Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
Report No: 65797
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
Public Disclosure Authorized PROPOSED CREDIT
IN THE AMOUNT OF SDR 29.6 MILLION (US$ 46.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF BENIN
FOR THE
DECENTRALIZED COMMUNITY DRIVEN Public Disclosure Authorized SERVICES PROJECT (PHASE I) ADAPTABLE PROGRAM LENDING (APL)
April 10, 2012
This document is being made publicly available prior to Board consideration. This does not Public Disclosure Authorized imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank's policy on Access to Information. CURRENCY EQUIVALENTS (ExchangeRate Effective February 29, 2012)
Currency Unit = CFA Franc 488 FCFA = US$1 US$ 1.56 = SDR 1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS
ADV Association de Développement Initiative Villageoise ESMF Environmental and Social APDC Agents Porteurs de Développement Management Framework Communautaire EU European Union APL Adaptable Program Loan FADeC Fonds d'Appui au Développement AGETIP Agence d'Exécution des Travaux des Communes d'IntérêtPublic FCFA Francde la Communauté AGETUR Agence d'Exécution des Travaux FinancièreAfricaine Urbains FM Financial Management ANCB Association Nationale des FY Fiscal Year Communes du Bénin GDP Gross Domestic Product BCEAO Banque Centraledes États de GIZ Deutsche Gesellschaftfir l'Afrique de l'Ouest InternationaleZusammenarbeit CAA Caisse Autonome d'Amortissement (GIZ) CAS Country Assistance Strategy GMT Grassroots Management Training CCS Comités Communaux de Suivi ICB International Competitive Bidding CDD Community Driven Development IDA International Development CDPR Comités Départementaux des Association Pistes Rurales IFR Interim Financial Report CGC Comité de Gestion Communautaire INSAE Institut National de la Statistique et CONAFIL Commission Nationale des de l'Analyse Economique Finances Locales IGAA Inspection Générale des Affaires CPS Centres de Promotion Sociale Administratives CTNPR Conseil Technique National des IGF Inspection générale des finances Pistes Rurales ISP Implementation Support Plan DAT Délégation à l'Amenagement du KfW Kreditanstaltfür Wiederaujbau Territoire M&E Monitoring and Evaluation DGAE Direction Générale de MDG Millennium Development Goals l'Administrationde l'Etat MDGLAAT Ministry of Decentralization, Local DGB Direction Générale du Budget Govemment, and Administration DGDGL Direction Générale de la and Development of the Territory Décentralisationet de la MEMP Ministry of Maternal and Primary Gouvernance Locale Education DP Direct payment NCB National Competitive Bidding DPP Direction de la Programmationet NGO Non-govemmental organization de la Prospective ORAF Operational Risk Assessment EFA/FTI Education for All / Fast Track Framework PAD Project Appraisal Document ROSC Reports on the Observance of PDC Plan de Développement Communal Standards and Codes PDO Project Development Objectives SCRP-3 Stratégie de Croissancepour la PIM Project Implementation Manual Réduction de la Pauvreté PIU Project Implementation Unit SSDCC Secrétariataux services PNDCC Projet National d'appui au décentralisés conduits par les Développement Conduit par les communautés (Secretariat for Communautés Decentralized Community Driven PSDCC Projet de Services Décentralisés Services) Conduits par les Communautés SYSCOHADA Système Comptable de (Decentralized Community Driven l'Organisationpour Services Project) l'Harmonisationen Afrique du PONADEC PolitiqueNationale de Droit des Affaires Décentralisationet de UNICEF United Nations Children's Fund Déconcentration WA Withdrawal Application RPF Resettlement Policy Framework
Regional Vice President: Obiageli K. Ezekwesili Country Director: Madani M. Tall Sector Director: Ritva Reinikka Sector Manager: Lynne Sherburne-Benz Task Team Leader: John Van Dyck
Table of Contents
I. Strategic Context...... 1 A. Country Context...... 1 B. Sectoral and Institutional Context...... 2 C. Higher Level Objectives to which the Project Contributes...... 5 II. Project Development Objectives (PDO) ...... 6 A. PDO ...... 6 1. Project Beneficiaries ...... 6 2. PDO Level Results Indicators...... 6 III. Project Description ...... 6 A. Project components...... 6 B. Project Financing ...... 12 C. Program Objective and Phases...... 12 D. Lessons Learned and Reflected in the Project Design...... 14 IV. Implementation...... 15 A. Institutional and Implementation Arrangements...... 15 B. Results Monitoring and Evaluation...... 16 C. Sustainability ...... 16 V. Key Risks and Mitigation Measures...... 17 A. Risk Ratings Summary Table ...... 17 B. Overall Risk Rating Explanation...... 17 VI. Appraisal Summary ...... 18 A. Economic and Financial Analysis...... 18 B. Technical ...... 19 C. Financial Management...... 20 D. Procurement ...... 22 E. Social (including safeguards)...... 23 F. Environment (including safeguards)...... 23 Annex 1: Results Framework and Monitoring...... 25 Annex 2: Detailed Project Description...... 29 Annex 3: Implementation Arrangements...... 46 A. Overall Implementation Arrangements...... 46 B. Funds Flow and Disbursement arrangements...... 47 C. Procurement Arrangements...... 52 Annex 4: Operational Risk Assessment Framework (ORAF)...... 56 Annex 5: Implementation Support Plan...... 59
PAD DATA SHEET Benin Decentralized Community Driven Services Project (APL Phase I) PROJECT APPRAISAL DOCUMENT
AFRICA AFTSP
Basic Information Date: 10-Apr-2012 Sectors: Sub-national government administration (30%), Other social services (30%), Primary education (30%), Health (5%), Water supply (5%) Country Director: Madani M. Tall Themes: Other human development (40%), Decentralization (40%), Social Sector Manager/Director: Lynne D. Sherburne- safety nets (20%) Benz/Ritva S. Reinikka Project ID: P117764 EA Category: B - Partial Assessment Lending Instrument: Adaptable Program Loan Team Leader(s): John Van Dyck Joint IFC: No
Borrower: Republic of Benin Responsible Agency: Ministry of Decentralization, Local Government, and Administration and Development of the Territory Contact: Victorin Djacoto Title: Permanent Secretary, CONAFIL Telephone No.: (229) 2130-4030 Email: [email protected]
Project Implementation Period: Start Date: 03-May-2012 End Date: 30-Jun-2016 Expected Effectiveness Date: 30-Sep-2012 Expected Closing Date: 30-Jun-2016
Project Financing Data(US$M) Loan [ ] Grant Term: standard IDA credit [X] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost (US$M): 46.00 Total Bank Financing (US$M): 46.00
Financing Source Amount(US$M) BORROWER/RECIPIENT 0.00 International Development Association (IDA) 46.00 Total 46.00
Expected Disbursements (in USD Million) FiscalYear 2013 2014 2015 2016 2017 2018 2019 2020 2021 Annual 10.00 14.00 14.00 8.00 0.00 0.00 0.00 0.00 0.00 Cumulative 10.00 24.00 38.00 46.00 46.00 46.00 46.00 46.00 46.00 Project Development Objective(s) To improve access to decentralized basic social services and to mainstream the CDD approach for such services.
Components Component Name Cost (USD Millions) Service Delivery Grants to Communes 36.00 Pilot Social Safety Net Program 5.00 Technical Assistance and Capacity Building 5.00
Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [X]
Does the project require any waivers of Bank policies? Yes[] No [X] Have these been approved by Bank management? Yes[] No[] Is approval for any policy waiver sought from the Board? Yes[] No [X] Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ]
Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 x
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X
Legal Covenants Name Recurrent Due Date Frequency Financing Agreement Reference: Section 4.01(a) 30-Sep-2012 Effectiveness condition
Description of Covenant The Recipient has (i) established the SSDCC in form and substance acceptable to the Association; and (ii) recruited for the SSDCC a Coordinator (Secr6taire Ex6cutif), a financial management specialist, a procurement specialist, and a grassroots management training specialist. Name Recurrent Due Date Frequency Financing Agreement Reference: Section 4.01(b) 30-Sep-2012 Effectiveness condition
Description of Covenant The Recipient has recruited six (6) finance controllers to support the Communes. Name Recurrent Due Date Frequency Financing Agreement Reference: Section 4.01(c) 30-Sep-2012 Effectiveness condition
Description of Covenant The Recipient has adopted the PIM in form and substance acceptable to the Association. Name Recurrent Due Date Frequency Financing Agreement Reference: Section II.B.4 of 31-Jan-2013 Four months after Schedule 2 effectiveness Description of Covenant The Recipient shall appoint an external auditor in accordance with the provisions of Schedule 2, Section III of the Financing Agreement. Name Recurrent Due Date Frequency Financing Agreement Reference: Section II.B.5 of 31-Jan-2013 Four months after Schedule 2 effectiveness Description of Covenant The Recipient shall install, and thereafter maintain operational throughout the implementation of the Project, a computerized accounting system within the SSDCC, in form and substance acceptable to the Association.
Team Composition Bank Staff Name Title Specialization Unit Josiane M. S. Luchmun Program Assistant Program Assistant AFTSP Tawfik M. Ramtoolah Consultant Public Sector and AFTPR Decentralization Serge Theunynck Consultant Education and Community AFTED Driven Development Abdoul-Wahab Seyni Senior Social Development Social AFTCS Specialist John Van Dyck Senior Operations Officer Team Lead AFTSP Lucian Bucur Pop Senior Economist Safety Nets HDNSP Christophe Ribes Ros Consultant Safety Nets AFTSP Itchi Gnon Ayindo Senior Procurement Specialist Procurement AFTPC Aissatou Diallo Senior Finance Officer Disbursements CTRLA Hyacinthe Gbaye Education Economist Education AFTED Africa Eshogba Olojoba Senior Environmental Environment AFTEN Specialist Sylvie Charlotte Ida do Rego Program Assistant Program Assistant AFMBJ Felicien Donat Edgar Economist, Poverty Poverty AFTP4 Towenan Accrombessy Anthony Molle Senior Counsel Legal LEGAF Alain Hinkati Financial Management Financial Management AFTFM Specialist Gbetoho Joachim Boko Consultant Decentralization and Local AFTSP Governance Mathias Gogohounga Consultant Procurement AFTPC Nina Rosas Raffo E T Consultant Safety Nets AFTSP Non Bank Staff Name Title Office Phone City
Locations Country First Administrative Location Planned Actual Comments Division Republic of Benin All 77 communes REPUBLIC OF BENIN
DECENTRALIZED COMMUNITY DRIVEN SERVICES PROJECT (APL PHASE I)
PROJECT APPRAISAL DOCUMENT
I. Strategic Context
A. Country Context
1. Benin has made important economic and political gains over the last two decades. Following the 1990 National Conference which marked the beginning of a new era of openness, multiparty democracy and a radical shift from a centrally-planned to a market-based economy, real GDP grew by an annual average rate of 4.4 percent during the decade of the 1990s and thereafter by 4.3 percent between 2001-2008, compared with 0.3 percent between 1986 and 1989. The global economic crisis led to a deceleration in growth-from 5 percent in 2008 to 2.7 percent in 2009 and 2.6 percent in 2010-largely due to difficulties in the cotton and re-export sectors and the 2010 floods. Growth was expected to recover to 3.1 percent in 2011.
2. In the last decade, the country has held regular free and fair elections both at central and local levels. The latest presidential elections took place on March 13, 2011 and the incumbent, Boni Yayi, won a second and final mandate with 53 percent of the vote. Legislative elections were held on April 30, 2011. These elections represent the fifth presidential and sixth legislative elections since the new Constitution in 1990. The country also began holding local elections in 2002, building the foundations for decentralization, and then in 2008. The next local elections are scheduled to be held in 2013.
3. Key human development indicators have seen improvements in the last decade, but they still fall well short of what is needed to achieve the Millennium Development Goals (MDGs). Potentially more worrisome, income poverty rose from 28.5 percent in 2002 to 33.3 percent in 2007 and to an estimated 35.2 percent in 20091. While the global crisis has certainly played a role in this negative performance, the forthcoming Poverty Assessment is expected to shed more light on the underlying factors (both domestic and global) behind this trend. The impact of the recent global economic crises has been intensified by Benin's lack of an efficient or coherent safety net system. While a few safety nets are included in the budget (food for work, food aid, school feeding and others in the health sector), they are not well targeted and their effectiveness is uncertain.
1Due to changes in methodology, these figures are not entirely comparable and are provided here as an illustration which should be interpreted cautiously.
1 B. Sectoral and Institutional Context
4. Benin's National Conference of 1990 marked a historic break from the authoritarian and strong centralizing political and economic system that had prevailed until then. The conference led to the preparation of a new constitution which was overwhelmingly approved in a referendum in December 1990. In addition to the adoption of a multiparty system as the basis for political organization, the new constitution recognized the freedom of "territorial collectivities" to administer themselves under specific conditions supervised by the central government. The role of the central government was henceforth to ensure "the harmonious development of territorial collectivities on the basis of national solidarity, regional potentialities and interregional balance." (Article 153 of the Constitution). Despite the seeming shift in the balance of power to territorial collectivities, the question of how much real authority and resources should be devolved to the local level remained controversial, and it took the authorities another nine years to work out the operational details of the process.
5. Finally in 1999, a set of laws was adopted to define the legal and institutional framework within which the decentralization process was to be organized. There were to be, respectively, a unique level of decentralized entity (the commune) and equally only one level of deconcentration (the department), from where central institutions would supervise and assist communes to carry out their new legal responsibilities. 77 communes and 12 departments were created.2 A commune is a financially autonomous, legal entity run by a Council of officials elected by universal suffrage, the executive head of which is the Mayor chosen by them. The head of the department and therefore the supervisory authority of communes is the "pr6fet", six of whom were appointed, one for two departments. A proposed law to increase the number of departments to 29 is expected to be considered in the current session of the National Assembly.
6. It took another four years for the first communal elections to be organized in 2003 followed by the second ones in 2008. The communes are now firmly in place and running, albeit at different speeds, some (i.e. those with special status and a few of the urban ones) able to discharge, with varying levels of performance, their responsibilities, others (mostly the rural and isolated ones) struggling to do so. While broadly the three areas of responsibilities transferred to communes are primary education, health and water management, they specifically include the following activities as per law 97-029 (some of which are shared with the central level): planning, infrastructure (building /maintenance of roads, street lighting), environment, hygiene and sanitation (drinking water and waste management), literacy, early childhood and primary education (building, equipment and maintenance of schools), health and social education (building, equipment and maintenance of public health centers), economic services and investments (building, equipment and maintenance of markets and abattoirs).
2 A commune is made up of arrondissements, below which are villages for rural communes and city districts for urban ones. There are thus 12 departments, 77 communes, 546 arrondissements and 3,628 villages or city districts. Three of the 77 communes have special status (Cotonou, Parakou and Porto-Novo) meaning they would have a few responsibilities more than an ordinary commune. Special status is conferred on the basis of three criteria, namely, size, population and ability to mobilize local resources. Arrondissements, villages and urban districts are administrative but not legal entities and they do not have financial autonomy. In the context of this project, community is generally taken to mean either village or urban district (quartierurban).
2 7. Other major developments regarding the decentralization agenda took place in 2008 and Box 1: PONADEC 2009. The Fonds d'Appui au Diveloppement des Communes (FADeC) and the Commission PNAE,luceinOtbr20,s Nationale desNatinaledesFinacesLocaes Finances Locales CoNAFIL)CONAIL) theGovernment's institutional strategicconditions framework for broad aimed and sustainable at creating were set up and the Politique Nationale de D¢ralisationD&enraliatin et de DDiconcentration oncntraion governance,dvlpetbsdo transparency, oriae and local oaempowerment. (PONADEC) was finalized. FADeC is a It seeks to empower and define the roles and transfer mechanism that seeks to equalize and responsibilities of all the actors involved in consolidate all transfers to communes. FADeC decentralization: central authorities, local elected transfers are made up of: (i) an operational officials, the civil service at all levels, development allocation to cover recurrent costs of partners, and local populations. The strategy covers communes' decentralized responsibilities; and 10 years (2009-2019) and contains a detailed action (ii) an investment allocation to cover costs of plan for its implementation. The implementation of capital expenditures related to decentralized PONADEC is structured around 5 key priorities: (i) services. The investment allocation is further ensuring that local development is at the heart of broken down into non-earmarked and public policy; (ii) ensuring that decentralization and earmarked portions;earmrke porion;ththe fomerformer determinedetemine ononthe modernization of government; (iii) recognizing the the basis of the size of a commune, its role of the commune and reinforcing the democratic population and poverty level, and its expression; (iv)making the fight against poverty an performance, and the latter on the basis of integral part of decentralization policy; and (v) specific sectoral needs. CONAFIL is charged reinforcing institutional capacity of all actors involved with examining the modalities, mechanism, in decentralization through a better allocation of criteria and amount of transfers to communes; public resources and provision of technical support. setting up monitoring and evaluation of the performance of FADeC; and ensuring the proper functioning of FADeC, especially regarding the swift disbursement of budgeted funds. Since its inception, the Government has shown a strong commitment to FADeC, committing FCFA 10.9 billion (USD 21.7 million) for FADeC transfers in 20 10 and FCFA 20.5 billion (USD 40.8 million) in 2011.
8. The 2010 Public Expenditure Review, which focused on decentralization, concluded that (i) transfers have heavily favored urban communes with special status, (ii) communes are not exercising their full mandates, and (iii) the execution of capital expenditures has been particularly weak. The three communes with special status received 36 percent of total transfers despite having only 15 percent of the total population.
