Document of The World Bank Report No: ICR2922 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-46760 TF-96422) ON A CREDIT IN THE AMOUNT OF SDR 40.9 MILLION (US$65 MILLION EQUIVALENT) TO THE THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR THE SRI LANKA: EMERGENCY NORTHERN RECOVERY PROJECT (ENREP) CREDIT 46760 - LK June 26, 2014 Rural Development & Livelihoods Sustainable Development Department South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective October 2, 2013) Currency Unit = Sri Lankan Rupee SLR 129 = US$1 US$ = SDR 1.588989 FISCAL YEAR ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank FR Financial Reports AG Auditor General of Sri Lanka GA Government Agent ARCS Audit Reports Compliance System GAAC Governance and Accountability AGAOA Association of Government Accounts Action Plan Organizations of Asia GNDs Gram Niladhari Divisions CAS Country Assistance Strategy GOSL Government of Sri Lanka CBC Community-Based Contracting GPN General Procurement Notice CBO Community Based Organization IBRD International Bank for Reconstruction and CBSM Confidence Building and Stabilization Development Measures IC Individual Consultants CCI Chamber of Construction Industry ICB International Competitive Bidding CDD Community Driven Development ICTAD Institute of Construction Training CEA Central Environmental Authority And Development CECB Central Engineering Consultancy Bureau IDA International Development Association CFW Cash for Work Program IDP Internally Displaced People CF Counterpart Funds IEE Initial Environmental Examination CFAA Country Financial Accountability IFAD International Fund for Agricultural Development Assessment IMF International Monetary Fund CLG Commissioner of Local Governments IPDB Indigenous Peoples Development Plans COM Community Operational Manual ISDS Integrated Safeguards Data Sheet COPs Codes of Practice IUFR Interim Unaudited Financial Reports CQS Consultants’ Qualifications LKR Sri Lankan Rupees CSIA Continuous Social Impact Assessment MC Mahinda Chintana (10-year Development DA Designated Account Framework) DC Direct Contracting MDGs Millennium Development Goals DCC Divisional Coordination Committee M&E Monitoring and Evaluation DDC District Development Council ML&E Monitoring, Learning and Evaluation DEO District Environmental Officer MNB Ministry of Nation Building (Short name for DPCC District Planning and Coordination Committee Ministry of Nation Building and Estate DoB Department of Buildings Infrastructure Development) DLTF District Land Task Force MoFP Ministry of Finance and Planning DMAO District Mine Action Office MOU Memorandum of Understanding DPMU District Project Management Unit MTR Mid-Term Review DPS Designated Procurement Specialist NCB National Competitive Bidding DSD Divisional Secretariat Division NEIAP North-East Irrigated Agriculture Project DWC Department of Wildlife Conservation NEERP North-East Emergency Reconstruction Project EIA Environmental Impact Assessment NEHRP North-East Housing Reconstruction Project EMP Environment Management Plan NGO Non-Governmental Organization ENREP Emergency Northern Recovery Project NPA National Procurement Agency ESAMF Environmental and Social Assessment NPC Northern Provincial Council Management Framework NWS&DB National Water Supply and Drainage Board ESMF Environmental and Social Management Framework OP/BP Operational Policy/Bank Policy FBS Fixed Budget Selection PAPs Project Affected People FD Forest Department PC Provincial Council FM Financial Management PCN Project Concept Note FMIS Financial Management Information Systems PDO Project Development Objective FMR Financial Management Report i PEACE Program for Economic Advancement and SBD Standard Bidding Document Community Empowerment Project SD&CC State Development and Construction Corporation PHRD Policy and Human Resources Development SEC State Engineering Corporation PHP Puttalam Housing Project SEIA Socio-Economic Impact Assessment PIC Project Implementation Cell SWAP Sector Wide Approach PP Project Paper SSS Single-Source Selection PPCC Provincial Planning and Coordination TERP Tsunami Emergency Recovery Project Committee UNDB United Nations Development Business PS Pradeshiya Sabha UNDP United Nations Development Program PTF Presidential Task Force UNHCR United Nations High Commissioner for Refugees QBS Quality-Based Selection UXO Unexploded Ordinance QCBS Quality and Cost Based Selection VDP Village Development Plan RAP Reawakening Project (popular name For VO Village Organization Community Livelihoods in Conflict Affected VSCO Village Savings and Credit Organizations Areas Project) WA Withdrawal Application RFP Request for Proposal Vice President: Philippe H. Le Houerou Country Director: Françoise Clottes Sector Manager: Shobha Shetty Project Team Leader: Seenithamby Manoharan ICR Team Leader: Seenithamby Manoharan ii SRI LANKA Emergency Northern Recovery Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design……………………………….1 2. Key Factors Affecting Implementation and Outcomes..................................................4 3. Assessment of Outcomes .............................................................................................11 4. Assessment of Risk to Development Outcome ............................................................15 5. Assessment of Bank and Borrower Performance ........................................................15 6. Lessons Learned...........................................................................................................18 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ..............19 Annex 1. Project Costs and Financing .............................................................................20 Annex 2. Outputs by Component.....................................................................................21 Annex 3. Economic and Financial Analysis ....................................................................36 Annex 4. Bank Lending and Implementation Support/Supervision Processes ................49 Annex 5. Beneficiary Survey Results ..............................................................................51 Annex 6. List of Supporting Documents .........................................................................54 MAP ii A. Basic Information Sri Lanka: Emergency Country: Sri Lanka Project Name: Northern Recovery Project Project ID: P118870 L/C/TF Number(s): IDA-46760,TF-96422 ICR Date: 09/10/2013 ICR Type: Core ICR Government of Sri Lending Instrument: ERL Borrower: Lanka Original Total XDR 40.90M Commitment: Revised Amount: Disbursed Amount: IDA XDR 40.90M IDA XDR 40.89 M AusAID USD 10.50M AusAID USD 10.50M Environmental Category: B Implementing Agencies: Ministry of Economic Development Co-Financiers and Other External Partners: Australian AID (Presently DFAT) B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/29/2009 Effectiveness: 02/22/2010 Appraisal: 11/25/2009 Restructuring(s): 03/01/2011 Approval: 12/17/2009 Mid-term Review: 01/31/2011 05/16/2011 Closing: 12/31/2012 12/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: iii C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General public administration sector 5 5 Irrigation and drainage 18 18 Other social services 44 44 Rural and Inter-Urban Roads and Highways 15 15 Water supply 18 18 Theme Code (as % of total Bank financing) Conflict prevention and post-conflict reconstruction 100 100 E. Bank Staff Positions At ICR At Approval Vice President: Philippe H. Le Houerou Isabel M. Guerrero Country Director: Francoise Clottes Naoko Ishii Sector Manager: Shobha Shetty Simeon Kacou Ehui Project Team Leader: Seenithamby Manoharan Nihal Fernando ICR Team Leader: Seenithamby Manoharan ICR Primary Author: William Sorrenson (FAO) F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objective (PDO) is to support Government of Sri Lanka’s efforts to rapidly resettle the IDPs in the Northern Province by creating an enabling environment. It will be achieved through: (A) Emergency Assistance to IDPs; (B) a Work-fare Program; (C) Rehabilitation and Reconstruction of Essential Public and Economic Infrastructure; and (D) Project Management Support. Revised Project Development Objectives (as approved by original approving authority) N/A iv (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Number of returning and assisted Internally Displaced People (IDPs) 290,000 IDPs are living Value in camps, and another quantitative or 100,000 140,000 147,414 300,000 with relatives Qualitative) and friends Date achieved 11/25/2009 01/10/2010 03/01/2011 12/31/2013 Comments (incl. % The achievement is more than planned and it is appreciated by the GOSL. achievement) (b) Intermediate Outcome Indicator(s) Original Formally Actual Value Unit of Target Revised Achieved at Indicator Measure Baseline Value Values (from Target Completion or approval Values Target Years documents) A2. Hectares of Hectares 19,000 ha of 7,600 7,600 7,207. farmlands farm lands Resettlement cleared cannot be got delayed in farmed due to the latter thick vegetative stage. But, growth 406.5 km defense earth bunds removed for people’s use. A3. No. of Number Zero – 15,000 6,600 14,796 Farmers/ Returnees do fishermen not have cash to receiving seeds purchase seeds or agricultural and implements and fishing implements Person days of Families Zero – No 45,000 40,000 44,671 work provided employment to returnees opportunities and conflict for IDPS in the affected first 50-60 days households after return Person- Zero – No 1,070,000 1,070,000 2,132,048 days employment v opportunities for IDPS in the first 50-60 days after return C1. Hectares of Hectares 53,000 ha of 12,000 16,200 19,086 farm lands paddy land had cultivated after not been rehabilitation cultivated of Irrigation (abandoned) tanks, canals due to and ponds unavailability of irrigation water supply C2. Km of Km About 1,200 650 875 686. Irrigation rural road Km of rural rehabilitation rehabilitated roads badly superseded damaged road rehabilitation and RAP covered the balance. C3. No of Number About 80, 000 30,000 30,000 5,247. There people IDPs do not is a delay in provided with have safe and receiving access to safe regular water application drinking water supply as 20 for supply water supply schemes are connections. dysfunctional Total target due to internal may get conflict damage realized by end of 2014. C4. Number of Number Large number 260 400 469 public of public buildings buildings restored and severely functional damaged Number of Number Comprehensive 6 6 3 at World CSIAs social Bank completed and assessments to 3 at PMU lessons learned evaluate social incorporated qualitative aspects of the IDP return and project impacts are urgently required vi G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 05/25/2010 Satisfactory Moderately Satisfactory 9.00 2 12/14/2010 Satisfactory Moderately Satisfactory 23.28 3 06/07/2011 Satisfactory Satisfactory 38.19 4 12/24/2011 Satisfactory Satisfactory 38.75 5 06/12/2012 Satisfactory Satisfactory 48.75 6 12/16/2012 Satisfactory Satisfactory 58.45 7 03/24/2013 Satisfactory Satisfactory 58.45 8 06/05/2013 Satisfactory Satisfactory 58.45 9 09/24/2013 Satisfactory Satisfactory 62.15 10 03/19/2014 Satisfactory Satisfactory 62.56 H. Restructuring (if any) The project was restructured in March 2011. While the components remained the same, Components (A) and (B) were reduced in scope and Component (C) was increased. I. Disbursement Profile vii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1.1.1 The Northern and Eastern Provinces had been ravaged by the internal armed conflict over almost three decades and is estimated to have cost the lives of about 70,000 people and resulted in severe physical and psychological trauma to many more. By the dawn of 2009, the Government restored peace establishing full control over the entire Eastern Province, but the conflict had intensified in parts of the Northern Province which were not under the Government’s control. On May 19, 2009 the President of Sri Lanka announced full victory of the conflict by bringing back the entire Northern Province under the Government control too. Large-scale displacements of civilians and fostered exodus of people to other countries have occurred during the conflict, especially during the last period of the intensified armed conflict in 2008 and early 2009. The conflict stunted development in the Northern and Eastern Provinces, and also negatively affected growth in the country at large. Despite the conflict, the Government, with assistance from donors, including the World Bank, implemented several credible programs for emergency welfare and livelihood assistance and rehabilitation in these areas throughout the conflict. 1.1.2 Preparation of the Emergency Northern Recovery Project (ENREP) was initiated in July 2009 shortly after the end of the conflict during a time of rapidly changing circumstances when over 290,000 internally displaced persons (IDPs) were being held in the Government’s welfare camps. Board approval was granted December 2, 2009. During the project preparation the situation was changing dramatically quickly as approximately 140,000 people were at the time being released from the camps while more returnees were scheduled for return. At the same time, the Government, with assistance from the United Nations Development Program (UNDP) and several bi-lateral donors, was carrying out a demining operation in the project area to facilitate the rapid return of the displaced families. Moreover, the Government announced on November 23, 2009, that all movement restrictions both in and out of the welfare camps and in the Northern Province would be lifted from December 1, 2009. Consequently, the immediate challenge was shifting from moving the people out of the camps to putting in place arrangements to help the returnees restore their livelihoods and get access to minimal levels of services in their communities. 