World Bank Document · 5. CAS objective(s) supported by the project Document number and date of...

Document of the World BankInternational Development Association

Report No. 16403-BEN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT OF SDR 12.4 MILLION

TO

THE REPUBLIC OF BENIN

FOR A

SOCIAL FUND PROJECT

April 22, 1998

Human Development IIIAfrica Region

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CURRENCY EQUIVALENTS

Currency Unit = CFA franc (CFAF)

US$1.00 = CFAF 540 (April 1997)

FISCAL YEAR

January I - December I

ACRONYMS

AGeFIB Agency for financing of cornmunity-based initiatives (Agence de Financement desInitiatives de Base)

AGePIB Agency for promotion of community-based initiatives (Agence de Promotion desInitiatives de Base)

CAS Country Assistance StrategyCREP Rural savings and credits associations (Caisse Rurale d'Epargne et de Credit)FECECAM Federation of agricultural credits and savings (Federation de caisses d'4pargne et de

credits agricoles mutuels)GoB Government of BeninICB International Competitive BiddingIDA International Development AgencyIGIP Ingenieur-Gesellschaft fur Internationale Planungsaufgaben GmbhKfW Kreditanstalt fur WiederaujbauLOI Letter of InvitationMIS Management Information SystemMPREPE Ministry of Plan, Economic Restructuring and Employment PromotionNCB National Competitive BiddingNGO Nongovernmental OrganizationPADME Microenterprise Development Project (Projet d'appui au developpement des

microentreprises)PCD Project Concept DocumentPHRD Policy and Human Resources Development FundPPF Project Preparation FacilitySARAR Strength, Resourcefulness, Action planning and Responsibility for follow-throughSIF Social Investment FundSOE Statement of expenditureTOR Terms of ReferenceZOPP-PPO Log-frame "Zielorientierte Projektplanung - Planification par objectifs)

|Vice President Jean-Louis Sarbib|Country Director Theodore AhlerslTechnical Manager Helena Ribe|Task Team Leader Maurizia Tovo

BENIN

SOCIAL FUND PROJECT

TABLE OF CONTENTS

Project Financing Data ............................................................... IBlock 1: Project descrilption ................................................................ 2

1. Project development objectives ................................................................ 22. Project components ............................................................... 23. Benefits and target population ................................................................ 24. Institutional and implementation arrangements .................................... 3............................3

Block 2: Project Rationale ................................................................ 45. CAS objectives supported by the project ................... .............................................. 46. Main sector issues and Government strategy ........................ ........................................ 47. Sector issues to be addressed by the project and strategic choices ............................ ......................48. Project alternatives considered and reasons for rejection ................................................................ 49. Major related pirojects financed by the Bank and/or other development agencies ............ ..............510. Lessons learned and reflected in the project design . ............................................................... 511. Indications of borrower commitment and ownership ................................................................ 512. Value added of Bank support ................................................................ 5

Block 3: Summary Project Assessment ................................................................. 613. Economic Assessment ............................................................... 614. Financial Assessment ............................................................... 615. Technical Assessment ................................................................ 616. Institutional Assessment ................................................................ 617. Social Assessment ................................................................ 618 Environmental Assessment ................................................................. 619. Participatory Approach ................................................................ 720. Sustainability ................................................................ 721. Critical Risks ............................................................... 722. Possible Controversial Aspects ................................................................ 8

Block 4: Main Credit Conditions ................................................................. 823. Effectiveness Conditions ................................................................. 824. Other ................................................................ 8

Block 5: Compliance with Bank Policies ................................................................ 8

List of Annexes

Annex 1: Project Design SummaryAnnex 2: Detailed Project DescriptionAnnex 3: Estimated Project CostsAnnex 4: Cost Effectiveness Analysis SummaryAnnex 5: Financial SummaryAnnex 6: Procurement and Disbursement ArrangementsAnnex 7: Project Processing Budget and ScheduleAnnex 8: Documents in the Project FileAnnex 9: Benin at a glance

Benin Social FundINTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

Africa Regional OfficeCD 13

Project Appraisal Document

BeninSocial Fund Project

Date: 04/22/98 [] Draft [X] FinalTask Manager: Maurizia Tovo Country Manager: Theodore AhlersProject ID: 35645 Sector: SocialLending Instrument: Specific Investment Loan PTI: [X] Yes [ ] No

Project Financing Data [] Loan [x ] Credit [ Guarantee [ Other (Specifyl

For Loans/Credits/Others:

Amount (US$m/SDRm): US$16.7 million/SDR 12.4 millionProposed Terms: [xl Multicurrency [] Single currency

Grace period (years): 10 [] Standard Variable [] Fixed [] LIBOR-basedYears to maturity: 40Commitment fee: NA

Service charge: .75%

Financing plan (US$m):Source Local Foreign Total

Government (including communities) 3.9 - 3.9CofinanciersIBRD/IDA 16.3 0.4 16.7Other (specify)Borrower: Government of BeninGuarantor: NAResponsible agency(ies): Ministry of Plan, Economic Restructuring and Employment PromotionEstimated disbursements (Bank FY/US$M): 1999 2000 2001 2002 2003 2004

Annual 1.1 2.8 3.8 4.2 3.5 1.3Cumulative 1.1 3.9 7.7 11.9 15.4 16.7

For Guarantees: NA [ Partial Credit [ Partial risk

Proposed coverage:Project sponsor:Nature of underlying financing:Terms of financing:

Principal amount (US$)Finall maturity

Amortization profileFinancing available without guarantee?: [ Yes [ NoIf yes, estimated cost or maturity:Estimated financing cost or maturity with guarantee:

Expected effectiveness date: 30 October 1998 Closing date: 31 December 2003

Project Appraisal Document Page 2Country: Benin Project Title: Social Fund

Block 1: Project Description

1. Project development objectives (see Annex I for key performance indicators):

A. Improved access to basic social services: Indicator: # of people (by gender) with access to improved services: schools, clinics,water points, storage facilities.B. Community empowerment: Indicator: # of communities/NGOs using new capacities for self-help.C. Increased income-generation by the poor: Indicator: # of people (by gender) with increased or more stable income due to credit orimproved infrastructure

2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component Category Cost Incl. Contingencies % of Total(US$M)

A. Socio-economic infrastructure: Physical 9.3 46Financing of small socio-economic infrastructure(e.g., rehabilitation or extension of elementaryschools and health centers, installation of waterpoints, construction of latrines, repair of bridges,markets, etc.).B. Income generation: Institution Building and Other 5.1 25Support to income-generating activities in low-income groups by facilitating access to formalfinancial intermediation and by providingassistance to informal financial intermediaries,especially those reaching out to women, in theform of institution building grants and matchinggrants.C. Capacity building: Institution Building 1.9 9Capacity building and social capital development,primarily at the grass-root and the intermediarylevel (NGOs), through a variety of means (e.g.,information, training and short-term technicalassistance) to equip beneficiaries withorganizational, managerial and strategic skills.D. Institutional strengthening of AGeFIB: Institution Building and project 4.2 20Operating expenditures for project managementimplementation, management andsupervision.

Total 20.5 100

3. Benefits and target population

The project will contribute to the Government's poverty reduction program by providing essential basic assets and services to poorcommunities. Local communities and grassroot groups (especially women) will be empowered by learning how to organize, analyzetheir needs, identify and evaluate feasible solutions, design sub-projects to put into practice such solutions, and manage theirimplementation. Social intermediation between such groups and formal financial institutions, and assistance to informal financialinstitutions will improve the poor's access to financial services, thus helping them increase or at least stabilize their incomes.Traditional financial systems will be strengthened and be able to improve and expand their operations. Intermediary NGOs, theprimary interlocutors between the agency and the communities, will improve both their internal functioning and their effectivenesswith their clients. This strengthening of the capacity of NGOs, small local contractors, local government structures and otherfacilitators of community development will support decentralization and participatory development. The target population willinclude poor rural and peri-urban communities, with a special focus on women and unemployed youth.


4. Institutional and implementation arrangements

o Implementation period: 5 years.* Executing agencies: AGeFI13, a not-for-profit association serving the public interest (association a but non lucratifreconnue

d 'utilite publique), created in October 1997 to manage the social fund.* Project coordination: Project coordination will be the primary responsibility of the Director of AGeFIB and coordinators for each

project component. To ensure coordination at the sectoral level, the Operating Manual requires clearance from the relevantministry for each sub-project. In addition, each sectoral ministry has nominated contact persons who will be available to provideguidance to AGeFIB staff on matters relating to sectoral policies and approaches so as to harmonize interventions, avoid wastageand maximize synergies. Clearance procedures and standard criteria have been agreed with the individual ministries.