9. The principal constraints to a higher rate of execution for capital expenditures are the weak implementation capacity of authorities at all levels, lack of predictability of transfer and long delays in received funds, burdensome and poorly known procedures for public expenditures, insufficient capacity in using the integrated financial management system due to staff turnover, lack of qualified personnel in the Direction G-rale du Budget (DGB) and low capacities for procurement, and delays in preparation of procurement plans and work plans - or even the absence of these documents. For expenditures funded by internal resources, these factors are compounded by weak capacity for planning, implementation, and monitoring and evaluation. For externally-financed expenditures, complicating factors include poor
3 understanding of donor procedures, lack of predictability of funding, and delays in mobilizing counterpart funds.
10. The Community Driven Development (CDD) approach-operating in its current form in Benin since 2005-offers part of the answer for improving the execution performance of capital expenditures for basic services. At its core, this approach aims to empower communities to identify and implement small-scale, low complexity development activities. Poor communities identify their local needs, receive funds, plan and implement the projects chosen, and monitor the provision of services that result from those projects. In the Benin context, communities have exercised these functions in partnership with communes (Benin's lowest level of government), which have delegated to communities the authority to implement such projects as part of their Communal Development Plans (PDCs).
11. The CDD approach in Benin has been widely used by communities across Benin under the International Development Association (IDA)-supported National Community Driven Development Project-in French, Projet National d'appui au Developpement Conduit par les Communautes (PNDCC) 3. It built on the experience of three earlier successful World Bank- funded participatory development projects in Benin (prior to actual decentralization) which involved communities, while refining the approach by involving communes in the project and improving community procurement. Since 2005, over 700,000 people participated in PNDCC grassroots management training in 1,518 communities (about 40 percent of communities in Benin). Within these same communities, about 29,000 people exercised project management responsibilities, of which 3,365 top performers were trained to become grassroots management agents and trainers. About 1,441 community subprojects (primary schools, health posts, water systems and markets) have been completed as of March 13, 2012, against the target of 1,400. About 141,550 students are enrolled in primary schools constructed or rehabilitated under the project. Government ownership of the program has been strong, and co-financing from public resources amounted to about US$3 million per year. The project is expected to close on April 30, 2012.
12. PNDCC has also built the capacity of communes to integrate CDD into their commune development plans, or plans de developpement communal (PDC), and to delegate implementation of portions of these plans to communities via the CDD approach. It has helped line ministries (such as education, health, water and sanitation, agriculture, livestock and fisheries) to incorporate this approach into their sectoral strategies. Furthermore, the Ministry of Economic Analysis, Development, and Planning has prepared a directive guiding ministries, communes and communities on the adoption of the CDD approach, which was approved by Cabinet on October 5, 2011. Finally, the project has supported good governance and accountability through capacity-building in demand-driven methods at all levels, as well as procurement and fiduciary management at the community and local government levels. Based on the successful experience under PNDCC, the CDD approach has also been adopted by the Ministry of Education for one third of the primary schools program financed by the Education for All / Fast Track Initiative (EFA/FTI) Project. The experience under the EFA/FTI program
3 The $50 million PNDCC (of which $37.7 was an IDA credit and $12.3 million an IDA grant) was approved by the Board on October 7, 2004. An Additional Grant of $12 million under the Crisis Response Window was approved on July 6, 2010. The project, which is 99 percent disbursed, will close on April 30, 2012. 4 shows that for primary school construction, the CDD approach delivered results faster and at lower cost than conventional methods for village-scale, low-complexity basic service infrastructure.
C. Higher Level Objectives to which the Project Contributes
13. Benin's new poverty reduction strategy for 2011-2015, the Strategie de Croissancepour la Reduction de la Pauvrete (SCRP-3), retains the same strategic pillars as SCRP-2, i.e.: (i) accelerating sustainable growth and transforming the economy ; (ii) development of infrastructure; (iii) reinforcement of human capital; (iv) improving the quality of governance; and (v) promoting equitable and sustainable national development. Social protection, including safety nets, appears to take a more prominent role in the pillar on reinforcement of human capital, and the extent of high vulnerability among the population has increased the demand for social safety net measures. In terms of the pillar on improving the quality of governance, a key priority action is the rationalization of administrative structures to clarify their roles and responsibilities on the basis of the principle of subsidiarity4 . In regard to the last pillar, decentralization is seen as a critical means of reducing disparities across regions and reducing poverty. This pillar also includes the development of a solid partnership with civil society organizations to increase transparency and accountability in public affairs.
14. Finally, the SCRP-3 particularly singles out the CDD approach as a recommended implementation mechanism for achieving the goals of the strategy. According to SCRP-3 (paragraph 342), "the CDD approach, which promotes participatory local development, will be used for the implementation of projects at the local level." As is currently the case, projects implemented through this approach will be drawn from the PDCs, which are seen as the local vehicle for achieving the objectives of SCRP-3. SCRP-3 specifies that the CDD approach must be based on the following three principles: 1) training of communities in key facets of project execution; 2) delegation of responsibility for implementation from communes to communities; and 3) stimulation of the local economy by relying on local skills.
15. The Country Assistance Strategy (CAS) for Benin for FYO9-12 (Report No 46485 - BJ) was discussed by the Board on February 26, 2009. The CAS has three key pillars: (i) strengthening competitiveness and accelerating private sector-led growth; (ii) improving access to basic services; and (iii) promoting better governance and strengthening institutional capacities. The proposed project directly supports the second and third pillars by financing the construction of basic community infrastructure, supporting Government's decentralization reforms, and financing a pilot safety net program to benefit the poor. The CAS called for a follow-up operation to the PNDCC to support decentralization, help local governments to align their development plans with the SCRP and community priorities, strengthen accountability and transparency in local decision making, and eventually harmonize donor support around a common program.
4 For an explanation of the principle of subsidiarity, please see page 13.
5 II. Project Development Objectives (PDO)
A. PDO
16. For the proposed project (which represents the first phase of the APL series), the Project Development Objective is to improve access to decentralized basic social services and to mainstream the community driven development approach for such services. This objective will also be the objective of the overall APL series.
1. Project Beneficiaries
17. The beneficiaries of the project will be individuals in poor communities targeted to receive support for construction of small-scale basic infrastructure (component one), pilot safety net interventions (component two), and grassroots management training (component three). In the project monitoring framework, beneficiary numbers will be disaggregated by gender.
2. PDO Level Results Indicators
18. The project's performance in attaining the PDO will be measured through a set of 6 outcome indicators. These indicators (particularly numbers 1, 2, 4, and 5) are similar to those used in the PNDCC, and therefore will allow comparability and continuity of measurement.
1. Direct project beneficiaries (number); of which female (percent) 2. Resources transferred through FADeC that are executed by communities for basic social infrastructure through delegation of responsibility from communes (percent) 3. Timeliness of FADeC transfers to communes (average number of days' variation from the published transfer schedule) 4. Students enrolled in schools constructed/rehabilitated under the project (number) 5. People in rural areas with access to an improved water source constructed/ rehabilitated under the project (number) 6. Temporary employment created in labor intensive public works subprojects (number of person-days)
III. Project Description
A. Project components
Component 1: Service Delivery Grants to Communes (IDA US$36.0 million).
19. This component aims to strengthen the delivery of basic services at the decentralized level in line with the objectives of Benin's SCRP-3 and PONADEC. It will support increased levels of fiscal transfers to local governments (communes) to be used for investments that are included in their PDCs. Eligible expenditures will include investment projects in the areas of education, health, water, and commerce (public markets). Whereas under the PNDCC IDA
6 funds flowing to subprojects went directly from the Project Implementation Unit (PIU) to communes or communities, the project resources would be transferred to communes periodically during the year through the FADeC fiscal transfer system. The estimated size of the transfers would equal about US$12 million per year, in three tranches per year according to FADeC procedures, which equates to an average of about US$160,000 per commune per year-with poorer communes receiving more than this average, and wealthier communes receiving less.
20. Eighty percent of resources under this component will fund community-level investments that are consistent with PDCs in the areas of education, health, water, and market infrastructure. For these relatively simple community-level investments, the responsibility for implementation would be delegated by the communes to communities through the CDD approach. Resources would be transferred to communes through an earmarked window of the FADeC controlled by the Ministry of Decentralization, Local Government, and Administration and Development of the Territory (MDGLAAT) 5 (see figure 1), and would only be made available once an agreement has been signed between a commune and community to delegate responsibility for implementation of an eligible subproject. Allocation of resources among communes would be weighted in favor of the poorer communes, by means of a relative poverty index that will be prepared by the Institut National de la Statistique et de l'Analyse Economique (INSAE). Once allocations to communes are completed, selection of beneficiary communities will be made by communal councils on the basis of pre-defined criteria related to poverty and lack of access to basic services.
21. For more complex investments that deal with multiple villages, communes would retain responsibility for implementation. Twenty percent of the resources under component one will support commune-level infrastructure investment. These resources would be transferred to communes through the guichet non-affecte investissement (non-earmarked investment window) of the FADeC, and as such they would follow the procedures for allocation, transfer, management, and reporting for this window. Specifically, this means that allocation among communes would be made on the basis of the FADeC allocation formula administered by CONAFIL, which incorporates population, poverty, and performance. Transfers would occur periodically throughout the year in line with the FADeC schedule for transfers. World Bank resources would be linked to specific investments in the PDCs, enabling traceability. Supported expenditures would need to be limited to certain types of activities (education, health, water, and public markets) to ensure compliance with World Bank environmental and social safeguards requirements.
22. Unlike PNDCC, all 77 communes in Benin will receive support for commune and community subprojects under the proposed project. In PNDCC, the three urban communes with special status (Cotonou, Porto Novo, and Parakou) had been excluded.
Given that the use of the FADeC earmarked window under MDGLAAT is new, it will be evaluated at the end of the first phase of the program and adjusted as needed in phase I.
7 Figure 1: Flow of Funds for Component One
Ministry of Decentralization Ministry of Education (MEMP) Capacity Building (M DG LAAT) Budget Budget (example of a sector ministry) MDGi.AAT
Donors Govt IDA (PSDCC) Donors Govt EFA/FTI andother L ministries
*. * . 80%
Other Capacity Non- w MDGLAAT MEMP ~~sector Bidn 0 earmarked earmarked earmarked earmarked Building window windowwwnndowindow window earardo CONAFIL
Commune (Commune Development Plan) Capacity Large and Medium- size Small Building complex and multi- community- Communes infrastructure community scale infrastructure infrastructure
Principle of Subsidiarity
O Delegation of Delegation of Community execution to Direct execution to Capacity contracting Building by an agency community .4) GMT
PSDCC *** Government .... > Donors
8 Component 2: Pilot Social Safety Net Program (IDA US$ 5.0 million)
23. Benin's social safety net system was shown to be insufficiently developed to permit significant scaling-up to mitigate the impact on the poor and vulnerable of the global food, financial, and fuel shocks experienced from 2008 to 2010, as well as the floods that struck the country in 2010. Existing safety nets are small in scale (with the exception of school feeding), fragmented, poorly evaluated, and not easily scalable in times of crisis. There is an important need to strengthen Benin's safety net system so that it can help to counteract the recent increase in poverty in Benin, despite the country's good economic growth performance, and to allow for a more effective, targeted, and timely response to future shocks.
24. The July 2010 PNDCC Additional Financing set aside financing for technical assistance to help Benin strengthen its social safety net system. The first phase of the technical assistance, a review of Benin's existing social safety net programs including recommendations for strengthening safety nets, was completed in May 2011. Among other recommendations, the review suggested that the Government consider developing a new safety net program combining two windows: cash transfers for the chronic poor, particularly those households unable to provide labor, together with labor-intensive public works for households with available labor. These windows should be capable of scaling up rapidly in times of crisis. In the second phase of the technical assistance under PNDCC, which is currently near completion, the Government is conducting a feasibility analysis 6 for this new safety net program.
25. This component would support a pilot of the safety net program recommended by the review. The objective of the pilot would be to test an approach to increase income and consumption and improve the ability to cope with shocks among targeted vulnerable population groups. The program will be composed of two elements: i) a basic unconditional cash transfer to all targeted households, and ii) labor-intensive public works for the same households to provide the opportunity to earn an additional transfer during the agricultural lean season. The cash transfer intervention is intended to increase the household income over a sustained period while the public works program seeks to provide a predictable transfer during the lean season to encourage beneficiary households to avoid negative coping decisions, which include selling assets, pulling children out of school and sending children to work.
26. The implementation of the pilot would largely echo the implementation arrangements for component one. About 15 percent of communes in the country (about 12 communes) would be targeted for the pilot program according to their levels of income poverty, contribution to national poverty, and their levels of food insecurity. Within each participating commune, the selection of villages would be made randomly from a pool of the poorest villages. The random selection of villages would enable an impact evaluation of the safety net pilot, in order to inform a decision on the scale up of the program.
6 This feasibility analysis is examining the viability of different implementation options for the proposed safety net program in terms of (i) type of beneficiaries and targeting mechanism for both the cash transfer and public works windows; (ii) conditionality or unconditionality of cash transfer window, and if conditional, what type of conditionality; (iii) sectors and type of works for public works window; (iv) size of transfers/wages and duration of program; (v) mechanisms for payment and verification of conditionality (if applicable); (vi) monitoring and evaluation arrangements; (vii) implementation arrangements; and (viii) intervention areas for the pilot phase. The feasibility assessment is developing simulations to show the estimated costs, coverage, and impacts of different program options. 9 27. Once villages are selected by their communes, they will receive Grassroots Management Training (GMT) (see sub-component 3.3) and undergo a Participatory Poverty Assessment to enable them to identify the factors underlying poverty in their community, identify the poorest and most vulnerable households, and prioritize their needs. The prioritization of needs would help the communities to determine the type of public works sub-projects for which they will receive financing, from among the menu of eligible sub-project types. The communities' proposals for public works sub-projects will be approved by the communes and also vetted, as necessary, by the relevant sectoral ministry or authority, such as the Conseil Technique National des Pistes Rurales (CTNPR) and Comites Departementaux des Pistes Rurales (CDPR) in the case of rural roads. The choice of sub-projects will be formalized in sub-grant agreements signed between the commune and the Comite de Gestion Communautaire (CGC). The process for sub-project preparation by the CGCs and the approval by communes of public works sub- projects will follow the same mechanism as for CDD sub-projects in component one.
28. Overall implementation will be supervised by CGCs. The CGCs, based on their training in GMT, will procure all needed tools and materials and recruit a local private contractor to act as the site supervisor for the public works sub-project. The site supervisor will enforce working hours, define and assign tasks to be performed by beneficiaries, and keep attendance records. Supervision of public works activities will be done by the technical staff of the communes on a regular basis and attendance records will be checked periodically by the CGCs. Commune technical staff will also ensure that sub-projects comply with environmental and social safeguards. Payments of both the basic cash transfer and public works wages will be effected by one or more payment agencies selected on the basis of the following criteria: i) service coverage and ability to provide timely service at the community level in the communes selected for the pilot; ii) review of financial management capacity and fiduciary track record in providing payment services; and iii) level of fees proposed by the payment agency.
Component 3: Technical Assistance and Capacity Building (IDA US$5.0 million)
29. Subcomponent 3.1: Technical Assistance and Capacity Building for MDGLAAT and other key Ministries. This sub-component will aim to strengthen the performance of the FADeC and to ensure the necessary capacity is in place to supervise and mainstream the CDD approach. Capacity building will be provided for CONAFIL to strengthen administration of the FADeC (for example, by improving the transparency of the calculation of allocations, fiduciary controls, and monitoring and evaluation). MDGLAAT's capacity to implement the project will be ensured by the creation of the Secretariat for Decentralized Community Driven Services (SSDCC in French). Technical assistance will be given to prefectures to strengthen their technical and financial capacity to ensure the quality of decentralized investments. Assistance will also be given to key sectoral and cross-cutting Ministries to implement decentralization and deconcentration while incorporating and streamlining the CDD approach into their regular operations. This assistance builds on the PNDCC's support to sectoral ministries to include CDD in their sectoral strategies, which will require continued follow-up after the closing of PNDCC. A capacity-building plan, with measurable final objectives and progress benchmarks will be prepared for this sub-component (and sub component 3.2). The sub-component will be coordinated with other IDA and donor activities to ensure complementarity and avoid overlap.
10 The sub-component will also aim to strengthen the institutional capacity of the Ministry of Family and Social Affairs to enable its deconcentrated staff in the Centres de Promotion Sociale (CPS) in each commune to perform key functions relating to the safety net pilot program in component two.
30. Subcomponent 3.2: Technical Assistance and Capacity Building for Communes. This subcomponent builds on the capacity-building program for communes supported by PNDCC. It will strengthen communes' capacity to (i) improve participatory preparation of PDCs, (ii) implement poverty targeting; (iii) adopt the CDD approach for the implementation of small-scale community-level investment projects; and (iv) implement social protection projects (safety nets). The technical assistance will be coordinated with other IDA and donor activities to ensure complementarity and avoid overlap. One output of this sub-component would be, inter alia, a specific CDD Guide for Communes describing how to implement small investment projects through CDD-as a complement to the Guide for PDC preparation. This subcomponent will also finance, for communes, an implementation guide for small social protection projects. A capacity-building plan, with measurable final objectives and progress benchmarks will be prepared for this sub-component in cooperation with the National Association of Communes in Benin (ANCB).
31. Subcomponent 3.3: GrassrootsManagement Training (GMT)for Communities. Capacity building of communities to participate in the commune's development planning process and to take on the responsibility for implementing development projects is a key element of the CDD approach. This sub-component will support the expansion of the GMT program, which has already been successfully conducted in 1,518 communities under PNDCC, to cover all 3,700 communities in Benin-regardless of whether they will implement a project through the CDD approach. Refresher training will be offered to communities already reached. The GMT will be updated to contain a module on social safety nets for those communities that will participate in the safety net pilot. The component will take advantage of the existing large network of trained community development agents from PNDCC, which will greatly reduce the start up costs of the training. The large number of radio emissions that have already been recorded under PNDCC could largely be rebroadcast under the proposed project.