1.1.3 ENREP was planned as an immediate recovery operation that would complement a package of ongoing Bank financed interventions targeted to the Northern Province of Sri Lanka. The on-going Health Sector Development and the Education Sector Development Projects were providing support to re-establish health care and education facilities for IDPs, while housing assistance to IDPs in the Northern Province of US$40 million was being provided through the ongoing North-East Housing Reconstruction Project. Livelihood support to the most vulnerable IDPs, including women headed households, disabled, and landless IDPs, was being channeled through the community driven development (CDD) Reawakening Project (RaP). An additional financing of US$12 million for RaP was considered by the Board together with ENREP. The Provincial Roads Project, which was also being considered by the Board along with ENREP and RaP, had provision for US$20 million (out of a Credit of US$l05 million) targeted to rehabilitating selected provincial roads in the Northern Province. 1.1.4 At appraisal, the presence of people, development partners and UN were not available in the area controlled by the forces. ENREP was designed around a core high priority set of activities that would help the Government to create a platform for other development partners to consider providing assistance. JICA and ADB were considering their assistance during negotiations of ENREP. On top of the large scale disruption and devastation that had been endured in the North due to the long civil unrest, especially that which was inflicted during the final phases of battle with large-scale displacement of people, on the economic front Sri Lanka had been buffeted by a series of shocks in the 18-months immediately preceding the end of the conflict. Impacts from the Global Financial Crisis and rapid rises in food and commodity 1 prices had severely worsened the country’s terms of trade. Foreign capital was rapidly flowing out of the country and Government had entered into a negotiation with the International Monetary Fund (IMF). The end of hostilities in the country was changing the economic sentiment in the country. 1.1.5 Government moved quickly to prepare a 180-day plan for dealing with the reconstruction of the North, which included four main activities: demining; return and resettlement plan for the IDPs; provision of basic welfare, infrastructure, and social services; and support to resume livelihoods of the IDPs. Central to the 180 day plan was a four phased, time-bound return and resettlement plan of the IDPs. The Government also mobilized the relevant line ministries and agencies at the center as well as at the provincial and district level to carry out rapid assessment of immediate livelihood, rehabilitation and reconstruction needs of the North. This needs assessment and the resettlement plan provided guidance for the preparation of this project. Within the 180-day plan framework, high priority investments and activities were identified to restore the livelihoods of the returning IDPs and rehabilitate essential infrastructure. Before appraisal Bank had evaluated the detailed initial plan of activities for the first six months to provide the basis to guide financing activities during the first six months of implementation. Government had already demonstrated in the Eastern Province that it had the capacity to carry out a substantial program of moving IDPs back to their places of origin with the help of UN agencies. 1.1.6 Government requested Bank’s urgent assistance primarily for the rapid return of IDPs planned under Phases III and IV of its Resettlement Plan with some specific assistance to meet the needs of people returned under Phase II. Government had extensively engaged with the Bank from the beginning of September 2009 in seeking support for its return plan. It was considered at appraisal that significant resources would be needed to address all issues, and that it would be unrealistic to expect that the livelihoods of the returning IDPs could be restored without adequate attention to emergency income support, livelihood restoration initiatives and rehabilitation of infrastructure. 1.2 Original Project Development Objectives (PDO) and Key Indicators 1.2.1 The Project Development Objective (PDO) was to support Government of Sri Lanka’s efforts to rapidly resettle the IDPs in the Northern Province by creating an enabling environment. The project objective was expected to be achieved through the implementation of three components: (A) emergency assistance to IDPs; (B) Cash for Work (CFW) program; (C) rehabilitation and reconstruction of essential public and economic infrastructure. There was also a project management support component to assist in the implementation of the project. The project aimed to: (i) assist the IDPs to resume farming and livelihood activities: (ii) generate immediate employment for 45,000 IDP households through village level cash for work (CFW) program; and (iii) support sustainable livelihoods through the rehabilitation of essential infrastructure and facilities. 1.2.2 The major anticipated development outcome was to directly support the Government sponsored program for return and resettlement of 100,000 IDPs to their places of origin in five districts of Jaffna, Kilinochichi, Mullaitivu, Mannar and Vavuniya which constitute the Northern Province. The targeted 100,000 were out of the 290,000 people living in Government’s welfare camps consequent to intensified conflict during 2008 and early 2009. The approved outcome indicator was the number of IDPs directly benefitting from the project. Although this indicator is a measure of output rather than outcome of the assistance provided to returnees, given that the operation was designed as an emergency recovery project, this outcome indicator is considered to be both appropriate and justifiable. It would not have been practical to have considered higher level outcome indicators to measure the extent to which returnees had sustainably re-established incomes above poverty levels, or achieved food security, because of the fact that RAP was restructured with USD 12 M additional financing along with ENREP to provide complementary development assistance to these resettled people and that there were other major interventions being supported throughout the project area at the same time that were also impacting on the social and economic 2 wellbeing of returnees. The key component level output indicators were: (i) Component (A): number of hectares of farm land cleared, and number farmers and fishers receiving seeds and agricultural farming/fishing implements; (ii) Component (B): number of benefiting families and number of person-days of labor; (iii) Component (C): number of hectares of irrigated land after irrigation rehabilitation work, number of kilometers of rehabilitated roads, number of persons accessing safe drinking water, and number of restored and functioning public buildings; and (iv) Component (D): number and regularity of systematic Continuous Social Impact Assessments (CSIAs). 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 1.3.1 The PDO remained relevant and was not revised. However, the project used a flexible implementation approach by extending its assistance beyond the targeted beneficiaries living in the government welfare camps. Consequently, the project assisted not only the IDPs returning from the camps under the government sponsored resettlement plan but also the IDPs living elsewhere outside the camps and returning voluntarily to their villages of origin. This resulted in the revision of the original target of 100,000 to 140,000 people at the Mid Term Review. Before Mid Term Review (MTR), additional grant financing equivalent of US$10.5 million was provided by AUSAID to fund cash for work Component (B). This facilitated the implementation of CFW as Government were reluctant to fund it through loan monies rather than with grants and did have a policy for providing cash payments direct to IDPs. Provision of the AUSAID grant provided an opportunity to channel more IDA funds into the rehabilitation of urgently needed public economic and social service infrastructure. In response to Government policy, project services were consequently extended to target IDPs who were resettling rapidly and who were not getting assistance from other institutions. 1.4 Main Beneficiaries 1.4.1 At appraisal the project’s primary target group was 100,000 IDPs out of a total of 290,000 people who were living in Government camps in July 2009. A large majority of the IDPs targeted under the project were people displaced consequent to intensified fighting between Armed Forces of the Government and the rebels of the North in 2008 up to May 2009. The project assisted not only the IDPs in the welfare camps, but also the IDPs who returned from relatives, friends and from India voluntarily. The school children were benefitted through rehabilitation of 143 school buildings; farmers through rehabilitation of 109 irrigation schemes, 686 km rural roads, 19 markets, 58 multipurpose cooperative buildings, 198 government offices and 48 storage facilities; and women through CFW program that benefitted 44,671 families. 2,525 and 9,603 households were provided with seed materials and plants. The project also benefitted local small scale contractors who got disrupted by the conflict to resume their business by offering a large number of small and medium scale contracts. 1.5 Original Components 1.5.1 The project components as stated in the Project Paper (PP) were: (A) Emergency Assistance to IDPs (US$6 million, 9.2% of total costs ) to provide assistance to retuned households to re-engage in livelihood activities such as agricultural farming and marine fishing; (B) Cash for Work (US$12 million, 18.5% of total costs) to provide labor employment to the returnees immediately after they had been resettled helping to bridge the income gap between the time of return (after having received emergency assistance) and until IDPs could obtain income from regular livelihoods; (C) Rehabilitation and Reconstruction of Essential Public and Economic Infrastructure (US$44 million, 67.7% of total costs) to provide assistance to repair, reconstruct and restore vital public and economic infrastructure and facilities damaged by the war and that were dysfunctional or partly functional; and (D) Project Management, Oversight, Monitoring and Evaluation, and Special Studies (US$3 million, 4.6% of total costs) to support Government implement the project, 3 coordinate all project related activities, monitor and evaluate project inputs, outputs and results, carry out financial management, technical, procurement and safeguard audits. Provision was made for systematic, regular and continuous social impact assessments (CSIAs). 1.6 Revised Components 1.6.1 The project components remained the same, although changes were made in the scope of the components and to some of the sub-components. Board approved a restructuring of the project in February 2010 in response to a decision by Government to (i) use an AUSAID grant to retroactively finance expenditure incurred on CFW up to that time from the IDA Credit of the project; and (ii) revise financial allocations among the project components as described in Section 1.7 below. In addition, Component (A) included provision for meeting the operational costs of the proposed mobile land task forces, as well as studies and surveys to rapidly restore contested property rights of returning IDPs. In view of Government’s policy at the time the project was being implemented of using its existing judicial and administrative mechanisms to resolve property disputes of the returning IDPs, it was decided this provision would not be required. 1.7 Other significant changes 1.7.1 By MTR, other institutions (among these were ADB, UNOPS, Caritas, World Vision and Care) had started funding the CFW program under their own work plans but using ENREP design and guidelines. Also, a number of other donors had been providing substantial amounts of inputs for farmer and fisher IDPs. In view of the additional donor funding coming into the project area, it was decided at MTR to reallocate funds from Components (A) and (B) to Component (C). A number of key output targets were consequently revised (refer Section F. Input Data Sheet for details of the agreed changes). This resulted in a reallocation of the appraisal estimated budget allocation for Component (A) from US$6 million to US$2 million, Component (B) budget allocation of US$12 million was reduced 13% to US$10.5, and Component (C) would have an increased allocation from US$44 million to US$54.5 million. Component (D) allocation remained at US$3million. Thus the size of the project was increased from US$65 million to US$75.5 million (US$65 million IDA Credit plus US$10.5 million AUSAID Grant). The main change was that ENREP would fund additional social and economic infrastructure rehabilitation works. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 2.1.1 The project was designed during a rapidly changing situation described in Section 1.1.1. Not only had there been massive displacement of people and widespread placement of land mines, but also substantial damage to land, buildings and other infrastructure. Government plans and policies for assisting IDPs to return to their villages of origin and reconstructing the Northern Province were rapidly evolving. Bank considered the operation high risk. 2.1.2 The Bank was the first institution to receive a request from the Government to implement its return plan and was granted early access to the project sites. Bank had been one of the few agencies operating in the Northern Province even during the height of the conflict, and was well placed to assist Government due to its wide international experience in post conflict reconstruction. It pioneered development assistance in the North-East of the country in 1998 through the North-East Irrigated Agriculture Project (NEIAP) an initiative which had catalyzed development support to the region from other development partners. 2.1.3 In contrast to most post-conflict situations in other countries, there was already clearly demonstrated implementation capacity in the North of the country to implement a rapid recovery program. Even during the 4 height of the conflict, the Government maintained well-functioning government services in the North and East of the country, such as education, health care, agricultural support, producer cooperatives and food supply. Government also implemented several Bank and other donor agencies projects quite successfully. 2.1.4 Project preparation was carried out quickly but was thorough and well thought through in consultation with Government. Three project preparation missions were carried out over a four month period jointly with active participation of senior officials from various ministries. Detailed project design was prepared with Government in October 2009 and the project approved December 2, 2009. The strategy to utilize the Bank’s existing portfolio of projects to support activities and investments in the Northern Province, and to prepare a new operation that could be quickly implemented to encourage rapid return of IDPs, but at the same time support vital livelihood activities and infrastructure rehabilitation in the Northern Province, was relevant and appropriate. 2.1.5 The project was designed as a two year project. However, it was recognized in the Project Paper (PP) that emergency operations often require more time to be implemented to complete the rehabilitation of damaged infrastructure and facilities due to demining and unforeseen implementation issues, the credit closing period was set at three years. 2.1.6 The design was simple and incorporated lessons learned in past and on-going projects in the region, as well as in other post conflict operations in Sri Lanka and elsewhere. These lessons highlighted the need to (i) provide immediate help to returnees; (ii) balance livelihood support with the rehabilitation of public services and basic infrastructure; and (iii) ensure adequate implementation arrangements are in place right from project start-up. The inclusion of technical and financial auditing as useful design elements improved accuracy of costing of a large number of geographically scattered civil works ($60 million), while ensuring their constriction quality, and proper contract management. 2.1.7 The objectives of the project were clear and focused on the project outcome. Although there were high risks which could affect the outcome, especially the speed at which the IDPs could and would be willing to leave welfare camps and return to their homelands, the project components were appropriate. Whilst the objectives of the project were undoubtedly very demanding on the implementing agencies, a number of important considerations provided confidence that the project could be implemented: (i) the needs in the conflict-inflicted project area were so great; (ii) the Borrower was committed to the project and was fully consulted during project preparation; (iii) the project was embedded within Government’s own resettlement program; (iv) past and on-going Bank operations had proven that there would be the required capacity within both the public and private sectors to implement the project. 2.1.8 There were a number of important features included in the project design which ensured quick project start-up: (i) tapping into the PMU of RAP ensured project implementation could start immediately; (ii) using community social mobilizers (referred to as community resource persons - CRPs) of the on-going RAP project to consult with returning IDPs and carry out needs assessments to select village level priorities to be funded by the project; (iii) including 6-monthly activity plans to prioritize project activities using the results of the needs assessments; (iv) using an area-based targeted approach whereby areas and villages selected by Divisional Secretariat Divisions identified in the Government’s return program are assisted to maximize the project’s development impact; and (v) preparing a Financial Management Manual, Environmental and Social Assessment and Management Framework, and a CFW Operations Manual before the project was approved, ensured speedy start-up of the project. 2.1.9 In recognition of the high risks involved in the operation, a number of well-considered and appropriate risk mitigation measures were incorporated in the project design: (i) the formulation of a Conflict and Reconciliation Filter highlighted the risks and clarified measures to be taken to mitigate these; (ii) the incorporation of three disbursement triggers linked to the cumulative progress of the return of the IDP to 5 ensure that specified numbers of IDPs were returned to their place of origin before funds would be available; and (iii) Continuous Social Impact Assessment (CSIA) to be undertaken quarterly in year one and six- monthly thereafter throughout the project, including regular internal monitoring and evaluation (M&E) and reporting procedures. CSIA was a novel feature of the project ambitiously designed to examine a wide range of aspects: (i) both intended and unintended social impacts related to the return of IDPs; (ii) the adequacy of technical and financial assistance, health and education services; (iii) grievance redressal mechanisms; (iv) beneficiary consultation, targeting and selection of CFW and other activities financed by the project; (v) utilization of local labor for rehabilitation works; and (vi) impact of the project on recovery of the local economy and livelihoods. 2.1.10 Project design also recognized the importance of working in partnership with UN and other agencies, a lesson that had been learned in the earlier Bank funded NEIAP. Several UN agencies were providing parallel support to the return process, while others were supporting rehabilitation and community development activities. UNHCR’s confirmation of the returning IDPs was used to monitor the achievement of the project’s primary development objective and for assessing if the disbursement triggers have been met. 2.1.11 Although Government had requested the Bank to assist IDPs included in Phases III and IV of their Return Plan, the design incorporated flexibility to support other IDPs should this be necessary during project implementation, which proved to be the case. These included late returning IDPs and IDPs who had been displaced for much longer because their homes were in declared high security zones. Also, by mutual agreement between the Bank and Government, on a case by case basis, other IDPs and activities outside Phases III and IV would be supported. This was a sensible arrangement in view of the uncertainties associated with the resettlement plan. 2.1.12 The project design recognized that demining was a critical first step in enabling the return of IDPs. A thorough process of mine clearance was planned by Government in association with UNDP and supported by several bilateral donors (including Australia, India, Japan, Norway, Denmark, Sweden, Switzerland, UK and US). Demining of designated geographical areas was being done either by the Sri Lankan Army or by one of the six international and one national mine clearing agencies. Demining activities were being carried out in accordance with the International Mine Action Standards. Subject to the results of quality control checks, land was “released” for return of IDPs and livelihood development activities could commence. Mine clearance was foreseen as a time consuming, arduous, and risky process. The process of land release in the North was initially slow. However, at the same time the Government in consultation with the mine clearing agencies worked continuously to find an acceptable balance between accelerating the release of land, including through improved targeting of the available mine action resources, while ensuring that the risks to the safety of returnees and contractors were adequately mitigated. It was a tribute to the demining program that no mining incidents were reported during project implementation. 2.2 Implementation 2.2.1 The overall project design of implementation arrangements were built on the experience gained in the implementation of preceding and ongoing Bank funded projects in the Northern and Eastern Provinces that provided satisfactory development outcomes. Implementation arrangements for the project were well designed and appropriate at national, provincial, district, local government and village levels. The Ministry of Nation Building – NMB (later renamed Ministry of Economic Development - MED) was the executing agency for the project. The Presidential Task Force (PTF) provided oversight and policy guidance for humanitarian assistance, security, return and reconstruction of the North. Responsibility for ensuring effective planning and implementation of the project rested with the Secretary MED. The PTF, among other important functions, coordinated programs and action plans, and helped resolve implementation bottlenecks and interagency issues and conflicts. At the national level, the Secretary MED chaired a 6 National Steering Committee specific for the project. At the provincial level, the Northern Provincial Council (NPC) was responsible for reviewing, coordinating and monitoring all project activities implemented by the provincial and local government agencies, and for resolving implementation issues within its purview. At district level planning, implementation and coordination was overseen by the respective Government Agents (GAs) of the five project districts. District Implementation Cells (PICs) were established in each district to assist in implementation. The PICs were crucial for implementing the project as also the Project Implementation Unit (PMU) which was established within the project area in Vavuniya. 2.2.2 Project implementation continued at a fast pace over a four year implementation period. Throughout implementation overall project implementation progress was rated by Bank supervision missions as satisfactory, except during the first year when it was rated moderately satisfactory due to initial delays in hiring of PMU/DPMU staff, establishing closer working relationships with Provincial and Departmental staff, short-listing contractors and in the finalizing 6-month work plans. 2.2.3 The project components were appropriately related to the project objective and the capacity of the implementing agencies. Component (A) Emergency Assistance to IDPs (originally US$6 million reduced to US$2 million) 2.2.4 This component was designed to provide assistance to returned households to restart their livelihood activities such as farming and fishing. Revival of livelihoods of returnees was to provide sustainable incomes, and help rejuvenate the rural economy and ensure food security to the local population. The component was to provide financing to: (i) meet costs related to mobile land task forces, surveys and studies to restore contested property rights of returnees; (ii) conduct demining awareness programs for IDPs, project staff and contractors; (iii) clear thick vegetative growth of paddy lands to be able to resume land preparation and cultivation; (iv) provide seeds, basic agricultural and fishing implements to start fishing and marine fishing. 2.2.5 This component was designed to complement the emergency assistance provided by Government to the returning IDP families which made provision for tarpaulin kit, Rs 25,000 cash grant, six months food ration and tin sheets. The geographic locations for land clearing were selected with the government’s plans for return and resettlement of the people. This had a positive impact on rapid return, as the Government could clear the lands for return of people and facilitated the commencement of rainfed agriculture by the IDPs immediately after their return. Also, clearing of bunkers inside and outside the private houses as well as in settlement areas facilitated resolving previously distorted land boundaries and local drainage patterns. Component (B) Work-fare (Cash for Work) (originally US$12 million reduced to US$10.5 million) 2.2.6 The CFW program was designed to provide immediate income for IDPs through the execution of small-scale labor intensive repair and rehabilitation works of village level infrastructure and facilities by employing one member from each household as daily wage laborers. The program was to provide a minimum of 50 labor days of guaranteed work employment for one person from each IDP household at Rs500 per day. Of the 50 days returnees would be eligible to spend 10 days to repair their own homes. The component had a dual objective: (i) to provide immediate cash to families; and (ii) to undertake urgent labor intensive repair works such as the clearing of debris from village buildings, dug wells access tracks and hamlet level roads and irrigation canals. According to the Financial Agreement, wages under CFW were to be 20% below the local unskilled wage in each respective district to eliminate disincentives for the returnees to take up more job opportunities in rehabilitation works in the project area. The program was to remain in effect until reasonable income opportunities were available to all returnees in their home towns and villages. Special workfare activities were to be provided for returnee households with no able-bodied workers, to ensure employment of at least one person in each such household. The program was also seen as an avenue for consultations and participation to identify and implement community infrastructure works to create 7 ownership and sustainability of these. Though it was assumed that in the event that demining was delayed, CFW could be continued beyond the 50 days until the returnees had access to land or start other livelihood activities, this did not happen. 