Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD941 PROJECT PAPER ON A PROPOSED SECOND ADDITIONAL GRANT IN THE AMOUNT OF SDR 32.4 MILLION (US$50 MILLION EQUIVALENT) TO THE REPUBLIC OF YEMEN FOR THE SOCIAL FUND FOR DEVELOPMENT PHASE IV PROJECT JULY 8, 2014 Human Development Department Yemen, Egypt and Djibouti Country Management Unit Middle East and North Africa Region This document is being made publicly available prior to Board consideration. This does not 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 (Exchange Rate Effective MARCH 31, 2014) Currency Unit = Yemeni Riyal (YER) YER 215.31 = US$1 US$0.65 = SDR 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing CLDP Community and Local Development Program CBO Community Based Organization DfID UK Department for International Development ELD Empowerment for Local Development EMP Environmental Management Plan ESMF Environmental and Social Management Framework IDA International Development Association ISN Interim Strategy Note LIW Labor-Intensive Works MOPHP Ministry of Public Health and Population MOU Memorandum of Understanding MOLA Ministry of Local Administration MIS Management Information System M&E Monitoring and Evaluation NGO Non-Governmental Organization NDC National Dialogue Conference OM Operational Manual PDO Project’s Development Objectives SFD IV Social Fund for Development IV Project SMED Small and Micro Enterprise Development SMEPS Small and Micro Enterprise Promotion Services SNACC Supreme National Authority for Combating Corruption UNICEF United Nations Children's Fund WFP World Food Programme Vice President: Inger Andersen Country Director: Hartwig Schaefer Country Manager: Wael Zakout Sector Manager: Yasser El Gammal Task Team Leader: Mira Hong ii YEMEN, REPUBLIC OF ADDITIONAL FINANCING II FOR SOCIAL FUND FOR DEVELOPMENT IV PROJECT CONTENTS Project Paper Data Sheet Project Paper I. Introduction 1 II. Background and Rationale for Additional Financing 1 III. Proposed Changes 5 IV. Appraisal Summary 8 Annex 1. Revised Results Framework and Monitoring Indicators 15 Annex 2. Operational Risk Assessment Framework 31 Annex 3. Detailed Project Description of the Original Project and 41 Additional Financing 1 iii ADDITIONAL FINANCING DATA SHEET Yemen, Republic of Second Additional Financing for SFD IV ( P148474 ) MIDDLE EAST AND NORTH AFRICA MNSSP . Basic Information – Parent Parent Project ID: P117949 Original EA Category: B - Partial Assessment Current Closing Date: 31-Dec-2016 Basic Information – Additional Financing Additional Financing Project ID: P148474 Financing Gap Type (from AUS): Regional Vice President: Inger Andersen Proposed EA Category: B - Partial Assessment Expected Effectiveness Country Director: Hartwig Schafer 10-Sep-2014 Date: Sector Director: Enis Baris Expected Closing Date: 31-Dec-2016 Yasser Aabdel-Aleem Sector Manager: Report No: PAD941 Awny El-Gammal Team Leader: Mira Hong Recipient: Government of Yemen Organization Name Contact Title Telephone Email Mr. Abdullah Al Managing 967 - 1 - 449669 aaldailami@sfd- Social Fund for Dailami Director ext.(206) yemen.org Development Project Financing Data – Parent ( RY:Social Fund for Development IV-P117949 ) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status Signing Date Date Date Closing Date Closing Date P117949 IDA-H5480 Effective 30-Mar-2010 28-Jun-2010 07-Oct-2010 31-Dec-2015 31-Dec-2016 P133699 IDA-H8330 Effective 02-Apr-2013 04-May-2013 19-Jun-2013 31-Dec-2016 Disbursements Undisbur % Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed sed Disbursed P117949 IDA-H5480 Effective XDR 38.70 38.70 0.00 38.70 0.00 100.00 P133699 IDA-H8330 Effective XDR 16.30 16.30 0.00 1.30 15.00 7.96 iv Project Financing Data – Additional Financing II for SFD IV ( P148474 ) [ ] Loan [ ] Grant [X] IDA Grant [ ] Credit [ ] Guarantee [ ] Other Total Project Cost: 50.00 Total Bank Financing: 50.00 Financing Gap: 50.00 Financing Source – Additional Financing (AF) Amount BORROWER/RECIPIENT 0.00 IDA Grant 50.00 Total 50.00 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No Explanation Team Composition Bank Staff Name Title Specialization Unit Mira Hong Senior Operations Team Lead MNSSP Officer Dominique Van De Lead Economist Lead Economist DECHD Walle Gillian M. Perkins Consultant Sr. Education Specialist MNSSP Lire Ersado Senior Economist Sr. Economist MNSSP Afrah Alawi Al-Ahmadi Senior Human Sr. Human Development MNSSP Development Specialist Specialist Elena Gagieva-Petrova Operations Analyst Operations Analyst MNSHD Banu Setlur Senior Environmental Sr. Environmental MNSEE Specialist Specialist Chaogang Wang Senior Social Sr. Development MNSSU Development Specialist Specialist Sanjay Agarwal Senior Social Sr. Social Development SDV Development Specialist Specialist Alaa Mahmoud Hamed Senior Health Specialist Sr. Health Specialist MNSHH Abdel-Hamid Ali Ahmed Al- Senior Health Specialist Sr. Health Specialist MNSHH Mudhwahi v Jamal Abdulla Senior Procurement Sr. Procurement MNAPC Abdulaziz Specialist Specialist Samira Al-Harithi Procurement Analyst Procurement Analyst MNAPC Moad M. Alrubaidi Senior Financial Sr. Financial MNAFM Management Specialist Management Specialist Saleh Qasem Al-Manary Financial Management Financial Management MNAFM Analyst Analyst Edith Ruguru Mwenda Senior Counsel Sr. Counsel LEGAM Andrianirina Michel Finance Officer Finance Officer CTRLA Eric Ranjeva Dominique Van De Lead Economist Lead Economist DECHD Walle Khalid Ahmed Ali E T Consultant Social Protection Officer MNSSP Moheyddeen Non Bank Staff Name Title Office Phone City N/A Locations Country First Administrative Location Planned Actual Comments Division Yemen, Nation-wide Republic of Institutional Data Parent ( RY: Social Fund for Development IV-P117949 ) Sector Board Social Protection Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Health and other social services Other social services 42 Public Administration, Law, and Sub-national 22 Justice government administration Education Pre-primary education 14 Water, sanitation and flood protection General water, 14 sanitation and flood protection sector vi Finance SME Finance 8 Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural services and infrastructure 63 Social dev/gender/inclusion Participation and civic engagement 21 Financial and private sector Financial Consumer Protection and 8 development Financial Literacy Rural development Rural policies and institutions 4 Rural development Rural markets 4 Total 100 Additional Financing II for SFD IV ( P148474 ) Sector Board Social Protection Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Health and other social services Other social services 90 Public Administration, Law, and Sub-national 10 Justice government administration Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural services and infrastructure 70 Social dev/gender/inclusion Participation and civic engagement 20 Rural development Rural policies and institutions 10 Total 100 vii I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in the amount of SDR 32.4 million (US$50 million equivalent) to the Republic of Yemen for a second additional financing of the Social Fund for Development Phase IV Project (SFD IV, P148474, Grant No. IDA H984-RY). 2. The first additional financing of US$25 million equivalent (AF1) for SFD Phase IV was approved on April 2, 2013 to finance additional activities under the Labor-Intensive Works (LIW) Component. The proposed second additional grant (AF2) would help meet the financing gap under the project’s largest component, the Community and Local Development Program (CLDP) Component. The original budget plan and results targets for SFD IV, covering the period 2011 to 2016, are based on the assumption that additional resources will be mobilized during the course of implementation. So far, almost 70 percent of SFD IV’s total US$1.126 billion budget is being covered by donors, including the World Bank, and the Government. The financing gap for CLDP stands at US$218 million. 3. The project has been performing consistently well throughout the challenges following the Arab Spring, playing a crucial role in channeling resources effectively to meet increased needs in poor communities and contributing directly to the World Bank Group’s overarching goals of eradicating extreme poverty and boosting shared prosperity. Disbursements are ahead of schedule. The proposed AF2 would help finance the costs associated with continuing activities under SFD’s established and successful CLDP over the remainder of the project period by improving access to basic services through delivery of poverty-targeted improvements in community infrastructure and building local capacity. The expected outcomes, based on performance of the program to date, include: (a) increased school enrolment, especially of girls; (b) improved access to water; (c) increased agricultural productivity and incomes; (d) access to improved public health services; and (e) reduced travelling time owing to rural road improvements. II. Background and Rationale for Additional Financing in the amount of US$50.00 million 4. The AF2 would support the ongoing Yemen SFD IV (P117949, US$60 million equivalent) and AF1 (P133699, US$25.0 million equivalent). 1 The AF1, which became effective on June 19, 2013, is scaling up the project’s LIW program with the aim of providing income opportunities and work experience to young people and women who would be providing health and education services. The purpose of the AF2 is to help fill a financing gap for activities under the CLDP. SFD IV became effective on October 7, 2010 and is expected to close on December 31, 2016. AF1 is also expected to close on December 31, 2016. The proposed AF2 would have the same closing date and the project development objectives would be unchanged. 5. The Project Development Objectives of the SFD IV and AF1 are to: (i) improve access to basic services; (ii) enhance economic opportunities; and (iii) reduce the vulnerability of the poor. The objectives are consistent with the World Bank’s Yemen Interim Strategy Note FY13-14 (Report 70943-YE, October 1, 2012), directly supporting two of the three pillars: achieving 1 See Annex 3 for detailed project description. 1 quick wins and protecting the poor; and enhancing governance and local service delivery. The proposed project is also aligned with MENA’s Regional Strategy, supporting the pillar on economic and social inclusion. The objectives, which remain highly relevant, are supported through four components (see Annex 3 for detailed project description): (i) Community and Local Development Program (CLDP). The CLDP activities, to be supported through the proposed AF2, are directed to improving access of the poor to basic services. The activities include community-driven small infrastructure projects targeted to poor communities, primarily in the education, water, roads, health and agriculture sectors. They also include interventions targeted towards the poorest communities and special needs groups as well as local-level capacity building. (ii) Small and Micro Enterprise Development Program which aims to strengthen and build capacity of local microfinance providers and to actively promote entry into the market by creating an enabling environment and by encouraging the establishment of new financial service providers. (iii) Capacity Building Program which supports the other three programs through a focus on capacity-building of local entities, including local and central government bodies, NGOs, and communities, as well as supporting strengthening of SFD’s own institutional capacity, to include for example monitoring and evaluation, management, and transparency. (iv) Labor-Intensive Works Program, providing a cash-for-work safety net to targeted households to bridge their consumption gap during shocks and stagnation of agricultural seasons, while increasing the productive assets of communities and households. 6. Overall, the progress of SFD IV has been ahead of schedule in implementation, disbursement and achievement of its development objectives. The original grant of US$60 million equivalent to SFD IV (representing 13 percent of funds committed from all sources at the outset of the project) is 100 percent disbursed halfway through the lifetime of the project. As of March 2014, SFD IV had disbursed a total of US$384 million equivalent from all funding sources, creating 24 million employment days, with 4.5 million direct beneficiaries (of which 2.5 million are female). Since its inception in 2010, SFD IV has performed satisfactorily (on both implementation progress and development objectives) and the most recent implementation progress rating has been highly satisfactory. The SFD IV project management has earned a highly satisfactory rating throughout implementation. 