approaches, and legitimacy, such as NGOs, local associations, and specialists, depending on the cases. In most cases, the communes would contract specialized organizations or consultants to implement the subprojects. Good practices and technical experiences have beenidentifiedduringthe preparation o f the project and would be replicated when relevant (housing, for example). 163. Inmany cases, subprojects for vulnerable groups would benefit a number o findividuals. A list o fbeneficiaries with clear andjustified criteria would beprepared, validated at community and communal levels, and finally made available for public information and control. 58 Component C: Project Management, Monitoring and Evaluation, and Communication- US$3.4 million 164. The project would finance spending related to technical, administrative, and financial management, strengthening the capacity o f the structures coordinating the implementation o f the project. It would support equipment, staff training, study tours, technical assistance (TA), goods, services, and operating costs. 165. An Executive Secretariat (ES) would be responsible for the day-to-day management of the project activities. It would be attached to the Department o f Decentralization and Self- Development and report to its General Director. The ES would have the following specific functions: (i) incollaboration with the technical directorates of the DGDMAD, oversight of all technical, social, and environmental matters related to project implementation; (ii) planning the project activities and preparation o f the annual work program, jointly with the directorates; (iii) M&E o f all activities with the technical directorates; (iv) financial management of IDA resources; (v) all procurement related to these funds; and (vi) all financial agreements to be signed by the ES with the communes. The ES would be led by an Executive Secretary; it would be a small team recruited through an open competition and comprised o f a capacity-building specialist (Component A), civil works specialist (Component B), M&E specialist, socioenvironmental specialist, financial manager, procurement specialist, accountant, and treasurer. It would be strengthened with several comptrollers provided by a fiduciary firm to review and monitor fiduciary activities at the communal level. The project would finance the recurrent costs, training, equipment, and vehicles requiredfor the ES to be operational. 166. The project would finance M&E activities. It would focus on results-oriented data collection for the purpose o f management decisions and impact evaluation. The M&E system o f the project would be critical for its implementation. Appendix 3 outlines the indicators to measure the achievement o f the project's development objective and intermediate outcomes. The project M&E system intends to (i) inform stakeholders o f the project's progress in achieving its objectives; (ii)provide information to evaluate the efficiency in the implementation o f the overall project; and (iii) M&E capacity within the Ministry o f Interior and Public Security, build particularly within the Department o f Decentralization and Self Development, to evaluate progress made in implementing the decentralization policy and to disseminate lessons learned from the project. 167. Before effectiveness, a baseline survey would be conducted to establish the value o f the main indicators. Annual evaluations would be conducted to assess the performances o f the project and its impacts. Participatory monitoring techniques would be mainstreamed into the project by strengthening capacity at the communal level to lead a process o f consultation with local communities. The M&E activities would occur at the national, provincial, and local (communal and community) level. At the national level, the PRADECS ES would include a M&E specialist in charge of the (i)management of the M&E system; (ii)management of PRADECS database; (iii) organization o f studies related to M&E system; (iv) capacity building o f actors involved in M&E at all levels including the DGMAD; (v) organization o f M&E external activities; (vi) exploitation o f the results o f studies; and (vii) establishment and maintenance o f the collaboration with the structures in charge o f the monitoring o f local development and poverty. 59 168. The ES would ensure continuous dissemination o f lessons learned and best practices among beneficiaries to help participatory evaluation. At the provincial level, the APSD would have the following functions: (i)consolidation o f data coming from the communes; (ii) production and diffusion o f M&Ereports; and (iii) strengtheningo f capacities o f actors involved inM&E.Itwould work closely with theprovincialunit o fthe MinistryofDevelopmentPlanning and National Reconstruction, which i s monitoring local development in the province. At the communal level, the project would (i) develop capacity at community and commune level, help and (ii)develop a functional mechanism for transmitting the collected data from bottom to top. The commune would be responsible for the general M&E o f activities undertaken on its geographical zone. The CDA jointly with the CCDC would ensure M&E o f implementation of the CDP and report to the CC. The project would strengthen their capacity to do so. Reports would be produced by the CDA The community would be responsible for activities in its geographic areas based on an agreement signed with the commune. A Community Council would be responsible for M&E within its community but would set up an M&E technical committee to do so. It i s foreseen that members o f the former CDC may be part o f these committees. 169. The project also would develop a communication strategy and implement it. It would ensure efficient information circulation between the different stakeholders involved in the project. This activity includes the elaboration and maintenance o f a website that would include various functionalities dependingon the targeted audience. 60 Annex 5 ProjectCosts - BURUNDI: Communityand Social DevelopmentProject Project cost by component and/or activity Local Foreign Total T TCCm VUVllC US$m US$m Capacity building 5,349.70 624.00 5,973.70 Financingsubprojects for local development 31,184.00 - 31,184.00 Project Management, M&E, and 2,965.20 400,lO 3,365.40 communication PPF 579.40 579.40 Total baseline cost 40,078.40 1,024.10 41,102.50 Physical contingencies 70.10 70.40 140.50 Price contingencies 133.20 25.80 159.00 Totalprojectcosts* 40,28 1.70 1,120.30 41,502.00 Interest during construction Front-end fee Totalfinancingrequired Note: * Identifiable taxes and duties are US$0.22m; the total project cost, net o f taxes, = i s US$41.18m.Therefore, the share o fproject cost, net o f taxes, is 99.22%. 61 Annex 6 ImplementationArrangements - BURUNDI: CommunityandSocial DevelopmentProject 170. The project would be implementedover five years. The Ministry o f Interior and Public Security, in particular, the Department o f Decentralization and Self Development (Direction Ge'ne'ralede la De'centralisation et de la Mobilisation pour I'Auto-De'veloppement) (DGDMAD), which is in charge o f decentralization, would assume overall responsibility for coordination and implementation o f the project. The institutional and implementation arrangements o f the project have been designed according to the PCN and QER review meetings and several studies including, among others, an institutional assessment, a study on decentralized financial management mechanisms, and a capacity assessment o f service providers. It i s grounded within the framework o f the decentralization policy, particularly the new Communal Law (enacted in April 2005). 171. As abackground, Burundi'sadministrativestructures are: 3 116 rural Communes, subdivided in zones, then communities (set for villages inBurundi). Communes are led by an elected Communal Council (CC), managed by a communal administrator (from among the CC) with its staff. The staff includes a communal development agent (CDA), a communal social agent (CSA), and an accountant. The CC benefits from guidance from a consultative body, the Communal Community Development Committee (CCDC). Community Councils also are elected at the community level and the CC relies on them to interact with the communities. 3 1 6 Provinces (apart from Bujumbura), led by designated Governors with their staff. 3 Centrallevel Projectcoverage 172. The project would cover the 16 rural provinces, but it will not be implemented everywhere with the same intensity. Strong support would be provided to the 8 provinces o f Bubanza, Cankuzo, Kirundo, Makamba, Muramvya, Muyinga, Mwaro, and Ngozi (50 communes). The project would start in 3 communes in each province the first year. Selection would be made based on the needs in basic infrastructures. All other communes would be covered duringthe second year ofthe implementationofthe project. Light support would beprovided to the eight other provinces where other projects are already giving similar support. The project would supplementtheir support duringthe third year o fimplementation, ifneeded. 62 ProjectManagement 173. Project management arrangements have been designed based on the following guiding principles: 0 Need to build the country's institutional capacity and allowing for a greater integration o f project's management in the country's existing institutions and systems. Necessity to strengthen the capacity o f the new Department o f Decentralization and Self-Development in the Ministry o f Interior (one year oldlack o f staff/fairly decentralized). 0 Urgency for showing results on the ground inthe post-crisis atmosphere. 0 Multisectoral dimension o fthe project. 174. A National Orientation and Steering Committee (NOSC) would be chaired by the first vice-president and would comprise 11 Ministers: o f Interior and Public Security; Good Governance, Inspection and Local Administration; Planning and Reconstruction; Finance; Public Works and Equipment; Land Management, Environment and Tourism; Energy and Mines; National Education and Culture; Public Health; Youth and Sports; and National Solidarity, Rights and Gender. NOSC would be responsible for (i) supervising the overall orientation, coordination, and M&E o f project implementation; and (ii) approve the project's annual work programs and budgets.NOSC would meet twice a year. 175. A Technical Execution Monitoring Committee (TEMC) would be responsible for (i) reviewing the project's annual work programs and budgets, (ii)monitoring the project's operations and providing guidance, (iii)and approving the project's manuals (Project Implementation Manual, Financial and Administrative Manual, Monitoring and Evaluation Manual). TEMC would be chaired by the Minister o f Interior and Public Security or hidher delegate, and composed o f representatives from the key sectoral ministries, local governments, and civil society. TEMC would meet every quarter. 176. An Executive Secretariat (ES) would be attached to the DGDMAD. It would have the following specific functions: (i)in collaboration with the technical directorates o f the DGDMAD, oversight, of all technical, social, and environmental matters related to project implementation; (ii) planning o f project activities and preparation of the annual work program jointly with the directorates; (iii)M&E o f all activities with the technical directorates; (iv) financial management o f IDA resources; (v) all procurement related to these funds; and (vi) all financial agreements to be signed by the ES with the communes. The ES would be led by an Executive Secretary. It would be a small team recruited through an open competition and comprised o f a capacity-building specialist (Component A), civil works specialist (Component B), M&E specialist, safeguards specialist, financial management specialist, procurement specialist, accountant, and treasurer. The ES would be strengthened with several comptrollers provided by a fiduciary firm to review and monitor fiduciary activities at the commune level. 63 177. The existing decentralized services of the DGDMAD (APSD) at the provincial level also would be involved. APSD would carry out the following tasks: (i) diffusion o f information on project activities, (ii) reception, analysis, and diffusion o f activity reports coming from the communes, and (iii) monitoring the Facilitation Agencies (FAs). They would receive training from the project to strengthentheir capacities to take over more and more M&E responsibilities by the end ofthe project. Mainimplementationresponsibilities 178. Communities. Communities would be responsible for conducting a participatory needs assessment that would lead to the preparation o f the Communal Development Plan and to the identification and preparation o f priority subprojects to be financed by Component B. Technical support would be provided by multidisciplinary teams set up by the FA. After the subprojects have been approved by the Communal Council, some would be implemented at the communal level. Others, which would benefit a particular community only, would be implemented at the community level. In all cases, subprojects management committees would be set up to implement and manage the subprojects. Community Councils would be empowered for the M&E o f the implementation and management o f investmentsat the community level. 