Document of The World Bank Report No: 35350 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-36490; NETH-52503) ON A CREDIT IN THE AMOUNT OF SDR 4.1 MILLION (US$5 MILLION EQUIVALENT) TO THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA FOR A COMMUNITY DEVELOPMENT PROJECT October 3, 2006 Human Development Sector Unit South East Europe Country Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 2006) Currency Unit = Denar (MKD MKD1.00 = US$0.0194 Euro 1.00 = US$1.20 US$100 Euro 0.83 FISCAL YEAR January 1 ­ December 31 ABBREVIATIONS AND ACRONYMS BA Beneficiary Assessment CAS Country Assistance Strategy CDP Community Development Project CIC Community Implementing Committee CIC's Citizen Information Centers ECHO European Community Humanitarian Office EU European Union FMS Financial Management System GNP Gross National Product IDA International Development Agency IDPs Internally Dispalced Persons IMF International Monetary Fund IOM International Organization for Migration LG Local Government MIS Management Information System MOF Ministry of Finance NGO Non-Governmental Organization OM Operational Manual PAD Project Appraisal Document PCF Post-Conflict Fund PIU Project Implementation Unit PSMAC Public Sector Management Adjustment Credit SIDA Swedish International Development Agency SIF Social Investment Fund TA Technical Assistance TOR Terms of Reference TSS Transitional Support Strategy UN United Nations UNDP United Nations Development Programme UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children's Fund USAID United States Agency for International Development Vice President: Shigeo Katsu Country Director: Orsalia Kalantzopoulos Sector Manager: Hermann von Gersdorff Project Team Leader: Caroline Mascarell ICR Team Leader: Michael T. Mertaugh ICR Primary Author: Sati Achath MACEDONIA COMMUNITY DEVELOPMENT PROJECT CONTENTS Page No. 1. Basic Information 1 2. Key Dates 1 3. Ratings Summary 1 4. Sector and Theme Codes 2 5. Bank Staff 2 6. Project Context, Development Objectives and Design 3 7. Key Factors Affecting Implementation and Outcomes 8 8. Assessment of Outcomes 12 9. Assessment of Risk to Development Outcome 17 10. Assessment of Bank and Borrower Performance 18 11. Lessons Learned (both project-specific and of wide general application) 20 12. Comments on Issues Raised by Borrower/Implementing Agencies/Partners 21 Annex 1. Results Framework Analysis 22 Annex 2. Restructuring 25 Annex 3. Project Costs and Financing 26 Annex 4. Outputs by Component 28 Annex 5. Economic and Financial Analysis 33 Annex 6. Bank Lending and Implementation Support/Supervision Processes 34 Annex 7. Detailed Ratings of Bank and Borrower Performance 36 Annex 8. Beneficiary Survey Results 37 Annex 9. Stakeholder Workshop Report and Results 43 Annex 10. Summary of Borrower's ICR and/or Comments on Draft ICR 44 Annex 11. Comments of Cofinanciers and Other Partners/Stakeholders 49 Annex 12. List of Supporting Documents 50 1. Basic Information (some fields are pre-populated by the system) Country: Macedonia Project Name: COMMUNITY DEVELOPMENT Project ID: P076712 L/C/TF Number(s): IDA-36490,NETH-52503 ICR Date: 10/03/2006 ICR Type:1 Core ICR Lending Instrument: SIL Borrower: FYR MACEDONIA Original Total Commitment: XDR 4.1M Disbursed Amount: XDR 3.5M Environmental Category: F Implementing Agencies Ministry of Finance CDP - PIU, Ministry of Finance Cofinanciers and Other External Partners Government of Netherlands 2. Key Dates (all fields are pre-populated by the system) Process Date Process Original Date Revised / Actual Date(s) Concept Review: 01/24/2002 Effectiveness: 04/08/2003 04/08/2003 Appraisal: 03/25/2002 Restructuring(s): Approval: 05/30/2002 Mid-term Review: 04/30/2004 06/01/2005 Closing: 12/31/2005 06/30/2006 3. Ratings Summary2 (the system automatically displays entries in other relevant sections3) 3.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory 1Core or Intensive Learning (ILI) ICR. 2All ratings given by the ICR should use a six-point rating scale (Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, or Highly Unsatisfactory), except for the rating of Risk to Development Outcome that use a four-point scale (Negligible to Low, Modest, Significant, High). 3Data pulled from Sections 8.4, 9, 10.1(c), and 10.2(c). 1 3.2 Quality at Entry and Implementation Performance Indicators (all fields are pre-populated by the system) Implementation Performance Indicators QAG Assessments (if any) Indicators Potential Problem Project at any time No Quality at Entry (QEA): Satisfactory (Yes/No): Problem Project at any time (Yes/No): No Quality of Supervision (QSA): Satisfactory DO rating before Closing/Inactive Satisfactory status: 4. Sector and Theme Codes4 (the original column is pre-populated by the system-the same as in SAP/AUS) Original Actual Sector Code (as % of total Bank financing) Other social services 100 100 Original Priority Actual Priority Theme Code (Primary/Secondary) Social safety nets Primary Primary Participation and civic engagement Primary Primary Conflict prevention and post-conflict reconstruction Primary Primary Municipal finance Secondary Secondary Rural services and infrastructure Not Applicable Not Applicable 5. Bank Staff (some fields are pre-populated by the system) Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F. Linn Orsalia Country Director: Christiaan J. Poortman Kalantzopoulos Hermann A. von Sector Manager: Michal J. Rutkowski Gersdorff Project Team Leader: Caroline Mascarell Caroline Mascarell ICR Team Leader: Michael T. Mertaugh ICR Primary Author: Sati Achath 4There can be a maximum of five Sector Codes (that has more than zero percent) and five Theme Codes (of which up to two are 'Primary'). 2 6. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/ISR , not evaluative): 6.1 Context at Appraisal (brief summary of country and sector backgrounds, rationale for Bank assistance): Country Background: FYR Macedonia achieved independence from the Socialist Federal Republic of Yugoslavia in 1991 - the only former republic to do so without violence. Nonetheless, latent tensions between the ethnic Albanian (roughly one quarter to one third of the total population) and ethnic FYR Macedonian populations raised the possibility of conflict. Such conflict was avoided for a decade, despite the social strains of both a weakened economy and the Kosovo crisis. But in early 2001, ethnic Albanian armed groups began a low-grade insurgency that brought the country to the brink of civil war. Violence was centered around the areas of Tetovo, Kumanovo, and the northern outskirts of Skopje. As a result of the conflict, by end July 2001, about 170,000 persons, according to UNHCR estimates, fled their homes and became displaced within FYR Macedonia or in neighboring countries. The number of houses damaged during the conflict was estimated by UNHCR at around 6,700. In August 2001, the international community brokered a Framework Agreement, which produced a fragile cease-fire that was to be consolidated through constitutional amendments to address the grievances of the ethnic Albanian population and an amnesty for most combatants. While the cease-fire generally held through the lengthy and contentious political process of approving the measures required by this Agreement, it had been marred by a number of incidents of violence, and tensions remained high. As of April 2002, most refugees had returned home and the number of internally displaced persons assisted by the Red Cross had fallen to approximately 14,300. The aftermath of the conflict had brought into sharp focus the main challenge of strengthening social cohesion through an integrated approach to address post conflict priorities, including the country's main problems of poverty, unemployment, disparities in living standards, the poor state of social and economic services, and limited public service capacity at the local level. Seeking and implementing solutions to these problems were crucially important, and were assigned the highest priority by the Government, in the present post-conflict phase. Sector Background: The main sector issues in the aftermath of the conflict related to the following areas: (i) Social Tension and Conflict Prevention. Underlying social tensions had adversely affected the social fabric and well-being of the population of FYR Macedonia. The core of the problem was the social divisiveness between ethnic groups, particularly (although not exclusively) between ethnic Macedonians and Albanians. Deep-rooted economic and social factors had created much tension between ethnic groups, which had been exacerbated by the conflict. (ii) Poverty. FYR Macedonia suffered major economic losses and social disruptions following the breakup of the Yugoslav Federation in 1991 and the ensuing regional conflicts. In the process, the country lost a large protected market for its industrial products, key transport routes, large transfers from the federal government, and foreign currency savings of more than US$1.2 billion. Consequently, FYR Macedonia emerged as a country with high levels of poverty and unemployment among its population of around two million. Living conditions of the poor were badly affected by the run-down state of the country's social and economic services. (iii) Unemployment. The extremely high level of unemployment of about 32 percent was one of the most pressing social problems facing FYR Macedonia. Unemployment had remained at around 30 percent over the past decade due to the downturn in economic activity after the separation from the Federal Republic of Yugoslav in 1991, the lack of adequate economic growth since then, and the rigidities in the labor market. Since 1991, a large number of factories had been shut down, or forced to operate at low capacity, and a number of major public enterprises had been privatized. Consequently, large numbers of employees suffered layoffs, exacerbating unemployment. (iv) Status of Women. Major disparities existed in the private and rural sectors of the economy. For example, women hired by the private sector were less than 30 percent of the total. In the rural sector, women were far more engaged in household activities than their urban counterparts, and were far less represented in outside employment, in the 3 broader activities of their communities, and in local government. Poor infrastructure facilities in some rural areas appeared to have placed a greater workload on the domestic activities performed by women (e.g. fetching of water from distant sources). Another significant feature was that ethnic Albanian and Roma women lagged behind ethnic Macedonian women in education, and hence in their participation in social and economic activities. (v) Capacity for Service Delivery at the Local Level. Within the Federal Republic of Yugoslavia, local government exercised substantial delegated powers. However, with the breakup of the Federation, there arose a perceived need on the part of the newly independent governments to strengthen the power of the center. As a result, in FYR Macedonia, the government became highly centralized, and the following features were characteristic of local governance: (1) institutionally weak local governments, with limited financial resources and modest- to- weak institutional capacities; (2) inadequate systems of accounting, financial planning, and budgeting at the local level; (3) lack of partnerships at the local level; (4) lack of involvement of citizens in the decision-making process in development activities, management, and service provision; and (5) lack of access to basic information regarding services and entitlements on the part of local communities, particularly in rural areas. While some of the larger municipalities were receiving attention through donor-assisted programs, smaller municipalities, along with local communities, particularly in rural and remote locations, as well as marginal urban neighborhoods, were receiving much less attention and financial support. Rationale for Bank assistance: The project was consistent with the Bank's Transitional Support Strategy (TSS) for FYR Macedonia51, in which the objectives of poverty reduction and the development of human capital were clearly emphasized. The new short-term challenges mentioned in the TSS included balance of payments needs, reconstruction of destroyed villages, financing of community-building initiatives that provide employment and strengthen social cohesion, and service delivery and public sector management at the local level in the context of accelerated decentralization. The importance of fostering reconciliation and preventing further conflict had also been highlighted in the TSS. Further, drawing from its extensive international experience, the comparative advantage of the World Bank was its ability to make the linkage between emergency and development assistance and in being able to do so by working in close coordination with the Government. Thus, the project was aimed to support an integrated development program designed to facilitate the transition from conflict to peace, in keeping with the Government's post conflict priorities. The Bank had an additional comparative advantage in FYR Macedonia in that it could have a wide ranging development impact in Macedonia because of its intermediation role between the Government's development policies and community-based change. This would be achieved under the project through the design and implementation of mechanisms to carry out effective community outreach, information dissemination, and impact monitoring. The project would also respond to the need in FYR Macedonia to improve coordination activities both within the donor community and with the Central Government. 6.2 Original Project Development Objectives (PDO) and Key Indicators (as approved): The main objective of the Community Development Project (CDP) is to provide support to the Government of the former Yugoslav Republic (FYR) of Macedonia in its post-conflict development efforts aimed at fostering reconciliation amongst its people, reducing social tensions, and building local social capital. To attain this objective, the focus of the project is on piloting small-scale community-based initiatives in selected demonstration communities under an integrated development framework designed to respond to priority social needs and facilitate the transition from conflict to peace. The project supports a participatory development process at the local level that is inclusive, gender-sensitive and responsive to community priorities. Project outputs will consist of infrastructure and services sustained by capacity building. The project will also support the Government's decentralization initiatives designed to increase the competencies and accountability of municipal administration, increase the participation of citizens in decision-making and ultimately, enhance empowerment at the local level. 6.3 Revised PDO and Key Indicators (as approved by original approving authority), and reasons/justification: The objective was not revised. 4 6.4 Main Beneficiaries, original and revised (briefly describe the "the primary target group" identified in the PAD and as captured in the PDO, as well as any other individuals and organizations expected to benefit from the project): The allocation of project funds broadly supported the Government's post-conflict development priorities aimed at fostering reconciliation amongst its people, reducing social tensions, and building local social capital. Given the limited funds available from the project and the need for selectivity, the targeting of funds was approached at two levels, i.e., regional targeting and local community targeting, as described below: (i) Regional Targeting. Eight regional groupings of municipalities were identified by the authorities corresponding to the geographical regions covered by the eight regional offices of the Statistics Department. These regions were: Pelagonija, the South West, the North East, Poloski, the South East, the East, Vardarski, and Skopski. A composite poverty-conflict index was calculated for these eight regions based on: (a) population size; (b) extent of poverty, based on regional indicators of the level and intensity of poverty; (c) unemployment; and (d) the number of persons displaced from each region (by origin), and damaged houses - to take account of the effects of the conflict. (ii) Local Community Targeting. As a consequence of the local government reforms and the new territorial boundaries, there were a total of 123 municipalities in FYR Macedonia plus one for Skopje. Based on discussions with key government officials, the major Donors, and NGOs, the proposal was to channel the regional allocations to targeted municipalities and local communities within each region. 6.5 Original Components (as approved): The project consisted of four components as follows: Component 1. Community Investment Projects: Original base cost: US$7.04 million. This component financed on a grant basis small-scale community works and services projects selected on a demand-driven basis with the active participation of community groups and local governments. It responded to both the demand and need in FYR Macedonia for carrying out small-scale community infrastructure and community services projects. 