L 3E O DEPARMENT of STATE AGENCY for INTERNATICNAL DEVELOPHMT Washington, D.C
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511 C.AJITTA-,;SIS2:TL;Tr", IrP 571-L-c'+W- I (vaP-1' L 3e O DEPARMENT OF STATE AGENCY FOR INTERNATICNAL DEVELOPHMT Washington, D.C. 20523 UNCLASSIFIED AID-DLC/P-1031 !5/1 31-, 3 June 6, 1972 ME O4RANl M FOR THE DEVELOPMENT LOAN COWITTEE SUJECT: Bolivia - Rural Community Development Attached for your review are the recommendations for authorization of a loan in an amount not to exceed $3,000,000 to .the Government of Bolivia to assist in financing the United States dollar and local currency costs of the Community Develop ment Program administered by the Borrower' s NationAl Couunity Development Service (NCrS). Please advise us as early as possible but in no event later than close of business on Wednesday, June 14, 1972, if you have a basic policy issue arising out of this proposal. Rachel R. Agee Secretary Development Loan Committee Attachments: Sumary and Recommendations Project Analysis ANNEXES I-11V UNCLASSIFIED UNCLASSIFIED AID-DLC/P-1031 TABLE OF CONTENTS June 6, 1972 J.OLTVTA - RURAL Co1,1MITY DEVELOPENT SUNvARY AN'D RECOMEWflATIOUS ............................. .. SECTION I - NATURE OF TILE PROJECT ......... .. ........... ........ 1 A. Project Description ............ ................ e....* . 1 1. Purpose ........ .............. .......... 2. Strategy and Fecus of the Project ......................1 3. Description of the Major Elements of the Program ....... 2 4. Priorities ............................................. 2 5. Basis for the Size of the Lon .. ...... 3 6. Issue: Loan vs. Grant Funding of Self-Help Projects ... 3 7. Sub-Project Eligi~lity Criteria ................ .. 8. Preliminary Plan for Implementation .................... 5 B. Project Background ........................ ........ 1. The History of CD in Bolivia ......................... 7 2. History of the First Loan (511-L-038) .................. 7 3. Relationship of Loan to USAID and GOB Priorities ...... 1O SECTION II - PROJECT ANALYSIS ........... A. Analysis of the Executing Agen~cy (NCDS) ................... 11 1. Organizational Structure .......... a................*.. a. Central Level ........... i b. Regional Level ......... (i) Regional Offices ........ ................. 16 (ii) Aren Omeration Offices ...................... 17 (iii) Trining Centers .................. ........... 17 -2 c. Local and Compiunity Tevel ......................... 18 2. Organizational Assets ........... ........ ....... ... 20 a. Staff Qualifications .... ......... ............ ... 20 b. Plant and Equipment ............................... 22 3. NCDS System for Engineering and Administrative Sub-Project Review, Approval and Monitoring ........... 22 a. Pre-Project State .................. ..... ... .. .23 b. Project Request Stage ............ .*...... ... *o* 923 c. Project Financial Assistance Request Stage ...... ;23 d. Project Construction Stage ............... ......... 24 e. Project Completion Stage .......................... 25 4. Coordination with Other Agencies ...................... 25 5. NCDS Disbursement and Financial Control System ...... 30 at Central Office .. *o.e..............o..... ... 30 b. Regional and Area Offices ......................... 30 6. Proposed Audit Program for NCDS Internal Audit Division ........... .................... .. .. .... 31 7. NCDS Procurement and Contracting Procedures ......... 33 8. Development of NCDS Evaluation Capacity ............... 35 9. Technical-Assistance . ........ ........................ 37 B. Financial Analysis ............... ...... .. ......... 39 1. Summary Cost Estimate and Financial Plan FY 73-75 .... 39 2 Administrative Cost Analysis..........................39 -3- Page 3. Bolivia's External Debt amd Repayment Capacity ........ 41 4. Requirements of Section 611 (a) ?.A.A . ...........,....47 C. Loan Retionale and Economic Analysis ......................49 1. Characteristics of the Rural Sector ................... 49 2. Rationale for the Loan ............. ......... ..... .55 3. Economic Analysis ................... 58 a. Irrigation Projects .............................. 58 b. Feeder Road Projects o......................... 58 c. Storage Projects ............................ d. Provision of Capital ........................... 59 e. Marketing ................. .. .. .. .. .. 5 f. Human Resources ...................... .......... 59 g. Savings ........... 60 4. Social and Tditical Analysis ................ 60 a. Local Government in Bolivia ............ ....... 6 0 b. Local Organization Created by NCDS Program (Title IX Concept) ....... ............ 9 5. Selection of NCDS as-Executing Agency ................. 63 SECTION III - LOAN ADMINISTRATION ........... ...... ....... 68 A. Target Dates ............... .......... ... .. 