179. Communes. The Communal Law defines the roles o f communes as well as their structure. Communes would play a major role inthe project. They would be the contracting authority o f all subprojects, although they would delegate the contracting authority to communities for small subprojects that benefit only one community. The commune would have six responsibilities: (i) consulting with communities to prepare a participatory Communal Development Plan, (ii) approving the CDP, (iii) preparing and approving subprojects to be submitted to the ES for financing, (iv) signing contractual agreements with the ES to receive funding for the approved subprojects, (v) signing contractual agreements with communities to delegate implementation and management o f community-level subprojects, and (vi) monitoring operation and maintenance (O&M) o f the infrastructure built under the project. 180. According to the Communal Law, the following communal structures would be involved intheproject's implementation: The Communal Council (CC), which i s the elected body that rules the commune, would approve the CDP, the communal budget, and all subprojects with their financing plans; and would oversee the implementation o f the CDP. The CC i s assisted by the Communal Community Development Committee (CCDC) for the participatorypreparation o f the CDP and the M&E o f its implementation. The CC is a consultative body that comprises representatives from the communities, civil society, and the decentralized technical services. 64 0 Communal staff would be in charge o f the implementation o f the CDP, including its fiduciary aspects. The staff includes a communal administrator (elected from within the Communal Council), an accountant, a development agent (CDA), and a social agent (CSA). The development agent would be particularly involved inthe facilitation activities jointly with the FA. They would facilitate the participatory preparation o f the CDP, its implementation, and its M&E. The social agent would play a major role in the interactions betweenthe project and marginalizedgroups, facilitating 181. Line ministries. They include the ministries in charge o f education, health, civil works, water, transport, youth, and any other sector, depending on the subproject chosen by the commune. Through their decentralized officers, the line ministries would (i) provide technical advice to communes and communities on sector strategies and quality norms; (ii) give technical clearance on the CDP as well as on the subproject proposal; (iii) ensure provision o f staff and equipment when the subproject requires it; (iv) develop and update rosters o f qualified contractors, suppliers, and technical assistance (TA); and (v) provide T A to ensure that infrastructure achieves expected quality standards. To mitigate risks o f lack o f inputs for subprojects and inconsistencies with national strategies and standards, (i)each line ministry would sign formal agreements with the project; (ii) linkages betweenthe project and the strong decentralized line ministries would be developed at the provincial level through the APSD; and (iii) clearancesfromtherespectivelineministryrepresentativewouldberequestedbythe formal commune prior to approval o f subprojects. 182. Civil society. NGOs, particularly those with specialized expertise, could be promoters of ideas andor executors o f specific training and subprojects, with due endorsement by communities and communes. The following key roles for NGOs inPRADECS can be identified: 0 Support to the preparation of CDP and subprojects. Most o f Component A would be subcontracted at the provincial level to Facilitation Agencies (FAs) (NGOs or consulting firms). These agencies would be recruited through a national bidding process and perfonnance- and results-based contracts. The ES would coordinate their activities and oversee that they respect the project's key principles and strategy. FAs would be responsible for all animation activities at the local level for each stage o f the plan and subproject cycles. FAs would set up multidisciplinary teams to work with communities and communes, including competent technicians to assist marginalized groups. The FAs also would make sure that requisite disbursementdocuments (agreements, reports on civil works) pertaining to subprojects are provided to the ES on a timely basis to avoid delays inpayments. 65 0 To avoid inconsistent approaches, the ES would ensure (i) and regular workshops initial to agree on a common approach and to share experiences and lessons during project implementation, (ii)preparation o f a specific guide for facilitation, (iii) submission by the FAs of reports on their activities and on their annual work program for review and approval, (iv) their evaluation by an external agency, and (v) a performance-based contract renewable on an annual basis. FAs would be held accountable for performance against outputs, but with some flexibility in the choice o f specific facilitation methods and work planning. An External Evaluation Agency would be recruited to evaluate their performance against outputs. 0 Construction and engineering services. Local entrepreneurs would be recruited by communes or communities (according to community-based procurement guidelines) to implement the subprojects (primarily civil works). Civil works expert also would be recruited to ensure quality control o f infrastructure and achieve expected quality standards. 183. More details can be found in below charts and in the Project Implementation Manual (PIM). Its adoptionwould be a condition o f effectiveness. 66 Implementationarrangements I National Steering Committee I Technical Monitoring Committee I Ministry of Interior and Public Security I i Department of Decentralization and Self- Development Executive Secretariat L P. 67 SubprojectCycle .eve1 Responsibility Activities >olline Colline Council Information Meeting F Communal Development Agent Actor inventory (incl. vuln groups) a [CDA) Situation analysis c Communal Social Agent Validation of diagnosis I [CSA) Development of long term vision I CCDC Development of 3 year plan (incl. vul. grps.) I Priority results and budget t Establishment of M&E participatory committee a Establishment of a grievance 'mechanism t lcommunication to commune I >ommune CCDC IPreparation of Communal Development Plan 0 CDA and CSA ( P ~ c(incl. vuln. grps) ) n Line Ministries Technical inputs for PDC Communal Council 1 1Review and approval of PDC b st year action plan Y Beneficiaries IPreparation of subproiects . - Fea'sibiIity studies a Mobilization of contribution n Line Ministries Technical review I Communal Council Approval of subprojects m h m m u n e & CommunelColline Procurement a M i n e CCDC Verification of physical progress t CD A Evaluation of action plan 0 Colline Council Colline wide assemblies to validate r Subpr.Management Committee Operation and maintenance S 68 Annex 7 FinancialManagementand DisbursementArrangements - BURUNDI: Communityand Social DevelopmentProject 1.INTRODUCTION AND EXECUTIVE SUMMARY 184. A financial management assessment was carried out in accordance with the Financial Management Practices Manual issuedby the Financial Management Board on 3 November 2005. The objective o f the assessment was to determine whether the implementing entities have acceptable financial management arrangements, which will ensure: (1) the funds are used only for the intended purposes in an efficient and economical way, (2) the preparation o f accurate, reliable and timely periodic financial reports, and (3) safeguard the entities' assets. 185. The financial management arrangements for the Project have been designed after taking into account the country's post-conflict situation and the weaknesses o f the country PFM at central and decentralized levels. The arrangements aim to facilitate disbursementsboth at central and at decentralized levels and to ensure effective use o f Project resources and funds while the country's own systems are used to the extent possible. To this end, overall coordination o f the financial management aspects o f the Project will be the responsibility o f the Executive Secretariat (ES) located at the Department o f Decentralization and Self Development, within the Ministry of Interior and Public Security. The principal objective o f the Project's financial management system will be to support the Project in the use o f resources to ensure economy, efficiency and effectiveness in delivering the results required to achieve Project objectives. The financial management system must be capable o f producing timely, relevant and reliable financial information that will enable the Project's management to plan, implement, monitor and assess the Project's overall progress toward its objectives. 186. The financial management department o f the ES composed o f 3 staff will be headed by a qualified, experienced Financial Manager selected on a competitive basis. The financial management department o f the ES will be responsible for (i)approving payments to contracted service providers, suppliers o f equipment and goods, and implementing agents mainly the local governments or community-based organizations; and (ii) recording the project's transactions, (iii)maintaining the records and books o f accounts and (iv) preparing periodic financial reports. A firm will be contracted to perform financial control over communes. This financial controller will review and approve, prior to any payment, all the evidences and documents (e.g. invoices, financial reports and M& E reports.. .) submittedby the local governments to support the request for replenishment o f their bank accounts. The review will include the verification o f eligibility o f expenditures ex-post and where required, physical inspection o f works and goods acquired at communal levels. The findings o f the financial controller will be used by the ES to make decisions regardingpayments for the various service providers and local governments. 69 187. Two Designated Accounts denominated in U S dollars will be opened in a commercial bank acceptable to IDA. The accounts will be managed by the ES. The replenishment o f these designated accounts will be made on the basis o f period transaction-based withdrawal applications. Funds will be disbursed to local government entities as well as contractors and service providers after the approval o f the financial controller (for expenditures relating to sub- projects). Initial payments will be made to local governments to finance subproject. These payments will be made after it i s certified that communal accountants have received appropriate training, and that the local governments have raisedtheir contribution. Qualified, experienced and independent auditor ("external auditors") will be appointed on approved terms o f reference. The scope o f the external financial audit, including eligibility o f expenditures and physical inspections, will cover all aspects o f project activities at central and decentralized levels and will be carried out on an annual basis. 2. COUNTRY ISSUES 188. A Country Financial Accountability Assessment for Burundi was carried out in 2004. The review noted that the public financial management systemwas weak following years o f civil war that were followed by a four year transition. There were substantial weaknesses related to budget formulation and execution, financial reporting, and oversight systems, as well as a weak linkage between agreed policies, budget planning and execution. Since then, significant progress has beenmade in all areas (e.g., establishment o f an audit court, publication o f the first audit o f budget execution, audits o f the treasury, and successive audits o f the Central Bank). The Government i s committed to implementing additional reforms and i s preparing an integrated medium-ternreform plan, covering the legal framework, budget formulation, budget execution, public procurement, financial management and reporting, internal control and audit, external oversight, and control over the wage bill. 189. The Government has also launched a decentralization program whose objective i s to enhance capacity for financial management at the decentralized levels o f government. At those levels, recent studies suggest that there i s a lack o f transparency and predictability in public resource management, and financial transfers from the Central Government are not effective since mechanisms for financial transfers toward communes have not yet been established. 