32. Subcomponent 3.4: Social Accountability, Monitoring and Evaluation. This sub- component will support the roll-out of community scorecards in communities in Benin as part of the GMT. Through focus groups and facilitated meetings, the scorecard process will engage communities in discussions with service providers on their performance, and on actions that can be taken to address performance shortcomings. The community scorecards component is expected to be implemented by the SSDCC together with a non-governmental organization (NGO) to be contracted by MDGLAAT. The sub-component will also support the monitoring and evaluation function of the SSDCC, periodic technical audits, and the impact evaluation of the safety nets pilot.
11 B. Project Financing
33. Lending Instrument. Given the need for a continuous engagement over a sustained period to support consolidation of the approach, the project will be structured as an Adaptable Program Loan (APL) with three phases.
Table 1: Project Cost and Financing
tIBRD or cost IDA Financing Project Components (US$ Financing (percent) million) (US$ million) 1. Service Delivery Grants to Communes 36 36 100 2. Pilot Social Safety Net Program 5 5 100 3. Technical Assistance and Capacity 5 5 100 Building
Total Project Costs 46 46 100 Interest During Implementation 100 Front-End Fees 100 Total Financing Required 46 46 100
C. Program Objective and Phases
34. For the overall three-phase, 12 year APL series, the program objective is to improve access to decentralized basic social services and to mainstream the CDD approach for such services. Phase I of the program will focus on building capacity at the central, commune, and community levels for development planning, fiduciary controls, monitoring and evaluation, and community implementation of development projects, and piloting social accountability mechanisms. Phases II and III, with indicative amounts of $50 million each7 , will focus more explicitly on translating that capacity into increased responsibilities for communes to fulfill all of their mandates, and ensuring that the involvement of central ministries in local service delivery is limited to their legal mandate. Phases II and III will also focus on making sustained refinements to the transfer system, monitoring and evaluation arrangements, and scaling-up/mainstreaming of social accountability mechanisms. Given that the use of the FADeC earmarked window under MDGLAAT is new, it will be evaluated at the end of the first phase of the program and adjusted as needed in phase II. As the series progresses, the Bank will also encourage partners to align increasingly with the program, whether through co-financing or parallel financing.
35. APL Triggers. The triggers that will signal readiness to proceed to the second phase of the APL will be organized around four key principles (the "FAST" principles: Fiduciary, Additionality and predictability, Subsidiarity, and Transparency and accountability).
7 These amounts are indicative only, to be discussed with Government during the preparation of the second and third phases, and contingent on resource availability.
12 36. Fiduciary. Capacity for ensuring adequate fiduciary controls at decentralized levels is developing but still limited. The project would support capacity building at both communal and central levels to building financial management (FM) and procurement capacity. Acceptable commune audits will be required for continued transfers. In addition, following the Ethiopia Protection of Basic Services model, continuous random audits will be undertaken by an independent firm on a random selection sample of localities. At the community level, the Grassroots Management Training approach will build community capacity for the financial management and procurement of small-scale projects.
* Trigger 1: In 2015, the FADeC and 90 percent of communes will have up to date financial audits with published plans for implementation of recommendations to correct any revealed deficiencies.
37. Additionality and predictability. This principle will aim to ensure that the project resources are additional to Government resources supporting decentralized basic service delivery, and do not simply substitute for public funds that would otherwise have been channeled to local governments.
* Trigger 2: During the project, the Government will transfer at least 3.4 percent of domestic revenues to communes through the FADeC. * Trigger 3: Timeliness of FADeC transfers to communes is respected (average variation from published transfer schedule does not exceed 15 days during the course of the project)
38. Subsidiarity. Subsidiarity, widely used as an organizing principle in decentralized systems, is also included as one of seven "guiding principles" of the SCRP 3. The principle states that any given activity should be undertaken by the lowest-level actor that can effectively carry it out. In practice, this means that in a decentralized system such as Benin's, communities can be the most effective entities to manage construction and maintenance of simple, single- village facilities such as small primary schools, whereas more complex multi-village infrastructure (secondary schools, for example) will be directly implemented by the commune. Given that communes are the lowest level of government in Benin with legal standing, execution by communities implies a decision by communes to delegate the responsibility for small, simple facilities to community associations. Adherence to the principle of subsidiarity will be measured in the project by the percentage of small, simple infrastructure that is constructed by communities.
* Trigger 4: In 2015, at least 15 percent of resources transferred through FADeC will be spent by communities for basic social infrastructure through delegation of responsibility from communes.
13 39. Transparency and accountability. The positive effects on service delivery of increasing transparency and accountability are well known, and PONADEC places an emphasis on the need for increased transparency at the decentralized level. On the demand side, the CDD approach in and of itself is a powerful tool for increasing accountability of public service provision. In addition, the project will support the roll-out of community scorecards to engage communities in discussions with service providers on their performance, and on actions that can be taken to address performance shortcomings. On the supply side (i.e. in terms of actions planned by the Government to boost its own accountability and transparency), there are a number of measures that could be supported by the project, including increasing public participation in local budgeting and planning including through more participatory Community Development Plans (PDCs), increasing access to information on budgets and service delivery performance, and strengthening bodies such as the Comites Communaux de Suivi (CCS).
* Trigger 5: In 2015, at least 90 percent of communes will have second generation Community Development Plans (PDCs) which were prepared in a participatory process.
D. Lessons Learned and Reflected in the Project Design
40. The CDD approach has been proven to deliver resultsfaster and more economically than conventional methods for village-scale, low-complexity basic service infrastructure. In Benin, this has been borne out by the performance of the PNDCC, and in school construction under the EFA/FTI program, where the CDD approach proved to be more efficient and effective than contracting out to contract management agencies.
41. The PNDCC performed well in construction of village infrastructure and community participationbut for its approach to be sustainable, it needs to be mainstreamed and further integrated with the country's decentralized system. This lesson is the principal motivation for channeling project resources through the FADeC system.
42. Having scalable safety nets systems already in place before the onset of shocks is essential to be able to respond effectively and in a well-targeted manner. Benin's social safety net system was shown to be insufficiently developed to permit significant scaling-up to mitigate the impact on the poor and vulnerable of the global food, financial, and fuel shocks experienced from 2008 to 2010, as well as the floods that struck the country in 2010. There is an important need to strengthen Benin's safety net system so that it can help to counteract the recent increase in poverty in Benin, despite the country's good economic growth performance, and to allow for a more effective, targeted and timely response to future shocks.
43. Safety net programs in Ethiopia and Tanzania have provided a model for combining public works programs and cash transfers to enhance development impact. Cash transfers can help to increase the household income over a sustained period while a public works program can provide a predictable transfer during the lean season to encourage beneficiary households to avoid negative coping decisions, which include selling assets, pulling children out of school and sending children to work.
14 IV. Implementation
A. Institutional and Implementation Arrangements
44. The Ministry of Decentralization, Local Government, and Administration and Development of the Territory (MDGLAAT) will be responsible for the overall supervision and coordination of the Project.
45. The National Commission for Local Finances (CONAFIL), which is charged with administering FADeC and which operates under the aegis of MDGLAAT, will take primary responsibility for administering the grants to communes under component one. CONAFIL will be responsible for (i) setting grant allocations for communes in line with criteria agreed between CONAFIL and the Bank; (ii) ensuring the timeliness, transparency and predictability of transfers from the Treasury to communes; (iii) signing sub-grant agreements with communes based on the template to be included in the Project Implementation Manual (PIM) to ensure that eligibility criteria for communes are met8; and (iv) monitoring and reporting on the execution of funds by communes. CONAFIL's monitoring oversight of the funds transferred to communes will be bolstered by periodic technical and financial audits to verify the appropriate use of funds, and by financial controllers to be placed in each of the six Departments in the country.
46. Once resources are transferred to them through FADeC, communes will be responsible for the execution of commune and community sub-projects. They will: a) target their poorest communities based on targeting criteria provided by MDGLAAT with the support of INSAE; b) form committees to approve project proposals from targeted communities and then include these projects in their Plan de Developpement Communal (PDC), Annual Investment Plan, and Procurement Plan; c) for communal sub-projects, execute such sub-projects; d) for projects where execution will be delegated to communities, sign a sub-grant agreement with community associations based on the template to be included in the PIM; e) provide capacity building for communities in the form of GMT; and f) supervise project execution for projects delegated to communities.
47. A proposed new Secretariat for Decentralized Community Driven Services (SSDCC in French) will be created in the MDGLAAT and would take responsibility for implementing components two and three, as well as for fiduciary oversight of the Project. This structure would provide technical capacity for mainstreaming CDD, particularly in regard to training communities to engage in the CDD approach, and helping Ministries and communes to mainstream CDD in their operations. The Secretariat would also monitor the implementation progress at the community level of subprojects, and coordinate the start-up and implementation of the safety net pilot. In addition to its head, the SSDCC would require financial management and procurement experts, grassroots management training expertise, expertise in safety nets, and
8 Eligibility criteria in the PIM will include, among others: (i) formation by the commune of a Commission de Passationdes Marchis Publics in line with the decree no 2010-496 of November 26, 2010; (ii) up to date and acceptable financial audits; (iii) formation by the commune of a Community Sub-projects Approval and Monitoring Committee, and (iv) opening of two commune accounts to hold PSDCC funds transferred through FADeC for commune and community sub-projects.
15 monitoring and evaluation, civil engineering, and communications functions. These staff will be recruited competitively.
B. Results Monitoring and Evaluation
48. The M&E system would be designed to operate at the national, regional and community levels and will build on and enhance existing systems. The existing monitoring system for FADeC fiscal transfers managed by CONAFIL will be enhanced to allow for tracking of flow of funds and execution by communes-including transfers from communes to communities-and will provide the data on timeliness of transfers needed for the PDO indicators. At the community level, the existing PNDCC system will be adopted and refined by the SSDCC, and will provide timely collection of data on the PDO indicators related to direct project beneficiaries, students enrolled in schools constructed or rehabilitated under the project, and people with access to an improved water source in rural areas. Beneficiary satisfaction will be measured by two beneficiary impact assessments, one at mid-term and one at the end of the project.
49. Due to the pilot nature of component two, it will include funding for a randomized impact evaluation. As a randomized evaluation, it will be able to attribute causality to the pilot program, and therefore will be a key input into the decision as to whether the pilot should be eventually scaled up.
C. Sustainability
50. This project represents the successful conclusion of the strategy adopted by the Government in 2004 (and supported by PNDCC) to promote the CDD approach in Benin and mainstream it into government funding and implementation mechanisms. While IDA resources under PNDCC were channeled through a parallel structure, Government co-financing followed regular national financial channels. This project takes the mainstreaming of CDD to the next logical step: the complete integration of funding channels and project supervision into regular government structures.
51. The project will represent a significant share of funds flowing through the FADeC. The projected US$12 million in project resources to be transferred annually through the FADeC represents about 29 percent of expected transfers of Government resources of about US$40.8 million through FADeC in 2011. In 2010, Swiss Development Cooperation and the United Nations Capital Development Fund tested the use of FADeC for donor funds, and Kreditanstalt fir Wiederaufbau (KfW) and the European Union are expected to channel their resources through FADeC soon. In terms of fiscal sustainability, while the resources of the Bank and other partners will represent an important share of overall transfers to local governments in the beginning, the APL triggers are designed to ensure the continued growth of Government's own financing of FADeC transfers.
52. It is expected that recurrent expenditures implied for maintenance of the new infrastructure built under component one will be adequately sustained, since the arrangements regarding the roles and responsibilities of different actors, financing, and training for
16 maintenance will be included as part of the design of all community subprojects. Overall, maintenance mechanisms will be designed according to the concerned sector policy. International experience shows that maintenance of infrastructures is generally better when they are built through bottom-up and participatory processes than through top-down ones.
V. Key Risks and Mitigation Measures
A. Risk Ratings Summary Table
Rating Stakeholder Risk Moderate Implementing Agency Risk
- Capacity Substantial - Governance Substantial Project Risk - Design Moderate - Social and Environmental Moderate - Program and Donor Substantial - Delivery Monitoring and Sustainability Substantial Overall Implementation Risk Substantial
B. Overall Risk Rating Explanation
53. The CDD approach is well established in Benin, but channeling donor resources to local governments through the Government's fiscal transfer system has only been done on a small scale. Key risks include:
54. Government may not maintain its funding for local service delivery through FADeC at sufficient levels. The APL triggers will include the Government's adherence to maintaining funding above an agreed percentage of revenues.
55. Some local government officials and donor partners may view the CDD approach as being opposed to decentralization. The design of the project itself seeks to debunk the idea that CDD and decentralization are incompatible. The project team will consult closely with commune associations such as the National Association of Communes of Benin (ANCB) and the technical and financial partners, whose feedback and experiences were incorporated in preparation and will continue to be taken into account during implementation.
56. Ministries may be resistantto fully adopt the CDD approach or to channelfunds through the FADeC. The Ministry of Development has prepared national CDD directives as guidance for
17 Ministries to integrate CDD into their sectoral strategies. These directives will be a valuable tool in helping Ministries move towards a more mainstreamed role for CDD.
57. Mayors may see the Project as a competitor for resources. Project preparation will include dialogue and consultation with the ANCB, which represents mayors, and will support it to play a harmonizing role among mayors.
58. Fraud and corruption. The Project includes institutional strengthening subcomponents for central ministries, communes, and communities. Frequent audits will verify financial and technical compliance. Remedies including suspension of disbursement can be applied if necessary. Furthermore, the project, with its strong involvement of the grassroots as part of the CDD approach, will engender a high level of social accountability which should boost citizens' voice in demanding good governance. Finally, Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants, dated October 15, 2006 and updated January 2011, shall apply to the proposed project.
VI. Appraisal Summary
A. Economic and Financial Analysis
59. It is difficult to estimate the project's likely economic rate of return since the majority of the community subprojects are of a social nature and do not easily lend themselves to economic analysis. Still, there is a strong economic rationale for the project-it will build needed basic social infrastructure in a cost effective manner. Solid evidence for the approach's cost- effectiveness comes from the primary schools program financed by the Education for All / Fast Track Initiative (EFA/FTI) Project, which provides a natural experiment for measuring the cost- effectiveness of the CDD approach in Benin versus alternative methods. The EFA/FTI program is split between the CDD approach managed by PNDCC (one third) and the two main Contract Management Agencies, the Agence d'Execution des Travaux Urbains (AGETUR) and the Agence d'Execution des Travaux d'Interet Public (AGETIP). Since 2008, 340 primary schools (i.e 615 classrooms) have been constructed using the CDD approach. The comparison of the three parallel sub-programs shows that the CDD approach has outperformed the other approaches. In May 2010, 93 percent of the 2008 CDD program was completed, while the agencies had completed only 8 percent and 6 percent respectively of theirs, with a unit cost 2 (US$149 and 155 per M ) that was one third more expensive than classrooms built through the CDD approach (US$112 per m 2 ).
60. The continued expansion of the CDD approach also supports greater allocative efficiency in public expenditure. Like in PNDCC, the proposed project will empower communities to allocate scarce resources across sectors through the promotion of participatory decision making at the local level (the participatory community planning process), thereby ensuring that such resources are applied most efficiently in response to local priorities. Broad-based participation creates local ownership which, combined with other complementary activities that PNDCC provides (such as capacity building, etc.), makes the subprojects sustainable and extends the life of the investment's benefits.
18 61. The transfers in the pilot safety net component (whether conditioned on labor or unconditional) are devised to mitigate poverty, promote equity, and help Benin to build its ability to manage shocks. In recent years the World Bank's support of cash transfer operations has expanded, especially in low income countries such as Benin. A review of the current portfolio of cash transfers highlights the multidimensional use of this instrument in terms of (i) promoting human development and productivity through income and consumption smoothing (e.g., Ethiopia, Malawi, West Bank and Gaza) (ii) protecting especially vulnerable groups and population cohorts such as orphans and vulnerable children (e.g., Nepal, Lesotho, Kenya) and (iii) preventing irreversible losses from shocks and emergencies (e.g., Bangladesh, Zambia). As the portfolio has evolved, cash grants have typically formed part of a series of safety net interventions, depending on the needs and objectives of specific programs.
62. Empirical evidence indicates that cash transfers have a significant development impact, leading for example to increased spending on health, education and food security, as well as to economic investment, e.g., under Ethiopia's Productive Safety Nets Project III at least 25 percent of household cash transfers were used for productive purposes. This development impact can be directly related to formal conditionalities (e.g., building or maintaining physical assets through labor intensive public works, or raising school attendance by conditioning transfers on attending school) but also go beyond it (e.g., reduced early pregnancies) or be independent of formal conditionalities (e.g., in South Africa unconditional cash transfers to the elderly poor resulted in better schooling outcomes for their orphan grand-children). Evidence also suggests that cash grants are particularly appropriate in contexts like Benin's, where service supply is low and where administrative capacity is weak. The targeting criterion applied will act as a conditioning filter to ensure benefits reach those most in need, while a monitoring mechanism will assure compliance with fiduciary requirements.
B. Technical
63. Much of the literature on CDD speaks of the potential benefits of linking the approach closely with decentralization (Guggenheim and Wong, 2005; Serrano, 2005). This literature has highlighted CDD's potential role in improving the quality of decentralization by promoting greater civic participation, voice, and accountability in local governance; delivering cost- effective and timely services within a decentralized context; and CDD's possible role in informing and formulating decentralization regulations. However, in practice, many attempts to exploit the potential synergies between the two approaches have fallen short of the ideal. Funding for CDD has rarely been channeled to local governments through intergovernmental transfer systems for eventual delegation to community organizations. CDD activities are often not integrated in local or central government planning, and communities are often reduced to being objects of procedural consultation, rather than truly empowered actors in their own development.
