Documentof The World Bank FOROFFICIAL USEONLY ReportNo. 39784 - LR INTERNATIONALDEVELOPMENTASSOCIATION PROJECTPAPER FORA PROPOSEDPRE-ARREARSCLEARANCE GRANT INTHE AMOUNT OFSDR3.3 MILLION (US$5.0 MILLIONEQUIVALENT) TO THE REPUBLICOFLIBERIA FORA SECONDCOMMUNITY EMPOWERMENTPROJECT(CEP 11) May30,2007 HumanDevelopmentSector West Africa Department 1 Africa RegionalOffice This document has a restricted distribution and may be used by recipients only inthe performance of their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (ExchangeRate Effective, 2007) Currency Unit = Liberian Dollars (LR$) 1US$ - LRS8.0 1US$ - 0.65576 SDR FISCALYEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AWP&B Annual Work ProgramsandBudgets CBO Community-BasedOrganization CDD Community Driven Development CEP Community EmpowermentProject CF Community Facilitators CFAA Country FinancialAccountability Assessment CFSNS ComprehensiveFood Security and Nutrition Survey CMC Commissionfor Monopolies and Contracts CPA ComprehensivePeaceAgreement DA DesignatedAccount DDC District DevelopmentCommittee EC EuropeanCommission EPP EmergencyProjectPaper ESIA Environmental SocialImpact Assessment ESMF Environmental and SocialManagementFramework FA Financing Agreement FAPM Financial andAccounting ProcedureManual FBO Faith-BasedOrganizations FD FinanceDirector I A Internal Audit IAPSO Inter-Agency ProcurementServices Office IBTF Initiating Brieffor aTrust Fund IC Individual Consultants ICB International Competitive Bidding ICR Implementation Completion and ResultsReport IDP Internally DisplacedPerson IEC Information, Education, and Communication IFR InterimUn-Audited Financial Report I-PRSP InterimPovertyReductionStrategyPaper ISA International Standards of Auditing ISN InterimStrategy Note Kfw Kreditanstalt fur Wiederaufbau(GermanDevelopmentBank) LACE Liberia Agency for Community Empowerment LCS Least-CostSelection LIB Limited International Bidding LICUS TF Low Income Countries Under Stress Trust Fund FOR OFFICIAL USEONLY M&E MonitoringandEvaluation MAAFP Manualof Administrative, AccountingandFinancialProcedures MoE Ministry of Education MoH Ministry of Healthand SocialWelfare NGO Non-GovernmentalOrganization NTG NationalTransitionalGovernment OM ovc OperationManual Orphans andVulnerableChildren PDO ProjectDevelopmentObjective PMC ProjectManagementCommittee PPCC PublicProcurementandConcessions Act PPCR PublicProcurementandConcessions Reform PS Procurement Specialist QCBS Quality andCostBasedSelection QSG Quality Support Group RFTF Results FocusedTransitionalFramework RPF ResettlementPolicy Framework RRC RapidResponseCommittee RSA RapidSocialAssessment SBD StandardBiddingDocuments SOEs sss Statement of Expenditures Single-SourceSelection TA TechnicalAssistance TBA TraditionalBirthAttendants TFLIB Trust Fundfor Liberia UNDP UnitedNationsDevelopmentProgram UNMIL UnitedNationsMissioninLiberia VIP VentilatedImprovedPit WA WithdrawalApplication Vice President: Obiageli Katryn Ezekwesili Country Director: Mats Karlsson Sector Manager: Eva Jarawan Task Team Leader: Giuseppe Zampaglione This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. THE REPUBLIC OF LIBERIA COMMUNITY EMPOWERMENT I1 TABLEOF CONTENTS A. Introduction.......................................................................................................................... 6 B. EmergencyChallenge: Country Context. RecoveryStrategy and Rationale for Proposed Bank EmergencyProject..................................................................................................... 6 C. Bank Responseand Strategy............................................................................................... 8 D. Appraisal of Project Activities, Benefits and Risks......................................................... 11 F. Risks .................................................................................................................................... 14 G. Terms and Conditions ....................................................................................................... 16 Annexes: Annex 1:Detailed Description of Project Components............................................................ 18 Annex 3: Summary of EstimatedProject Costs........................................................................ Annex 2: ResultsFramework andMonitoring.......................................................................... 25 27 28 Annex 5: Procurement Arrangements ....................................................................................... Annex 4: FinancialManagementandDisbursementArrangements...................................... Annex 6: Implementation and MonitoringArrangements ...................................................... 34 Annex 7: Project Preparation andAppraisal Team Members................................................ 41 Annex 8: Environmentaland SocialSafeguards....................................................................... 45 Annex 9: SupervisionAmplementationSupport Strategy- CEP I1 -Firstten months........ 49 47 Annex 12: Map............................................................................................................................. Annex 11:Country at a Glance.................................................................................................. 51 Annex 10: DocumentsinProject Files....................................................................................... 50 53 iv Emergency Project Paper Data Sheet Country: Liberia Sector Manager: EvaJarawan Project Name: Second Community Country Director: Mats Karlsson EmpowermentProject (CEP 11) Environmental Category: B Responsibleagency: Liberia Agency for Community Empowerment(LACE) -Closing date: June 30, 2011 Note: If the EC financing i s not secured, the IDA Grant i s likely to be disbursedintwo years only. Project developmentobjectives: As part of the governmentresponseto the social and economic emergency inLiberia, the Project will improve poor rural communities' access to basic services and economic opportunities through a Community Driven Development approach, by investing in community sub-projects andincapacity building at the community and local governmentlevels. Does the Project trigger any safeguardpolicies? YES Ifso, click hereto indicatewhich one(s) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP/GP 4.01) [XI [I Natural Habitats(OPBP 4.04) [I [XI Pest Management(OP 4.09) [I [XI Forests (OPE3P4.36) [I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) [I [XI Involuntary Resettlement(OPE3P 4.12) [XI [I IndigenousPeoples (OD 4.20, beingrevised as OP4.10) [I [XI Safety of Dams (OPE3P4.37) [I [XI u~ International Waterways (OPE3P/GP 7.60) [I [XI [I [XI Source Local Foreign Total IBRD/IDA 5.00 0.00 5.00 EuropeanCommission(8.5million)* 11.25 0.00 11.25 Total 16.25 0.00 16.25 1 final decisionby the EC is made (expectedbeforeend of July 2007). Once approved, the EC co-financing, will complement and further strengthen the objectives of the Project. A. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide a Pre-Arrears Clearance Grant in an amount of SDR3.3 million (US$5.0 million equivalent) to the Republic of Liberia for the SecondCommunity EmpowermentProject (CEP II). 2. Following years of civil war, the World Bank financed a first set of community oriented operations through the Low Income Countries Under Stress Trust Fund (LICUS TF) and the Trust Fundfor Liberia (TFLIB). The Community Empowerment Project (CEP I) US$6.0 million was for approved on February 24, 2005; it has had a tangible impact in restoring basic services and in supporting war affected communities. Recognizing the scale of the emergency situation in Liberia, the proposed CEP I1 will finance the costs associated with improved access by poor rural communities to basic services and economic opportunities through a Community Driven Development (CDD) approach, and investments in community sub-projects and capacity-building at the community and local government levels. The proposed project addresses basic emergency needs of the population at large, andby supporting community action it will contribute to stabilize the social andpolitical situation inLiberia. 3. The proposed Project i s highly participatory in nature, involving multiple stakeholders, including local government at the county and district levels, and the donor community. The European Commission (EC) i s processing a financing request in the amount of 68.5 million to co-finance the CEP 11through co-financing arrangements (Contribution Agreement) to be finalized as soon as a final decision by the EC i s made (expected before end of July 2007). Other donors such as USAIDand the Liberia EducationTrust (a US basedprivate foundation) have expressedinterest in supporting CEP I1 with parallel co-financing. The German cooperation (KfW) has expressed interest in the overall approach of CEP I1and has participatedas an observer inthe appraisal of the Project. Becauseof the emergency nature of this operation and the streamlined procedures used under OP8.0, this EPP i s dealing with IDA resources only. Once approved, the EC co-financing will complement and further strengthenthe objectives of the Project. B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for ProposedBank Emergency Project 4. Liberia was a middle-income country before the civil war began in late 1989. However, fifteen years of brutalwar have devastatedthe country's economy, physical infrastructure, and human assets. In August 2003, the warring parties ended hostilities with the signing of the Comprehensive Peace Agreement (CPA) in Accra, Ghana, and a National Transitional Government (NTGL) was established for a two-year interim period prior to national elections in October 2005. The United Nations Mission inLiberia (UNMIL)was established with the mandate to support the implementation of the peace process. In 2003, the United Nations Development Program (UNDP) and the World Bank undertook a needs assessment which led to the development of a Results FocusedTransitional Framework (RFTF) for Liberia. The Bank's assistance during this period was consolidated under a 2004 Country Reengagement Note which focused primarily on economic governance reform, emergency infrastructure rehabilitation, and community-driven development. A democratically elected Government took office in January 2006, and completed an Interim Poverty Reduction Strategy inearly 2007 upon which a new BankInterimStrategy Note' has been based. 'See Liberia: Joint Interim Strategy Note (IDMR-2007-0141)May 23,2007. 6 5. Since the end of the war in 2003, Liberia has undergone profound changes. The newly established government has made progress in restoring certain basic services and infrastructure, and creating mechanisms to support human rights, good governance, and economic growth. In 2006, Liberia's GDP growth rate was 7.8%, compared to 5.3% in 2005, and -31% (negative) at the end of the conflict in 2003. Despite positive developments, Liberians are worse off today than they were 25 years ago. Progress i s limitedby the devastation causedby years of conflict and by the fact that war- related spending channeled resources away from the provision of basic services. Other factors limiting the speed of recovery are the persisting low Government's capacity, the inadequacy of its control functions, and the volatility of the political situation. 6. Local government institutions have been weakened as a result of the civil conflict. At the county and district levels, physical infrastructure was either severely damaged or destroyed. More profoundly, the "institutional space" for local decision-making by government officials and local collective action has been undermined by population dislocation, weakness in local economic activity, lack of social capital, and widespread dependence on humanitarian relief and assistance providedby external agencies. 7. Liberia's basic health indicators are among the worst in the world. Infant and under-five mortality rates are 157 and 235 per 1,000 live births, respectively (I-PRSP, 2007). Chronic malnutrition rates are extremely high in the country's 15 counties. Of children below five-years-old, 39% are stunted, 27% are underweight and 7% are wasted. The war, which caused massive destruction to the economy, did not spare physical infrastructure, equipment and functioning of the health sector. Many hospitals and clinics were raised to the ground. Moreover, only 10% of communities covered by a recent Comprehensive Food Security and Nutrition Survey (CFSNS 2006) reported having a health care facility within their community. 8. Liberia's education system has been one of the weakest in Sub-Saharan Africa due to inadequate resources, poor infrastructure, and limited expenditures from the national budget. As a result, over half of Liberian children of primary school age are estimated to be out of school. The drop out rate i s high with only 35% of boys and 27% of girls reaching grade five; and illiteracy i s estimated at 70% of the total population (I-PRSP, 2007). 9. The plundering of the Liberian economy during the conflict has resulted in excessively high levels of unemployment, particularly amongst youth, internally displaced persons (IDPs) and refugees. Formal sector employment i s currently estimated at 120,000 or just 4% of the population, and nearly 50% of these workers are employed by the public sector. The dominance of the informal economy means that the majority of people are involved in subsistencefarming or employed in low- paidjobs (I-PRSP, 2007). Moreover, with an income poverty rate of 80% of total households and a severe poverty rate of more than 60%, the creation of job opportunities as part of Liberia's post- conflict strategy i s critical to ensuring sustainable peace and stability (I-PRSP, 2007). 10. Ina context such as Liberia, with exceptional needs, very scarce resources,weak government capacity, and a highly volatile institutional and political situation, a CDD approach i s the most appropriate vehicle for emergency social and economic recovery especially in the rural areas which have suffered the most from the war, from isolation, and from past lack of Government support. A CDD approach will also empower communities, by providing them the opportunity to identify their needs, to work towards the implementation of the sub-project, to manage directly sub-project resources and to be in charge of their appropriate and most efficient utilization. This will help recreate some of the social capital that has been severely depleted duringthe protracted conflict, and will be a vehicle of stabilization and peace. Previous projects financed by the Bank, the EC, UNDP, the German Cooperation, USAID, and other partners show that CDD approaches - if well managed 7 andmonitored- are on balance very successful to respondto emergency situations. They can recreate some economic and social dynamics in rural Liberia which are key to reducing poverty and addressing some of the root causes of the conflict. 11. The Project i s in line with the Bank's strategy as articulated in its the new Interim Strategy Note, which c o n f i i the need for building on successful projects and in strengthening the community participation to the economic and social post-war recovery programs. The Project i s in line with donor approaches to community rehabilitation. During 2005-2006 the Bank, UNDP, USAID, EC and UNMIL, with the participation of the Government, launched a series of activities aimed at coordinating donor response at the community level, harmonizing approaches to community empowerment andensuring long-term sustainability of basic services. To a large extent, the proposed Project i s the outcome of these discussions with a concentrated effort on coordinated approaches to local development. 12. The Project responds to the Government's request for emergency funds and aims to continue the activities under the existing Community Empowerment Project and supports the emerging local government agenda. Under the current US$6.0 million TFLIB operation, IDA i s financing nearly 100 communities through mobilization efforts, the strengthening of local capacity, and the rehabilitation and management of social and economic infrastructures. CEP Ihas generated significant attention and hope from poor ruralcommunities. CEP Ihas been implementedby an efficient agency (Liberia Agency for Community Empowerment - LACE) in a satisfactory manner and without any major fiduciary problem. CEP Iclosing date i s August 24, 2007. Failure to continue what i s seen by the government and beneficiaries as a successful responseto local emergency needs may lead to renewed frustration and disappointment among poor rural communities. Moreover, the Project is in line with donors' plans in the area of CDD, as it will: a) fill part of the gap that the phasing out of the Community Recovery Programfinanced by UNDPwill leave inthe next 6-12 months; and b) provide the basis for a 8.5 millionEC co-financing. 