2.2.7 Implementation of the CFW program commenced in December 2009 and accelerated during the period April-July 2010. The first Supervision Mission in February 2010 reported progress on CFW as commendable. It was already having a big impact on encouraging IDPs to be released from camps. However, on July 15, 2010, CFW was suspended by Government following its decision that it must be financed from the AusAID grant funds rather than use the IDA Credit. The first and second Bank supervision missions emphasized that the fund was an important source of income opportunities for newly resettled communities and its suspension had served to reduce these opportunities. By the time the CFW was suspended, US$3.4 million had been spent. It then took time for Government, AusAID and Bank to agree on implementation modalities for the remainder of the fund. After nearly a year’s suspension, the CFW recommenced July 25, 2011 in Phase 1 activities in three districts, Jaffna, Kilonochchi and Mullaitivu, thereafter moving to Phase 11 in the Kilinochchi and Mullaitivu districts only. When the program restarted and entered a second phase, the level of benefit per household was inequitably reduced to spread the remaining available funds to a larger number of IDPs approximating the original design target of 45,000 families. But, this decision had not affected the returnees, since there were adequate job opportunities available towards the end of this activity in the project area. 2.2.15 On the whole the program has been implemented very well within the available resources and constraints that prevailed during a rapidly changing and traumatic time. The level of satisfaction of beneficiaries interviewed during the SEIA with respect to the number of days of work provided by the CFW was high: 100% in Jaffna and Vavuniya; 96% and 94% respectively in Mullaitivu and Kilinochchi; and 80% in Mannar. Also in view of the fact that other donors started CFW programs in the project area after ENREP had commenced, CFW programs did provide important and, for the majority of IDPs, adequate bridging sources of income. While lessons can be learned for improving the performance of a CFW program, there is no doubt that IDPs benefitted greatly from the program Component (C) Rehabilitation (originally US$ 44 million increased to US$ 54.5 million) 2.2.16 This component was to provide assistance to repair, reconstruct and restore vital infrastructure and facilities damaged during the conflict. It was designed to (i) help re-establish inter-village connectivity; (ii) provide access to schools, clinics markets and safe drinking water and (iii) access to essential public and technical services from Government’s civil administration. The increase in allocation was necessary to assist as many IDP returnees as possible to resume their livelihoods through rehabilitation or reconstruction of irrigation schemes, rural link roads, drinking water supply schemes, cooperative buildings, agriculture storage facilities, and government offices. 2.2.31 Actual allocation of expenditure on buildings across the project districts varied from 10% for Mannar to 27% in Kilinochichi. Expenditures across the main categories of buildings varied from 28% for “Other Government Buildings”, Schools 19%, Cooperative Societies and Divisional Secretariats each 9%, Markets 6%, Health Centers, Post Offices and Local Government Buildings each 5% followed by Agrarian Centers 4%, Fertilizer and Paddy Stores each 3%, and for Seed Production Farms and Agricultural Training Centers 1% each. More was allocated to “Other Government Buildings” which were dominated by a number of new buildings particularly in Jaffna district which had been badly damaged or destroyed during the war. Component (D) (US$ 3 million) 2.2.31 The objective of this component was to support Government to implement the project, coordinate all project related activities, monitor project inputs, outputs and results, financial management, as well as 8 technical, procurement and safeguard audits. This component was to finance any surveys, consultations, strategic studies, and feasibility standards required to improve the development effectiveness of the project as well as longer term development of the Northern Province. 2.2.32 Actual expenditure on Component (D) was approximately US$3.13 M slightly above the PP allocated amount of US$3 million. Three items of expenditure accounted for 83% of the total costs of this component, viz. (i) purchase of vehicles, equipment and office facilities (the latter were destroyed during the war) (40%); (ii) project staff salaries (24%); and (iii) safeguard auditing (19%). Less than1% was expended on feasibility and special studies. 2.2.33 Project design specified the minimum staff required to execute the project. Staffing of the PMU and district PICs was satisfactory, staff were of a high quality and ensured the project was implemented in a timely and efficient way. Despite some delays in recruitment, staff was mostly recruited quickly, mainly younger people, gender-balanced, eager to learn, dedicated and enthusiastic to do a good job. The complementary aspects and impact of RAP implementation machinery on the ENREP implementation had been the key for success. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 2.3.1 The PMU was to be responsible for monitoring and evaluation of inputs, outputs and intermediate outcomes. The PMU, through the PICs in each district, were to collect information from the government agencies responsible for implementing project activities, and importantly from various reports to monitor the return of the IDPs. The PMU was to include a full time M&E officer responsible for the task. A financial management system was envisaged when the project was prepared that would be an integrated system linking financial management, procurement and M&E. Actual M&E staffing of the PMU and PICs is detailed in the next table. M&E staff was independent from those directly involved in implementation which was important for ensuring integrity of the information generated. The role played by the MED and the District Secretaries (Government Agents) in the monitoring of the project activities had been extraordinary. Project implemented a grievance redressal mechanism within the project manangement but it would have been more fruitful if it had been independent. 2.3.1 The experience on M&E during ENREP has shown a large staff is not required to develop and maintain an EXCEL-based M&E system that is simple, yet sufficiently comprehensive, to monitor project results and be capable of assisting management to improve the effectiveness of a project. Initially M&E staff employed on RAP assisted in setting-up the M&E system which explains why the recruitment of M&E staff specifically for the project did not start until August 2010. For the six positions, a total of 15 staff worked on M&E with most staff filling their respective positions for two years. When staff was replaced there were no delays in filling the posts which ensured the M&E system continued to function well throughout implementation of the project. Taking ownership of the M&E system by PMU staff, and continuous constructive assistance from Bank supervision missions, were important to ensuring the M&E system successfully evolved throughout project implementation. 2.4 Safeguard and Fiduciary Compliance 2.4.1 During project preparation, risks that could potentially affect project implementation were identified and mitigation measures planned, some of which became conditions of effectiveness. A strong fiduciary architecture for financial management and procurement, including social accountability mechanisms at community level, as well as social and environmental safeguards, were considered to be important to mitigate these potential project risks. 9 2.4.2 Financial management and procurement. Bank supervision missions raised a number of financial management and procurement issues during implementation which were all satisfactorily resolved by the PMU and did not impede implementation. Throughout the first two years of implementation financial management was rated moderately satisfactory, but performance improved to satisfactory during the final year. Internal and external financial audit reporting ensured that financial management met required Bank standards. Procurement was rated by most missions as satisfactory although performance was downgraded to moderately satisfactory on three occasions, two of these in the final year up to August 2013 due to an over- commitment of works contracts which had not been prior-approved by the Bank. The independent Technical Audit consultant in place from the last quarter of 2010 shortly after commencement of infrastructure works, provided useful technical monitoring and quality audits which resulted in an improvement of the quality of works. 2.4.3 Social safeguards and environmental safeguards. Social and environmental safeguards were considered satisfactory by all missions except the third (November 2010) when it was downgraded to moderately unsatisfactory due to the CFW program being stopped midway and delays in paying IDPs for their work which was considered a reputational risk. A total of 25 training programs on social and environmental safeguards were done throughout project implementation for project management staff, contractors and for communities. In general Bank supervision recommended social development and safeguards actions were complied with by the PMU. By August 2013 almost 80% of sub-project social screening checklists had been prepared and showed relatively very few land acquisitions involved as land donations and lands released from the Government. Orientation for safeguards monitoring for field staff had been conducted in all five project districts and progress reports on social safeguards compliance monitoring had been prepared and submitted to the Bank for review. Annex 5 provides an insight of the Continuous Socio-economic Impact Assessments carried out during project implementation. 2.4.4 Environmental impact assessment. PP stipulated that an Environmental Management Plan (EMP) be prepared for each works sub-project. An Environmental Screening Checklist was also prepared and used. According to the Borrowers Draft ICR, an in-depth analysis by the Borrower’s ICR Team of the implementation of environmental safeguards, environmental monitoring and reporting for a sample of sub- projects, showed that for 98% of these, EMPs and environmental and social checklists had been satisfactorily prepared. Borrower’s ICR Team also found environmental mitigation activities for the majority of sub- projects had been satisfactorily carried out. 2.4.5 In August 2013, due to a lack of funds, PMU informed Bank that it could not procure a consulting firm to conduct a project-wide independent Environmental Impact Assessment (EIA). Bank agreed, “in order to speed up the process”, that the EIA be conducted as an in-house activity by the Environmental PMU Officer in collaboration with an external environmental expert. The results of this assessment are incorporated in the Borrowers draft ICR. The key conclusions of this assessment are: (i) monitoring by the environmental safeguards officer in the PMU improved from 2012 after specific formats were prepared for monitoring project activities; (ii) independent quarterly environmental monitoring by the external consultant resulted in improved compliance; (iii) the checklists used to identify potential impacts and proposed mitigation measures were adequate in most cases; (iv) taken individually the majority of sub-projects funded through ENREP were of a scale that did not require detailed environmental impact assessments and that almost all sub-projects comprised rehabilitation or renovation of existing buildings, irrigation schemes and roads, although the accumulative affect of a large number of sub-projects could be significant. 