64. The project will continue the heavy emphasis placed by the PNDCC on Grassroots Management Training (GMT). GMT, which was initially developed by the World Bank Institute in 1997, is designed such that: (i) the low levels of literacy in many communities are not a constraint; (ii) control of the project is protected against elite capture; and (iii) women and vulnerable groups (including the handicapped) participate heavily in local management
19 arrangements. The GMT modules comprise: (i) information and communication; (ii) community organization and dynamics; (iii) participatory poverty and needs assessments; (iv) participatory planning; (v) participatory monitoring and evaluation; (vi) community procurement; (vii) community financial management; and (viii) maintenance of infrastructure assets. The GMT program to be expanded to the whole country will be much cheaper and more feasible than during PNDCC, since more than 3,300 village-based experts have emerged and their expertise will be tapped to expand the GMT program on a sustainable basis.
65. The GMT approach will be strengthened to empower communities to become more active in monitoring service delivery. Community associations (and local elected officials) will be trained to produce community scorecards, which will measure the performance of local health, education, and water facilities. In other African countries, such efforts have been shown to have a striking impact: in an often-cited Ugandan example, villages that produced such scorecards, and engaged in discussions with service providers on how to remedy deficiencies revealed by the scorecards, experienced 19 percent less nurse absenteeism, 7-10 percent higher immunization rates, a 16 percent higher rate of facility utilization, and a 33 percent drop in child mortality.
66. Social safety nets are also an important public service whose delivery can benefit significantly from the involvement of communes and communities. The inclusion of a social safety nets pilot in this project is due to (i) the demonstrated lack of an efficient and scalable social safety net system in Benin that can respond rapidly to shocks such as food, fuel, and financial crises and natural disasters such as the recent floods; and (ii) the potential for community associations trained in the CDD approach to play a role in targeting of beneficiaries, implementation, and monitoring of safety nets; and (iii) the potential role of communes in the planning, implementation, and monitoring of safety net activities.
67. The GMT process will also be extended to help in the delivery of social safety nets. For those communities participating in the pilot safety net program (component two), the community associations trained in the CDD approach will be trained and empowered to target beneficiaries for public works and cash transfers, to prioritize different types of public works interventions, to procure contractors, and to monitor the implementation of public works projects.
C. Financial Management
68. As part of the project preparation, a financial management assessment has been carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on March 1, 2010. The objective of the assessment was to determine whether the implementing agency, the MDGLAAT, including the CONAFIL, has acceptable financial management capacity for the project, particurlarly component one which is managed by CONAFIL. At the central level, the Secretariat for Decentralized Community Driven Services (SSDCC in French) will have the overall responsibility for fiduciary management of components two and three and will include some well experienced Beninese financial management staff. At the decentralized level, the responsibility for fiduciary control over expenditures initiated by
9 M. Bjorkman and J. Svensson, "Power to the people: Evidence from a randomized experiment on community-based monitoring in Uganda," Quarterly Journal of Economics 124/2 (2009), pp. 735-769.
20 Communes will remain with the Public Treasury agents who are showing good performance under the FADEC mechanism and will coordinate with the Finance Controllers to be hired at the commune level by ensuring compliance with agreed time limits for funds transfers, adequate budget executing and expenditures recording.
69. The conclusion of the financial management assessment is that financial management arrangements for the Project are being established in order to satisfy the World Bank's minimum requirements under OP/BP10.02, after which they will be adequate to provide, with reasonable assurance, accurate and timely information on the status of the Project as required by the Bank.
70. In order to mitigate fraud and corruption risks inherent to the public sector in Benin and reinforce the governance of the project, the following measures have already been incorporated into the Project design: (i) regular internal audit missions (with a greater focusing on activities at decentralized levels) to be completed by the Government internal audit institutions (IGF and IGAA) based on a planning resulting from a risk map to be established by a qualified and well experienced internal audit consultant; (ii) a reasonable sample of sub-grants and disbursements under the social safety net component will be reviewed each year by the financial auditor to ensure that funds were used for the purposes intended; (iii) the completion of regular technical audits (every two years) on infrastructure and safety net sub-projects financed during the project life, and (iv) the roll-out of a community scorecards system, to be implemented by the SSDCC together with an NGO to be contracted by MDGLAAT, which will contribute to enhanced social accountability.
71. In addition to the above, the main actions related to financial management to be completed with the Project Preparation Advance include :
i) the recruitment of experienced and qualified FM staff at central and decentralized levels (one FM officer to reinforce the SSDCC in MDGLAAT and six (6) Finance Controllers who will support Public Treasury agents located at the commune level by ensuring compliance with agreed time limits for funds transfers, adequate budget executing and expenditures recording) prior to effectiveness, ii) the adoption of the project implementation manual clarifying the procedures to ensure acceptable fiduciary arrangements at communes and community levels prior to effectiveness; iii) the set up of an acceptable accounting software which will help to generate the project financial reports no later than four (4) months after effectiveness; and iv) the recruitment, no later than four (4) months after the Effective Date, of an independent external auditor
72. The overall fiduciary risk rating for the project is assessed as Substantial and is expected to be Moderate once the mitigation measures are implemented.
21 D. Procurement
73. Overall Procurement activities will be carried out by the SSDCC under the MDGLAAT. The assessment conducted in March 2012 by the procurement specialist based in the Benin Country Office has reviewed the organizational structure for implementing the Project.
74. Procurement by the SSDCC. The SSDCC will be responsible for all procurement activities envisaged under the Project, including those of the communes and communities. The coordination of procurement activities at all levels will be ensured by the Procurement Specialist who will be recruited for the Project. All project procurement prior review documents should be submitted to IDA by the SSDCC.
75. Procurement by the Communes. Works, goods and services and non-consulting services to be procured by the communes for the implementation of their sub-projects, will be procured by the procurement commission of communes (Commission de Passation des March6s Publics in French) in line with the decree no 2010-496 of November 26, 2010 according to rules of transparency, economy, efficiency, equality judged acceptable by the IDA. The Project will build procurement capacity in communes. A commune will be authorized to procure goods and services only when its procurement capacity is considered satisfactory subsequent to an assessment carried out by an independent Consultant carried out prior to each annual review, beyond those that could be conducted by IDA. The main capacity criteria will be that the commune is staffed with a capable procurement staff who has a proven knowledge of the procedures allowed under the Project, and who is entirely responsible for the commune(s) procurement. All procurement prior review documents should be submitted to IDA through the SSDCC.
76. Procurement by Community Associations. Communities will implement sub-projects according to simplified procedures (procurement with community participation) accepted by IDA. As part of the overall Grassroots Management Training program for communities, the SSDCC will empower communities to manage procurement of contractors and supervisors for subprojects. Communities will award contracts of up to a maximum of US$ 40,000 Equivalent for each subproject, following the simplified procurement procedures with community participation developed under PNDCC. The communities' management units that will carry out the implementation of sub-projects will be assisted by technical service of Commune and supervised by the recruited facilitator ("animateur") in Community Development in each Commune.
77. The overall project procurement risk has been rated high. Most of the issues/risks concerning the procurement component for implementation of the Project have been identified and include a lack of procurement and management competency at the community level to execute their sub-projects without assistance (capacity building, technical assistance) and a lack of procurement staff who are involved in Bank procurement procedures in the proposed SSDC. Corrective measures have been identified and agreed, and are described in Annex 3.
22 78. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 2011 and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011 and the provisions of the Financial Agreement. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the World Bank project team in the Procurement Plan. The Procurement Plan shall be updated throughout the duration of the project at least annually including contracts previously awarded and to be procured in the next twelve (12) months. All procurement plans and their updates or modifications shall be subject to the bank's prior review and no objection before implementation.
E. Social (including safeguards)
79. Benin faces many of the same social issues as similar countries with high levels of poverty: social services delivery is poor; inequality between men and women is high; many people are not able to cope with either idiosyncratic or large-scale shocks; and there is little response to the needs of the disabled and vulnerable. The project will directly address these problems through CDD, and will support: (i) access to basic services, particularly in the areas of education, health, water, and sanitation (latrines); and (ii) increasing participation of women, disabled persons, and vulnerable groups in local decision-making processes; and (iii) strengthening the country's safety nets system to align it better with the risks faced by the poor and vulnerable, expand coverage, and improve its ability to scale-up in the event of shocks.
80. The project is not expected to have any significant adverse social impact. Land appropriation or restriction of access to sources of livelihoods is not envisaged, but as due diligence the PNDCC Resettlement Policy Framework (RPF) has been revised and adapted for this project. The revised RPF was disclosed in-country and at the Infoshop before appraisal. If required, Resettlement Action Plans will be prepared and submitted to the Bank prior to the commencement of civil works.
F. Environment (including safeguards)
81. Subprojects to be supported under component one will include construction of schools, health clinics, small water supply systems, latrines, rural roads, and boutiques/market stalls/hangars. The physical project activities would be carried out in all communes and a large number of local communities in Benin. The subprojects could trigger small-scale and site specific environmental impacts typical of category B projects. The menu of eligible public works under component two will likely include soil and water conservation activities, natural resources management, and small feeder roads rehabilitation. Other expected activities under component three, such as capacity building and technical assistance, are not expected to have any environmental impacts.
82. The proposed project's predecessor, the PNDCC, developed effective policies to mitigate environmental risks associated with small-scale construction. Implementation of environmental safeguards throughout the PNDCC has been consistently satisfactory. The Environmental and
23 Social Management Framework (ESMF) from the PNDCC has been revised and updated for the this project and was disclosed in-country and at the Infoshop prior to appraisal.
83. The water-related investments supported under the Project will consist of the construction of village wells and the extension of existing water supply systems to underserved villages. Since the project will be implemented on a community-driven basis, the number and location of water investments cannot be measured in advance at this time. As the water-related investments will be small-scale in nature, the impact on surface waters or groundwater reserves should not be significant and no appreciable harm is anticipated to the water resources of any neighboring countries. Still, the Project triggers the World Bank Operational Policy for Projects on International Waterways (OP/BP 7.50) because some of the Project-supported water investments may be implemented in the basin of certain tributaries of the Niger River or transboundary aquifers. In accordance with OP/BP 7.50, the Bank notified the Niger Basin Authority about the project and received the no objection of the NBA to proceed with the project.
84. As oversight for the implementation of safeguards will pass from the PNDCC PIU to the MDGLAAT, safeguards training will be provided under the project for this Ministry and for communes. The lessons from the soon to be finalized PNDCC Environmental and Social Audit will also be integrated into the safeguards framework for the new project.
24 Annex 1: Results Framework and Monitoring
BENIN: DECENTRALIZED COMMUNITY DRIVEN SERVICES PROJECT
Project Development Objective (PDO): To improve access to decentralized basic social services and to mainstream the CDD approach for such services. Data Source/ Responsibility Lt Unit of Baseline Cumulative Target Values** Frequency for Data PDO Level Results Indicators* 0 Mesr 01Methodology C. Measure 2011 CollectionCleto 2012 2013 2014 2015 Indicator One: Direct project number 0 0 85,840 257,520 429,200 Annual Admin. data SSDCC beneficiarieso
of which female percent NA N/A 40% 40% 40% Indicator Two: Resources percent negligible negligible 5% 10% 15% Annual CONAFIL and CONAFIL and transferred through FADeC that are Admin. data SSDCC executed by communities for basic social infrastructure through delegation of responsibility from communes Indicator Three: Timeliness of number 16 15 15 15 15 Annual CONAFIL data CONAFIL FADeC transfers to communes ofdays (average number of days' variation from the published transfer schedule) Indicator Four: Students enrolled in number 0 0 12,000 36,000 60,000 Annual Admin. data SSDCC schools constructed/rehabilitated [ under the project' 1 Indicator Five: People in rural areas number 0 0 2,500 7,500 12,500 Annual Admin. data SSDCC with access to an improved water source constructed/ rehabilitated under the project 12 Indicator Six: Temporary number 0 0 648,000 1,296,000 1,296,000 Annual Admin. data SSDCC employment created in labor of intensive public works subprojectsl 3 person- days
10Defined as the sum of direct beneficiaries of schools, health posts, and water systems (Comp. 1), safety net beneficiaries (Comp. 2), and people receiving GMT (Comp. 3.3). 1 Number of schools will depend on community choice. Estimated based on Ministry of Education standard of 50 students per classroom. 12 Number of schools will depend on community choice. Based on the National Rural Water Supply Strategy estimate of 250 people served on average by a water point. 13 This estimate assumes: i) a maximum monthly value of 3,300 CFAF and 9,900 CFAF for the unconditional transfer and the public works transfers, respectively; and ii) a 90% share of eligible households with available labor.
25 Data Source/ Responsibility Unit of Baseline Cumulative Target Values** Frequency DataoSoc for Data Intermediate Results Indicators* W esr 01 ehdlg Collection 2012 2013 2014 2015
INTERMEDIATE RESULTS
Intermediate Result (Component One):
Community subprojects for basic number 0 0 140 420 700 Annual Admin. data CONAFIL and infrastructure completed (number) E SSDCC
Communes having executed at least percent 0 0 20 60 100 Annual Admin. data CONAFIL and one multi-village subproject E SSDCC
Additional classrooms built or number 0 0 240 720 1200 Annual Admin. data CONAFIL and rehabilitated at the primary level SSDCC resulting from project interventions
Health facilities constructed, number 0 0 14 42 70 Annual Admin. data CONAFIL and renovated, and/or equipped SSDCC
Improved community water points number 0 0 10 30 50 Annual Admin. data CONAFIL and constructed or rehabilitated under the SSDCC project
Intermediate Result (Component Two):
Beneficiaries of safety nets number 0 0 6,000 12,000 12,000 Annual Admin. data SSDCC
Of which women percent NA N/A 50% 50% 50%
Communities implementing safety number 0 0 60 120 120 Annual Admin. data SSDCC nets program E
Public works schemes completed percent 0 0 80 90 90 Annual Technical SSDCC with satisfactory technical quality E audit
Proportion of total cost of public percent 0 0 70 70 70 Annual Admin. data SSDCC works subprojects allocated to wages H
26 Data Source/ Responsibility Unit of Baseline Cumulative Target Values** Frequency Methodology for Data Intermediate Results Indicators* MeasureMesrW01 2011 ehdlg CletoCollection 2012 2013 2014 2015 Transfer payments made within 5 percent 0 0 80 80 80 Annual Admin. data SSDCC days of when they are due, according to the annual payment calendar
Proportion of total safety nets percent 0 0 70 70 70 Once over Impact SSDCC transfers received by households in the course evaluation the bottom two quintiles of the E of the pilot national consumption distribution 4
Intermediate Result (Component Three):
Communes with up to date financial percent 0 90 90 90 90 Annual Admin. data CONAFIL and audits with published action plans to SSDCC correct any revealed deficiencies
Communes with second generation percent 79 79 90 90 90 Annual Admin. data CONAFIL and Community Development Plans SSDCC (PDCs) which were prepared in a E participatory process
Communities that have received number 0 0 1724 3447 3447 (95% Annual Admin. data SSDCC Grassroots Management Training of total) (refresher or full GMT)
Beneficiaries of Grassroots number 0 0 172,400 344,700 344,700 Annual Admin. data SSDCC Management Training E Of which women percent N/A N/A 40% 40% 40%
Communities having produced number 0 0 0 100 360 Annual Admin. data SSDCC service delivery scorecards H
14 If consumption data is not feasible to collect, this indicator will be calculated using a wealth index or similar measure. 27 APL Program Development Objective (PDO): To improve access to decentralized basic social services and to mainstream the CDD approach for such services. Data Source/ Responsibility ;o Unit of Baseline Cumulative Target Values** Frequency for Data APL Level Results Indicators* 0 C. Measure 2011 Methodology CletoCollection End of APL 1 End of APL 2 End of APL 3 Percent of total cost of transferred percent TBD TBD TBD TBD Annual CONAFIL CONAFIL competencies transferred by and Ministry Government to communes through E of Finance the FADeC." data
Percent of domestic revenues percent 3.3%16 3.4% 3.5% 3.6% Annual CONAFIL CONAFIL transferred by Government to and Ministry communes through the FADeC of Finance (average over life of project) data
Resources transferred through percent negligible 15% 20% 20% Annual CONAFIL CONAFIL and FADeC that are executed by and Admin. SSDCC communities for basic social data infrastructure through delegation of responsibility from communes
Students enrolled in schools number 0 60,000 130,000 200,000 Annual Admin. data SSDCC constructed/rehabilitated under the APL series 17
Communes with scalable percent none 12% 90% 100% Annual Admin. data SSDCC decentralized safety net program in operation
15 Baseline and target indicators to be determined before effectiveness. 16 2011 represented an exceptionally good year for speed and volume of transfers 17 Estimated based on Ministry of Education standard of 50 students per classroom.
28 Annex 2: Detailed Project Description
Component 1: Service Delivery Grants to Communes (IDA US$36.0 million)
Diagnosis
1. The pre-existing situation can be summarized as follows:
2. This project-the Decentralized Community Driven Services Project, or in French the Projetde Services D¢ralisks Conduitspar les Communautis (PSDCC)-is a follow-up to the National Community Driven Development Project-in French, Projet National d'Appui au Diveloppement Conduit par les Communautis (PNDCC)-which was financed by IDA at the request of the Government in 2004. The predecessor project (2005-2012) was designed to support the recent decentralization process, put in place with the first election of mayors and municipal councils. At that time, communes' capacity was extremely low. An ad hoc Government entity, the DecentralizationMission, was developing tools and procedures for the young communes, while most donors were providing support to decentralization through an array of 22 projects, mainly focusing on capacity building. In was in this context that the Government requested that the World Bank finance a project to test and promote the CDD approach within decentralization. While other donors focused their support on building young communes' capacity in their relationships with higher levels (prefectures and central government), the World Bank was requested to help communes address capacity issues related to sub-communal responsibilities through CDD (i.e. developing partnerships between communes and their local communities).