* Project oversight (policy guidance, etc.): AGeFIB is under the nominal responsibility (tutelle) of the MPREPE. It has an electedBoard of Directors, comprising 2 representing NGOs, 2 representing potential beneficiaries of the agency, I representing the civilsociety and 2 representing the Government. The Board of Directors may, in turn, avail itself of the advice of selected experts asthe occasion arises.

* Accounting. financial reporting and auditing arrangements: AGeFIB will have at least one full-time accountant for monitoringexecution of contracts with intermediaries and communities, as well as the agency financial management and accounting system;in addition, each departmental office will have a junior accountant. Accountants will be provided with any additional necessarytraining through the capacity-building component, and the Resident Mission will be available for trouble-shooting and occasionalmonitoring (this is already happening during the pilot phase). Specialized software to manage the project accounts and tomonitor sub-project disbursements have been purchased during the pilot phase, and AGeFIB staff trained in their use.Intermediary NGOs and community groups will have access to appropriate training in financial management through thecapacity-building component. Audit reports should be produced for each component, covering the use of SOEs, management ofspecial accounts and other matters. Given the extensive reliance on SOEs, special attention will be paid in verifying theirreliability, and to the internal procedures and controls involved in their prevaration.

* Monitoring and evaluation arrangements: Monitoring is an integral part of each sub-project implementation, as disbursements oftranches for each sub-project are contingent on performance monitoring by the NGOs acting as intermediaries and by projectstaff. Monitoring and evaluation mechanisms are built into the AGeFIB information system, a computer software especiallydesigned for social funds. Data on key indicators (in terms of both process and outputs) will be generated quarterly and reviewedby project and Bank staff. The following performance indicators were agreed at negotiations: (a) timely disbursement ofcounterpart funds; (b) 90 percent of dossiers processed within the time period specified in the Operating Manual; (c) not morethan 20 percent of project costs going to administrative expenses; (d) 80 percent of social infrastructure, such as primary schoolsand dispensaries, has the necessary personnel and materials needed to operate properly; (e) 50 percent of the beneficiaries arewomen; (f) 90 percent of the beneficiaries are members of the target groups, as defined in the Operating Manual; and (g) 70percent of the maintenance plans relating to sub-projects under Component I of the Project, are being satisfactorily implementedtwo years after the sub-projects are completed. Regularly scheduled supervision missions will provide close monitoring as willan annual progress review. A mid-term evaluation conducted jointly by the government of Benin and the donors will examineissues not captured in the AGeFIB information system, such as indirect impacts and qualitative changes. AGeFIB's pilot researchprogram will allow for beneficiary assessments of individual sub-projects as well as the examination of impact issues concerningmore than one sub-project. Progress reports on project implementation and outcomes will be prepared twice a year. Animplementation completion report will be prepared within six months of the Credit closing, with the government of Benin'scontribution included.


Block 2: Project Rationale

5. CAS objective(s) supported by the project Document number and date of latest CAS discussion: P-6308-BEN 5/11/94

This project supports the CAS objective of providing technical and financial support to the government's development strategy whichincludes the promotion of community-based development and of employment. In addition, the project addresses the CAS objective to"promote women's participation in economic activities."

6. Main sector issues and Government strategy:

The Government of Benin is aware of the precarious situation in which the lower socio-economic strata find themselves and of theneed for targeted interventions if they are to be full partners in the country's development. As a result, a Social Dimension ofDevelopment program was adopted in 1992. In June 1994, the Government presented to the donor community a strategy comprisingfour elements: (a) strengthening the national capacity to formulate and implement social policies, (b) monitoring the living conditionsof vulnerable groups, (c) promoting community-based development through sub-projects, and (d) promoting employment. Whilesubstantial donor assistance was pledged for the first, second and fourth component, the Government of Benin specifically requestedWorld Bank assistance to fund the third component through a project establishing a social fund. Following elections in 1996, the newGovernment has launched a National Employment Program which takes as a departure point the imperative of ensuring access to thebasic social needs (Minimum Social Commun) of each citizen through the organization of Community Development Units at thecommunity level.

7. Sector issues to be addressed by the project and strategic choices

Constraints to community-based development include lack of capacity at the community level for designing and implementing sub-projects, lack of capacity among government and non government organizations to assist communities in these activities, a top-downapproach in the public sector, and lack of access to financial resources. By building local capacity for planning, implementing,monitoring and evaluating sustainable economic and social activities, the project aims at increasing self-reliance, facilitating ongoingdecentralization efforts, and strengthening the civil society. As AGeFIB is a private agency, it is easier for it to foster a bottom-upapproach; simple and rigorous administrative procedures will facilitate communities' access to financial resources. Sub-projects to besupported under the project will help to increase the poor's access to social services or their income-earning capacity.Because the project encompasses several sectors, close collaboration with relevant sectoral ministries is being pursued. This meansthat, within each sector, the project will support sectoral policies and approaches. In particular, the activities financed by the socialfund will complement ongoing or planned World Bank-supported projects in health, education, rural water supply, transport andprivate sector development.

8. Project alternatives considered and reasons for rejection

Provision of social infrastructure could be done through sectoral ministries, but their implementation capacity is limited and wouldtherefore constrain the pace of infrastructure delivery. In addition, by using community participation in the selection,.design andimplementation of the activities, the project helps meet the government objective of increased community empowerment. Thesynergistic effect of providing social infrastructure while at the same time increasing community capacity will provide moresustainable mechanisms for development at the local level. To improve access to financial intermediation, the project could haveprovided lines of credit to commercial banks and other formal financial institutions. However, the main obstacle is not a liquidityshortage within the banking sector but rather the perceived high cost of financial transactions with low-income clients, both from thepoint of view of prospective clients and of financial institutions. Hence the choice of providing social intermediation. On the otherhand, it is the informal financial institutions that typically serve the poor, because of their greater outreach capacity and thecharacteristics of their products. Hence the emphasis is on assistance to the informal financial sector to improve the quality and scopeof their services.A number of alternative institutional set-ups were considered for AGeFIB, and one was actually tested whereby the agency was underthe Association for the Social Dimensions of Development. In the end, preference was given to the proposed set-up, i.e., anindependent non-profit association, to allow for autonomy from other existing institutions (both public and private), minimize red-tape and optimize flexibility.


9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned).

World Bank:Community-Based Food Security Project (PILSA): promotes increased food security in 20 districts, pre-selected for their high level ofinsecurity, through a combination of nutrition activities, support through NGOs to local development initiatives and institutionbuilding for food-security planning and monitoring. A recently completed implementation review mission reports satisfactoryprogress in terms of outreach and disbursement, although better monitoring and improved NGO performance are needed for micro-credit activities. Ongoing.Urban Development (AGETUR): supports infrastructure rehabilitation and environmental sanitation in the country's two largest cities,following approaches which optimize the impact of public works on the employment and income of the urban poor, promote thedevelopment of local small and medium-sized private enterprises and involve NGOs and residents. Ongoing.Private Sector Development (PSD): addresses legal, policy and institutional constraints to private sector development at all levels,including the financial and regulatory system for small and microenterprises. Planned.IFAD:Projet d'Activites Generatrices de Revenus (PAGER): aims at increasing revenues, and improving food security and living conditionsof rural populations essentially through short and medium-term credit and a guarantee fund managed by FECECAM, as well ascommunity development activities and capacity building for grassroot organizations. Starting.