2.5 Post-completion Operation/Next Phase 2.5.1 Two sustainability interventions were initiated towards the end of project implementation with the aim of ensuring adequate maintenance of the infrastructure facilities created through the project, viz. (i) establishing Sustainability Assessment Committees comprising village officers and representatives of the 10 communities and relevant agencies, and (ii) facilitating the involvement of Village Development Organizations (VDOs) functioning and overseen by RAP. Action was taken before the end of project implementation to hand-over project assisted assets. After project closure, RAP staff was assisting villages to prepare sustainability assessment programs for all village-level assets built, or rehabilitated, through ENREP. SEIA concludes that VDOs can play an important role in ensuring these assets, particularly rural access roads, are properly maintained. The report highlights that priority should be accorded by Government to strengthen VDOs as they can potentially play a crucial role in mobilizing resources for maintaining village- level infrastructure and accordingly lessen the financial burden on Government resources. Bank and Government should follow up on this recommendation so that these village-level infrastructures are adequately maintained as at the end of implementation adequate maintenance of these facilities is not adequately assured. According to the Borrowers draft ICR, sustainability assessment programs had been completed and handed-over for 668 (94%) of the 711 sub-projects completed by the project. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 3.1.2. The project objectives were relevant at the time the project was designed and remained relevant throughout implementation. The project was in-line with Bank’s Country Assistance Strategy (CAS) for Financial Years 2009-2012 and with the CPS for Financial years 2013 – 2016 which was prepared during ENREP implementation. CAS, in view of the complex and challenging environment facing the country at the time, was designed to support Government’s vision of economic development through narrowly scoped investment projects in poor and underserved areas delivered through local and provincial governments to provide infrastructure, public services and livelihoods at the local level. Priority was given to reconstruction and service delivery in conflict-affected areas. CPS highlighted priority to the restoration of livelihoods of conflict-affected persons. 3.2 Achievement of Project Development Objectives 3.2.1. The project achieved its project development objective (PDO) satisfactorily. The PDO of supporting Government’s efforts to rapidly resettle the IDPs to their places of origin and restore their social and economic life was achieved above expectations. The target number of direct beneficiaries of the project was 100,000 of the 290,000 being held at the Menik farm camp at the end of 2009. During implementation beneficiaries directly targeted by the project were defined as the number of returnees directly benefiting from the CFW program. The target was revised upwards to 140,000 at MTR. Actual achievement was 147,414, some 5% above the revised target. All of these beneficiaries were from Menik farm. They accounted for 51% of the total number of IDPs detained at Menik farm at the end of the conflict. 3.2.2. ENREP was the first major externally funded operation to support Government’s resettlement program. As a result of ENREP, Government stepped up its demining program. The speed of return of the IDPs was rapid and many other donor agencies began to fund CFW programs which became a major incentive for IDPs to return to their places of origin. Consequently by the end of the project, a total of 514,555 displaced persons had been resettled through Government’s resettlement program which included all of the 290,000 detained at Menik farm. 3.2.3. Whilst the success of the CFW program was an important causal link to the PDO, the interventions of Components (A) and (C) were also important. Component (A) provided immediate assistance to returnees to reestablish their crops, especially paddy. Reducing the scale of this component was justified as other donors provided essential seeds and tools to assist returnees. The decision to exclude project activities to address and monitor resolution of land issues was sensible as Government took full ownership of these sensitive matters. Land disputes according to the Borrowers ICR were reported to have been resolved by the 11 Provincial Commissioner of Lands and the Divisional Secretaries. The SEIA survey found that 12% female and 9% male heads of respondent households still reported outstanding issues concerning land ownership and use. The rehabilitation of public buildings, irrigation and water supply schemes through Component (C) to rapidly restore essential public services provided an important causal link to the PDO as it encouraged returnees back to their homelands. 3.2.4. The achievements of the project component activities are summarized in Annex 2 and described in Section 2.1. The results have been quite exceptional and in most cases the actual achievements have exceeded the revised targets at MTR, with the exception of the number of CSIAs. The socio-economic impact assessment at the end of project implementation has confirmed that the social and economic impacts of the project have been quite substantial. The one exception has been the ten water supply schemes rehabilitated through the project. At the end of project implementation, though all schemes were completed only 17% of the potential number of people who could access safe drinking water from the schemes have been able to connect to the schemes. It will be important that Government continues to review its connection and water fee policies so that more of the potential created through these schemes can be realized (see Section 2.2 for details), although Government will need to weigh the costs of providing these subsidies versus the benefits of providing greater access to safe drinking water to conflict affected persons. 3.2.5. Project M&E unfortunately had some limitations concerning disaggregation of data by gender and on tracking the extent to which local people, particularly IDPs, benefited from ENREP supported recovery activities such as rehabilitation works carried out by contractors. However, SEIA reported that entrusting jungle and bund clearing on a contract basis to CBOs, such as School Development and Multipurpose Cooperative Societies, provided labor opportunities for local people and helped rebuild community organizations and trust among members. SEIA also reported that following resettlement, 34% of female and 54% of male heads of family were engaged in farming and a further 4% female and 16% male in fishing. The rates of unemployment were 33% female and 2% male. These results confirm that the majority of IDP heads of families (30% female and 70% male) were engaged in livelihood activities at project implementation end. A workshop discussion revealed over 580,000 labor day payments have been done by the contractors. 3.3 Efficiency 3.3.1. The project was expected to generate many benefits, some economic in nature and others social and environmental in nature. A Cost Benefit Analysis could not be conducted for the project initially because the socio-economic and productive investments were on a demand driven basis and benefits from investments in natural resource management, education, health, etc. could not be easily quantified in monetary terms. Economic rates of return and net economic benefits, for each of the project sub-components, and for the overall project, are tabulated below and detailed in Annex 3. The costs of each of the sub-components are included in the respective net economic benefit figures. The overall project rate of return includes all project costs, inclusive of the full costs of Component (D), viz. for project management and oversight, M&E and special studies. Whilst many of the benefits that will arise from the most expensive component, (Component C), will be generated over the medium to longer term, the economic analysis has been conservative and included only those readily quantifiable benefits realized as at the end of project implementation. Substantially greater benefits will be realized in the future providing political stability in the region is maintained and market opportunities expand. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 3.4.1. ENREP was relevant as it provided rapid immediate assistance to Government’s Resettlement Program and was one of the driving factors behind what has been a most successful resettlement of IDPs. 12 The project PDO was exceeded above expectation as described in Section 3.3. Apart from the restoration of ten expensive water supply schemes, the other project interventions have been cost effective and benefits (either quantitative and/or non-quantitative) have far exceeded costs. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 3.5.1. Poverty. By targeting IDPs returning to villages in the war-torn North, the project focused on some of the poorest areas in the country. As a result it has had a major impact on poverty reduction throughout the Northern Province. Refer to Annexes 3 and the SEIA for details of the socio-economic impacts of the project. In addition, additional financing of US$12 million for RAP approved at the same time as ENREP, ensured livelihood support reached the most vulnerable IDPs, including women headed households, disabled and landless IDPs. 3.5.2. Gender. Whilst there was no specific targeting of women, according to the Borrowers draft ICR report, priority was given for the inclusion of women headed households and for elderly women. The report notes that an unspecified number of women headed households received support through ENREP, or RAP, for special income generation activities. The impact assessment of the second phase of the CFW in July 2011 showed that female participation varied between 65-70% compared to males at 30-35%. SEIA at the end of the project implementation concludes that the CFW was a great relief for women, particularly women headed households, to enable them to return to something resembling normal as it provided them with the opportunity to earn money and support their families. SEIA also notes a number of other positive impacts: (i) assigning less physical activities to women enabled more women to benefit from the project; (ii) RAP provided credit facilities for women to start livelihood activities; (iii) Women’s Rural Development Societies were established; (iv) improved access to drinking water has relieved women from the daily chore of fetching water; and (v) improved road access has considerably benefited women by reducing the amount of time they spend in purchasing essential household items and in accessing school and health services. CRPs were almost all younger women. This has provided the opportunity for young women to emerge as community development leaders. PMU attempted to identify model projects to empower women, particularly female headed households, but follow-up feasibility studies indicated that practical challenges and constraints inhibited them from being supported through the project. 3.5.3. Social development. Substantial positive social development impacts were envisaged as a result of the project interventions, although project design did recognize that there were several challenges and risks in realizing these impacts. Several key issues/risks were included within the Conflict and Reconciliation Filter related to (i) pace of return and inadequate standards of return process; (ii) quality of demining; (iii) restitution of housing, land and property; (iv) accessibility to the Bank and other relevant national and international agencies to the conflict affected districts to be engaged in consultations; (v) opportunities for returnees and local people to be engaged in wage earnings in rehabilitation and reconstruction activities; (vi) inadequate support to IDPs to restore their livelihood; (vii) imbalances and polarization in demographic changes. Involuntary land acquisition was thought to be the major safeguards issue. Project design incorporated CSIAs to track and address these risks. Following four quarterly continuous social impact assessments by external consultants engaged by the Bank, and in view of the drastically changed situation in terms of accessibility and mobility, and the fact that the majority of the IDPs had been able to return, attention was focused on livelihood restoration (supervision mission May 2012). PMU, through RAP, managed to support livelihood activities particularly by the formation of Women’s Rural Development Societies. Internal CSIAs also highlighted the need for more concerted effort to put to full usage public buildings and facilities such as markets. While many of the social development issues were outside of the project to address directly, it is noteworthy that PMU made efforts to interface with other departments and 13 development agencies to address issues raised by supervision missions and CSIAs and that the results were addressed satisfactory. (b) Institutional Change/Strengthening 3.5.4. ENREP has been able to tap into the institutional changes and strengthening from previous Bank funded projects in the region, in particular NEIAP and RAP and has further consolidated on these efforts. NEIAP was the first large-scale donor funded rehabilitation program that was successfully implemented in the North East from 1989-2005 when the region was still in a “conflict status”. Through NEIAP Government built skills and capacity of their staff for large scale rehabilitation and reconstruction interventions, and paved the way for an open and transparent dialogue between Government and Bank staff. The implementation approach used in ENREP has further strengthened the collaborative and harmonious relationships between central government, and the Northern Province and district agencies initiated in NEIAP and now being further consolidated in a second phase of the project which is the on-going RAP project. Technical field staff gained the experience to work closely with communities and they are now being absorbed by other Development Partners. (c) Other Unintended Outcomes and Impacts (positive or negative) 3.5.5. IDPs returned from camps to their lands much faster than was anticipated at the time the project was prepared. In fact the speed at which returnees would leave the camps was considered a major project risk. The speedier return was a major outcome attributable to the project, particularly Components (A) and (B) which provided direct assistance very rapidly to returning IDPs. The assumption that the IDP return may be lengthy process turned out to be a “non-issue” as disbursement triggers linked to the return of IDPs had already been fulfilled by MTR in May 2011. Although the exact affect of ENREP on increasing the speed of return of IDPs is not known, there is no doubt that it has had a significant positive impact as described in Annex 3. Compared to an earlier resettlement program in the Eastern Province involving 159,000 IDPs, this most recent resettlement during ENREP has been more rapid. Resettlement in the Eastern Province took over four years with issues still remaining, whereas during ENREP, all IDPs were resettled in under three years. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 3.6.1. Not only has ENREP had a significant impact on the lives of the direct IDP target beneficiaries, it has also indirectly impacted on the lives of many more through Component (C), the public infrastructure and services rehabilitation program. These impacts will only be fully realized over the longer term. SEIA carried out by Resources Development Consultancy (RDC) during the last three months of the project implementation interviewed in depth a total of 1,750 beneficiaries, individually or in focal groups, from a stratified random sample of project interventions. The RDC report (see list of supporting documents) provides a comprehensive assessment of the social and economic impacts of the project. Findings of the SEIA have been highlighted in relevant sections throughout this report. Economic impacts of the project are analyzed in detail in Annex 3. 4. Assessment of Risk to Development Outcome Rating: Moderate 4.1. This operation has successfully eased the difficult living conditions of the IDPs who were living in camps, by paving the way to restoring their human dignity and economic livelihoods, and re-establishing access to basic social and economic infrastructure. The project has supported a speedy return of the IDPs. However, the project was not designed to deal with the long term ethnic tensions throughout the country which are deep rooted and multi-faceted. There remain a number of risks outside the development outcome of the project such as ethnic reconciliation, militarization on North, etc. 14 4.2. The risk that IDPs will not stay on their homelands provided there is not another conflict, is rated as low. Most land disputes have been resolved by the Provincial Commissioner of Lands through District and Divisional Secretaries. The rehabilitation and reconstruction of basic public infrastructure and services, particularly health, education and road access, as well as the revitalization of their homes and villages, now provide a solid base for redevelopment. 4.3. Government capacity in the North to implement reconstruction and development in war-damaged areas has been well proven, but there is a moderate risk that the public infrastructure rehabilitated through the project are not adequately maintained by provincial, district and local government authorities, community- based organizations and village-level organizations. The risk of sustaining livelihood activities supported through ENREP and aided by RAP, is moderate. Much more priority investment will be required by Government and the private sector to improve agricultural research, extension and marketing services, as well improve access to credit. 4.4. As such, although the people of the Northern Province are extremely resourceful and resilient, the overall risk to the development outcome is rated as moderate. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 5.1.1. Bank capitalized on the significant experience it has accumulated in supporting post-conflict projects particularly in the north and eastern provinces of Sri Lanka, and prepared ENREP as a quick disbursing recovery operation to deliver early visible results in a context of extreme needs and high expectations. The project design drew on lessons of several ICRs of post-conflict projects in Sri Lanka and elsewhere with the objective of ensuring results from the operation would be sustainable with satisfactory institutional development impacts. The project was prepared to a very high standard of quality rapidly over a four month period in full consultation with Government so that the project was immersed within Government’s own Resettlement Program. The Bank’s team provided a supportive and facilitative role in designing the project. Refer to Section 2.1 for detailed assessment of the quality at entry. (b) Quality of Supervision Rating: Satisfactory 5.1.1. There were a total of 10 Supervision Missions carried out over the 4-year project implementation period. Bank supervision was regular and of a high standard, assisting Government and the implementation agencies at all times to successfully implement the project. Aide memoires were prepared to a high standard clearly setting out implementation status, major issues and recommended actions to overcome the issues. Tables showing the status of implementation assisted greatly in assessing project performance and these were consistently updated based on information from the project M&E system. Continuity of Bank staff and consultants, as well as staff of the PMU and the PICs, resulted in a good working relationship between them as well as with the staff of the District and Divisional Secretariats and other implementation agencies. 5.1.2. From the first supervision mission of February 2010, in view of commendable progress being made under the CFW program, Bank pointed out that it was important that Government make a decision on whether the grant portion of CFW could be increased, especially for vulnerable households. Increasing cash 15 grants to vulnerable households was also recommended so these households could receive a larger share of the benefits. Bank also attempted to resolve the issues associated with differences emerging particularly between ENREP and the CFW program also being funded by AUSAID through the ADB NECORD project. Supervision ensured agreement was reached between Government, ADB and the Bank to have the two programs operate in separate divisions and that the ADB cash grant assistance of Rs25,000 per household, which was not part of ENREP, would not be paid to those returnees under Phases III and IV of Government’s resettlement program who were assisted by ENREP and to avoid duplication. 5.1.3. The first three supervision missions emphasized the importance of the PMU putting an effective M&E system in place and of using independent financial and technical audits to monitor the extensive infrastructure rehabilitation works being undertaken. The emphasis on M&E was to improve planning, targeting and feedback to relevant stakeholders, as well as timely decision making. 5.1.4. Bank responded to Government’s request to expand the infrastructure component at the expense of the CFW program. While this threatened shifting focus on to infrastructure rehabilitation work at the expense of providing more immediate direct assistance to returnees to restore their livelihoods, to the credit of Bank supervision, focus on the restoration of livelihoods was maintained primarily through RAP under the USD 12 M additional financing. Having the same TTL for both ENREP and RAP facilitated important synergistic linkages between these projects which enhanced the impact of ENREP. (c) Justification Rating for Overall Bank Performance Rating: Satisfactory 5.1.5. Overall Bank performance is rated as Satisfactory because the supervision has been rated as Satisfactory for reasons explained above in Sections 5.1 (a) and 5.1 (b), even though the quality at entry was Highly Satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 5.2.1. Government had requested Bank’s assistance in rapidly returning IDPs to their homelands and enabling them to reinitiate their livelihoods. Government was fully committed to the project, took ownership of it and was committed to achieving the project’s development objective. The project had the direct and active support of the Secretaries and key staff of the MED and the Ministry of Finance & Planning, the Governor and Chief Secretary and other key staff of the Northern Provincial Council, and provincial department directors and staff, as well as provincial and district level coordination committees, who all worked closely with the PMU and Bank team to ensure the project was implemented successfully. 5.2.2. The Financial Agreement signed between Government and Bank set out clearly the requirements and understanding concerning (i) institutional arrangements (ii) implementation arrangements; (iii) anti- corruption; (iv) project monitoring, reporting and evaluation; (v) financial management, financial reports and audits; (vi) procurement; and (vii) withdrawal of the proceeds of the financing. The Borrower complied with all matters pertaining to the Agreement. 5.2.3. Amalgamation of the PMU of this shorter duration rapid recovery response project ENREP with the on-going RAP development project during the first and last years of project implementation brought several advantages. While it resulted in cost savings for government, as noted earlier in the report, this initiative enabled ENREP to get off to a flying start. It also enabled, through the RAP trained CRPs, rapid and 16 continuous consultation with the IDPs to assess their priority needs, and facilitated the implementation of the project activities particularly CFW program and livelihood support activities. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 5.2.4. On behalf of Government, the PMU and the PICs were staffed by competent people who were dedicated to ensuring the project activities were implemented well and in a timely manner. All of the implementation agencies responsibly implemented their respective project activities. With the assistance of a good M&E system, implementation progress could be tracked and actions were taken resulting in most activities exceeding project targets, and quality standards of project activities improved to a good standard. The vast number of implementing agencies at National, Provincial, District and Divisional levels, as well as local government and community-based organizations, all implemented activities to a satisfactory to high standard, and the Coordination Committees at Provincial and District levels ensured that all of the activities were very well coordinated. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 5.2.5. Borrower performance has been overall quite exemplary as IDPs have been resettled in their homelands much more rapidly than was anticipated without any reported mining incidents. Essential public services and infrastructure have been rapidly restored to a generally high standard. However, a number of issues have caused a down-rating of the performance of Government and the implementation agencies to satisfactory. The CFW program, which was providing much needed cash assistance to IDPs, was suspended for almost 12 months due to the ineligibility of the use of some of the funds and the concerns of Government of providing cash grants directly to IDPs. When the program restarted and entered a second phase, the level of benefit per household was inequitably reduced to spread the remaining available funds to a larger number of IDPs approximating the original design target of 45,000 families. The over-commitment of available funds for new rehabilitation works was premised on an incorrect assumption that these could be funded through savings from on-going works and pre-approval for these new works was not sought from the Bank. The limited utilization of the potential created through a costly rehabilitation of ten water supply schemes, due to the high connection fees, has limited the realization of this potential at the end of project implementation. There remain issues concerning the sustainability of these schemes which will require better coordination between the National Water Supply & Drainage Board, local government agencies and directly benefitting communities. 6. Lessons Learned 6.1. A post conflict recovery project can provide immediate assistance to IDP returnees and substantially help restore their livelihoods provided it can be started immediately, has political commitment and effective implementation mechanisms in place, and has the right components. This was the case in ENREP. 6.2. Including a wide range of provincial, district and local level implementation agencies into a project enables an emergency recovery project to simultaneously address urgent high priority multiple recovery needs of IDPs in war ravaged areas. Political leadership is necessary to provide effective coordination. 