Public Disclosure Authorized MINISTRY OF LOCAL GOVERNMENT AND MINISTRY OF FINANCE Public Disclosure Authorized DRAFT ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK Public Sector Governance for Service Delivery Program Public Disclosure Authorized Project ID: No. P169384 June 2019 Public Disclosure Authorized EXECUTIVE SUMMARY Project Description The Government of the Republic of Zambia (GRZ) has formulated a Program centered around the Governance pillar of the Seventh National Development Plan (7NDP) to accelerate the implementation of decentralization. The proposed World Bank-financed Public Sector Governance for Service Delivery Project (PSGSDP) will support Key Result Areas of the Government Devolution namely; 1) Devolution implementation; 2) Fiscal decentralization implementation; 3) Citizen participation promotion; 4) Local authorities’ debt dismantling; and Capacity development. Some of the elements of the Government’s program are already under implementation. Thus far, the implementation of the Government program has focused on the preparation of Sector Devolution Plans and the strengthening of the organizational structures and human resource capacities of local governments. Also, some policy actions have been taken to reduce the debt burden of local governments. Fifteen sector functions have been devolved and Ten Sector Devolution Actions Plans have been prepared. New organizational structures for Local Councils have been approved, and Staff Registers of all staff performing the devolved functions have been compiled. This is being done as a prelude to the transfer of their human resource (HR) management function from the Public Service Commission/Teachers Service Commission to the Local Government Service Commission (LGSC). The Central Government has assumed the payment of salary and pension obligations of local governments as an interim measure until local governments can strengthen their financial management capacities. Although the Government program has made significant progress, much more needs to be done. The Government has put in place a policy framework for devolution and established a Local Government Equalization Fund with the intention of providing formula based fiscal transfers to local governments. Though the Government has started providing an equalization grant to resource local governments (since 2015), the lack of transparency and predictability of these transfers reduce their effectiveness as a sustainable source of financing for local service delivery. In addition, the weak capacities and institutional systems of local governments — especially in public financial management, mobilization of local revenues and accountability of local governments to citizens — are critical binding constraints for the effective and efficient delivery of local services. For example, although the equalization fund requires local governments to use a minimum of 20 percent of the grant for capital investment purposes, most local governments use almost the entire grant to meet their operating expenses, leaving very little to finance the critical ii investments required for service delivery. Also, although some local governments are receiving development partner support1, the majority of local governments need financial and technical support to improve their service delivery capabilities. The proposed Project will support establishing an incentive framework for enhanced institutional performance, as well as provide an integrated package of financial and institutional development to strengthen the governance and service delivery capacities of local governments, thereby enabling them to fulfill their service delivery mandate in a transparent and accountable manner. The proposed project will take a systematic and dynamic approach to institutional development, which will include a combination of a financing framework that incentivizes institutional performance of local governments. In addition, this will be guided by the Central Government’s concurrent policy, regulatory and capacity-building support by the Central Government to help strengthen the core functions of local governments. It would also ensure that the capacities of local governments are strengthened in relation to the functions that they perform (“learning by doing”) and that they are held to account (by citizens and the national government), as well as appropriately rewarded for the efficient performance of these functions. Rationale for ESMF The proposed project activities are expected to have low environmental and social impacts, which can be readily mitigated through an environment and social impacts assessment process. All site-specific details and approach will be informed through a demand driven and consultative approach. Capital investments by town councils from the performance grants will include small infrastructure works limited to construction and rehabilitation of public services within well-defined publicly owned land and assets such as markets, public toilets and bus stations. Potential social and environmental risks arising from these works include disruption of access to public spaces and services, community health and safety, occupational health and safety of workers, disposal and management of waste generated during works, non-inclusion of project affected parties, particularly women, youths and persons with disability, leading to unequal distribution of opportunities to participate in the project and potential risks of weak grievance redress mechanisms and poorly 1 For example, the German Corporation for International Cooperation (GIZ), Germany’s development agency, is supporting local governments in three provinces to strengthen their planning, financial management and local revenue systems. iii coordinated community communication process. An assessment of Gender Based Violence (GBV) risk on the project was conducted. The outcome of the assessment rated the project as low risk. Whilst the risk was rated low, preventive measures to ensure the risk is mitigated have been proposed in line with the World Bank Good Note Practice on Labour Influx. The ESMP highlights mitigation measures to be monitored during project implementation and the Stakeholder Engagement Plan (SEP) also includes prevention of GBV as a key subject to be discussed during stakeholder consultations. Furthermore, the draft Grievance Redress Mechanism (GRM) provides for reporting of GBV cases that may arise during the project cycle. To ensure the environmental and social risks associated with the development of small infrastructure are managed, this ESMF has been prepared to manage risks in beneficiary town councils where specific activities to be undertaken have not yet been defined. During the implementation of the project and associated subprojects, preparation, construction and operational activities are likely to result in the following environmental and social impacts; job creation and business opportunities, loss of vegetation during site preparation, increased levels of construction and domestic waste, increased noise levels, visual intrusion and alteration in aesthetics and increased incidences of HIV/AIDS and Sexually Transmitted Infections (STI’s). Since most of the specific project activities and locations have not yet been agreed on, the proposed environmental assessment instruments are ESMF and RPF. The ESMF and RPF also include provisions related to compliance with national and World Bank ESS: The ESMF which has been prepared, and will be disclosed, it provides detailed step-by- step processes for identification and screening of the sub-projects of critical environment and social risks; procedures for evaluation of significance of environmental risks and impacts; development of site-specific mitigation and monitoring plan when sub-project details are identified; and institutional arrangement for safeguards implementation and capacity building measures. The ESMF provides guidance for development of any associated Environmental and Social Management Plans (ESMP) that will present mitigation measures to address the potential environmental and social impacts of the Project at the sub-project level, once the activities location and scope have been identified. The ESMPs will be prepared, consulted with stakeholders and made available to beneficiary agencies prior to commencement of detailed planning and physical works, consistent with ESS1 Assessment and Management of Environmental and Social Risks and Impacts and supervision requirements for the physical, chemical and biological environment (waste, water and sanitation etc.), health and safety of construction workers and safety and security of neighboring communities are built into the ESMF. iv Implementation and Monitoring System The project will be implemented by the PFM Reform Unit in the MoF in close collaboration and partnership with the Intergovernmental Fiscal Relations Unit, the Accountant General (both in the MOF), the Decentralization Secretariat, the Ministry of Local Government (MLG), the Office of the Auditor General and the Town Councils. The PFM Unit successfully managed the recently closed Public Financial Management Reform Project (PFMRP) and will take responsibility for overall project management and will coordinate with other agencies for the implementation of the project component activities and delivery of results with other Ministries and Department ESMF Outline The first three Chapters (Chapters 1 to 3) of the ESMF provide background information that starts with a description of the proposed