10. Lessons learned and reflected in the project design

Social funds have proved to be an important tool for channeling funds to the poor for self-enhancement activities (see Marc, Graham,Schacter and Schmidt, The World Bank, 1995). Accumulated experience has shown that the effectiveness of social funds depends onseveral factors, such as a marked administrative autonomy, coordination with public administration agencies, integration with globaland sectoral policies, flexible procurement and disbursement, a participatory approach, rigorous but simple procedures, and politicalsupport and commitment. In particular, a recent review of micro-finance components in social funds (Randhawa, 1996) hashighlighted the main characteristics of success, which include separate management of the component, a pilot approach and theinclusion of technical assistance in the component. Accordingly, there has been an endeavor to incorporate these elements in thedesign of this social fund. The creation of AGeFIB ensures administrative autonomy. The Operating Manual describes animplementation approach in line with best practice (participation, coordination, flexibility, etc.). In addition, in the case of Benin, thePILSA project has highlighted some problematic aspects in using NGOs as implementing agencies, including limited NGO capacityand the need to adapt administrative procedures to field conditions. The Capacity-Building Component of the project aims atequipping NGOs with the competencies needed for effective collaboration with AGeFIB; frequent consultation with PILSA staff andNGOs have guided the drafting of the Operating Manual to ensure that AGeFIB's administrative procedures are adapted to fieldconditions

11. Indications of borrower commitment and ownership

As the project was initially conceived by the government and is being prepared at their request, political support is very high,especially in the aftermath of the April 1996 presidential elections. The government has appointed a director general for the projectand opened a special account for the pilot phase; it has also participated in the creation of AGeFIB and the selection of its directorgeneral. Government officials have expressed great interest in getting the social fund operating and have provided considerableassistance in pushing through the required administrative arrangements. The Minister of Plan, Economic Restructuring andEmployment Promotion has himself inaugurated the first infrastructures built with project financing.

12. Value added of Bank support

While other donors are funding other parts of the government's poverty reduction strategy, the government has specifically asked forIDA's involvement in this project because of its considerable experience with social fund operations across the world, and its capacityto act as a catalyst and umbrella for other contributions. It has become clear during project preparation that the Bank's involvementhas attracted other donors (the Islamic Development Bank has expressed interest in parallel financing, and GTZ has contributed to thepilot phase through the provision of equipment, vehicles, capacity building for AGeFIB staff and consulting services). The project isalso part of the Bank's strategy for poverty reduction in Benin and follows up on the recommendations of the 1994 PovertyAssessment for greater participation and a bottom-up approach in the fight against poverty.


Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)Cost-Benefit Analysis: NPV=NA [x] Cost Effectiveness [] Other

13. Economic Assessment (see Annex 4) ERR= Analysis [Specify]

Fiscal impact (for all projects): NegligibleNPV=US$ million; FRR= %

14. Financial Assessment (see Annex 5) NA

15. Technical Assessment

The project is technically sound. Lessons learned from experiences with other social funds have been included in project design.The pilot phase has allowed modification of procedures and of institutional arrangements to improve the project's effectiveness andits ability to reach the poor.

16. Institutional Assessment

a. Executing agencies: AGeFIB is an autonomous agency under the nominal supervision of the Ministry of Plan, EconomicRestructuring and Employment Promotion (MPREPE). The ministry is not involved in day-to-day affairs, but exercises oversightthrough representation on the board of directors; in addition, the ministry's Technical Unit for the Social Dimensions of Developmentmonitors project activities. The agency itself has a small staff of people chosen for their technical qualifications and dynamism.Should AGeFIB's institutional capacity be insufficient, the project contains a substantial capacity building component that will allowthe required skills to be acquired; for example, procurement training was provided to key project staff during the pilot phase. Inaddition, AGeFIB has the capacity to hire specialized expertise on a contractual basis when necessary. Over the course of the 18month pilot phase this procedure appears to have worked well.

b. Project management: Project management was selected for the pilot phase through a competitive process and has demonstratedskill and dedication. Civil servants were considered for project management positions only if they agreed to leave the civil servicebefore joining AGePIB. A new Director General has been selected to guide AGeFIB and complete the transition from the pilot phaseto effectiveness.

17. Social Assessment

A social fund was recommended in the Benin Poverty Assessment, which included extensive social analysis. This analysis highlightedseveral constraints to poverty reduction, many of which will be addressed by this project (insufficient access to basic social services,insufficient access to financial services, lack of self-reliance, weak NGOs, etc.). It is expected that the project will have substantialsocial benefits as it has been designed to target those groups who have been identified as the most vulnerable, particularly women. Itis recognized, however, that actually reaching these groups may be difficult because of the causes of their vulnerability: low levels ofliteracy, distance to services/markets, poor infrastructure, lack of information, cultural barriers, etc. Project outreach and sub-projectprocedures were established to alleviate these problems and maximize access to project benefits by the poorest groups. Periodicbeneficiary assessments will be carried out as part of ongoing project monitoring.

18. Environmental Assessment Environmental Category: B

Since the social fund involves demand-driven micro-projects, it is not possible a priori to determine the environmental impact of theproject. The social fund agency has an agreement with the Ministry of the Environment (Ministere de l'environnement, de l'habitat etde l'urbanisme), so that each micro-project will be approved by the ministry before it is submitted to the social fund agency forfunding. Authority for approval rests with the departmental representative of the Ministry who visits the proposed site and reviewsthe construction plans. A set of national guidelines/norms, prepared by the Ministry, is used to determine whether or not a moredetailed assessment is needed. If further study is required, the group proposing the project can request the Ministry to do the work orit can request help from the Benin Environmental Agency. The Agency has in-house capacity to do more in-depth environmentalwork and it has a roster of independent consultants that can be hired to do environmental evaluations.


19. Participatory Approach Identification/Preparation Implementation Operation

Beneficiaries/community groups CON COL COLNGOs COL COL COL

Academic institutions COLLocal government CON COL COL

Other donors COL COL COL

Note: IS = information sharing; CON = consultation, and COL = collaboration

20. Sustainability

Steps taken to support the sustainability of AGeFIB-funded sub-projects include: (i) an assessment of community commitment andcapacity which will ensure local ownership and motivation to maintain and operate assets created with AGeFIB support; (ii) capacitybuilding and participative processes to strengthen the involvement of local communities, with special attention to maintenancearrangements (including choice of simple maintenance technologies); (iii) community investments in sub-project costs, and contractson their maintenance responsibilities; (iv) where applicable, prior commitment from the relevant government agency to supportrecurrent expenditures; and (v) capacity building to provide communities with maintenance-related technical and managerial skills.

21. Critical Risks (see fourth column of Annex 1):

Risk Risk Rating Risk Minimization MeasureProject outputs to Low or non-utilization of new social Modest In-depth needs analysis, demand-driven

development infrastructure implementation, bottom-up approach withobjectives community involvement

Duplication of activities being Modest Close coordination with sector ministries andundertaken by other donors; sector ministries approval requiredministries/projects before funding of sub-projects

Lack of resources for operation and Modest Each sub-project will be required to have amaintenance of new social maintenance plan and communities will signinfrastructure maintenance agreements; sector ministries

must guarantee recurrent costs prior to sub-project approval

Interest rate ceiling may constrain Substantial Engage in dialogue with government onthe ability of micro-finance appropriate application of regulations tointermediaries to reach micro-finance institutionssustainability

Poor investment choices Modest Careful screening and training for NGOsassisting micro-finance component

Macro environment will stifle local Modest On-going dialogue with government oncapacity economic policy

Project components to Needs determination process may Substantial Careful screening and training foroutputs not be participative intermediary NGOs, training for community

groups, careful monitoring

AGeFIB mechanisms may not be Modest Pilot testing of AGeFIB procedures, ZOPP-transparent and effective PPO


Despite NGO assistance, credit Modest Close coordination with financial institutionsapplication procedures will deter and capacity building for local groupsthe poor from seeking credit.

NGOs selected will have Modest Screening of intermediary NGOs willinsufficient capacity include assessment of technical and financial

management capacity. Training will beoffered to selected NGOs who need capacitystrengthening

Overall Risk Rating Modest

22. Possible Controversial Aspects

The Government was initially adamant about including credit lines for formal financial institutions in the project package. However,the interest showed by other donors in co-financing the project has eased pressure on the World Bank for credit lines, which could beprovided by other sources. In addition, there is some disagreement over interest rates, with the Bank team supporting commercialrates and the Beninese team preferring subsidized rates. The controversy should be easily resolved as the World Bank will not providecredit lines, and assistance to informal financial intermnediaries will not interfere with interest rates deternined by local marketconditions.

Block 4: Main Loan Conditions

23. Effectiveness Conditions

(a) An agreement (Convention) between the Borrower and AGeFIB has been executed; under this agreement, the Borrower willtransfer to AGeFIB the entire proceeds of the credit on a non-reimbursable basis.(b) The Project Account has been opened and the initial contribution of 162 million CFA Francs has been deposited in the saidAccount.(c) The Borrower has employed independent auditors for the Project.(d) AGeFIB has adopted an Operating Manual and an Administrative and Financial Procedure Manual, satisfactory to the Borrowerand IDA.(e) The Borrower has issued the Decree granting to AGeFIB the status of a public interest association, in form and substancesatisfactory to IDA.