7. The Social Fund for Development (SFD) has expanded and diversified its operations over the last 16 years, maintaining high standards in implementation and earning a strong reputation with communities and other stakeholders. The crisis in Yemen 2011, in the wake of the Arab Spring, and the subsequent continuing instability in the country have presented particular challenges. According to the World Food Programme (WFP), food insecurity affected approximately 45 percent of the population in 2012, with almost half of children under five in the country – two million children - chronically malnourished and one million acutely malnourished. The project showed resilience and maintained excellent performance throughout the country crisis, adapting to the new environment with innovative approaches to meet implementation challenges, and playing an important role in responding to urgent needs of the population. 2 8. Following the crisis in 2011, Yemen has embarked on a political transition, based on an agreement brokered by the Gulf Cooperation Council. The transitional government, known as the Government of National Reconciliation, was formed in early 2012 and the National Dialogue Conference was launched to support development of a new constitution under which new legislative and presidential elections would be held. The National Dialogue Conference ended in February 2014 with a series of agreements signed by participating parties, resulting in proposals for the decentralization of the Government into a federal structure. So far, the process has been implemented broadly as originally planned but the transition faces high risks unless reforms and economic opportunities materialize quickly and substantive changes are felt by the population. 9. The SFD is uniquely placed to deliver safety net and development programs during this politically uncertain and challenging period. Through diversified programs, SFD is responding to many pressing immediate and medium-term needs of the population. Its ability to respond flexibly and produce innovative multi-sectoral solutions is based on its operational autonomy, decentralized structure with strong branch offices, its focus on strong local-level partnerships, and transparent procedures with emphasis on monitoring and evaluation and good information systems. The SFD’s board is chaired by the Prime Minister with members representing line ministries, private sector, labor union and non-governmental organizations (NGOs). The government of Yemen, which has been financing over 10 percent of the SFD’s budget since 2004, is fully committed to the project and supports the proposed AF2. 10. The CLDP component activities to be financed through the AF2 would support the national transition process by improving access of the poor to basic services. The component’s activities include a wide range of infrastructure subprojects, targeted to poor communities and responding to priorities defined by the community: school construction and rehabilitation, water and sanitation, health, roads, environment, agriculture, and rural development. An Empowerment for Local Development (ELD) Program is directed to building the capacity of communities and local authorities to manage implementation of community-driven projects. Projects selected through community demand have accounted for some 70 percent of all CLDP projects. The CLDP also incorporates activities that are developed with ministries and local authorities at the governorate level, supporting the establishment of sector policies and strategies, building capacity, and targeting interventions to address particular needs. These include: (a) the development of kindergarten and adult literacy programs; (b) training of education and health professionals and local authority staff; (c) integrated community-level projects to promote school enrollment of girls, targeted to districts where the gender gap is most extreme; (d) projects for special needs groups; (e) cultural heritage projects; and (f) integrated, multi-sectoral interventions in the poorest communities. 11. The CLDP has a strong momentum and is exceeding many of its targets. Site visits during the last year through the Third Party Monitoring mechanism have confirmed consistently good standards in procurement and construction quality. Follow up studies have found that the great majority (87 percent in the latest annual survey) of CLDP infrastructure continues to be utilized, while impact evaluations (the latest in 2010) have found substantial impacts of CLDP operations, including increases in school enrolments, especially of girls, improved access to water, and reduced travel time through rural road improvements. Impact evaluations also found satisfactory poverty targeting of CLDP interventions. 3 12. The existence of the financing gap at this stage is explained by the particular funding process employed for SFD’s operations. At the beginning of each phase of operation, SFD prepares a 3-5 year budget plan and mobilizes around 20-30 percent of total funds at project outset, from the World Bank and key donors. During the implementation period, SFD mobilizes additional funds to fill the financing gap. Phase III, which covered years 2005-10, started with a budget plan of US$400 million, of which IDA financed US$60 million at the outset and a further US$35.22 million during implementation. Altogether, SFD had succeeded in mobilizing around US$800 million by the end of the third phase. 13. The fourth phase program covers 2011-16 and has a budget plan of US$1.126 billion, of which IDA financing to date is US$85 million. The plan is ambitious but realistic, considering SFD’s expansion history and absorption capacity. Currently US$760 million has been committed by 12 donors as well as the Government. To date, US$633 million of these funds are effective and US$335 million has been disbursed (as of November 2013). Based on the budget plan, there is a funding gap of US$365 million for SFD IV, of which US$218 million is for the CLDP component. 14. CLDP is the SFD’s core program, accounting for around 65 percent of its overall budget. So far, US$413 million of the US$713 million CLDP budget for 2011-2016 has been mobilized, of which US$260 million is effective. Most of these funds have been disbursed or already committed to subprojects currently under implementation. During 2013, SFD averaged US$19 million per month in disbursements, of which US$12 million was for the CLDP component. On the reasonable assumption of the same or a somewhat higher rate of implementation over the remaining years of SFD IV, the CLDP component could effectively absorb a further US$350 to US$400 million. The SFD thus has adequate capacity to absorb the US$50 million AF2 for the CLDP on the basis of its recent rates of implementation and disbursement. The continuing need and demand from communities is strong and SFD currently has a pipeline of 563 sub-projects already prepared with an estimated cost of US$175 million. 15. The SFD is working to mobilize additional funds from other donors and it is expected that the World Bank’s support through AF2 will lead this effort. Considering the strong commitment of the Government to SFD, as well as SFD’s success to date in mobilizing funds and its positive reputation with donors, it can be expected that at least most of the remaining financing gap can be filled. In the event that part of the remaining financing gap cannot be filled, then fewer CLDP subprojects than planned would be implemented, SFD IV would not meet all its targets, and the benefits at the end of the project would be proportionately reduced; however, this would not affect the viability and expected benefits of the activities to be financed through the AF2. 16. The proposed AF2 does not itself present any implications for the results framework as it supports only existing project activities within the SFD IV budget framework and associated targets. However, the results framework for SFD IV as a whole was reviewed and is being revised based on discussions with SFD and donors during the mid-term review in June 2013. Some revisions and clarifications have been proposed and agreed upon (detailed in Annex 1) regarding how to measure some of the project development objective (PDO) indicators; in 4 addition, some of the intermediate indicators and targets will be modified to better capture the project results. 17. It is expected that the proposed AF2 will not result in any changes in the project’s safeguards arrangements: the AF2 will continue to be classified as environmental category B; it will not trigger additional safeguards policies; and it will not raise safeguard-related issues that were not covered in the original project. While the existing safeguards instrument (Environmental Management Plan - EMP) that was disclosed during January 2010 under the parent project (SFD IV) is still applicable to the AF2, SFD is taking the opportunity to improve and update this document by reflecting lessons learnt from the previous operations. Consequently, an Environmental and Social Management Framework (ESMF) has been prepared that would serve as the new safeguards instrument for SFD’s operations, and was disclosed both in-country and at the World Bank’s InfoShop on April 15, 2014. Safeguards compliance has been rated Satisfactory since the beginning of the SFD IV operation. The recently completed Phase I of the Yemen Third Party Monitoring concluded that SFD did not have any major environmental deviations and it maintains its own, well run quality control department. 18. Overall, considering (i) the SFD’s success in implementing projects over the past 16 years; (ii) that the SFD IV Project is on track to achieve its development objectives; and (iii) that the program has well tested implementation mechanisms with established efficient operational procedures and highly satisfactory management, the option of additional funding to the ongoing project, as requested by the Government, provides the most cost-effective way for both the World Bank and the Government to narrow the financing gap and increase the development impact of the project. III. Proposed Changes Summary of Proposed Changes The changes proposed are (i) an increase in the World Bank’s commitment to and its disbursement estimates for the SFD IV project, through an additional grant of US$50 million equivalent to help meet the financing gap for an existing project component 1 2; and (ii) modification of some indicators for PDO and intermediate results and targets, to better capture the project results, as per the agreement with SFD and donors during the mid-term review (June 2013). The overall budget plan for SFD IV, which includes committed and expected funding from all donor sources, is unchanged, as are the project’s objectives. The activities to be financed through this component are unchanged, and no changes would be required in the existing well-established and satisfactory implementation arrangements. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] 2 See Annex 3 for detailed project description. 5 Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results Project’s Development Objectives Original PDO The Project Development Objectives are to: (i) improve access to basic services; (ii) enhance economic opportunities; and (iii) reduce the vulnerability of the poor. Change in Results Framework Explanation: The proposed AF2 does not itself present any implications for the results framework as it supports only existing project activities within the SFD IV existing budget framework and associated targets. However, the results framework for SFD IV as a whole was reviewed and is being revised based on discussions with SFD and donors during the mid-term review in June 2013. Some revisions and clarifications have been proposed and agreed upon (detailed in Annex 1) regarding how to measure some of the project development objective (PDO) indicators; in addition, some of the intermediate indicators and targets will be modified to better capture the project results. Compliance Covenants ( Additional Financing II for SFD IV - P148474 ) Source of Finance Description of Funds Agreement Date Due Recurrent Frequency Action Covenants Reference The subsidiary agreement has been IDA Article V, 5.01 Effectiveness New executed on behalf of the Recipient and SFD. 6 The Subsidiary agreement has been duly authorized or ratified by the IDA Article V, 5.02 Recipient and SFD and New is legally binding upon the Recipient and SFD in accordance with its terms. Finance Grant Closing Date - ( Additional Financing II for SFD IV - P148474 ) Source of Funds Proposed Additional Financing Grant Closing Date IDA Grant December 31, 2016 Change in Disbursement Estimates (including all sources of Financing) Explanation: The revised disbursement estimates reflect an increase in the World Bank’s commitment to the SFD IV project, through an additional grant of US$50 million equivalent to help meet the financing gap for the existing project component 1. Expected Disbursements (in USD Million) (including all Sources of Financing) Fiscal Year 2015 2016 2017 Annual 15.00 20.00 15.00 Cumulative 15.00 35.00 50.00 Allocations - ( Additional Financing II for SFD IV - P148474 ) Disbursement Source of Allocation Currency Category of Expenditure %(Type Total) Fund Proposed Proposed Goods, works, non- consulting services, consultants’ services, Sub- IDA XDR 32,400,000 100.00 grants, Training and Incremental Operating Costs for the Project Total: 32,400,000 Current Proposed Current Proposed Goods, consultants’ services, Sub-grants, Training and 38,700,000.0 IDA-H5480 XDR 0.00 100.00 100.00 Incremental Operating Costs 0 for the Project 7 IDA-H5480 Designated Account 0.00 0.00 100.00 100.00 38,700,000.0 Total: 0.00 0 Goods, works, non- consulting services, consultants’ services, Sub- grants, wages of social 16,300,000.0 IDA-H8330 XDR 0.00 100.00 100.00 services providers under Part 0 D.4 of the Project, Training and Incremental Operating Costs for the Project IDA-H8330 Designated Account 0.00 0.00 100.00 100.00 16,300,000.0 Total: 0.00 0 Components Change to Components and Cost Explanation: There is no change to the components of the parent, as the AF uses the same component. However, as the AF adds additional funding to the project, the component costs change. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) 1. Community and Additional 1. Community and Local Local Development 25.00 75.00 commitment of Development Program Program US$50 million 2. Small and Micro 2. Small and Micro Enterprises Enterprises Development 5.00 5.00 No Change Development Program Program 3. Capacity-Building 3. Capacity-Building 5.00 5.00 No Change Program Program 4. Labor-Intensive 4. Labor-Intensive Works 50.00 50.00 No Change Works Program Program Total: 85.00 135.00 Appraisal Summary Economic and Financial Analysis The Yemen Social Fund for Development (SFD) second additional financing would provide increased support to a flagship program in Yemen that has made remarkable progress in improving access to basic 8 services, enhancing economic opportunities and in reducing the vulnerability of the poorest. This additional financing provides further IDA resources to the Community and Local Development Program (CLDP) component of the current project that accounts for approximately two thirds of the SFD program budget of US$1.12 billion and that supports a wide range of community-identified infrastructure sub-projects. As Yemen embarks on an ambitious and fragile political transition, SFD has a critical role to play in improving the access of the poor to basic services and in supporting opportunities for voice and participation through the use of efficient, proven and responsive community-driven processes. What is the project’s development impact? Progress of the SFD program is assessed periodically through independent impact evaluation. The most recent analysis (2010) confirmed strong evidence of positive impact relating to CLDP interventions in education, health, water, and roads. Interventions in education were shown to have led to significant increases in school enrolment rates including among girls and children with special needs (two groups specifically targeted under the program). Health interventions under CLDP were shown to have had a greater impact relative to other modes of support in the sector with significant increases recorded in the access of poor women to reproductive health care. An overwhelming majority (86%) of the beneficiaries of CLDP-funded water projects reported increased access to and availability of water. While comparable data on cost-effectiveness are limited, analysis indicates that CLDP school construction costs are lower than those of other national programs. Finally, the national scope of SFD and the ability to mobilize a decentralized network of local branches ensures that CLDP activities can take place in every district including remote underserved communities, as well as those made inaccessible by geography, political disputes or the limited reach of the state. What is the rationale for public financing? There is a powerful rationale for public intervention to insure social risk, including the risk of poverty, through the public provision of social services and safety nets. Infrastructure created through the community-based works will increase use of social services and bring better human development outcomes. Safety net programs help mitigate the welfare losses that households experience when shocks occur while also reducing vulnerability to future events. The economic benefits of SFD programs as a whole can be represented by (i) improvements in household wellbeing as a result of consumption smoothing, asset protection and the avoidance of negative coping behaviors; (ii) enhanced livelihoods through asset accumulation and increased productivity; and (iii) increased use of social services and better human development outcomes as a result of the infrastructure created through the infrastructure projects. The SFD thus provides both protective and productive benefits at the household and the community levels. In other settings, basic infrastructure projects and social safety nets are supported by a combination of public and private funding. However, this model is not feasible in current country context of Yemen, and there is therefore a clear rationale for public financing to help reduce poverty, to improve resilience and to promote inclusive growth. What is the Bank’s value-added? The World Bank helped establish SFD in Yemen more than a dozen years ago and continues to offer technical guidance and financial support. IDA’s sustained engagement, the program’s growing capacity, reach and effectiveness have helped to catalyze additional donor funding (SFD now benefits 9 from support from more than a dozen development partners). The proposed additional support from IDA would ensure that SFD can continue to play a central role in Yemen’s transition by providing the poorest and most underserved communities with access to essential services, by promoting voice and participation and by helping to smooth social tension. Economic viability and cost effectiveness of the projects: The 2010 evaluation recorded positive results in relation to SFD’s operational efficiency, the number of beneficiaries reached, and the costs per beneficiary. Evidence is limited on the cost effectiveness of SFD relative to other means of project delivery but a study of school construction costs in Yemen in 2008 found the CLDP to be the most efficient in terms of procurement, better for example than the Public Works Programme. This was attributed to the “decentralised implementation structure with their supporting local branches.” SFD branches were also found to be well equipped and have well trained supervisors and procurement specialists. Most recently, the Phase 1 report of the Third Party Monitoring (July 2013) indicates that good technical and procurement standards are being maintained in CLDP construction subprojects. Effectiveness of targeting mechanisms and the projects’ incidence: SFD’s targeting strategy is described below. Successive evaluations have found targeting to be pro- poor, whether based on the income level of beneficiary households (through periodic impact evaluation) or proxy means testing. Applying the Social Welfare Fund’s poverty categorization to SFD data in 2010 showed that 30 percent of SFD resources went to the extreme poor category, 54 percent to both extreme and moderate poor, and 79 percent to all poor households. SFD is continuing to develop and refine its tools for targeting and reaching the poorest communities and for measuring its targeting performance. While SFD has advantages in reaching the poor, it faces major constraints in reaching the very poorest, in particular those living in remote, small and scattered communities that are not reached by mainstream services. The CLDP has incorporated alternative approaches to the community-driven model to reach such communities but these are still relatively small in scale. Technical Analysis The CLDP is based on lessons from international practice of social funds and from on-going experience in the Yemen country context. Key elements include: the integration of its interventions with country and sector strategies; a decentralized implementation structure through strong branch offices; the use of mixed targeting mechanisms; focus on partnerships between local authorities and communities; and robust and transparent policies. SFD’s neutrality as an organization enables it to operate in nearly all communities. Targeting of resources Implementation of the AF2 would follow existing mechanisms for sub-project selection and targeting of CLDP investments. The SFD was conceived as a demand-driven social fund but has taken a more active role over time in targeting marginal groups and the poorest communities. For the CLDP, it uses a targeting policy that emphasizes the financing needs of poor communities and remote areas. Its three integrated targeting mechanisms rely on Yemen’s most recent poverty indicators and on qualitative 10 tools to further refine the broad geographic allocation of resources. The poverty indicators, consisting of consumption based headcount indices and a deprivation index reflecting lack of access to infrastructure and facilities as well as other dimensions of disadvantage, are currently based on the 2005/06 Household Budget Survey and 2004 Census of Population and Houses, respectively. Both are due to be updated shortly with the upcoming 2014 Census and household budget survey. CLDP’s three targeting mechanisms consist of the following: • Geographic targeting covers all the districts in the country by distributing the majority of SFD resources based on a composite welfare index of the number of poor and needy individuals first across all governorates. The allocated budget is then further distributed across districts within governorates, using district level indicators and the same methods. Within districts, SFD then uses a variety of data sources, including qualitative assessments and participatory approaches, to target specific communities, with investment based on the demand of communities for SFD interventions. The distribution of resources between sectors is thus dictated by community preferences. SFD branch offices conduct a desk review for sub-districts from which they have not received any applications to assess their ‘poverty’ status and any service gaps. Participatory Rapid Appraisals are then conducted in locations who have applied and who have not, but whose poverty and service deprivation status, merit targeting. The latter communities are encouraged to apply for projects in the next application cycle. A village deprivation index, based also on the 2004 population Census, is used to group villages into four poverty categories of which the poorest are given precedence. • Sector targeting is designed to address gaps in the supply of basic services that are not addressed by the demand approach that characterises allocations under the geographic targeting mechanism. Nominally, 50 percent of CLDP resources are budgeted for sector targeting although Phase IV allocations of received funds to date show only 32 percent of resources are sector targeted. This uses assessment tools and community participation approaches to refine the broad geographic and demographic indicators to ensure that the neediest areas receive support. The SFD has been continuously improving its tools and deepening its engagement with communities. This approach allows more strategic investments within areas, as there are often diverse circumstances within districts as a result of social and economic factors. • Social targeting is designed to ensure that particular special needs groups—such as people living with disabilities; orphans; juveniles; street children; working children; and marginalized groups—are targeted and do not have to compete for resources with other groups targeted under the geographic and sector targeting mechanisms. In practice, the programs implemented under the social targeting budget are heavily focused on children. These additional resources address problems specific to these groups. Sector standards SFD has a number of mechanisms for coordination with line ministries at all levels to ensure that activities are (i) consistent with national and sector strategies and standards and (ii) are synchronized with sector programs, and with local plans where these exist. In particular, where line ministries will be responsible for subsequent allocations of personnel and operating costs for new facilities, the 11 responsible ministry participates as a third party in the agreement between SFD and the community or sponsoring agency. Relatively high technical and construction standards have been maintained, as confirmed recently by the new Third Party Monitoring report. SFD is currently giving increased attention to measures to promote the maintenance and effective utilization of infrastructure after subproject completion, and hence the sustainability of benefits. Existing measures include (i) mainstreaming maintenance and sustainability issues throughout the sub- project cycle; (ii) active community participation and contribution to promote beneficiary ownership, (iii) ensuring that O&M arrangements are properly reflected in the subproject financing and implementation agreement; and (iv) close involvement of line ministries at central and local levels. Still, from recent surveys of completed projects and from Third Party Monitoring, some problems are arising frequently, for example in O&M of water subprojects and functioning of school water supply and toilets. 