NOTES AGRICULTURAL & RURAL DEVELOPMENT 41240 2nd Annual Golden Plough Award for Excellence in Project Supervision Building Infrastructure and Social Capital in Rural Egypt ISSUE 24 AUGUST 2007 Disparity in growth rates between Upper and Lower Yet rural development programs under similar condi- Egypt has been dramatic. While national per capita tions throughout Egypt recently experienced some sig- income averaged 3 percent growth annually beginning nificant successes. The most notable success was a par- in the mid 1990s, and growth rates in metropolitan ticipatory approach to rural development planning areas approached 8 percent--Upper Egypt experienced introduced in the framework of the 1994 National negative per capita growth rates during the same peri- Program for Integrated Rural Development--known as od. By 2001, Upper Egypt accounted for 37 percent of "Shorouk" or "Sunrise." the country's population, but 65 percent of the popula- tion lived below the poverty line (UNDP 2004). SHOROUK: EGYPT'S NATIONAL Sohag Governorate is the poorest area in Upper Egypt PROGRAM FOR INTEGRATED and exhibits some of the lowest human development RURAL DEVELOPMENT indicators in the country. In 1997, when this story Shorouk was developed by the Organization for begins, 77 percent of its population of 3.2 million lived Reconstruction and Development of the Egyptian in rural areas, with 2.8 percent population growth Village (ORDEV) within the Ministry of Local despite high levels of out-migration. With some 1,900 Development, to build on the participatory methods people per square kilometer, the area had one of the of local council planning that were developed in proj- highest population densities on earth. About 70 per- ects during the 1980s. Its ultimate goal was to close cent of Sohag's adult population and about 84 percent the gaps between development in rural and urban of its female population were illiterate. 90 percent of areas through the efficient utilization of local villages in rural areas lacked sanitation. The provision of resources, and expanding opportunities for productive rural services and infrastructure was characterized by employment by diversifying the rural economy. It highly centralized decision making, protracted bureau- mainly attained these objectives through "ever- cratic procedures, and slow disbursement. expanding grassroots participation in all aspects of life at the rural communities' level" (ILO 2004). In the Egyptian system of public administration, the lowest level of community representation resides with village councils, above which is the district level into which governorates are divided. Governorates receive fund- ing for small local infrastructure projects from the state, with supplemental funding from two sources: the Shorouk national program for rural development, and the Social Fund for Development. Each village council has a Shorouk committee (World Bank 2005). In 1996 when the International Fund for Agricultural Development (IFAD) and World Bank (International Development Association) began planning a co-lend- ing operation to support a large Government of Sohag rural development program, Shorouk participa- tory approaches were already becoming well-known. THE WORLD BANK The United States Agency for International Development articulation of operation and maintenance plans a key (USAID) began supporting the two-year-old program as determinant for a sub-project's eligibility for project financ- a democratization initiative that year. Its mixed evalua- ing. The third component, the Rural Finance Program, tion of the program was largely based on its potential as would undergo a reorientation following the Project's mid- a lever to promote democratic processes. Despite a term in 2003, in which the Micro-Credit for Income number of bureaucratic shortcomings, the potential of Generation subcomponent would become the compo- the young program was evident. It enjoyed clear gov- nent's priority based on community demand. ernment support and was gathering important experi- ence in coordinating activities with other government IDENTIFYING AND entities, as well as experience in project design and SOLVING PROBLEMS implementation. It commanded considerable attention among rural audiences and succeeded to raise aware- The early implementation of the Sohag Rural ness of the need for greater participation by women in Development Project was beleaguered by problems that community planning (IFAD 2007). were typical of integrated rural development projects in the 1990s. As a complex integrated rural development THE SOHAG RURAL project that involved multiple institutions at different DEVELOPMENT PROJECT administrative levels, the Project lacked a strong social monitoring system to oversee investments in local infra- The Project became effective in 2000, and sought to structure in its early stage. Problems also emerged with build physical infrastructure and social capital in sub- the type of traditional agricultural credit offered by gov- projects identified by communities. These sub-projects ernmental financial intermediaries. The limited role of included village water supply and sanitation, irrigation national and local sector departments in project design and drainage, rural roads, and classrooms, among other and in