24. Other [classify according to covenant types used in the Legal Agreements database.]

Block 5: Compliance with Bank Policies[x] This project complies with all applicable Bank policies.

Task Manager: Maurizia Tovo Country Manager: Theodore Ahlers

ANNEX IPage I of 2

BENINSOCIAL FUND PROJECT

PROJECT DESIGN SUMMARY

Narrative Summary Key Performance Indicators' Monitoring and Supervision Critical Assumptions and(Exact targets will be Risks

determined on the basis ofresults from the pilot phase)

CAS Objective (CAS Objective to BankPromote community-based # of people (by gender) with Mid-term evaluation and end Mission)development and employment. increased or more stable of project evaluation

income due to credit orimproved infrastructure On-going project monitoring# of days of work created system

Project Development (Development Objectives toObjectives CAS Objective)1. Improved access to social 1.1 # of people (by gender) 1. 1.1. On-going throughservices (Minimum social with access to improved project MIS, beneficiarycommun) services: schools, clinics, water assessments, AGeFIB yearly

points, storage facilities reports to the Board ofDirectors

2. Increased income-generation 2.1. # of people (by gender) 2.1.1. Mid-term evaluation,by the poor with increased or more stable end of project evaluation and

income due to credit or beneficiary assessmentsimproved infrastructure

3. Social capital development, 3.1. # of communities/NGOs 3.1.1. Mid-term evaluation,particularly increased using new capacities for self- end of project evaluation andcommunity empowerment help beneficiary assessments

Project Outputs (Outputs to DevelopmentObjectives)

1. Improved socio-economic 1.1. 600 UCD (Unites 1.1.1. Sub-project completion 1. Assumption: Improvedinfrastructure in poor Communautaires de and location available from infrastructure will improvecommunities, maintained by Developpement) have at least project MIS, beneficiary access to services and markets.the communities one socioeconomic assessments Risks: Low or non-utilization

infrastructure sub-project (e.g. of new infrastructureimproved schools,dispensaries, threshing floorsetc.)

1.2. 70% of community 1.2.1. Mid-term and end ofmaintenance committees project evaluations, beneficiaryestablished under project are assessments

-functioning after two years.

Baseline and targeted values should be shown, with the latter divided into values expected at mid-term, end of project and full impact.

ANNEX IPage 2 of 2

Narrative Summary Key Performance Indicators2 Monitoring and Supervision Critical Assumptions and(Exact targets will be Risks

determined on the basis ofresults from the pilot phase)

Project Outputs (Continued)

2. Increased utilization of 2.1. 2000 savings groups 2.1.1 Project MIS 2. Assumption: Access tomicro-finance by poor receiving finance due to credit will increase incomecommunities/groups, project activities through income-generatingparticularly women investments. Risk: Poor

2.2. At least 50% of group 2.2.1. Project MIS and investment choices. Macromembers women beneficiary assessments environment not conducive

3. Increased capacity among 3.1. 500 NGOs/communities 3.1.1. Mid-term and end of 3. Assumption: IncreasedNGOs and communities for with improved capacity for project evaluations, beneficiary capacity among NGOs andidentifying needs and solutions needs assessment and planning assessments communities will lead to local

empowerment. Risk: Macroenvironment will stifle localcapacity

Project Components (Components to Outputs)

1. Micro-infrastructure 1.1. 600 sub-projects 1.1.1. All information available 1. Assumption: Institutionalapproved in project management structure of AGeFIB will

information system respond to community needs.1.2. 540 sub-projects Risks: needs determinationcompleted process will not be

participative, AGeFIBmechanisms will not betransparent and effective

2. Micro-finance 2.1. 2000 informal savings 2.1.1. All information available 2. Assumption: There is angroups put in contact with in project management unmet demand for micro-financial institutions information system finance due to access

difficulties or lack of capital.2.2. 120 matching grants made Risk: Even with NGO

assistance credit applicationprocedures will deter the poorfrom seeking credit. Formalfinancial institutions may nothave the capacity to handlelarge numbers of poor clients

3. Capacity building 3.1. 525 training sessions held 3.1.1. All information available 3. Assumption: NGOs andin project management communities feel the need forinformation system additional capacity and will

respond to opportunities.AGeFIB will be able torespond to requests forcapacity building witheffective programs

22Baseline and targeted values should be shown, with the latter divided into values expected at mid-term, end of project and full impact.

ANNEX 2Page I of 5


Detailed Project Description

Overview

This project is in response to a government request, endorsed by the donor community during aroundtable on the social dimensions of development held in June 1994. It is part of a poverty reductionstrategy comprising four elements: (a) strengthening the national capacity to formulate and implementsocial policies, (b) monitoring the living conditions of poor and vulnerable groups, (c) promotingcommunity-based development through micro-projects, and (d) promoting employment. A social fundhas been identified as the best approach to implement the third element of the strategy, and as animportant contribution to employment promotion.

The Project has three main components:

1. small socio-economic infrastructures at the community level2. support to income-generating activities through financial intermediation3. capacity building for grassroot communities, civil society and AGeFIB.

Implementation will be the responsibility of an independent association (AGeFIB) financed by theproject, which will rely heavily on contractual services provided by private sector operators (NGOs,consulting firms, training institutions, etc.). Because the project is essentially demand-driven--that is,interventions to be financed will be almost exclusively on demand from intended beneficiaries--accurateplanning and budgeting are difficult. Project design, therefore, has to allow for maximum flexibility.This flexibility has been built in by keeping operating expenditures low and leaving a portion of thebudget unallocated. Close monitoring will guide allocations as the project evolves so as to be able torespond to emerging needs.

Institutional Arrangements

The pilot phase of the social fund has been managed by AGePIB, an agency created in August 1995 byADSD (Association pour la Dimension Sociale du Diveloppement, a non-profit private association) forthe express purpose of rnanaging the social fund and has thus far operated thanks to grants from GTZ andthe Japanese government (through a PHRD grant obtained by the World Bank), as well as a ProjectPreparation Fund. However, it has become clear during the pilot phase that a more independent structureis needed to obtain the required flexibility. Therefore, a new entity, AGeFIB, with its own independentlegal identity, was created in October 1997. AGeFIB (an association ai but non lucratif under the 1901Law of Associations) is entitled to negotiate its own financing agreements and to enter into contracts. Asa condition of effectiveness, AGeFIB will have the status of a public interest association by decree. Theproject will cover the cost of expanding/intensifying AGeFIB's activities for a period of five years. Thiswill include: (a) small investments, such as construction or rehabilitation of office space, officeequipment, furniture and vehicles, as well as consultant services, workshops and training, and (b)operating expenditures for project implementation, management and supervision, such as staff salaries(on a contractual basis), field supervision and associated subsistence allowances, office consumables,and maintenance of buildings, vehicles and equipment.

ANNEX 2Page 2 of 5

AGeFIB professional staff is selected in a competitive process on the basis of technical expertise,experience and dynamism. Although civil servants are not prevented from applying, they are requestedto leave the civil service before being hired. Overseeing the work of the agency will be a Board ofDirectors, composed of two representatives of the government, two representatives of NGOs, tworepresentatives of potential beneficiaries through community-based organizations and one representativeof the civil society.

The structure of AGeFIB has been kept lean, with the intention of facilitating a flexible approach andallowing as much opportunity for initiative as possible to the civil society. Hence the agency will focuson promotion, screening, financing and overall monitoring & evaluation, while implementation will becontracted out either to intermediaries, that is, NGOs and private firms, or, where appropriate, directly tocommunity groups. Intermediaries will be selected in a competitive manner on the basis of theirexperience, competence and reputation, as well as direct assessment of their field work.

In addition to the headquarters based in Cotonou, the agency will have four departmental offices (inAtacora, Borgou and Zou, plus one to cover the three southern departments). The first departmentaloffice to open will be in Atacora; the others will follow in a phased manner in response to demand.Departmental offices will be staffed initially by three experts (one per component) plus a junioraccountant, and will contract out specialized services as needed. They will concentrate on screening andmonitoring sub-projects of Component 1, and have autonomy to approve sub-projects up to 20 millionCFAF. Screening Committees (Comites d'Approbation) at the departmental level will have to approveall sub-projects above 20 million CFAF, as well as all exceptional requests, that is, requests fallingoutside the guidelines provided in the Operating Manual in terms of sector, target group or approach.