12 Social Analysis Poverty targeting Although targeting of CLDP resources has been consistently pro-poor, the community-driven model does not facilitate precise targeting of the very poorest in the population. Geographical targeting ensures that the CLDP reaches areas with higher concentrations of poverty, but the interventions are for both poor and non-poor inhabitants of the beneficiary communities; also, the most deprived communities may lack the capacity to organize effectively. SFD faces particular constraints in targeting Yemen’s poorest populations, including: dispersed populations and difficult terrain; the limited reach of the state (such as the Health and Education Ministries); limited institutional capacity; poor infrastructure; and political tensions and security concerns. Certain additional constraints have been imposed by the Ministries and by SFD on its operations, including that they avoid communities with populations less than 300 and projects in places where the main counterpart Ministry does not have a presence. Yet despite these real world constraints, SFD has succeeded in reaching many of the poorest places. Using a combination of targeting methods, described above, (including programmatic targeting of integrated interventions to address needs in extremely poor areas, tailored interventions where girls’ enrolment rates are lowest, and various training programs, e.g., targeting the shortage of rural health workers in the poorest areas) the CLDP has succeeded in directing the majority of its resources to communities that are ranked lowest based on an index of access to facilities and household wealth and well-being. Impact evaluations in 2003 and 2006 found that 70% of resources were focused on households in the bottom 3 income deciles. The 2010 impact evaluation found satisfactory targeting for the CLDP’s education, health, water, and roads projects. Applying the Social Welfare Fund’s new categorization model to SFD data in 2010 showed that only eight percent of projects benefited non- poor households while 54 percent benefited households classified as poor or extremely poor. Gender, participation and inclusion Several CLDP activities are specifically designed to meet the particular needs of girls and women in Yemen through awareness programs and community organization as well as improving access to girls’ schools, female literacy and life skills programs, water, and reproductive health services. Efforts are made throughout the CLDP to promote the participation of women who represent, for example, 68 percent of the education and health professionals trained to date through SFD IV. The program supports participation by a wide range of stakeholders in project preparation and design, including local communities, political leaders and government offices. By establishing community groups, and promoting the election of representatives who will serve the whole community, the CLDP is contributing to reviving the traditional systems of social capital and self help which have been in decline since the 1970s. Elected representatives of the community oversee the implementation of contracts, establishing the role of communities as partners rather than recipients. Successive evaluations have found substantial progress over time in participation in CLDP. In 2003, only 70 percent of households participating in the evaluation indicated that projects were representing their priorities. This increased to 78 percent in the 2006 evaluation and to 90 percent in 2009. The participation of women in community committees for CLDP projects, estimated at zero in 2003, increased to 26 percent in 2006 and 34 percent in 2009. 13 Safeguards The AF2 will continue to be classified as environmental category B and the World Bank Safeguard Policies on Environmental Assessment (OP 4.01) and Physical Cultural Resources (OP 4.11) will be triggered. The small scale nature of infrastructure works combined with a community participatory approach makes it possible for the CLDP to obtain land needed through voluntary land donation. Any subprojects which involve involuntary taking of land will not be eligible for funding under this project. Therefore the Bank Policy on Involuntary Resettlement OP 4.12 will not be applied to this project. Any such subprojects, or subprojects that are potential environmental category A in nature, will be rejected at the stage of screening the subproject proposals. Screening of subprojects will be undertaken by applying the environmental and social screening checklist (including voluntary land donation procedures and process) contained in the ESMF (as well as SFD’s own screening procedures), and as specified in the SFD’s OM. Environmental Analysis The CLDP under the AF2 will continue to implement subprojects in various sectors including education, health, special needs groups (disabled persons, orphans, women at risk, among others), water and sanitation, cultural heritage, agriculture, and rural roads. The activities under the AF2 will not trigger any additional safeguards policies. While the existing safeguards instrument EMP that was prepared and disclosed during January 2010 under SFD IV was still applicable to the AF2, SFD has however prepared a new Environmental and Social Management Framework (ESMF) which serve as the new safeguards instrument. In accordance with the World Bank Disclosure Policy, the executive summary of the ESMF was translated into Arabic and both versions were disclosed in-country and at the Bank’s InfoShop on April 15, 2014. The ESMF includes an environmental and social screening form which will be applied during the screening of subprojects. Any category A subprojects (including category A type sub-projects relating to cultural heritage) will be excluded from IDA funding as identified during the subproject screening process. It is expected that site specific EMPs will be prepared for subprojects before they are approved for implementation. The AF2 will continue to implement subprojects to document/preserve/conserve endangered cultural heritage sites in Yemen, in compliance with the “Preservation of the Historic Cities and Sites Law No. 16” (endorsed by Cabinet on August 13, 2013), for protecting Yemen’s cultural heritage. For this positive effort to preserve cultural assets, SFD will continue to benefit from qualified national and international expertise to secure quality interventions, trying at the same time to enhance and expand national technical capacity. According to a Memorandum of Understanding (MOU) signed between SFD and the Ministry of Culture, both parties will: (i) work with the Ministry of Higher Education to adopt standard conservation as a mandatory subject in the curricula of Architecture and Engineering faculties in public and private universities, and (ii) explore and demonstrate income generation opportunities out of different cultural heritage assets. This will serve both the sustainable preservation and poverty alleviation objectives (Please see the ESMF for further details on physical cultural 14 resources). In terms of reporting on compliance with the EMPs, SFD will continue to recruit an independent consultant to undertake an annual environmental compliance and performance audit. In addition to sharing this report with the Bank, SFD will include a separate annex on compliance with the ESMF and EMPs, in the progress reports that are submitted to the World Bank. Risk The overall risk rating for project implementation is “Substantial.” The main risks for the project pertain to the difficult country conditions, especially the prevailing political uncertainty, security concerns, and the weak social accountability and governance environment in Yemen. The risk is also identified that SFD’s capacity could become overstretched, as it further expands and diversifies its operations in response to escalating demand. The participatory techniques and governance mechanisms incorporated in SFD’s operations and documented in its Operational Manual will ensure transparency of processes and reduce opportunities for elite capture. A complaint handling mechanism and a communications strategy are in place and transparent participatory and social accountability arrangements will be utilized. In addition, SFD has demonstrated solid performance in the past, especially during the political and economic crisis, in adapting to the new environment and in scaling up its activities. Staff capacity has been built up steadily, and solid financial management and M&E systems are supported by a state-of-the-art MIS. The risk of overstretching its capacity is acknowledged by SFD and is being addressed through dialogue relating to preparation of Phase V. 15 ANNEX 1: RESULTS FRAMEWORK AND MONITORING INDICATORS Revisions to the Results Framework Comments/ Rationale for Change Project Development Objective Current (PAD) Proposed To improve access to basic services, enhance economic No change. opportunities and reduce the vulnerability of the poor Project Outcome Indicators Current (PAD) Proposed change* * Participation: 70% of households which agree with the Moved down to This indicator does not selection of the community demand driven project as a component level directly attribute to the PDO. priority of the community *Poverty Targeting: 50% of CLD resources go to the Change to “Poverty Household income is not a lowest three income deciles of households Targeting: 60% of good measure of well-being in CLD and LIWP Yemen because incomes are resources that go to highly variable and difficult to the lowest 50% measure reliably. Resources deprived households are allocated based on a deprivation index; thus the deprived households are more appropriate. *Education usage: net enrolment rate in basic education Change to Education usage: This in rural CLD beneficiary communities 60% for girls and “Education access indicator has been changed (i) 75% for boys and usage: because of the difficulty in enrollment in getting accurate local schools supported population figures by age and by SFD (ii) because the use of net (disaggregated by enrolment rates was boys, girls and inappropriate when some SFD children with special interventions are directed to needs)” encouraging the enrolment of girls and re-enrolment of school drop-outs, many of whom may be over-age. Measuring the simple increase in school enrolments provides a direct measure of the impact of SFD interventions and is more readily monitorable. *Water usage: Percentage of households in rural CLD No change. areas where time to collect water is 30 minutes or less *Rural roads: time taken to reach nearest market / town No change. 90 minutes *Microfinance access: 100,000 active clients accessing Changed to Changed for clarity. microfinance services supported by SFD directly or “Microfinance indirectly (sex disaggregated) (60% women) access: 100,000 16 Revisions to the Results Framework Comments/ Rationale for Change active clients accessing microfinance services supported by SFD (sex disaggregated) (60% women) *Reduced vulnerability: at least 70% of LIW direct Changed to Reduced The previous indicator was beneficiary households are able to meet their basic cereals vulnerability: difficult to measure and did consumption. proportion of not allow for the fact that the participating basic needs of households are households that wider than just food, including spent cash on food, most importantly, health care basic necessities and and repayment of debts. food related items (target 70%) *Sustainability: Percentage of completed subprojects Added Added to measure the which are operational by sector sustainability. Intermediate Results Indicators Current (PAD) Proposed change* *Total number of direct beneficiaries of SFD funded No change. projects (sex disaggregated) *Total number of indirect beneficiaries of SFD funded Deleted This indicator does not have projects (sex disaggregated) precise definition and the measurement. End of project target Overestimated at appraisal. *Total number of person-days employment created changed to 27m from 30 m days. Component 1. Community and Local Development Program Changed to *Number of district authorities which are certified and “Number of local There is no mechanism implementing development projects funded by SFD authorities at established to “certify”. district level that reached recognized performance level and implementing development projects funded by SFD”. 