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Document of The World Bank Public Disclosure Authorized Report No: 20929-AR Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED LEARNING AND INNOVATION LOAN IN THE AMOUNT OF US$5.00MILLION TO THE Public Disclosure Authorized GOVERNMENT OF ARGENTINA FOR AN INDIGENOUS COMMUNITY DEVELOPMENT LIL September 19,2000 Argentina Country Management Unit Environmentally and Socially Sustainable Development Unit Latin America and Caribbean Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective September 2000) Currency Unit = Argentine Peso LC = US$1 US$1 = LC FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AC AdvisoryCouncil CAS CountryAssistance Strategy CMU CountryManagement Unit EA EnvironmentalAssessment GEF Global EnvironmentalFacility GOA Governmentof Argentina IBRD InternationalBank for Reconstructionand Development (World Bank) IDA InternationalDevelopment Association (World Bank) IDB Inter-AmericanDevelopment Bank IDF InstitutionalDevelopment Fund INAI NationalInstitute for IndigenousAffairs (InstitutoNacional para Asuntos Indigenas) IPA IndigenousProtected Area LCR Latin Americaand the CaribbeanRegion LCSES Environmentaland SociallySustainable Development Sector Unit of LCR LIL Learningand InnovationLoan LMU Local ManagementUnit NCB NationalCompetitive Bidding NGO Non-GovernmentalOrganization PAD ProjectAppraisal Document PMU ProjectManagement Unit SA SpecialAccount SC SubprojectsCommittee TG TechnicalGroup TOR Terms of Reference UCAF Administrativeand FinancialCoordination Unit Vice President: David De Ferranti Country Manager/Director Myrna Alexander Sector Manager/Director John Redwood Task Team Leader/Task Manager: Jorge E. Uguillas and Sandra Cesilini ARGENTINA INDIGENOUS COMMUNITY DEVELOPMENT LIL CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Learning and development issues to be addressed by the project 5 4. Learning and innovation expectations 5 C. Project Description Summary 1. Project components 6 2. Institutional and implementation arrangements 7 3. Monitoring and evaluation arrangements 8 D. Project Rationale (This section is not to be completed in a LIL PAD) E. Summary Project Analysis 1. Economic 8 2. Financial 8 3. Technical 9 4. Institutional 9 5. Environmental 9 6. Social 10 7. Safeguard Policies 11 F. Sustainability and Risks 1. Sustainability 12 2. Critical risks 12 3. Possible controversial aspects 13 G. Main Loan Conditions 1. Effectiveness Condition 13 2. Other 13 H. Readinessfor Implementation 13 I. Compliancewith Bank Policies 13 Annexes Annex 1: ProjectDesign Summary 14 Annex 2: DetailedProject Description 18 Annex 3: EstimatedProject Costs 22 Annex 4: CostBenefit Analysis Summary, or Cost-EffectivenessAnalysis Summary 23 Annex 5: FinancialSummary for Revenue-EarningProject Entities, or FinancialSummary 24 Annex 6: Procurementand DisbursementArrangements 25 Annex 7: ProjectProcessing Schedule 33 Annex8: Documentsin the ProjectFile 34 Annex 9: Statementof Loansand Credits 37 Annex 10:Country at a Glance 40 Annex 11: SocialAssessment 42 Annex 12:Legal Analysis 54 MAP(S) ARGENTINA INDIGENOUS COMMUNITY DEVELOPMENT LIL ProjectAppraisal Document Latin America and Caribbean Region LCSES Date: September19, 2000 Team Leader: Jorge E. UquillasRodas CountryManager/Director: Myrna Alexander SectorManager/Director: John Redwood ProjectID: P057473 Sector(s): SY - Other SocialSector LendingInstrument: Learning and InnovationLoan (LIL) Theme(s): PovertyTargeted Intervention: Y ProjectFinancing Data 3 Loan B Credit B Grant O Guarantee O Other (Specify) For Loans/Credits/Others: Amount(US$m): $5.0 million ProposedTerms: VariableSpread & Rate Single Currency Loan (VSCL) Graceperiod (years): 5 Years to maturity:15 Commitmentfee: .75 Front end fee on Bank loan: 1.00% FinancingPlan: Source LOCl Foreign Total GOVERNMENT 0.88 0.00 0.88 IBRD 5.00 0.00 5.00 Total: 5.88 0.00 5.88 Borrower: GOV. OF ARGENTINA Responsibleagency: NAT'L INSTITUTE OF INDIG. AFFAIRS Address: Lavalle 547, 7o Piso Buenos Aires Contact Person: Alejandro Isla, President Tel: 43939924/4345/4304/4306 Fax: Email: Estimateddisbursements ( Bank FY/US$MI_ FY 2001 2002 2003 2004 Annual 1.0 2.0 1.5 0.5 Cumulative 1.0 3.0 4.5 5.0 Projectimplementation period: October 2000 - June 2003 Expectedeffectiveness date: 10/01/2000 Expectedclosing date: 12/31/2003 OCS PADfF Rev-M, ZDD A. ProjectDevelopment Objective 1. Projectdevelopment objective: (see Annex 1) The project developmentobjective is to establish the basis for community-drivendevelopment and managementof natural resourceson indigenouslands. This includesstrengthening social organizationand culture, formulatinglocal developmentand