AGeFIB Organigram

| Board ofDirectors|

Director General

Monitoring & Finane randEvaluation Unit Accounting Unit

Socio-economic Income Generating Capacity-Building/Infrastructure Unit Activities Unit Exteral Relations

Regional Office Regional Offic Regional Office R

ANNEX 2Page 3 of 5

Project Component 1 Small Socio-Economic Infrastructure

Component 1 will finance small socio-economic infrastructure at the community level, includingpreparatory identification steps and maintenance related arrangements and training. The OperatingManual identifies eligible interventions as well as norms and criteria for selection. The basicrequirement is that the proposed sub-project addresses a priority need felt by the community and helpsthe community achieve the Minimum Social Commun, that is, a minimum package of socio-economicgoods and services considered necessary to start a self-reliant development process at the local level.Possible interventions include: rehabilitation, extension or construction of primary schools;rehabilitation, extension or construction of health centers and dispensaries; installation of water points,reservoirs and sanitation services; rehabilitation or repair of feeder roads, small bridges and other basictransport infrastructure; small socio-economic infrastructure for community use such as markets andstorage facilities.

Requests presented to AGeFIB by selected intermediaries or by the communities themselves must be theresult of a participatory process whereby the whole community, and not just the elite, took part in thediscussion and agreed with the decision. To ensure sustainability, maintenance plans will have to besubmitted together with a detailed budget and work plan. Should recurrent costs be of concern, such asin the case of construction of schools and health centers, requests will have to include provisions for suchcosts; both the health and education ministries have plans to hire additional personnel over the next fewyears (in both cases, in the context of IDA-financed projects).

Close collaboration with sectoral ministries will be necessary not only to make sure that recurrent costsare taken care of, but also to make sure that interventions financed by AGeFIB are consistent withsectoral and regional policies, and actually reinforce them. To this end, contact people have beenidentified in each relevant sectoral ministry. These contact people will assist AGeFIB in definingtechnical specifications and maintenance plans acceptable to the ministry, inform AGeFIB of relevantpolicy decisions in their sector, help assess the viability of proposed sub-projects (if necessary), and actas liaison between AGeFIB and other actors in the sector to optimize coordination. No sub-project willbe financed in the absence of a written approval by the appropriate sectoral ministry (whether on thebasis of a pre-established list or on a case by case analysis) and of clear and concrete plans to coverrecurrent costs and maintenance.

While basic environmental information will be part of the documentation necessary to obtain financing,environmental assessments may be required in some cases, and environmental education will beprovided at the community level through Component 3. The Benin Environmental Agency has a pool ofqualified experts who can be contracted to do environmental assessments.

AGeFIB will contribute 90% of the cost of approved sub-projects in the form of subsidy, while therequesting community will provide the remaining 10% in the form of goods (e.g., land, sand, woodenpoles), labor (e.g., clearing land, digging foundations, building enclosures) or cash (e.g., in the case ofwater pumps and wells, a cash contribution is required by sectoral policy). Intermediaries (NGOs orprivate firms) who will assist communities in their efforts to organize, identify and prioritize theirproblems, discuss possible solutions, select a sub-project, work out concrete plans and a budget, submit aproposal to AGeFIB and implement the sub-project, will receive a fee of up to 20% of the portionfinanced by the Credit and paid by AGeFIB (90% of the total cost of the sub-project). Local artisans andmicroentrepreneurs will be used to carry out necessary works, hence encouraging private sectordevelopment at the local level.

ANNEX 2Page 4 of 5

Intermediaries will be required to use a participatory approach, paying particular attention to the activeparticipation of women, young people, the poor and other disadvantaged groups which often do not havea voice in public fora. They will also be responsible for day-to-day monitoring and follow-up to ensurethe good use of AGeFIB funds. Should communities present their requests directly to AGeFIB,monitoring and follow-up will be sub-contracted to private sector operators active in the area (NGOs,individual consultants, consulting companies). In all cases, AGeFIB staff will conduct on-sitemonitoring on a sample basis.

Project Component 2: Support to Income-Generating Activities

This component aims at developing financial intermediation services for low-income groups, so as toprovide them with greater opportunities to increase or stabilize their revenues, as well as with the meansto access and maintain basic social services. Support to income-generating activities, therefore, will beprimarily in the form of assistance to microfinance institutions. To take into account the heterogeneity ofinstitutions involved in microfinance, the unequal distribution of financial services in the country(especially urban/rural) and the preferences/characteristics of prospective clients, the component isdivided into two sub-components, one dealing with formal financial systems, the other with informalones.

(a) Formal Financial Systems. A number of formal institutions are already involved inmicrofinance (e.g., FECECAM, PADME, PAssEF, CREP, Echoppe, etc.) and haveexpressed interest in collaborating with AGeFIB. This collaboration will take the form ofsocial intermediation aimed at facilitating the poor's access to the financial services offeredby such institutions. AGeFIB will finance social intermediation to be carried out by selectedintermediaries (NGOs and private firms), hence providing an indirect subsidy to formalfinancial institutions by lowering their cost of servicing low-income customers.

Intermediaries will be requested to: identify suitable formal financial institutions operatingin a given area, negotiate a collaboration agreement with them, conduct information andoutreach campaigns (e.g., explanation of services available and ways to access suchservices), and assist prospective clients in making contact with the institutions, opening anaccount and obtaining a credit. As part of the agreement, formal financial institutions will berequired to participate in promotion activities, offer products appropriate to the needs ofdisadvantaged groups (especially women), organize itinerant banking services and simplifyprocedures if needed, and facilitate monitoring and evaluation by providing timelyinformation. In addition, intermediaries and financial institutions will be encouraged tonegotiate particular arrangements for follow-up services to ensure high repayment rates.

(b) Informal Financial Systems. Informal financial systems, such as savings and credit groups,are already accessible to disadvantaged groups, but they can benefit from institutionaldevelopment assistance. Such assistance, to be financed by AGeFIB and delivered byselected intermediaries, will be of two kinds: (1) training and consulting services to improvethe efficiency and safety of operations, and (2) provision of matching funds to allow for anincrease in the credit portfolio and therefore outreach. Criteria for selecting informalfinancial systems are detailed in the Operating Manual and will be strict. They include:years of successful operation, membership (number and gender), accounting procedures anddiscipline, savings mobilization, and credit repayment rates. Matching funds will be madeavailable on a limited basis, with the ultimate purpose of preparing receiving organizationsto gain access to commercial sources of funds. All assistance provided to informal financialsystems will be in the form of grants, contingent on performance.

ANNEX 2Page 5 of 5

Project activities under this component complement two other IDA-financed projects, one in support ofthe rehabilitation of FECECAM (Federation of Savings and Loans Cooperatives), which is ongoing, andthe other in support of private sector development, under preparation. In particular, the Private SectorDevelopment Project has a microenterprise component which will enable PADME to extend itsoperations beyond Cotonou and Porto Novo by providing both technical and financial assistance.

Project Component 3: Capacity Building and Institutional Arrangements

This component will priimarily address capacity building at the grass-root and intermediary levels(NGOs), and aim at equipping beneficiaries with organizational, managerial and strategic skills. In thecase of grass-root communities, the ultimate goal is increased self-reliance and the development of socialcapital; in the case of intermediaries, benefits should be both in terms of improved internal functioning aswell as better support to grass-root communities. AGeFIB staff may also benefit from activities financedunder this component such as study tours to other social funds, training on Bank's procurement anddisbursement procedures and documents, and assistance provided for post-review by a third party.

Capacity-building interventions may be on demand from beneficiaries themselves or from suggestions byqualified organizations working with the intended beneficiaries (e.g., intermediaries proposing assistancefor communities, or AGeFIB proposing assistance for intermediaries). A wide variety of activities canbe financed under this component, including: information sessions/material, training, action-research,twinning arrangements, secondments and short-term technical assistance. Initial assessments suggest theneed of interventions in: participatory techniques, needs assessment, accounting, sub-project planning,and time management.

Demands for capacity-building interventions will be examined by AGeFIB and, if needed, passed to anNGO/consulting agency with capacity-building expertise to refine the requests in collaboration with theintended beneficiaries and identify the appropriate delivery mechanisms. For service delivery, threeoptions will be possible: (a) AGeFIB will do it directly, (b) AGeFIB will contract a private provider (e.g.,consultants, training institutes), or (c) AGeFIB will rely on the services of an intermediaryNGO/consulting agency which will not itself provide the capacity-building services but rather facilitateaccess to them.