190. Studies carried out recently to assess the financial management capacity at the decentralized levels of government (communes and communities) revealed several and significant weaknesses. These weaknesses include: (i) the lack o f transparency and predictability in public resource management; (ii) insufficiently qualified staff in the areas of financial the management; (iii) the lack o f a double-entry accounting system acceptable to IDA. In addition, the local government staff are not familiar with IDA financed-projects procedures for reporting requirements, disbursement arrangements and auditing and financial transfers from the Central Government are not effective since mechanisms for financial transfers toward communes have not yet been established. 191. The distribution o f responsibilitiesbetweenthe state and local government i s thus not yet finalized and the regulatory framework still needs to be completed. Furthermore, capacity buildingneeds among communes and communities are severe interms o f financial management, governance and planning. 70 3. OBJECTIVESAND PROJECTDESCRIPTIONAND COSTS 192. The project development objective is to establish and operationalize a decentralized, participatory and transparent financing mechanism that empowers local governments and communities for better and equitable local service delivery. This will be done through the following components: 8 Component A: Capacity Building- US$ 6 million; 8 Component B: Financing Subprojects for Local Development -US$30 million; 8 Component C: Project Management, Monitoring and Evaluation, and Communication-US$ 3.4 million. 4. INSTITUTIONAL ARRANGEMENTSFOR FINANCIAL MANAGEMENT 193. A National Orientation and Steering Committee (NOSC), chaired by the First Vice- President and composed o f the Minister o f Interior and Public Security, Minister o f Good Governance, Inspection and Local Administration, Minister o f Planning and Reconstruction, Minister of Finance, Minister o f Public Works and Equipment, Minister o f Land Management, Environment and Tourism, Minister o f Energy and Mines, Minister o f national Education and Culture, Minister o f Public Health, Minister o f Youth and Sports, Minister o f national Solidarity, Rights and Gender. It will be responsible for (i) supervisingthe overall orientation, coordination and monitoring and evaluation o f the implementation o f the Project, and (ii)approving the project's annual work programs and budgets. It will meet twice a year. 194. A Technical Execution Monitoring Committee (TEMC) will be responsible for (i) reviewing the project's annual work programs and budgets, (ii)monitoring the Project's operations and providing guidance, (iii)and approving the project's manuals (Project Implementation Manual, Financial and Administrative Manual, Monitoring and Evaluation Manual), and (iv) regularly reviewing financial reports and any audit reports thereon, and ensuring follow up o f identified issues. It will be chaired by the Minister o f Interior and Public Security, or its delegate, and composed inter alia o f representatives from the key sectoral ministries, local governments and the civil society. It will meet every quarter. The Project's implementation arrangements are designed to reinforce the Department o f Decentralization and Self Development for it eventually to assume the entire responsibility for managing a similar development project in future. To this end, the responsibility for overall policy guidance and oversight o f Project implementation, including its financial management aspects, will be assumed by the TEMC. It will ensure that the Project funds are used according to the agreed objectives. 71 195. An Executive Secretariat (ES) will be created under the Department o f Decentralization and Self development, itself headed by a Director General. The ES will implement and manage the project activities, including activities pertaining to monitoring and evaluation, as well as managing project funds. The ES will have professional staff to ensure effective coordination between the executive divisions o f the ministries involved in the project (through their participation inthe TEMC and NOSC) and local governments. It will be headed by an Executive Secretary selected on a competitive basis. The financial management team, which consists o f competitively selected individual consultants, will be responsible for:(i) monitoring the implementation o f financial management procedures outlined in the Financial Management Manual; (ii) maintaining ES expenditure accounts; (iii) approving and making disbursements o f funds to local government as well as direct payments to service providers, contractors and suppliers o f goods; (iv) leading and consolidating the project financial statements including the budget, FMR andproject accounts; and (v) auditing and reporting to IDA. 196. The ES financial management staff will be strengthened with a fiduciary firm to control financial management procedures at communal level. It will be selected on a competitive basis with term ofreference acceptable to IDA.Writtenposition descriptions that clearly define duties, responsibilities, lines o f supervision, and limits o f authority for all o f the officers, managers, and staff with project financial management responsibilities will be drawn up and documented inthe Administrative, Financial and Accounting Manual. An appropriate training program which will include World Bank financial management procedures will be provided for staff, The allocation o f responsibilities should enable the appropriate segregation o f duties to ensure proper accountability. 5. RISKASSESSMENT AND MITIGATION 197. The objectives o f the project's financial management system are to: (i) that funds ensure are used only for their intendedpurposes in an efficient and economical way while implementing agreed activities; (ii) enable the preparation o f accurate and timely financial reports; (iii) to ensure that funds are properly managed and flow smoothly, rapidly, adequately, regularly and predictably to implementing agencies; (iv) enable project management to monitor the efficient implementation o f the project; and to (v) safeguard the project's assets and resources. Furthermore, in order to ensure a strong financial management system, the implementing agencies (local governments) should have an adequate number and mix o f skilled and experienced staff, the internal control system should ensure the conduct o f an orderly and efficient payment and procurement process, and proper recording and safeguarding o f assets and resources. The accounting system should support the project's requests for funding and meet its reporting obligations to fund providers including the Government, IDA, other donors, and local communities. The system should also be capable o f providing financial data to measure performance when linked to the outputs o f the project. Lastly, an independent, qualified auditor should be appointed to review the Project's financial statements and internal controls. 72 ummar; Risk RiskMitigatingMeasures Conditions Remarks Rating IncorporatedintoProject for Design M&aess WIN) Inherent H risk Country S The Government o f Burundi i s N The CFAA in 2004 as well as level highly committed to a reform recent studies outlined program that includes the substantial PFM weaknesses at strengthening o f the budget central and decentralized levels classifications, implementation of (i) in term o f budget an interim IFMIS. A new legal formulation and execution, framework i s being prepared. financial reporting, and However, there are still oversight systems, (ii)weak weaknesses in capacity and in linkage between agreed audit, preparation o f first set of policies, budget planning and consolidated accounts. Efforts are execution; (iii)lack of an continuing to strengthen adequate tracking and reporting accounting and audit capacity. system and a formal accounting system within the ministries; (iv) the lack o f transparency and predictability in public resource management at local and central level; (v) the insufficiently qualified staff in the areas o f financial management; (iii)financial transfers from the Central Government are not effective. ( see above FM Assessment report o f PFM o f Burundi) Entitylevel H Creation o f a ES and use o f IDA N A new Communal Law was FMsystems. recently enacted. However, it i s still weak on financial management aspects and the division o f responsibilities for financial management between the central and local governments. The lack o f capacity also serves to enhance the risk inthis category. 73 Risk Risk RiskMitigating Measures Remarks Rating Incorporated into Project Design ?roject level H Recruitment o f consultants on a Y The project aims to finance Gompetitive basis including the projects and sub-projects in a outsourcing o f the financial decentralized environment that controller to a firm. In mitigation is characterized by the lack o f o f this risk, arrangements will be zapacity and a decentralized made at provincial level to back legal framework that i s yet to up capacity at the local levels in be fully implemented. The financial management, and number of transactions may monitoring o f activities. also be relatively high since more than fifty local governments. Control S Risk M The project Administrative, N Budgeting Financial and Accounting Manual will define the arrangements for budgeting, budgetary control and the requirements for budgeting revisions. Annual work plan and budgetrequired. M The project will adopt Y Local governments still use a Accounting international accounting single entry accounting system, standards, and accounting Furthermore, bank transactions procedures and policies will be are not fully recorded and bank documented in the reconciliations are not carried Administrative, Financial and out ina regular manner. Accounting Manual. Qualified staff will be recruited, and a computerized accounting systemwill be installed. Training on IDA FMprocedures planned. 74 Risk Risk RiskMitigating Measures Conditions Remarks Rating Incorporated into Project for Design Effectiveness (Ym Internal H The Administrative, Financial Y The distribution o f Control and Accounting Manual should responsibilities between the document the project's internal state and local government i s controls. Internal audit function not finalized and the regulatory exists, but i s largely compliance framework still needs to be and transaction oriented and adds completed. Internal audit little value to the control function exists, but i s largely framework. The recruitment and compliance and transaction training o f an internal auditor, oriented and adds little value to and the nature and scope o f the the control framework. At local project activities will mitigate government level, the studies this. revealed significant conflict o f interests. FundsFlow H (i) designatedaccountswill Two Y Funds, especially for be opened at central level and implementation agencies and each local government will open the ES ,may not be used in an a bank account. efficient and economical way (ii)Payment requests will be and exclusively for intended approved by the Financial purposes. The scattered N Controller prior to disbursement locations and lack o f capacity o f hndsto local governments. o f the local governments may lead to some delays in the (ii)Training and technical transfer of funds and could also assistance will be provided to impede ex-post controls on local government in managing activities. funds received from the ES. (iii)An annual evaluation of perfonnance will be conducted and to ensure a close link between physical progress and financial reporting. 