co-financing likewise proved a serious bottleneck. infrastructure. Women, the By the time the midterm review ultra-poor, and unemployed of the Project in September youth in particular were priori- 2003 identified these issues, ty targets. Promoting their only 15 percent of the project access to credit services also funding allocated had been dis- entailed supporting rural bursed. financial institutions by provid- ing funds for on-lending, Decisive actions taken in increasing loan recovery rates, response to the findings of the and introducing a variety of midterm review dramatically user charges. The Project changed the course of imple- explicitly sought to work mentation, which ultimately with--and to work on--the led to the project's acknowl- participatory approach intro- edgement as the recipient of duced by Shorouk. In addition to improving income lev- the 2006 Golden Plough Award for Excellence in Project els and access to credit and employment opportunities, Supervision. the Project sought to build local capacity to program, appraise, co-finance, carry out, and manage rural infra- The Project's credit agreement was amended to re-allo- structure projects and services. cate funding across the three project subcomponents. In response to community demand for health and educa- All three of the Project's components relied heavily on vil- tion services, additional funding was allocated to the lage-level monitoring and required ongoing supervision. Project's village infrastructure component. In addition to The first component concerned strengthening local insti- the resources committed to health and education servic- tutions and building their capacity to identify needs and es, the Bank project team collaborated closely with col- monitor project impacts--including line ministries' supervi- leagues in the Human Development Network and suc- sion capacity. The second component consisted of the cessfully integrated the health and education strategies Project's Village Infrastructure Program, which made the used by other active projects into local planning. 2 Extensive dialogue with national sector ministries led to building efforts under the Project. Indicators were also an agreement that co-financing would be directly chan- used in the elaboration of annual workplans, in which neled through the departments responsible for water, feedback on recently constructed infrastructure was schools, health facilities, and youth centers. The arrange- received from communities and then incorporated into ment led to accelerated implementation, characterized by the next planning cycle. greater local ownership of the institutions supported. Supervision and monitoring in the Sohag Rural The World Bank Agriculture and Rural Development Development Project benefited from the proximity of Anchor reviewed a number of studies of local demand for much of the Project team, including the task team leader, rural finance and financial services. The review led the who was located in the Egypt Country Office. Ready Bank team to scale down the rural finance component of access to project sites enabled diligent and continuing fol- the Project to achieve a sharper focus on micro-credit for low-up to assure that the midterm review recommenda- income generation. The team established a scalable tions were being carried out with the desired results-- model of partnership between accelerated disbursement rates, government financial institu- prompt implementation, and tions and successful non-gov- regular reporting on impact and ernmental organizations (NGOs) output indicators. in delivering micro-finance to the rural poor, particularly poor By 2006, the Sohag Project women. The gender dimension disbursed over 90 percent of of the Project was further its funds, covering every local strengthened when IFAD, the administrative unit of the gov- Project's co-financier, also fol- ernorate. More than 400 sub- lowed the review recommenda- projects were undertaken in tions. IFAD lending was used to water supply, rural roads, further leverage grant resources schools, health facilities, irri- for gender-relevant activities like small grants, the gation canals, sanitation systems, veterinary services, issuance of identification cards, and training. In fact, part- post offices, and social centers for women, youths, nership grant resources within the World Bank and with and other groups. The Project had served nearly 2.5 active local and national NGOs enabled Project staff to million people. support small programs focusing on women's capacity and legal rights. These provided a good complement to Sustainability the project infrastructure and credit services. The Sohag Community participation in decision making and com- Bank for Agricultural Credit established a unit specializing munity ownership of completed infrastructure was seen in micro-credit delivery using separate guidelines and as intrinsically and necessarily related to the sustainabil- employing loan officers in three village banks where the ity of project outcomes by the project's designers and new delivery mechanism was piloted. managers. "Grassroots participation is a strategic goal, not just a tool [that] aims to transform the rural citizen The need for a comprehensive social monitoring system from a receiver to a