1.A. Community Infrastructure Sub-Component: This sub-component addressed the need for rehabilitation of small- scale social and economic infrastructure at the local level through the financing of community investment microprojects. These microproject types which were to be carried out by Community Implementing Committees (CICs) focused on the renovation and rehabilitation of key social infrastructure covering education (i.e., kindergarten, primary and secondary schools), health (i.e., primary health care facilities), water supply and small roads, and priority economic infrastructure including, but not limited to, small-scale water supply systems, small- scale sanitation systems, and minor irrigation works. The menu of microprojects that could also be financed under this component included: (i) microprojects involving the rehabilitation or upgrading of school heating systems to ensure better school attendance during the cold winter months; and (ii) school furniture (desks, chairs, blackboards, etc.). 1.B. Community Social Services Sub-Component: This component supported small grants programs, in the form of service packages, targeted to address the needs of vulnerable and disadvantaged groups in FYR Macedonia with a view to promote inter-community integration by actively engaging citizens in the development process of their communities. Community services projects focused on a wide range of programs benefiting different groups in support of the decentralized management of basic social services. Some of the programs included: (a) Education Sector: Programs to support local governments in organizing transportation for school children in rural areas, scholarship programs to support education opportunities for poor students and women of minority groups in secondary and higher education. (b) Health Sector: Community health awareness/education programs, including dissemination of information and workshops on safe motherhood, information on treatment of sexually transmitted diseases, water and sanitation. 5 (c) Social Services: Programs to assist returning families in their communities, programs to support community- based day care centers for the disabled, elderly and other marginalized and vulnerable groups of the population, fund raising campaigns to support programs for the disabled, programs to support inter-ethnic activities such as sports events and open market places, and programs for the rehabilitation of alcohol and drug abusers. Component 2: Local Level Institutional Strengthening: Original base cost: US$0.33 million. This component complemented the community investment component, enabling local level institutions and community groups to address the needs and priorities for local development through a capacity building program, which was consistent with the Government's overall development policy framework. The component also supported the Government's decentralization initiatives designed to increase the competency and accountability of municipal administration, increase the participation of citizens in decision-making and ultimately, empowerment at the local level. It focused on two key levels, the microproject level and the local government level. At the micoprojects level, institutional strengthening focused on local governments, communities and contractors participating in community infrastructure and services microprojects. The composition of these participating local groups ensured equitable representation of women who will benefit from microproject training activities carried out in their communities. The focus was on building the capacity of these local groups to plan, manage, operate, supervise and maintain investments and improve the quality and availability of local service provision. At the local government level, the project focused on capacity building needs on selected medium-sized and smaller municipalities. The training activities were to be carried out in those municipalities where the CDP promotion team was going to work in and which met the required criteria, so that training activities were going to be carried out in parallel with the project cycle of community investment projects. Employment Surveys. The main focus of these surveys was to strengthen the information base for development planning in selected municipalities that had embarked upon economic development planning at the local level. To help develop a better understanding of the problems faced by the private sector, the objectives of the employment surveys were to: (i) assess bureaucratic constraints faced by local small- and medium-scale enterprises in expanding production and employment, and to provide feedback to municipalities for streamlining the local regulatory framework (e.g., speedier building permits and zoning); (ii) provide an assessment of perceived needs of infrastructure support for the private sector that should be addressed in the formulation of local level development plans; and (iii) provide feedback for improvements in labor policy. Component 3: Community Outreach, Information Dissemination and Project Impact Monitoring and Evaluation. Original base cost: US$ 0.19 million. This component provided institutional support to the community infrastructure, services, and institutional strengthening components through an integrated operational framework designed to strengthen and support institutional, structural and procedural activities at the project management level and at the local community level. The mechanisms for these activities were to be developed to carry out effective community outreach, information dissemination and impact monitoring under the project, as well as to enhance the effectiveness, coordination and synergies between the different project components. Component 4: Support to Project Management: Original base cost: US$0.69 million. This component supported the PIU through the provision of limited office equipment (computers, software, printers, photocopy machines, fax machines) vehicles, consultants' fees, operating costs such as communication, local travel, utilities and publication, office supplies, fuel, vehicle insurance and inspection, vehicle maintenance and repair, training and technical assistance, and monitoring and evaluation. The component also financed training for staff in the CDP PlU. 6.6 Revised Components: The components were not revised. 6 6.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) : During implementation, the Credit Agreement was revised twice and reallocation of the funds between categories under the Credit was made as a result of the depreciation of the SDR rate and savings in different categories as shown below: First Reallocation of Funds: Category Amount of the Credit % of Expenditures to be Revised Allocation Allocated(Expressed in SDR Finance (Expressed in SDR Equivalent) Equivalent) 1. Grants under Part A.2 400,000.00 100% 500,000.00 of the Project 2. Works under Part A.1 2,000,000.00 84% 2,420,000.00 of the Project 3. Goods (a) under Part A.1 of the 280,000.00 100% of foreign 0.00 Project expenditures; 100% local expenditures (b) under Part D of the 70,000.00 (ex-factory cost) and 80% 70,000.00 Project of local expenditures for other items produced locally 4. Consultant Services (a) under Part A.1 of the 175,000.00 100% of expenditures of 175,000.00 Project foreign consultants (b) under Part B, C and 600,000.00 87% of expenditures of 670,000.00 D of the Project local firms, 85% of expenditures of local individual consultants 5. Training 95,000.00 100% 95,000.00 6. Incremental Operating 80,000.00 100% of expenditures 90,000.00 Costs incurred through June 30, 2003, 90% of expenditures incurred through June 30, 2004 and 70% of expenditures thereafter 7. Unallocated 400,000.00 80,000.00 TOTAL 4,100,000.00 4,100,000.00 7 Second Reallocation of Funds: Category Amount of the Credit % of Expenditures to be Revised Allocation Allocated(Expressed in SDR Finance (Expressed in SDR Equivalent) Equivalent) 1. Grants under Part A.2 500,000.00 100% 500,000.00 of the Project 2. Works under Part A.1 2,420,000.00 84% 2,770,000.00 of the Project 3. Goods (a) under Part A.1 of the 0.00 100% of foreign 0.00 Project expenditures; 100% local expenditures (b) under Part D of the 70,000.00 (ex-factory cost) and 80% 70,000.00 Project of local expenditures for other items produced locally 4. Consultant Services (a) under Part A.1 of the 175,000.00 100% of expenditures of 190,000.00 Project foreign consultants (b) under Part B, C and 670,000.00 87% of expenditures of 400,000.00 D of the Project local firms, 85% of expenditures of local individual consultants 5. Training 95,000.00 100% 80,000.00 6. Incremental Operating 90,000.00 100% of expenditures 90,000.00 Costs incurred through June 30, 2003, 90% of expenditures incurred through June 30, 2004 and 70% of expenditures thereafter 7. Unallocated 80,000.00 0.00 TOTAL 4,100,000.00 4,100,000.00 The Government of Netherlands provided US$1.5 million co-financing grant (TF052503) to support the objectives of the Community Development Project. The grant was recipient executed and provided the following financing: · US$1.2 million for grants for community investment projects; · US$0.2 million for consultant services; and · US$0.1 million for training. 7. Key Factors Affecting Implementation and Outcomes 7.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account , risks and their mitigations identified, and adequacy of participatory processes, as applicable): During preparation, the project design took into account lessons learned from previous Bank-assisted projects in the social sector in Macedonia and other countries. Likewise, the design considered the risk factors and appropriate 8 measures were adopted to mitigate them. The project also provided a participatory framework designed to strengthen the institutional arrangements both at the project management level, as well as the community level, with the objective of enhancing the overall effectiveness and accountability of the CDP PIU and of the local counterparts. A. Lessons Learned. · Post Conflict Reconstruction: (i) carrying out small-scale activities designed to facilitate the transition from conflict to peace is an effective means to post-conflict development; (ii) the active engagement of civil society can contribute to a better understanding of how conflict can be prevented and actually help prevent such recurrence of conflict; and (iii) confidence and trust can be restored through self-help interventions. · Community Driven Development: Local governments and communities can come together in a participatory manner to promote community development when they perceive potential common benefits. In addition, one of the key ingredients for implementing projects in mixed communities is to allow the time that is needed for community interaction to evolve. · Sectoral Policies and Investment Priorities: There is a critical need for ensuring that social fund activities are consistent with social sector strategy priorities, government reform programs, and activities of municipal, Non-Governmental Organization (NGO), United Nations (UN), and donor agencies. It is therefore important to ensure that projects focus on greater coordination of social fund-type activities with relevant sectoral policies (i.e., health and education) and investment priorities. · Sustainability: To improve project sustainability, lessons learned have pointed to a combination of factors including a strong management and administration of project activities under the direction of a PIU, institution building at the local level, greater stakeholder participation, and decentralized monitoring and evaluation. · Poverty Targeting: (i) a clearly formulated poverty targeting strategy and an allocation mechanism based on objective criteria and poverty data ensures the flow of project benefits to the neediest segments of the population; (ii) the use of a well developed poverty targeting strategy and an allocation mechanism will mitigate political pressures in the allocation of funds; and (iii) a well developed poverty targeting strategy should have sufficient flexibility, within the overall allocations, to target specific needs on a demand-driven basis. B. Risks and their mitigation. · High levels of tension between ethnic communities that may constrain project activities in mixed communities or preempt equitable access to services by minority communities. Mitigating measures: The CDP PIU had to ensure that teams involved with work in mixed communities had adequate representation from the relevant communities, and that they had good outreach and communication skills. In addition, the CDP had to identify credible intermediaries who could act as agents in minority areas. · Quality of works financed under the project. Mitigating measures: The project ensured good quality of microprojects through: (a) Development and enforcement of adequate norms and standards; (b) Engagement of technical experts in the design and supervision of works; (c) Training of CDP PIU staff on norms and standards of construction; (d) Annual procurement and technical reviews; and (e) Bank supervision and mid-term reviews. · Potential lack of willingness of local communities to contribute, participate, and help sustain facilities. Mitigating measures: Active community participation at all stages of the microprojects cycle through: (a) Designing of cost effective microprojects; (b) Strengthening of local government capacity and accountability on effective asset management; (c) Ensuring good quality of works through quality enhancement and procurement; (d) Development of effective training program for the benefit of local governments and communities; and (e) Building effective partnerships amongst the key stakeholders at the local level. C. Adequacy of participatory processes. 9 · Investigative stage, consisting of listening to the members of diverse communities regarding their interests and capacity for participating in the project, community outreach and promotional activities. · Consultation and Information Dissemination stage, involving consultations with local groups involving public meetings and interviews to discuss and determine priorities and concerns that would engender ownership and distribute information on the CDP program and on relevant Government sectoral policies. · Negotiations/Preparation Stage, involving the close collaboration of CDP technical staff working together with Community Implementation Committees in microproject design, planning and management. · Implementation/Supervision Stage, for enhancing and supporting the involvement of the local communities through the active participation of communities in the management and supervision of microprojects activities. Participatory appraisal and planning techniques were designed to enable communities to prioritize, plan and implement their own development and to give voice to the poor. · Beneficiary Impact Assessment Stage: Beneficiary impact assessments were included as part of the project design in order to monitor key stakeholder participation and overall satisfaction with the CDP program. 7.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, a s applicable): The project was not restructured; there were no major changes made to the design, and the project was never at risk. The Bank conducted a Midterm Review in May 2005, and assessed the progress to date on all project components, using impact, progress and financial indicators developed at the design stage, as well as current issues and the actions to be taken to ensure the successful completion of the project. (i) Because of the country's ethnic diversity, a careful balance was maintained in the selection of the municipalities where community projects were implemented. In this respect, a new approach for selection of the municipalities was established, where instead of working with 18 municipalities, as previously planned, it was agreed to work in all 123 municipalities. Therefore, a clear selection criterion was set up, using the Municipal Profiling results, creating three clusters of municipalities to start with. This planning was a good start of implementation, with equal attention to the differences within municipalities. (ii) The existence of a well functioning Steering Committee with higher-level officials from the MOF, Ministry of Labor, Ministry of Education, and Ministry of Urban Planning provided an effective oversight, and added value in terms of quality of advice and preventing any overlap of activities and decisions. (iii) There was a delay of 11 months in project effectiveness because of the national elections, the formation of a new government, and the time needed to set up the PIU, to develop implementation procedures, and to recruit its personnel. (iv) Extension of Closing Date. The closing date of the project was extended from December 31, 2005 to June 30, 2006, in order to allow more time for implementing some of the more complex social services projects involving comprehensive training, the coordination of activities with a number of implementing partners, and the engagement of different ethnic groups in organized activities. Another reason that supported the extension to utilize project savings of US$945,000 resulting from changes in the SDR vis-a vis the US$, which was planned to be used by June 30, 2006. 