3. The PNDCC project was designed to help communes practice CDD by tapping existing communities' capacity to implement their Plans de Diveloppement Communal (PDCs). In this approach, communes delegated to the concerned local communities the implementation of the small-scale basic social infrastructure in the PDCs, applying the "subsidiarity principle". At the request of the Government, in 2004 the National Assembly adopted a revision of contract law to allow communities to be delegated this responsibility. Targeted communities are organized in Associations de Diveloppement Villageoises (ADVs) which assume the responsibility for implementation after it is delegated to them by the communes and confirmed in a written agreement between the commune and community. The project also helped line ministries to better align their modus operandi to decentralization and CDD. IDA provided US$62 million to finance, among other things, about 1,600 projects. The objective of the Government and IDA was that at the end of the project the CDD approach would be fully internalized by the central government, communes, and line ministries, and would be supported by all donors.
4. One of the main results was to show that the CDD approach is highly cost-effective compared to other approaches to developing small basic infrastructure.This was mainly due to the combination of three factors: i) local bidding that allowed small local businesses to be eligible to win small contracts; ii) the use of open bidding procedures that strengthened competition; and iii) the responsibility for decision making and management given to the
Law No 2005-07 of April 8, 2005, modifying law no 2001-07 of May 9, 2001 concerning public contracting in Benin.
29 community, which accelerated all project processes. This result became apparent early on with the first small projects and was confirmed on a larger scale at the end.
5. Although significant results were delivered on the ground, as early as 2008 the Government perceived that PNDCC's objective offully streamlining CDD into decentralization would not be achieved by the project's end. The reasons include: i) a lack of ownership of the approach by the ministry in charge of decentralization created in 2007; ii) the failure to relay of information regarding the 2005 law regarding project execution, which left doubt among some elected officials as to the legality of the CDD approach); iii) the absence of explicit provisions allowing communes to take into account CDD in FADeC's operations manual, which was adopted in 2008 (leaving the impression that CDD was excluded); iv) low enthusiasm on the part of some line ministries in incorporating CDD in their sectoral strategies; and v) skepticism of donors in the "decentralization group" about the CDD's compatibility with decentralization. In order to close these gaps, in 2009 the Government and the World Bank made the decision to include a follow up to the PNDCC (i.e., this project) in the CAS.
6. During the subsequent two years, the Government has continued the decentralization process, particularly through the adoption of the 10-year decentralization strategy, PONADEC, in 2009. This strategy reinforces the role of communes - at the heart of decentralization - and defines actors' roles and responsibilities. PONADEC seeks to set up efficient territorial governance, fostering grassroots development. 19 It recommends that community-driven approaches be aligned with decentralization and that communes develop partnerships with 20 communities to choose the most cost-efficient management mode . Since 2011, the Government's policy has made explicit reference to CDD with the issuance of the 3' Stratigie de Croissance pour la Riduction de la Pauvretd (SCRP-3). This policy paper adopts the subsidiarityprinciple in delineating the roles and responsibilities of actors, and singles out the CDD approach as a recommended mechanism to implement community-level infrastructure. The same year, the Ministry in charge of Development issued guidelines for sectoral ministries to incorporate CDD into their sectoral strategies. This is expected to be finalized by four ministries (education, water, rural development, and finances) by year's end. In parallel, the World Bank team has been fully integrated into the donor "decentralization group".
7. In this context, the Government wants to streamline the CDD approach by incorporating it into the regular mechanism for the transfer of decentralized public funds. In other words, IDA funds for CDD will be channeled as earmarked resources through the FADeC.
Objective
8. The objective of component one is to strengthen the delivery of basic services at the decentralized level in line with the objectives of Benin's SCRP-3 and PONADEC through the provision of grants to communes to finance commune-level and community-level subprojects in their commune development plans, or plans de ddveloppement communal (PDC).
19PONADEC, June 2009, p. 1 0 20"Good governance implies choosing the most efficient method of implementation in terms of price and quality." 30 9. This objective builds on the success of the PSDCC's predecessor, while moving away from some project-specific aspects of the previous approach to ensure that the CDD approach is fully streamlined into the country's decentralization-deconcentration process, thereby reinforcing it. Achievement of this specific component's objective will be monitored through three series of indicators: (a) the five PDO performance indicators, namely #1, 2, 3, 4 and 5 (see Annex 1 for details); (b) five intermediate indicators, allowing measurement of the provision of resources to communes and implementation performance; and (c) the five triggers for the second phase of the APL, of which some also fall under category a.
Coverage
10. Component one will target:
* All 77 communes of Benin (an expansion from the predecessor project that did not include the 3 special status communes); * The 6 prefectures (future regions) and 12 (future 29) departments; * Approximately 700 of the poorest communities (defined as villages and urban neighborhoods); * The key ministries responsible for the transfer of competencies to communes for social services including the construction of basic local infrastructures (i.e., education, health, water and sanitation, transport, economy and finance); and * Key MDGLAAT bodies: Direction G ndrale de l'Administration de 'Etat (DGAE), Direction Gndrale de la D¢ralisation et de la Gouvernance Locale (DGDGL), Direction de la Programmationet de la Prospective (DPP), Ddligation a l'Amnagement de la Territoire (DAT), SSDCC and CONAFIL.
Beneficiaries
11. The pro-poor orientation of the PSDCC is in line with the PONADEC, whose 4th Orientation states that the fight against poverty is a major aim of decentralization, particularly for funds passing through the earmarked windows of FADeC21 . Direct beneficiaries of this component can be thought of at two levels:
12. Direct beneficiaries of commune-level projects are all citizens of all communes (i.e., all inhabitants of the country). Inhabitants of poorer communes will benefit more from this segment of the component, since the poverty criteria governing the allocation of funds through the FADeC's existing non-earmarked window, will be reinforced under the PSDCC. It is expected that a change in these criteria will take place during the course of revisions to the FADeC operations manual.
13. Direct beneficiaries of community-level projects are inhabitants of the poorest rural communities or urban neighborhoods targeted by the communes to receive grants for the construction of small-scale basic infrastructure. The PNDCC targeted 40 percent of the then poorest villages. Based on the level of Project resources available for FADeC's earmarked
21PONADEC, p. 40
31 window for CDD (dedicated to MDGLAAT) together with the established maximum unit cost (equivalent to US$ 40,000), an estimated 700 targeted communities will benefit from this window of the Project. Communes will target their poorest communities using criteria provided by the MDGLAAT with the support of INSAE. For this purpose, INSAE will provide baseline data on the poverty levels of villages and neighborhoods within all communes will be during project preparation. INSAE's methodology will be based on indices of income poverty, non- income poverty, and food insecurity calculated based on the 2002 Census and most recent household surveys. This data will be updated as soon as the results of the forthcoming census become available. The Performance Indicator #1 of the PDO will track the total quantity of direct beneficiaries, and will break out female beneficiaries.
Strategy
14. The strategy for achieving this component's objective is four-fold:
15. The use of FADeC to channel Projectfunds, which represents a break with the PNDCC, is at the heart of this strategy. Through FADeC, two windows will be operated: a) the non- earmarked window will receive the portion of Project funds to be used by communes to finance medium-size projects in their PDCs; and b) an earmarked CDD window under the budget of MDGLAAT22 will receive the portion of the Project funds to be used by communes to finance community-implemented projects of community-level interest, size, complexity, and cost. If deemed necessary during the preparation of the PIM, the MDGLAAT, in coordination with the Ministry of Finance, will issue an inter-ministerial decree clarifying certain processes related to the implementation of PSDCC.
16. Sectoral Ministries will provide strategic guidance to communes regarding the implementation of sector-specific projects, lwlnugh the dissemination of their respective CDD strategy documents. These documents were developed during the PNDCC within the framework of the CDD strategy guidelines issued by the Ministry of Development and adopted by the Cabinet on October 5, 2011. According to these guidelines, in all sectors, the implementation of small-scale CDD projects should be accomplished through a delegation of responsibility (delegation de maii-i,c d'ouvrage) to communities following the principle of subsidiarity.
17. Communes are at the heart of local development and they exercise all transferred responsibilities.Local development strategies are implemented by the communes in compliance with: a) sectoral policies referred to above, and with the ability to delegate, in particular to grassroots communities; b) the poverty reduction strategy, which recommends the CDD approach; and c) Benin's commitments to the Millennium Development Goals related to universal access to basic services (e.g., health, education, water), in which communes will be key players. Their PDCs outline their development activities and will drive the adoption of the CDD approach. It will be the PDCs that will from now on include the communes' poverty reduction strategy, namely: i) the targeting of the poorest communities, ii) the choice of which among these to prioritize, and iii) the delegation of implementation to these communities to complete the projects according to this prioritization.
22 Given that the use of the FADeC earmarked window under MDGLAAT is new, it will be evaluated at the end of the first phase of the program and adjusted as needed in phase I.
32 18. Communities will be empowered by their respective communes to implement, by delegation of responsibility, small-scale community projects. This delegation of responsibility will be codified in a sub-grant agreement between the commune and community. The sub-grant agreement between the two parties will specify that the commune holds responsibility for project oversight, finances the community project, and delegates to the community the responsibility to implement it, including procurement and financial responsibility provided the community has the capacity (or receives the appropriate training from the SSDCC) to successfully carry out the project under the supervision of the commune.
Implementation
19. The National Commission for Local Finances (CONAFIL), which is charged with administering FADeC and which operates under the aegis of MDGLAAT, will take primary responsibilityfor administering the grants to communes under component one. CONAFIL will be responsible for (i) setting grant allocations for communes in line with criteria agreed between CONAFIL and the Bank; (ii) ensuring the timeliness, transparency and predictability of transfers from the Treasury to communes; (iii) signing sub-grant agreements with communes based on the template to be included in the PIM to ensure that eligibility criteria for communes are met23 ; and (iv) monitoring and reporting on the execution of funds by communes. CONAFIL's monitoring oversight of the funds transferred to communes will be bolstered by periodic technical and financial audits to verify the appropriate use of funds, and by financial controllers to be placed in each of the six Departments in the country.
20. The key departments of MDGLAAT will exercise their regular roles in regard to component one: for example the DGAE, which oversees the prefectures, will be responsible for the integration of CDD in the action of the prefectures. The DGDGL will be responsible for the monitoring of CONAFIL and the communes in terms of their implementation of the component. The DAT will be responsible for the geographical monitoring of progress on coverage of basic services. SSDCC will have responsibility for monitoring and evaluation under this component.
21. The key departments of the Ministry of the Economy and Finance will play a critical role in component 1. These include the Direction G ndrale du Trisor et de la Comptabilit Publique, who is responsible for transferring resources to the prefectures; the Rfgisseur G ndral des Finances, who ensures monitoring and bookkeeping of the funds transferred to communes through department and commune treasuries; and the Inspection G ndrale des Finances, who is responsible for the annual internal financial audit.
22. The decentralized services of MDGLAAT (i.e., the prdfectures) will be strengthened to exercise the following dual responsibility: a) advisory assistance to communes and supervise the legality of their work, which is their regular mandate to which financial and technical
23 Eligibility criteria in the PIM will include, among others: (i) formation by the commune of a Commission de Passationdes MarchisPublics in line with the decree no 2010-496 of November 26, 2010; (ii) up to date and acceptable financial audits; (iii) formation by the commune of a Community Sub-projects Approval and Monitoring Committee, and (iv) opening of two commune accounts to hold PSDCC funds transferred through FADeC for commune and community sub-projects. 33 supervision of projects will be added, and b) coordination of technical assistance to communes' technical supervisors (Chefs de Services Techniques) for the implementation of this component.
23. The sector ministries will have the responsibility for providing the operational directives, in their respective sectors, for the implementation of CDD by communes through communities, who will exercise the mandate of project execution delegated to them.
24. The decentralized technical services are responsible for: a) providing communes and communities the standards, standard plans, toolkits, and technical advice for the application of the CDD strategy document; b) participating in commune council meetings on the assessment and approval of community projects within their sector and verifying application of sectoral resource allocation criteria; and c) monitoring of projects within their sector and reporting for their sectoral M&E system.
25. Once resources are transferred to them houugh FADeC, communes will be responsible for the execution of commune and community sub-projects. They will: a) target their poorest communities based on targeting criteria provided by MDGLAAT with the support of INSAE; b) form committees to approve project proposals from targeted communities and then include these projects in their Plan de Developpement Communal (PDC), Annual Investment Plan, and Procurement Plan; c) for communal sub-projects, execute such sub-projects; d) for projects where execution will be delegated to communities, sign a sub-grant agreement with community associations based on the template to be included in the PIM; e) provide capacity building for communities in the form of GMT; and f) supervise project execution for projects delegated to communities.
26. Communes will be responsible for classifying their Annual Investment Plan in 3 categories according to the subsidiarity principle: 1) projects of medium size, cost, and complexity that will be executed by the commune through direct contracting; 2) projects of large size and cost and high complexity that will be executed by delegation to a contracting agency; and 3) community-level projects of small size, cost, and complexity, where project execution will be delegated to communities. This categorization will allow CONAFIL to determine how PSDCC funds that are transferred to communes through the non-earmarked and earmarked windows are used -- direct execution by communes for the former, and delegation to communities for the latter. Apart from this, the procedures governing the transfers to communes by CONAFIL will be those described in the FADeC Manual of Procedures. At the commune and community levels, the procedures for utilization of PSDCC funds will be described in the Project Implementation Manual. Adoption by the Government of a Project Implementation Manual that is acceptable to IDA is a condition of effectiveness for the project.
27. Communities targeted by the communes will be responsible, through delegation by their respective commune, to execute community-level projects that they have proposed and will implement. The responsibility of communities includes: i) community organization; ii) identification of priority projects and their submission to communes; iii) if approved, the signature and of a sub-grant agreement for financing and delegation of project execution; iv) procurement and management of works; v) financial management and accounting of the contract; vi) commissioning of works by the commune and registration of the new infrastructure as a
34 commune asset, which the commune has the responsibility of maintaining. Specifically, the execution of community subprojects will follow the framework of the community project cycle in 15 stages (with any necessary changes), which has already been employed by 1,500 communities. For communities that have not yet experience CDD, the project cycle is combined with GMT already developed and used widely under PNDCC in 40 percent of the country's communities. This training program will be adapted to the changes introduced by PSDCC. The 24 standard GMT program is composed of 8 modules , which are synchronized with various phases of the project cycle, following a "learning-by-doing" approach. For communities that have already benefited from GMT training in the course of the previous project, an upgrade program will be created based on lessons drawn from that project through technical audit and the assessment of the gains from GMT training (see details in component 3).
Activities
28. Activities eligible for funding under this component will be grants to communes; they will be of two types:
29. Grants for commune-level projects. A communal sub-project is eligible for PSDCC financing under this component, if it: (i)is initiated by a commune and included in its PDC; (ii) addresses multi-village issue and/or is of an amount or complexity beyond the capacity of a single community, such as education, health, and water facilities of a multi-village nature (not including primary school construction), market infrastructure, and inter-village rural roads; (iii) benefits the commune's targeted communities; (iv) complies with laws and regulations relating to the relevant sector, and the strategy, technical, social and economic norms and standards established by this sector for communal sub-projects; (v) has been subject of an environmental and social analysis of its impacts and complies with the ESMF and the RPF; (vi) includes adequate arrangements for the financing of maintenance and other incremental recurrent costs. Communes will not be able to fund projects in their PDC that are classified as being of large size and cost and high complexity to be executed by delegation to a contracting agency.
30. Given that communes will receive a resource envelope determined by the formula for fiscal transfers under FADeC, their allocation is not likely to exactly cover the full costs of any one activity. It is permissible for PSDCC resources to co-finance sub-projects with other resources available to a commune; provided that all sub-projects receiving any financing from PSDCC, even if it is not the major source of financing, must comply with all PSDCC procedures for financial management, procurement, environmental and social safeguards, and other project aspects as described in the PSDCC Financing Agreement and PIM.
31. Grants for community-level projects. These grants, which will pass through the earmarked window of FADeC managed by MDGLAAT, will allow communes to finance the costs of agreements that they will enter into with communities for basic infrastructure in the areas of education, health, water, and commerce (public markets). These grants will finance the
24 The 8 GRM training modules are: 1) information and communication, 2) community organization and dynamics, 3) participatory poverty and needs assessment, 4) participatory and operational planning of a sub-project, 5) community procurement, 6) financial management, 7) participatory monitoring and evaluation, and 8) servicing and maintenance of infrastructure.
35 costs of contracts for the works, furniture, and standard amenities necessary (according to the standard unit cost established by the relevant sector ministry) and the cost of the technical inspection of the works. PNDCC experience has shown that local procurement of a local small contractor to build a small-scale facility results in lower unit costs compared to any other implementation arrangement to procure works. On the basis of this experience, sector ministries would set projected standard unit costs for types of eligible small-scale social infrastructure. However, while unit costs of basic infrastructure are sector-specific, grants provided by communes to communities will be capped to a maximum averaging of FCFA 20 million (equivalent to about US$40,000) per project. To provide equitable treatment to all communities regardless of their geographical location, the maximum average unit cost will be adjusted with a geographical corrective index (provided by the ministry in charge of transport) to take into account the cost of transport of imported materials.
Component 2: Pilot Safety Net program (IDA US$ 5.0 million)
Diagnosis
32. The diagnostic that led to the development of this pilot component of the project established the following:
33. Benin's social safety net system was shown to be insufficiently developed to permit significant scaling-up to mitigate the impact on the poor and vulnerable of the global food, financial, and fuel shocks experienced from 2008 to 2010, as well as the floods that struck the country in 2010. Existing safety nets are small in scale (with the exception of school feeding), fragmented, poorly evaluated, and not easily scalable in times of crisis. There is an important need to strengthen Benin's safety net system so that it can help to counteract the recent increase in poverty in Benin, despite the country's good economic growth performance, and to allow for a more effective, targeted, and timely response to future shocks.