3 *Education access: Number of classrooms constructed or rehabilitated No change. *Education usage: Number of pupils enrolled in SFD supported basic schools, disaggregated by: Moved to PDO level - Boys See rationale at PDO level. - Girls - children with special needs 3 An independent auditor will review the performance and advice MOF, MOLA and SFD to base the recognition. 17 Revisions to the Results Framework Comments/ Rationale for Change *Education quality: Number of teachers trained (sex No change. disaggregated) Add: To differentiate non-formal *Education access: and formal teacher training Number of (i) formal and different inputs. education (by gender) and (ii) non-formal education female teachers trained 4 *Education access: Number of non-formal education female teachers qualified 5 *Number of educational professionals trained (sex disaggregated) No change. *Health access: Number of health personnel trained (sex Added disaggregated For accurate reporting on disaggregated) information by type as project inputs. below: (i) # of CMWs trained 6 (ii) # of CMWs qualified 7 (iii) # of PHCs trained (sex disaggregated) 8 (iv) # of PHCs qualified 9 (sex disaggregated) *Number of health facilities constructed/renovated and/or As per the MOPHP’s request. Changed target from equipped 800 to 150. *Water access: Number of households using improved Changed to “number To be consistent with core water sources of people provided sector indictor. with access to improved water sources” and changed target accordingly. *Volume of improved drinking water stored (m3) Changed to “Storage Revised to use sector standard capacity for indicator and the target at 4 Formal education training (8 day); and non-formal education training (18 day). 5 Non-formal education qualification: average 90 days of training. 6 Average 18 days of training. 7 2 years of training. 8 Average 18 days of training. 9 3 years of training. 18 Revisions to the Results Framework Comments/ Rationale for Change improved water appraisal was underestimated. (m3)” and the end of project target increased to 2.2 m from 1.1 m. *Volume of unimproved drinking water stored (m3) Change to “Storage Revised for better capacity for measurement and the target at unimproved water appraisal was underestimated. (m3) and the end of project target decreased to 1.7m from 260,000. *Sanitation access: Number of households using Changed to To be consistent with core improved sanitation facilities “Number of people sector indicator. provided with access to improved sanitation facilities” *Number of Open Defecation Free project communities No change. *Rural roads access: Total length of roads improved / Target changed Target overestimated at built from 1,825 km to appraisal. 1,300 km. *Cultural heritage: Number of sites and monuments No Change. documented / saved or conserved # of Master builders trained \gained skills # of professionals trained & gained skills (Architects\ Archaeologist\ Engineers) Component Two: Small and Micro Enterprises Development Program Outreach: * Number of active borrowers (No. of active loan No change. accounts) - Percentage active female borrowers Changed to “number Difficult to report because - Percentage active rural borrowers of additional MFIs do not report on rural vs. branches in rural urban borrowers. It is more area”. practical and feasible to report the number of additional branches that open in rural areas and serve rural No change populations Av. Outstanding balance/GDP per capita Loan Portfolio Quality: No change. *Portfolio at risk PAR > 30 days (of total Loan Portfolio outstanding) Financial sustainability: Changed to Revised to be consistent with * Percentage of active borrowers served by microfinance “Financial self- core indicator. providers are financially sustainable [i.e. number of MFIs sufficiency (MFIs 19 Revisions to the Results Framework Comments/ Rationale for Change that are financially sustainable] that are financially sustainable (%)”. Enabling Environment: *Enabling environment: credit bureau No change. legislation/regulation submitted to the government *Code of Conduct regarding consumer protection adopted No change. by Yemen Microfinance Network *Number of good practice Greenfield initiatives that have No change. entered the market Overestimation at appraisal. *Business Development Services: Number of subsectors Changed target from that have diversified and enhanced added value 21 to 13. *% SMEPS operating cost covered by SFD No change. Component Three: Capacity Building Program *% of village councils in pilot areas which are Revised functioning effectively: - meeting regularly Revised to add clarity to the - participation (sex disaggregated) definition. - initiate self-help initiatives * Number of people trained in M&E, participatory methods, planning or other strategic information Redefined trainees management disaggregated by and increased - young volunteers (sex disaggregated) targets. - local authority members To be more specific and - individuals (consultants, engineers, contractors) reflect the progress. Organizations Support - NGOs - local authorities - community based organizations Component Four: Labor-Intensive Works Program *Number of people directly benefiting from multi-year Changed to add: Short-term workfare was workfare assistance short-term workfare added during crisis in 2011- assistance by urban 2012 and rural. Targets for multi-year were reduced. *Number of working days employment created under Added targets for Short-term workfare was workfare assistance program multi- year and added during crisis in 2011- short-term. 2012 *Indirect beneficiaries: Number of people benefiting from No change community livelihood assets 20 Revisions to the Results Framework Comments/ Rationale for Change *Land: Total area of agricultural rehabilitated land and No change terraces *% of resources transferred to beneficiary households on No change. a timely basis *Average length of payment delay (Number of days) Remove Timely transfer of cash will (target: 2-3 days) be measured through above indicator. Add % of This is an important indicator resources paid as to measure the efficiency of wages the program. *number of person days of employment (disaggregated No change. by gender) created through: (i) LIW for youth (ii) Cash-for-Work for education and literacy (iii) Cash-for-Work for nutrition *number of beneficiaries of education and literacy training services. *number of children receiving nutrition services. *number of pregnant and lactating women receiving nutrition services. 21 Arrangements for Results Monitoring (annual targets are cumulative) UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start PDO Indicators *Poverty % 60% End of MIS SFD M&E Unit Targeting: CLD project and LIWP resources go to the lowest 50% deprived households *Education access No. 0 Boys: 4,480 53,760 103,040 152,320 201,600 End of Project SFD M&E Unit and usage: 116,938 3,520 42,240 80,960 119,680 158,400 project Survey Enrollment in Girls: 500 1,625 2,750 3,875 5,000 schools supported by 102,120 SFD, disaggregated Children by: with - Boys special - Girls needs: - Children with Boys:1,856 special needs Girls:1,849 *Water usage: % 15% 58% End of Evaluation SFD M&E Unit households in project rural CLD areas where time to collect water is 30 minutes or less *Rural roads: time Minut 120 90 End of Evaluation SFD M&E Unit taken to reach es minutes minutes project nearest market / or more town *Microfinance No. 32,000 94,966 57,000 67,000 78,000 88,000 100,000 100,000 Every 6 MIS SFD M&E Unit access: active (59% (60% months clients accessing women) women) through microfinance progress services supported report 22 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start by SFD (sex disaggregated) *Reduced % 70% End of Evaluation SFD M&E Unit vulnerability: project proportion of participating households that spent cash on food, basic necessities and food related items *Sustainability:% % 70% Annually MIS SFD M&E Unit of completed projects which are operational by sector Results Indicators for All Components * Direct No. Every 6 MIS (ALL) SFD (ALL) beneficiaries of SFD months funded projects (sex (ALL) disaggregated): - male 0 1.6m 0.6 1.6 2.8 4.2 6.0 - female 0 2.0m 0.7 1.9 3.3 5 7 *Person-days No. 0 13.8m 2.0 6.0 12.0 19.0 27.0 employment created * Participation: % 70% (to 70% (to Every 3-4 Evaluation SFD (All) Households who 80%) 80%) years agree with the across across through IE selection of the different different community sector sectors demand driven project as a priority of the community Component 1: Community and Local Development Program 23 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start *Local authorities at No. 0 0 0 0 5 20 40 Every 6 MIS (ALL) SFD (ALL) district level that months reached recognized (ALL) performance 10 level and implementing development projects funded by SFD *Education access: No. 0 4582 200 2,400 4,600 6,800 9,000 Classrooms constructed or rehabilitated *Education quality: No. 0 All formal 20 40 60 80 100 Formal education and non- teachers trained (sex formal 20 40 60 80 100 disaggregated) 11 (Males: 195); Females: 1,396) *Education access: No. 0 100 200 300 400 1,000 Non-formal education female teachers trained 12 *Education access: No. 0 20 40 60 80 200 Non-formal education female teachers qualified 13 * Educational No. 0 Males: 594 156 312 468 624 782 professionals trained Females: 120 240 360 480 600 (sex 389 disaggregated) 14 *Health access: No. 0 Males: Health personnel 1,107 10 An independent auditor will review the performance and advice MOF, MOLA and SFD to base the recognition 11 Formal education training: 8 day training. 12 Non-formal education training: 18 day training. 13 Non-formal education qualification: average 90 days training. 14 Education professionals training: average 8 days training. 24 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start trained (sex Females: disaggregated) 2,276 (i) # of CMWs (i)400 (i)800 (i)1,200 (i)1,600 (i)2,000 trained 15 (ii) # of CMWs (ii)200 (ii)220 (ii)220 (ii)220 (ii)240 qualified 16 (iii) # of PHCs (iii)225(m) (iii)450(m) (iii)675(m) (iii)900(m) (iii)1,125 trained (sex 150 (f) 300(f) 450(f) 600(f) (m); 750(f) disaggregated) 17 (iv) # of PHCs (iv)60(m); (iv)120(m) (iv)180(m) (iv)240(m) (iv)300(m) qualified 18 (sex 60 (f) 120(f) 180(f) 240(f) 300(f) disaggregated) *Number of health No. 0 100 30 60 90 120 150 facilities constructed renovated and/or equipped *Water access: No. 0 439,536 170,000 256,000 386,000 516,000 646,000 Number of people provided with access to improved water sources 19 Storage capacity for M3 0 1,232,985 630,000 890,000 1,340,000 1,790,000 2,240,000 improved water (m3) Storage capacity for M3 0 1,292,059 430,000 1,190,000 1,350,000 1,510,000 1,690,000 unimproved water (m3) *Sanitation access: No. 0 134,203 30,000 70,000 135,000 200,000 265,000 Number of people with access to improved sanitation facilities 15 Average 18 days of training. 16 2 years of training. 17 Average 18 days of training. 18 3 years of training. 19 Within 30 minutes walking distance or less. 25 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start *Number of Open No. 0 96 0 50 110 170 240 Defecation Free project communities *Rural roads access: km 0 574 210 350 460 880 1,300 Total length of roads improved / built * Cultural Heritage: No 0 328 70 170 270 390 510 Master builders trained \gained skills Professionals trained No. 0 176 30 65 105 145 190 & gained skills (Architects\ Archaeologist\ Engineers) Sites and No. 0 28 10 20 30 40 50 monuments documented saved /conserved Component 2: Small & Microenterprise Development Program Outreach: Number of active No. 42,000 91,038 57,000 67,000 78,000 88,000 100,000 Every 6 MIS (ALL) SFD (ALL) borrowers 20 months (ALL) - Percentage active % 77% 59% 60% 60% 60% 60% 60% female borrowers - Number of No. 2 4 6 additional branches in rural areas Av. Outstanding % 20% <100% < 100% < 100% < 125 % < 125 % < 150% balance/GDP per capita Loan Portfolio Quality: *Loan portfolio % 2% <5% < 5% < 5% < 5% < 5% < 5% quality: percentage portfolio at risk 20 Active clients accessing microfinance services supported by SFD. 26 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start (PAR) over 30 days (of total portfolio outstanding) Financial sustainability: * Financial Self- % 16 21 25% 25% 50% 60% 60% Sufficiency ( MFIs that are financially sustainable) Enabling Environment: *Enabling Text No 1st Draft Final environment: credit legislation prepared draft bureau submitted legislation/regulation submitted to the government *Code of Conduct Text No code 1st draft 1st Draft 1st draft Draft regarding consumer of conduct sent to all prepared sent to adopted protection adopted MFIs+ MFIs and by MFIs by Yemen YMN YMN and YMS Microfinance provide plus Network consumer workshop protection guidelines to MFIs. A workshop was conducted *Number of good Text One a full 1 1 practice Greenfield Greenfield proposal additional additional initiatives that have (Al Amal) document MFI MFIestabl entered the market for establishe ished establishm d ent of a new green 21 Two out of 12 supported by SFD are self-sufficient. 