Under this Component it will also be possible to carry out a pilot program of research, superviseddirectly by AGeFIB. Such a program will include:

(a) studies aimed at improving the efficiency or performance of AGeFIB, whether byaddressing a frequent problem (e.g., how to deal with land tenure issues when buildingnew infrastructure) or by seeking technical solutions (e.g., the best techniques to buildreservoirs under particular agro-ecological conditions);

(b) innovative approaches or activities not originally envisaged under AGeFIB's mandate,such as the piloting of comprehensive services to microentrepreneurs including marketingand feasibility studies.

Because of its nature, this pilot program will be subjected to very strict monitoring and evaluation.

The activities financed in relation to the institutional arrangements are described on page 1 of thisAnnex.

ANNEX 3Page I of I


ESTIMATED PROJECT COSTS

Project Component Local Foreign Total-----------------------US $ million--------------------

1. Small Socio-Economic lnfrastructure 7.7 0.0 7.72. Support to Income-Generating Activities 4.1 0.1 4.23. Capacity Building 1.5 0.1 1.64. Project Management 3.4 0.2 3.6Total Baseline Cost 16.7 0.4 17.1

Physical Contingencies 1.3 0.01 1.3Price Contingencies 2.1 0.01 2.1

Total Proiect Cost 20.1 0.4 20.5

Note: Totals may not add up due to rounding.

ANNEX 4Page I of 2


COST EFFECTIVENESS ANALYSIS SUMMARY

(Indicate currency, units, and base year)

Present Value of Flows Fiscal ImpactEconomic FinancialAnalysis Analysis3 Taxes Subsidies

Project Costs N.A. N.A. negligible negligible

Background:

Interventions of the social fund will be essentially demand-driven (negative list). Social assessmentsand related studies provide extensive evidence of unmet demand and willingness to pay for services to beprovided under the SIF. Results of the March 1997 Beneficiary Assessment suggest the followingtentative breakdown of social fund financing: (a) primary health and education infrastructure 30%;(b) water and sanitation 20%; (c) basic transport infrastructure 20%; (d) other (mainly agriculturalservices and credit) 30%. In each category, the SIF will meet only a small fraction of total needs.

The nature and conditions of SIF interventions are coherent with prevailing GoB/IDA strategies inthe respective sectors. Selection of SIF activities/projects is to be based on risk assessment andcost-effectiveness criteria. Construction and other works will be contracted to the private sector.

Incremental health and education personnel requirements likely to be generated by the SIF arealready accounted for in the Government budget; if this is not the case, communities will berequired to provide realistic plans to cover them before financing for the sub-project is approved.For all types of interventions, communities/beneficiaries are to contribute 10% of total projectcosts. Communities are also responsible for the maintenance of infrastructure provided under theSIF. The project's overall fiscal impact is therefore negligible.

Cost-effectiveness indicators4

In view of the uncertainties surrounding the precise nature, location and timing of the SIFactivities/projects, conventional economic analysis is of limited use. Instead, a comprehensivemonitoring and evaluation framework has been developed during the preparation and the pilotphases of the project (see Annex 8), to maximize cost-effectiveness of AGeFIB operations andinsure optimal results on the ground. AGeFIB staff has been sensitized to the need for systematicapplication of this framework.

Continuous monitoring and evaluation of AGeFIB operations will proceed at four levels:* the initial conditions essential for the success AGeFIB-financed projects;

If the difference between the present value of financial and economic flows is large and cannot be explained by taxes and subsidies, a brief explanation of the difference iswarranted, e.g., 'The difference between financial and economic costs arises from price controls on the inputs."

These indicators should compare the project with a suitable comparator, e.g., unit project costs of altemative project designs or international standards.

ANNEX 4Page 2 of 2

* the complementary requirements for effective and sustainable operation of completedprojects, such as school and medical supplies, qualified staff, access to technical support from lineministries;* outcomes, both in termns of project execution and impact on selected target groups, inaccordance with stated objectives; and* the performance of the principal actors (promoters, intermediaries, beneficiaries andAGeFIB staff).

Specific performance indicators are defined at each level. With respect to initial conditions, theexperience with social funds emphasizes three critical factors of success, namely the assurancethat: (a) projects adequately address priority needs of target groups, hence are identified, preparedand implemented with their full collaboration; (b) applied technologies are appropriately suited tomaintenance and management capabilities of targeted communities; and (c) locally availableresources are adequately mobilized and organized to insure proper functioning and maintenanceof micro projects.

Cost-effectiveness in project implementation will be measured against unit costs in comparable,mostly IDA-financed, activities in health, education, community-based food security andnutrition. Outcomes will be compared to prevailing standards at local, regional and nationallevels. Monitoring and evaluation of the performance of the principal actors will essentially serveto identify needs for training, technical assistance and social marketing, or for strategicadjustments in the choice of intennediaries, contract terms and AGeFIB operational procedures.

ANNEX 5Page I of I


FINANCIAL SUMMARY

Fiscal Years Ending 2003(US$ million)

Implementation Period1999 2000 2001 2002 2003

Proiect CostsInvestment Costs 2.4 3.8 4.9 4.9 2.8Recurrent Costs 0.2 0.3 0.4 0.4 0.4

Total 2.6 4.1 5.3 5.3 3.2

Financing Sources (% of totalproiect costs)

IBRD/IDA 83 82 80 79 82Co-financiersGovermment

Central 10 10 9 10 10Local

User Fees/Beneficiaries 7 8 11 11 8Total 100 100 100 100 100

ANNEX 6Page I of 6


PROCUREMENT AND DISBURSEMENT ARRANGEMENTS

1. PROCUREMENT

The procurement methods applicable to the various expenditure categories are summarized in Table A.

TABLE A: PROJECT COSTS BY PROCUREMENT ARRANGEMENTS(in US$ million equivalent, including contingencies)

Procurement MethodExpenditure Category NCB Community Other a N.B.F TOTAL

ParticipationA. Civil Works: Construction orRehabilitation of Regional Offices 0.09 0.09

(0.08) (0.08)B. Goods: Equipment, Vehicles andFurniture for central & regional offices 0.4 0.1 0.5

(0.3) (0.1) (0.4)C. Grants for Sub-projects 7.5 7.5

(5.5) (5.5D. Matching Grant 1.2 1.2 2.4

(1.2) (1.2)E. Consultants' Services 1.8 4.0 5.8

(1.8) (4.0) (5.8)F. Training 2.3 2.3

(2.3) (2.3)G. Studies, Research and Surveys 0.2 0.2

(0.2) (0.2)H. Operating Cost c 1.4 0.3 1.7

(1.2) (1.2)

TOTAL 0.5 9.3 9.2 1.5 20.51__ (0.4) (7.3) (9.0) (16.7)

Note: Figures in parentheses are the amounts to be financed by the IDA credit, excluding taxes and duties. Totals may not add updue to rounding.

a Other procurement methods include national shopping, direct purchasing of goods, selection of consultants following Bank/IDAguidelines, and expenditures following Government's administrative procedures acceptable to IDA.

b N.B.F. = Not IDA-financed.Operating costs includes incremental operating costs incurred for project implementation, management and supervision. Theseinclude office consumables, field supervision and associated subsistence allowances, building, vehicle and equipmentmaintenance and operating costs, office rental, and incremental contractual salaries (excluding civil servants salaries).

ANNEX 6Page 2 of 6

Procedures

The proposed project will follow World Bank's guidelines on procurement of goods, works and services --Guidelines. Procurement under IBRD Loans and IDA Credits, January 1995 revised January and August1996, and September 1997 (Procurement Guidelines) and Guidelines for the Selection and Employment ofConsultants by World Bank Borrowers, January 1997 and revised in September 1997 (ConsultantGuidelines)--in all respects. Preference for domestically manufactured goods does not apply. In view ofthe experience already acquired under the pilot phase and the simple nature of the procurement to becarried out under the project, the financial officer of the AGeFIB will be responsible for theimplementation of all procurement activities foreseen under the project. Procurement training was alsoprovided to AGeFIB staff during the pilot phase.

International Competitive Bidding: ICB procedures would be applied for any contract above thethreshold of about US$200,000 for goods and US$100,000 for works. Given the nature of the project, nocontracts above US$60,000 are expected, both for civil works and procurement of goods. NationalCompetitive Bidding (NCB) and Community Participation will constitute the main procurement methodsused in the project.