34. The July 2010 PNDCC Additional Financing set aside financing for technical assistance to help Benin strengthen its social safety net system. The first phase of the technical assistance, a review of Benin's existing social safety net programs including recommendations for strengthening safety nets, was completed in May 2011. Among other recommendations, the review suggested that the Government consider developing a new safety net program combining two windows: cash transfers for the chronic poor, particularly those households unable to provide labor, together with labor-intensive public works for households with available labor. These windows should be capable of scaling up rapidly in times of crisis. In the second phase of the technical assistance under PNDCC, which is currently near completion, the Government is conducting a feasibility analysis25 for this new safety net program.
25 This feasibility analysis is examining the viability of different implementation options for the proposed safety net program in terms of (i) type of beneficiaries and targeting mechanism for both the cash transfer and public works windows; (ii) conditionality or unconditionality of cash transfer window, and if conditional, what type of conditionality; (iii) sectors and type of works for public works window; (iv) size of transfers/wages and duration of program; (v) mechanisms for payment; (vi) monitoring and evaluation arrangements; (vii) implementation arrangements; and (viii) intervention areas for the pilot phase. The feasibility assessment is developing simulations to show the estimated costs, coverage, and impacts of different program options. 36 Objective
35. The objective of the pilot would be to test a safety net program to increase income and consumption and improve the ability to cope with shocks among targeted vulnerable population groups. The program will be composed of two elements: i) a basic unconditional cash transfer to all targeted households, and ii) labor-intensive public works for the same households to provide the opportunity to earn an additional transfer during the agricultural lean season. The cash transfer intervention is intended to increase the household income over a sustained period while the public works program seeks to provide a predictable transfer during the lean season to encourage beneficiary households to avoid negative coping decisions, which include selling assets, pulling children out of school and sending children to work.
Coverage
36. Approximately 15 percent of communes in the country (about 12 communes) will be selected to participate in the pilot program using a two-step geographical targeting mechanism. First, all communes will be ranked according to their contribution to national food poverty (i.e., total people living under the food poverty line in a particular commune as a percent of total food poor in the country). Those with the largest shares will then be selected to participate; however, the poorest commune among the special status communes will also be included irrespective of its overall ranking to ensure adequate representation of different types of poverty situations. Second, the available safety net resources will be distributed according to the relative shares of food poverty among communes selected to participate.
37. Approximately 120 villages will be selected by participating communes. To do so, each commune will select a long list of eligible communities based on community-level food poverty indicators provided by INSAE. From this list, a final list of beneficiary communities will be randomly selected to participate in the program. This random selection of communities will: i) enable an impact evaluation of the safety net pilot, in order to inform a decision on the scale up of the program, and ii) is justified by the fact that in the pilot phase, the program cannot cover all of the poorest communities.
38. The final number of participating villages will vary by commune, according to the overall pilot resources each is allocated by the geographical targeting mechanism. The precise number of communities to include in the long list will be established prior to the start of the program by the SSDCC, taking into account both the resource allocation as well as relevant impact evaluation considerations.
Beneficiaries
39. The direct beneficiaries of this component are defined in the following manner:
40. The beneficiaries of the pilot will be the poorest households in each targeted community. Beneficiary households will be identified through community-based targeting. The Comites de Gestion Communautaires (CGCs), with support from the Centres de Promotion Sociale (CPS) and CDD animateurs, will be responsible for identifying beneficiary households based on pre-
37 determined eligibility criteria specified in the PIM. The final step in the targeting process will be validation of the community-based targeting by the CPS. Specifically, CPS will be responsible for verifying the eligibility of a random sub-sample of the households selected to participate in the pilot. Among beneficiary households, the ability to work would be defined according to a number of criteria such as age (over 18 and under 60 years old), place of residency, and health status. Participating households will be allowed to participate for two years.
41. The number of beneficiary households in each community will follow a simple system of fixed quota per community defined by the Project preparation team. The number of households in each community that will receive the basic cash transfer is estimated to be 100. Accordingly, the program is expected to benefit 12,000 households on a multi-annual basis. It is expected that the number of working days created during the two years of implementation of the pilot project will be 1,296,000 over the course of the two years. This estimate is based on the assumption that 90 percent of beneficiary households will choose to work in their community's public works scheme.
42. Women are expected to make up at least 40 percent of public works beneficiaries. Childcare may be organized at the worksite to facilitate participation of women with young children, and some women can be tasked with childcare and paid at the same rate as other workers.
Strategy
43. The program's dual approach with cash transfers and labor-intensive public works is critical to achieve the component's objective. The Benin Safety Net Review and the subsequent Safety Nets Feasibility Study show that effectively tackling poverty and vulnerability requires a combination of measures to mitigate chronic poverty, prevent and help households to cope with seasonal and unpredictable shocks and promote welfare improvement of beneficiary households. Conditional cash transfer programs have proven to be effective mechanisms to mitigate short term poverty while linking households to social services and reduce vulnerability in the longterm. Labor intensive public works programs have also been effective instruments to smooth consumption during lean and hungry seasons while improve dietary behaviors among beneficiaries. The pilot will test the implementation of a comprehensive social safety net operating as a system (rather than as isolated programs) to address chronic poverty and vulnerability.
44. Participatoryplanning process. A participatory process will be conducted with the targeted communities under the responsibility of local governments, and will lead to multi-year planning and identification of one-year public works plans. The annual plans should include a sufficient number of activities in order to provide the required number of working days for the targeted households. Multi-year plans will simply be updated the following year without having to repeat the full planning exercise.
45. Timing of public works. The timing of public works will be linked to the seasonality experienced in rural areas of Benin, in order to time the additional income from public works wages to coincide with the lean season. Communes will have the flexibility to time public works
38 sub-projects so that they do not overlap with busy times for agricultural work, such as sowing. The provision of a predictable source of income during the lean season is expected to encourage beneficiary households to avoid negative coping decisions, which include selling assets, pulling children out of school and sending children to work. In line with the rough duration of the lean season, public works sub-projects will last 4 months.
Table A1.1: Climatic and Agricultural Calendar in Benin : Timing of Lean Season
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec North long dry season long rainy season long dry Climatic season calendar South long dry season long rainy season short dry short rainy long dry season season season
- E harvest Agricultural North L - CS sowing calendar South L - CS sowing - E harvest L - E har- vest CS: counter-seasonal harvest (with irrigation) E/L: early or late harvest
North P leanseason P Lean season abundance P abundance periods South rel. abun- Ptlean season abunnive dance Pabundance P: pre/post lean season
Source: AGVSAN (2009)
46. Generosity. The monthly transfer amount per household for the basic cash transfer will be 3,300 CFAF (approximately US$ 7) per month, which is equivalent to 10 percent of mean household consumption among households under the food poverty line. Beneficiary households with available labor will be eligible to earn an additional annual transfer of maximum 39,600 CFAF (approximately US$80). For these households, the total number of days to be worked will be 15 days per month over a period of 4 months during the year. The estimated rate per task will be 660 CFAF (equivalent to US$ 1.4 per day), with one task corresponding to a 7-hour working day. This number of days to be worked per month has been fixed to take into account the special needs of women, and in particular women heads of households or women with small children, and to foster their participation into the public works program while allowing them to carry out their nutrition and reproductive roles.
Implementation - Responsibilites
47. The overall responsibility for implementation of the component will rest with the SSDCC. The SSDCC will coordinate with communes and communities on implementation, provide advice and guidance, and ensure timely financing of transfers and public works sub- projects. The secretariat's team will include a safety nets coordinator who will report to the head of SSDCC.
39 48. The communes will be responsible for: (i) targeting of participating communities, (ii) conducting participatory planning processes for annual and multi-annual public works, (iii) assessment and approval of public works sub-projects, (iv) assessment, approval, and signature of a Financing Agreement with the CGC and the community for the execution of safety net sub- projects, and (v) the supervision of public works through the communes' technical services.
49. The CPS of the Ministry of Social Affairs (the local branch of the Ministry of Social Affairs at the commune level) will be responsible for: (i) supporting the identification of the poorest households, who will be the beneficiaries of the safety net transfers, (ii) verification of a sub-sample of the households selected through the community-based targeting process to participate in the safety net program, with a view toward minimizing errors of inclusion and exclusion, (iii) organize follow-up visits to support beneficiary households in the various program processes.
50. Payment agencies will be responsible for making payments to beneficiary households. The criteria for selecting the payment agencies includes: (i) geographical coverage, proximity to communities, and capacity to provide services in a timely manner, (ii) financial capacity and performance record, and (iii) cost of services.
51. In the social safety net pilot, CGCs will be responsible for: (i) determining the list of beneficiary households, (ii) identifying sub-projects through the through the participatory planning exercise, (iii) developing, with the support of communes, the annual and multi-annual plans for labor-intensive public works, (iv) submitting safety net sub-projects for approval to communes, and (v) carrying out the day-to-day management of sub-project implementation.
52. The targeted households will be responsible for participating in labor-intensive public works.
Implementation - Process
53. Communes participating in the pilot will select a long list of eligible communities based on community-level food poverty indicators provided by INSAE. From this list, a final list of beneficiary communities will be randomly selected to participate in the program. Once villages are selected by their communes, they will receive Grassroots Management Training (GMT) (see sub-component 3.3) and undergo a Participatory Poverty Assessment to enable them to identify the factors underlying poverty in their community, identify the poorest and most vulnerable households, and prioritize their needs. The prioritization of needs help the communities to determine the type of public works sub-projects for which they will receive financing, from among the menu of eligible sub-project types. The communities' proposals for public works sub-projects will be approved by the communes and also vetted, as necessary, by the relevant sectoral ministry or authority, such as the Conseil Technique National des Pistes Rurales (CTNPR) and Comites Departementaux des Pistes Rurales (CDPR) in the case of rural roads. The choice of sub-projects will be formalized in sub-grant agreements signed between the commune and the CGC. The process for sub-project preparation by the CGCs and the approval
40 by communes of public works sub-projects will follow the same mechanism as for CDD sub- projects in component 1. CGCs will select beneficiaries and CPS will validate the targeting.
54. Payment of basic cash transfers. For the basic transfer, payments will be made to beneficiaries on a bi-monthly or monthly basis as determined in the PIM. Payments will be effected by one or more payment agencies selected on the basis of the following criteria: i) service coverage and ability to provide timely service at the community level in the communes selected for the pilot; ii) review of financial management capacity and fiduciary track record in providing payment services; and iii) level of fees proposed by the payment agency.
55. Implementation of public works sub-projects and payment to beneficiaries. Overall implementation will be supervised by CGCs. The CGCs, based on their training in GMT, will procure all needed tools and materials and recruit a local private contractor to act as the site supervisor for the public works sub-project. The site supervisor will enforce working hours, define and assign tasks to be performed by beneficiaries, and keep attendance records. Supervision of public works activities will be done by the technical staff of the communes on a regular basis and attendance records will be checked periodically by the CGCs. Commune technical staff will also ensure that sub-projects comply with environmental and social safeguards. The payments to beneficiaries will be made bi-weekly through the same mechanism used to make basic transfer payments.
56. Seasonality of public works activities. Public works will be implemented during the agricultural slack season, which is usually November to March, with variation across regions. Given the regional differences in seasonality, the exact period for implementing Public Works will be determined by each local government.
Activities
57. Public works will be selected by communities from a menu of eligible activities. The PIM will describe these activities and include standard design, technical norms and work productivity norms. Public works subprojects will have to meet a number of criteria, such as i) providing a public benefit to a wide range of community members; ii) at least 70 percent of the activities budget should be spent on wages, with the remaining 30 percent being used towards non-wage costs (such as capital inputs and administrative costs); iii) subprojects should create/rehabilitate productive assets and have a direct impact on food security or welfare of the community; iv) public works activities should not have negative environmental and social impact. It is expected that the menu will include soil and water conservation activities, natural resources management, and small feeder roads rehabilitation.
COMPONENT 3: TECHNICAL ASSISTANCE AND CAPACITY BUILDING (IDA US$5.0 MILLION)
Subcomponent 3.1: Technical Assistance and Capacity Buildingfor MDGLAAT and other key Ministries.
58. Capacity building under sub-component 3.1 will have the objectives of improving the ability of MDGLAAT, CONAFIL, and sector and cross-cutting ministries at central and
41 deconcentrated levels to: i) implement basic service delivery sub-projects using the CDD approach, and ii) test a new pilot safety nets approach.
59. Implementing basic service delivery sub-projects using the CDD approach. This sub- component will aim to strengthen the performance of the FADeC and to ensure the necessary capacity is in place to supervise and mainstream the CDD approach. Capacity building will be provided for CONAFIL to strengthen administration of the FADeC (for example, by improving the transparency of the calculation of allocations, fiduciary controls, and monitoring and evaluation). MDGLAAT's capacity to implement the project will be ensured by the creation of the SSDCC. Assistance will also be given to key sectoral and cross-cutting Ministries to implement decentralization and deconcentration while incorporating and streamlining the CDD approach into their regular operations. This assistance builds on the PNDCC's support to sectoral ministries to include CDD in their sectoral strategies, which will require continued follow-up after the closing of PNDCC. A capacity-building plan, with measurable final objectives and progress benchmarks will be prepared for this sub-component (and sub component 3.2). The sub-component will be coordinated with other IDA and donor activities to ensure complementarity and avoid overlap.
60. Testing a new pilot safety nets approach. The sub-component will aim to strengthen the institutional capacity of the Ministry of Family and Social Affairs to enable its deconcentrated staff in the Centres de Promotion Sociale (CPS) in each commune to (i) help communities in targeting safety net beneficiaries and in validating the results of community targeting; (ii) to compile and update a beneficiary register for their commune, and to share this data with the central Ministry to form the national registry; (iii) to monitor the implementation of sub-grant agreements between communes and communities for the safety net sub-projects; and (iv) to coordinate activities under PSDCC with those of the Government, UNICEF, and other partners. The capacity of the SSDCC to oversee implementation of safety nets project in according to CDD principles will also be strengthening by recruitment of a safety nets coordinator.
Subcomponent 3.2: Technical Assistance and Capacity Buildingfor Communes.
61. This subcomponent builds on the capacity-building program for communes supported by PNDCC. In relation to component one, it will strengthen communes' capacity to (i) improve participatory preparation of PDCs, (ii) implement poverty targeting; and (iii) use the CDD approach for the implementation of small-scale community-level investment projects. Eligible activities will include (i) consultant contracts for the recruitment of Agents de Developpement Communautaires (ADC) on a competitive basis, based on the list of existing PNDCC ADCs having performed satisfactorily together with new candidates, and training for communes to acquire skills needed to use the CDD approach; (ii) training workshops and peer-to-peer exchanges at local, regional, and national levels (including trainers, per diem, transportation costs, and workshop logistics); (iii) equipment to enable the ADCs to function effectively, such as motorcycles, as necessary; (iv) printing of documents related to CDD implementation by communes (PDCs, directives, toolkits, guides, and manuals); and (v) transportation,logistical, and operationalcosts related to sub-project supervision and preparation of PDCs.
42 62. In regard to component two, eligible activities would include (i) printing of documents related to safety net sub-project implementation by communes (PDCs, directives, toolkits, guides, and manuals); and (ii) transportation,logistical, and operationalcosts related to related to sub-project supervision.
63. The technical assistance and capacity building will be coordinated with other donor activities to ensure complementarity and avoid overlap. One output would be, inter alia, a specific CDD Guide for Communes describing how to implement small investment projects through CDD-as a complement to the Guide for PDC preparation. A capacity-building plan, with measurable final objectives and progress benchmarks will be prepared for this sub- component in cooperation with the National Association of Communes in Benin (ANCB).
Subcomponent 3.3: GrassrootsManagement Training (GMT) for Communities.
64. Capacity building of communities to participate in the commune's development planning process and to take on the responsibility for implementing development projects is a key element of the CDD approach. This sub-component will support the expansion of the GMT program, which has already been successfully conducted in 1,518 communities under PNDCC, to cover all 3,700 communities in Benin-regardless of whether they will implement a project through the CDD approach. Refresher training will be offered to communities already reached. The 8 GMT training modules are : 1) information and communication, 2) community organization and dynamics, 3) participatory poverty and needs assessment, 4) participatory and operational planning of a sub-project, 5) community procurement, 6) financial management, 7) participatory monitoring and evaluation, and 8) servicing and maintenance of infrastructure. The GMT will be enhanced to contain a module on social safety nets for those communities that will participate in the safety net pilot. The component will take advantage of the existing large network of trained community development agents from PNDCC, which will greatly reduce the start up costs of the training. The large number of radio emissions that have already been recorded under PNDCC could largely be rebroadcast by PSDCC.
65. In regard to both components one and two, eligible activities under component 3.3 will include: (i) consultant services for "senior" trainers and illustrators; (ii) printing of illustrated guides for new and revised training modules; (iii) honoraria for training provided by Agents Porteurs de Developpement Communautaire (APDCs); (iv) supervision costs; and (v) costs of GMT training session in villages.
Subcomponent 3.4: Social Accountability, Monitoring and Evaluation.
Social Accountability
66. Scorecards. This mechanism has the objective of providing feedback to communes from grassroots-level beneficiaries on services provided by the communes. These scorecards are an easy to implement and understand feedback system which allows individual beneficiaries to grade their level of satisfaction with services. The scorecards will consist of a series of multiple choice questions about the quality of service provision, with the possible responses consisting of a range from highly satisfactory to highly unsatisfactory. However, to permit the scorecards to be used even by illiterate people, the questionnaire will be translated into local languages and
43 using colors instead of words to represent levels of satisfaction. The scorecards will be administered to a representative sample of beneficiary populations. As per international experience, an NGO will be contracted to assist with implementing the scorecard program and analyzing the results in partnership with the Government. The scorecards will be prepared annually under the supervision of the SSDCC, and the results will be shared by MDGLAAT and publicized widely. After the results are available, the communes and participating communities will engage in a dialogue about how to address the conclusions of the scorecard exercise, particularly focusing on the actions communes can take to address critical weaknesses revealed by the scorecards.