13. The rationale for the proposed emergency operation can be summarized as follow: a) continue to support the Bank financed operation which i s scheduled to close in August 24, 2007, hence avoiding the disruption of current Bank financed community based activities; b) build on a sustainable model of community development fostering peace and security; c) catalyze donor support around a single community development delivery mechanism; d) create an environment that would foster the development of local government structures; and e) provide a context for collaboration between community-based activities and government sector policies, in health and education in particular. C. BankResponseandStrategy Brief description of Bank's strategy of emergency supporl 14. Following nearly three years of peace and the establishment of a democratically-elected government, the environment in Liberia is now conducive to extensive reconstruction and recovery efforts. The international donor community i s mobilized to help the Government rebuild a functioning economy and restore the population's livelihood. It i s of utmost importance that during this process the Bank provides uninterrupted financial and technical support to Liberia's reconstruction. In order to respond to these objectives, the Bank's new Interim Strategy Note for Liberia lays out a 12-month strategy, which i s closely aligned with priorities outlined in the Government's I-PRSP. The ISN provides for a scaled-up IDA program in infrastructure, economic governance reform, and delivery of basic. This focus is expected to be a continuing priority under the 8 Government's full PRSP, being prepared in the coming year, and the corresponding future Bank strategy. 15. The proposed emergency Project addresses the Government's I-PRSP emphasis on community based recovery through highly decentralized implementation approaches to local development and on the role played by communities with the support of local governments, in particular by the District Development Committees and County Support Teams. Duringthe past two years, the Bank has had a fruitful and continuous dialogue with the Government and with leading donors in the areas of local development, community rehabilitation, and local governance. CEP I1 benefits from such dialogue and deepens and complements the existing CEP operation. Project Development Objective 16. As part of the government response to the social and economic emergency in Liberia, the Project will improve poor rural communities' access to basic services and economic opportunities through a Community Driven Development approach, by investing in community sub-projects and in capacity buildingat the community and local government levels. 17. Building on progress made under the current CEP operation, the Project will support the rehabilitation of and access to social and economic services. In so doing it will address the emergency situation in social services, in health and education in particular (as highlighted in section B of this EPP), andopennew economic opportunities. The Projectenvisagesa strong involvement of local authorities in key sub-project phases by providing them with capacity-building and involving theminthe selection and supervision of sub-projects. Summary of Project Components 18. CEP I1will be implemented over a four year period from September 1, 2007 to June 30, 2011. IDA financing will be of US$5 million to which US$11.25 million equivalent i s expected to be addedby the EC (total of US16.25 million). The Project will include the following components (see annex 1for further details): 1) Community DrivenProgram (US$4 millionor US$13.0 million with EC co-financing). This component will provide support to local communities to select, design, implement, and maintain small-scale sub-projects that will help in restoring social and economic infrastructure. This will be achieved through community mobilization and collective action. Funds will be channeled directly to the communities based on a participatory needs assessment. Communities will be assisted by Community Facilitators (CF) and Engineering Consultants. LACE will support the access of CBOs to economic opportunities that would increase the income of CBOs members, their families, and the community at large. This component will finance 80 sub-projects (260 with EC co-financing). Capacity Building Program (US$0.4 million or US$1.3 million with EC co-financing). This component will fund the CF, the Engineering Consultants, and training programs for communities, local authorities, and other key stakeholders to enable them to play a leading role in identification, design, and implementation of community-based activities. Training institutions, NGOs, and consultants will update existing training modules (book keeping, procurement, sub-project operations and maintenance). Incollaboration with other donors, in particular with the EC, this component may also finance TA to support the Government on policy issuesrelatedto local governance. 9 3) Project Management (US$0.6 million or US$1.95 million with EC co-financing). This component will finance: (a) the M&E system to collect data from the community, regional and central levels; (b) Information, Education, and Communication (IEC) activities; (c) financial, technical, procurement, and management audits; (d) technical assistance for social and beneficiary assessments, community mobilization, and environmental studies; and (e) incremental operating costs for the implementing agency, LACE. The component will also finance the strengthening of LACE'Soperational capacity. Co-$naming from the EC 19. As discussed in the introduction of this EPP, by the end of July 2007 the European Commission will have made a final decision on its co-financing to the operation, expected to be 8.5 million, equivalent to US$11.25 million (exchange rate of US$1.32 to 1). The Liberia EC delegation proposal to the EC Quality Support Group (QSG) i s for a 25 million County Development Program, which includes three components: Community driven development (8.5 million), County/district level infrastructure rehabilitation and maintenance (10 million), and Institutional support and local governance (5.5 million). The first component will be implemented by LACE and has been prepared in close collaboration with the Bank as a scale-up of CEP. The Project development objectives, the Project components, overall design, and implementation arrangements are identicalto those proposed in this EPP. The EC financial support to the program, if approved, will require a Contribution Agreement between the EC and the Bank and a TF agreement between the Government of Liberiaand the Bank, with the Bank acting as the administrator of the EC funds. Eligibilityfor Processing under OP/BP 8.0 20. The Project i s an important part of the Bank's overall emergency response in Liberia as described above inthis Section. The proposed Project i s fully consistent with OP 8.00 criteria, and, in fact, will address the following priorities: (a) rebuilding and restoring physical assets, (b) preserving or restoring essential services, and (c) establishing and/or preserving human, institutional and/or social capital. ConsistencywithInterim Strategy Note (ISN) 21. As described in both Section A and this Section, the Project is fully consistent with the new Interim Strategy Note for Liberia, which envisions a continuing lead role for IDA in CDD activities, given its long experience and its comparative advantage. Expected Outcomes 22. Progress towards achieving the Project objectives will be measured by the following key indicators: a) All supported communities have benefitedfrom social mobilization and at least 90% of sub- projects undertakenreflect the emergency priorities of targeted communities and beneficiaries, and are implemented incollaboration with local authorities; b) PMCs are inclusive, well-representative, and well-trained; c) At least 400 PMC members are successfully trained every year in sub-project management; d) Completionof at least 80 sub-projects, by end of Project implementation; e) Increase inaccess to basic services, inparticular health and education by endof Project implementation; 10 fj Projectmanagementexpensesas defined inthe MAAFPareless than 13%of totalbudgeted annualexpenditures. 23. The completion of at least 80 sub-projects corresponds to an average cost of US$50,000, which i s quite highfor a community sub-project. With additional financing from the EC, the number of completed sub-projects will be 260 (expected outcome d), the number of PMC members successfully trained every year will be 650 (expected outcome c), and the impact of sub-projects on employment will be significant (see section 27). 24. LACE will be responsible for gathering data on the Project's outcome and results indicators. Beneficiary assessments will be carried out for a sample number of sub-projects. The impact of sub- projects on marginalized groups and women and the impact of sub-projects on access to basic social services, economic opportunities and temporary employment will be covered under these assessments. During CEP I,LACE has prepared an Environmental and Social Management Framework (ESMF) which was reviewed and approved by IDA. A Resettlement Policy Framework (WF) was also prepared and adopted by LACE. DuringCEP 11, LACE will continue to adopt both Frameworks. Financial, Procurement and ManagemenUtechnical audits will also be carried out. D. Appraisalof ProjectActivities,BenefitsandRisks Benefits 25. As was the case under CEP I, main target population under CEP I1will be poor rural the communities. Consideration will be given to vulnerable and disadvantaged groups, such as female- headed households, unemployed youth, the disabled, internally displaced persons, and other war- affected victims. 26. The benefits that will accrue from CEP I1will be of a similar nature and proportional to those achieved under CEP I.For example, based on the most recent estimates, the 100 sub-projects that are being implemented under CEPI Iwill benefit approximately 150,000 people. These sub-projects include among others, 35 primary schools, 10 health centers, one birwmaternity center, 12 new market buildings, 13 small bridges. 6 wells, and 1 disability center. The CEP Ialso increased community access to and use of social and economic services. Student enrollment has dramatically increased and in some cases increases have been three to four fold. A newly built LACE-funded community clinic recorded at least 28 patients per day since it began operations in late November 2006. Evidence from field missions suggests that recently constructed community markets have enhanced economic and commercial activities. In addition, capacity-building has been strengthened with the training of more than 700 PMC members (out of 80 communities in 11 counties). It i s estimated that more than 300,000 person-days of employment will have been created by the end of the CEP I.Based on this experience, it i s estimated that IDA grant for CEP I1will benefit about 125,000 people and train some 860 people, and that some 250,000 person-days of employment will have been created by end of CEP II.With EC co-financing being added, the beneficiaries will increase to 450,000, people trained to 2,960, and more than 800,000 person-days of temporary employment will be created. 27. A cost-benefit analysis of the Project is not feasible at this time due to lack of data and to the emergency nature of the proposed operation. Moreover, it is always difficult to measurebenefits in a rural economy where goods, services and labor are often not traded or are traded in kind and, therefore, are difficult to value inmoney terms. 11 Fiduciary 28. Financial Management. LACE has an existing Finance Division, headedby a Director (FD), who i s a professionally qualified accountant. He i s responsible for financial reporting under the Project, including the submission of quarterly interimun-audited financial reports (IFRs), and timely conduct of audits. The financial management system i s described in the existing Manual of Administrative, Accounting and Financial Procedures (MAAFP), which was adopted in May 2005 and approved by IDA. More detailed financial and internal control procedures are described in a Financial and Accounting Procedure Manual (FAPM) developed by the FD and his staff which was reviewed and accepted by IDA. LACE submitted the 2005 audit report, albeit with some delay. The auditors expressed an unqualified opinion on the financial statements of CEP Ifor the year ending December 31, 2005. It i s expected that the audited financial statements for the period ending December 31, 2006 will be submitted on time (i.e. by June 30, 2007), as the independent auditing firmhas already been recruited and it is working on the assignment. The auditor report will include an audit of a random sample of CBO sub-grants and accounts. LACE is current in submitting quarterly financial reports. As of April 2007, LACE has complied with fiduciary requirements, has prepared and successfully processed 20 withdrawal applications and has completed an independent financial audit. The Bankhas assessedFMprocedures as satisfactory. 29. Procurement Management. LACE had previously recruited a Procurement Specialist (PS) with qualifications acceptable to IDA. The PS managed the procurement functions, including the submission of and adherence to Project Procurement Plans, and the submission of regular reports. However, duringa recent mission, a World Bank team found that there i s scope for LACEto improve its procurement planning, filing, and management, particularly for goods and services, and contract management capacity. These weaknesses will be addressed under CEP I1 on the basis of a supervision and implementation support planthat i s discussedinAnnex 5 and Annex 9. Annex 5 also discusses the methods for procurement of civil works, goods and consultants' services, by LACE as well as by CBOs. Under CEP I1 and Bank Budget resources, the Project will benefit from: a) increased capacity in LACE by hiring new staff as soon as May 2007 and by promoting training; b) intense Bank supervision; c) specific audits, studies and assessments; and c) the outcome of the evaluation of CEP I(ICR, Post-procurement review, etc.). Technical 30. Ensuringthat the quality of the sub-projects is satisfactory is not an easy task for LACE. Based on the experience gained under the CEP I,LACE'S capacity for supervision, particularly technical supervision, will also be strengthened under CEP 11, in coordination with line ministries and local governments. Social 31. A Post-War Rapid Social Assessment entitled "Community CohesioninLiberia" was carried out over a six-month period in 2004 and the report was published in January 2005, with an update in late 2006. NGOs, CBOs, Faith-based organizations (FBOs), development partners, government officials and civil society (ex-combatants, unemployed youth and women's groups) have been fully consulted as part of the RSA process. The RSA helped in the design of the CEP I1by providing insighton the following areas: (a) understanding the underlying socio-cultural, institutional, historical andpolitical context of Liberian society; (b) understanding the underlying reasons of the conflict; and (c) identifying constraints and opportunities posed by the current context for conducting CDD operations, and for conflict recovery as a whole. The RSA and the update also highlightissues which are critical to the successful reintegration of ex-combatants and unemployed youth who are 12 vulnerable to future militia recruitment due to the regional dimension of this conflict in West Africa. In CEP I1LACE'S focus on the above issues will be strengthened and capacity-building programs will be conducted to make sure that the activities of LACE reflect some of the main findings of the RSA andcan further stabilize the social situationespecially inrural Liberia. Safeguard Policies - Environment 32. It is estimated that the majority of the sub-projects will be for the rehabilitation of buildings, roads or other tangible assets. Environmental issues important to the Project are: (a) awareness- raising of beneficiary communities on possible environmental impact of sub-project activities; (b) discussion of environmental issues during sub-project design phase; (c) environmental impact study andagreementon appropriate mitigation measures; and(d) M&E. 33. The environmental category of the Project i s B due to the planned rehabilitation activities at the community level. The Project triggers the following safeguard policies: OP/BP/GP 4.01 on Environmental Assessment and OP/BP 4.12 on Involuntary Resettlement that sub-projects implemented by communities may generate, such as for example use of privately owned land for construction purposes. Under CEP I,an Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF) have been prepared by LACE. These documents include requirements for consultations, and appropriate measures to be taken to ensure that LACE will have the capacity to implement these frameworks effectively. The LACE O M has a chapter describing the environmental directives to be followed and proposed mitigation measures for sub- projects. Policy Exceptions and Readiness 34. There are no exceptions to Bank policies2. The Project meets the "readiness for implementation" criteria: (i) operation and procedures manuals define the content, scope, activities, implementationmodalities, fiduciary and monitoring and evaluation arrangementsfor the Project; and (ii) implementingagencyhasalreadybeenfunctioningformorethantwoyears. the Lessons learned and reflected in the Project design 35. An important lesson learned from the implementation of projects inpost-conflict countries is that a CDD project can only be properly designed if funding agencies and other stakeholders have a strong understanding of the root causes of conflict and the necessarypeace-making processes needed to ensure stability. The RSA and its recent update were a useful tool to promote that understanding. Another important lesson i s that the likelihood of success i s directly related to the simplicity of project design. The Project has been designed in the simplest manner possible (as discussed in Annexes 1 and 6). In order to be sustainable, community-based projects require a participatory process that ensures community involvement throughout the project cycle andbeyond. Moreover, the experience from CEP Iconfirms that CDD projects to be successful require: a) adequate support to communities (as provided by the CF in the case of Liberia); b) strong leadership at the level of the implementing agency (LACE inthe case of Liberia); and c) comprehensive implementation manuals. Paragraph48 below includes a requestfrom Managementthat the Boardgrant a partial waiver inrespectof one of the five conditionsapplicable underthe pre-arrears clearance grants frameworkwhich the Board approvedonJuly 9,2001 (Democratic Republicof Congo: Emergency Early Recovery Project, IDA Report No: P 7469ZR). 