National Competitive Bidding. NCB procedures will be used for: (a) the procurement of works for fourdepartmental offices of the AGeFIB in the regions for individual contract costing in average US$25,000 upto an aggregate value of US$100,000; and (b) the procurement of furniture, equipment and vehicles forindividual contracts above or equivalent to US$60,000 up to an aggregate value of US$300,000. NCBprocedures will include: (a) explicit statement to bidders of the evaluation and award criteria; (b) localadvertising with public bid opening and minimum time of 30 day for bid preparation; (c) award to lowestacceptable evaluated bidder; and (d) foreign bidders will not be precluded from participating in NCB.

National Shopping method of procurement may be used occasionally for procuring readily available off-the-shelf goods or standard specifications commodities that are small in value. Size of individual contractswill be invariably less than US$60,000, for an aggregate value of US$ 100,000.

Community Participationl methods will form the bulk of the project procurement given the nature of theproject and its purpose of encouraging community self-determination. Communities, with technicalassistance from NGOs, will be implementing turnkey micro-projects (through grants for sub-projects)purchasing both services of skilled labors and goods or equipment purchased through methods outlined inthe Manual of Procedures and prescribed in the contract agreements signed with the communities.AGeFIB will contract out implementation activities to individuals, private contractors, NGOs andcommunity-based agencies such as private voluntary associations selected on criteria established in theManual of Procedures. Standard unit cost lists will be maintained by AGeFIB and will be updated everythree to six months. The lists will be used for reference in prices by communities and as price ranges forstandardized socio-economic infrastructure. Communities will hire contractors of the required skill level,which predetermines their wage rates, and procure materials and supplies by obtaining quotes from threesuppliers, when available, and selecting the suppliers with the lowest cost who fulfills their requirements.When too few qualified local contractors or suppliers are available, communities may resort to directcontracting with a local village contractor or supplier. Implementation of the full range of activitiesincluded in the micro-projects will be monitored by AGeFIB and by third party verification firms, forquality and disbursement purposes.

Consulting Services. Consultants for the projects will be selected in accordance with the Guidelines forthe Selection and Employment of Consultants by World Bank Borrowers, January 1997 and revised in

ANNEX 6Page 3 of 6

September 1997. Different procedures will be used depending on the nature of the assignment and localconditions of work. These procedures are described in detail in the Project Agreement and consist of: (a)quality- and cost-based selection for the main contracts such as capacity building and skill-transmissionassignments, project evaluation and auditing contracts, third-party post review; (b) fixed budget contracts,easy to administer and based on performance, for most NGOs and other intermediaries assignments, suchas management of turnkey micro-projects; (c) selection based on consultants qualifications, for smallproject evaluation contracts estimated to cost less than US$50,000 equivalent and carried out in rural areasfor which the need for preparing and evaluating competitive proposals is not justified; and (d) selection ofindividual consultants will be made for project management, capacity building and project evaluation.

Prior Review

Prior review will be carried out for all NCB contracts for procurement of goods and works. The first fivedraft micro-projects contracts (or more if necessary) for each of the five offices will also be reviewed.Most Bank supervision will consist of post-review on a sample basis either by the task team leader orindividual consultants/third party firms. For consulting services, prior review of documentation would berequired for: (a) contracts with consulting firms with an estimated value of US$100,000 equivalent ormore; (b) contracts with consulting firms with an estimated value between US$50,000 and US$100,000,except technical evaluation report; (c) contracts with individuals of US$50,000 equivalent or more; (d) allsole source selections of consulting firms; (e) terms of reference for all contracts regardless of value; and(e) amendments to contracts with consulting firms and individuals that result in revised value equivalent orgreater than US$50,000. Procurement plan: prior to the issuance of any invitations to prequalify forbidding or to bid for contracts, the proposed procurement plan for the Project will be submitted to IDA forreview and approval.

ANNEX 6Page 4 of 6

TABLE B: THRESHOLDS FOR PROCUREMENT METHODS AND PRIOR REVIEW(in US$ equivalent)

l _________________ l Method of Procurement lCategories NCB | Community | Other Prior Review by IDA

l l || Participation l

Civil Works for > or equal to All NCB contractsregional offices $25,000 or < to

$100,000 equiv.(Aggregate $0.1million)

Furniture, Vehicles, and > or equal to < $60,000 equiv. All NCB contractsEquipment for central $60,000 or < to (Aggregate $0.1& regional offices $200,000 equiv. million)

(Aggregate $0.3million)

Grants for Sub-projects < $60,000 equiv. First five draft micro-(Aggregate $7.5 project contracts (ormillion) more if necessary) for

each of the five officeswill be subject to priorreview

Matching Grant NA All Procedure of selectionand review detailed inManual of procedures

Consultants' Services NA $1.8 million equiv. $4.0 million Firms = $100,000 orequiv. more; Firms = $50,000

to < $100,000: excepttechnical evaluationreport; Indiv. >$50,000;sole source; all TORs;short-list; draft contract;

______________ _____________________ letter of invitationTraining, Studies, NA All see Consultants'Research, and Surveys _ Services

Documents

The project will be based on standardized bid documents and procedures firmly set-up in the Manual ofProcedures. NCB bid documents will be based on Bank Standard Bidding Documents for theprocurement of goods and small civil works contracts. Simplified standard documents, based on AGeTIP-type documents, will be used for smaller works under the project.

Consulting contracts, letter of invitations (LOIs) and evaluation criteria will be standardized and based onBank standard forms of contract and models. A Manual of Procedures, to be approved by the Bank atnegotiations, will establish the procurement procedures for the micro-projects and other NGOs orintermediate managed assignments. Technical documents for the micro-projects will include estimates oftype/number of works for geographical area; packaging of works/goods and their implementation/delivery

ANNEX 6Page 5 of 6

schedule; standard specifications and design of structures; unit costs and single structures estimatesallowing for streamlined execution and monitoring of projects.

II DISBURSEMENT

Disbursement will be made for goods, works, and services that are eligible for IDA financing.The US dollar will be considered an eligible currency for bidding and payment (paras. 2.29 and 2.32 ofthe Procurement Guidelines) and it will also be acceptable for consultant services payment.

Use of Statement of Expenditures

All withdrawal applications submitted for disbursements of funds for eligible expenditures will be fullydocumented. However, the Borrower will be authorized to submit withdrawal applications on the basis ofstatement of expenditures (SOEs) for contracts of less than US$100,000 equivalent of goods, works andconsulting firms and US$50,000 for individual consultants, training and operating costs. All supportingdocumentation for such withdrawal application claimed on the basis of SOEs will be retained by theAGeFIB and will be readily available for review by visiting World Bank missions and external auditors.all claims for expenditures above the limits of SOE expenditures indicated above would be eligible fordirect payment.

Special Account (denominated in CFA francs)

Authorized allocation of CFAF 500 million, initial deposit in a commercial bank of CFAF 250 millionupon effectiveness will increase to CFAF 500 million once disbursement and commitments reach SDR2.5 million.Direct payment: minimum application amount above or equivalent to 20 percent of Special Accountdeposit.

ANNEX 6Page 6 of 6

Disbursement categories and the percentage financed are shown in Table C below

TABLE C: ALLOCATION OF CREDIT PROCEEDS

Expenditure Category Amount in Financing PercentageUS$ million

1. Grants for Sub-projects 5.0 100% of amount disbursed

2. Civil Works 0.1 100% foreign expenditures and85% local expenditures

3. Equipment, Vehicles, Furniture and 0.4 100 % foreign andmaterials 85% local expenditures

4. Consultants' services, Audits, Training and 5.2 100%Studies

5. Matching Grants 1.2 100% of amount disbursed

6. Operating Costs a 1.2 85%

7. Project Preparation Facility 0.6

8. Unallocated 3.0

Total Financed by IDA 16.7Operating costs include incremental operating costs incurred for project implementation, management and supervision. Theseinclude office consumables, field supervision and associated subsistence allowances, buildings, vehicles and equipmentmaintenance and operating costs, office rental, and incremental contractual salaries (excluding civil servants salaries)

III PROJECT ACCOUNTS AND AUDITING

Project Account. Prior to credit effectiveness, Government will be required to deposit the first tranche ofthe counterpart funds in the amount of 162 million Francs CFA (equivalent to about US$300,000) tocover the first year of project implementation

Audit. AGeFIB will maintain project accounts in accordance with sound accounting practices acceptableto IDA.

An annual audit report of project accounts, prepared by independent auditors acceptable to IDA, and inaccordance with the Bank document "Financial Account Reporting and Auditing Handbook", January1995, will be submitted to IDA no more than six months after completion of each fiscal year. Semi-annual audit reports of the Statements of Expenditures (SOE) will be submitted within three months ofeach period.