9 .. .. .68 B. Disbursement Procedures ............ .... 9..... .. 68 C. Procurement Procedures ......... .......... .. ......969 D. USAID Monitoring Responsibilities ......................... 69 -4- Page E. Reports ............ ............... F. Conditions and Covenants ......... .... ...... .. .......... 70 SECTION IV - ENVIROMTENT ............. ....................... 72 1. Env.ironmental Determination ........................... 72 ANNEXES Annex I - Draft Loan Authorization Annex II - Certification pursuant to Section 611 (a) F.A.A. Annex IIII - Checklist of Statutory Criteria Annex IV - Translation of GOB Loan Request Annex V - Estimated NCDS projects FY 73-75 Annex VI - Estimated Externally Financed Local Procurement for NCDS Projects Annex VII - Estimated Procurement List of NCDS Equipment Annex VIII - NCDS Budget FY 73-75 Annex IX - NCDS Professional Staff Annex X - NCDS Projects Built Under Loan 511-L-038 Annex XI - Past Financial Inputs to NCDS Annex XII - Evaiation of NCDS Engineering, Plant, and Maintenance Capabilities Annex XIII - NCDS Administrative Expenditures Annex XIV - List of Present NCDS Equipment UNCLASSIFIED -q- AID-DLC/P-1031 S1"MMARY 'AND RECOMMENDATIONS June 6, 1972 1. Borrower. The Government of Bolivia (GOB) will be the borrower. The National Community Development Service (NCDS) a decentralized public institution which acts under the dir ection of the Minister of Rural Affairs and Agriculture, will be the executing agency. 2. Amount and Terms of the Loan. Up to $3 million, repayable over 40 years including a grace period of ten years on principal and with interest at 2% per annum during the grace period and 3% per annum thereafter. Up to 75% of the AID loan may be con vertible to Bolivian pesos to meet estimated local currency requirements. 3. Purpose. The objectives of the loan are (a) to encourage the increased participation of the rural population (Campesinos) in the development process through a variety of self-help pro jects which provide for both income generating infrastructure and social needs, and (b) to introduce organization and project planning and implementation skills at the community level, (c) to improve and strengthen the institutional structure of the NCDS. The loan will be used to provide support for three yea1s, to the on-going Bolivian National Community Development Service (NCDS) program of self-help projects in the rural areas of Bolivia. 4. Project Description.. The project essentially consists of support for the NCDS which will enable it to carry out its plan ned operations for FY 1973-1975. The plan provides for construct ion of 2000 self-help proJects of various types in the rural areas with emphasis on engineering and agricultural projects. This emphasis reflects the expressed desires of the communities. At least half of the cost of each self-help project will be borne by the local community in the form of cash contribution, labor and local materials. In many cases, the communities bear a greater share of the cost, depending on their ability to con tribute. The remaining balance necessary to complete each self help project is to be provided by the NCDS, together with admin istrative support, supervision, training and technical assistance. The GOB will pay for NCDS salaries and provide for some administrative support. The AID loan will pay the remainin3 expenses of tho NCDS. ThIs includes local purchase of self-help project materials, equipmgnt and supplies for the NCDS, some NCDS administrative expenses, and technical assistance and training. 5. Proposed Use of Loan Funds. (a) It is estimated that $1.75 million of the $3.0 million AID loan will be directly used in the construction of self-help projects. The bulk (at least 90%) of this $1.75 million will be used for local EXchange Rate: US$1.00 $1b 12.00 UNCIASSIFIE - ii procurement of commodities for the 2,O00 projects proposed in the NCDS three year plan (Annex VI). Some of the $1.75 million devoted construction to the of self-help projects, however, will be used for rental of construction equipment, to hire skilled labor where necessary and to cover transportation costs of the commodities which have been procured, and which the community canot cover. (b) About $700,000 will be used for equipment and supplies for NCDS the (see Annex VII, Equipment List). It is estimated that about $60,000 will be used for "off-the-shelf" purchases in Bolivia, and about $640,000 will be used for imports from Code 941 suppliers. (c) $231,000 will be used to pay for some administrative of expenses the NCDS (see Annex VII, Proposed NCDS budget for FY 1973-1975). (d) Up to $319,00O will be used for technical assistance and training expenses. It should be noted that the figures mentioned above are estimates applicable to a projected three year program. The program will be subject to