17 6.3. The effectiveness of short recovery operations can be enhanced through careful targeting of beneficiaries, beneficiary needs assessment and complaints redressal mechanisms. Active participation of beneficiaries in the implementation of project supported activities is also crucial for sustaining project funded village-level infrastructure. Provision of alternative but low cost and affordable facilities such as community tube wells and open dug wells would be more effective in such circumstances for immediate resumption of the livelihoods of returning IDPs. Beneficiaries need to have a widely known and easily accessible system for submitting and monitoring any complaints they may have concerning a recovery project’s activities. 6.4. Allocation of project funds on a first-come first-serve basis rather than fixed district allocations increases project success provided effective social safeguards are in place. ENREP provided benefits to not only returnees from the ‘welfare’ camp, but also the IDPs (and refugees) returning from other displacement locations. Provision of intensive independent and third party technical, financial, environmental and social monitoring would greatly enhance the achievement of the PDO, efficiency and efficacy in the implementation of emergency projects following the end of a conflict, as seen in ENREP. 6.5. A large demand-based public services and infrastructure rehabilitation component should be subject to economic analysis/justification during project design and implementation, have adequate provision for funding operations and maintenance, and incorporate an unallocated reserve fund of at least 10% of the component cost. Basic infrastructure facilities are essential to make sure that the IDP returnees are comfortable to resume their livelihoods. ENREP experience points to the need to ensure adequate provision is made during project design and implementation for ensuring responsibilities and funding are clearly delineated and agreed to for operating and maintaining the infrastructure created. 6.6. Well-coordinated cash for work programs can be extremely effective in post conflict situations to encourage IDPs to return to their areas of origin, and to provide them with immediate and extremely beneficial assistance to kick-start their livelihoods until regular income generation activities are resumed. Adequate provision should be made available for all IDPs to benefit, including late returnees. 6.7. M&E systems should be kept as simple as possible, preferably be EXCEL-based and be set up independently within a project management structure to continuously assess project processes and impacts with beneficiary participation. They should also capture labour days or employment generated in contracts for small IDP run contractor outfits in order to evaluate economic benefits deriving from rehabilitation works. The people responsible for M&E should be independent from those responsible for implementation of project activities so as to ensure integrity of data and information collection and evaluation. 6.8. Gender mainstreaming and targeting of vulnerable and marginalized persons should be incorporated in to recovery projects, rather than rely only on area-based targeting and self-targeting by setting labor rates below market rates. It would also increase a recovery project’s impacts on improving the health, security and the well-being of families and of entire communities. 6.9. Emergency recovery interventions in post-conflict situations should incorporate immediate, short-term, and medium to long-term activities but this need to be carefully balanced and continuously monitored and evaluated during implementation and adjusted to emerging circumstances/results. To ensure such emergency recovery operations can begin to effectively re-establish sustainable livelihoods, it is critical that such operations incorporate interventions which will assist in realizing medium to long-term development needs, and be well coordinated with other on-going recovery and development operations. 18 6.10. Emergency operations may be designed to initially assist returning of IDPs, but it is necessary to include sustainable incomes above poverty level and to achieve food security. The need for freestanding livelihood support activities for both immediate return and reintegration of IDPs is essential. While infrastructure and CFW programs are useful, it would be good to ensure that measures are put in place to ensure sustainability of incomes and food security over the long term. 6.11. ENREP used a flexible implementation approach which extended its assistance beyond the targeted beneficiaries living in the government welfare camps. Consequently, the project assisted not only the IDPs returning from the camps under the government sponsored resettlement plan but also the IDPs living elsewhere outside the camps and returning voluntarily to their villages of origin. This is an important adjustment that contributed to ensure equitable access to project benefits for all returning IDPs. 6.12. UNHCR’s confirmation of the returning IDPs was used to monitor the achievement of the project’s primary development objective and for assessing if the disbursement triggers have been met. This is an independent monitoring mechanism which is accepted internationally. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies (b) Co-Financiers Nil (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) Nil 19 Annex 1. Project Costs and Financing (a) Project Cost by Component (in US$ Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (US$ millions) Appraisal (US$ millions) Emergency Assistance to IDs 6.0 2.0 33 Work-fare 12.0 10.5 88 Rehabilitation and Reconstruction of Essential Public and 44.0 60.0 136 Economic Infrastructure Project Management, Oversight, Monitoring and 3.0 3.0 100 Evaluation and Special Studies Total Project Cost 65.0 75.5 116 Total Financing Required 65.0 75.5 116 (b) Financing Appraisal Actual/Latest Percentage Type of Co- Estimate Source of Funds Estimate of Financing (US$ million (US$ millions) Appraisal s) Borrower 0.0 0.0 N/A *AUSAID 0.0 10.5 N/A International Development Association (IDA) 65.0 65.0 100 *Formally AUSAID but now it is Dept. of Foreign Affairs and Trade (DFAT) 20 Annex 2. Outputs by Component Implementation: The Credit was negotiated in November 2009, approved on December 17, 2009 and became effective on February 10, 2010. The Financing Agreement was signed January 11, 2010. At the time of Board approval, AusAID had indicated the availability of a grant of approximately US$10.5 million (Australian 12 million dollars) to finance CFW activities parallel with the IDA Credit funds. Restructuring which expanded the project by inclusion of the grant funds was agreed to on February 07, 2010 whereas the agreement was reached in principle between the Sri Lankan and Australian Governments and the Bank in late 2009. After Board approval, AusAID Grant Agreement was signed by the Government and the Bank on August 13, 2010. Reasons for the delay included the Government’s decision to solely use the IDA Credit funds to support priority needs of restoration and rehabilitation of essential infrastructure and facilities, and the suspension of the CFW activity on July 2010 whilst issues regarding the scope of the activity were resolved. The project got off to a flying start. This was due in large part to (i) the support provided by Government as it was an integral and important part of a well-prepared Government resettlement program and (ii) it piggy- backed an on-going Bank operation, RAP, under implementation in the northern and eastern regions of the country. The PMU of RAP was used initially and then expanded to accommodate newly recruited ENREP staff. Staff of the PMUs of the two projects remained together until July 2010 when ENREP was separated from RAP with its own Project Director and staff. This remained so until January 2012 when the two PMUs were again rejoined enabling Government to reduce management costs of the two projects. Several implementation agencies were involved in project implementation as shown below: Project Components Implementation Agency Emergency Assistance to IDPs Farm land clearing Central/Provincial Irrigation Departments Provision of seeds Provincial Agriculture Department Work-Fare Selection and implementation Divisional Secretaries assisted by RAP in consultation with IDPs Rehabilitation and Reconstruction of Essential Public Infrastructure and Facilities Irrigation schemes and ponds Central/Provincial Irrigation Departments and Agrarian Development Departments Rural roads Local Governments Departments/Local Authorities Water supply National Water Supply and Drainage Board Public buildings Department of Buildings/Appropriate Provincial Agencies Project Management, Coordination, M&E and Auditing Policy, strategic guidance and oversight Presidential Task Force, Secretary MED Project coordination and accountability PMU Overall management and supervision PMU District level project supervision District PICs, District Secretary, Development Coordination Committees Provincial level coordination Provincial Planning and Coordination Committee Technical support and quality assurance Technical auditing consultants (based at district level) M&E and auditing PMU and PICs Public awareness and campaigns PMU and PICs Project implementation and support PMU, PICs and other stakeholders Overall liaison with Bank and oversight World Bank Task Team 21 By embedding the project within Government’s own Resettlement Plan and tapping into the provincial and local government coordination mechanisms, it was ensured the project activities were coordinated with the efforts of other recovery and rehabilitation agencies operating in the Northern Province. Rapid access into the project area, and the much quicker than anticipated return of IDPs to their places of origin, enabled project staff to consult with IDPs from early in the project implementation. This provided the opportunity for the project to meet the immediate priority needs of IDPs of carrying out repairs to their houses, clearing farm land, and recommencing agricultural and fishing activities. It was also sensible to shift additional project funds into the rehabilitation and restoration of irrigation tanks, rural roads, seed farms, cooperative buildings, schools and medical service and other public service buildings, to rapidly restore essential services and infrastructure in the severely damaged Northern Province. The project was expected to be implemented and completed over two years ending December 31, 2011. Although as noted earlier, the Credit closing period was kept at three years in case of unexpected implementation delays. The project was restructured at the end of the first year driven by Government’s decision to use AUSAID complementary financing for CFW Component (B), which was aligned to its resettlement strategy, and to use the IDA Credit funds to support priority needs for the restoration and rehabilitation of essential infrastructure and facilities required to rapidly restore social and economic life of the returnees to the project area. At the time of the MTR in May 2011, Component C increased by 40% from an allocation of US$44 million to US$60 million and the project closing date was extended by one year to December 31, 2013 to allow sufficient time for Government to plan, design and implement additional infrastructure rehabilitation work consequent to the faster than expected return of IDPs to their places of origin. Bank had already approved in October 2010 retroactive financing of up to 62% of the amount of the AUSAID grant (Equivalent US$10.5 million) to meet CFW expenses incurred under the IDA project credit. Component A: The component got off to a slow start. The first supervision mission reported progress as disappointing even though there was provision for retroactive financing initial activities. It soon became apparent that there would be no need to provide assistance concerning property rights as Government decided to complete this task using its own resources. Once awareness training on demining got underway, land clearing commenced. Of the target 7,600 hectares of land clearing, 7,207 hectares were cleared. In addition, based on urgent needs identified in the project area, 406 kilometers of defense bunds and rural roads were cleared of vegetation. Of the 15,000 farmers/fishers targeted for receiving seeds or agricultural/fishing equipment, 14,796 received assistance by project end despite the initial target of 15,000 at appraisal being reduced to 6,600 at MTR. By MTR many other donors were active in supplying seeds and equipment; hence the original target was justifiably reduced. After MTR there was an increased demand from later returnees for seeds and equipment and the project responded by meeting many of these needs when the emergency assistance operations being provided by other donors were being scaled back. The Socio-economic Impact Assessment (SEIA) provided in Annex 5 has shown that the direct beneficiaries of land clearing and irrigation rehabilitation, and of the provision of farm and fishing inputs, have been able to recommence their livelihoods on a sustainable basis and are food secure at the end of project implementation. Component B: There were differences in modalities between the two phases of the CFW. Phase I made provision for 90 days of labor per household at Rs500 per day for a total of 90 days (40 days for work on their own properties and 50 days on village owned common property). The number of days IDPs would