27 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start field bank in Yemen completed *Business No. 12 3 4 5 10 13 Development Services: Number of subsectors that have diversified and enhanced added value *% SMEPS % 100 100 90 80 70 60 60 operating cost covered by SFD Component 3: Capacity Building Program # of village councils No. 0 3,097 0 500 900 1,200 1,500 Every 6 MIS (ALL) SFD (ALL) in pilot areas which months are functioning (ALL) effectively: - meeting regularly - participation (sex disaggregated) - initiate self-help initiatives * Number of people trained in M&E, participatory methods, planning or other strategic information management disaggregated by - young volunteers No. Male 514 500 1,000 1,500 2,000 2,500 Female 452 300 600 900 1,200 1,500 - local authority No. 3,686 300 600 900 1,200 1,500 members trained on ELD Program - # of individual 3,917 600 1,200 1,800 2,400 3,000 SFD consultants, engineers, 28 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start contractors Organizations No. Supported - NGOs 54 20 40 60 75 90 - local authorities No. 23 10 30 50 70 90 - community-based No. 1,689 800 1,400 1,900 2,200 2,500 organizations Component 4: Labor-Intensive Works Program *Number of people No. 333,270 Every 6 SFD (ALL) directly benefiting (all) months from: (ALL) (i) multi-year 90,000 90,000 90,000 workfare assistance in rural areas MIS (ALL) (ii) short-term workfare assistance by: 85,300 217,900 331,600 416,900 - urban 50,000 250,000 570,000 768,000 900,000 - rural) *Number of working No. 6,822,173 days employment (all) created under workfare assistance programby: (i) multi-year rural (ii)540,000 (i)1.312m (i)2.625m (ii) short-term urban (iii)600,0 (iii)3m (ii)1.38m (ii)2.1m (ii)2.64m (iii) short-term rural 00 (iii)5.5m (iii)9.5m (iii)13.13m *Indirect 166,450 250,000 260,000 beneficiaries: Number of people benefiting from community livelihood assets *Land: Total area of M2 1,614 415 1,245 2490 3735 4980 agricultural rehabilitated land and terraces *% of resources % 70% 75% 70% 75% 75% 80% 80% 29 UOM Baseline Progress YR1 YR2 YR3 YR4 YR5 YR6 Frequency Data Source/ Responsibility Comments Original to Date 2011 2012 2013 2014 2015 2016 and Reports Methodology for Data Core Project Collection Start transferred to beneficiary households on a timely bases *% of resources paid 70% 60% 60% 60% 60% 60% as wages * Person days of employment created through (disaggregated by gender): (i) LIW for youth No. 0 50,000 200,000 300,000 420,000 (ii) Cash-for-Work No. 0 100,000 350,000 500,000 750,000 for education and literacy (iii) Cash-for-Work No. 0 50,000 200,000 350,000 460,000 for nutrition * Beneficiaries of No. 0 10,000 20,000 30,000 35,000 education and literacy training services. * Children No. 0 20,000 40,000 50,000 75,000 receiving nutrition services. * Pregnant and No. 0 5,000 10,000 15,000 20,000 lactating women receiving nutrition services. 30 Annex 2 Operational Risk Assessment Framework (ORAF) Yemen, Republic: Additional Financing II for SFD IV (P148474) . Risks . Project Stakeholder Risks Stakeholder Risk Rating Moderate Risk Description: Risk Management: Coordination challenge with multiple The Bank will continue to focus substantial time and resources on coordination, information sharing donors: The Bank’s role (together with the and dialogue with partners and to bring in experts to the discussion of technical issues as they arise. U.K’s Department for International The use of additional investments outside the joint framework will continue to be monitored and the Development) in leading the Joint Review possible implications identified. A well-functioning social protection donor working group is meeting process could become untenable if (a) in person every two to three months and much more frequently through phone and email goodwill is lost due to disagreements communications. between donors or (b) too many donor projects with SFD are negotiated outside the framework of the agreed joint program. Resp: Client Stage: Both Recurrent: Due Frequency: CO Status: In Date: NTI Progres NU s OU S Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Moderate Risk Description: Risk Management: Further escalation and diversification of There is minimal risk with respect to SFD’s capacity to implement AF2. SFD has been implementing demands on SFD could overstretch its its core CLD Program since 1997 and has sufficient existing staff to implement the AF2 activities capacity. SFD continues to be approached including procurement and FM tasks. Its program has been successfully decentralized to implement by the Bank and donors for additional through nine strong branch offices. Since its establishment, staff and consultant capacity has been built 31 investments in existing and new activities up steadily. It has an excellent M&E system and state-of-the-art MIS. The AF2 is based on the as it is one of the few well performing assumption that SFD can continue to deliver its core CLD activities at approximately the same rate as institutions in Yemen with the ability to in the last year (when monthly CLD disbursements averaged US$12 million). reach out to most communities in the country and deliver services. For SFD IV as a whole, and for SFD as an organization, however, the risk of overstretching capacity is a significant one. The Bank, together with other donors, has been having continuous dialogue with SFD concerning this risk and it has been agreed that SFD would focus on the areas in which it has comparative advantage and on the tasks that can help strengthen its key programs and exploit synergies. The administrative burden on SFD of multiple donor support has been restrained so far by combining the majority of donor funding in a joint program (as for SFD IV) with unified reporting requirements and joint review process. The question of capacity limitations, and the need to prioritize areas and modes of intervention, will be major considerations in visioning and preparation for Phase V. Resp: Client Stage: Both Recurrent: Due 12/30/2016 Frequency: Status: In Date: progres s Governance Rating Moderate Risk Description: Risk Management: (i) The participatory techniques and the governance mechanisms incorporated in the SFD’s OM ensure (i) Weak social accountability and transparency of processes and reduce opportunities for elite capture. A complaint handling mechanism governance environment in Yemen may and communication strategy are in place to prevent elite capture and deterioration of service quality. lead to elite capture and affect service This risk will be mitigated through a renewed focus on transparency and participatory mechanisms, quality. through improved social accountability arrangements. In addition, through its nine branch offices, SFD partners with local communities and local authorities to empower them. The program empowers the (ii) Project funds may benefit only those local authorities to prepare self-initiated development plans with community participation in line with beneficiaries residing in districts and available local resources and based on the priorities of local communities. governorates linked to political interest. (ii) SFD’s accumulated experience and political neutrality enable it to reach out to pockets of poverty in all regions of the country. SFD was the first institution to promote community participation and active engagement in development projects, and has succeeded over the years in empowering the poor and communities in remote areas. The AF2 will apply SFD’s existing and proven criteria and targeting system, clearly defined in the Operations Manual. Risk Management: 32 Resp: Client Stage: Both Recurrent: Due Frequency: CO Status: In Date: NTI Progres NU s OU S Project Risks Design Rating Low Risk Description: Risk Management: (i) SFD may not be able to achieve (i) SFD will continue to use a mix of targeting and fund allocation mechanisms to ensure targeting the effective targeting of its resources poor and vulnerable. SFD uses the service deprivation index (SDI) and a combination of SDI and the poverty headcount to allocate resources at the district level and then to rural villages. A new Household (ii) The poorest and most vulnerable Budget Survey is ongoing which will provide data for updating poverty mapping. SFD, SWF and PWP communities, especially where households have arrangements for data exchanges. SWF has developed a database of 1.62 million families are scattered, may be unable to articulate providing a good database of the poor, which is being utilized by SFD. their needs, and lack the resources and capacity to implement community-driven (ii) SFD will utilize its network of branch offices, well-established relations with local civil society subprojects. organizations and local authorities to ensure that financed subprojects address local needs. SFD undertakes awareness and promotion campaigns targeting underserved communities to help identify communities’ priorities. In the poorest communities, SFD implements integrated development interventions to build capacities and conducts training to increase the supply of trained health personnel who will remain and serve in their areas. Similarly, SFD targets its integrated Rural Girls program to communities where the gender gap in school enrolments is most extreme. Resp: Client Stage: Imple Recurrent: Due Frequency: Status: In menta Date: CONTINU Progres tion OUS s Social and Environmental Rating Moderate Risk Description: Risk Management: Subprojects cause adverse environmental An EMP has been prepared that will guide implementation of subprojects. and social impacts. The project is rated as environmental Category B for rehabilitating small community assets, and the safeguard policy on Environmental Assessment, OP 4.01 will be triggered. No other safeguard policies are envisaged to be triggered. The small scale nature of the infrastructure work, combined with community participatory approach, makes it possible for the CLDP to avoid triggering Involuntary 33 Settlement (OP 4.12). From the beginning of Phase III, SFD has maintained an explicit policy of excluding any subprojects that would invoke this Policy. Any such projects are rejected at the stage of screening proposals, as specified in the SFD’s Operational Manual. Resp: Client Stage: Imple Recurrent: Due Frequency: Status: In menta Date: CONTINU Progres tion OUS s Program and Donor Rating Low Risk Description: Risk Management: SFD’s program impacted by weak donor Donor coordination is good at present and maintained through regular communication, joint review coordination. missions, and harmonized monitoring and reporting requirements. A well-functioning social protection donor working group is meeting in person every two to three months and much more frequently through phone and email communications. Resp: Bank Stage: Both Recurrent: Due Frequency: Status: In Date: CONTINU Progres OUS s Delivery Monitoring and Rating Moderate Sustainability Risk Description: Risk Management: (i) Inadequate information on results. A solid monitoring system is in place and regular follow-up studies and assessments are carried out. Strong communication and coordination exists and will be maintained between SFD and the relevant (ii) Sustainability of subproject benefits ministries. Coordination mechanisms have been defined and are confirmed in signed MOUs. jeopardized by inadequate sector policies Resp: Client Stage: Both Recurrent: Due Frequency: Status: In and/or inability to maintain adequate Date: CONTINU Progres staffing and other inputs to facilities. OUS s 4.5 Other (Optional) Rating Substantial Risk Description: Risk Management: Substitution effects between food and Qat The Project will continue to monitor substitution effects through the household surveys. The consumption will occur under workfare Government has embarked on a public information campaign to raise public awareness about this issue. program. Participation of women is encouraged as they are more likely to use the money on food for the family. Resp: Client Stage: Imple Recurrent: Due Frequency: Status: In 34 menta Date: CONTINU Progres tion OUS s Overall Risk Overall Implementation Risk: Substantial Risk Description: The overall risk rating for project implementation is “Substantial” due to the High risk in the country environment. 