13 E. Implementation ArrangementsandFinancingPlan 36. The implementing agency for CEP I1will continue to be LACE. The Project implementation period will be of approximately four years, from September 2007 to June 2011. LACE i s an independent government agency which i s accountable to the President of the Republic of Liberia and i s governed by a nine-member Board of Directors with representatives of government ministries, civil society and development partners. The Board i s the governing and policy making body of the Agency and ensures that the Agency operates within the provisions of its mandate. The day to day business of LACE i s run by the Executive Director and his staff in accordance with the Operation Manualandthe Manual of Administrative, Accounting and FinancialProceduresof the Agency. All staff i s recruitedon a competitive basis. 37. LACE finances sub-projects of poor communities. The Agency does not implement community sub-projects, but works with communities or other implementing bodies; it assists community-based organizations to develop technical and managerial capabilities in all aspectsof sub- project activities; and it works closely with Government officials at the national and local level to ensure sub-project sustainability andconsistency with national and local sector policies and plans. 38. The proposed institutional arrangements are based on the first two years of operation of LACE and on best practices gleaned from other post-conflict countries. In CEP 11, LACE will be responsible for overall Project implementation, coordination, and M&E. LACE will work closely with local authorities. In particular, LACE will work with County Superintendents and County Support Teams, District Commissioners, the District Development Committees, and local sectoral officers to: a) inform them on procedures and plans to support communities; b) consult with them on the selection of communities; c) involve them inkey phases of sub-project selection, implementation and supervision, while recognizingthat the power to identify andimplement sub-projects remain with communities; d) verify that the selection i s consistent with local government plans, if any. Detailed guidelines on the involvement of local authorities will be prepared by LACE during the first year of Project implementation. In addition to the involvement of local authorities, LACE will obtain the approval from line ministries of the proposed sub-projects, and their commitment to support recurrent costs. Duringappraisal, LACE has discussed with the Ministry of Education (MoE) and the Ministry of Health (MoH) ways to improve their on-going collaboration, and in particular on how to regulate their relationship in areas such as design of facilities, flow of information, endorsement of proposed facilities, Monitoring and Evaluation, commitment to staffing and recurrent costs. While local authorities and line ministries have an important supporting role, the ultimate fiduciary and legal responsibility of CEP I1rests with LACE andthe communities. 39. Funds will be channeled directly from LACE to the beneficiary communities. The Operation Manual (OM), approved by LACE'S Board and revised and approved by the Bank, details this process and includes a sample sub-grant agreement. The PMC of the beneficiary villages or communities will receive the funds from the IDA designated account; funds will be deposited into the PMCs' bank accounts opened specifically for this purpose. F. Risks 40. Liberia remains in an emergency situation with a highly volatile social, political and security situation (both nationally and regionally). The recurrence of violence by specific sectors of society cannot be ruled out, especially if they perceive that they are not benefiting from the peace dividend, or that their situation i s made worst by reforms and institutional changes. By providing direct and indirect economic opportunities at the local level, the Project will contribute to addressing these challenges and stabilizing the overall social situation inLiberia. 14 41. The Government of Liberia has made a commitment to decentralize decision-making and resource allocation to local government, both at the county and district levels, thereby empowering them to take control of local issues and development processes. Moreover, the Government with the support of UNDPhas prepared a Local Government Capacity Assessment, with the aimof identifying major capacity gaps at the level of local government and of providing strategic guidance to the decentralization process. However, the pace of Government action on decentralization is uncertain and will affect the use of resources under CEP 11. To mitigate this risk, the Project capitalizes on the experience of the UNDP supported District Development Committees Iinitiative, and of County Support Teams under a UNproject administered by UNDP. Moreover, CEP I1will work in synergy and close collaboration with the "Institutional Support and Local Governance" component of the proposed EC County Development Program. However, in the medium-term a clear overall framework for decentralization i s requiredso as to make this and other projects fully successful. 42. Other factors that are critical to the success of the Project include: 0 Quick rebuilding of social capital in war devastated communities should be carried out in parallel with any infrastructure investment; 0 Supporting the creation of an enabling environment that strengthens local government structures as they emerge, and providing them with the necessary resources allows them to gradually become key interlocutors infostering and supporting community-driven initiatives; 0 Community facilitation process needs to focus on training beneficiaries to properly maintain infrastructure while also keeping options open to put into place cost recovery schemes (e.g. collection of user fees for water sub-projects); 0 Beneficiary contributions need to be real, but not necessarily in cash, to ensure that communities are fully on board andcommitted to the sub-projects; 0 Intermediaries working towards producingcommunity-level results must systematically do so in a manner that strengthens the capacities of local administration at the county and district levels and enhances prospects for sustainability of public investments and services; 0 CEP I1as other emergency projects requires strong implementation support and supervision by donors, especially inthe launching phase (see Annex 9 for the supervision strategy). 43. Due to the lack of financing for recurrent costs (staff inparticular) and of trained staff (health workers and teachers in particular), the impact of the investment may be reduced. LACE will work with central authorities to make sure sub-projects get the necessary level of approval and support. LACE will facilitate coordination between local authorities and central authorities to ensure that sub- projects are part of a balanced approach between community needs and overall sector planning priorities. Moreover, as a measure to ensure consistency with Bank programs and with sector plans, the CEP I1has been designed and will be implemented in coordination with the Liberia Health System Reconstruction Project and the Liberia Primary Education Recovery Program Fast Track Initiative. 44. Post-conflict countries usually experience a surge inthe price of construction materials which can affect the average cost of sub-projects; this is likely to cause delays in implementation and affect the quality of construction. To a large extent this has already happened in Liberia, and will continue to impact project implementation because of the significant number of new infrastructure projects financed by the donor community. LACE will monitor price increases and adapt Project design, targets and implementation arrangements without adversely affecting quality. LACE will continue working with sector ministries (Health, Education, Public works in particular) to mitigate these factors while preserving quality of infrastructure. 15 45. The CEP 11i s designed as a scalable project, financed by IDA US$5 million and by EC co- financing of 8.5 million. Inthe unlikely event that EC co-financing i s not made available the Project as designed will still be viable, although the implementation period will be muchreduced. G. Terms and Conditions Legal Basisfor Financial Assistanceto Countries in Non-Accrual Status 46. Beginning with the IDA12 Replenishment, IDA donor funds may be used for pre-arrears clearance grants in the context of assistance to post-conflict countries with large and protracted arrears, where the needs are great and alternative sources of financing are inadequate. A framework for providing pre-arrears clearance grants was approved by the Board in July 20013.. It outlined the following five conditions, four of which have been met in Liberia's case, and one of which has only been partially met: (a) the proposed grant has been designed in accordance with OP 2.30; (b) early performance i s promising as evidenced by the recipient country having taken convincing steps towards social and economic recovery; (c) arrears to IBRD and/or IDA are large and protracted and cannot be easily or quickly cleared using domestic resources; (d) a concerted international effort to provide positive financial flows andother assistancei s underway, and other creditors have agreed not to make net withdrawals of financial resources from the country; and (e) alternative sources of financing for post-conflict recovery are inadequate or available only on inappropriate terms. 47. With respect to condition (a), the objectives, terms and conditions of the proposed operation are consistent with OP 2.30, the Guidelines on Operational Development and Conflict. With respect to condition (b), Liberia has taken convincing steps towards social and economic recovery as evidenced by the Government's track record of good policy performance over the last 15 months, which has been supported by the Governance and Economic Management Assistance Program (GEMAP), and by the IMF's staff monitored program (SMP) which meets the standard of an upper credit tranche Fund arrangement, as discussedby the Fundsboard in February 2007. With respect to condition (c), Liberiahas been in non-accrual since 1987, and total arrears to IBRD and IDA amount to nearly $460 million, which compares to a GDP of approximately $530 million. With respect to condition (d), a concerted effort i s being made to provide positive financial flows and other assistance to the Government as it tackles the challenges left behind by the war; in this regard new pledges of donor support were made at the Liberia Partners' Forum which was co-hosted by the Bank, the UN, the EC, the IMF, the AfDB, and the U.S. in February 2007. The Bank, the IMF and the AfDB have also been working closely with partners to forge a comprehensive solution to clear Liberia's arrears. Inthe meantime, however, the Liberian government has been making"good faith' payments to the IMF,the AfDB and the Bank as part of their arrears clearance strategy. With regard to condition (e), the immense reconstruction needs facing Liberia overwhelm the financing that is currently available from donors or domestic resources. The use of pre-arrearsclearance grants was providedfor inparagraphs38 of the IDA12 Replenishmentreport (IDNR98-195). The IDA12Resolutionspecifies that suchgrants shouldbe used "under a framework approved by the Executive Directors." Such a framework was detailed in paragraphs 24 and 25 of the project documentationfor the first IDA pre-arrearsclearance grant to the DemocraticRepublic of Congo: Emergency EarlyRecoveryProject", IDA Report No: P 7469 ZR. The framework andthe grant to DRC were approvedon July 9, 2001. In turn, these provisions were carried over in Annex 2 to IDA's Thirteenth Replenishment Resolutionandinparagraph9 of Annex 1to IDA'sFourteenthReplenishmentResolution. 16 Waiver of Compliance with Framework Condition(d) 48. InOctober 2006, ExecutiveDirectors approved a waiver of the conditionrelatingto "good faith" payments inorder to make additional financing available for the Emergency Infrastructure Project. Inlight of Liberia's urgent reconstructionneeds, the Government's track record of good policy performance, and the fact that the delay inarrears clearance i s unrelated to the efforts of the Liberian Government, Management requeststhat the Board grant a similar waiver inthis instance to allow the Community Empowerment Project to continue without interruption. Other 49. For each category of the Financing Agreement (FA) the disbursement percentage will be 100%. There areno conditions of effectiveness attachedto this Project. 17 Annex 1:DetailedDescription of Project Components General Buildingon progress made under the current CEP operation, the Project Development Objective for CEP I1 will be the following: As part of the government response to the social and economic emergency in Liberia, the Project will improve poor rural communities' access to basic services and economic opportunities through a Community Driven Development approach, by investing in community sub-projects and incapacity buildingat the community and local government levels. The main target population i s poor communities, mostly located in rural and particularly in remote areas o f the country. Special considerations will be given to vulnerable and disadvantaged groups, such as female-headed households, unemployed youth, the disabled, internally displaced persons and other war-affected victims. Project Components The Project will be implemented from September 1, 2007 to June 30, 2011. It will include three components: (1) a community-driven program; (2) a capacity building program; and (3) project management. Component 1 Community-driven program (Estimated cost: US$4.0 million or US$ 13.0 million - iftheECfinancing is secured4). LACE will provide sub-grants to beneficiary communities to finance sub-projects identified, implemented and managed by the beneficiary communities themselves, in accordance with procedures and processes described in LACE'S Operation Manual (OM). It is estimated that the Project will finance at least 80 sub-projects (at an average cost of $50,000), or at least 260 sub- projects if the EC financing i s secured. Eligible community sub-projects In principle, the types of sub-projects and activities that can be financed by LACE should be quite open, as long as those sub-projects and activities contribute to the improvement of the welfare of poor beneficiary communities, as long as they have been selected by the beneficiaries themselves followinga participatory approach and as long as they meet the eligibility criteria. However, ina post conflict situation the rehabilitationor reconstruction of social and economic infrastructurei s a priority of the population, particularly the displaced persons and refugees returning to their towns and villages. Therefore, the emphasis should be on social infrastructure (such as primary and basic education, primary health, and water and sanitation) and economic infrastructure, in particular to support the agricultural sector (such as rural transport, markets and storage facilities). The appendix to this annex provides more information on the types and contents of eligible sub-projects, as well as on the sub-projects, activities and expenditures that cannot be financed by the CEP I1 ("negative list"). Excludes 10%community contributions estimatedat US$0.4millionor US$1.3 millionif EC financing is secured. 