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Document of The World Bank Report No: 20195-SE Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 23.6 MILLION (US$30 MILLION EQUIVALENT) TO THE REPUBLIC OF SENEGAL Public Disclosure Authorized FOR A SOCLkL DEVELOPMENT FUND PROJECT IN SUPPORT OF THE FIRST PHASE OF A SOCIAL DEVELOPMENT FUND PROGRAM December 1, 2000 Human Development II Country Department 14 Public Disclosure Authorized Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2000) Currency Unit = FCFA FCFA 1 = US$0.00 14 US$1 = FCFA 697 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ADM Agence de D&veloppementMunicipal MEF Ministere de l'Economie et des Finance AfDB African Development Bank MFSN Ministere de la Famille el de la Solidarite Nationale AGETIP Agence d'Execution des Travaux dI'ntereitPublic MFSU Micro-Finance Support Unit contre le Sous-Emploi MIS Management Information System APL Adaptable Program Lending NGO Non-Governmental Organization CAS Country Assistance Strategy NPPA National Program for Poverty Alleviation CBOs Community-Based Organizations NRIP National Rural Infrastructure Program CDSU Community Development Support Unit OCC Orientation and Coordination Committee CIDA Canadian International Development Agency PA Project Account CMTS Coordination and Monitoring Technical Secretariat PAGD Management Development Project CNLP Coordination Nationale de Lutte contre la Pauvrete PANC Poverty Alleviation National Coordination CSFU Central Social Fund Unit PDEF Plan Decennal de l'Education ei de la Formation DDI Direction de la Dette et de l'Investissement PDRHI Projet de Developpement des Ressources Humaines I DPS Direction de la Prevision et de la Statistique PDIS Plan de Developpemnt Integre de la Sante DP Department of Planning PFI Participating Financial Institution ECD Early Childhood Development PLP Programme de Lutte contre la Pauvrete ESAM Enquetes Sdnigalaises aupres des Manages PPA Participatory Poverty Assessment FAU Financial and Administrative Unit RFMU Regional Fund Management Unit FCFA Franc de la Communaute Financiere de l'Afrique SA Special Account GMT Grassroot Management Training SCAs Saving and Credit Associations HBS Household Budget Survey SDF Social Development Fund IDA Intemational Development Association SDFP Social Development Fund Program IEC Information Education and Communication SDC Social Development Credit IGA Income-Generating Activities SDG Social Development Grant IMEU Information Monitoring and Evaluation Unit SFMA Social Fund Management Association IRCD International Research Center for Development SFMU Social Fund Management Unit LACI Loan Administration Change Initiative UNDP United Nations Development Programme MB Managing Board WB World Bank Vice President: Callisto E. Madavo Country Director: John McIntire Sector Manager: Nicholas R. Bumett Task Team Leader: Alassane Diawara SENEGAL SOCIALDEVELOPMENT FUND PROGRAM CONTENTS A. Program Purpose and Project DevelopmentObjective Page 1. Program purpose and program phasing 3 2. Project development objective 3 3. Key performance indicators 3 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 5 4. Program description and performance triggers for subsequent loans 7 C. Program and Project Description Summary 1. Project components 10 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 .4. Institutionaland implementationarrangements 12 D. Project Rationale 1. Project alternatives considered and reasons for rejection 17 2. Major related projects financed by the Bank and other development agencies 19 3. Lessons learned and reflected in proposed project design 19 4. Indications of borrower commitment and ownership 21 5. Value added of Bank support in this project 21 E. Summary Project Analysis 1. Economic 21 2. Financial 23 3. Technical 24 4. Institutional 24 5. Environmental 28 6. Social 30 7. Safeguard Policies 34 F. Sustainabilityand Risks 1. Sustainability 34 2. Critical risks 34 3. Possible controversial aspects 35 G. Main Conditions 1. Effectiveness Condition 35 2. Other 36 H. Readiness for Implementation 36 I. Compliance with Bank Policies 37 Annexes Annex 1: Project Design Summary 38 Annex 2: Detailed Project Description 44 Annex 3: Estimated Project Costs 58 Annex 4: Cost-Effectiveness Analysis Summary 59 Annex 5: Financial Summary 64 Annex 6: Procurement and Disbursement Arrangements 65 Annex 7: Project Processing Schedule 76 Annex 8: Documents in the Project File 77 Annex 9: Statement of Loans and Credits 79 Annex 10: Country at a Glance 81 Annex I 1: Summary Findings of Social Assessment 83 Annex 12: Mainstreaming Gender into the Social Development Fund 