Monitoring
67. Monitoring of Component One. The division of responsibilities in the project monitoring system will be as follows :
68. The SSDCC will be directly responsible for monitoring the project indicators and the triggers for the second phase of the APL. As part of its monitoring and information sharing duties, the SSDCC will establish a partnership with all donors active in the areas of decentralization.
69. CONAFIL will be responsible for the monitoring of the following indicators specific to component one: (i) the dates of transfer of Government funds through the FADeC as compared to the scheduled dates (average delay for the three annual transfers); (ii) compliance with the maximum time limit (8 days) for transfers from communes to communities; (iii) the rate of resource use by communes; and (iv) the rate of resource use by communities.
70. The DA T, in association with relevant sector ministries, will be responsible for updating a map tracking map the progress made on the provision of basic services financed by the Project (based on data provided by CONAFIL) and their adherence to planned school and health maps (cartes scolaires et sanitaires)and other sectoral provisions. This monitoring process will use the Systeme d'Information Territoriale, a system put in place by the DAT in 2007 through the l'ObservatoireNational d'Analyse Spatiale and operationalized in 2011.
71. The communes will be responsible for providing CONAFIL information on execution of sub-projects financed by PSDCC. For sub-projects executed at the commune level, the communes will provide information on the following aspects of project execution: (i) procurement, (ii) financial execution of contracts and physical construction of infrastructure, and (iii) commissioning of works and closing of contracts. For sub-projects delegated to communities by communes, the communes will provide the following information: (i) details of the financing agreement between the commune and community, namely the agreement number, the signing date, the amount and purpose of the agreement, (ii) information on the execution of the agreement by communities (see next paragraph).
72. Communities will be responsible for providing communes with the following information on the progress of the execution of the agreement with the commune: (i) procurement information (call for proposals, numbers of proposals received, date of bid opening and contract award), (ii) information on each item/service procured (number, amount, purpose, signing date, 44 duration), (iii) information on the physical progress made on the works, (iv) information on financial management of contracts, (v) date of commissioning of works by the commune.
73. The technical services will be responsible for providing the central body with all the information necessary to monitor the stock of communal infrastructure used in their service provision (shared competence).
74. Monitoring of progress on component two. The SSDCC will be responsible for monitoring component two based on periodic and final reports that will be produced by: (i) the safety nets expert and consultants, (ii) the Ministry of Family and Social Affairs, and (iii) the beneficiaries of study tours.
Evaluation
75. Evaluation of Component One. This evaluation will be the responsibility of the SSDCC and will consist of the following activities:
76. Technical audit. The technical audit will seek to: (i) evaluate the technical quality of the works carried out by the communes and by the communities through delegation by the communes, and (ii) to inform MDGLAAT, the relevant ministries, and IDA about the cost- effectiveness of the audited operations. The audit is carried out annually by an auditor on the basis of a representative sample of sub-projects. The terms of reference of such an audit could be modeled after similar documents used under PNDCC. The conclusions of the audit will be shared in a transparent way with all relevant parties (ministers, communes, and communities) and be made public.
77. Ex post procurement review. This review aims to: (i) examine the degree to which procurement by communes complies with the procedures outlined in FADeC operations manual, and (ii) examine the degree to which procurement by communities complies with the procedures outlined in PIM.
78. Assessment of GMT. This assessment will seek to evaluate the gains to communities in terms of governance and grassroots management. The terms of references will be modeled after similar documents used under PNDCC. The assessment will be carried out by an independent consultant specializing in assessments of adult training programs and GMT. The conclusions of this assessment, including the list of village experts, will be made public.
79. Evaluation of Component Two. Given the pilot nature of the component, it would be important to understand the impact of the program through a randomized impact evaluation. This would help analyze the program's impact on different subsets of beneficiaries, and inform any modifications that might be required to scale up the program. The details of the impact evaluation will be specified in a concept note to be prepared by the SSDCC with technical assistance from the Bank.
80. An assessment of the results of the institutional capacity building efforts will be carried out by the SSDCC using the assessment of the gains to CPS that received training.
45 Annex 3: Implementation Arrangements
A. Overall Implementation Arrangements
1. The Ministry of Decentralization, Local Government, and Administration and Development of the Territory (MDGLAAT) will be responsible for the overall supervision and coordination of the Project.
2. The National Commission for Local Finances (CONAFIL), which is charged with administering FADeC and which operates under the aegis of MDGLAAT, will take primary responsibility for administering the grants to communes under component one. CONAFIL will be responsible for (i) setting grant allocations for communes in line with criteria agreed between CONAFIL and the Bank; (ii) ensuring the timeliness, transparency and predictability of transfers from the Treasury to communes; (iii) signing sub-grant agreements with communes based on the template to be included in the PIM to ensure that eligibility criteria for communes are met 2 6 ; and (iv) monitoring and reporting on the execution of funds by communes. CONAFIL's monitoring oversight of the funds transferred to communes will be bolstered by periodic technical and financial audits to verify the appropriate use of funds, and by financial controllers to be placed in each of the six Departments in the country.
3. Once resources are transferred to them through FADeC, communes will be responsible for the execution of commune and community sub-projects. They will: a) target their poorest communities based on targeting criteria provided by MDGLAAT with the support of INSAE; b) form committees to approve project proposals from targeted communities and then include these projects in their Plan de Developpement Communal (PDC), Annual Investment Plan (AIP), and Procurement Plan (PP); c) for communal sub-projects, execute such sub-projects; d) for projects where execution will be delegated to communities, sign a sub-grant agreement with community associations based on the template to be included in the PIM; e) provide capacity building for communities in the form of GMT; and f) supervise project execution for projects delegated to communities.
4. A proposed new Secretariat for Decentralized Community Driven Services (SSDCC in French) will be created in the MDGLAAT would take responsibility for implementing Components Two and Three and fiduciary oversight of the Project. This structure would provide technical capacity for mainstreaming CDD, particularly in regard to training communities to engage in the CDD approach, and helping Ministries and communes to mainstream CDD in their operations. The Secretariat would also monitor the implementation progress at the community level of subprojects, and coordinate the start-up and implementation of the safety net pilot. In addition to its head, the SSDCC would require financial management and procurement experts, grassroots management training expertise, expertise in safety nets, and monitoring and evaluation, civil engineering, and communications functions. These staff will be recruited competitively.
26 Eligibility criteria in the PIM will include, among others: (i) formation by the commune of a Commission de Passationdes MarchisPublics in line with the decree no 2010-496 of November 26, 2010; (ii) up to date and acceptable financial audits; (iii) formation by the commune of a Community Sub-projects Approval and Monitoring Committee, and (iv) opening of two commune accounts to hold PSDCC funds transferred through FADeC for commune and community sub-projects.
46 5. A key role of the SSDCC will be to coordinate the efforts of key sectoral ministries in implementing activities in their sectors through the CDD approach. In particular, the SSDCC will be expected to work in close coordination with the Ministry of Primary Education; Ministry of Health, Ministry of Energy, Petroleum and Mining, Water, and Renewable Energy; Ministry of the Family and Social Affairs; Ministry of Public Works and Transport; and Ministry of the Environment, Habitat, and Urbanism; the Ministry of Finance, and the Ministry of Microfinance and Youth and Women's Employment.
6. In addition to the Conditions of Effectiveness stipulated in the General Conditions, the following Conditions of Effectiveness will also apply:
(a) the Government has (i) established the SSDCC in form and substance acceptable to the Association; and (ii) recruited for the SSDCC a Coordinator (Secretaire Ex&utij), a financial management specialist, a procurement specialist, and a grassroots management training specialist;
(b) the Government has recruited six (6) finance controllers to support the Communes; and
(c) the Government has adopted the PIM in form and substance acceptable to the Association.
7. Implementation arrangements for each component are described in Annex 2 and will be further detailed in the PIM.
B. Funds Flow and Disbursement arrangements
Designatedaccount
8. The Caisse Autonome d'Amortissement (CAA) is the assigned representative of the Recipient for the mobilization of IDA funds. Withdrawal Application requests will be prepared by the SSDCC under the Ministry of Decentralization , signed by a designated signatory or signatories (the signature authorization letter is signed by the Minister of Finance), and sent to the Bank for processing. This procedure applies to all Bank financed projects in Benin.
9. Funds will flow from the Credit Account through the Designated Account to be opened at the Banque Centrale des tats de l'Afrique de l'Ouest (BCEAO). The funds would be released in: one transit account to be opened at the Central Bank of Benin for the transfers to communes through the FADeC mechanism and a transactions account to be opened in a reputable commercial bank for the other activities of the project. The FADeC transit account for IDA operations will be managed in compliance with FADeC procedures. Payments orders from the transactions Account would be jointly signed by the Project coordinator and the project Financial Management Specialist. The accounts are set up to fund eligible expenditures based on the approved annual activity plans.
47 Disbursement methods andprocesses
10. The ceiling of the designated account will be based on the six-month forecast for disbursements as stated in the quarterly Interim Financial Report (IFR). Detailed supporting documentation for IFRs will be retained by the Project coordination unit, which has the primary responsibility for maintaining all documentation. Payments from the transit account to local FADeC accounts will comply with FADeC procedures and will be based on approved communes annual activity plans and the level of justification of previous advances.
11. Given the Government procedures used for channeling funds to the municipalities and arrangements agreed to strengthen the FM system of the project, the project will use a quarterly report-based disbursement mechanism. Not later than 45 days following the end of the quarter, the SSDCC will elaborate and transmit to IDA an IFR that will serve as basis for disbursement. IFRs will be supplemented by (i) Bank reconciliation statements of the designated account; (ii) cash-flow forecast for the following year; and (iii) the list of payments against contracts that are subject to Bank prior review, and (iv) a list of payments against contracts that are not subject to prior review.
12. The designated account will be replenished through IFRs on a quarterly basis after an initial advance equivalent to the cash forecast for six months is made. In addition to advances to the designated account, other disbursement methods will be available for use under the project, such as direct, reimbursement, and special commitment methods. Further instructions on the withdrawal of proceeds will be outlined in the disbursement letter and details on the operations of the designated account will be provided in financial and accounting section of the PIM.
13. Under the FADeC transfer mechanism, the transit account opened at central level for IDA operations will function in the same manner as the common account opened for other donors partners. From the IDA transit account for commune grants, funds will flow to the FADeC accounts at commune level managed by local Treasury agents based on appropriate instructions received from the CONAFIL in compliance with the FADeC procedures and IDA project implementation manual. The communes will be responsible for the physical implementation of the project with the support of the communities. An appropriate expenditure recording system will be put in place by each local Treasury agent as regards IDA operations to facilitate collection of information on budget execution for financial reporting purpose. The project will finance the recruitment of six finance Controllers located in each Department of the country, who will support Treasury agents located at the commune level by ensuring compliance with agreed time limits for funds transfers, adequate budget execution and expenditure recording. In addition to that support, the recording system as well as all transactions on each local FADeC account will be subject at least to one quarterly regularity review by the Departmental Treasury agent (receveur des finances de la pr6fecture) in order to prevent possible diversion of funds. It is clearly accepted that provision of funds from FADeC should only be utilized for activities agreed with the donors. Local Treasury Agents will pay all the expenditures specifically related to commune subprojects, and will transfer to communities the installments of approved sub-grants based on the progress in the implementation of the sub-project and in accordance with the sub- grant agreement stipulations.
48 Figure A3.1: Flow of Funds
IDA Account (Funds) DP (Washington) at the World Bank
IFR / WA/ DP
Designated Account L (BCEAO) managed by CAA4
FADeC Transit Account for IDA Transactions Account for Suppliers / Consultants operations (BCEAO) for Components 2 and 3 /Beneficiaries Accounts Component 1 (in acceptable commercial bank) managed by Receveur Gindral des managed by the SSDCC Finances du Trsor
FADeC local accounts (at communes' level)
Managed by the Receveur-Percepteur based on Ma ors'orders 1 2 3 77
E b rats to communities Payments to others suppliers
Funds
:i Reports, Goods etc
DP Direct Payment
WA Withdrawal Application
49 14. Payments under the Pilot Social Safety Net Program will be managed by the Secretariat for Decentralized Community Driven Services but outsourced to one or more financial institutions. In addition to the necessary financial, operational and technological capacity, financial institutions will also have to demonstrate a well performing representation in the rural areas capable of making direct payments to the beneficiaries. The payment procedures will be detailed in the PIM. Resources for the pilot safety net component will transit from the designated account (which will be replenished on the basis of bi-annual IFRs) to the transactions account, and from there directly to communities in three installments, on the basis of a list of beneficiaries verified by a third party. In particular, the initial disbursement to communities will be made upon receipt of (a) the list of beneficiaries selected in line with the criteria identified in the manual; and (b) the verification of the list by a third party who will confirm adherence to the manual. A technical audit will confirm the eligibility of expenditures under this component.
15. The table below sets out the expenditure category to be financed out of the credit.
Table A3.1: Expenditure categories
Category Amount of the Amount of the Percentage of Financing Allocated Financing Allocated Expenditures to be (expressed in SDR) (USD equivalent) Financed (inclusive of Taxes) (1) Goods, works, non- 4,600,000 7,200,000 100% of amounts consulting services, disbursed under consultants' services and Communal Grants Training for Subprojects under Component 1
(2) Goods, works, non- 18,500,000 28,800,000 100% of amounts consulting services, disbursed under Local consultants' services and Community Grants Training for Subprojects under Component 1
(3) Goods, works, non- 4,400,000 6,780,000 100% consulting services, consultants' services, Operating Costs and Training for Components 2 and 3
(4) Cash Transfers under 1,300,000 2,000,000 100% Component 3 (5) Refund of Preparation 800,000 1,220,000 Amount payable Advance pursuant to Section 2.07 of the General Conditions
TOTAL AMOUNT 29,600,000 46,000,000
50 Reporting and Auditing arrangements
16. The Secretariat for Decentralized Community Driven Services will be responsible for coordinating and submitting the IFR required to be produced under the project and submit copies to the Bank within 45 days following the end of each quarter. The local treasury agents (Receveur percepteur) with the support of the Finance Controllers will report every two months to the Secretariat for Decentralized Community Driven Services within 15 days following the end of the related period.
17. The Secretariat for Decentralized Community Driven Services will produce Annual Financial Statements for the Project which will comply with the accounting standards of the Systeme Comptable de l'Organisationpour l'Harmonisation en Afrique du Droit des Affaires (SYSCOHADA). SYSCOHADA is the assigned accounting system in West African Francophone countries. Project accounts will be maintained on a cash basis, supported with appropriate records and procedures to track commitments and to safeguard assets. Annual financial statements will be prepared by the Secretariat for Decentralized Community Driven Services in accordance with the SYSCOHADA. The Reports on the Observance of Standards and Codes (ROSC) Accounting and Auditing review identified some differences with the International Accounting Standards but they are not expected to impact the project. Accounting and control procedures are documented in the FM section of the Project Manual.
Audit arrangements
InternalAudit and internal controls
18. The internal control will be organized through the Project manual and the FADeC manual with appropriate segregation of duties and responsibilities. Internal audit functions will be assumed by the Government internal audit institutions (IGF and IGAA) whose professional capacity will be strengthened. An internal audit consultant will be recruited to provide a risk map of the project and the ministry which will help the Government internal audit institutions to apply a risk based approach. All the operations executed at commune level (the recording system as well as the entire transactions on each local FADeC account) will be subject to at least a quarterly regularity review by the regional Treasury agent (receveur des finances de la prefecture) in order to prevent possible diversion of funds. The finance Controllers located in each of the six Departments of Benin will be supporting local treasury agents and the communities in bookkeeping and in preventing any non-compliance on agreed fiduciary procedures-especially adherence with predefined fund transfers time from central level to commune level, and from commune level to communities. Mechanisms to increase social accountability, such as community scorecards, will be developed during the project implementation based on lessons learnt. More details will be inserted in the PIM and a reputable NGO will be recruited to provide appropriate training for involved communities to ensure easy measurement of performance from public service providers.
51 External audit
19. An external Independent and qualified auditor will carry out the audit of project accounts. By expressing an opinion on the Annual Financial Statements and in compliance with International Standards on Auditing, the auditor will be required to prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, and controls. The financial auditor will especially review a reasonable sample of sub-grants and disbursements under social safety nets operations each year to ensure that activities were completed pursuant to the agreed procedures and that funds were used for the purposes intended. The audit report will be submitted to IDA within six months of the end of each fiscal year.
20. In addition, technical audits will be carried out that will review project performance, i.e: project progress, quality and timeliness in relation to milestones and objectives stated in the Project Document, as well as the economy and efficiency with which the project is being implemented.
C. Procurement Arrangements
21. Overall Procurement activities will be carried out by a proposed new Secretariat for Decentralized Community Driven Services (SSDCC in French) under the Ministry of Decentralization, Local Government, Administration and Development of the Territory (MDGLAAT). The assessment conducted in March 2012 by the procurement specialist based in Benin Country Office has reviewed the organizational structure for implementing the Project:
22. Procurement by the SSDC: The SSDC will be responsible for all procurement activities envisaged under the Project, including those of the communes, communities. The coordination of procurement activities at all levels will be ensured by the Procurement Specialist who will be recruited for the Project. All project procurement prior review documents should be submitted to IDA by the SSDC.