18 Eligible beneficiary communities Beneficiary communities will be community-based organizations (CBO), defined as well-organized groups of people living inclose proximity to each other and with a common bond related to a locality (such as a town, clan or chiefdom). Inorder to be eligible for LACE financing, a CBO must: (1) have legal status, so that it may enter into a sub-grant agreement with LACE, open and manage a bank account and enter into contracts with private sector operators, as required; (2) have elected a project management committee or PMC that will act on behalf of the community; (3) demonstrate, to the satisfaction of LACE, that all community members have the opportunity to participate fully at all stages of sub-project cycle; and (4) demonstrate, to the satisfaction of LACE, that its Project Management Committee (PMC) will be capable to procure works, goods and services, to keep simple accounts, and generally to manage sub-project implementation. Thecommunity sub-project cycle Communities will be responsible for identifying, through a participatory process, sub-projects that address priority problems of the community and for which there i s evidence of wide-spread support within the community. Community facilitators (CF), financed under the capacity buildingcomponent, will assist the communities to identify and to implement sub-projects, while ensuring that the process i s participatory at the community-level. Once LACE approves sub-projects submitted by communities, LACE will enter into sub-grant agreements with the CBOs representing the communities. The financing required to undertake a sub- project i s based on the cost of that sub-project and, therefore, varies from sub-project to sub-project. According to the Financing Agreement (FA) and the Operation Manual (OM), the maximumfunding that a community can receive from LACE over a three-year period i s US$75,000, regardless of the size and/or capacity of the community. That amount of up to US$75,000 can be used to finance several sub-projects under separate sub-grants from LACE. For each sub-project, communities must contribute at least 10% of the financing provided by LACE to the community. The community contribution may be in cash, in kind (e.g. the supply of materials such as sand and bricks for the construction of a school), or in the form of labor (such as the clearing of site for a building or the digging of a well or trenches for a rural water supply). The community contribution should be provided up-front, before the sub-project launch and before the beginning of construction (obviously, with the exception of the labor to be provided duringthe constructionitself). The implementation of the sub-projects i s the responsibility of the CBO, assisted by the CF. It i s managed by the PMC who decides whether the sub-projects will be undertaken by force account or by contractors. However, all sub-projects costing US$15,000 or more and sub-projects that are technologically complex must be executed by individual contractors or enterprises recruited competitively. Upon completion of the sub-projects, the communities will also be responsible for their operation andmaintenance. Component 2 Capacity-buildingprogram (Estimated cost: US$0.4 million or US$ 1.3 million if - the EC financing i s secured) The major thrust of this component i s to build capacity among community members and other stakeholders involved in the various aspects of sub-project identification, design and implementation that will ensure the quality and sustainability of sub-projects. This component will finance: (i) capacity buildingactivities for communities and (ii) buildingactivities for counties. capacity 19 Capacity building activitiesfor communities Based on the recommendations of the rapid social assessment (RSA) and its update, this component i s to undertake activities that promote building of social capital in the aftermath of conflict, including community mobilization and increased cooperation and trust within the community. It will enhance the capacity of communities to planand manage their own development. Communities will learn by doing, receiving training and guidance by LACE staff and community facilitators (CF) as they plan, implement and maintain their sub-projects. They will also participate in training modules focusing on sub-project management, procurement and financial management, environmentalappraisal, etc. Community Facilitators (CF) are NGOs, enterprises or individuals, who will be recruited and trained by LACE to assist communities with information and technical know-how and to help them to assess their condition and to get organized to identify, prepare and execute sub-projects. The purpose of the CFs contribution i s to ensure the quality of the social mobilizatiodfacilitation processes. CFs will not interfere with decision-making process of community members and decision-making powers of the PMC. The Manual of Administrative, Accounting and Financial Procedures (MAAFP) includes a model of an output-based, contract-for-services for community facilitators. The component will also finance the recruitment by LACE of engineering consultants. Engineering consultants are consulting firms or individuals with expertise in buildings, roads, bridges and water supply that will supervise all technical aspects of sub-projects including procurement, in order to ensure the integrity of the bidding process and the technical quality of the sub-projects. The MAAFP includes a model of a contract-for-services for engineering consultants. Capacity building activitiesfor counties Buildingon the approach taken during CEP I,the Project will develop local capacity for collective action by enhancing the involvement of local government, at the district and county levels, in the community development process implemented by LACE. It will support collaboration between local government and communities to work towards a participatory planningand implementation approach inlocal development. The component will finance capacity buildingfor counties. Ifthe EC financing i s secured, the component may finance grant pilots to counties for the implementation of CDD projects. If required, in collaboration with other donors, in particular with the EC, this component may also finance TA to support the Government on policy issuesrelated to local governance. The overall design and details of the capacity buildingactivities for counties need to be developed. LACE, or a consultant recruited by LACE, should prepare the guidelines for a greater involvement of local authorities, before June 30,2008. Component 3 Project management (Estimated cost: US$ 0.6 million or US$ 1.95 million if EC - financing i s secured) Effective project management will be critical to the success of the Project and to ensure the achievement of sustainable outcomes. LACE i s an ongoing organization with about two-year's experience. It has a satisfactory track record, but needs to be strengthened in a number of areas. To handle the scaling up of activities by a factor of three, it will require additional staff, vehicles and equipment; also, there i s need for additional field offices so that LACE can remain close to its clients. 20 The component will finance: a) LACE staffingcosts (both professional and support staff). b) Consultants recruited to complement LACE staff (Le. engineering consultant). c) LACE operating expenses, including office space rental and security guard service; utilities and supplies; bank charges; communications; vehicle operation, maintenance and insurance; buildingandequipment maintenance; andin-country travel and supervision. d) Staff training. e) Purchaseof vehicles, office equipment andpower generators. f) Small civil works for improvementof office facilities andthe work environment. g) Financial, procurement, management andtechnical audits. h) Sample-basedsub-project assessment-beneficiary assessment. i)Any other consultingservices (for M& E,the mid-termreview, theprojectcompletion report, etc.). Appendix to Annex 1- Types of sub-projects Education LACE finances the rehabilitation/ construction of primary schools that are a community priority and that address the issues of access, quality and equity in the provision of basic education (pre-grade to grade 6) and other educational programs. Community school sub-projects must be endorsed by the Ministryof Educationandmustuse architectural designs approvedby the MoE. The following is a purely indicative list (and not an exhaustive one) of the things that LACE could finance: The rehabilitation and construction of classrooms, headmasteroffices, teacher houses, etc for primary schools; The construction of new primary schools in areas where such new constructionis justified, in accordancewith the school mappingexercise; Furniture for rehabilitatedandnew classrooms; Dormitory facilities for rural, remote primary schools and for those with a policy favourable to orphans and vulnerable children (OVC); Textbooks and learning materials; In-service teacher training; Provisionof lighting(gridor solar); Water and sanitation facilities for primary schools; Vocational training for youth to provide them with a trade, such as carpentry, masonry, tailoring, etc.; Functional literacy training, particularly for women; Agricultural activities at the school; The training of communities, parent / teachers associations or school management committees to buildtheir capacity to manage and maintainprimary schools. 21 PrimaryHealth LACE finances sub-projects for primary health care. Community health sub-projects must be endorsed by the Ministry of Health. Recurrent costs (including salaries and availability of drugs) and service delivery must be assuredby the Ministryof Health, or by an NGOor by the community itself. The following i s a purely indicative list (and not an exhaustive one) of the things that LACE could finance: The construction of healthposts; The reconstruction / rehabilitation of existing health centers, together with maternity wards, out-patients and maternal childhealthblocks; Incineratorsfor medical waste; Staff housesfor medical personnel; Basic furniture and equipment for rehabilitatedexpanded health centers, including electrification (grid or solar); Water and sanitation facilities for healthposts andhealthcenters; Initial stock of drugs for a community pharmacy - revolving drug fund; Training of trainers and training for traditional birthattendants (TBA) and community health workers and others (inter alia: home based care, nutrition, etc); Strengthening the capacity of Health Center Management Committees. Community Water andSanitation LACE finances sub-projects to increase availability and accessibility to safe, adequate and reliable water supply, and to contribute to the provision of appropriate sanitation services to poor and disadvantaged people in Liberia. Appropriate technologies for the local conditions should be used, andcommunity members shouldbe provided information on technology options. The following is a purely indicative list (and not an exhaustive one) of the things that LACE could finance: Construction, installation or rehabilitation of protected wells andboreholes with handpumps; Rehabilitation or extension of communal piped water supplies by gravity with standpipes; Constructionof Ventilated Improved Pit (VIP) latrines; Solid or hazardouswaste disposal; Garbage collection; Waste recycling activities; Activities which improve drainage; and Training of water and sanitation committees. 22 Economic Infrastructure and Activities Rural transport LACE finances the rehabilitation of existing infrastructure and some construction of new community transport infrastructure to improve access by rural households to economic and social services. The objective i s to ensure "basic ac~ess"~,at a reasonable cost, through small infrastructure that the majority of the population (particularly women) actually uses and that the beneficiary community will be capable of maintaining. Therefore, the infrastructure should include more than community roads6: e.g. tracks, trails, footpaths, small bridges including footbridges, culverts and causeways. With respect to community roads, technicalrequirements shouldbe simple indesign and the mode of execution should be labor intensive. "Low cost options" will be preferred, which might include spot7 improvements (as opposed to full rehabilitation), small bridges, culverts and causeways. Any parts of the works or entire works which are technologically more complex will be executed by small-scale andmedium-scale contractors recruitedby the communities. This executionmodality would have the advantage of developing the local contracting industry. Markets and storagefacilities LACEfinances: The construction or rehabilitation of markets; The construction or rehabilitationof storage facilities; The training of members of market or storage facilities management committees. Economic opportunities LACE will support the access of CBOs to economic opportunities that would increase the income of CBOs members, their families, and the community at large. Activities will include community farming, fishing activities; and agro-processing activities. They will be financed by matching grants in the order of 85% of the total investment, and the remaining 15% will be provided in cash by the CBOs. Since this is a new area of activity for LACE, some adaptation to the current OM maybe needed. Sub-projects, activities and expenditures that cannot be financed by the Community EmpowermentProject - CEP I1("negative list") 1. The sub-projects and activities that do not contribute to the improvement of the welfare of poor beneficiary communities. 2. The sub-projects and activities that are not priorities of the community development plan or action plan prepared by the beneficiary community following a participatory approach. Such as access to basic services (health, education, clean water), to areas of production, to markets, and to assable feeder roads. `These are the roads and structures which currently fall outside of the designated responsibility o f central or local government and become, by default, the responsibility of communities. Such as repairs to only the parts of the road (usuallythe most damaged ones) that must absolutely be fixed in order to ensurebasic access, at least during the dry season. 23 3. The sub-projects and activities that do not meet agreed-upon eligibility criteria regarding the CBO, the maximum financing per CBO and the required counterpart contribution from the CBO. 4. The sub-projects, activities or items that are already financed, or scheduled to be financed, within the framework of other programs, by other agencies or development partners. 5. The sub-projects or activities that are too difficult to manage in the local environment (too sophisticated, or requiring lengthy preparatory studies, etc.). 6. The sub-projects or activities which cannot be implemented, managed and maintainedby the beneficiary communities and/or the government technical departments. 7. The sub-projects or activities that are not consistent with the government development plans or sectoral strategies and/or that are not endorsed by the respective sector Ministry or local authority. 8. The sub-projects or activities that have a negative impact on the environment. 9. Productive agricultural or commercial sub-projects or activities for the benefit of a few individuals, as opposed to sub-projects benefitingall community members. 10. The sub-projects or activities that cannot be completed inless than 12months. 11. The sub-projects or activities dealing with the marketing or use in any form of alcoholic beverages, tobacco, drugs, asbestos, pesticides, luxury items, military items and equipment, and other potentially dangerous materials and equipment. 12. The sub-projects and activities that are contrary to prevailing moral principles or ethics. 13. The purchase of or compensation for land, or the constructionor rehabilitation of buildingsor any other infrastructureon landthat do not belongto the community. 14. The purchase of automobile vehicles, motorcycles, tractors, trailers, etc. and related equipment and accessories. 15. The constructionor rehabilitation of churches, chapels, temples or mosques and any religious activity (on the other hand, schools and health centers operated by faith-based organizations are eligible). 16. The construction or rehabilitation of administrative buildings (other than court banies and small security posts in rural areas), and the purchase of office equipment, furniture and supplies for the administrative services of the state, counties and districts. 