75 Risk R i s k RiskMitigatingMeasures Conditions Remarks Ratin Incorporated into Project Design Financial S To reduce delays and ensure Compilation o f the project's Reporting proper financial reporting system, accounting information may be a computerized accounting complex given the relatively system will be put in place. wide geographical span of Format of reporting statements transactions. will be specified in the Administrative, Financial and Accounting Manual. Overall policy guidance arrangements will ensure that management reviews financial information and follows UP relevant recommendations. Auditing M (i)The project's institutional Y The auditing profession in arrangements allow for the Burundiis still generally weak. appointment o f adequate external International auditing standards auditors. are followed in the industry. (ii) Financial statements will be Audit reports are generally audited by a firm selected on a timely, and management letters competitive basis contain issues that assist management to ensure the continuing adequacy of the financial management arrangements. Overall H Risk Rating H-High,S-Si stanti 4-Moderate, L-Low 198. The financial management assessment identifies a HighRisk for the project. In order to mitigate the identifiedrisks and to ensure a smooth implementation o f the project, the following actions are envisaged: 76 issue RemedialActionsRecommended DueDate Staffing (i) A Financial Management Specialist and 1 Done Accountant will be recruited. (ii) Recruitment o f the financial control firm. Before 3 months after effectiveness Administrative, (i) Recruitment o f a consultant for, and preparation o f Done Financial and the first draft o f the Administrative, Financial and Accounting Manual Accounting Manual. o fthe ES (ii)FinalizationoftheAdministrative, Financialand Before Accounting Manual o f the ES. effectiveness Manual o f Financial (i) Recruitment o f a consultant for, and preparation o f Done procedures for Local the first draft o f the manual o f financial procedures for Governments local governments. (ii) Finalization o f the Manual o f Financial procedures Before for Local Governments effectiveness Information System- Acquisition and installation o f accounting software for Before accounting software the project, effectiveness Chart o fAccounts Revision o f the Chart o f Accounts to reflect the Before project's transactions effectiveness Reporting Design and agreement with IDA o f the formats o f Done Arrangements financial reports Audit o f project Update and agreement with IDA o f the Terms o f Before financial statements Reference for the audit o f the financial statements, effectiveness indicating the scope and coverage o f the audit and selection o f external auditors completed. Capacity building (i)Training for local government accountants Condition o f and local completed and (ii) government contributions paid disbursement local government to local contribution. government's accounts from Designated Account A 77 6. FLOW OF FUNDS 199. The project will provide financial support to the communes and communities to implement demand-driven public subprojects that are part o f the Communal Development Plan. The financial support will be provided through a grant and complemented by a contribution from the local government annual budget (between 0.5 and 2% of the approved subproject cost o f the communes and communities, in cash, depending on the commune financial resources) and the beneficiaries (3% in kind or in cash). Financing for subprojects will be available subject to the establishment o f satisfactory arrangements for the management o f the funds. Eligibility criteria and procedures o f use will be described in the Project Implementation Manual. Eligible subprojects could be identified and proposed by communities or the communes themselves. Their financing will require their presence in communal development plans or at least the approval o fthe Communal Council. b 6.1. Disbursementof IDA Funds to the ES 200. The following bank accounts will be maintained by the ES for project fimds: 0 Designated Account A (DA-A): Denominated in U S dollars, this will be used to finance exclusively all the subprojects in form o f Grants. Disbursements will be authorized for subprojects having fulfilled the eligibility criteria, as specified in the Manual o f Procedures. Subsequent payments will be subject to (i) a technical certificate o fprogress; (ii)simplifiedfinancialreport,aspertheBank'sMay7,2002FMsimplifiedguidelines a for CDD projects and (iii)certificate deliveredby the Financial Controller following the a reviewo f all supporting documentations submittedby the local governments. Evidence o f payment will be maintainedby each local government for reviewby the external auditors. Payment documentation will not be required by ES at central level for the deposit o f the second and third tranche under a sub-project but the certificate delivered by the financial controller will be requiredprior to any disbursementto the local governments. Designated Account B (DA-B):Denominated inU S dollars, it will be used to finance all other expenditures including but not limitedto activities such as consultant services and studies, capacity building, Information Education & Communication, ES operating costs.. . etc. 201. The Designated Accounts will be maintained in a commercial bank acceptable to IDA and their signatories will be determined and documented inthe Financial Procedures Manual but at least the signature o f the FinancialManager o f ES i s mandatory. 202. An advance into the Designated Accounts A and B will be made at the inception of the project. The authorized allocation will be US$ 2 million for the Designated Account A and US$ 500,000 for the Designated Account B. The amounts have been calculated to represent approximately four months o f eligible expenditures. Upon grant effectiveness, IDA will deposit US$ 2 million in the Designated Account A and US$ 250,000 in the Designated Account B representing 50% o f the authorized allocations. 78 203. The balance will be made available when aggregate withdrawals from the grant account plus the total amount o f all outstanding Special Commitments entered into by the Association shall be equal to or exceed the equivalent o fUS$2million for the Designated Account B. 204. The Designated Accounts will be used for all payments o f amounts below 20% o f the deposited amount and replenishment applications will be submitted, at least once a month. Additional deposits into the Designated Accounts will be made against withdrawal applications supported by appropriate documents, including Statements O f Expenditures ( SOEs). 0 Disbursementon the basis o fFinancialMonitoring Reports 205. Inthe long term, disbursement of IDA funds to the ES for activities could be done based on Financial Monitoring Reports (FMRs) that integrate financial reporting, procurement and contract management with physical implementation progress. The FMRs will include the following: a project financial statement which includes a summary o f sources and uses o f funds, an updated six-month forecast, a Special Account activity statement; a statement o f eligible expenditures by disbursement category; a project progress report explaining variances between actual physical and financial progress versus forecasts; a Summary Statement o f Special Account Expenditures for Contracts subject to Prior Review; and a Summary Statement o f SA Expenditures not subject to Prior Review. 206. An advance will be made into the Special Account at the time o f conversion to this method o f disbursement. The advance will be meant to cover project expenditures for 6 months as indicated in the initial six-month cashflow forecast. After every subsequent quarter, the project will submit FMRs which include a cashflow forecast for the following 6 month period. The cash request at the reporting date will be the amount required for the forecast period as shown in the approved FMRs less the balance in the Special Account at the end o f the quarter. Subsequent disbursementso fthe IDA funds will be made inrespect o fthis request. 207. The option o f disbursingthe funds through direct payments from IDA on contracts above a pre-determined threshold will also be available. Withdrawal applications for such payments will be accompanied by relevant supporting documents such as copies o f the contract, contractors' invoices and appropriate certifications. 79 0 Transitionalarrangementsfor disbursement 208. Inthe interveningperiod after Credit effectiveness but before the project adopts report- based disbursements; the IDA Credit will be disbursed using traditional methods. An advance into the Special Account will be made at the inception o f the project, and subsequent replenishments will be made on the basis o f withdrawal applications and Statements o f Expenditure (SOE's). During this period, FMRs that are required under FMR-based disbursementswill beprepared by the project and submittedto the IDA for review. They will be used to assess progress towards meeting the requirements o f FMR-based methods o f disbursement. At the time o f conversion, the project will prepare a reconciliation o f project expenditures, disbursements received, and Special Account movements up to the proposed date o f the conversion. Other details for the conversion will be worked out closer to the time o f conversion betweenthe project team and IDA. 6.2. Disbursementof funds fromthe DesignatedAccountA to Local Governments 209. Every participating local government shall establish a separate bank account for the project to be used exclusively for project funds in accordance with Local Administration regulations. Project funds will be disbursed from the Designated Account A to the local governments for activities to be implemented at the local administration level. The accounts maintained by the local governments into which these transfers will be deposited will be separate from the accounts o f the local administration. Funds received from the IDA Designated Account A will be deposited on these. 210. Local governments will be financed on an imprest basis, with an initial advance given once workplans are approved. Subsequent replenishments will be made upon periodic submission o f accountability to the Financial Controller for review and approval. 211. Initially, once annual workplans are approved, a cash request in respect o f the workplan will be submitted to the ES for an amount o f estimated expenditures for a period covering no more than 90 days (or 40% o f the total annual budget). In making disbursements to, and payments on behalf of the local governments, the ES will ensure that such amounts do not at any time exceed those indicated inthe approved annual workplans. 212. The ES will prepare guidelines for local governments that will include the format and proposed content o f these periodic reports. Payments o f subsequent tranches for sub-project expenditures will be made according to a predetermined payment schedule and are subject to prior review o f supporting documentation and evidences o f payments by the Financial Controller. 80 6.3. Payments for services by local governments 213. Approved sub projects will indicate the arrangements through which payments for goods or services provided under the sub project will be paid for. These include the payee details, schedules o f payments, and conditions to be satisfied before stage payments are made. Payments will be made by issuing a cheque to the suppliers drawn on the local government account. In certain cases, local governments may request the ES to make a direct payment to suppliers on their behalf. Where payments are based on the satisfaction o f certain conditions, the local governments will make the necessary arrangements to ensure that those conditions are fulfilled before making the payments. 214. Quarterly reports will be prepared and submittedby the local governments to the'ESthat will reflect expenditures paid for by local governments. The ES through the Financial Controllers will then undertake reviews on a sample basis to verify these reports and ensure continuing eligibility o f expenditures and compliance with project objectives. 215. The following diagrams thus summarize the proposed funds flow mechanism for the project. 81 Figure 1 FundsFlow mechanism - IDA Designated Designated AccountA AccountB I I -1 I I I I I I I * I I LocalGovernment I I I I I I b Accounts I I I I I I I I I I I I I I I I I I I I I I I i 1 I I I I Other proiect activities I I I I 82 DetailedFlow of Fundsfor subproiects 4 I I Request II Replenishment Designated Account A Service Providers A G I \ I I Clearance 5 I Reports II Audit Replenishment 3 tran hes Communal Account ES: Executive Secretary I FM: Financial Manager FC: Financial Controller Service Providers I CA: Communal Administrator LA: Communal Accountant 0signature 6.4. CounterpartFunds 216. The Government o f Burundi through the budget o f local government will provide counterpart funds in a percentage estimated at 0.5 to 2% o f the approved subproject costs. Contributions from communities will be inkind or incash and estimated at 3% o f the cost o f the subproject. Details on community contributions will be provided inthe FMR.IDA would finance between95% and 96.5 % o f the total cost o f each local government approved subproject. These contributions will be required prior to payment o f the initial advance required for each subproject. The contribution will be paid into the bank account o f the local government and evidence should be sent to the Financial Controller for confirmation. 