7.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: Project monitoring: Physical monitoring of the implementation of micro-projects was done through routine visits (at minimum before each payment) to all infrastructure and social service micro-projects in order to check the progress and quality of the works. The implementation process was followed up by: PIU Engineer, Supervisor and CIC representative. Monthly 10 monitoring reports were accomplished from each site and were recorded in the micro-project file. Internal monitoring was done through detailed checking on the entire necessary documentation needed for realization of the micro-project cycle. Inspection was done on the submitted official requests, applications, minutes of the CIC and community meetings, list of participants, capacity assessments on CICs and communities, desk and field appraisals, environmental checklists and Final Appraisal Reports. In order to verify accuracy of the accomplished works, the Monitoring Officer participated in the Provisional Handover of the completed micro-projects. Checking was also done on daily civil books, measurement books, micro-project implementation plans, CIC, Supervisor and PIU Monthly monitoring reports and all supporting documentation such as: designs, specifications, necessary permits and approvals, quality certificates for built-in materials, probation research, A-tests and other needed documents. Computerized follow-up was done through the Management Information System (MIS). MIS was used as an essential tool for monitoring and evaluation. The M&E officer was involved in verifying accuracy of the outputs, correctness of the entered data, finding discrepancies and resolving the same. Financial follow-up was done through the computerized Financial Management information System (FMIS). In order to ensure that all processes are in compliance with the Finance Management System, checking was done on the files with fixed assets register, general ledger, signed invoices etc. 7.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable): There were no major environmental issues during the implementation of the project, given the relatively small size and rehabilitation nature of most community infrastructure projects. The Operational Manual of the project laid out procedures and implementation arrangements for ensuring full consideration of environmental safeguards, in accordance with the Bank's environmental assessment guidelines. It described existing environmental regulations and standards relevant to the project and made reference to institutions at the local and central levels responsible for issuing permits, licenses and enforcing environmental standards compliance. It also provided detailed guidelines for the PIU and the project proposers on environmental screening, appraisal and monitoring applied to infrastructure microprojects. Each microproject was individually screened and reviewed by the CDP PIU for any negative impacts, and mitigation measures were proposed where necessary. The financial management arrangements for both the PCF grant and the CDP were established during project preparation by an accounting consultant familiar with Bank financial management requirements. The project did not have any fiduciary issues during implementation. 7.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by p resent operation, Operation & Maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable): The sustainability of the project's post-completion operation is likely, as demonstrated by the following: · All public facilities renovated or reconstructed and social services projects implemented under the project are linked to formal local institutions. This is done by involving officials of these institutions in all stages of the microproject cycle as CIC members, providing the necessary training, and including the provision of line items in the municipal budgets to finance operation and maintenance. In the case of social services, all facilities created are located in either schools or municipal centers. As a standard procedure, under community infrastructure projects, cash contributions are deposited in the municipal accounts so as to ensure that the public facilities renovated are itemized in the municipal budgets. This provides for the maintenance of the public facilities, many of which fall under the responsibility of the Municipality. · The MOF has expressed interest in using the skills, experience and project approach of the CDP in supporting the Ministry to effectively manage and facilitate a Decentralized System of Implementation 11 (DIS) of EU financial assistance, focusing in particular, on institution building programs and support to the Government's Decentralization Reform agenda. Such support could be provided through a Bank IDF Grant, where the specific focus would be on strengthening implementing agencies in the participating line ministries and recipient municipalities in developing and implementing their respective programs and projects. · As part of capacity building at the municipal level, one of the key areas covered by the project concerned financial planning and budgeting aimed at ensuring adequate funding for operations and maintenance of public assets constructed or rehabilitated under the CDP. The sustainability of these assets will crucially depend on operation and maintenance supported by adequate funding from a number of sources. These sources include transfers from the central government, contributions from public enterprises, where relevant, community contributions, and municipal taxes and fees and are featured as integral elements of municipal financial plans. In addition, these sources of finance are now clearly documented in line items of municipal budgets as advised by the CDP. Of equal importance is the efficient and timely allocation of these resources to responsible entities for the maintenance of these assets. 8. Assessment of Outcomes 8.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy): The objective was clear and important to the country's social and economic development. It was also timely and appropriate to the needs of Macedonia, which was then in a post-conflict situation. As mentioned in Section 6.1, the project was consistent with the Bank's TSS for FYR Macedonia. The project also supported the implementation of the Framework Agreement (i.e., peace agreement) embodied in the Constitution. This was aimed to be accomplished through: (i) reducing underlying social tensions, fostering reconciliation, and building local social capital. Social cohesion would be fostered by providing equitable access to services and by encouraging people to work together on common concerns; (ii) the project's focus on conflict- affected areas, where living standards were seriously affected through displacement from homes and livelihoods, damage to and loss of household property, and damage to community infrastructure and service delivery; and (iii) an emphasis on poverty reduction and short-term employment that would address one of the key causes of conflict, namely frustration with socioeconomic conditions, as well as adequate attention that vulnerable groups were effectively targeted under the project. In addition, the project supported the Government's evolving priority social needs. For example, the project supported the Government's decentralization program, which inter alia, focused on improving education, health, and social service delivery at the local level. Further, the Community Outreach, Information Dissemination and Impact Monitoring component contributed to the decentralization program by building the capacity of community members to work constructively with their local governments. 8.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes , with details on outputs in Annex 4): Satisfactory. The project successfully supported the Government in its post-conflict development efforts aimed at fostering reconciliation amongst its people, reducing social tensions, and building local social capital. This was done mainly by: (i) targeting the poorest and vulnerable communities, including ethnic and mixed communities, by carrying out small-scale activities. These activities responded to urgent needs under a comprehensive and interrelated package of interventions designed to facilitate the transition from conflict to peace; (ii) the active engagement of civil society in the above activities; and (iii) restoring confidence and trust in the communities through self-help interventions. For example, infrastructure microprojects, especially water supply, school construction or rehabilitation, and 12 neighborhood access roads, as well as a variety of community social services focusing on vulnerable groups have contributed to raising the living standards of the poor and vulnerable groups. Living standards were improved through reconstructed access roads and bridges, increased availability of potable water, reduction of water shortages in the summer months, rehabilitated and better heated schools, and multi-purpose municipal community centers supporting youth and multi-ethnic cultural activities. Likewise, social services have contributed to raise social and cultural standards, improve social integration, and provide vital services to vulnerable groups. The project also fostered reconciliation by bringing local governments and communities together through progressive, flexible, participatory, and demand-driven approach to promote community development. The community-based microprojects served as a catalyst for a process in which citizens in the targeted communities, especially in mixed and minority communities, gradually came together over time and participated in the design, implementation and monitoring of these microprojects. By creating opportunities and facilities for the participation of community members for pursuing common interests and common goals, they came to appreciate that their interaction is mutually beneficial. The above efforts were complemented by capacity building activities at the local level, which contributed to promote social cohesion and reconciliation. For example, micro-project training activities for communities helped in: · Initiating new behavior patterns and abilities that contributes to poverty reduction and reconciliation in the communities; · Strengthening the participative decision-making process in the identification and coverage of all the local interests at stake; · Increasing awareness on collective management of renewable natural resources and contribution to the environmental protection; and · Increasing implication and capabilities of vulnerable groups (particularly women, disabled, rejected groups) in local development. Capacity building activities for CICs and project committees have resulted in: · Well trained local CIC members in micro-project preparation, procurement, implementation, supervision, reporting and sustainability preparation (following a participative process) on behalf of the community; · Empowered local capacity in providing sustainable solutions to poverty and confidence in future initiatives; and · Strengthened capacities of user's committees and improve their chances of implementing sustainable mechanisms. The details of the project's major outcomes and achievements are as follows: Development Impact of Community Investments -- Tangible Results at the Community Level. The microprojects implemented by CDP have contributed to the reduction in non-income poverty in tangible terms, both in rural and urban areas. The CDP responded very effectively to the priority needs of the poor, vulnerable groups and of minority communities and helped raise their living standards. At a broader level, these projects gave primacy to the active involvement of community members in decisions, which affect their lives by putting in place a framework for greater stakeholder participation. By supporting a decentralized self-management approach, the project promoted self-help mechanisms, increased the sense of community ownership and reinforced local government and community relations. The Beneficiary Assessment (BA) revealed that, overall the CDP had a positive impact on communities in both rural and urban areas. This was primarily the result of the physical improvements carried out under priority community infrastructure projects and the positive impact and effectiveness of social services delivered under the CDP. A few examples given below illustrate the project's specific developmental impact: A. Community Infrastructure: With regard to community infrastructure provided by the CDP, there was a strong 13 sense of satisfaction on the project's response to priority needs, the improvement of living conditions, better social integration, quality of works, sustainability and transparency. The beneficiary satisfaction depicted in the Table 1 below reveals high ratings regarding the project's impact. With regard to responding to priority needs and improvement of living conditions, all four project types covering transport and access, schools, water supply and irrigation received very high beneficiary satisfaction with ratings above the 90th percentile. With regard to quality of works, sustainability and transparency, the school, water supply and irrigation projects received higher beneficiary satisfaction ratings, as compared to transport and access projects, which were between the 65th and 75th percentile. Regarding social integration, the average rating reached a more modest rating of 64 percent with significant differences between the ratings received for school projects (45.7 percent), water supply projects (87.5 percent), and transport and access projects (66.4 percent). The ratings appear to respond more to meeting priority needs, such as water projects, which raised the welfare level of the community, induced greater interest and participation, and was perceived by communities as enhancing social integration. Infrastructure Projects - Ratings by Beneficiaries Water Impact/Results Average for Transport and Schools Irrigatrion Infrastructure (%) Access (%) (%) Supply (%) (%) Responds to Priority Needs 93.3 99.2 98.8 90.0 100.0 Improvement of Living Conditions 95.7 94.1 96.3 92.5 100.0 Better Social Integration 64.1 66.4 45.7 87.5 -- Quality of Works 90.8 65.5 87.6 90.0 82.5 Sustainability 81.3 73.1 100.0 82.5 70.0 Transparency 81.4 66.3 85.1 75.0 87.0 Source: Beneficiary Assessment, July 2005 Access Road Projects: The CDP responded to a number of microprojects proposals designed to address priority road infrastructure needs, by constructing new roads and reconstructing existing ones. As a result of these road projects, communications and trading with Skopje and neighboring communities have improved in many villages, and the transportation of livestock, in particular, has been greatly facilitated, thus bettering the living standards of the people. Bridge construction projects were also selected as priority projects in a number of communities. One such project was the bridge reinforcement project in the municipality of Kartinci. This bridge was the main trade route linking peripheral communities to the municipalities of Karbinci and Stip. The school projects carried out under the project reflected the close collaboration between the Municipality, the local branches of the Ministry of Education, the parent-teacher councils, and the CICs. In the Poloski region, the School Heating Project in the Municipality of Dzhepciste, the School Renovation and Heating project in the Municipality of Gostivar, and the School Sports Field Reconstruction Project in the Municipality of Rostuce, were all carried out with very good quality and with the full participation of all community members. Water Supply. The provision of water supply to communities living in mountainous terrains has been a challenging problem in Macedonia. The completion of the CDP financed microprojects, consisting of wells and water supply network, has ensured continuous water supply to many communities. A number of multipurpose community centers implemented under the project are serving the communities in several ways, such as: (i) to organize school and cultural events for the community; (ii) to disseminate information to community members on services available in their communities; and (iii) to house local NGOs that were established to provide services to their communities. Irrigation. The CDP financed microprojects, consisting of irrigation system restored irrigation facilities to people in 14 rural areas, and gave a boost to agricultural activity. B. Community Social Services. There was unanimous agreement from BA respondents that the social services projects have had a positive impact on local communities throughout Macedonia. Findings from the assessment revealed that these projects focusing on a wide range of social programs have been very effective in restoring self- confidence in certain vulnerable groups in Macedonia, in particular, the youth, the elderly, and mixed ethnic communities. This was achieved by engaging them as active members of their communities, giving them a renewed sense of confidence in participating as active members in the local economy. In the case of youths, the