17. The construction or rehabilitation of buildings for political parties and trade unions, and any political or trade union activity. 18. The constructionor rehabilitation of buildingsfor cooperatives and associations. 19. Salaries of civil servants and administrative personnel of the state, counties and districts. 20. Activities that employ children below the age of 16years. 21. Activities that exploit anindividual or individuals. 22. International travel. 23. Recurrent operating expenditures. 24 Annex 2: Results Framework and Monitoring A. ResultsFramework PDO Use of OutcomeInformation OutcomeIndicators As part of the government 1. All supportedcommunities havebenefitedfrom social Gaugewhether Project i s effective in responseto the social and mobilization and at least 90% of sub-projects undertaken mobilizing communities. economic emergency in reflect the emergencypriorities of targetedcommunities and Gaugewhether sub-projects reflect community Liberia, the Project will beneficiaries, and are implemented incollaboration with local priorities. improvepoor rural authorities,. Case study for Bankwork in other post- communities' access to 2. Increasedaccess to basic services inparticular inhealth and conflict countries. basic services and education, by end of Project implementation. MTRBeneficiary Assessment economic opportunities Inparticular in: througha Community A - primary education, measuredby the attendancerate Driven Development of primary schools one year after completion (target of approach, by investing in at least 90% of the planned attendance); community sub-projects B - health, measured by the population of the and incapacity building catchment area of the facilities (target of at least 7,500 at the community and people for health clinic). local government levels. Intermediate ResultsIndicatorsfor EachComponent Use of ResultsMonitoring Results ComponentOne: 3. PMCs are inclusive, well-representative, and well-trained; Communities use/continue to usePMCs/CDD Community-driven 4. Completionof at least 80 sub-projects by end of project processfor local decision making outside of program implementation (or completion of at least 260 sub-projects if EC LACE activities. financing i s secured). GaugeLACE'Sefficiency inachieving results on the ground. Increase the engagement between beneficiary communities and local authorities. Scaleup support if CDD approach i s having positiveimpact on social development outcomes. ComponentTwo: 5. At least 400 PMC members are successfully trained every year Develop self-reliance to access resources, Capacity-building insub-project management(simplified financialandprocurement advocate for needs, interact with national and program management, reporting. monitoring and evaluation, etc.) (or 650 if local authorities. co-financing i s secured). ComponentThree: 6. Project management expenses, as defined in Chapter V of the Measuresthe efficiency of LACE operation. Project Management existing Administrative Manual of LACE, are less than 13% of total budgeted annualexpenditures. Under intermediated results, Component Two, the Bank, Government representatives and LACE also discussedthe following indicator: At least 30 county/district officials are successfully trained every year incommunity participation and social mobilization (or 90 if co- financing i s secured). It was decided that untilnew procedures on LACE activities with Local authorities are finalized, this indicator will not bepart of the Financing agreement, but that LACEwill monitor its progress. 25 B. Arrangementsfor ResultsMonitoring Base- Yr 1 Yr 2 Yr 3 Yr 4 Frequency and data line collection Projectoutcome indicators At least 90% of sub-projects Midtermand endof reflect Beneficiary's priorities 90% 90% Project - Beneficiary assessments Access to basic services A. primaryeducation, measured 90% 90% 90% Annual - Reports by the attendancerate of primary schools one year after completion Access to basic services B.Health, measuredby the 90% 90% 90% Annual - Reports population of the catchment area of the facilities Resultsindicatorsfor components Completion of sub-projects * Annual - Reports PMCs are inclusive, well- Midtermand endof representative and well-trained 90% Iassessments Number of PMC members 400 I successfully trained yearly * ** (650) (650) (650) Annual -Reports Number of County/district 30 (90) (90) (90) Annual - Reports officials successfully trained every year I II I I I Project management expenses as a % o f total budgeted annual <13 I 4 3 <13 Annual-Reports expenditures (1) 45 studentsper classroom for primary schools (2) 7,500 people for healthclinic ***Figures inparentheses assume that the EC co-financing is secured See footnote to the Results Framework 26 Annex 3: Summary of EstimatedProjectCosts Project Cost By Component Total Project Costs * ' le EC is currently processing a financing request in the amount o f 8.5 million, equivalent of US$ 11.25 million (exchange rate o f 1.32 US$ for l) to co-finance the CEP I1through a Contribution Agreement to be finalized as soon as a final decision by the EC i s made (expected before end o f July 2007). Once approved, the EC co-financing, will complement and further strengthen the objectives of the Project. **Excludes the community contributions estimated to be US$0.4million or US$1.3 million if EC financing is secured. 27 Annex 4: Financial Management and Disbursement Arrangements Introduction The financial management assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on 3 November 2005. The objective of the assessment was to determine whether the implementing entities have acceptable financial management arrangements, which will ensure that: (1) the funds are used only for the intended purposes in an efficient and economical way; (2) periodic financial reports are prepared in an accurate, reliable andtimely manner; (3) and the entities' assets are safeguarded. The project i s a follow-on to an ongoing project (CEP I, managed by LACE). FM arrangements will therefore mirror those of the ongoing project, and will be handled directly by the LACE, which i s already established, and will follow existing procedures and practices as documented in LACE'S MAAFP, OM and FAPM. Overview of Program andImplementationArrangements The development objective of the Project i s to improve poor rural communities' access to basic services and economic opportunities through a Community Driven Development approach, by investing incommunity. LACE will be in charge of overall project implementation, coordination, and M&E. LACE was established inJuly 2004 by Act of Parliament, which sets out its powers, duties, and responsibilities. The project is a CDD type, where communities implement sub-projects that they have themselves selected. The roles and responsibilities of implementing partners are spelled out in detail in the Implementation Arrangements (Annex 6). Country Accountability Issues Due to the extended conflict situation in the country which led to disengagement, the Bank has not carried out a Country Financial Accountability Assessment (CFAA) or similar FM related ESW in Liberia in recent years. According to the Interim Strategy Note, a Public Expenditure Management and Financial Accountability Review (PEMFAR) is being lined up, and expected to be conducted within the next two years. In the meantime, country knowledge i s limited, based solely on project implementation experience, which itself i s still inits infancy. What i s clear however i s that Liberiai s emerging from 15 years of civil war. Both physical andbureaucratic infrastructure was decimated by the war, including an exodus of most skilled personnel. Thus Human Capital in the area of FM is decidedly short, affecting both the private and public sectors. Capacity building i s therefore a significant partof most Bank operations commissioned since the re-engagement. The risk analysis and mitigation measures are limited to the risks within the project's control. 28 Summaryof RiskAnalysis Risk RiskRating: RiskMitigationMeasureRemarks OverallInherentRisks: High Reasons explained under country issues above. ControlRisk: ImplementingEntities: a) LACE'SFMsystems may not be L a) The existing financial and internal adequatefor the implementationof control procedures have been up-dated the scaled-up project. to reflect the complexities of the scaled- upproject. The up-dated FAPMhas be reviewed and approved by the Bank. b) Localauthorities/County M b) LACE will support capacity building Support Teams are not able to of local authorities by providing some participate inthe development resourcesfor training and supervision. process generatedby LACE CEP I1i s designed as ajoint effort with activities, becauseof lack of the EC County Development Program personnel, weak mandate, and lack which will provide support to local of resources. authorities. Flow of Funds c) Poor record keepingby S c) Continuing assistancewill be implementing partners provided to PMCs, andother (decentralized levels, NGOs, implementing partners insimplified CBOs communities etc). Some accounting records and other could have very limited documentation. experience. d) Delays insubmission of L d) The experience gained with the past withdrawal applications (WA). operation will reduce this risk.LACE has submitted 20 WA, almost once a month. The Bank will monitor this activity and provide necessary assistance and advice. e) Riskof misapplicationof project M e) LACEwill institutestrict supervision funds by beneficiaries and andmonitoring of sub-project implementing partners. implementation andensure adequate financial controls to minimize this risk. lnternalAudit f> The Internal Audit (IA) may lack M f) The Project will continue support of support to implement procedures the IA programs and procedures and and audit programs, in a timely insist on maintaining appropriate manner, for effective operations. staffing levels. ExternalAudit M g) Very few qualified firms are g) To ensure timely submission of the available to carry out external audit report, the selection of 29 audits independent auditors will be completed within an agreed time frame after effectiveness. Overall Control Risk S h) Due to the relative success of the ongoing project in mitigating the identified risks, residual risk is I considered moderate. Strengths and Weaknesses Strengths LACE i s already well established and experienced in the management of similar activities from successful implementation of CEP I.The FM staff of LACE i s already managing a Bank financed project, and the prior experience will come in handy. Use of LACE will also ensure the speedy and timely implementation of sub-projects. The LACE has established and maintained, at all times, appropriate financial management systems and practices that have met the World Bank FM requirements. Weaknesses As in other post conflict countries, the overall fiduciary environment in general in Liberia is very weak. Successful implementation of this project will require ownership and active support from Governmental authorities. FMStaffing for the Project The LACE finance unit i s headedby a Finance Director (FD). The FDi s a qualified accountant with extensive project financial management experience. He i s assistedby two accounts officers. The job descriptions of the assistants ensure the presence of effective internal controls and avoid duplication of functions. The FD i s responsible for the Project's day to day financial management and ensures that resources provided for project activities are managed for the benefit of the Project, including keeping adequate books and records, recording transactions correctly and ensuring that the Interim UnauditedFinancialReports (IFRs) reflect the true financial affairs of the Project. Accounting The project will adopt the cash basis in the treatment and recording of all transactions. In addition, accounting will be based on standard double entry bookkeeping, and comply with international accounting standards. As regards procedures, the project will follow financial accounting procedures established for the on-going project and up-dated to reflect the complexities of the scaled-up project. These are encompassed in an MAAFP, O M and FAPM, which have been reviewed and accepted for the CEP I. Flow of FundsArrangements The implementation of activities will be carried out by communities and community-based organizations (CBOs), which are assisted by community facilitators (CFs). Disbursements and flow 30 of funds will be based on approved criteria and in accordance with guidelines contained in the updated MAAFP, OM, and FAPM. All approved sub-projects will be backed by sub-grant agreements between LACE and the CBO/community. The maximum financing for a CBO/community over a three-year period will be US$75,000. The sub-grant agreement includes the disbursements modalities for sub-projects. Funds will be released inthree installments. The first and second installments are each40% of the sub-grant amount, while the third installment i s 20% of the sub-grant amount, however LACE will have the discretion to vary these proportions. Subsequent installments will only be releasedif, at least, 75% of a previous installment has beenproperly accounted for and expenditures justified. Once the sub-project has been approved, the first advance will be released after the PMCKBO has opened up a bank account for LACE activities and the sub-grant agreement has been signed. Wire transfers will be made to CBO bank accounts (in rare instances by bank checks). Under no circumstances will cash transfers be permitted. AuditingArrangements Independent and qualified auditors, acceptable to the Bank, would be selectedto carry out the annual financial audit of the project. Within the flexibilities of the Bank's procurement requirement for competitive selection and economy, arrangements could be made to use LACE'Sexisting auditors. Each audit of the Financial Statements shall cover the period of one (1) fiscal year of the Recipient, except that the first audit may cover more than 12 months up to 18 months. All audits subsequent to the first shall cover a duration of 12 months period. The arrangements for the first audit of the new project mustbefinalized within six months of the project being declared effective. The project financial statements including movements in the designated account will be audited in accordance with International Standards of Auditing (ISA) and a single opinion will be issued to cover the project financial statements, Statement of Expenditures (SOEs) and the designated account, inaccordancewith the Bank's new audit policy. The externalauditor will also audit, on samplebasis, the accounts of sub-grantees to verify expenditures and compliance with the Operation Manual (OM) at the levelof the CBOs. The auditors' report and opinion in respect of the financial statements including the management letter would be furnishedto the World Bank within six months of the close of eachfiscal year. Reportingand Monitoring The project will prepare quarterly project interim un-audited financial reports or statements (IFRs) in the areas of finance, procurement, and physical project progress. The minimumIFR reports expected are: The Quarterly Financial Reports: which consists of a statement of cash receipts by source and expenditures by main expenditure classifications for the period and cumulatively; cash balances of the project; and supporting schedules comparing actual and budgeted expenditures by component and/or activity within component and explanations of any variances. These Reports include the amounts disbursed by LACE to CBOs under the sub- grants. Quarterly Physical Progress Report: includes narrative information and output indicators, linking financial information with physical progress and reports on issues that require attention. 