83 217. Information on local government counterpart funds will be integrated inthe FMR. 6.5. Remedies againstnon-submission of returns and other financialinformation 218. IDA will have the right, as reflected inthe Grant Agreement, to suspend disbursementto ES if reporting requirements are not complied with. Similarly, participating agreements will grant a right o f suspension to ES and the district if proper supporting documentation i s not submitted from lower levels o f implementationas required. 6.6. Prior Review and Uses of Statementof Expenditures 219. Except as the Association shall otherwise determine by notice to the Recipient, the following contracts shall be subject to Prior Review by the Association: (a) each contract for goods estimated to cost the equivalent o f US$150,000, (b) each contract for works estimated to cost the equivalent o f US$200,000, (c) each contract for consultants' services with specific regard to the terms o f reference for such contract; (d) the first contract for consultants' services provided by a firm; (e) each contract for consultants' services provided by a firm estimated to cost the equivalent o f US$lOO,OOO or more; (0 the first contract for consultants' services provided by an individual; (g) each contract for consultants' services provided by an individual estimated to cost the equivalent o f US$50,000 or more; (h) each contract for consultants' services procured on the basis o f single source selection; and (i) each contract for training, workshops, and study tours in accordance with the provisions o f the Project Implementation Manual. All other contracts shall be subject to Post Review by the Association 220. Disbursementsfor all expenditures should be made against full documentation except for contracts valued at less than US$200,000 for works, US$150,000 for goods, US$lOO,OOO for consulting firms and US$50,000 for individual consultants as well as operating costs which will be claimed on the basis o f Statement o f Expenditures (SOEs) without supporting documentation. Local government and Community sub-projects, training and operating costs will also be claimed on the basis o f statement o f expenditures (SOEs). All supporting documentation for SOEs will be retained at the ES central coordination, provincial and local government and communities. They will be kept readily accessible for systematic review by the Financial Controllers on request. The supporting documentation will also subject to periodic review by IDA and ESteam duringsupervision missions as well as bythe external auditors. 84 Allocationof IDA Grant Proceeds (excludingtaxes) Total DisbursementCategories (US$ million) FinancingPercentage 1.Goods 0.95 100% 2. Works 0.71 100% 3. Consultant Services I 2.3 1 I 100% 4. Trainings, Workshops, 2.76 100% Seminars and Study tours 5. Financing o f sub- 30 100% projects, Grants 6. operating Costs 0.65 100% 7. PPF Refinancing 0.58 100% Unallocated 2 Total 40 7. FINANCIAL AND ADMINISTRATIVE MANAGEMENT 7.1. OverallResponsibilitiesof the ES 221. The Financial Department o f the ES will be responsible for all financial management, accounting and audit aspects o f the project. Inparticular, it will be responsible for the following: (i)designing and establishing a computerized financial management system; (ii)approving disbursement of funds to implementingpartners; (iii) maintaining up-to-date accounting records and ledgers; (iv) recording fiduciary transactions for all activities pertaining to the project for which the Financial Department o f the ES i s held responsible; (v) fiduciary reporting; (vi) submitting audit reports; and (vii) ensuring that a proper internal control system i s in place to achieve accountability at all levels. At least three sets o f financial reports will be prepared and consolidated by the Financial Department o f the ES, namely the annual budget o f the project, the quarterly Financial Monitoring Reports (FMRs), and the project financial statements. 85 7.2. Administrative,financialand accountingmanual 222. The project's accounting policies will specify the accounting treatment for the project's financial transactions and will constitute basic principles designedto ensure that the accounting records are complete, relevant and reliable and that accounting practices are followed consistently. The accounting systems, policies and procedures employed by the ES inaccounting for and managing project funds will be documented in the project's Administrative, Financial and Accounting Manual. The Administrative, Financial and Accounting Manual will be usedby: project staff as reference manual; IDA to assess the acceptability o f the project accounting, reporting and control systems; and by the auditors to assess project accounting systems and controls and indesigning specific project audit procedures. Specific procedures will be documented for each significant accounting function. They will be written to depict document and transaction flows, and will cover the following aspects: administrative and humans resources aspects, flow o f funds; financial and accounting policies; record keepingand maintenance, the chart o f accounts, formats o f records and books o f account; authorization procedures for transactions; planning and budgeting; financial reports (including formats, linkages with Chart o f Accounts and procedures for reviewing these); and auditing arrangements. The Administrative, Financial and Accounting Manual will also describe the ES organizational chart and administrative and procurement procedures as agreed in Schedule 3 o f the Grant Agreement. 223. In addition, the Administrative, Financial and Accounting Manual will document the arrangements that have been made for recording project impacts, outcomes, outputs, and inputs that are required to assess progress toward the achievement o f project objectives. It also documents the procedures undertaken for the replenishment o fthe Special Account. 224. A Financial and Accounting Procedures Manual for Local Government will be also prepared and will contain the required documentation o f the project's financial management procedures for the Local Governments 7.3. PlanningandBudgeting 225. ES will use the planning and budgetingsystem of the Ministryto ensure proper planning for the implementation o f its activities. Annual budgets will reflect the regular updating o f this disbursement schedule and financial requirements o f the project. The annual budget will be prepared based on the policy guidelines issued by Ministry o f Finance. The budget will serve as a planning, management and control tool. 226. ES will prepare an annual work plan and budget for implementing Project activities taking into account the Project's objectives. The work plan and budgets will identify the activities to be undertaken and the role o f respective parties in implementation. Annual work plans and the budgets will be consolidated into a single document by the ES, which will be submitted to the National Orientation Steering Committee for approval, and thereafter to IDA for no objection no later than November 30 o f each year proceeding the year the work plan should be implemented. 86 227. The consolidation will be done after the ES ensures, through its technical department, that the plan and budget meet the Project objectives. It will be regularlymonitored, and material variances between budgeted and actual amounts will be investigated. The results o f the monitoring process will be fedback into the budgetingprocess to ensure proper follow up o fkey issues identified. 228. The project will ensure the existence o f suitable development planningcapacity ina local government before disbursingfunds. Planning and budgetingfor project funded expenditure will be done within the Local Administration legal and regulatory framework. Planning guidelines issued by the Ministry o f Interior and Public Security will support the local governments in planning and budgeting for investment funds and address inclusion o f community development plans inconsolidated Communal Development Plans (CDPs). Expenditure under the project has to be in line with council-approved annual plans. The disbursement o f grants to local governments will be based on their work plans. 229. At the community level, sub-projects will be generated by the communities with the help o f a facilitator. Proposals for funding the sub-projects identified will be forwarded to the communal council (CC) which will then consider them for approval. Once approved, the proposals will be forwarded to ES for funding. The ES will verify the workplans. Following decision by the CC and approval by the ES, a Grant Agreement will be entered into between the ES andthe CC regardingthe implementation o fthe planand the activities proposed therein. 230. Variances between actual and budgeted figures will be regularly investigated, and the results will be fed back into the planningprocess. 7.4. Staffing: ES and the financial controller 231. ES will retain staffing resources that are adequate for the level o f Project operations and activities and are sufficient to maintain accounting records relating to Project financed transactions, and to prepare the Project's financial reports. Training and capacity building plans will also be designed for all potential staff. The financial management department o f the ES will be composed o f a qualified and experienced Financial Manager (FM), in charge o f the supervision o f the overall financial management function o f the Project, one experienced accountant, and a treasurer. 232. The financial management team will be strengthened with a fiduciary firm to control financial management procedures at communal level The duties o f the financial controller will include the prior review o f all documentations and financial reports submitted by the local governments to support requests for direct payments of suppliers and contractors or for replenishment o f the local bank accounts. The controller will also be responsible for capacity buildingo flocal government financial management staff. 87 7.5. Internalcontrols 233. The project's internal controls will include all the means by which the implementing units will ensure that its operations are carried out efficiently and effectively. In addition, this system will be used to ensure that project transactions are correctly made, recorded and reported upon. The accountings systems will be used to track, record, analyze and summarize financial transactions relating to the components for which they are responsible. 234. Each o f the implementingunits' accounting systems will be used to track, record, analyze and summarize financial transactions relating to the components for which they are responsible. The project's accounts will be prepared on a cash basis in accordance with International Accounting Standards. 7.6. Books of accounts 235. These will include at a minimum, a general ledger, and cashbook and subsidiary ledgers. A proper filing systemthat allows authorized users easy access will be set up to ensure that all accounting and supporting documents are retained on a permanent basis and properly maintained. ES will have an accounting system that allows for the proper recording o f project financial transactions, including the allocation o f expenditures in accordance with the respective components, disbursement categories, and sources o f funds. Appropriate controls over the preparation and approval o f transactions should be put inplace to ensure that all transactions are correctly made, recorded and reported upon. 236. Local governments will also maintain the accounting records and documents for transactions financed using project funds. All accounting documents will be kept at their premises and made available upon request during the review o f the financial controller or during supervision and audit missions. 7.7. Accountingsystem 237. The project's accounts will be prepared on a cash basis in accordance with International Accounting Standards. The ES will have an accounting system that allows for the proper recording o fproject financial transactions, including the allocation o f expenditures inaccordance with the respective components, disbursement categories, and sources o f funds. Controls over the preparation and approval o f transactions should be put inplace to ensure that all transactions are correctly made, recorded and reported upon. A list o f accounts codes (Chart o f Accounts) should also be drawn up. This should match with the classification o f expenditures and sources and application o f funds indicated in the Grant Agreement. The Chart o f accounts should be developed in a way that allows project costs to be directly related to specific work activities and outputs o f the project. 