doer, a participant in the develop- was firmly identified by the midterm review. Responding ment process, as a means of ensuring the persistence to the recommendation, a cadre of trained staff and par- and sustainability of development." (United Nations ticipating community representatives, known as man- Development Programme (UNDP) and Institute for dubeen, was formed. These counterparts carried out National Planning 2003). The Shorouk village develop- separate monitoring and evaluation missions and arrived ment committee structures were utilized and enhanced, at a series of indicators to determine different facets of leading to a community share in investments of about project performance. The indicators were used to gauge 15 percent in some sectors. Community responsibility the level of active community participation in project for the operation and maintenance of completed infra- activities, and the impact of project training on human structure was a matter of both ownership and capacity, capital development. Other indicators were developed and participation in investment was a salient indicator of to measure the effectiveness of institutional capacity community commitment. 3 Restructuring flows of funds so that budget can be allo- at the outset. However, this ultimately proved purposeful cated from line ministries at the local level was a measure in building confidence among local authorities that proj- that supported the longer term objective of fiscal decen- ect achievements could be replicated with targeted tech- tralization, which also relates to the sustainability of nical support. Project outcomes. In particular, it provides a model for The participatory planning structures employed by the decentralized fund management and ownership, which Sohag Project were essentially adaptations of the existing enhances the Governorate's capacity to undertake inte- Shorouk system. These sought to improve the perform- grated planning. ance of local development committees through targeted Replicability women's meetings, reviews of project coverage, consulta- tions covering ad hoc issues, and the incorporation of par- The supervision experience in the Sohag Rural ticipants' views into the monitoring and evaluation sys- Development Project suggests a number of important tem. The emergence of such models for devolving plan- practical lessons which have been taken up in related sec- ning roles to the governorate and district levels is particu- tor work as well as in the planning of the new rural lend- larly timely in the current context as Egypt struggles to ing pipeline. The Project's village infrastructure compo- reorient itself away from a highly centralized system of nent, in particular, represents a model for decentralized development planning and administration. planning, which the Government of Egypt hopes to apply in four additional governorates to the north of Sohag in In November 2006, the Sohag Rural Development Project Upper Egypt. Working through government institutions received the Golden Plough Award for Excellence in meant that more time was devoted to technical assistance Project Supervision. SOURCES World Bank. August 2006. "Agriculture and Rural Development in MENA: Briefing Note." World Bank. 15 June 2006. "Upper Egypt--Challenges and Priorities for Rural Development, Policy Note." Report No. 36432-EG. International Fund for Agricultural Development (IFAD). February 2007 (Updated). IFAD Operations: Sohag Rural Development Project. http://www.ifad.org/english/operations/pn/egy/i484eg/index.htm. World Bank. 31 March 2005. Arab Republic of Egypt: Operational Framework for Integrated Rural Sanitation Service Delivery. Report No. 32230-EG. International Labour Organisation (ILO) 2004. El-Ehwany, Naglass and Heba El-Laithy. Poverty, Employment and Policy- Making in Egypt: A Country Profile. Toward Decent Work in North Africa, No. 1. International Labor Organization (ILO) Area Office, Cairo. North Africa Multi-Disciplinary Advisory Team. United Nations Development Programme (UNDP) and the Egyptian Institute for National Planning. 2003. Egypt Human Development Report 2003: Local Participatory Development. Commercial Press Kalyoub Egypt. Cairo. IFAD. April 2002. "Experience Sharing from the Sohag Rural Development Project in Egypt: Confidence Building to Mobilize Participation. Near East and North Africa Gender Programme." http://www.ifad.org/nena/studies/egypt/eg_484.htm. IFAD. 10 September 1998. Report and Recommendation of the President to the Executive Board on a Proposed Loan to the Arab Republic of Egypt for the Sohag Rural Development Project. http://www.ifad.org/gbdocs/eb/64/e/EB-98-64-R- 23-Rev-1.pdf. World Bank. 1997. Report No. PIC4680: Egypt-Sohag Rural Development Project wds.worldbank.org/.../WDSP/IB/1997/09/05/000009265_3971229184207/Rendered/PDF/multi0page.pdf. Ayat Soliman is Senior Environment Specialist in the Middle East and North Africa Sustainable Development Department and Task Team Leader for the Sohag Rural Development Project. Gunnar Larson, who wrote this ARD Note, is a consultant for the Agriculture and Rural Development Department. This Note is based on the FY 2006 Golden Plough Award for Excellence in Project Supervision. THEWORLDBANK 1818 H Street.NW Washington, DC 20433 www.worldbank.org/rural