acquisition of skills (e.g., computer training, textile training) have made them more marketable. Similarly, in the case of the handicapped, specialized skills have provided them with opportunities to integrate in society and lead more productive lives. These projects complemented nicely the community infrastructure projects by supporting priority programs designed to promote inter-community integration and building trust by gradually establishing dialogue among members of different socioeconomic groups and by promoting shared activities for a common good. The sub-projects ranged from a school mentoring program in a Roma community where school attendance is low, a sports project engaging the participation of youth of different ethnic backgrounds, a soup kitchen and doctor's visit for the elderly, recreational and cultural centers for children and youth, a public information campaign to combat the use of drugs in primary schools and high schools, to a skill enhancement textile training project directed at youth. All of these projects were discussed and agreed upon in open meetings, where community members came together and decided on the priority needs of the neediest segments of the population. Each of these projects was critical in providing some desperately needed services to the communities. The BA showed that 91 percent of beneficiaries interviewed were satisfied with the services received and noted that the social services projects carried out helped raise the social and cultural standards in their communities. Another important finding was that 85 percent agreed that the projects helped improve interpersonal relations and 82 percent were of the opinion that the projects helped improve social integration. The Roma School Mentoring Program is an impressive project managed by a very active and committed Roma medical student who heads a local NGO, which has been supporting Roma community members for the past four years. He is assisted by six Roma high school students, who work in shifts. The team mentors a total of 150 Roma students from an elementary school and a high school located in Gostivar. This is an important program in a Roma community where there is high unemployment and low levels of secondary and high school completion. The mentoring program consists of helping students with homework, school assignments, and areas where the students are performing poorly. Workshops are also organized covering family planning, drug addiction and AIDS prevention. The Hot Meal and Doctor's Visit project targets the poor elderly community members living in Valandovo. The program is managed by the Social Works Centers in partnership with the Veterans Association. There are also a number of young volunteers, which provide their time and services to the program. The program is currently targeting 41 elderly persons who were selected based on their needs. The doctor's visits are carried out up to three times a week. The Textile Training Program for unemployed youth in the Municipality of Kriva Palanka is an important project to the community, building on a strong alliance between the Municipality, local textile businesses, the Social Works Center, and the local media. With the help of the local media, a total of 45 applications were received, from both rural and urban areas. With the assistance of the Employment Bureau, the Municipality, and the Social Works Center of Kriva Planka, the neediest cases were identified and 30 young and unemployed applicants were selected to participate in the program from the communities of Konopnica and Zedilovo. 8.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and Financial Rate of Return): Net Present Value/Economic Rate of Return and Financial Rate of Return are not applicable. Cost effective analysis was not carried out since there was no follow-on operation. 15 8.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency): Based on the discussion given in Sections 8.1 and 8.2, the overall outcome is rated as satisfactory. 8.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above): (a) Poverty Impacts, Gender Aspects, and Social Development: Social Development. Under the Law of Social Protection, the Ministry of Labor and Social Policy has embarked upon a deinstitutionalization program covering a number of facilities such as daily centers for vulnerable groups. In support of this, the Ministry has allocated a small budget to train local NGOs to operationalize the needed services at the community level. In this regard, the Ministry has expressed interest in adopting the approach used by the CDP in dealing with NGOs. This includes the recruitment process and training of NGOs, the coordination of project activities with local institutions and the private sector, and the monitoring and supervision of activities. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development): The project resulted in a substantial institutional development impact as demonstrated by the following: · Local Government Capacity. The project was instrumental in building institutional capacity in areas such as local finance administration (financial management, budgeting and accounting); asset management (inventory monitoring, operation and maintenance of assets); and information dissemination (community meeting, public hearings and referendums, surveys, and information materials). · Social Service Delivery Capacity. The project facilitated in strengthening the capacity at the local level in the prioritization process of social services projects and in the coverage, scope and content of social welfare and benefits services. The CDP worked closely with the Ministry of Labor and Social Policy, as well as with the Social Welfare Centers and EU PHARE, to develop a training program benefiting municipal leaders in the delivery of social services. · The establishment of Community Implementation Committees at the local level has enhanced community empowerment by creating meaningful opportunities for citizens to participate. As a result, for the first time, communities are given an opportunity to express their priority project proposals through a selected representative of the community. This establishes a relationship between the local government and the community, vis-a-vis the community representative, to which the mayor must be accountable. The experience through the CICs has set the precedence for opening a two-way communication process between the community and the local governments. The value added of this activity, apart of the infrastructure improvement was the simulation and learning how to do: (i) participatory capital budgeting; (ii) citizens involvement in local policy development; and (iii) involvement of the beneficiaries in control of implementation of works which secures extra pressure for works to be done. Municipalities, through the social project component, also learned how to outsource services (outsourcing is not a known phenomena in delivering of the social services). (c) Other Unintended Outcomes and Impacts (positive or negative, if any) One unexpected positive impact of the project was that the financial management training program developed under the project with close coordination and collaboration of the MOF and the donors such as USAID and UNDP, eventually became a national training program for municipal officers in financial management. This program also served as the base for the new Law on Municipal Finance. Another unintended positive impact was the development of Social Service Delivery Training program. This program was developed as the need arose during project implementation to strengthen the capacity at the local level 16 in the prioritization process of social services projects and in the coverage, scope and content of social welfare and benefits services. The CDP worked closely with the Ministry of Labor and Social Welfare, as well as with the Social Welfare Centers and EU PHARE, to develop this program benefiting municipal leaders in the delivery of social services. The program achieved the following objectives: · Building necessary understanding and providing the essential knowledge base on principles and practice of social protection and community development, as well as the roles of municipal stakeholders in the development of local social activities and programs; · Preparing and implementing community development initiatives; · Reviewing the detailed legislative mechanisms related to the process of decentralization in general, and in social welfare and services in particular (Law on Local Self-Government, Law on Social Protection, Law on Financing of the Local Self-Government Units etc.); · Providing introduction and overview of the process of effective identification and diagnosis of local social needs and problems, as a shared responsibility of local stakeholders; · Ensuring practical understanding on the issues of joint planning, operating and sustainability of local social services; · Promoting community outreach, particularly to rural settlements and remote communities which are more socially endangered and underserved; · Paving the way to building partner relationships between municipal authorities, NGOs, social institutions, centers for social work and other relevant institutions in the domain of community development and initiation of local social actions; and · Raising the awareness among the municipal authorities on the importance of social development for community wellbeing and the need to consider the social milieu of the municipalities while planning the issues on municipal agenda that will be of primary concern. Social Service Delivery Training program has also evolved as a part of the national training program, covering the whole country. Its follow-on training program, Local Action Plan for Social Protection, which started in May 2006, would help representatives from Social Service sector at local level to prepare Action Plan and also support the implementation of three social service projects selected from the best developed Action Plan. There was no unexpected negative impact of the project. 8.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes): The Beneficiary Assessment revealed that overall the CDP had a positive impact on communities in both rural and urban areas. This was primarily the result of the physical improvements carried out under priority community infrastructure projects and the positive impact and effectiveness of social services delivered under the CDP. For details see Annex 8. 9. Assessment of Risk to Development Outcome Rating: Moderate For minimizing the risk of lack of willingness of local communities to sustain facilities, the mitigating measures included: (a) Strengthening of local government capacity and accountability on effective asset management; (b) Development of effective training program for the benefit of local governments and communities; and (c) Building effective partnerships amongst the key stakeholders at the local level. 17 In order to counter the risk of ineffective and unsustainable capacity building efforts, effective microprojects training has been given to local communities. Local government officials have been trained in the operation and maintenance of public assets. 10. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 10.1 Bank: (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase): Rating: Satisfactory The Bank's performance in the identification, preparation, and appraisal of the project was satisfactory. The identification process focused on critical gaps and opportunities for interventions in Macedonia's social sector. The project's consistency with the Government's development priorities and the Bank's TSS was assured. In addition, the Bank also covered in-depth sociological aspects and local issues while designing the project. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management. In addition, major risk factors and lessons learned from other earlier projects in the social sector were considered and incorporated into the project design. The organizational structure of the project was designed to ensure efficient and effective institutional arrangements for the administration of project activities, as well as to ensure effective coordination with government, community institutions, and the donor community. The novel features of this structure were its focus on institutional support activities covering community outreach activities; local level training and technical assistance; and monitoring and evaluation, all geared towards the sustainability of this development endeavor. The project also provided a participatory framework designed to strengthen the institutional arrangements both at the project management level, as well as the community level, with the objective of enhancing the overall effectiveness and accountability of the CDP PIU and of the local counterparts. In order to support the preparation of the project, a grant of US$1 million was allocated from the Bank's Post- Conflict Fund (PCF). The PCF grant supported the preparation of the CDP by funding critical project start-up costs, facilitating intervention by developing a solid understanding of the sources of conflict, and testing the kinds of activities that could receive funding under the project. In addition, it provided a relatively rapid response in a post- conflict situation. The Bank played an active part on its intermediation role between the Government's development policies and community-based change. This was achieved under the project through the design and implementation of mechanisms to carry out effective community outreach, information dissemination, and impact monitoring. The Bank also responded to the need in FYR Macedonia to improve coordination activities both within the donor community and with the central Government. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal. (b) Quality of Supervision (including of fiduciary and safeguards policies): Rating: Satisfactory The Bank's performance during the implementation of the project was satisfactory. Sufficient budget and staff 18 resources were allocated, and the project was adequately and intensively supervised, and closely monitored. The task team prepared Aide-Memoires regularly, alerted the Government and the PIU to problems with project execution, and facilitated remedies in a timely manner, in conformity with Bank procedures. The Implementation Status Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. The project's innovative approach was featured in the Local Government Framework Paper developed by the Social Funds team in HDNSP as a demonstration project for the ECA region on local development and its linkage to governance. (c) Justification of Rating for Overall Bank Performance: Rating: Satisfactory Based on the Bank performance during lending phase and supervision as discussed in Section 10.1, Overall Bank Performance is rated as Satisfactory. 