88 238. The accounting system for ES shall be computerized. The system should integrate budgeting, operating and accounting systems to facilitate monitoring and reporting. This will facilitate the automatically generation o f interim, annual and other financial reports. Accounting staff will be adequately trained to maintain the system and appropriate controls will be instituted to safeguard the confidentiality, integrity, and availability o f the data. The ES will upgrade its accounting system to enable it to automatically generate financial monitoring reports. The computerization o f the accounting system will help to reduce the risk o f human errors in record keeping, and would help enhance the efficiency o f the process o fpreparing reports. 7.8. Financial reporting 239. Formats and responsibilities for preparingperiodic financial reports to be generated from the financial management system will be defined. There will be clear linkages between the information in these reports and the Chart o f Accounts. The financial reports will be designedto provide quality and timely information to project management, implementing agencies, and various stakeholders on project performance. These reports include financial statements (e.g. ' sources and application o f funds; expenditure classified by project components, disbursement categories, expenditure types and implementing agencies, and comparison with budgets; short- term forecasts o f expenditure; unit costs for key items and comparison with budgets; etc.). The reports will closely follow sample formats that are indicated in the Guidelines for Borrowers on Financial Monitoring Reports. 240. Annual Financial Statements and Annexes for the project will include: a Statement o f Sources and Uses o f Funds showing funds from IDA and Government o f Burundi separately, a summary o f expenditures analyzed under the main headings and by main category o f expenditures, Notes in respect o f significant accounting policies and accounting standards adopted by management, a Special Account Reconciliation Statement showing deposits and replenishments received, payments substantiated by withdrawal applications, interest that may be earned on the account and the balance at the end o f the fiscal year; an Implementation Report, which would be a narrative summary o f the implementation progress for the project; and a Summary o f Withdrawals using Statements o f Expenditures or FMR's, listing individual withdrawal applications byreference number, date and amount. 241. Each local government will be required to produce simplified statements o f final accounts. A Manual o fProcedures for Financial Management will provide formats and schedules to guide the preparation o f these accounts. Separate consolidated reports shall be made and submittedto the ES on a quarterly basis to account for project funds. 89 8. AUDITING ARRANGEMENTS 8.1. InternalAudit 242. Internal audit arrangements relating to local governments will be executed as provided for in the relevant legal and regulatory framework. Reliance shall be placed by the ES on the Internal Auditors in the local government administration who will conduct regular audit verification o f sub-project transactions to ascertain whether individual expenditurei s eligible for financing under the project and fully supported by adequate documentation. Furthemore, they will ensure that supporting documents are reliable and accurate. Local government internal audit reports will be prepared and submitted to the ES. Technical supervision and financial audits carried out regularly by the local government technical staff and the internal auditors will be used as part o f monitoring and evaluation exercise. Arrangements will be made by the ES to support local governments where necessary. The ES will also make arrangements to monitor compliance with procedures in the use o f funds for sub-projects and performance benchmarks maintained by the districts for directly-funded sub-projects. FAs will also have a major role in ensuring compliance with the project's internal control procedures. 8.2. ExternalFinancialAudit 243. A firm o f qualified independent auditors will be contracted by the ES to carry out the audit o f the financial statements o f the Project on an annual basis. The selection o f the auditor will bebased on Terms o fReference that set forth the scope o fthe audit and will be on terms that meet IDA requirementsrelating to independence, qualifications and experience. The scope o f the audit will cover the activities performed by any entity managing Project funds, mainly ES and local governments. The audit mission will require field visits and will include the review o f the expenditureso f at least two local governments ineachprovince. The audited financial statements together with the auditor's report and management letter covering identifiedinternal control and accounting system weaknesses will be submittedto IDA no latter than six months after the end o f each accounting period. A single audit opinion will be issued with respect to project income and expenditures, special accounts and the FMRs. A second audit opinion will be issued on specific controls such as compliance with procurement procedures and FMR requirements and consistency between financial statements and management reports and field visits. The audit report will thus refer to any incidences o f non-compliance, and ineligible expenditures identified duringthe audit mission. 244. The duties o f the Management o f the ES and the Steering Committee will include the review o f audited financial statements and external audit findings as well as issues raised by the financial controllers duringthe review o f the documentation supporting local government request for replenishment o f their bank account or for direct payment o f contractors and service providers. 90 9. CONCLUSION OF THE ASSESSMENT 245. The current financial management arrangements, subject to the improvements foreseen after the implementation of the Financial Management Action Plan, will enable the project to meet the minimum requirements for financial management as defined in OPBP 10:02. The Action plan contains areas that require strengthening, as identified during the assessment. This plan has been agreed between IDA and Government. 10. SUPERVISION 246. A financial management supervision mission will be conducted over the Project's lifetime, and at least on a semi-annual basis. The mission's objectives will ensure that adequate and effective financial management systems are maintained for the Project throughout its lifetime. A review will be carried out regularly to ensure that expenditures incurred by the Project remain eligible for IDA funding. The Implementation Status Report (ISR) will include a financial and procurement management rating for the project. 91 Annex 8 ProcurementArrangements - BURUNDI: CommunityandSocial DevelopmentProject A - GENERAL 247. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The general description o f various itemsunder different expenditure category are described below For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed betweenthe Borrower and the Bankproject team inthe Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity 248. Procurement of Works: Works procured under this project would be limited to those included in subprojects financed under component 2. The works contract envisaged will consist o f constructions, extensions and rehabilitations o f infrastructures in sectors such as health, education, water and sanitation, road and transport provided it i s part o f the communal devolvement plan and not included inthe negative list. No ICB i s foreseen as no contract above the equivalent o f US$ 200,000 is expected. Works contract would be small and spread in the whole country. It would be procured through a combination o f National Competitive bidding (NCB) and shopping usingthe SBD provided by the Project ImplementationManual. 249. Procurement of Goods: Goods to be procured by the grant would include vehicles, furniture, office supplies and computer equipment. The above mentioned goods would be procured through a combination o f the following procures: (a) International competitive bidding for contracts estimated to cost more than the equivalent o fUS$ 150,000; (b) national competitive bidding for contracts o f value amounted more than the equivalent of US$ 30,000 but less than US$ 150, 000 and; (c) shopping for contracts estimated to cost less than the equivalent o f US$ 30,000. Insituations and'circumstances that are in compliance with the provisions o f paragraph 3.6 o fthe Guidelines for procurement direct contractingmay be usedwith Bank prior review. 250. Procurementof non consulting services: Non consulting services to be financed under the grant would include office and equipment maintenance, rental expenses, communication costs, transport and insurance. Regarding the size and nature o f these types o f contracts, the procurement process will be conducted under procedures acceptable to IDA and that would be described in the Project Implementing Manual and in the project financial and administrative manual. Bothmanuals will have to bereviewed and found acceptable to IDA. 92 251. Procurement under the Community participation.Under component B, the project will finance subprojects for local development. Subprojects financed under this component would comprise a broad spectrum o f activities to be undertaken with direct participation and financial contribution o f local communities. It i s not possible to determine the exact mix o f works, goods and services to be procured under this component due to their demand driven nature. Funding for these activities would be in the form o f grants. Therefore, the types o f activities to be financed under subprojects and their procurement details would depend on the needs identified in the communal development plan. The works, goods and services would be procured following simplified procurement procedures as described in the Project ImplementationManual. 252. Selection of consultants, training and workshop: consultant services to be procured under this grant would include, recruitment o f facilitation agencies that will be responsible for the implementation of most of the component A (capacity building), technical assistance, training, audit, monitoring and evaluation, design and supervision o f works under component B (subprojects for local development). 253. Contracts estimated to cost the equivalent o f US$ 100,000 or more, would be procured through Quality-and Cost-Based Selection (QCBS). The contracts for services estimated to cost less than the equivalent o f US$ 100,000 per contract may be procured under contracts based on Consultants' Qualzjkations in accordance with the provisions o f paragraphs 3.1 and 3.7 o f the Consultant Guidelines. 254. Financial and technical audit estimated to cost less than the equivalent o f US$ 100,000 may be procured under Least Cost Selection (LCS) in accordance with the provisions o f 3.1 and 3.6 o f the Consultant Guidelines Consultant for services meeting the requirements o f section V o f the consultant guidelinesmay be selected under the provisions for the Selection of Individual Consultants, i.e. inessence through the comparison of the curriculum vitae o f at least 3 qualified individuals. N o civil servant can be hired as consultant. 255. Single source selection may be used exceptionally in accordance with paragraph 3.9 to 3.12 o f the Consultant Guidelines for (i) training; (ii) consulting assignment provided by NGOs or local other organization (iii)for consultant assignment estimated to cost less than the equivalent US$ 10,000 per contract. 256. To ensure that priority is given to the identification o f suitable and qualified national consultants, short-lists for contracts estimated under US$ 100,000 equivalent may be comprised entirely o f national consultants (in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines), provided that a sufficient number o f qualified individuals or firms (at least three) are available at competitive costs. 257. Training, workshops, conference attendance and study tours would be carried out on the basis o f approved annual work programs that would identifythe general framework o ftraining or similar activities for the year, including the nature o f training/study tours/workshops, number o f participants, and cost estimated. 