natural resource managementplans and testing innovative approachesto addressingkey socioeconomicand environmentalissues in a gender-sensitivemanner. The project will develop an indigenouscommunity-driven development model from experiencein three cases, the Mapuche territory of Pulmari(Neuquen Province), the Diaguita-Calchaquiterritory of Amaicha del Valle/Quilmes(Tucuman Province) and the Kolla territoryof Finca Santiago(Salta Province).The project will be considered successfulwhen local indigenous social organizationsare legally recognized and functioning;mechanisms are in place and workingto resolve land tenure conflicts;an IndigenousProtected Areas legal frameworkhas been formulated;there has been a successfulintegration of sustainablenatural resources managementpractices in community development plans; several successful new types of economicalternatives have been identifiedand testedin each targetedarea; and there is an on-goingprocess of technologyadoption which would in the long run lead to increasedproductivity and income among projectbeneficiaries. The generalobjective of the Govemment'sindigenous peoples policy, as expressedin Article75 of the NationalConstitution, is to guaranteethe respectfor their culturalidentity and their right to a bilingual and inter-culturaleducation, to recognizethe juridicalpersonality of their communitiesand the communal possessionand ownershipof traditionally-heldlands. It also establishesthe need to ensuretheir participationin the managementof naturalresources which they controland in other areas of their interest. To achievethe statedobjectives, the projectwill supportthe followingactivities: (a) Socialand Cultural Strengtheningof IndigenousCommunities, by supportinglocal indigenousorganizations and indigenous culturalheritage, land regularization(including legal assistanceand conflictresolution), and planninglocal communitydevelopment and naturalresource management; (b) SustainableUse of Natural Resources,by makinginvestments in selectedactivities such as water managementagricultural diversification, pastures and forestrymanagement, artisan production and marketexchanges; and (c) ProjectManagement, includingimplementation arrangements, monitoring and evaluation,and communicationsand disseminationof lessonslearned. An associated project, financed by a GEF grant, will complementthis LIL, supporting biodiversity conservationand promotingthe creationof indigenousprotected areas. 2. Key performanceindicators: (see Annex 1) The mainperformance indicators are relatedto: (a) screeningand selectionof socialand productive investments(among them cost-benefitestimates, cash flow, ratingof environmentalrisks and remediation measures);(b) supervisionof implementationof socialand productiveinvestments (among them success rate of new enterprises,number of visitsper investmentproject, checks on environmentalmitigation); (c) institutionalcapacity and local facilitation(among them reportsof the Local ManagementUnit, LMU, to the communityorganization, adoption of soundbusiness practices, formulation of communitydevelopment plans and proposals);and (d) institutionalcapacity and outwardlinkages (including networking, regular participationin outsideevents, establishmentof inter-communityconflict resolutions mechanisms, support from provincialand federalgovernment agencies and establishmentof a legal frameworkfor indigenous protectedareas). -2 - B. Strategic Context 1. Sector-relatedCountry Assistance Strategy (CAS) goal supportedby the project: (seeAnnex 1) Documentnumber: R2000-1 16/IFC/R2000-120 Dateof latestCAS discussion: 06/27/2000 Improvingtargeting and effectivenessof socialassistance generally through innovative mechanisms for reachingthe poorestis an importantelement of the socialdevelopment strategy of the CAS for Argentina. The CASenvironmental actions include promoting sustainable growth coupled with conservationof natural resourcesthrough improved protection and management. A progressbenchmark for socialdevelopment is establishmentof community-basedprojects in ruralareas and innovativepartnerships for poverty reduction,which is matchedin the case of environmentby the benchmarkof establishingand properly managingprotected areas. The two objectives(social and environmental)will be addressedby the project. Provenpractices for achievingthese objectives,at leastas regardsindigenous peoples, are not currently availableto the Governmentof Argentina. The projectwill help developsuch practices and contributeto the broaderCAS objectivesof environmentallyand sociallysustainable development. Accordingto the FY01-04 CAS, the focus on insuringthat the poor participatein the developmentprocess