23. Procurement by the Communes. Works, goods and services and non-consulting services to be procured by the communes for the implementation of their sub-project, will be procured by the procurement commission of communes (Commission de Passation des March6s Publics in French) in line with the decree no 2010-496 of November 26, 2010 according to rules of transparency, economy, efficiency, equality judged acceptable by the IDA. The Project will build procurement capacity in Communes. A commune will be authorized to procure woks, goods and services only when his procurement commission has been established with a capable procurement staff who has a proven knowledge of the procedures allowed under the Project acceptable to IDA, and who is entirely responsible for the commune(s) procurement. Annual Procurement review will be done by an independent Consultant beyond those that could be conducted by IDA. All procurement prior review documents should be submitted to IDA through the SSDC.
24. Procurement by Community Associations. Communities will implement sub-projects according to simplified procedures (procurement with community participation) accepted by
52 IDA. The communities' management units that will carry out the implementation of sub-projects will be assisted by technical service of Commune and supervised by the recruited facilitators on grassroots communities of each Commune.
Risks and Mitigation measures
25. Most of the issues/risks concerning the procurement component for implementation of the Project have been identified and include a lack of procurement and management competency at the community level to execute their sub-projects without assistance (capacity building, technical assistance) and a lack of procurement staff who are involved in Bank procurement procedures in the proposed SSDCC. The corrective measures which have been agreed are:
a) the recruitment of a Procurement Specialist with the Terms of Reference acceptable for IDA. This Procurement Specialist should have continuing procurement training in a Bank-accredited training center in order to be familiarized with CDD procurement and recent changes in the Bank's Procurement Guidelines and standard documents;
b) the elaboration of a PIM specifying the procurement procedures and comprising simplified tender documents for the grassroots communities and communes before Project effectiveness;
c) the elaboration of procurement plan for the first eighteen (18) months of the Project implementation;
d) the selection of consultant who will be responsible of training for procurements staff of the communities, communes, SSDCC, facilitators on grassroots communities and members of the sub-project approved Management Committees before releasing the funds to the beneficiaries.' procurement principles (simplified methods). Three training workshops will be organized during the first two years of the Project; This training will concern procedures contained in the PIM for selection of service providers, acquisition of goods and execution of works before effectiveness;
e) the Procurement post-review, during supervision missions, to identify possible weaknesses and advising the staff involved in procurement on the relevant improvements;
f) the submission to IDA by each commune beneficiary the text of creation of procurement commission in line with the decree no 2010-496 of November 26, 2010 before releasing the funds to the Commune;
g) the selection by the Borrower of an individual independent procurement consultant for annual post procurement review in communes and community during project implementation before effectiveness.
26. The overall project procurement risk has been rated high.
53 Guidelines and procurement documents
27. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated January 201 land "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011 and the provisions of the Financial Agreement.
28. The procurement will be carried out using the Bank's Standard Bidding Documents or Standard Request for Proposal respectively for all International Competitive Bidding (ICB) for goods and recruitment of consultants. For National Competitive Bidding (NCB), the Borrower could submit a sample form of bidding documents to the Bank prior review and will use this type of document throughout the project once agreed upon. The Sample Form of Evaluation Reports developed by the Bank, will be used.
Frequency ofprocurement reviews and supervision
29. Bank's prior and post reviews will be carrying out on basis of review thresholds indicated in the following table. The Bank will conduct six-monthly supervision mission and annual Post Procurement Review; the ratio of post review is at least 1 to 5 contracts. The Bank could also conduct an Independent Procurement Review at any time until two years of the closing date of the project. A post review procurement will be conducted annually by an selected individual independent consultant in commune and communities.
Table A3.2: Procurement and selection review thresholds . Prior Review Procurement/Selection Treol Coment methods (Threshold Comments (US $) 1. Works and Goods
ICB * Works N/A Method can be applied for any * Goods > 300 000 amount, but they are mandatory above these amounts NCB N/A Review of the first two contracts independently of amount Shopping N/A Review of the first two contracts independently of amount Direct Contracting All contracts All contracts 2. Consulting services With review of the first two contracts Sindependently of amount LCS >With review of the first two contracts independently of amount CQS > 50,000 With review of the first two contracts (for contracts sUS$1 00,000) > independently of amount
54 FBS With review of the first two contracts (for contracts
On basis of detailed and approved p>5000 annual plan (with indication of venue, number of participants, duration and exhaustive budget, etc.)
30. All trainings, terms of reference of contracts estimated to more US$10,000, and all amendments of contracts raising the initial contract value by more than 15 percent of original amount or above the prior review thresholds will be subject to IDA prior review. All contracts not submitted to the prior review, will be submitted to IDA post review in accordance with the provisions of paragraph 4 of Annex 1 of the Bank's Consultant Selection Guidelines and Bank's procurement Guidelines
Procurement Plan
31. All procurement activities will be carrying out in accordance with the original or formally updated agreed procurement plan. The SSDCC will be responsible for the preparation and updating of procurement plan. The Procurement Plans will be updated at least annually or as required to reflect the actual project implementation needs and capacity improvements.
Table A3.3: Works and goods contract Packages which will be procured following ICB and Direct contracting
1 2 3 4 5 6 7 8 9 10 Prior Estimated Expected Ref Estimated Procure Pre Domestic DESCRIPTION Amount -ment qualification preference Review ing Comments No. (US$ 000) Method (yes/no) (yes/no) (yes/no) Date Date Analysis of Nine (9) vehicles for existing the SSDCC (3) and September November vehicles and 1 prefectures (6) to 540 ICB No No Yes 2012 2012 needs to be ensure supervision carried out capabilities prior to IDA no objection
32. No Consulting Assignments contracts with short-lists of international firms are foreseen in the current procurement plan.
55 Annex 4: Operational Risk Assessment Framework (ORAF)
Stakeholder Risk Rating Moderate Description: Risk Management:
Government's support to local service delivery may be threatened by a fiscal APL triggers will include the Government's adherence to maintaining funding above an agreed percentage of revenues. crisis or reprioritization of expenditures, which could translate into Government Resp: Client Stage: Implementation Due Date: Status: Not Yet Due not maintain its funding for local service delivery through FADeC at sufficient levels. Risk Management: Donor partners and local officials may see the mainstreaming of CDD as a threat The design of the project itself seeks to debunk the idea that CDD and decentralization are incompatible. The project team to the prerogatives of communes, leading some local government officials and will consult closely with commune associations such as the Association Nationale des Communes du Benin (ANCB) and donor partners may oppose the CDD approach. Indeed, some communes have the technical and financial partners, whose feedback and experiences have been incorporated in preparation and will expressed concern in the past about not being sufficiently involved in or in control continue to be taken into account during implementation. of ODD implementation. eResp: Client Stage: Preparation and Due Date: Status: In progress I I Implementation
Capacity Rating Substantial Description: Risk Management:
MDGLAAT has a lack of experience with IDA financing. MDGLAAT has not Training/mentoring by World Bank FM, procurement and disbursement staff, and/or the possibility of hiring new personnel recently implemented Bank operations, and it needs to become accustomed to with previous experience with IDA projects. Bank processes and understand the need to follow certain rules and principles Resp: Bank Stage: Implementation Due Date: Status: Not Yet Due during project implementation. capacity. In Risk Management: There is weak local FM, procurement, and contract management absence of appropriate mitigation, low capacity in these areas could lead to Recruitment of experienced and qualified FM consultants at central and decentralized level and update of the FADeC leakages, delays and/or poor quality of implementation. manual of procedures in order to include IDA project requirements and fiduciary procedures at community level. The Project includes institutional strengthening subcomponents for central ministries, communes, and communities. MDGLAAT There is a lack of capacity for providing technical assistance on local could contract consultants with experience working with the Bank to support the FM/procurement process. The project will development planning and CDD. Capacity for providing technical assistance on also support six (6) Finance Controllers who will support Public Treasury agents located at communes level by ensuring CDD will have to be either built in MDGLAAT or transferred from the PNDCC. compliance with agreed delays for funds transfers, adequate budget executing and expenditures recording. Tapping the expertise of PNDCC project staff, either by hiring them as consultants to MDGLAAT or otherwise, could be a way to Capacity for monitoring use of FADeC funds also needs to be strengthened to mitigate the risk of lack of technical capacity on CDD. ensure they are spent efficiently and effectively. CONAFIL, the body charged with Resp: Client Stage: Implementation Due Date: Status: Not Yet Due administering FADeC is understaffed and requires institutional capacity building support to build its ability to monitor use of FADeC funds. Risk Management:
The technical quality and staffing levels of deconcentrated sectoral staff are not The performance of CONAFIL and FADeC will be closely monitored. Assistance for institutional capacity building of sufficient in many communes to assure technical quality of projects. Whereas CONAFIL will be provided in coordination with donor partners. under PNDCC the technical quality of subprojects was backstopped by engineers of the Fiduciary Agent, this project will rely on commune-level staff to assure the quality of the work of the contractor and technical supervisor. Resp: Bank Stage: Implementation Due Date: Status: Not Yet Due
56 Risk Management: Train local government staff on simple and efficient methods to monitor quality. Issue black list of poor performing contractors and controllers. Support hiring of engineers in departments to control quality of technical supervision in communes. Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Governance Rating Substantial Description: Risk Management:
There is a risk of capture, as communes or sectoral ministries may try to gain Support to Prefectures, who are responsible to monitor the respect of law and national commitments by local governments. control of subprojects resulting in disempowerment of communities. Communes Team will ensure that relevant communes understand what is at stake and that they will be held accountable for results. may also resist social accountability measures and participatory planning. Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Although senior levels of Government are currently supportive of the proposed Risk Management: project, changes may occur during the implementation of the project. Changes in senior Government leadership could change the commitment to decentralization Work closely with other donors supporting decentralization to help the Government keep momentum. or CDD. Resp: Bank Stage: Implementation Due Date: Status: Not Yet Due
Risk Management: The Project includes institutional strengthening subcomponents for central ministries, communes, and communities. The project will also support social accountability measures designed to boost citizens' demand for good governance. Resp: Client Stage: Implementation Due Date: Status: Not Yet Due
Risk Management: Frequent audits will verify financial and technical compliance. Remedies including suspension of disbursement can be applied if necessary. Resp: Bank Stage: Implementation Due Date: Status: Not Yet Due
Design Rating Moderate Description: Risk Management: Delivery of social safety nets through CDD has not been attempted and is a new Close integration of safety net pilot procedures with existing CDD model. Minimization of additional steps required for concept in the country. The safety net pilot is a new concept for Benin and its safety net implementation. Hiring of safety net expert in SSDCC. implementation a design will need to be grafted onto existing Grassroots Management Training and CDD procedures. Resp: Client Stage: Implementation Due Date: Status: In Progress Social and Environmental Rating Moderate Description: Risk Management: Subprojects to be supported under component one will include construction of Environmental and Social Management Framework (ESMF) with: (i) an environmental and social screening process for schools, health clinics, small water supply systems, latrines, rural roads, and subprojects; (ii) guidance for the operation of water management structures; (iii) Environmental and Social Management market stalls/hangars. The physical project activities would be carried out in all Plan (EMP) for the proposed project; and (iv) a medical waste management plan. A Resettlement Planning Framework communes and a large number of local communities in Benin. The subprojects should be applied if subprojects require land and/or have negative impacts on livelihoods. 57 could trigger small-scale and site specific environmental impacts typical of Resp: Client Stage: Preparation Due Date: 18-Jan-2012 Status: Completed category B projects. The menu of eligible public works under component two will likely include public goods such as road rehabilitation, small-scale irrigation, reforestation, and other environmental management type subprojects. Other expected activities under component three, such as capacity building and technical assistance, are not expected to have any environmental impacts. Potential environmental impacts are site-specific, reversible in nature, and mitigating measures can be readily designed. As projects supported are small in scale, potential impacts are likely to be on the same scale. Potential impacts, in the absence of mitigation, include dust, soil and water pollution, soil erosion, loss of vegetation and land acquisition have been identified as possible impacts that could arise from implementation of subprojects. Program and Donor Rating Substantial Description: Risk Management: The project benefits from donor support for the Government's decentralization The Bank team and Government will engage donors in dialogue on decentralization and CDD (through the Technical program, including support for FADeC. If this support were to be reduced, the Working Group on Decentralization). project may suffer. Donors have indicated strong commitment to supporting R decentralization, including FADeC, but have displayed mixed support for CDD. Resp: Bank Stage: Preparation and Due Date: Status: In Progress UNICEF will provide coordinated support to build safety net capacity in the Implementation Ministry of Social Affairs. Delivery Monitoring and Sustainability Rating Substantial Description: Risk Management:
Proper monitoring and evaluation is important to establish adequate targets to The project will support the strengthening of CONAFIL's monitoring and evaluation capacity. The team will also work with measure the success of the Project in achieving its development objective. CONAFIL toward a better understanding on the necessity of maintaining funding for projects. The project will monitor the CONAFIL has currently only limited M&E capacity. There are also risks related to recurrent budget of communes compared to resource needs for ongoing operation and maintenance of their infrastructure the sustainability of investments and of policy reforms. With respect to endowment. Furthermore, as in the PNDCC, communities will be trained in maintenance of projects. investments, arrangements for operations and maintenance of investments may Resp: Bank Stage: Implementation Due Date: Status: Not Yet Due not be adequately respected or resourced. Regarding policy reforms, policies relating to decentralization and CDD may not be maintained after the project Risk Management: closes. The APL structure allows for sustained support by IDA over a longer-term, which will encourage the policies to take deep root. Resp: Bank Stage: Preparation and Due Date: Status: In Progress implementataion
Implementation Risk Rating: Substantial Comments:
The CDD approach is well established in Benin, but channeling donor resources to local governments through the Government's fiscal transfer system has only been done on a small scale. There is weak local FM, procurement, and contract management capacity. In absence of appropriate mitigation, low capacity in these areas could lead to leakages, delays and/or poor quality of implementation. Delivery of social safety nets through CDD has not been attempted and is a new concept in the country.
58 Annex 5: Implementation Support Plan
1. The Implementation Support Plan (ISP) will take into consideration the major issues identified as risks at various levels. These include: having strong teams for support missions to ensure that all areas are professionally catered for to provide the required advice to implementing agencies at all levels. While the Government and its implementing agencies remain responsible for program implementation, responsibility for resolving challenges constraining achievement of the PDO will be shared by all stakeholders including the Government and the Bank. The Bank will to conduct implementation support missions at minimum twice a year.
2. The Bank team has necessarily been multi-sectoral for project preparation, including team members from Public Sector Reform and Capacity unit, the Poverty Economist based in Cotonou, and the Education and Health specialists for Benin. It will be critical to continue this multi-sectoralism in the implementation support phase.
3. In addition to the implementation support missions, a Mid-Term Review will be carried out during the implementation of first phase of the APL to assess if the project design assumptions are still valid. Missions and reviews will be complemented by external reviews that could include the following areas: financial management, procurement, monitoring and evaluation, and technical audits.
4. The World Bank Task Team Leader will handle the day-to-day matters of the project which will include IDA support, and adherence to World Bank policies.
Table A5.1: Main areas of focus in terms of support to implementation:
Time Focus Skills Needed Resource Partner Role Estimate First twelve - Identification of - Grassroots US$150,000 p.a. UNICEF to months target communities Management support capacity - Grassroots Training building of Management Training - Public Sector Ministry of Social - Capacity building at Reform Affairs for safety central and commune -Safety nets nets targeting and level - FM other functions - Financial - Procurement management - M&E GiZ, EU, and - Procurement - Impact others to provide - Rollout of M&E Evaluations coordinated system and scorecards - Scorecards support for - Baseline data for capacity building impact evaluation of CONAFIL
12-42 months - Implementation - Grassroots US$150,000 p.a. UNICEF to Support Management support capacity - Capacity building at Training building of central and commune - Public Sector Ministry of Social level Reform Affairs for
59 - Financial -Safety nets targeting and to management - FM provide technical - Procurement - Procurement inputs - Implementation of - M&E impact evaluation - Impact GiZ, EU, and Evaluations others to provide - Scorecards coordinated support for capacity building of CONAFIL
5. The Financial management aspect of the project will be supervised on a risk-based approach. Supervision will focus on the status of financial management system to verify whether the system continues to operate well and provide support where needed. It will comprise inter alia, the review of audit reports and IFRs, advice to task team on all FM issues, review of annual audited financial statements and management letters. Based on the current risk assessment which is Substantial, there will be two on-site supervision visits per year during implementation and a review of transactions will be performed on these occasions.
6. Based on the outcome of the FM risk assessment, the following implementation support plan is proposed. The objective of the implementation support plan is to ensure the project maintains a satisfactory financial management system throughout the project's life.
Table A5.2: FM Implementation Support Plan
FM Activity Frequency
Desk reviews Interim financial reports review Quarterly Audit report review of the program Annually Review of other relevant information such as interim Continuous as they become internal control systems reports. available On site visits Review of overall operation of the FM system Twice by year (Implementation Support Mission)
Monitoring of actions taken on issues highlighted in As needed audit reports, auditors' management letters, internal audit and other reports Transaction reviews (if needed) As needed Capacity building support FM training sessions During implementation and as and when needed.
60 Table A5.3: Skills mix required
Skills Needed Number of Staff Number of Comments Weeks per year Trips per year
Procurement 2 0 Based in the Region Social Specialist 1 0 Country Office Based Environment Specialist 1 0 Based in the Region Financial Management 2 0 Country Office based Specialist Impact Evaluation 6 3 HQ Based Specialist Monitoring and Evaluation 1 0 HQ Based Specialist Public Sector Reform/ 4 2 Based in the Region Decentralization Specialist Health Specialist 1 0 Country Office Based Education Specialist 1 0 Country Office Based Poverty Economist 1 0 Country Office Based CDD specialist 6 3 Consultant Safety Net Specialist 8 3 HQ Based/Consultant Task Team Leader 6 3 HQ Based
Table A5.4: Partners
Name Role UNICEF Support capacity building of Ministry of Social Affairs for safety nets targeting and other functions Sub-group for capacity Provide coordinated support for capacity building building of CONAFIL of CONAFIL (including GiZ, EU, and others)
61