93 258. Operating costs: Operating costs to be financed under the grant f include the non consulting services above mentioned plus per diem, supervision cost and salaries o f locally recruited staff. These costs shall exclude salaries, bonuses, and fees for government civil servants. These expenses will be procured usingprocedures acceptable to IDA and that would be described inthe P O M and inthe project financial and administrativemanual. B-ASSESSMENT OF THE AGENCIES' CAPACITY TO IMPLEMENT PROCUREMENT 259. Country issues. The country procurement system is a matter of concern for the government and stakeholders. In June 2003, the Government established a steering committee including representatives from the public and the private sectors and the civil society. The steering committee was aimed at carrying out an assessment o f the national procurement system in order to propose a procurement reform action plan. In 2004 the Bank conducted a Country Procurement Issue Paper (CPIP) which was issued in June 2004. The government and Bank assessments concluded that Burundi procurement system shows a significant number o f deficiencies: (i)The legal and institutional framework is outdated; (ii) environment i s not the conducive to effective procurement, as it plagued by political interference, and; (iii) there i s a lack o f accountability, as well as non-compliance with the existing procedures either because o f rules and regulations not widely known and/or due to the absence o f capacity to handle procurement inan efficient manner 260. In June 2005, the steering committee reviewed and updated the government action and mergedit with the CPP action plan. The integrated procurement reform action plan is built on five components namely: (i) revision o f the institutional and legal framework with a view to the separating the execution function from the regulatory function; (ii)the modernization o f procurement procedures; (iii) the strengtheningo f procurement capacity; (iv) the settingup o f an independent ex-post control system; and (v) the enforcing of adequate measures against corruption. 261. This action plan i s being executed. Thus, the draft o f a revised procurement code and institutional framework consistent with the recommendations o f the procurement reform action plan was discussed by stakeholder during a four days workshop held in August 2006. The comments and the recommendations made by the participants were incorporated in a new version o f the code which was reviewed and adopted by the cabinet meeting inNovember 2006. The new procurement code i s planned to be presented to the parliament before end o f February. This law i s expected to be promulgatedby end o f March2007. 262. Assessment of the agencies. Procurement activities under the project would include the following actors: (I) The Executive Secretariat; (ii)the facilitation Agencies and; (iii) Communes. 94 263. The assessment o f the capacity to implement procurement activities that took place duringthe appraisal mission was more theoretical than actual, as inNovember 2006 the ES and the facilitation agencies were not inplace. Regardingthe communes apart from the capital city, Bujumbura, which i s not among the communes that will be assisted by the procurement, no commune inthe country has significant experience. However, it might happen that insome cases one or two members o f the communal council do have some experience in procurement. Thus, the general procurement environment is weak, cases o f corruption and collusive practices are regularly revealed by the press and civil society organizations. Consequently the overall project risk for procurement is high. 264. However experience has shown that the risk can be reduced with a combination o f measures, one set o f actions directed to the procurement tools and the other concerning the key staff involved inthe procurement process. Action PlanSchedule Action to be undertaken 1 Responsible Time-frame body Recruitment o f a procurement specialist to be part o f the ES Technical Done so that he or she can contribute to finalize the project Monitoring procurement arrangement. Among other things the Committee/ES Procurement specialist will contribute review the PIM, assist the various education services to define their needs and prepare the initial procurement plan. Submission to the Bank o f the Procurement Plan for the first ES Done 18 months o fthe project. The members o f the technical monitoring committee and the Technical Prior to ES staff will be given the opportunity to attend intensive Monitoring Effectiveness procurement training, that procurement training will be Committee/ES designed by a local consultant with extensive experience in public procurement and procurement financed by donors. Key staff will be urged to attend the regional training workshop organized with the Bank's assistance. The project launching workshop will include a one day ES Immediately session focused on the project's procurement arrangements; after provide detailed explanation on the critical steps o f the Effectiveness procurement process and how to use the tools that are provided inthe PIM. 95 C- PROCUREMENT PLAN 265. The recipient o f the grant submittedat appraisal at November 2006, a procurement plan that was reviewed and agreed during the negotiations in February 2007. The plan comprises the procurement activities for the first 18 months that are not o f demand driven nature. The procurement plan will be available at the office o f the ES. It will be also available inthe project data base and in Bank's external website. The procurement plan will be updated in agreement with Bank annually or as required to reflect the actual project implementation needs and the improvement ininstitutional capacity. D-FREQUENCY OF PROCUREMENTSUPERVISION 266. In addition to the prior review supervision to be carried out from Bank office, the capacity assessment o f the implementing agencies has recommended at least two supervision missions to carry out post review o fprocurement actions and yearly procurement audits. E- DETAILS OF THE PROCUREMENTARRANGEMENTSINVOLVING COMPETITION 1. Goods andWorks andnon consultingservices. (a) List o f contract Packages which will beprocured following ICB and direct contracting: - 1 1 -1 2 3 4 -5 6 7 8 9 Ref Contract Es:;;;ed Procurement P- Domestic Review Expected Comm (Description) Method Q Preference by Bank Bid- ents No. (yedno) (Prior / Opening Post) Date - 1. Vehicles $250,000 UN(IApS0) N O No Prior 05/2007 N/A - 2. Motorcycles $360,000 UN(IAPS0) No - No Prior 05/2007 N / A 3. Motorcbcles i $36o:ooo i uNiIApsoi No No I Prior I 05/2008 I N/A 96 2. ConsultingServices. (a) List o f Consulting Assignments with short-list o f international firms. 1 1 1 2 I 3 1 4 1 5 1 6 I 7 I Ref. No. Descriptionof Estimated Selection Review Expected Comments Assignment cost Method by Bank Proposals (Prior / Submission Post) Date 1. Firmfor financial $160,000 QCBS Prior 0612007 NIA 267. Except as the Association shall otherwise determine by notice to the Recipient, the following contracts shall be subject to Prior Review by the Association: (a) each contract for goods estimated to cost the equivalent o f $150,000 or more, (b) each contract for works estimated to cost the equivalent o f $200,000 or more, (c) each contract for consultants' services with specific regard to the terms of reference for such contract; (d) the first contract for consultants' services provided by a firm; (e) each contract for consultants' services provided by a firm estimated to cost the equivalent of $100,000 or more; (0the first contract for consultants' services provided by an individual; (g) each contract for consultants' services provided by an individual estimated to cost the equivalent o f $50,000 or more; (h) each contract for consultants' services procured on the basis o f single source selection; and (i)each contract for training, workshops, and study tours in accordance with the provisions o f the Project Implementation Manual. All other contracts shall be subject to Post Reviewby the Association 97 Annex 9 SafeguardPolicyIssues - BURUNDI: Communityand SocialDevelopmentProject 268. The project has triggered (i)OP 4.01 Environmental Assessment due to potential construction and rehabilitation activities as well as potential impacts related to potential medical waste; (ii)OD 4.20 Indigenous Peoples in order to avoid risk o f marginalization and discrimination against the Batwa population; and OP 4.12 Involuntary Resettlement due to the potential need for land acquisition for future sub-projects. Environmental category i s B. 269. The Recipient has prepared an Environmental and Social Management Framework (ESMF), aResettlement Policy Framework (RPF) and an IndigenousPeople's DevelopmentPlan (IPDP) to identify and mitigate potential negative environmental and social impacts o f future sub-projects. These studies have been disclosed in Burundi and at the Bank's Infoshop on November 20 and November 27. 270. These documents were prepared as the lack o fprecise details interms o f the sub-project's exact location, scale, and materials/technologies to be financed under the PRADECS prevents the determination o f the exact environmental and social impacts and their respective measures. These studies have been conducted inorder to assess project potential negative impacts resulting from project-related activities and to determine mitigation measures that would minimize those negative impacts. Subprojects to be implemented under PRADECS could be in the following sectors: health (health posts, HIV/AIDS prevention centers, personnel training), education (classrooms, teacher trainings, and literacy), transport (small road accesses, bridges), water and sanitation (wells, latrines), culture and sport and collective economic infrastructures. OP 4.01 EnvironmentalAssessment 271. The ESMF identified the major environmental and social issues that could result from subprojects: noise and dust pollution resulting from construction, water and soil pollution, medical waste, etc. Most o f these negative impacts can be mitigated and are addressedunder the ESMFby screening and review procedures. The recommendations and relevant provisions of the ESMFreport will bereflected intheproject implementationmanual. 272. The ESMF includes: (i) a clear description o f project components; (ii) brief baseline a information pertaining to policy, legal, and administrative and institutional framework, within which the project i s to be implemented; (iii) analysis o f potential positive and negative an impacts; (iv) an environmental management plan (EMP) with clear institutional arrangements, roles and responsibilities for screening, implementingand monitoring sub-projects, along with their capacity buildingrequirements to effectively mitigate project negative impacts, as well as enhance its positive ones; (v) a monitoringplanand (vi) a budgetto cover the EMP. 273. During subprojects preparation, animators will support beneficiaries fill out subprojects environmental and social screening form (included in the PIM) to assess possible impacts and categorize the subprojects. Animation team will have to include a resource person with the necessary skills required for this support. Based on the category, specific additional technical analysis will be conducted with the support o f the animators. Inaddition, the ESMFrecommends that a Local Commission for Sustainable Development (LCSD) be set up within each Communal 98 274. Community Development Committees, which will screen sub-projects proposed to the CCDC according to the ESMF. Duringthe implementation o f sub-projects, the LCSD would be responsible at the level o f the CCDC for the coordination and supervision o f the implementation o f the ESMF. The Project will provide specific trainings to animation teams as well as to LCSD, CCDC, Communal Councils and communal staff. Decentralized agents o f the Ministry o f Environment will be strongly involved to bring technical assistance. At the central level, a safeguards specialist will be included within the Project Executive Secretary to monitor the implementation o f the ESMF. OP. 4.12 InvoluntaryResettlement 275. This OP was triggeredbecause sites for subprojects will be needed. These sites will either be donated, purchased or acquired through dispossession. Given that neither the type of land acquisition nor the exact locations o f the sites o f the subprojects are known at this stage, the potential negative social impacts related to dispossession and displacement cannot be identified and evaluated beforehand. Subsequently, a Resettlement Policy Framework, specially conceived for a situation like this, has been prepared. The RPF outlines the policies and procedures to be followed inthe event that sub-projects require land acquisition. The overall responsibility for the implementation o f the RPF will be with the communes, the communities and will be supervised bythe ES safeguards specialist. OP 4.10 IndigenousPeoples 276. PRADECS will focus on rural areas and i s therefore expected to affect the Batwa population, which i s an ethnic minority in the country. The Indigenous People's Development Planprovides information supplementary to the ESMF and the RPF. An IPDPhas beenprepared to ensure that PRADECS will respect the rights, interests, dignity and culture o f the Batwa population as well as to ensure that they will benefit from the project. The IPDP was elaborated in a participatory manner through: (i) discussions with Batwa individuals or Batwa households; (ii) intoaccountthepointofviewoforganizationsupportingthepromotionoftheBatwa taking population; (iii) meetings with administrative authorities and local elected officials; and (iv) discussions with technical services and international and national NGOs. The IPDP includes (i) a baseline, (ii)an evaluation o f possible impacts o f the project, (iii)activities to be conducted to ensure similar benefits towards Batwas than towards other communities, (iv) monitoring and evaluation arrangements and (v) abudget. 