10.2 Borrower: NOTE: When the government and implementing agency are indistinguishable, provide rating and justification only for Overall Borrower Performance. (a) Government Performance: Rating: Satisfactory The Government's commitment to the project was initially demonstrated by its concurrence with the TSS of August 20, 2001. The TSS introduced the need to finance small-scale rehabilitation of infrastructure, help inter-community integration, and to address social issues through a community development project, as part of its post-conflict development program. Furthermore, during project identification, the Government confirmed its commitment to the project and agreed that provisions would be made in the Government's 2002 budget for a Government counterpart contribution to the CDP of US$100,000, and an additional amount of US$400,000 during the next two and half calendar years. However, during the subsequent project costing exercise, the total estimated government contribution increased to US$968,000. The government cash contribution of US$400,000 were meant for financing microprojects, grants for community social services, and PIU office rent and operating costs over a 3-year period. The government consistently maintained its commitment throughout the implementation. The government officials worked closely with the Bank's project team on a continual basis, and cooperated fully with the task team. MOF played an active role, especially on the training component. The Ministry of Labor was active on the social services component, and the Ministry of Local Self-Government collaborated closely with the Bank in implementation. In the design and certification of project activities under Component 2, the Ministries concerned were actively involved. There was also systematic consultation and coordination between the relevant Ministries and the PIU, which was responsible for the overall implementation of the project and was very responsive to take corrective implementation measures and to deal effectively with the operational issues. Appropriate levels of review and approval were usually in place. Financial accountability and follow-up was observed, and expenditures were duly authorized before they were incurred. Documentation was maintained properly for periodic review. The project did not suffer from any counterpart funding problems, as the GOM took timely corrective measures and made appropriate budget provisions. (b) Implementing Agency or Agencies Performance: Rating: Satisfactory Implementing Agency Performance 19 The performance of CDP-PIU, which coordinated the project, was satisfactory. The PIU staff assumed their tasks under very challenging circumstances of starting a new project implementation unit and planning and carrying out a number of key initial activities focusing on community outreach and promotion and needs assessment activities. Throughout project implementation, given the close integration of the work under each of the departments in the PIU, the staff worked closely together, thus ensuring consistency in the work of the PIU. Joint field visits were regularly carried out, where staff from different departments shared their knowledge and experience, and provided support and advice to one another. This close association engendered team spirit and created a favorable professional working environment. The PIU was very effective in carrying out all aspects of project management, such as financial management, procurement arrangements, reporting activities, and disbursements. Financial Management Review. The financial management system including accounting, controls, auditing and reporting was adequate and satisfied the Bank's financial management requirements. CDP-PIU All FMRs reviewed were submitted on a timely basis and found to be satisfactory. The financial audit reports were all received on time and the opinions in the Management Letters were "unqualified" in regard to the project's financial statements. Procurement Arrangements. Procurement of all works, goods, and technical services under the project followed the Procurement Guidelines "Procurement under IBRD Loans and IDA Credits." Reporting Arrangements. The PIU submitted all required quarterly and annual reports in a timely manner. These reports were informative, and provided valuable feedback on how the CDP was progressing covering all project activities. The status of performance indicators were incorporated in all progress reports and served as valuable input to Bank supervision mission reports. PIU acted as an effective intermediary agency supporting the Government in the critical stage of implementing the decentralization reform program. In the course of implementing the project, the PIU communicated successfully with central and municipal authorities on national policies that have impacted on the implementation of CDP as well as some policy issues that had emerged from project activities. (c) Justification of Rating for Overall Borrower Performance: Rating: Satisfactory Based on the Bank performance during lending phase and supervision as discussed in Section 10.1, Overall Bank Performance is rated as Satisfactory. 11. Lessons Learned (both project-specific and of wide general application) · Factors responsible for the project's success. The confluence of various key factors such as the following contributed to the success of the project: (i) responsiveness to local needs and priorities; (ii) institution and capacity building at the local level; (iii) consonance with government decentralization policy; (iv) an innovative approach to promotion and outreach; and (v) systematic monitoring and evaluation. · Municipal Planning within the Decentralization Framework. It is important to build capacity at the municipal level in order to effectively carry out functions and responsibilities devolved to the municipalities under the decentralization program. 20 · The innovative integrated development approach, which linked public administrative reform programs at the macro level with community development initiatives at the micro level (through multi-sector community-based projects and institution building), was very effective for the success of the project. · Labor Policy. Given that the majority of the firms surveyed (employment survey) considered that the provision of minimum wages and benefits (determined by law) were the main obstacles to the expansion of production, it would be important to discuss this issue with the central authorities. There is also the need for training, perhaps at the post-secondary level, in basic technical, professional, and management skills, to meet the increasing demands from the private sector. · A project like CDP can be made efficacious by bridging micro and macro, linking local communities with civil society and local government and buttressing local institutions that empower the poor. · It is very important to build the capacity of beneficiaries at the local level. It is also equally important to have direct communication with the beneficiaries at the grass root level. The experience gained from the project on these aspects was very valuable for other subsequent projects in Macedonia and other countries in the region. · For a project such as CDP, which focused on linking local social investments with the Government's policy agenda, three years will not be sufficient to achieve the objectives of the project. 12. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies: Borrower's comments on the ICR were considered and appropriate changes have been made wherever applicable. (b) Cofinanciers: The Embassy of Netherlands provided the following comments: "The outcomes of the project were satisfactory with respect to the expectations that were rather ambitious and manifold. A value added to this project was its timeliness and the effort paid to sustainability issues, as well as the well-developed and comprehensive participatory process. The efficiency of the PIU was commendable ­ they had a proactive approach and went beyond their original tasks in order to meet the needs of the borrower, primarily related to training and coordination. The latter is considered especially important by the Netherlands Embassy as a co-financier, as CDP cover a broad variety of sectors (especially in its social services sub-component), which required significant efforts in terms of coordinating with domestic institutions and international donors present in Macedonia. PIU also demonstrated a high degree of professionalism, administrative and project management skills. They had proactive, professional and open line of communication with the Netherlands Embassy. There were no visible obstacles in the project implementation except for occasional administrative unclarities and slow information flow within various WB management structures. This situation has significantly improved with the appointment of the new operations officer at WB Skopje office (September 2004). The chosen management structure for the overall Trust Fund (3 different PIUs within the overall Community Development Programme that also included the components Culture and Youth and Sport), although initially suggested by the Netherlands Embassy, proved to be difficult and should be avoided in possible future activities." (c) Other partners and stakeholders: (e.g. NGOs/private sector/civil society): N.A. 21 Annex 1. Results Framework Analysis Project Development Objectives (from Project Appraisal Document): The main objective of the project was to provide support to the Government of the Former Yugoslav Republic (FYR) of Macedonia in its post-conflict development efforts aimed at fostering reconciliation amongst its people, reducing social tensions, and building local social capital. Revised Project Development Objectives (as approved by original approving authority): The objective was not revised. (a) PDO Indicator(s) - from Project Appraisal Document (Indicators pre-populated from the ISR) Baseline Values from Project Outcome Indicators/Date of Value (from approval documents) Intermediate Original Target Values Formally Outcome Baseline Value (from approval Revised Actual Value Achieved at Indicator documents) Target Completion or Target Years Values PDO Completed Community Works Projects benefiting poor, conflict-affected, and vulnerable Indicator 1 : communities. Not Applicable due to Value A total of 90 completed the demand-driven A total of 123 infrastructure (quantitative or Community Works nature of Community micro-projects were completed. Qualitative) projects are targeted. Works Projects. Date achieved 05/16/2005 05/16/2005 06/30/2006 Comments (incl. % achievement) PDO Completed Community Social Services projects benefiting poor, conflict-affected, and Indicator 2 : vulnerable communities. Not Applicable due to A total of 40 completed Value A total of 79 completed the demand-driven Community Social (quantitative or Community Social Services nature of Community Services projects are Qualitative) projects. Social Services Projects. targeted. Date achieved 05/16/2005 05/16/2005 06/30/2006 Comments (incl. % achievement) PDO Trained local municipal finance officers in financial management, budgeting and accounting, in Indicator 3 : support of the Government 's decentralization program. 22 No target value was set No Baseline value due to due to the link of the Value the link of the training training program to A total of 210 municipal finance (quantitative or program to demand- demand-driven officers were trained. Qualitative) driven Community Community Works Infrastructure projects. projects. Date achieved 05/16/2005 05/16/2005 06/30/2006 Comments (incl. % achievement) PDO Trained local government officials in social service delivery, in support of the Government's Indicator 4 : decentralization program. A total of 505 participants were No target value was set No Baseline value due to trained comprising mayors, due to the link of the Value the link of the training officials from the Centers for training program to (quantitative or program to demand- Social Work and Social Policy, demand-driven Qualitative) driven Community officials from municipal Community Social Social Services projects. councils, and staff from local Services projects. NGOs. Date achieved 05/16/2005 05/16/2005 06/30/2006 Comments (incl. % achievement) (b) Intermediate Outcome Indicator(s) - from Project Appraisal Document Baseline Values from Project Outcome Indicators/Date of Value (from approval documents) Intermediate Baseline Original Target Values (from Formally Revised Actual Value Achieved at Outcome Indicator Value approval documents) Target Values Completion or Target Years IO Indicator 1 : Not applicable to this project. Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) IO Indicator 3 : Not applicable to this project. 23 Value (quantitative or Qualitative) Date achieved Comments (incl. % achievement) 24 Annex 2. Restructuring (if any) (some fields are pre-populated by the system) ISR Ratings at Restructuring Board Approved PDO Amount Disbursed at Reason for Restructuring Date(s) Change Restructuring in USD Restructuring & Key IP DO M Changes Made If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Against Formally Revised PDO/Targets Overall (weighted) rating Satisfactory 25 Annex 3. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) (Total rows and percentage column will be calculated by the system) Appraisal Actual/Latest Components Estimate Percentage of (USD M) Estimate (USD Appraisal (US$ million) M) I. COMMUNITY INVESTMENT PROJECTS. COMMUNITY INFRASTRUCTURE - 1.1 PREPARATION AND 7.00 7.20 102.86 IMPLEMENTATION OF MICROPROJECTS FOR THE REHABILITATION II. LOCAL LEVEL INSTITUTIONAL STRENGTHENING. CAPACITY BUILDING AND TA AT THE MICROPROJECT 0.30 0.30 100.00 LEVEL - 2. CAPACITY BUILDING AND TA AT THE L III. COMMUNITY OUTREACH, INFORMATION DISSEMINATION AND PROJECT IMPACT MONITORING 0.20 0.10 50.00 AND EVALUATION. IV. INSTITUTIONAL SUPPORT TO THE CDP PIU. 0.70 1.10 157.14 Total Baseline Cost 8.20 8.70 Physical Contingencies .70 .00 0.0 Price Contingencies .60 .00 0.0 Total Project Costs 9.50 8.70 Project Preparation Facility (PPF) .00 .00 0.0 Front-end fee IBRD .00 .00 0.0 Total Financing Required 9.50 8.70 (b) Financing (The appraisal estimate will be pre-populated from the Financing data in SAP/AUS; Percentage of Appraisal column will be calculated by the system) Source of Appraisal Estimate (USD Actual/Latest Estimate (USD Percentage of Funds Type of Cofinancing M) M) (US$ million) (US$ million) Appraisal BORR Government 0.10 0.13 130.00 WB-administered COMM 0.05 0.15 300.00 TF IDA 0.50 0.59 118.00 ZMUL Parallel financing 0.30 0.00 26 (c) Disbursement Profile (system generated graph) 27 Annex 4. Outputs by Component Component 1. Community Investment Projects As of end March 2006, a total of 88 infrastructure micro-projects were completed, benefiting over 247,279 community members. As shown in Table 1, below, the largest number of completed infrastructure micro- projects were in Transport and Access (31), followed by Education (22), Water Supply (15) and Community Services (10). The cost per beneficiaries averaged US$147.43, ranking from a high of US$305.12 in education micro-projects to a low of US$6.71 in health micro-projects. The lowest estimated average cost per beneficiaries reflects the relatively large number of beneficiaries in one health project: Reconstruction of facade of the unique facility (Clinic for child diseases) located in the Municipality of Center where ill children from all over the Macedonia are treated. Table 1: MCDP - Completed Infrastructure Micro-projects as of end of March 2006 Sector No. % Cost (US$) % Beneficiaries % Cost per Beneficiary Transport and Access 31 36 1,473.740.70 33 91,251 37 55.44 Education 22 26 1,107,863.23 25 11,795 5 305.12 Water Supply 15 17 771,467.79 18 39,638 16 243.44 Other 2 2 98,076.00 2 5,324 2 36.05 Community Services 10 11 468,154.34 11 11,903 5 56.69 Health 3 3 192,198.11 4 66,600 27 6.71 Environmental Infrastructure 1 1 80,516,76 2 10,000 4 8.05 Productive Infrastructure 2 2 154,046.95 4 9,830 4 16.95 Sanitation 2 2 55,108.28 1 938 0 94.86 Total 88 100 4,401,172.16 100 247,279 100 147.43 Table 1A: MCDP - Ongoing Infrastructure Micro-projects to be completed as of end of June 2006 Sector No. % Cost (US$) % Beneficiaries % Cost per Beneficiary Transport and Access 3 10 153,038.43 8 11,282 6 13.56 Education 9 29 631,311.57 34 7,383 4 85.51 Water Supply 6 20 414,011.58 23 74,842 36 5.53 Other 2 7 165,000.00 9 71,442 36 2.31 Community Services 4 13 165,828.39 9 18,620 9 8.91 Health 2 7 67,500.00 4 11,361 6 5.94 Environmental Infrastructure 2 7 121,364.08 7 1,599 1 75.90 Productive Infrastructure 0 - - - 0 - - Sanitation 2 7 105,075.80 6 3,900 2 26.94 Total 30 100 1,823,129.85 100 200,429 100 Community Social Services Projects The CDP also completed a total of 801 social services micro-projects, as of end-June 2006. The majority of the projects were targeted at children and youth and the disabled, as shown in Table 4 below. A total of 48.225 28 community members benefited from these projects. The cost per beneficiary came to US$19.08. This relatively high figure reflects typically small numbers of beneficiaries (e.g. women and single parents) served by these projects. Table 2: Completed Social Services Micro-projects Sector No. % Cost (US$) % Beneficiaries % Cost per Beneficiary Community Facilities 11 13.8 114,063.00 12.4 18,391 38.1 4.34 Children and Youth 35 43.8 386,086.00 41.9 16,906 35.1 19.31 Elderly People 14 17.5 154,826.00 16.8 4,412 9.1 21.93 Disabled and Marginalized 16 20.0 220,845.00 24.0 7,036 14.6 278.23 Women and Single Parents 4 5.0 44,544.00 4.8 1,480 3.1 30.77 Total 80 100 920,364.00 100 48,225 100 19.08 1 The 40 micro-projects from the total number (80) of completed micro-projects were finished till end of December 2005. The other 40 on going micro projects will be completed till end of June, 2006. From this 40 on going micro-projects 8 of them will be completed till end of April 2006, 5 will be completed till end May, and 27 will be completed till end of June 2006. Component 2. Local Level Institutional Strengthening A. Micro project Level Training: This training was conducted on three levels: (i) Capacity building for communities. Capacity building was provided by CDP PIU's officers at every phase of the project cycle. The PIU provided the technical, managerial and organizational support to the community for the promotion, appraisal and follow-up. Beneficiaries were all community members and local government representatives willing to work with the PIU and starting micro-projects preparation, with an equitable representation of women benefiting from micro-project training activities carried out in the community. (ii) Capacity building for CICs and Project committees. The achieved outputs of this training were: · Well trained local CIC members in micro-project preparation, procurement, implementation, supervision, reporting and sustainability preparation (following a participative process) on behalf of the community; · Empowered local capacity in providing sustainable solutions to poverty and confidence in future initiatives; and · Strengthened capacities of user's committees and improve their chances of implementing sustainable mechanisms. (iii) Capacity building for contractors. PIU delivered the workshops at the municipality level or, if feasible, at the micro-project sites. The trainings were delivered mainly on-the-job and in the form of a pre-bidding information workshop five days prior to the deadline for submission of bidding. Beneficiaries were contractors interested in bidding and