ANNEX 7Page I of I


PROJECT PROCESSING BUDGET AND SCHEDULE

A. Project Budget (US$000) Planned Actual(At final PCD stage)

305 305

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 10 MonthsFirst Bank mission (identification) 07/04/1996 07/04/1996Appraisal mission departure 04/28/1997 05/05/1997Negotiations 05/05/1997 04/20/1998Planned Date of Effectiveness 10/30/1998

Prepared by: Ministry of Plan, Economic Restructuring and Employment Promotion

Preparation assistance: PHRD Grant, PPF, GTZ

Bank staff who worked on the project included: Maurizia Tovo, Sociologist (TTL, AFTH3), JohanneAngers, Operations Analyst (AFTH3), Bertrand de Chazal, Senior Financial Analyst (AFTS3), Jean-Charles de Daruvar, Counsel (LEGAF), Ousmane Diagana, Senior Operations Officer (AFMBJ), JohnElder, Sociologist (Consultant, AFTH3), Cecile Fruman, Micro-finance Specialist (Consultant, ASTHR),Celine Gavach, Language Team Assistant (AFTH3), Christian Loupeda, Consultant (AFMBJ), HovsepMelkonian, Senior Disbursement Officer (LOAAF), Francesco Samo, Senior Procurement Specialist(AFTS3), Antoine Schwartz, Senior Economist (PSP), Michel Voyer, Operating Manual (Consultant)Peer Reviewers: Alexandre Marc, Human Resource Specialist (EC4MS), William Steel, TechnicalSpecialist (AFTP I).

ANNEX 8Page I of I


DOCUMENTS IN THE PROJECT FILE*

A. Project Implementation Plan:

Manuel de Procedures (draft, October 1997)Operating Manual in use during the pilot phase.

Monitoring and evaluation guidelines

B. Bank Staff Assessments

C. Other:

"Determination des besoins prioritaires des communautes de base," by IGIP (February-March1997). Participatory evaluation of priority community needs conducted using SARARmethodology in a sample of rural and urban communities. Distinguishes priorities by gender.

*Including electronic files.

ANNEX 9Page 1 of 2

Benin at a glance 8/28/97

Sub-POVERTY and SOCIAL Saharan Low-

Benin Africa income Development diamond'

Population mid-1996 (milions) 5.6 600 3,229GNP per capita 1996 (US$) 360 490 500 Life expectancyGNP 1996 (billions USS) 2.0 294 1,601

Average annual growth, 1990-96

Population ({) 2.9 2.7 1.7 GNP GrossLabor force (°%) 2.5 2.6 1.7 per pnmary

Most recent estimate (latestyear available since 1989) capfta enrollment

Poverty: headcount index (°% of populabon) 33Urban population (°X of total populaton) 42 31 29Life expectancy at birth (years) 50 52 63Infant mortality (per 1,000 live births) 95 92 69 Access to safe waterChild malnutrition (% of children under 5) 36Access to safe water (% of population) 70 47 53Illiteracy (% of populaffon age 15+) 63 43 34 -BeninGross primary enrollment (% of school-age populabon) 72 72 105

Male .. 78 112 Low-ncomegroupFemale .. 65 98

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1976 1985 1996 1996Economic ratios

GDP (billions US$) 0.7 1.0 2.0 2.2Gross domestic investment/GDP 19.3 8.9 19.0 17.5 Openness of economyExports of goods and services/GDP 21.1 34.4 25.6 24.8Gross domestic savings/GDP 1.7 0.8 9.3 9.2Gross national savings/GDP 9.2 4.7 12.2 12.6

Current account balance/GDP -15.6 -4.2 -7.4 -5.3 IvsmnInterest payments/GDP 0.1 1.3 0.0 0.0 Savings InvestmentTotal debtUGDP 12.7 78.1 77.9 77.8Total debt service/exports 3.7 11.5 7.1 16.0Present value of debtUGOP .. .. 44.3 37.4Present value of debt/exports .. .. 151.5 162.7 Indebtedness

197545 1986-96 1995 1996 1997-06(average annualgrowth) - BeninGDP 4.4 3.5 4.8 5.5 5.8 Low-income goupGNP per capita 1.4 -0.8 3.0 2.2 3.0Exports of goods and services 4.4 1.8 6.0 20.0 12.3 _

STRUCTURE of the ECONOMY

(% of GDP) 1976 1985 1995 1996 Growth rates of output and investment (%)Agriculture 30.5 34.5 33.9 35.1 40_

Industry 16.2 18.1 14.2 13.7 20- Manufacturing 12.2 8.2 8.1 8.0 20-

Services 53.3 47.4 51.9 51.2 to -N..\

Private consumption 89.1 83.8 79.8 79.6 .10 - 91 92 93 94 95

General govemment consumption 9.3 15.4 10.9 11.2 - GDI I3GOPImports of goods and services 38.7 42.5 35.3 33.1 1

197545 1986-96 1995 1996(average annual growth) Growth rates of exports and imports ('A)Agriculture 3.7 5.2 0.6 7.6 ro-Industry 7.6 3.6 5.9 3.9 40-

Manufacturing 2.5 4.2 5.2 5.8Services 4.0 1.3 6.5 4.7 20

Private consumption 3.0 2.1 6.8 0.6 91 92 93594 95General govemment consumption 3.4 -0.2 18.5 3.5 20

Gross domestic investment 4.2 10.3 32.5 -7.1 40 -

Imports of goods and services 1.7 0.5 36.9 -3.3 -Export 14Imports

Gross nabonal product 4.2 3.3 4.9 5.8

Note: 1996 data are preliminary estimates. Figures in italics are for years other than those specified.

The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe incomplete.

ANNEX 9Page 2 of 2

Benin

PRICES and GOVERNMENT FINANCE1975 1985 1995 1996 Inflation %

Domestic pnces(% change) 40

Consumer prices .. .. 14.9 4.7Implicit GDP deflator 14.2 -4.9 16.6 3.0 20

Government finance(% of GOP) 0Current revenue .. 12.7 14.4 15.1 91 92 93 94 95 96

Current budget balance .. -4.7 2.2 3.2 -G OP def. +CPIOverall surplus/deficit *- -4.7 -7.0 -4.6

TRADE

(millions USS) 1985 1996 1996 Export and import levels (mill. USS)

Total exports (fob) .. 298 405 423 750Cotton . .. 42 173 210Fats .. 4 17 1 1 So

Manufactures 4 0 0 0Total imports (df) .. 326 567 548

Food12 11 1 Fuel and energy 61 73 76Capital goods 7 1 1

Export price index (1987=100) .. 157 250 253 90 91 92 93 94 95 9t

Import price index (1987=100) .. 151 176 181 3Expons mimponsTerms of trade (1987=100) *- 104 142 140

BALANCE of PAYMENTS1975 1985 1995 1996

(millions US$) Current account balance to GOP ratio (%)Exports of goods and services 144 360 531 546 oImports of goods and services 264 444 732 728Resource balance -119 -85 -201 -182

Net income -1 -21 -44 -41Net current transfers 15 62 96 107

Current account balance,before official capital transfers -106 -44 -150 -116 t

Financing items (net) 86 30 134 164Changes in net reserves 20 14 16 -48 '

Memo:_Reserves including gold (rnill. USS) 15 8 296 360Conversion rate (localWSS) 214.3 449.3 512.2 543.9

EXTERNAL DEBT and RESOURCE FLOWS

1975 1985 1998 1996(millions US$) Composition of total debt, 1996 (mill. USS)

Total debtoutstanding and disbursed 86 817 1,576 1,712IBRO 0 0 0 0 F GIDA 19 125 498 520 52 35

Total debt service 6 49 43 99 491ISRO 0 0 0 0IDA 0 2 7 7

Composition of net resource flows ° E

Official grants 20 27 113 0 709 39Official creditors 12 29 65 0Private creditors 0 -18 0 0Foreign direct investment 2 0 1 0 DPortfolio equity 0 0 0 0 366

World Bank programCommitments 4 5 76 40 A - IBRD E -8ilateralDisbursements 4 19 31 41 | B-IDA 0- Other multilateral F - PnvrtePrincipal repayments 0 0 3 3 C - IMF G - Short-termnNet tlows 4 19 27 37Interest payments 0 1 4 4Net transfers 4 18 24 34

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World Bank Document · 5. CAS objective(s) supported by the project Document number and date of...

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Transcript of World Bank Document · 5. CAS objective(s) supported by the project Document number and date of...