277. The Project will provide specific support to Batwas groups. Subcomponent 1.2 includes capacity building activities for them as well as for associations which are supporting them. Subcomponent 2.2 will finance subprojects benefiting to them, based on their demands. Consequently, it i s foreseen that Batwas will benefit from the project interms o f (i) training and access to information, (ii) housing, (iii) education o f the children, (iv) professional integration, (v) legal assistance and (vi) social integrationwithin communities. 99 278. The institutional arrangement will bedone through: - The Project Executive Secretariat inwhich the Socio-environmental Specialist will be in charge o f the technical monitoring o f the environmental and social dimension o f the project. - The Capacity Building Operator recruited at the provincial level will be in charge o f the sensitization, planning and monitoring o fthe social and environmental aspects. - For the Batwa, UNIPROBA and Action Batwa will work together to implement activities infavor to Batwa's. - The Ministryo fNational Solidarity, HumanRight and Gender incharge o f the vulnerable groups will be impliedinthe supervision o fthe all the activities. 279. At the Bank side, supervision missionswill monitor the complianceo fthe project's social environmental aspects according to the Resettlement Policy Framework, the Indigenous People Development Plan, and the Environmental and Social Management Framework. 100 Annex 10 ProjectPreparationand Supervision - BURUNDI: Communityand Social DevelopmentProject Planned Actual PCNreview 12119/2005 07/26/2005 Initial PID to Infoshop 12/20/2005 09/09/2005 Initial ISDS to Infoshop 12/20/2005 07/28/2005 Appraisal 02/21/2006 11/27/2006 Negotiations 02/06/2007 02/06/2007 BoardRVP approval 03/20/2007 Planned date o f effectiveness 06/30/2007 Planned date o fmid-term review 06/30/2010 Planned closing date 12/12/2012 Key institutionsresponsiblefor preparationof the project: Ministry of Interior and Public Security Bankstaff and consultantswho worked on the projectincluded: Name Title Unit Valerie Layrol Task Team Leader aft53 Yvette Djachechi Sr. Social Development Specialist aft53 SameenaDost Sr. Counsel LEGAF Wolfgang Chadab Financial Officer 10ag2 Mohamed Arbi Ben-Achour Sr. Social Scientist (Safeguards) AFTS1 Africa Eshogba Olojoba Sr. Environmental Specialist (Safeguards) aft53 Lucienne M'Baipor SocialDevelopment Specialist (Safeguards) aft53 Joseph MubiruKizito Sr. FinancialManagement Specialist AFTFM Prosper Nindorera Sr. Procurement Specialist AFTPC SameenaDost Sr. Counsel LEGAF Wolfgang Chadab Finance Officer 10ag2 Pamphile Kantabaze Sr. Operations Officer AFTH3 Toni Ntaganda Kayonga Operations Officer aft53 Ingo Wiederhofer Sr. Operations Officer (Peer Reviewer) aft52 SeanBradley Sr. Social Development Sp. (Peer Reviewer) aft54 Scott Guggenheim Lead Social Development Sp. (Peer Reviewer) EASSO JoannaD e Berry Social Scientist (Peer Reviewer) SDV Soulemane Fofana Operations Analyst aft53 Korotimi Sylvie Traore Language Program Assistant aft53 EstellaMalayika Program Assistant aft53 Aurore Simbananiye Assistant AFMBI Oury Diallo Monitoring and Evaluation Specialist FA0 Josep Gari Social Development Specialist FA0 IngridMollard Consultant aft53 101 Bankfunds expended to date on projectpreparation: 1. Bank resources:US$290,000 2. Trust funds: PHRD TF056151Bank Executed (US$265,000) PHRD TF056500 Recipient Executed (US$235,000) EstimatedApproval and Supervisioncosts: 1. Remaining costs to approval: none 2. Estimated annual supervision variable cost:US$30,000 102 Annex 11 Documents inthe ProjectFile - BURUNDI: CommunityandSocial DevelopmentProject Consultancy Report 2006: Status of Communal Development inBurundi Consultancy Report 2006: Analysis o f the Institutional Framework for the Implementation of PRADECS Consultancy Report 2006: Analysis ofthe Capacity of Service Providers Consultancy Report 2006: Decentralized Financial Management Mechanisms inBurundi Consultancy Report 2006: Vulnerable Groups and Social Cohesion inBurundiReport Consultancy Report 2006: Environmental and Social Management Framework (ESMF) Consultancy Report 2006: ResettlementPolicy Framework (RPF) Consultancy Report 2006: Indigenous People's Development Plan (IPDP) World Bank 2006: CDD in the Context of Conflict-Affected Countries: Challenges and Opportunities World Bank 2005: Conflict-Sensitive Development Assistance; the Case of Burundi(J. Brachet / H.Wolpe) Consultancy Report 2006: Decentralization inBurundi(lRAM) 103 Annex 12 Statementof Loans andCredits - BURUNDI: CommunityandSocial DevelopmentProject Difference between expected and Original Amount inUS$ actual Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. ID Rev'd PO85981 2005 BI-GEF Agr 0.00 0.00 0.00 5.00 0.00 4.44 Rehab & Supt (FY05) PO64558 2005 BI-Agr Rehab & 0.00 0.00 0.00 0.00 0.00 30.53 Sustain Land Mgmt(FY05) PO81964 2004 BI- 0.00 0.00 0.00 0.00 0.00 59.06 Demobilization & Reint Prj (FY04) PO64876 2004 BI-Road Sec 0.00 51.40 0.00 0.00 0.00 47.90 Dev SIM (FY04) 6*62 0*0° PO78627 2004 BI-Econ Mgmt 0.00 26.00 0.00 0.00 0.00 24.41 Supt SIL (FY04) 5*39 II 0*0° PO74602 2003 BI-ERC (FY03) 0.00 54.00 0.00 0.00 0.00 0.06 0.00 17.44 PO71371 2002 BI-MultiSec 0.00 36.00 0.00 0.00 0.00 19.74 0.97 0.00 HIV/AIDS & Orph APL (FY02) PO65789 2001 Regional Trade 0.00 7.50 0.00 0.00 0.00 7.12 -0.52 0.00 Fac. Project - Burundi PO64961 2001 BI-Pub Works & 0.00 40.00 0.00 0.00 0.00 7.14 -6.52 0.00 Employ Creation (FYO1) PO64510 2000 Social Action I1 0.00 12.00 0.00 0.00 0.00 5.37 (BURSAP) -9.83 2.24 PO00216 1995 Health & 0.00 21.30 0.00 0.00 0.00 5.20 Population I1 -3.22 II -3*19 Total: 0.00 248.20 0.00 5.00 0.00 210.97 10.18 I 7.19 104 BURUNDI STATEMENT OF IFC's HeldandDisbursedPortfolio InMillionsofU S Dollars Committed Disbursed IFC IFC FY Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Approval 2000 AEF V&F 0.61 0.00 0.00 0.00 0.61 0.00 0.00 0.00 Export Total portfolio: 0.61 0.00 0.00 0.00 0.61 0.00 0.00 0.00 Approvals PendingCommitment FY Company Loan Equity Quasi Partic. Approval Total pending 0.00 0.00 0.00 0.00 commitment: 105 Annex 13: Country at a Glance BURUNDI: Communityand Social DevelopmentProject Sub- POVERTY and SOCIAL Saharan Low. Burundi Afrlca income 1Development diamond' 2004 Population,mid-year(mlllions) 7.3 7 8 2,336 GNIpercapita (Atlas method, US$) 90 600 5 0 I Life expectancy T GNI(Atlas method. US$ billions) 0.66 432 1,184 Average annual growth, 1998-04 I Population (Yd 19 2.2 18 Laborforce (%) 2.1 10 2.1 GNI Gross per primary M o s t recent estimate (latest year available, 1998.04) capita enrollment Poverty(%of populationbeiownatlonalpovertyline) Urban POpuiation (%of totalpopulation) n 37 31 Life expectancyat birth (years) 42 46 58 infant mortaiity(per lOOOlivebirths) 1% 0 1 79 Child malnutrition (%ofchildren under5) 45 44 I Access to improvedwatersource Access to an improvedwater source (%ofpopulation) 79 56 75 Literacy (%ofpopulationage ?5+) 59 65 61 Gross primaryenrollment (%of school-age population) 77 95 94 - Burundi Male 66 a 2 D1 Low-incomegroup Female 69 88 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1984 1994 2003 2004 Economic rat10s' GDP (US$ billions) 0.99 0.93 0.60 0.66 Gross capital formationlGDP 18.4 0.6 15.3 D.6 Exports of goods and services/GDP 11.5 0.3 6.8 8.6 Trade Gross domestic savings1GDP 6.3 -7.6 4.3 -5.6 Gross national savingslGDP 18.5 15.1 T Current account balance1GDP -8.9 -16 -6.2 -8.4 Interest paymentslGDP 0.8 13 11 Domestic Capital 2.5 Total debt/GDP savings formation 35.3 P l 9 223.0 20.8 Total debt servicelexports 20.6 39.6 50.8 186.0 Presentvalue of debVGDP 157.2 Presentvalue of debtlexports 622.9 indebtedness 1984-94 1994-04 2003 2004 2004.08 (averageannualgrowth) GDP 2.7 0.3 -12 5.5 -Burundi GDP percapita 0.0 -1.6 -3.1 3.5 __Lowincomegroup STRUCTURE o f the ECONOMY I 1984 I994 2003 2004 I (%of GDP) Growth o f capital and GDP ( X ) Agriculture 60.1 46.8 49.0 51.4 lo T Industry 13.8 22.5 8.0 20.0 Manufacturing 8.6 1.6 5 Services 26.0 30.7 32.0 28.6 0 Householdfinal consumption expenditure 85.9 95.0 87.2 97.7 Generalgov't final consumption expenditure 7.8 P.7 8.5 7.9 Importsof goods and services 23.6 28.5 17.9 24.8 I -GCF -GDP I 1884-94 1984-04 2003 2004 (average annualgrowth) Growth of exports and imports (%) Agriculture 1.9 15 -0.8 1.3 100 T Industry 2.2 2.3 Manufacturing 2.3 -6.0 Services 3.5 0.4 Householdfinal consumption expenditure 2.2 -3.7 Generalgov't final consumption expenditure 4.5 -0.5 Gross capital formation 1.4 5.3 imports of goods and services 1.3 0.7 106 Burundi PRICES and GOVERNMENT FINANCE 1984 1994 2003 2004 Domestic prices (%change) Consumer prices 14.3 14.8 13.7 5.5 Implicit GDP deflator 7.2 6.7 116 6.4 Government finance (%of GDP, includes current grants) Current revenue 14.4 18.5 211 8.3 Current budget balance 3.5 19 -13 -4.8 Overallsurplus/deficit -13.4 -4.2 -14.5 -20.6 I -GDPddlator -CPI 1 TRADE 1984 1994 2003 2004 (US$ millions) Export and import levels (US$ mill.) Total exports (fob) 130 81 77 82 Coffee 83 57 50 53 T Tea 7 9 6 6 200 Manufactures 5 5 1 1 150 Total imports (cif) 187 224 81 200 Food 6 30 11 11 100 Fuel and energy 33 29 23 24 50 I I Capital goods 55 81 71 73 0 Export price index(2000=WO) 176 158 98 99 00 01 02 03 Import price index(2000=MO) 83 132 .Exports olnports Terms of trade (2OOO=WO) 213 I56 O4 BALANCE of PAYMENTS 1984 1994 2003 2004 (US$ millions) Current account balance t o GDP (Oh) Exports of goods and services 114 95 58 53 0 Imports of goods andservices 232 264 l79 297 Resource balance -18 -68 -P2 -244 .5 Net income -13 -11 -20 -28 Net current transfers 135 I50 .lo Current account balance -88 -15 -37 -Pl .!5 Financing items (net) 87 63 36 P6 Changes in net reserves 0 -48 1 -5 -20 Memo: Reserves includinggold (US$ millions) Conversion rate (DEC, ioca//US$) 18.7 252.7 1082.6 1,130.9 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$ millions) Composltlon of 2004 debt (US$ mill.) Total debt outstandingand disbursed 348 1127 1,328 1,385 IBRD 0 0 0 0 I IDA 17 556 732 793 E 181 Total debt service 24 41 29 88 iBRD 0 0 0 0 IDA 2 6 8 20 Compositionof net resourcefiows Officialgrants 46 243 6 9 B 793 Official creditors 64 32 31 8 Private creditors 11 -1 8 -5 Foreigndirect investment (net inflows) 1 0 0 Portfolio equity(net inflows) 0 0 0 World Bank program Commitments 8 0 0 77 Disbursements 28 28 41 43 A-IBRD E - Bilateral B-IDA D-Othernultilateral F-Rivate Principal repayments 2 2 14 14 C-IMF G- Short-ter 107 MAP SECTION IBRD 33380 BURUNDI SELECTED CITIES AND TOWNS MAIN ROADS PROVINCE CAPITALS PROVINCE BOUNDARIES NATIONAL CAPITAL INTERNATIONAL BOUNDARIES RIVERS 29°E 30°E 31°E Lake To Kivu This map was produced by the Map Design Unit of The World Bank. Kigali The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any To endorsement or acceptance of such boundaries. Gitarama Lake Kagera Lake Rweru Cohoha RWANDA To K I R U N D O Cyangugu Kirundo To Butare To Kanyaru Rulenge Ruvuvu C I B I T O K E M U Y I N G A N G O Z I Muyinga To Cibitoke Nyakanura Ngozi Kayanza Rusiba 3°S Musada Ruvuvu Buhiga 3°S Bubanza K AYA N Z A To Karuzi Mwerusi Kakonko Rusizi B U B A N Z A K A R U Z I C A N K U Z O Cankuzo To Uvira M U R A M V YA Muramvya Ruvuvu BUJUMBURA Gitega DEM. REP. M WA R O Mwaro Luvironza Ruyiga OF CONGO B U R A R U Y I G I B U J U MMt. G I T E G A To Kibondo Heha (2,670 m) Bukirasazi Rumpungu TANZANIA Matana B U R U R I Mutangaro R U TA N A Bururi Most distant Rutana Rumonge headwater of the Nile River 4°S 4°S Makamba M A K A M B A BURUNDI Mabanda Lake Muragarazi Tanganyika Nyanza-Lac To Kasulu 0 10 20 30 40 Kilometers 0 10 20 30 Miles 29°E 30°E 31°E SEPTEMBER 2004