35 Annex 3: Detailed Project Description Original Project (SFD IV) 1. The project has four components, consisting of four operational programs which will be implemented by the SFD: (i) Community and Local Development (CLD) program; (ii) Small and Micro Enterprises Development (SMED) program; (iii) Capacity-Building (CB) program; and (iv) Labor-Intensive Works (LIW) program. While there is substantial continuity in the programs between Phases III and IV, there are also new “orientations” or directions in the new phase, especially under the CLD and LIW programs as described below. SFD will pursue these new emphases vigorously but also with caution, closely monitoring field implementation, starting from a smaller base and then scaling up when appropriate, building on the lessons learned from implementation, and adjusting the targets in the results framework accordingly. 2. Component 1: Community and Local Development (CLD) Program (IDA contribution US$25 million equivalent). The objective of this component is to improve access to basic social services. Under this program, SFD will continue to implement community-based subprojects in various sectors, while building the capacity of local authorities and engaging select districts in implementing development projects. Specifically, this component will do this through: (i) Provision of Sub-grants for the carrying out, by communities and local authorities, of Subprojects consisting of infrastructure and other services in various sectors including: education, health, special needs groups, water and sanitation, cultural heritage, agriculture, and rural roads; and (ii) Carrying out, through the provision of goods, training and consultants’ services, activities to develop SFD’s annual operational plans as well as the capacity of select local authorities and communities in participatory planning and management of development activities. 3. While the basic principles of targeting resources to the poorest communities in Yemen, participatory planning, and community based development will continue to underpin the CLD, some changes are being introduced in the approach for community development activities, as well as inclusion of a line of activity which supports the capacity-building of local authorities in the management of local development activities. • Modified approach to community development. In addition to the existing demand-driven nature of community investments, whereby SFD responds to project requests from a community, in Phase IV, community investments will also respond to national sector plans and priorities, such as the education sector’s master plan for schools or the water sector’s national planning framework, or the national strategy of the health sector. In this variation, which is being termed the “MDG Gap Approach,” the standards, criteria, and subproject cycle will remain identical to the existing guidelines except for the initial “application” stage, which will be guided by an analysis of national norms and/or data evidencing severe gaps in services. Elements of this approach have been applied in the Integrated Interventions and Special Programs elements of Phase III. This combination of modalities is intended to enhance SFD’s contribution towards the achievement of the MDGs at the national level. 36 4. Local development approach. As part of its commitment to support the decentralization strategy of Yemen, SFD will directly support local development through building capacity of a number of local authorities. Some major features of this new activity are: (i) SFD has signed a MOU with the Ministry of Local Administration regarding the delivery of its Empowerment and Local Development Program (ELD), which is the first stage of its support to local authorities. (ii) SFD will upfront formally agree on the 3-stage local development program with relevant national Government partners as a recognized process to certify or accredit local authorities as capable of managing resources for participatory local development. (iii) Since SFD cannot support all 333 local authorities simultaneously, it proposes to focus on approximately 80 districts with its first ELD stage of support. (iv) These ELD districts will be selected through objective, transparent selection criteria that would also consider geographical spread and ownership at the Governorate level. (v) SFD will sign agreements with each Governorate regarding the local development support it will be providing to districts. This will include Governorate commitments to sustained staffing of the selected districts. Component 2: Small and Micro Enterprises Development (SMED) Program (IDA contribution US$5 million equivalent). Over the last decade, SFD through SMED has performed exceptionally well in introducing and expanding the MFI sector in Yemen under very challenging conditions. Under SFD Phase IV, IDA will continue to support SMED’s efforts. The objective of this component is to support the overall SMED program of SFD to: strengthen and build capacity of local microfinance providers; and actively promote entry into the market by creating an enabling environment and by encouraging the establishment of new financial service providers managed on a private sector basis by international investors with strong technical partners. This component will be supported through: (i) Provision of Sub-grants to Eligible Intermediaries to build up the institutional capacity of such Eligible Intermediaries to deliver financial and business development services; and (ii) Carrying out, through the provision of goods, training and consultants’ services, a program to further support the institutional capacity of micro finance institutions and to create an enabling environment for small and micro enterprises development including through, the establishment of a credit bureau, the development of consumer protection legislation and associated regulations, and the development of financial literacy training programs. 5. Given competing demands on IDA resources, it was agreed that IDA funds would be limited to technical assistance, capacity-building, and business development services, while non-IDA sources would be used to finance loan funds to MFIs or banks. 6. During Phase IV SMED will continue to support with loan funds (mobilized from financiers other than IDA) and technical assistance the existing micro finance providers through an ongoing process of merger and consolidation. It will support the two microfinance programs in Aden and Abyan to merge in order to become a strong regional player in the South, and it will assist the largest microfinance provider – the NMF, which has a national coverage – to transform into a microfinance bank. Furthermore SMED will actively support at least one international microfinance provider (BRAC) to set up operations in Yemen and one private local financial 37 institution to set up a microfinance bank. With experienced seasoned players entering the microfinance market, it is hoped that the microfinance sector will experience a boost in growth. 7. SMED will continue its work on the enabling environment, focusing on passage of relevant legislation/regulation for the establishment of a credit bureau as well as for consumer protection (including truth in lending). SMED will also continue supporting SMEPS via provision of sub- grants for operational support and business development services albeit on a decreasing basis and based on SMEPS achieving an agreed upon set of performance targets. Finally, SMED will undertake a feasibility study addressing options regarding its own sustainability and legal status. This study will inter alia analyze the option of transforming SMED into an independent apex agency (wholesale lending). 8. Component 3: Capacity-Building Program (IDA contribution US$5million equivalent). A third set of activities will support the other three programs through a focus on capacity- building of local entities, including local and central government bodies, NGOs, and communities. The component will also support the strengthening of SFD’s own institutional capacity, to include for example monitoring and evaluation, management, and transparency. This component will be supported through: • Carrying out, through the provision of Sub-grants, goods, training and consultants’ services, Subprojects to develop the capacity of select governmental organizations, local authorities, community-based organizations, non-governmental organizations, private sector groups and individuals in the areas related to SFD activities. • Carrying out, through the provision of goods, training, consultants’ services, and operating costs, a program to strengthen the institutional capacity of SFD, including the project management capacity. 9. The first set of activities listed above will be carried out by the Training and Organizational Support Unit (TOSU) which promotes effective identification, preparation, and implementation of SFD’s diversified portfolio through training and enhancing skills of its various partners – communities, CBOs, NGOs, government agencies, private sector agencies (consultants, contracts) and local authorities. TOSU will mainstream skills accumulation across institutions involved in the poverty alleviation and good governance agenda of Yemen. TOSU will continue its work on the development and implementation of training programs, development of manuals, qualification of consultants and trainers, and documentation of lessons learned from the field. 10. The second set of activities will be carried out by different departments within SFD itself, including the Monitoring and Evaluation Department, the sector departments, and the branch offices. These activities will include: regular management activities, the M&E program, strengthening of the SFD MIS, and field supervision by branch offices. 11. Component 4: Labor-Intensive Works (LIW) Program (IDA contribution US$25 million equivalent). The objective of this component is to provide a cash-for-work safety net to target households to bridge their consumption gap during shocks and stagnation of agricultural seasons, while increasing the productive assets of communities and households. It will also aim to raise awareness among the targeted communities about the dangers of malnutrition and 38 damages of Qat, and build the capacity and enhance the skills of the targeted communities to cope with future shocks. This component will be supported through: (i) Provision of Sub-grants to targeted communities for the carrying out of labor-intensive works Subprojects in: irrigation, water harvesting, agricultural terraces rehabilitation, agricultural land improvement, maintenance and improvement of village access earth roads, the improvement of drinking water sources, watershed management and other fields based on the priority needs of each community; and (ii) Carrying out, through the provision of goods, training and consultants’ services, activities to develop the SFD’s annual operational plans as well as the capacity of select local authorities and communities in participatory planning and management of development activities. 12. SFD has been implementing a labor-intensive cash-for-works program since 2008 that targets households most affected by the recent food crisis. The LIW program is an important component of Yemen’s Social Protection Strategy. In the fourth phase, SFD will reflect on lessons learned from the first round of implementation of workfare programs to (i) scale-up coverage to roughly 300,000 individuals annually in the 45-50 poorest districts of Yemen; (ii) re-orient the program to have a simplified targeting process and target chronically vulnerable households; (iii) begin supporting interventions in communities for periods of 3-5 years rather than just one year; and (iv) support interventions implemented in each area that complement each other and have a focus on enhancing long-term productivity. The LIW program will also aim to be responsive to various shocks that affect communities. There will be greater consideration of agricultural lands and terraces that can be rehabilitated for the benefit of poorer households, and there will also be a greater emphasis on projects that might maximize female labor force participation. 13. Objective. This program aims to enhance the productivity of poor households by ensuring that the public works interventions contribute to improving local productive capacities and livelihood opportunities (i.e., community and household asset creation). 