implementing micro-projects in the municipalities. Local Government Training. The capacity building program at the municipal level focused on enhancing the capacity of selected local government officials in developing their skills in local finance administration (financial management, budgeting and accounting), asset management (inventory monitoring, operation and maintenance of assets), and information dissemination (community meeting, public hearings and referendums, surveys, and information materials). The training covered six municipalities targeted under the pilot projects and the 40 municipalities identified in the first cluster. The training was organized in 9 five-day sessions in 8 regions. A total of 193 participants, (of whom 101 were women) attended this training from 83 municipalities: 66 officers from local branches of the MOF and 127 municipal finance officers. Each participant received training 29 in the following key areas: (i) transfer of responsibilities from central government to local communities: (ii) integrated process of financial management and budgeting; (iii) internal control and auditing, external audit, accounting and treasury; and (iv) budget execution. Social Service Delivery Training: See Section 8.5(c). Employment Surveys. During 2004, the PIU completed the employment survey of small- and medium-scale enterprises in the Municipality of Kumanovo. Some of the key findings are as follows: (i) Construction Permits: Of the enterprises interviewed, 62 percent had experienced delays ranging from 3 months to over one year in obtaining a construction permit. (ii) Infrastructure Services: A total of 80 enterprises (out of 100) considered that the fees charged for services (electricity, water supply, telecommunications, and roads) were too high in relation to the services received. (iii) Information Services: Many citizens and potential investors expressed dissatisfaction regarding the lack of a information at the Municipality regarding basic historical, geographical, and political background, urban planning and other municipal services, as well as the procedures for obtaining construction permits. The lack of a One Stop Permit Center (OSPC), supported by a suitable website was considered to be another constraint. (iv) Labor Policy: A majority of the firms surveyed considered that the provision of minimum wages and benefits (determined by law) were the main obstacles to the expansion of production. The lack of appropriate educational qualifications and training was also identified as a barrier to employment. The need for professional training of employees and management training for employers were also considered to be high priority areas. (v) Environmental Issues: The survey found that 85 percent of the firms interviewed were interested in investing on new technology or in modifying their existing technology to help improve environmental protection. The PIU also successfully completed the Second Employment Survey of small- and medium-scale enterprises in the Municipality of Bitola, building upon the experience of the first survey carried out in the Municipality of Kumanovo. The report on the second employment survey provided some useful information and insights on problems faced by entrepreneurs. These relate to: (i) long bureaucratic procedures in obtaining of construction permits; (ii) inappropriate usage of fees for infrastructure services in industrial zones; (iii) the lack of a one-stop-shop for adequate information services needed by potential investors; (iv) the high level of contributions added to net salaries and the lack of suitable training for employees; and (v) inadequate enforcement environmental of standards and procedures. Component 3. Community Outreach, Information Dissemination and Project Impact Monitoring and Evaluation. Promotional Activities. In January 2006, the CDP completed their promotional activities in the two targeting clusters covering all eight regions of Macedonia. The outreach activities were conducted in the South West, Pelagoniski, Vardarski, and Skopje regions. In the Skopje Region, given its large size, the CDP developed new promotion procedures which included the active participation of the Mayor of Skopje and the mass media, the nomination of a popular Parliamentary member to chair and coordinate community meetings, and the acceptance of a larger (36 member) Community Implementation Committee (CIC). A total of 11 proposals for community investment projects were submitted to the CDP by the CIC of Skopje. As a result of effective promotional and outreach activities, the CDP completed its program covering all regions targeted equitably, in line with the agreed regional targeting strategy, which is an integral part of the project's Development Objective. A total of 91 CIC were established, with a membership of 1,079. As of June 2005, the PIU held 273 outreach meetings with the CIC's, as a part of the outreach and promotion program, and 364 meetings conducted with 30 the Local Communities. The Outreach Officers provided extensive institutional support to municipalities in operational micro-projects procedures through mechanisms such as presentations, discussions and workshops in all planned Municipalities and Local Communities. The outreach team assisted for carrying out micro-project activities such as: election of CIC, organizing community meetings, identifying the infrastructure and social service problems, defining and ranking of the top priority micro-projects. They gave training to the CIC members for preparation of the application forms and submission of the micro-projects proposals together with all necessary documentation. Component 4. Support to Project Management. MCDP Staff Training. In order to improve necessary competency and efficiency of PIU operations, 6 MCDP staff members attended the Training Courses at ILO Turin Centre and 4 staff members attended a two-day regional course in Zagreb on the practical use of the FIDIC conditions of contracts. ECA Net Regional Workshop and Conferences. Three MCDP-PIU representatives and one representative from the Ministry of Finance participated at the 4th ECANET Conference on the SIFs in Antalya, Turkey in 2003. From November 29 to December 1, 2004, the MCDP together with the Turkish Presidency of the ECANET successfully organized the 5th Regional Conference of the Europe and Central Asia Region Network of Social Funds in Ohrid, Macedonia. Two MCDP staff members participated on the workshop in Vlora, Albania carried out in April 2005. The topic of the workshop was Participatory Monitoring and Evaluation focused in Local Development Plan and Subprojects Implementation. MCDP took part in the 6th ECANET regional Conference in Armenia from September 12-14, 2005. The Mayors of Ohrid and Veles and representative from the Ministry of Finance as well as the MCDP project staff participated on the conference. Coordination with the Government, other Projects and Donors. With the Government. Regular coordination with the Ministry of Local Self Government, Ministry of Labor and Social Policy and Ministry of Finance on different issues of the project activities. Two representatives from the Ministry of Labor and Social Policy worked as members of the evaluation committee for Social Services micro- projects. Also representatives from the Ministry participate in the coordination of the Training on Local Level, and help MCDP in communication with the Local branches of the Social Welfare Centers in all Municipalities. There was also close coordination with the Ministries of Health, Education and Transportation in regard to the Infrastructure (works) micro-projects, thru the representatives of the distinguished Ministries in the Supervisory Board. All the micro-projects approved by the committee, got an approval from the different Ministries in order to avoid duplication of activities with the Governmental Transfers to the Municipalities in the period of the first transfer of competences. With other Community Development Projects. MCDP established a monthly coordination with the MCDC Project and MCD Youth Projects. Different issues regarding the possible activities on the field were defined especially with the Youth Project where the Babylon Centers through their members NGO's are invited as a members of the Community Implementing Committees in the process of the decision making and also are welcomed to apply for implementation of the micro-projects. On the technical level MCDP worked closely with the MCDYP in three particular municipalities (Izvor, Vasilevo and Oblesovo), where Babylon Centers and NGOs supported by MCDYP implemented micro-project activities under MCDP Social Services Micro-Projects. With Other Donors. USAID, OCSE, UNDP, KFW, FOSIM and other MCDP as a part of the Donor coordination, participated in all coordination meetings organized by the donors or by the Government, especially in the field of decentralization. As a result of a successful coordination, a Training on Financial 31 Management and Budgeting was organized with the participation of USAID funded MDW Project and OCSE. Regular meetings were held with the Trilateral Committee responsible for the overall National Training Planning in the field of decentralization. The Trilateral Committee consisted of representatives from the Ministry of Local Self Government, Civil Servants Agency and ZELS (Association of Local Self Government Units). 32 Annex 5. Economic and Financial Analysis (including assumptions in the analysis) Not applicable. 33 Annex 6. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members: Names Title Unit Responsibility/Specialty Lending Caroline Mascarell Sr Operations Off. ECSHD Team Leader Colin S. Scott Lead Spec. MNSRE Peer Reviewer/Post-Confl. Coordinator, Community Daniel P. Owen SDV Peer Reviewer/CDD Spec. Driven Hilarian M. Codippily Consultant ECSHD Poverty Spec./Economist Maria E. Gracheva Operations Officer ECSHD Pr. Costing/Mngmt Spec. Senior Social Development Mark C. Woodward ECSSD Social Dev. Specialist Spec Nicholay Chistyakov Senior Finance Officer LOAG1 Disbursement Officer Nikolai Soubbotin Sr Counsel LEGEC Legal Counsel Rajna Cemerska-Krtova Operations Officer ECSHD Social Sector Pr. Officer Lead Financial Sandro Zanus Michiei ECSPS FM Specialist Management Spec Theresa Afi Bebli Temporary AFTF1 Project Assistant Lead Social Protection Xiaoqing Yu EASHD Program Team Leader Special Yingwei Wu Sr Procurement Spec. ECSPS Procurement Specialist Supervision/ICR Augustina M. Nikolova Program Assistant ECSHD Project Assistant Bekim Imeri E T Consultant ECSSD Social Dev. Specialist Benedicta T. Oliveros- Procurement Analyst ECSPS Procurement Analyst Miranda Caroline Mascarell Sr Operations Off. ECSHD Team Leader Hilarian M. Codippily Consultant ECSHD Poverty Spec./Economist Rajna Cemerska-Krtova Operations Officer ECSHD Social Sector Pr. Officer Yingwei Wu Sr Procurement Spec. ECSPS Procurement Specialist 34 (b) Ratings of Project Performance in ISRs No. Date ISR Archived DO IP Actual Disbursements (USD M) 1 06/28/2002 Satisfactory Satisfactory 0.00 2 12/23/2002 Satisfactory Satisfactory 0.00 3 06/24/2003 Satisfactory Satisfactory 0.20 4 12/03/2003 Satisfactory Satisfactory 0.20 5 06/02/2004 Satisfactory Satisfactory 0.30 6 12/16/2004 Satisfactory Satisfactory 1.71 7 06/15/2005 Satisfactory Satisfactory 3.12 8 03/03/2006 Satisfactory Satisfactory 5.54 (c) Staff Time and Cost (from SAP) Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands No. of staff weeks (including travel and consultant costs) Lending FY02 34 263.66 FY03 6.22 FY04 0.00 Supervision/ICR Total: FY02 1.13 FY03 20 70.04 FY04 16 74.87 FY05 37 109.25 FY06 32 136.25 FY07 0.07 Supervision/ICR 35 Annex 7. Detailed Ratings of Bank and Borrower Performance Bank Ratings Borrower Ratings Quality at Entry (QEA): Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Bank Performance: Satisfactory Borrower Performance: Satisfactory 36 Annex 8. Beneficiary Survey Results (if any) SUMMARY OF BENEFICIARY ASSESSMENT I.1. Rationale for Intervention The overall objective of the Community Development Project (CDP) is to extend support to the Government of the Republic or Macedonia in its post-conflict efforts towards creation of social capital at the level of the local communities, in reconciliation of possible disputes between people, as well as, in prevention of the risk of possible new conflicts. CDP fully supports the Government in the process of decentralization and in its efforts to advance the competencies and the quality of the services provided on the local level, as well as in the promotion of the larger involvement of the public in the decision making process and local development planning. During the last two years, the Republic of Macedonia although under very difficult circumstances, performed some important economic reforms, such as the privatization and restructuring of the larger companies and banks, as well as few important interventions in some segments of its macroeconomic policy. These reforms were supported by the international financial institutions. However, despite these facts the general country indicators are still not satisfactory: the unemployment and the poverty still grow and there is even, a larger inequity among the various social groups. The regional disparities in the Republic of Macedonia are apparent and can be seen from the rate and the persistency of the problem of unemployment and the gap in the GDP per capita of various regions. According to the recent census data, the unemployment rate is the lowest in the region of Skopje, and the highest in the region of Polog Republic of Macedonia has eight regions: Pelagonia, Vardar, Northeast, Southwest, Skopje, Southeast, Polog, and East Region). Regional variations are evident when the birth rate trend is monitored between 1992 and 2002. The population grows in all of the identified regions, except in the Pelagonia region, where the population rate was -1.8%. The highest grow rate has the region of Polog (8.5%), and the lowest (0.8%) the East Region. The overall aging of population is apparent in most of the municipalities. The analyses show that the municipalities in Republic of Macedonia (as defined with the Territorial categorization done in 2004) differs in relation with the conditions and the equipment in their healthcare, education and cultural institutions. In addition, great discrepancies in the level of communal services, transportation, and similar crucial indicators are apparent. Following the trends in the other transition countries, Republic of Macedonia started similar processes of introduction of the basic principles of the democracy, social integration, and participation of the population, pluralism in the ways how the social problems of the citizens are resolved and the decentralization of the state power. The improved capacity of the municipalities and the creation of sustainable institutions for local development similar to those initiated with the CDP could prove as very effective way for overcoming the listed downward processes. I.2. The Applied Procedure for Micro-Project Selection The process of the decentralization of the state power is strongly related with the fulfillment of the objectives of the CDP Project. The fundamental principle of the CDP approach is that the local communities actively participate in the definition and prioritization of the problems which call for intervention, as well as, during the preparation, inception, and implementation stages of the micro-projects. 