31 Quarterly Procurement Management Report: this would consist of information on procurement for goods, works and consultants' services and compliance with agreed procurement methods. The report compares procurement performance against the agreed procurement plan as may be updated at the end of each quarter. The report should also provide any information on complaints by bidders, unsatisfactory performance by contractors and any contractual disputes. The LACE FM unit i s responsible for preparing the financial reports required as part of the interim un-audited financial reports. These financial reports will be submitted to the Bank within 45 days of the end of each quarter. The content and format of these reports will follow closely the agreed formats inuse for the ongoing project. DisbursementArrangements The proceeds of the grant would be disbursed over a 4 year period using transaction based disbursement. For a period of four (4) months after the closing date of the Grant, disbursements for expenditures incurredprior to the closing date will be allowed. The proceeds of the Grant will be allocated to the main categories of expenditure as in the following table: Allocation of Grant Proceeds ExpenditureCategory Amount in With EC Financing US$ million financing" Percentage 1. Goods 0.10 0.30 100% 2. Grants for Sub-projects 4.00 13.00 100% 3. Consultants' Services andTraining 0.40 1.20 100% 4. IncrementalOperating Costs 0.30 1.oo 100% 5. Unallocated 0.20 0.75 *TotalPro-iectCosts 5.00 16.25 The EC i s currently processing a financing request in the amount of 8.5 million, equivalent of US$ 11.25 million (exchange rate of 1.32 US$for le) to co-finance the CEP I1through a Contribution Agreement to be finalized as soon as a finaldecision by the EC is made (expectedbeforeend ofJuly 2007). Onceapproved, the EC co-financing, will complement and further strengthen the objectives of the Project. Use of Statement of Expenditures (SOEs) Disbursements for all expenditures would be against full documentation, except for the following items for which disbursements would be based on SOEs: (i) disbursement to CBOs under sub-grant agreements for sub-projects; (ii) expenditures under contracts and purchase orders below US$50,000 for goods and consulting firms, and (iii) expenditures of US$lO,OOO or less for individual consultant services, training and incremental costs. Supporting documentation for SOEs shall be retained by LACE for review by IDA missions and external auditors. DesignatedAccount (DA) The Recipientshall open a DesignatedAccount (DA)for the project. The Designated Account for the project funds will be maintained in US Dollars and opened at a commercial bank, under terms and conditions satisfactory to the IDA. The DA advance allocation will be specified in a Disbursement Letter to be issued separately. 32 Direct Payments The Bank may make payments direct to a third party (i.e. Consultants, Contractors and Suppliers) at the request of the recipient in a prescribed format to the Bankfor eligible expenditure incurred under the project. Special Commitments The Bank may make payments to a third party for eligible expenditure under Special Commitment entered into, in writing, at the recipient's request and on terms and conditions agreed between the Bankandthe recipient. Supervision Plan Duringproject implementation, intensive World Banksupervision will be required in order to ensure that the project financial management arrangements are in place and functioning at all times. The first supervision mission after effectiveness will take the form of an FM Specialist visiting LACE to ensure systems in place for the ongoing project sufficiently cover requirements of the new project. There will be a minimumof three supervision missions per year, complemented by desk reviews of quarterly IFRs. Conclusion of FMAssessment The financial management assessment established that the fiduciary riskfor the project i s substantial. Actions, which were started during CEP I,have been put in place to ensure that the identified risks are adequately mitigated. The engagement of a professionally qualified accountant as FD of LACE, the use of an established Accounting Manual to regulate financial activities and ensure adequate internal control, and the agreed auditing arrangements for the project will ensure that residual project risks are no higher than moderate. It is therefore the conclusion of the assessment that the proposed FMarrangementsfor the new project meet the Bank's minimumrequirements for FM. 33 Annex 5: Procurement Arrangements A. Introduction Due to the 14 years of civil wars in the country, the Legal and Institutional frameworks for Public procurement were completely destroyed and the Government of Liberia's (GoL) procurement policies, and practices lacked the basic principles of accountability, economy, efficiency and transparency. The United Nations and the World Bank carried out a Needs Assessment under their Economic Management Assistance Program for Liberia, which determined that Public Procurement Reform was critical to Liberia's Transition from war to recovery. Followingthis assessment, the GoL embarked on the Public Procurement Reform, starting with the enactment of the Public Procurement and Concessions Act (PPCC) in 2005. The Act is comprehensive and governs all government contracts, including those that may be financed out of fiscal resources, e.g. concessions and donor funds, and mandates the formation of Procurement Committee and Procuring Unit within each Procuring Entity. Currently, the functions of these two institutions are yet to be articulated and they are mostly nominal. In addition, there are no external control mechanisms that provide checks and balances within the Liberian procurement system. In reality, independent and credible procurement audits and internal quality controls are weak to non-existent. The Act also established the Public Procurement and Concessions Commission (PPCC), which i s charged with the implementation of Government's Public Procurement and Concessions Reform (PPCR). The reform i s being supported by the LiberiaPublic Procurement Reform Project (LICUS TF Grant # TF056754). B. General Procurement for goods, works and services would be carried out in accordance with: (i) World the Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised in October 2006; (ii)"Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised in October 2006; (iii) the Simplified Procurement Plan as permitted by the new OP8.0, and (iv) the provisions stipulated in the Financing Agreement or any other method accepted by the Bank. The general description of various items under different expenditure categories i s described below and in Table A. For each contract to be financed by the IDA Grant, the different procurement andconsultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the RecipientLACE and the Bank project team in LACE Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. For community activities, the community procurement planwill form part of the sub-project proposals. Procurement by the Community-basedOrganizations (CBOs)for Sub-projects. With the assistance and under the supervision of LACE, the CBOs are responsible for procurement for implementing their own community sub-projects. Procurement may include: contractingfor civil works (such as the rehabilitation or construction of a school or health post), purchasing goods (such as cement, other construction materials or school furniture), and selecting and recruiting consultants and temporary personnel that they may need to carry out their sub-projects. Because of the limit on the amount of sub-grants per CBO, the value of any contract should not normally exceed $75,000. However, in exceptional circumstances the Bank may waive this limit on case by case basis Procurement must be done in accordance with guidelines specified in Chapter VI11of the Operation Manual (OM), which also includes models of documents to be used. The guidelines are based on the World Bank simplified procedures for procurement by CBOs. In accordance with the OM, CBOs are required to indicate in their application for a subgrant, how they intend to implement the subproject, including the proposed procurement methods for the 34 subproject and to give detail breakdown of the items to be financed by the subgrant. (Annex I1of the OM). The CBO can start the procurement activities once it has received information from LACE that its application for a sub-grant has been approved. The Project Management Committee (PMC) appoints a Procurement Sub-committee, consisting of 4 members (2 men and 2 women) of the PMC, plus a representative of the Engineering Consultants (EC) and a representative of the community facilitator (CF). The responsibility of the Procurement Sub-committee is to ensure that the proper procurement procedures are being followed and that all members of the PMC but also all community members are consulted and/or being kept informed of all contracts, purchases, etc., in accordance with the internal regulations of the CBO. The internal regulations should spell out the financial limits and authority of the Procurement Sub-Committee and the thresholds above which decisions are to be made by the PMC, after consulting eventually the whole community. The Procurement Sub-committee deals with the planning of procurement (what needs to be purchased), the preparation of the necessary documentation, sending invitations to bid; opening and evaluating bids, making recommendations for awards and following up on works and the actual delivery of goods. In order to avoid conflicts of interest, a member of a Procurement Sub-committee who has an interest in the business of one of the bidders should not participate inbid evaluation and the recommendation for award. Procurement of Works and Goods When the estimated amount of the contract i s lower than US$500 or in case a competitive method cannot be used or i s not practical, direct contracting may be used. Direct contracting means that the CBO's representatives will select a reliable contractor or supplier familiar to them, agree on a price with hidher and award the contract for this negotiated price. When the estimated amount of the contract i s equal to or greater than US$500 but lower than US$15,000, local shopping should be used. Representatives of the implementing entity should send an invitation to bid to a minimumof three potential bidders that they have selected themselves. The contract has to be awarded to the lowest evaluated bidder on the basis of criteria mentioned in the invitation to bid. When the estimated amount of the contract i s equal to or greater than US$15,000, the works and goods should be procured through local bidding, using simplified procedures and documents dealing with advertising, the time allowed to submit bids, bidopening andevaluation, and contract award. Procurement of Services (Consultants) In most cases, services (consultants) will consist of the recruitment by the CBO of an individual consultant or engineering consulting firm for sub-project preparation and supervision. CBOs should prepare terms of reference clearly stating the scope of the assignments, and the requiredqualifications andexperience. Whenever feasible, CBOs are encouraged to invite proposals from a short list of potential candidates, and to select the persons or firms the most qualified and experienced for the assignments. However, CBOs should have great flexibility to recruit persons that they are familiar with and that they trust. When the estimated amount of the contract i s lower than US$5,000, direct contracting i s acceptable. When the estimated amount of the contract i s equal to or greater than US$5,000 equivalent, the CBO should consult at least three candidates. 35 Information of Community Members and the General Public Information on procurement processes and results, particularly awards of contracts, should be widely disseminated to the general public and to all the members of the community, through publication in the local media by LACE and circulars/announcements and postings at the District Offices by the CBO. Procurement of Civil Works by LACE': LACE works estimated to cost $500,000 and above shall be procuredusingICB procedures. Contracts below $500,000 but to cost $50,000 equivalent or more per contract may be procured under the National Competitive Bidding (NCB) process, using National Tender Documents satisfactory to the Bank. Contracts estimated to cost less than $50,000 equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank. Procurement of Goods by LACE: Goods to be procured under this Project will include vehicles, computers, office equipment, learning materials, etc.. Goods estimated to cost $200,000 equivalent or more per contract will be procured under International Competitive Bidding (ICB) procurement method. Limited International Bidding (LIB) procedures would be used only if there is limited number of suppliers. Contracts below $200,000 but to cost $30,000 equivalent or more per contract may be procured under the National Competitive Bidding process. Alternatively, vehicles and equipment costing less than $200,000 may be procured from UN Agencies (e.g. I N S O - Inter- Agency Procurement Services Office). Contracts estimated to cost less than $30,000 equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank.Direct contracting may also be used where necessary, subject to Banksprior approval. New Frameworkfor Rapid Response to Crises and Emergencies captured in OP 8.00:To facilitate project implementation and quick delivery of results, when appropriate, for procurement of works and goods no-objection will be given by the Bank to the application of the following: Using rapid procurement methods (direct contracting or simple shopping) for engaging the services of qualified UN Agenciedprograms, civil works contractors already mobilized and working inemergency area and/or suppliers of goods. Extending contracts issued under existing projects for similar activities by increasing their corresponding contract amounts. UsingNCB, acceleratedbiddingandstreamlined procedures andapplying Bank provisions on elimination of bid securities, as necessary. Standard Bidding Documents (SBDs) for Works and Goods: The use of World Bank Standard Biddingdocuments (SBDs) is mandatory for all ICBLIB procurement of works and goods.The Bank has reviewed the National SBDs for works and for goods and found that they are acceptable for use for World Bank-funded National Competitive Bidding (NCB) procurement subject to some modifications (e.g. references to domestic preference). Selection of Consultants by LACE: Consultancy services include project audits, monitoring and evaluation, capacity building, beneficiary assessment, community mobilization, project management * Atthe moment LACE does not envisage to procure civil works. Nevertheless, this section i s included in case some civil works are procured at a later stage under subsequent cofinancing arrangements. 36 and supervision. The project has been classified as a rapid response program where, in conjunction with the New Policy Framework, (OP 8.0), accelerated and Streamlined Procedures may apply to improve the flexibility, speed, and effectiveness of the Bank's emergency response. Therefore the use of a "pool of experts" or a list of "pre-selected' consulting f m s and/or individuals may be an appropriate method for supporting counterpart agencies at various steps of project execution. Such a method will remain consistent with QCBS, CQS, and/or the Selection of Individual Consultants. The selection process would be conducted by LACE for a series of assignments -- with standardTORs -- before credit effectiveness, and would be subject to Bank prior reviews, as usual. During project execution, the LACE would just have to pick-up experts or fims from the list, based on their availability to carry out the assignment. Remuneration and fees would be resolved, at time of pre- selection, and prescribed in a framework agreement - a sort of retainer contract. While this approach will expedite ad hoc recruitment of consultants for specific frequent assignments, it does not require any special waiver or clearance, because it will be fully consistent with the regular procedures. For all contracts to be awarded following QCBS, LCS and FBS, the Banks Standard Request for Proposals will be used. Table A: Thr Expenditure `Ontract Value Procurement ContractsSubjectto Prior Review/ Category Threshold Estimated Total Value Subject to lUS$) Method Prior Review(US$) Cornmunity Subprojects All Operation Manual Post Review C>500,000 ICB All contracts LACE 1` two contracts irrespective of value, Civil Works 50,000lOO,OOO C<50,000 Shopping Post Review c>200,000 ICB/LIB All contracts LACE 1` two contracts irrespective of value. All Goods 30,000lOO,OOO (firms) QCBS, CQ All contracts Qualifications of Proposed pool of consultants + TORs and Terms of employment If pool of experts method is not chosen, all contracts Qualifications of Proposed pool of consultants + TORs and Terms of LACE C10,000 Qualificationsof Proposedpool of (IndividuaIs) consultants +TORs and Terms of Tf- employment If pool of experts method is not chosen, all contracts c<10,000 7- Only TOR All contracts Training, To be based on Workshops, All values approved Annual Study Tours 37 Training, Workshopsand Study Tours: These will be carriedout on the basis of approved programs on a yearly basis. The programs will identify the general framework of training and similar activities for the year, includingthe nature and objectives of training and study tours, conferences, workshops, institutions where training/ study tours/ workshops would be conducted (selection of institutions and justification thereof), cost estimates and contents of the course, the number of participants, cost estimates, and the translation of the knowledge gained in the actual implementation of project components. Zncremental Operating Costs: This will cover project implementation-related expenditures such as in-country travel and per-diem, office supplies, office rentals, utilities, vehicle and equipment maintenance, communication costs, etc. They will be procured using the implementing agency's