14. Expected results. (i) achieve direct benefits of target households (cash for work); (ii) bridge the gap of consumption during shocks and stagnation of agricultural seasons; (iii) increase the productive assets of communities as well as households; (iv) raise awareness among the targeted communities about the dangers of malnutrition and damages of Qat; and (v) build the capacity and enhance the skills of the targeted communities to cope with future shocks. 39 First Additional Financing for SFD IV 17. The AF1 scaled up the Labor-Intensive Works (LIW) program (Component 4) with two new subcomponents to: (i) support LIW targeted to unemployed youth; and (ii) introduce cash- for-work opportunities for youth and women in the delivery of social services. The existing LIW component is being implemented successfully and will continue with its original allocation of US$25 million to finance labor-intensive community infrastructure subprojects, providing cash- for-work to participating members of poor households. The two new subcomponents are detailed below: 1) LIW for Youth (US$5 million): The main objective of this subcomponent is to reduce the vulnerability of unemployed youth through youth-targeted labor-intensive works. The subcomponent will finance subprojects that provide income opportunities and work experience to participating youth, while at the same time improving public infrastructure. The program will create approximately 420,000 person-days of employment for unemployed youth in the 18-30 year old age bracket in urban and semi-urban areas. The level of compensation will be set lowto ensure that the program attracts unemployed youth from poor households. Some 7,000 youth are expected to participate with up to 60 days employment each. Subprojectswill be selected on the basis of high labor-intensity and potential impact, primarily targeting semi-urban poverty pockets in towns with high unemployment.In addition to the LIW program’s regular menu, subprojects more suitable for youth and urban and semi-urban areas will be added, such as planting trees, paving cobblestone streets, cleaning shorelines, and especially rebuilding damaged public spaces. Management and coordination arrangements for subproject implementation will follow the procedures already tested and used for the LIW program, with implementation through SFD Branch Offices in close coordination with local authorities. Subcomponent 1 LIW for Youth will finance: • subproject costs in the targeted communities for carrying out labor-intensive public works; • the development of annual operational plans; • capacity building of the selected local authorities and communities in participatory planning and management of development activities; • the provision of goods, training, consultancy services and operating costs for management, monitoring and evaluation activities. 2) Cash-for-Work for Social Services (US$20 million): The objectives of this subcomponent are: (i) to reduce the vulnerability of unemployed youth and women through providing employment opportunities, and (ii) to improve access to basic social services in poor communities. In coordination with relevant national programs, this 40 subcomponent will finance education and nutrition services at the community level, with a particular focus on promoting demand for these services. (i) Education, literacy and numeracy Approximately 750,000 person days of employment in teaching will be created for up to 3,000 unemployed young women and men who have completed at least secondary education. Successful applicants will receive training and regular supervision in delivering the following services: teachers to fill teacher gaps in regular schools (pupils 6-14 years old); non-formal accelerated programs for children who have not enrolled or have dropped out of school, to help them re-integrate into the formal system; and adult literacy classes, including life skills. The beneficiary communities for these education services will be approximately 30 percent in urban areas and 70 percent in rural areas, selected on the basis of poverty and education indicators. The program expects to provide education and literacy benefits for approximately 26,000 children and 9,000 adults (70 percent women) in targeted communities. In implementing the subprojects, the SFD will use the tested procedures, guidelines, manuals and training content developed since 2004 for its Girls Education Program, taking an integrated community-based approach to addressing key constraints in the targeted communities, and will coordinate closely with the MOE and local government formal, community and adult education systems. (ii) Nutrition Approximately 460,000 person days of employment will be created for women Community Health Volunteers (CHVs) who will be trained and will receive monthly incentives in delivering a package of community-based nutrition services for children under 5 years old (U5) and pregnant and lactating women. This package includes: (a) enrolment and initial malnutrition screening; (b) quarterly or bi-annual malnutrition screening where MOPHP outreach services are not available; (c) facilitating transport to health facilities for treatment; (d) monthly nutrition education to mothers of U5 children; (e) nutrition education for pregnant women; (f) breastfeeding promotion; and (g) community level nutrition and health education. The services are targeted to Hodeida Governorate, based on its high malnutrition rate and its readiness to provide nutrition interventions through the public health facilities. The program will take a phased approach to covering the whole governorate, and expects to directly benefit approximately 75,000 acutely malnourished children, representing 15 percent of the estimated 493,644 children in the governorate, as well as providing nutrition education to 20,000 pregnant and lactating women. SFD will be responsible for managing and implementing the demand side community- level interventions, in close coordination with MOPHP which is responsible for the operation and equipment of health facilities and outreach teams. For implementation of the nutrition intervention, MOPHP will be supported by the Bank’s Health and 41 Population Project (P094755), which will supply nutrition kits, and the on-going treatment and supplementary feeding programs of UNICEF and WFP. Subcomponent 2 Cash-for-Work for Social Services will finance: • subproject costs in the targeted communities to carry out of cash-for-work for social services; • information, public awareness and recruitment campaigns; • testing of applicants and training of the youth and women recruited; • equipment and materials (textbooks and learning materials, supplies); • education and health supervisors (consultants); • the development of annual operational plans; • capacity building of select local authorities and communities in participatory planning and management of development activities; • management and monitoring and evaluation activities through the provision of goods, training, consultancy services and operating costs. 42 Second Additional Financing for SFD IV The Second Additional Financing will fill the financing gap for Component 1 of the original project: Component 1: Community and Local Development (CLD) Program (IDA contribution US$25 million equivalent). The objective of this component is to improve access to basic social services. Under this program, SFD will continue to implement community-based subprojects in various sectors, while building the capacity of local authorities and engaging select districts in implementing development projects. Specifically, this component will do this through: (i) Provision of Sub-grants for the carrying out, by communities and local authorities, of Subprojects consisting of infrastructure and other services in various sectors including: education, health, special needs groups, water and sanitation, cultural heritage, agriculture, and rural roads; and (ii) Carrying out, through the provision of goods, training and consultants’ services, activities to develop SFD’s annual operational plans as well as the capacity of select local authorities and communities in participatory planning and management of development activities. While the basic principles of targeting resources to the poorest communities in Yemen, participatory planning, and community based development will continue to underpin the CLD, some changes are being introduced in the approach for community development activities, as well as inclusion of a line of activity which supports the capacity-building of local authorities in the management of local development activities. • Modified approach to community development. In addition to the existing demand-driven nature of community investments, whereby SFD responds to project requests from a community, in Phase IV, community investments will also respond to national sector plans and priorities, such as the education sector’s master plan for schools or the water sector’s national planning framework, or the national strategy of the health sector. In this variation, which is being termed the “MDG Gap Approach,” the standards, criteria, and subproject cycle will remain identical to the existing guidelines except for the initial “application” stage, which will be guided by an analysis of national norms and/or data evidencing severe gaps in services. Elements of this approach have been applied in the Integrated Interventions and Special Programs elements of Phase III. This combination of modalities is intended to enhance SFD’s contribution towards the achievement of the MDGs at the national level. Local development approach. As part of its commitment to support the decentralization strategy of Yemen, SFD will directly support local development through building capacity of a number of local authorities. Some major features of this new activity are: (i) SFD has signed a MOU with the Ministry of Local Administration regarding the delivery of its Empowerment and Local Development Program (ELD), which is the first stage of its support to local authorities. (ii) SFD will upfront formally agree on the 3-stage local development program with relevant national Government partners as a recognized process to certify or accredit local authorities as capable of managing resources for participatory local development. (iii) Since SFD cannot support all 333 local authorities simultaneously, it proposes to focus on approximately 80 districts with its first 43 ELD stage of support. (iv) These ELD districts will be selected through objective, transparent selection criteria that would also consider geographical spread and ownership at the Governorate level. (v) SFD will sign agreements with each Governorate regarding the local development support it will be providing to districts. This will include Governorate commitments to sustained staffing of the selected districts 44 THE CITY OF SKOPJE Skopje serves as the 21°E To 22°E 23°E Municipality Capital for each of these To KOSOVO Nis This map was produced by the Map Design Unit of The World Bank. SUTO ORIZARI BUTEL Municipalities. Pristina SERBIA The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank GJORCE GAZI Group, any judgment on the legal status of any territory, or any PETROV BABA endorsement or acceptance of such boundaries. FORMER YUGOSLAV REPUBLIC OF SARAJ KARPOSH CHAIR Pelinci Pelinci MACED ONIA SKOPJE AERODROM To Staro Pernik KISELA CENTAR Nagorichane Rankovce VODA Kriva Lipkovo Vratnica Chucher- Sandevo Kumanovo Palanka BULGARIA SELECTED CITIES AND TOWNS . Tearce Kratovo Mts o v s k e Makedonska Jegunovce MUNICIPALITY CAPITALS* Arachinovo Osog Kamenica Tetovo SKOPJE NATIONAL CAPITAL 42°N Probistip Delcevo 42°N Zheino Ilinden To ca Bogovinje Blagoevgrad i THE CITY OF SKOPJE ni Brvenica Sopiste Petrovec ga Kocani Bre Sveti Obleshevo RIVERS Studenichani Vinica Nikole (Cheshinovo) Va Zelenikovo rd Vrapchishte Zrnovci MAIN ROADS ar Mt. Korab Karbinci (2,753 m) Gostivar Lozovo Pehcevo RAILROADS Veles Stip Malesevske Mts. Berovo MUNICIPAL BOUNDARIES INTERNATIONAL BOUNDARIES Chaska Rostusha Radovis (Mavrovo & Zajas Oslomej Gradsko ALBANIA Rostusha) *In most cases, the names of the municipalities Makedonski Debar Kicevo Rosoman are identical to their capitals. Where they Brod Konche Vasilevo differ, the municipality is shown in green italic. Centar Drugovo Negotino Vraneshtica Zupa Strumica Bosilovo Plasnica Dolneni Kavadarci Demir Kapija Cr Novo ni Krusevo Selo To D ri Prilep Petrich m Valandovo Belchishta Sopotnica Krivogashtani (Debarca) Star Dojran Vevcani (Dojran) Demir Hisar na Lake To Cr Bogdanci Elbasan Struga Dojran . Gevgelija Ohrid tn Mogila M Resen Lake FYR e GREECE MACEDONIA z Novaci Ohrid Bitola id 41°N 41°N N Lake Prespa Medzitlija 0 10 20 30 Kilometers IBRD 33438R2 0 5 10 15 20 Miles JULY 2009 To To Thessaloniki Korçë To Kozáni 22°E 23°E