37 Prior to the commencement with the planned activities, CDP organize and conduct Regional and Local promotion of MCDP and its activities and procedures, having in mind the Municipal Profiling results previously conducted. In parallel, on the Municipality level, the CDP initiates establishment of a Community Implementing Committee (CIC) comprised of members of the Municipality Council, representatives from the local public enterprises, representatives from the local branches of the respected Ministries, leaders of the NGOs active in the community, established business leaders and the civil servants from the local self- government, as a major PIU partner in implementation of the particular micro-projects. The CIC has a President, a Secretary, and members. The number of members depends of the available resources (people and institutions) in the particular Municipality. The CIC will organize a number of meetings and public hearings and disseminate the MCDP goals to their respected communities, to identify the problems and to apply with certain number of microprojects applications. CDP selection committee then selects the project based on the pre-defined criteria: Economic (Priorities for the particular local community); Social (Number of the identified beneficiaries); Financial (Costs of implementation per beneficiary), and Technical (Sustainability of the project outcomes). Therefore, CIC establishment and its activities undertaken proved as very important condition for successful implementation of the perceived project activities. The competency of its members was more then useful and needed in overcoming the problems during the project definition, implementation, reconciliation of some of the requirements coming from various stakeholders, and in overall establishment of the pre-conditions for implementation of the projects. CIC-s as active partner to the CDP has task to supervise and closely monitor the implementation of the particular microproject. The role of the CIP was perceived as very important and this form of partnership proved as essential factor for successful implementation of CDP on the local level. I.3. Compliance of the CDP Intervention to the Needs of the Local Communities One of the most critical pre-conditions for successful operation of the local communities is the larger participation of the public in the decision making during the identification of the priorities in social infrastructure and social services activities. In all municipalities in which the CDP activities were implemented, 93.26% of the interviewed stated that the implemented micro-projects fully comply with the actual needs of the community. The example from the micro-project implemented in the village Karbinci indicates the importance of the consensus of the local population regarding the real priorities for their community. Case: There was a mutual agreement that the reconstruction of the bridge is urgent since there was a very real danger the old bridge to collapse. The foundations were eroded and it was not possible to use this bridge for heavier traffic. Thus, the trucks had to make big detour (20 km more) traveling around Stip. The minutes from the interviews with the beneficiaries regarding the level of their satisfaction with the implemented projects show that 87.37% are highly satisfied with the results of the implemented projects, while only 3.96% expressed some form of dissatisfaction, most probably caused with the lack of awareness, relevant information, or current interests to comprehend the all outcomes. Case: It was to be expected that some residents of Ratavica will not be able to fully merit the effects of the new Irrigation System out of the regular watering season. I.4. Impacts The Survey performed allows for conclusion that the positive effects of the projects for the living conditions and other aspects of the social life are more then apparent. The aggregate data for all micro-project show that 87.37% of the interviewed are content with the overall outcomes from the projects, in particular: · 76.49% are content with the level of improvement of the living conditions and economic effects; · 65.10% are content with the way how the environment improved; · 64.11% are content with the improved social integration of people and the overall social effects 38 Indirectly, these effects will impact the functions of the local self-government, since the people will be more confident with the capacity of the local administration and the importance of its establishment. Important perspective to monitor the CDP projects and the effects from the implemented microprojects can be set from the individual level (level of the particular members of the community). These statements illustrate the impact of the projects from the viewpoint of the individual beneficiaries. Statements: Better quantity and quality of the farm products is the most important effect of this project, find the local population of Ratavica. · "If there would be water, we will have more and safe farm products"; · "We will double our output"; · "It is good to have water; the land will return more then double"; · "We will make for a good life"; · "Water means life for us, no more quarrels"; · "Farmland with watering system and without is differently priced; the price now is almost double." Case: The support from the CDP was estimated as very useful by the residents of the village Ciflik. As the most important benefit, they stated that their school age children travel much more easily to their schools. The public transport was established to allow the pupils to commute to the neighboring villages (Dolno and Sredno Konjari) where they attend the school. The implementation of the CDP projects in some cases resulted with more convenient communication and linkages with the neighboring cities and Skopje, the national capital. Thus, in the case of the reconstruction of the access road to the village Ciflik, the residents indicated the evident grow in the business activities, since the cattle traders come more often and more easily to their village, as stressed on the focus group held. Case: With the CDP, the living conditions in the village Martolci significantly improved. The intervention was assessed by the local residents as very useful and needed. The reconstruction of the streets eliminated the problems with the traffic after the rains and during the winter time. The implementation of the projects resulted with some significant mutual objectives: · Participation of the public in the local initiatives; · Creation of social capital within the community; · Transparency in identification of the interests of the residents and various social groups; · Establishment of institutional networking; and · Cooperation with the CDP. The best form for creation of collective sense in a community is the voluntary participation of community members in the activities. The public was involved in CDP projects by: · Voluntary work (in 34.41% of the cases); · Suggestions (in 26.24%); · Organization and support to the activities (in 22.77%). Case: As excellent example of participation of the local population is the project implemented in Ciflik. People used their tractors and with extensive voluntary work, prepared the road surface for the asphalt. I.5. Social Capital The basic elements of the social capital are the trust and collaboration. Social capital results with social networking through which individuals and various social groups can achieve their objectives, interests, and needs. The practice proves that the implementation of CDP results with creation of various integrative and bridging links and new forms of social capital. 39 Cases: In the case of the activities related with collection of the documentation needed for implementation of the particular CDP micro-project virtually all forms of social capital can be observed: mutual assistance and help to complete the documentation, interchange of available information, exchange of the experience and similar. During the implementation of the micro-project for reconstruction of the Bridge in Karbinci, the residents jointly identified the need and suggested additional enforcement of the construction. Establishment of institutional networks is also one of the outcomes of the implementation of the various CDP micro-projects, where CIC proved very useful for the objectives of the institutional networking. This network allows creation of horizontal linkages needed for better collaboration within the community, municipality, and Central Government. This model of partnership was successful in all of the implemented projects. I.6. Sustainable Development The sustainable development must be environmental friendly, follow the basic postulates of democracy and to be socially responsible, meaning that it must encompass the needs of various social groups. The idea of the CDP, for prior identification the entities or local authorities to continue with the maintenance of the micro- projects proved very useful since the projected activities continued after the micro-project finishing. The interviewed beneficiaries believe that nothing can be achieved without money (25.74%), but same times highly appreciate any new idea coming from their local communities (39.60% of the answers). The most offered form of contribution to the desired sustainability of the current and in implementation of similar new projects is the voluntary engagement (44.80% interviewed beneficiaries), very high ranked is the readiness to offer specific knowledge and skills (21.53%), the financial contribution are ready to offer 16.34%, while 11.88% of them will put their efforts in finding suitable donors. The fact that 95.79% of the interviewed beneficiaries think that the implemented projects deserve and should be supported further on, confirms that they are acceptable from the viewpoint of their environmental implications, that they are selected based on democratic procedure and that they are fully integrated into the local community. I.7. Identified Advantages and Risks The participation of the public in their community relationship management can be identified as the major advantage of the applied CDP approach. The citizens are involved in soliciting original initiatives; · Identification of the priorities for their community; · Appreciation of the public and individual initiatives and the work dedicated; · Higher social consent for the new ideas. However, the implementation of innovative approaches always brings more risk. In the case of the infrastructure projects, the most critical factor was the schedule respect, then the appropriateness of the selected contractors, and the risk of possible use of substandard construction material. In the case of the social services projects, the most critical factors proved to be lack of readiness to accept new forms of social care and lack of awareness for the importance of innovation in the applied procedures. Finally, it must be mentioned, that the evaluation went in parallel with the process of constitution of the new local-self government. This, most probably, introduced a downward bias in the responds, since the public was very concerned and in some cases even against the applied model. II. Conclusions The performed Beneficiary Assessment returned some important general conclusions which apply to all evaluated projects, like: 40 · The implementation of the CDP in Republic of Macedonia resulted in better insight into the communal and social services problems at the micro level and offered an innovative procedure to address these problems, which can be used as a best practice in the future implementation of similar projects in the local communities; · The implementation of micro-projects on the local level with suitable involvement of all stakeholders is a step forward in the process of decentralization of the executive power in the Republic of Macedonia and in strengthening capacities of the local communities; · The CDP continued the collaboration with the communities where the need for social intervention was identified, and implemented various micro-projects in communities with most emphasized and urgent social or infrastructure needs; · The establishment of the CIC proved as very important for effective support to micro projects implementation and for promotion of local population capacity to plan its local development. The role of the CIC was dominant in enlightening and overcoming of the targeted local problems; · The partnership established between the CDP and the CIC during the planning, management, supervision and monitoring of the implementation positively influenced the process; · The strict adherence to the identified need as indicated by the local stakeholders was instrumental and important condition for successful implantation, improvement of the living conditions, better cohesion of the people and higher social awareness. The development of various forms of socialization and contact between the people enriches the local community with new forms of cooperation; · A certain tendency towards the preference of the individual needs before those of the community can be noticed; · The population values very high the implemented projects, which resulted with very tangible and positive effects; · Although the general level of awareness and information is satisfactory, there is a room for better communication and new forms of approach to the general public, especially during the early stages of the project implementation; · The willingness and the enthusiasm of the local population to contribute with voluntary engagement and with some financial support is substantial; · Essential component of the CDP involvement, particularly in the case of the infrastructure projects, is the creation of ambiance for sustainable local development; · The participation of the public contributes to their self-motivation for sustainability of the joint efforts invested. In the case of the social services project some difficulties can perceived, caused with the lack of positive laws which will cove this area, and · In some infrastructure projects, the beneficiaries expressed some concerns and dissatisfaction with the contractors and the quality of the work performed. III. Recommendations Due to the differences in the priorities of the implemented projects, the recommendations are grouped in accordance with the type of the project. III.1. Infrastructure Projects · CDP should intensify the promotion activities for all relevant aspects of the projects. This will result with fully informed public about the scope of the planned activities (for example, it will be well known and communicated in advance which particular streets will be reconstructed, how long will be the water-supply network, and so on); · There is need for more intensive engagement of the locally available, unemployed, workforce and local contracting companies; · Since the interests of various residents vary with the age, there is a need for design of parallel projects to address the specific needs for all major age groups in the local communities; · Regarding the Budget for the infrastructure projects, there is need for improved level of information of the public for the spending; and · The public should be regularly informed about the issues related with the sustainability (or 41 continuation) of the projects, particularly in the case of a transfer of the responsibilities among the various stakeholders. III.2. Social Services Projects The period since the inception with the projects from this segment is very short. This prevents firm recommendations. However, the early experience can return the following: · There is a need for positive legislation on both, on the national and on the local self-government level, for alternative and non-institutional forms of social care; · There is need for training of the local leaders for the social problems of the population and raising their capacity to design and undertake suitable social services; and · Since there is trend of escalation of the problem with the poverty in the urban areas too, the CDP activities should also target the urban social problems in parallel. 42 Annex 9. Stakeholder Workshop Report and Results (if any) N.A. 43 Annex 10. Summary of Borrower's ICR and/or Comments on Draft ICR I. ASSESSMENT OF THE PROJECT OBJECTIVES, PROJECT DESIGN AND IMPLEMENTATION The main objective of the Community Development Project assigned by the Government as the highest priority at that time, is to provide support to the Government of Republic of Macedonia in its: · Post-conflict development efforts aimed at fostering reconciliation amongst its people, reducing social tensions, fostering reconciliation, preventing further inflict and building social capital; · Decentralization initiatives designed to increase the competencies and accountability of municipal administration, increase the participation of citizens in decision-making and ultimately, enhance empowerment at the local level. To achieve this objectives an integrated framework was developed at the project level to support the Government in bridging the post-conflict to development. Following the Ohrid Framework Agreement of August 2001 and the Amendments to the Constitution on November 2001, the Parliament adopted the Law on Local Self-Government in January 2002, laying a solid legal framework for establishing a new system of local self-government in Macedonia. To address the post conflict development objective, the focus of the project was given on small-scale community-based initiatives, under an integrated development framework designed to respond to priority social needs and facilitate the transition from conflict to peace. To address the Decentralization process, CDP included a subcomponent for capacity building and technical assistance at the local level to help improve service delivery within the decentralized framework, through: decentralization of power; fiscal decentralization; territorial organization; and capacity building at the municipal level. The Project Design fully met the Government objectives to respond to the needs and priorities of beneficiaries through community infrastructure and social services, capacity building, and facilitating the transition from conflict to peace. The project design was also essential in providing a basis and guiding project activities for translating national policy into effective and sustainable programs at the local level through strengthened institutional structures, improved governance and an operationally strong implementation unit. To that end, and according to the agreed with the World Bank and the Government of Republic of Macedonia, MCDP has undertaken broad agenda of activities: · Social Needs Assessment was carried out in order to define the target groups in deferent areas. · Three steps Targeting Methodology was designed as a tool for clustering of municipalities and prioritization of interventions. · Municipal Profiling was carried out to obtain clear picture of the infrastructure and social services condition on local