administrative procedures reviewedand found acceptable to the Association. C. Assessmentof the Agency's Capacity to ImplementProcurement The implementing Agency for the project i s the LACE with the overall responsibility o f (a) assuring steady progress of the procurement in accordance with an implementation schedule reviewed and approved by the World Bank; and (b) ensuring satisfactory implementation of procurement activities included in all contracts. A review of the capacity of LACE and of selected CBOs to handle and monitor procurement under the project was carried out as part of the broader assessment of the capacity in the country to implement Bank projects. The assessment was undertaken by Ferdinand Tsri Apronti of the Bank Procurement unit in FY05. At the time of this initial assessment, there was very little or no procurement capacity in LACE and the implementing CBOs. To mitigate procurement risks at the project implementation level, training in procurement was provided to staff of both LACE and the CBOs. Further, inresponseto the assessment, and to manage and provide guidance for procurement, LACE recruited a Procurement Specialist, with qualifications acceptable to IDA, to: (i) plan and process all procurement done centrally for all components; (ii) PMCs to prepare procurement assist plans for their respective sub-projects; (iii) the implementationof the procurement plans, and monitor (iv) train PMCs staff in the use of procurement procedures agreed under the Project, including compliance with World BankProcurement Guidelines. However, procurement capacity within LACE remains weak due to weak procurement planning, filing, and management, particularly for goods and services, where compliance with Bank non- objection procedures i s required. Further, during Mid-term review of CEP I(January 2007), the World Bank team found that there i s still scope for LACE to improve its capacity in procurement and contract management. One lesson learned from the implementation of CEP Ii s that there is a need to train several staff on procurement in order to ensure that the required expertise i s always available, even if there is a high staff turnover or an increase in the volume of business. That is why several LACE staff members participatedrecently in a procurement workshop in Monrovia. Another lesson learned i s that, in post- conflict countries, the implementing agency (LACE in the case of Liberia) must have, at least initially, a leadership role in training and assisting the CBOs and CFs incarrying out procurement for the sub-projects. As the CBOs and CFs become more experienced, LACE should be able to become less involved and spend more time on the monitoring of procurement done by CBOs with the assistanceof CFs. 38 Under CEP 11,in order to further strengthen LACE and mitigate the risks at CBOs level, LACE will recruit a new Procurement Specialist based in Monrovia. Focal officers in the CBOs with relevant qualifications and experience will be identified and trained in procurement under community participation strategies. Following this, to the extent that the Engineers to be based in the Monrovia HQ,Lofa, Bong and South East Region counties have divisional responsibilities for respective counties within Liberia, these Engineers shall also be trained in procurement and contract management, andtheir capacities built continually, inorder to offer additional procurement support to the CBOs within their areas of coverage. Procurement risk assessment is substantial D.ProcurementPlan The Recipient, at appraisal, developed a procurement plan for the first 6 months of project implementation. This plan covers goods and services to be procured centrally for project implementation and provides the basis for the procurement methods. The plan has been agreed on between the RecipientLACE and the Bank on April 17, 2007 and i s available at the LACE office in Monrovia and in the Ghana Country Office (see Tables B and C). The Procurement Plan will be updated in agreement with the Bank annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. For community activities, the procurement plans will form part of the sub-project proposals. E. FrequencyofProcurementSupervision The Bank will carry out supervision missions to conduct post review of contracts which are not subject to the above prior review requirements on a frequency of two or three supervision missions each year to visit the field and to canyout a post review of procurement actions, including activities carried by CBOs. The procurement post-reviews should cover at least 20% of contracts subject to post-review. In addition, post reviews of in-country training will be conducted from time to time to review the selection of institutions /facilitators / course contents of training andjustifications thereof, andcosts incurred. Procurement Audits: As part of the MTR scheduled on or about two years of the effective date, LACE will submit to the Bank a procurement audit report prepared by consultants selected in accordance with the guidelines for selection of consultants, based on TOR approved by the Bank. The audits would: (a) verify that the procurement and contractingprocedures and processes followed for the projects were in accordance with the Financing Agreement and the OM; (b) verify technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (c) review and comment on contract administration and management issues as dealt with by participating agencies; (d) review capacity of participating agencies in handling procurement efficiently; and (e) identify improvements in the procurement process in the light of any identified deficiencies. The RecipientLACE and IDA will review all thresholds stated in this section on an annual basis. Amendments may be agreed upon based on performance and actual values of procurement implemented. Amendments to the FA may be proposed accordingly. Procurement Management Reports: As part of the IFR, LACE and the beneficiary agencies will, every quarter, submit procurement managementreports to IDA.The procurement management report, as stated earlier, will consist of information on procurement of goods, works and consultants' services and compliance with agreed procurement methods. The report will compare procurement performance against the agreed procurement plan, as may be updated at the end of each quarter. The 39 report will also provide any information on complaints by bidders, unsatisfactory performance by contractors and any information on contractual disputes. F. Detailsofthe ProcurementArrangements InvolvingInternational Competition Table B: Goods and Works and non-consultingservices. (a) List of contract Package which will be procured following ICB method and direct contracting Estimated Procurement Method Bid- (yedno) Prior February. Table C: ConsultingServices. (a) List of ConsultingAssignments with short-list of internationalfirms. IRef I Contract Description 1 Cost I IReview by Bank 1Expected Proposals 1 No. I Estimated ($1 I Selection I Method (Prior/ Post) I Submissiondaie I Assessment (b) Short lists composedentirely of national consultants: Short lists of consultants for services estimated to cost less than 100,000 USDequivalents per contract may be composed entirely of nationalconsultants inaccordancewith the provisions of paragraph 2.7 of the Consultant Guidelines. 40 Annex 6: Implementationand Monitoring Arrangements General The Liberia Agency for Community Empowerment (LACE) will be responsible for overall project implementation, coordination and M&E. LACE i s a government agency that operates under its own procurement and disbursement procedures, and separate, transparent management and financial systems. LACE i s accountable to the President of the Republic. The Board of Directors i s the governing and policy makingbody of LACE. Inparticular, it approves the annual budget and work program of LACE, the Operation Manual (OM) and the Manual of Administrative, Accounting and Financial Procedures (MAAFP), and it appoints the Executive Director, the Deputy Executive Director (in charge of Administration) and the Finance Director. The Executive Director i s the chief executive officer of LACE. He/she i s responsible for the day to day runningof LACE, including the appointment of all other staff and the approval of sub-projects and sub-grants. The implementation and monitoring arrangements are detailed in the MAAFP which is an internal document of LACE and which has been approved by the Board and the Bank. It describes the organization of LACE, and spells out the procedures that LACE has to follow in its day-to-day operations regarding personnel management, preparation of work programs and budgets, appraisal and approval of community sub-projects, disbursement of funds, monitoring and evaluation, procurement, and accounting and audit. The OM, which should be widely available to communities and all interested parties in Liberia, deals in greater details with the identification and preparation of community sub-projects, the eligibility criteria for community beneficiaries and for community sub- projects, the terms and conditions of financing, the sub-grant agreements between LACE and the community-based organizations (CBOs), and the implementation of sub-projects by communities (including procurement, uses of funds, etc.). Geographical coverage of the CEP I1and allocation of resources The Liberia Agency for Community Empowerment can finance community sub-projects in all the counties and districts of Liberia. The Board of Directors of LACE, which approves annual work programs and budgets (AWP&B), has the mandate to ensure that funds are equitably distributed throughout the country. The Board will select the geographical areas (counties and districts) that should receive LACE'Sfinancing and indicate the amount of financing that could be allocated to each District, for inclusion in the AWP&B. Board's decisions on the areas of intervention can be based on the following elements (without any order of priority or importance): 41 Population and poverty considerations, including the assessedneeds of returning refugees and internally-displacedpersons (IDPs), ex-combatants and survivors in the countryside, as well as of any other disadvantaged group. Accessibility and security constraints, including the management, monitoring and logistics constraints for LACE itself. The dynamism and commitment of communities and the availability of suitable sub-projects preparedfollowing a participatory approach. The importance of facilitating the return and community reintegration process for displaced persons andex-combatants including their dependents. Responsesto emergencieswithin the scope of the Project. The existence and dynamism of community facilitators (local NGOs and other types of service providers) that can assist communities. The preferences of development partners in line with government development policies and plans. Annualwork programandbudget(AWP&B) The AWP&B i s the main tool available to LACE's management to plan and monitor LACE's activities. The AWP&B is prepared by LACE's Executive Director and staff, approved by the Board of Directors, and implemented and monitored by the Executive Director and hisher staff. Not later than November 30 of each year, LACE will submit to the Bank for its "no objection" the proposed AWP&B for the following year, approved by the Board. Once the Bank has given its no objection to the AWP&B, it will not have to approve the individual sub-grants to community-based organizations (CBOs), as long as they are within the maximumfundingof US$75,000 that a community can receive from LACEover a three-year period and are inline with all the others provisions of the OM. The AWP&B will be an important inputfor the preparation of the Procurement Plan that LACE must prepare and update (at intervals of not more than 12 months) and that must also be submitted to the Bank for "no objection". At the beginning of the annual process, the Board will select the counties and districts that should receive LACE financing. For each district, in consultation with local authorities, LACE management will make a list of the communities that could benefit from LACE financing. The AWP&B will list the various actions or steps that must be taken by LACE to implement the three components of the CEP and the related costs of those activities. The budget categories and allocations will be related to the disbursement categories in Section 4 of Schedule 2 to the FinancingAgreement Coordinationwith localauthoritiesandlineministries LACE will coordinate its activities with local authorities and line ministries. County and district officials will be associated on key phases of the selection of communities and sub-projects, to make sure that the selection of sub-projects i s consistent with local government plans. They will participate in the appraisal, launch and supervision of sub-projects. District officials typically have a good knowledge of the population and conditions intheir districts. They will help beneficiary communities obtain legal status through the issuance of certificates of registration. The district representative participating inthe field appraisal will sign the field appraisal form. 42 Line Ministry officials will endorse the sub-projects and provide architectural designs. Local representatives of line Ministries will participate in the appraisal of sub-projects. LACE will finance only those sub-projects consistent with government sectoral priorities and approved by the respective line Ministries, which will be asked to provide complementary inputs (teachers or textbooks in the case of a school, for example). The line Ministry representative in the appraisal signs the field appraisal form indicating support of the sub-project applicationand design. Community sub-project processing cycle Following the selection of the beneficiary communities, LACE and local authorities' staff (including representatives of the District Development Committee - DDC) visit these communities to brief them on community driven development and start the sub-project processing cycle. The process includes: a) The recruitment of the community facilitators (CFs) that will assist community-based organizations (CBOs). b) The social mobilization and facilitation process undertaken by the communities with the assistanceof the CFs. c) With the assistanceof the CFs, the identification andpreparation of sub-projects by the CBOs and the submission to LACE of requestsfor sub-grants. d) The appraisal of the CBOs and their sub-project proposals by LACE staff, in collaboration with local authorities and line ministries. e) The approval of the sub-grants and the signature by LACE and the CBOs of sub-grant agreements. f) The disbursement of the sub-grants by LACE, andthe implementationof the sub-projects by the CBOs with the assistance of the CFs. g) The monitoring and evaluation of the sub-grants and the sub-projects by LACE, in collaboration with local authorities and line ministries. Monitoring andEvaluation LACE i s responsible for monitoring and evaluation (M&E)of the Project. It supervises the execution of community sub-projects by the communities, makes arrangements for financial, procurement, management and technical audits of the Project and of a sample of community sub-projects. It also follows up on the operation and maintenance of those community sub-projects; and carries out, or causes to be carried out, periodic evaluation of the impact of the community sub-projects that it finances, including beneficiary assessments. Supervision of the sub-projects In collaboration with local authorities and line ministries, LACE will supervise the execution of the sub-projects by the communities. The supervision will deal with the technical aspects (e.g. quality, speed, costs, and consistency with national standards), the social aspects (level of community participation) and the financial aspects (use of funds and accounting for funds). LACE will also monitor and evaluate the performance of the community facilitators and of other entities that are involved inthe implementationof the sub-projects, such as the civil work contractors. 43 Annual reviews and mid-term review LACE will carry out annual reviews of the Project with the Bank and other development partners, on the basis of progress reports evaluating the achievement of the objectives and of the performance indicators andincluding recommendations to ensure the efficient implementationof the Project. About two years after the effective date of the grant, instead of the annual review, LACE will carry out, jointly with the Government, the Bank and other development partners, a comprehensive review to assess the status of project implementation. That mid-term review will be aimed at: (i) documenting progress towards the project objectives; (ii) monitoring the implementation of the environmental and social measures set forth in the ESMF and WF; (iii) identifying and resolving obstacles to project implementation; and (iv) adjusting, in agreement with the Bank, targets and corresponding activities to reflect progress achieved inproject implementation. The mid-term review will c o n f m or revise the project assumptions. Findingof this review will help in the planning and implementationof the remainingpart of the project up to completion. 