91 Annex 13: Note on Strategy for Poverty Targeting in the Social Development Fund Project 102 Annex 14: Institutional Arrangements 111 Annex 15: Financial Management Arrangements 116 Annex 16: Improving Access to Micro-Finance 123 Annex 17: Grassroot Management Training (GMT) for CBO's Capacity Building 130 MAP(S) IBRD 31219 SENEGAL Social DevelopmentFund Program Project Appraisal Document Africa Regional Office AFC14 Date: December 1, 2000 Team Leader: Alassane Diawara Country Manager/Director: John McIntire Sector Manager/Director: Nicholas R. Bumett Project ID: P041566 Sector(s): SY - Other Social Protection Lending Instrument: Adaptable Program Loan (APL) Theme(s): Poverty Reduction Poverty Targeted Intervention: Y ProgramFinancing Data Estimated APL IndicativeFinancing Plan ImplementationPeriod Borrower i_____________________ .______- __ ._ _;;(Bank FY) IDA Others Total Commitment Closing US$m % US$m USSm Date Date APL 1 30.00 64.5 16.52 46.52 03/31/2001 12/31/2004 Ministry of Economy and Loan/ Finance, Senegal Credit APL 2 30.00 50.0 30.00 60.00 12/31/2004 12/31/2007 Ministry of Economy and Loan/ Finance, Senegal Credit__ _ _ _ ___ _ _ _ _ APL 3 25.00 45.5 30.00 55.00 12/31/2007 12/31/2011 Ministry of Economy and Loan/ Finance, Senegal Credit API-4 Loan! Credit____ __ iTotal 85.00 1 76.52 161.52 ProjectFinancing Data [ I Loan [XI Credit [I Grant [I Guarantee [ Other: For LoanstCreditslOthers: Amount (US$m): 30.00 ProposedTerms: Standard Credit Graceperiod (years): 10 Years to maturity:40 Commitmentfee: Servicecharge: 0.75% FinancingPlan: Source Local Foreign Total BORROWER 2.17 1.45 3.62 IDA 17.80 12.20 30.00 OTHER SOURCES 7.74 5.16 12.90 Total: 27.71 18.81 46.52 Borrower:GOVERNMENT OF SENEGAL Responsibleagency: MINISTRY OF FAMILY AFFAIRS AND NATIONAL SOLIDARITY Address: BuildingAdministratif, 6eme etage Contact Person: Aminata Tall Tel: 221 822 36 94 Fax: 221 823 66 73 Email: Other Agency(ies): Associationpour le Fonds de DeveloppementSocial (AFDS) Address: BuildingAdministratif 6eme etage, Dakar, Senegal Contact Person: Aminata Tall Tel: 221 822 36 94 Fax: 221 823 66 73 Email: Estimated disbursements( Bank FY/US$M): FY 2001 2002 2003 2004 Annual 2.22 11.04 10.78 5.96 Cumulative 2.22 13.26 24.04 30.00 Project implementation period: 3 years Expectedeffectiveness date: 03/31/2001 Expected closing date: 12/31/2004 OCS AM. PADF-l. R"l M . 2W -2 - A. Program Purpose and Project DevelopmentObjective 1. Programpurpose and program phasing: The program will support, as part of the core Country Assistance Strategy (CAS), the capacity of poor communities to effectivelymanage their own developmentresources and economic and social services with equal participationof vulnerable groups, which will be gender inclusive. The program will support four main strategic objectivesof the Govemment of Senegal: (i) increasing access to basic social services through direct and indirect poverty reduction interventions;(ii) increasing access of poorer groups of the population to micro-financeproducts and services via existing participating financial institutions (PFIs) and savings and credit associations (SCAs); (iii) capacity building of community-basedorganizations (CBOs), PFIs and SCAs, and (iv) capacity building of Government for poverty strategy management, monitoring and evaluation. The proposed program will cover a total of 10 years. It will be carried out in three phases. The aim of this approach is to start activities on a small scale and progressivelyexpand them by fine-tuningmechanisms and tools of intervention. The first phase of 3 years specifically aims at setting up and operationalizing the structures needed for the project to take off, sensitizingthe beneficiaries about the project, testing the service delivery strategy at the central and local levels through small-scale operations designed to ease out the leaming process and, based on lessons leamed, start the second phase. Phase 2 is planned for 3 years and aims at scaling up implementationof the project componentsin order to reach all targeted communities within the program, as well as harmonizing objectives and procedures of all donor-financedsocial funds operating in the country. Based on the successes of the second phase, the third phase (4 years) will be implementedwith the view to fine-tuningthe operationalmechanism and mainstreamingthe strategy nationwide to include other operations,while ensuring long-term sustainabilityof the mechanism. 2. Project developmentobjective: (see Annex 1) The project developmentobjective is to achieve the effective use of social funds in priority development areas by the poorest test communities in