level. · A comprehensive Promotion and Outreach Program has been defined and implemented, involving wider community members in decision making and implementation process, emphasizing consensus building among community members. · An innovative feature developed by the CDP PIU has been the formation of Community Implementation Committees (CICs) at the municipal level, delegating to them the main responsibility of outreach and promotion at the community level, with CDP PIU participation on a selective basis. · 120 Community Infrastructure and 79 Community Social Services micro-projects have been implemented in accordance with the agreed procedures. · Citizen Information Networks have been established in three Municipalities as a part of the 44 Information Dissemination Program, enabling the small communities access to the information and services provided on Municipal level. · Two different stages of programs for Strengthening Capacities were design and successfully implemented: o On the micro-project level to build capacity for the community members in understanding the CDP goals and objectives, and o On the Local Government level to prepared the Local administration to undertake the new responsibilities coming with the Decentralization Process in the area of Fiscal Decentralization and Identification of the Social needs and Developing the Action Plans for social services activities. · Permanent Monitoring and Evaluation activities have been taken during the entire Project Live. o MIS was developed for generating reports on progress of activities, and o FMS was established to daily recording the accounting system. · Beneficiary Assessment Survey was carried out as a qualitative research tool, used to assess the effectiveness of project activities perceived by project beneficiaries to increase the effectiveness and sustainability of the CDP. · Technical Assessment of Quality of Works was carried out in order to assess the overall quality of works and to found out weather the implemented infrastructure projects are in accordance with the national quality standards. · Two Employment Surveys were carried out in order to promote better dialogue between local authorities and entrepreneurs; to enhance the quality of planning and provide inputs to local level development plans and o provide recommendations for and inputs to the formulation of labor policy. Achieved outputs from Community Investment Projects. Community Infrastructure Sub-Component: This sub-component was designed to address the need for rehabilitation of small-scale social and economic infrastructure at the local level, focused on renovation and rehabilitation of key social infrastructure in properly defined sectors. Outputs by sectors: · Transport and Access sectors include construction of local roads, bridges, and regulation on river shores. The qualitative outputs from this sector are improvement of communication and quality of access to basic service centers in poor, conflict affected mixed and vulnerable communities further away from cities, enabling connection from village to village, village to fields, and village to city and reducing the soil devastation and damages made by storm water. · Education sector covers renovation of school buildings, kindergartens, installation of heating systems, replacement of windows and renovation and building of new sanitations. The outputs are improvement of the quality of services and conditions of schools and kindergartens, reducing of pollution caused by using of wood and coal for heating and ensuring better school attendance during the cold winter months, decreasing absence from school and risk of diseases caused by demolished window frames and glassing and improvement of sanitation conditions, health protection of users and increasing the level of hygiene. · Water Supply sector include rehabilitation of existing water supply systems, building new ones and building small scale irrigation systems. The qualitative outputs from implemented water supply projects are reducing the number of disease caused by polluted or leak of drinking water, increasing the level of hygiene and enabling environment for productive activities. · Other sector covers construction of retaining wall and regulations of river shore. The outputs from these projects are elimination of earth devastation caused by storm waters and enabling direct access to the settlements from the regional road. · In Community Services sector, there are building and rehabilitation of community centers and construction of sport fields' playgrounds. Achieved goals from this sector are enabling conditions for inter-community integration, increasing the social life among the different groups and citizens and enabling environment for sport and recreation in the rural and neglected communities. · Health sector includes building and rehabilitation of primary health care centers that effected with increasing of quality for health services, improvement health protection of users and enabling better work condition for the medical staff. · Productive Infrastructure sector# consists of construction of public markets. The qualitative outputs 45 from these projects are improving of living conditions, promotion of business activities among the private sector and enabling higher financial return from farming. · Sanitation sector and construction of sewage systems contributes on reducing pollution on the environment, health protection of users and increasing the level of hygiene. Community Social Services Sub-Component: This sub-component supported small grants programs, in the form of service packages, targeted to address the needs of vulnerable and disadvantaged groups in the Republic of Macedonia with a view to promoting inter-community integration by actively engaging citizens in the development process of their communities. The Target Groups were defined according the Social Needs assessment conducted at the earlier stage of Project Implementation, and the outputs by Target Groups are: · For Community target groups two projects types have been implemented. (a) Preventive programs/campaigns against drug abuse, alcohols and others addict's disease helped in health awareness and developing prevention measures by local population: children, elementary and high school children, parent, professional persons (teachers, pedagogy, and psychologists). (b) Info Youth Centers assist developing of communicational capacities in rural areas, equal opportunities for young population regarding informatics technology and inventive / creative use of their free time. · Children and Youth target group was supported by Daily educative and creative centers, Culture art/folklore recreational programs and Educational support programs. (a) The qualitative outputs from first project type are Literacy improvement at children of different ethnicity from rural and poor communities (Roma, Turks, and Macedonians), integration and re-socialization of street children, better informing and education awareness among parents and children. (b) Culture art and folklore programs resulted with improvement of inter-ethnic relationships among young persons from rural communities with different ethnic nationality, organized free time activities and supporting of folklore tradition among different ethnic nationality. (c) Educational support programs improved school achievement by Roma students from elementary school from poor and marginalized communities, helped in building awareness of cooperative relation and cooperation among Roma populations and local schools. · Elderly People. Daily Caters and Centers for providing mobile social and medical services have been opened. This effected with support unintentional care of elderly people, initiation local activities and participation of the local community in care and protection of elderly people, helping in better social protection and health life for elderly people. Centers for providing mobile social and medical services supported home care social services. · People with special needs and marginalized persons. Impacts: Social inclusion of the disabled people and their acceptance from the local population, equal opportunity in working process according to their capabilities and abilities. · Women and Single Parents. Impacts: Inclusion of women in working process, increased economic independence and decreased unemployment, self awareness by women from rural isolated communities from different ethnicity: human rights, domestic violence rights, risk and consequences from STD, better child care and participation in social and economic activities. II. LESSONS LEARNED Institutional and operational framework. At the early stage of project implementation, particular attention was focused on the development of the institutional and operational frameworks developed relating to poverty targeting and community outreach and promotion. During this process, the CDP staff met regularly with government officials and donors to ensure the consistency of project activities with the government's reform programs as well as ensure complementarities with donor programs in. This phase was critical as it represents the core of the project framework and the foundation on which all project activities were built. Building upon the institutionally sound and operationally strong framework developed, and moving in synchronization with a favorable and evolving decentralization policy in the country, the CDP effectively carried out the implementation of community investments and local level capacity building activities. Establishment of the CICs. The establishment of the CICs at the local level has enhanced community empowerment by creating meaningful opportunities for citizens to participate. As a result, for the first time, communities are given an opportunity to express their priority project proposals through a selected 46 representative of the community. This establishes a relationship between the local government and the community, vis-a-vis the community representative, to which the mayor must be accountable. Since mayors are elected locally, communities feel empowered that they can put pressure on the local government to be responsive to its demands. The experience through the CICs has set a precedent for opening a two-way communication process between the community and the local governments. Development Policy Areas. The CDP project structure, which has representation from the key development ministries together with CDP procedures, has ensured stronger linkages between the project and government policies and programs. The implementation of the CDP within an integrated development framework has also brought to light several issues of development policy which are being discussed with the authorities, both at the central as well as the local level. Municipal Planning within the Decentralization Framework. One of the key elements in implementing the decentralization program has been that of building the capacity at the municipal level to effectively carry out functions and responsibilities devolved to the municipalities, focused on the planning and prioritization of investments based on national development objectives, policies, and plans, and also planning of the social services activities. Financial Planning and Budgeting at the Municipal Level. Through the CDP's assistance program, municipal officers, particularly finance officers, are better informed of the Government's policies and priorities, and are familiar with the Law on Municipal Finance and preparation of the budgets in accordance with the new law. Social Policy. Under the Law of Social Protection, the Ministry of Labor and Social Policy has embarked upon a deinstitutionalization program covering a number of facilities such as daily centers for vulnerable groups. In support of this, the Ministry has allocated a small budget to train local NGOs to operationalize the needed services at the community level. In this regard, the Ministry has expressed interest in adopting the approach used by the CDP in dealing with NGOs. This includes the recruitment process and training of NGOs, the coordination of project activities with local institutions and the private sector, and the monitoring and supervision of activities. The CDP is now advising the Ministry regarding the implementation of social services projects. Coordination with the Government, Other Projects and Donors: With the Government. Regular coordination with the Ministry of Local Self Government, Ministry of Labor and Social Policy and Ministry of Finance on different issues of the project activities. Two representatives from the Ministry of Labor and Social Policy worked as members of the evaluation committee for Social Services micro- projects. Also, representatives from the Ministry participate in the coordination of the Training on Local Level, and help MCDP in communication with the Local branches of the Social wealth-fare Centers in all Municipalities. There is also close coordination with the Ministries of Health, Education and Transportation in regard to the Infrastructure (works) micro-projects, thru the representatives of the distinguished Ministries in the Supervisory Board. All the micro-projects approved by the committee, get an approval from the different Ministries in order to avoid duplication of activities with the Governmental Transfers to the Municipalities in the period of the first transfer of competences. With Other Community Development Projects. MCDP has established a monthly coordination with the MCDC Project and MCD Youth Projects. Different issues regarding the possible activities on the field has been defined especially with the Youth Project where the Babylon Centers through their members NGO's are invited as a members of the Community Implementing Committees in the process of the decision making and also are welcomed to apply for implementation of the micro-projects. With Other Donors (USAID, OCSE, UNDP, KFW, FOSIM and others). MCDP was a part of the Donor coordination has been participated in all coordination meetings organized by the donors or by the Government, especially in the field of decentralization, which we are following with our activities. As a result of a successful coordination, a Training on Financial Management and Budgeting has been organized, with participation of USAID funded MDW Project and OCSE. 47 Regular donor coordination monthly meetings were held where every Project report of the activities and mutual plan of future activities have been prepared. Regular meetings were held with the UNDP Training Support Center for coordination of the Training Activities under the Ministry of Local Self Government. III. EVALUATION OF THE PERFORMANCE OF THE BANK AND OTHER DONORS Regular Banks missions have been conducted during the lifetime of the Project, reviewing the ongoing and future activities, and we appreciate the support given by the TTL and the WB during the mission towards achieving the Project goals. The in-depth assessment on the MCDP activities has been carried out during the Mid-term review mission, showing the importance of the Community Development Project in bridging micro and macro, linking local communities with civil society and local government and buttressing local institutions that empower the poor. It is our pleasure to say that we appreciate the strong support and efforts the World Bank extends to the Government of the Republic of Macedonia. We are convinced the World Bank will continue to be a reliable partner on a long-term base and will support the forthcoming reforms, through various projects and technical assistance support. IV. CONCLUSION As a result of an accurate Project Objectives, well designed Project Document and successful implementation, Republic of Macedonia achieved a long term results in: · Improvement of the quality, access and availability of community infrastructure and services in poor, conflict-affected and vulnerable communities; · Promotion of institution building at the grassroots level by assisting local governments and communities to plan and manage their investments and improve the decentralized management of service delivery; · Support for inter-community integration and empowerment through effective outreach programs and partnership building at the local level; and · Enhancement of national level development planning and policy formulation through impact monitoring and evaluation of outputs generated by the local development initiatives supported by the project. 48 Annex 11. Comments of Cofinanciers and Other Partners/Stakeholders Please refer to Section 12.c of the ICR. 49 Annex 12. List of Supporting Documents 1. Project Implementation Plan 2. Procurement Assessment 3. Financial Management Assessment 4. Local Government Institutional Review 5. Local Level Capacity Building Plan 6. Environmental Guidelines and Procedures 7. Project Implementation Arrangements 8. Project Appraisal Document for the Former Republic of Macedonia: Community Development Project dated May 3, 2002 (Report No. -23720-MK) 9. Aide Memoires, Back-to-Office Reports, and Project Status Reports 10. Project Progress Reports 11. Consultant Study Reports financed under the Project 12. Beneficiary Assessment, dated April 2005 13. Borrower's Evaluation Report dated July 2006 50