44 Annex 7: ProjectPreparationandAppraisalTeamMembers COMMUNITY EMPOWERMENT PROJECT (CEP11) Key institutionsresponsiblefor preparationof the Project: LACE, Ministry of Finance, Ministry of Education, Ministryof Health, Ministry of Planningand Ministry of InternalAffairs. Bankstaff andconsultantswho worked onthe Projectincluded: INooraArfaa I Consultant/ODerations I AFTH2 I Paul Geli Consultant/CDD Specialist AFTH2 Paul Kriss Sr. Economist AFTU2 RuthMulahi PromamAssistant AFTH2 Samuel Bruce-Smith Financial Management Specialist AFTFM Samanthade Silva Sr. Social ProtectionSpecialist HDNSP Thomas Walton Consultant EASTE 45 Other developmentpartners: Name Organization -Monika Hencsey EuropeanCommission Jean-Louis Alexandre EuropeanCommission SharonPauling USAID -WilliamMassanquoi USAID Till Blume Observer for KfW-GermanCooperation 46 Annex 8: Environmental and Social Safeguards Introduction The environmental and safeguard screening conducted by the World Bank classified the Project as Category B since planned implementation activities would take place at specific sites at the community level with possibility for mitigation measures. The World Bank's Environmental Assessment (OPA3P4.01) and Involuntary Resettlement (OPA3P 4.12) are therefore triggered. The project has prepared a package of two safeguard documents which are the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF). Objectivesof the Framework The objective of the framework i s to ensure that project activities do not have negative impact on the environment and distort social relations and structure. The Government of Liberiathrough the LACE has therefore taken measures to examine the environmental and social impact of the project and map out possible mitigation measures to address even the mildest anticipated environmental and social effect. Environmental Impacts The project identifies a number of environmental issues which are direct or indirect consequence of implementation of subprojects due to the nature of the subprojects. These subprojects like rehabilitation or construction of schools, health facilities, bridges, markets and community water and sanitation have been identified to have in some cases minimal environmental impacts. A rapid Environmental Social Impact Assessment of CEP I(ESIA) subprojects noted that due to the minimal level of environmental impact of the on-going subprojects, mitigation measures could be adopted to address them. Three key environmental issues were identified in this category. One of these i s land clearing for construction and use of land for waste disposal which may have very localized and perhaps temporary health implications. These can be mitigated by construction of garbage bins and good waste disposal practices. The second issue is the possibility of biodiversity loss, soil erosion due to clearing of trees which can be mitigated through community tree and grass planting. The third issue i s the possible creation of open pits as a result of rehabilitation or construction activities. In order to save both human and animal life, the ESIA proposed a conspicuous marking of these pits. Most importantly, the ESIA proposes mitigation measures for all identified environmental issues and Environmental and SocialManagement Plan(ESMP). Social Impact The implementation of the subprojects may require acquisition of land. This could lead to resettlement or relocation of some community members. The Project liaises with community leaders and works through local governance structures and community consultations to acquire lands for proposed LACE projects. As a result, resettlement due to landacquisition problems i s expected to be nil or very negligible. More importantly, the project is determined to avoid as much as possible, relocation issues. However, in cases where this i s unavoidable, the project has an RFP and mechanisms for ensuring that the relocation and resettlement i s done in accordance with the Liberian government and LACE policies in consultation with other key stakeholders. The RFP also makes provision for the development of a Community Resettlement Policy (CRP). These are to ensure that all affected persons are adequately resettled or compensated. 47 The resettlement issues aside, the project i s expected to positively impact the beneficiary communities and individuals in a number of ways. The rehabilitation of the social infrastructure on the whole will not only affect the way of life of the people in terms of having access to basic infrastructure, but will also serve as the basis for their social and economic empowerment and reduction in poverty levels. Institutional Capacityfor Safeguard Compliance LACE has demonstrated its commitment to environmental and social safeguards issues. However, capacity is limited. The ESIA and the RFP have indicated how the capacity issues are going to be addressedto ensure implementation of the framework and the policy. LACE has proposed the setting up of an Environmental Management Unit (EMU). The alternative arrangement is to hire an Environmental Consultant on retention basis to work with the LACE team. Consultations with the Environmental Protection Agency (EPA) and other environmental institutions in Liberia and with local government institutions will be a main feature of implementation. To ensure further commitment and measurable targets, LACE i s being encouraged to ensure that monitoring and evaluation indicators reflect the environmental and social issues identified. In addition to this commitment, a capacity building through training has also been identified as an additional means to support implementation at the community level. Whilst this proposal is targeted at community members, it i s proposed that the project supports LACE and local government staff to undertake some training on environmental and social impact assessments, mitigation and management plans. Stakeholder Consultations and Disclosure The preparation and presentation of the ESMFand the RPFhave been done through consultation with project affected community members and other stakeholders from both government and non- governmental agencies. Other development partners have been involved in the processes as well. The final report reflected the views of some of these stakeholders. The documents are to be sent to the World Bank's infoshop as required. Copies of the documents will be distributed to key stakeholders. LACE will continue with consultations duringimplementationof CEP 11. 48 * Annex 9: SupervisioflmplementationSupport Strategy CEPI1 Firstten months - - - =IT =F SupervisionlIS - Monl fromef 3ctivent Activities 9/07 10107 11/07 12/07 1/08 2/08 5/08 6/08 Preparation of xxx xxx xxx CY2008 Work-plan Preparation of new xxx xxx xxx procurement plan - c-I- EC and WB - Recruitment of new xxx xxx xxx staff Procurement of new xxx xxx xxx vehicle and equipment - Update of the OM - xxx $ Starts 04/07 Preparation of OM xxx xxx xxx xxx appendix on LACE and Local -+ Government(LG) Validation workshop of the OM LG appendix MoULACE - MOE- XXX Starts 08/07 MoULACE - MOH- xxx Starts 08/07 Prior review to first xxx xxx xxx xxx xxx two CEP contracts in eachcategory - SupervisionmissionI - xxx Supervision mission Supervision mission Ixxx I11 Launching workshop I X X X I New LACE Board I xxx IFRI-I11Quarter 07 xxx X I II IFR I1 - IV Quarter 07 IFR111- IQuarter 08 Amendment to xxx Financing Agreement Amendment to Subs. xxx Grant Agreement Note: Project implementation will be supported by intensive supervision especially during the first ten months of the CEP 11. Supervision will be carried out by the Bank and the EC teams, with the participation of other donors. Mandatory reports and assessments of the CEP I(ICR, Audits, Post-procurement assessment) will support CEP I1implementation. BB supervision costs are expected at US$75,000 (variables), excluding ICR preparation of CEP I.Procurement and financial managementspecialists are expected to join all missions and an environmental specialist will join at least one of the three missions. TF administration fee on EC co- financing (2%) will be investedin additional support with ad hoc consultants' services. 49 Annex 10: DocumentsinProject Files 1. EuropeanCommission, `Liberia: CountyDevelopmentFinancingProposal',April 2007 (Draft). 2. `InterimPovertyReductionStrategy: Republicof Liberia', January 2007. 3. `Liberia Agency for Community Empowerment (LACE) Manual of Administrative, Accounting andFinancialProcedures' May 19,2005. 4. `Liberia Agency for CommunityEmpowerment (LACE) OperationManual', January 2005. 5. LACE, `EnvironmentalandSocialImpactAssessment andPolicy Framework',January 2007. 6. LACE, "Resettlement Policy Framework', January 2007. 7. Louis Helling, `Assessment Note: Towards Enhancing LACE'SRole in Local Governance for LocalDevelopmentinLiberia', February 2007. 8. UNDP, `Capacity Building for DDC, Government, NGO and Communities in Liberia, TOT PresentationSlides andTraining Materials', January 2007. 9. UNDP, `Local GovernmentCapacity Assessment', March 2006 (Draft). 10. UNDP, `ParticipatoryDevelopment:A Training Manualfor CapacityBuilding for DDC, County Superintendents, Government, NGO andCommunitiesinLiberia', December 2006. 11. USAID, `Community FocusedReintegration', 2006. 12. World Bank, `Liberia: Country Re-engagementNote', March9, 2004. 13. World Bank, `Liberia RapidSocialAssessment Update- Phase l', 2007. January 14. World Bank, `Social Development Notes on Community-Driven Development: Liberia Rapid SocialAssessment', March2007. 15. World BanWUNDP, `Community Cohesion in Liberia: A Post-War Rapid Social Assessment', January 2005. 16. World HealthOrganization. `Liberia Country profile, HealthAction inCrisisReport', 2004. 50 Annex 11:Countryat a Glance Liberia at a glance May-07 Sub- I Key Development Indicators Saharan LOW Liberia Africa income Age distribution, 2005 (2005) Mala Female Population. mid-year(millions) 3.3 741 2,353 70.74 Surface area (thousandsq. km) 111 24.265 29,265 Population growth (%) 1.3 2.1 1.8 e4.M Urban population (% of totalpopulation) 58 35 30 9.54 4044 GNI (Atlasmethod,US$ billions) 0.4 552 1,364 30.34 GNI percapita(Atlas method, US$) 130 745 580 20.24 GNI percapita(PPP, international$) 1,981 2,486 GDP growth (%) 5.3 5.3 7.5 x) 10 0 10 GDP percapitagrowth (%) 3.9 3.1 5.6 Dercant (mostrecentestimate,2000-2005) Povertyheadcount ratioat $1 a day (PPP,%) 44 Povertyheadcount ratioat $2 a day (PPP,%) 75 Under-5 mortality rate (per 1,000) Life expectancyat birth(years) 42 46 59 infant mortality(per 1,000 live births) 157 100 80 Child malnutrition(% of children under5) 27 29 39 4dult literacy. male (% of ages 15and older) 73 4dult literacy,female (%of ages 15 andolder) 50 Sross primaryenrollment, male (% of age group) 115 99 110 Sross primaryenrollment, female (% of age group) 83 87 99 4ccess to an improvedwater source (% of population) 61 56 75 4ccess to improvedsanitationfacilities(% of population) 27 37 38 1690 1895 2 w G 2W4 0Liberia mSub-Saharan Africa Net Aid Flows 1980 1990 2000 2005 a I (US$millions) Vet ODA and officialaid 98 114 68 210 Srowth of GDP and GDP per capita (%) Top3 donors (in2004): UnitedStates 32 19 16 103 UnitedKingdom 1 1 3 16 Sweden 0 0 1 13 4id (%of GNI) 10.5 10.3 17.5 52.8 4id percapita (US$) 52 53 22 65 Long-Term Economic Trends 90 95 00 2onsumer prices (annual% change) 14.7 9.1 5.3 6.9 XIP implicitdeflator(annual% change) 9.1 -0.2 -1.3 9.5 +GDP -GDP per capita ixchange rate(annualaverage, localper US$) 1.o 1.o 41.O 57.1 rems of trade index (1997= 100) 113 140.9 1980-90 1990-2000 2000-05 (averageannualgrowth %) 'opulation, mid-year(millions) 1.9 2.1 3.1 3.3 1.3 3.6 1.4 :DP (US$millions) 954 384 561 548 -7.0 4.1 -6.8 (% of GDP) tgriculture 32.2 54.4 72.0 63.6 ndustiy 25.2 16.8 9.7 12.1 Manufacturing 6.9 9.5 12.0 hNiCeS 32.3 28.8 18.3 24.3 iouseholdfinal consumptionexpenditure 66.1 89.1 86.9 jeneral gov'tfinal consumptionexpenditure 19.1 14.4 10.8 jross capitalformation 4.9 Exports of goodsand services 84.3 23.2 36.6 mportsof goods and services 64.4 31.6 50.2 dote: Figuresin italicsare for years other than those specified. 2005 dataare preliminary estimates. .. indicates data are not available i.Aid dataarefor2004. IevelopmentEconomics, Development DataGroup (DECDG)and PREM4 (AFTP4),Africa Region. 51 Liberia lalance of Payments and Trade 2000 2005 iovernance indicators, 2000 and 2004 US$ mi//ions) `otal merchandiseexports (fob) 120 112 .otal merchandiseimports(cif) 146 295 Voice and accountability .let trade in goods and services -26 -183 Political stability Vorkers' remittances and compensation of employees(receipts) Regulatory quality brant account balance, incl.grants +131 -49.9 Rule of law as a % of GDP -23.3 -9.4 leserves, includinggold (netposition) 2 6.5 :entral Govern'ment Finance 2004 Country's percentile rank (0.100) 02000 higher v d ~ mpg bener refmgs s % of GDP) levenue 14.6 16.0 :xpense 15.4 15.4 Technology and Infrastructure 2000 2004 :ash surpiuddeficit 0.8 Paved roads (% of total) 6.2 iighest marginaltax rate (%) Fixed line and mobilephone Individual subscribers (per 1,000people) 3 Corporate Hightechnologyexports ("A of manufacturedexports) ixternal Debt and Resource Flows Environment US$mi//ions) `otal debt outstandingand disbursed 2,032 2,706 Agricultural land(?Aof landarea) 27 27 .otal debt service Forestarea(% of landarea. 2000 and 2005) 35.9 32.7 iIPC and MDRl debt relief (expected flow) -1 -1 Nationally protectedareas (% of landarea) .. 1.7 .otal debt (% of GDP) 362.2 544.6 Freshwaterresources percapita(cu. meters) .. 61,717 `otal debt service("4 of exports) 0.6 0.6 Freshwaterwithdrawal (Oh of internalresources) .. 0.1 :oreigndirect investment (net inflows) 21 20 C02 emissionsper capita(mt) 0.13 0.14 'ortfolioequity(net inflows) 0 0 GDP per unit of energy use (2000 PPP $per kg of oil equivalent) :omposition of tote1external debt, 2004 Energyuse percapita(kg of oil equivalent) IBRD, 1527 IDA. 111 (US$ mi//ions) Shon-tern, 1,191 IBRD Total debt outstanding and disbursed 130 146 Disbursements 0 0 Principal repayments 0 0 Pnvale.207 Interest payments 0 0 IS$ millions IDA Total debt outstanding and disbursed 100 106 Disbursements 0 0 Private Sector Development 2000 2005 Total debt service 0 0 Time requiredto start a business (days) IFC (fiscalyear) Cost to start a business ("Aof GNI per capita) Total disbursedand outstanding portfolio 4 1 Time requiredto registerproperty(days) of which IFC own account 4 1 Disbursements for IFC own account 4 0 Rankedas a majorconstraint to business Portfoliosales, prepaymentsand (xofmanagersSUNeyedwhoagreed) repaymentsfor iFC own account 0 1 n.a. n.a. MlGA Gross emosure Stock market capitalization("Aof GDP) Newguarantees -- -- Bank branches (per 100,000people) Note: Figures in italicsare for years other than thosespecified. 2005 dataare preliminaryestimates. .. indicatesdata 8/12/06 are not available. -indicates observation is not applicable. DevelopmentEconomics, DevelopmentDataGroup (DECDG). 52 MAP SECTION IBRD 33435R 11°W 10°W 9°W 8°W 9°N 9°N G U I N E A LIBERIA S I E R R A To L E O N E Irié To Voinjama oinjama Buedu KolahunKolahun To Mt. Wuteve Mt. uteve L O FA Pendembu (1,380 m) (1,380 m) 8°N Vahun ahun Mts. 8°N To Kenema GelahunGelahun To Lola Gbeya Wologizi Range Wonogizi Zorzor Zorzor Loffa Via Nianda Yekepa kepa Mts. To Nzérékoré Nimba Kongo G B A R P O L U GabalatuaiGabalatuai SenniquellieSenniquellie To To GahnpaGahnpa KahnpleKahnple Danané Zimmi GRANDGRAND Bopolu Bopolu BoBo 7°N CAPECAPE Gbarnga Gbarnga Paul PalalaPalala 7°N MOUNTMOUNT Sagleipie Sagleipie Tubmanburg ubmanburg St. ZienzuZienzuB O N G Yopie opie Bong Town Bong own Totota otota Robertsport N I M B A B O M I C Ô T E KlayKlay M A R G I B I BotataBotata Gloie Gloie Nuon D ' I V O I R E Careysburg Careysburg To Kakata Kakata Tapeta apeta Toulépleu St. John BensonvilleBensonville Tobli obli MONROVIA G R A N D Harbel Harbel B A S S A GuataGuata PoabliPoabli Kola Town Kola own MONTSERRADO HartfordHartford GaamodebiGaamodebi 6°N RIVER CESS RIVER CESS BabuBabu ZwedruZwedru 6°N G R A N D G E D E H Buchanan Trade rade Town own GongleeGonglee Dube PynePyne Cestos BokoaBokoa River Cess S I N O E PelokehnPelokehn ATLANTIC OCEAN KopoKopo JuazohnJuazohn R I V E R G E E Sehnkwehn KahnwiaKahnwia Fish Town Fish own Tawake awake Tawlokehn awlokehn 5°N Greenville 5°N G R A N D Nana Kru K R U BarclayvilleBarclayville Sasstown LIBERIA M ARYLAND NyaakeNyaake Grand Cess PliboPlibo To Tabou SELECTED CITIES AND TOWNS Harper COUNTY CAPITALS NATIONAL CAPITAL 4°N RIVERS MAIN ROADS This map was produced by the Map Design Unit of The World Bank. 0 20 40 60 80 100 Kilometers RAILROADS The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any COUNTY BOUNDARIES endorsement or acceptance of such boundaries. 0 20 40 60 Miles INTERNATIONAL BOUNDARIES 10°W 9°W 8°W APRIL 2007