be paid in Phase II was reduced to from 90 to 40 (10 days on their own land and 30 days on village areas). These changes were made to (i) accommodate for an expanded target of reaching 45,000 targeted IDPs (up from the original target of 40,000); (ii) increasing the daily labor rate from LKR 500 to LKR 625 per day more in-line with other donor 22 CFW programs; and (iii) for the reduction in funds available for CFW (reduced when the project was restructured from US$12 million to US$10.5 million). The output achievements of the CFW were substantial. Out of the 919 Grama Niladhari (GN) divisions in the Northern Province, the project was expected to cover a total of 253 GN divisions. The estimated number of families to benefit was estimated at 45,000. Despite a number of issues which arose during implementation explained below, the project has achieved its expected development outcome. As of December 31, 2012, the project had covered 282 GN divisions and 44,671 households which exceeded the targets. The interventions have yielded about 2,132,048 person days of wage labor. The main results of the CFW are summarized in the table below: Results Summary CFW Component (B) District DS GN Benefitting Payment per Payment per Total Payments Divisions Divisions Households Household Household Returnees No. No. No. Rs/HH US$/HH Rs (1) Phase I 2010 Phase I 2010 Killinochchi 3 23 8,411 26,574 273 223,517,000 Jaffna 4 15 2,253 24,237 216 54,605,250 Mullaitivu 4 69 9,984 29,122 258 290,758,250 Vavuniya 3 20 3,529 35,482 317 125,217,500 Mannar 4 39 4,396 28,180 252 123,878,750 Totals Phase I 18 166 28,573 817,976,750 Phase I 2011 Killinochchi 3 29 2,563 24,700 221 63,307,600 Jaffna 7 49 5,091 18,776 168 95,589,375 Mullaitivu 3 38 8,444 17,615 157 148,736,875 Totals Phase II 13 116 16,098 310,633,850 Overall Component Tot 31 282 44,671 1,128,610,600 (1) Expenditure figures exclude administration and other implementation costs amounting to Rs. 42,674,628, approximately 4% of the total payments to returnees The performance of CFW in terms of its contribution to the project’s outcome was impressive but could have been even greater. During implementation, CSIAs and Bank supervision missions identified several issues needing to be addressed to improve its effectiveness. The main issues were: (i) inclusion of all households in a village; (ii) speedy payment of wages; (iii) sustainability of the works created; (iv) creating awareness among beneficiaries on the existence and the use of the Grievance Redressal Mechanism; (v) carrying out Impact Assessment/Baseline Surveys, and (vi) over-dominance of CRPs in certain places. All of these issues were addressed satisfactorily by the PMU within the prevailing constraints and limited availability of resources. Delays were caused through problems associated with (i) ineligibility of some funds that had been spent which caused Bank to suspend retroactive funding of the program for a period of time; (ii) incorporating AUSAID grant funding of the program; and (iii) ENREP having to identify new GNs/villages, and then carry out new needs assessments, as other CFW donor agencies had started operations in locations that had been earmarked for ENREP. In fact, during the period of almost one year that CFW was suspended, ADB started a similar program, differing in a number of modalities compared to the ENREP program including paying more per day of labor (Rs625 per day). Very quickly other donors, viz. ACTED, World Vision, Caritas, UNOPS, Relief International Sarvodaya, SHA and People in Need, started to use cash for work as part of their assistance programs also with differing modes of implementation. Separate geographical boundaries were then defined by Government for each of the donor CFW programs. The program was designed to be self-targeting. However, in operationalizing CFW some targeting tasks proved somewhat problematic. The project followed a general rule of assisting all the resettled families and 23 allowing one member (over 18 years) to take part in the CFW activities. There was no gender segregation. CSIAs and regular monitoring noted that the most vulnerable elderly persons and children without an adult guardian were being excluded from participating in the hard labor projects. Project management then took steps to ensure elderly persons could be paid for childcare work. Unfortunately NGOs could not be appointed to implement a grievance redressal mechanism as envisaged during project preparation because Government was not in agreement to using NGOs. CSIAs identified that the lodging of complaints by telephone or websites were very little used due to limited access beneficiaries had to telephone and internet services. The system performed better after it was decided complaints could be lodged with Village Officers. Village Committees and CRPs also started to help and problems associated with the program were relieved. Despite implementation set-backs noted above, economic and social impacts of CFW have been quite impressive. M&E field visit reports, CSIAs and the SEIA, have shown that CFW beneficiaries invested their lump-sum payments received from the program on educational development of their children, purchased household items, bicycles, and livelihood equipment such as small water pumps to re-establish home gardens and had started various livelihood activities. In addition, small irrigation canals and rural roads cleared through community workfare projects opened up linkages to market and service centers. CSIAs and SEIA also highlighted that considerable social capital has accumulated through CFW programs. Community gatherings for workfare projects to restore village infrastructure, working in groups and including elderly community members for childcare, contributed to a sense of belonging and community ownership. IDPs have often mentioned that CFW workfare activities were the first community-level gatherings after their arrival from the camps. Prior to ENREP, Bank was aware that CFW programs had proven success in post-conflict situations because they are a simple and effective means of combining cash transfers with development. It was therefore foreseen during project design to be an important integral component of the project. Soon after ENREP started, it was very quickly realized how beneficial the program could be to entice IDPs to return to their places of origin through providing them with an initial cash input to repair their homes, and to work on repairing and rehabilitating public infrastructure. Very quickly other donor agencies were encouraged to assist Government in the Northern Province and to fund CFW as part of their assistance programs. Resettlement occurred very rapidly, much faster than expected. Although other factors contributed to this, it is widely acknowledged that the incentives provided through ENREP, in particular through the CFW component, resulted in IDPs putting pressure on the Government authorities to enable them to return to their places of origin. As a result of this pressure from IDPs, Government increased the number of demining teams, which sped up the process of resettlement. Already by the end of 2010, 71% of the IDPs had been resettled increasing to 86% by the end of 2011. Accelerating the pace of resettlement saved Government and international agencies considerable money in food costs and other costs associated with keeping IDPs in welfare camps. The economic implications of these are analyzed in Annex 3. The CFW operational manual prepared before project start-up has been adopted as a policy paper by Government. Several NGOs/INGOs use the manual for implementing similar CFW programs. ENREP provided the first major assistance to Government to implement its resettlement program. This enabled resettlement to start rapidly and paved the way for other donor’s to support Government’s resettlement plan. Finally, SEIA reported that savings deposits of IDPs held in commercial banks have significantly increased, and more beneficiaries are now using commercial banks to access Bank credit, as a result of the bank accounts that were opened by beneficiaries to receive CFW payments. 24 Component C: Estimated cost allocations across the sub-components of this component versus actual expenditure are tabulated below. Cost estimates in the PP were notional, determined at the time on the basis of the Government’s needs assessments and plans. Furthermore, PP recognized that the funds allocated under this component would not be sufficient to cover the entire needs of the Northern Province so that funds would have to be carefully targeted and actual amounts would be re-adjusted during implementation. Notional Allocations versus Actual Expenditure Component (C) Infrastructure Rehabilitation Sub-Component PAD Notional Cost % of total Actual Expenditure % of total Estimates US$ million to December US$ million 31,2013 (a) Irrigation 12.0 27 8.6 16 Rural roads 10.0 23 14.1 25 Water supply 12.0 27 11.5 21 Buildings 10.0 23 20.7 38 Total 44.0 100 54.9 100 (a) Final payments amounting to approximately US$5 million were still to be paid when this table was prepared. As noted earlier, the allocation of funds for Component (C) was raised at the time the project was restructured from US$44 million to US$ 60 million. The main difference between the notional appraisal allocations and actual expenditure was significantly less spending on irrigation while the amount spent on buildings rose substantially. Rehabilitation of irrigation schemes, rural roads, drinking water supply schemes, multipurpose cooperative buildings, agriculture storage facilities and government offices had facilitated the resumption of livelihoods. Rehabilitation of irrigation systems. A total of 109 irrigation schemes irrigating 19,086 hectares (against an appraisal target of 12,000 hectares revised after project restructuring to 16,200 hectares). The additional area irrigated in maha is 12,205 hectares and in yala 2,153 hectares directly benefiting 9,022 households (29,410 people). The economic impact of this on the direct beneficiaries has been substantial which has resulted from increasing the availability of water enabling farmers to irrigate more of the command areas of their schemes in both maha and yala seasons. Groundwater recharging of dugwells has enabled farmers to increase their irrigated areas around their homesteads. Rehabilitation of rural roads. This sub-component was designed to improve mobility and restore village inter-connectivity and access to markets, education and health of returnees. Roads were severely damaged and maintenance was insufficient during the conflict, requiring major rehabilitation to improve transport and mobility of people. The project was to provide financing to undertake essential rehabilitation of rural roads. The target at appraisal was 650 kilometers, revised at MTR to 875 kilometers. At project end 686 kilometers were completed. The socio-economic surveys of SEIA have shown that the road improvement has brought substantial benefits arising from improved access to schools, medical services and markets for purchasing household goods, and for buying farming/fishing inputs and marketing products. The prices realized by villagers for fish and farm produce sold are reported to have increased. Time savings for villagers have also been quite substantial as traders now come to their villages, whilst previously trips to towns to sell their produce were a time consuming necessity. Commonly produce price increases from 5-10% and time savings of 20 hours per household per week were recorded. The roads have directly benefitted 86,910 households (288,553 people) and indirectly benefitted many more (125,819 families, a staggering 409,318 people). Restoration of drinking water schemes. This sub-component was to restore eight key water supply schemes in Phases II and IV of the Resettlement Plan supplying piped water to about 30,000 families. These were to replace schemes which were destroyed during the last armed conflict. Several other development 25 partners repaired domestic dug wells and restored other drinking water supply schemes. The project completed nine reservoir schemes and one large dug well scheme. The number of beneficiaries at the end of implementation totaled 5,247. The potential number of beneficiaries of the domestic water supply schemes assisted through the project is estimated at 32,957 so that only 16% of the potential number of users has been achieved at the end of project implementation. SEIA highlighted that the relatively high connection costs is preventing more people from benefitting from what has been a relatively high cost investment. Government has in place a subsidized connection fee, which if increased, would enable more poor households to access safe drinking water, but the costs of doing this would need to be carefully assessed in view of high existing demands on Government’s limited financial resources. Rehabilitation and restoration of public buildings and facilities. The aim of this sub-component was to rehabilitate and reconstruct essential infrastructure badly damaged or destroyed during the conflict required to restore essential civil administration and various technical and welfare services for the public. These were to include, but not be limited to, Divisional Secretariats, agrarian service centers, seed production farms, agriculture training centers, fishing boat landings and cooperative stores. Support was to provide essential office furniture. Major school buildings, hospitals and health clinics would be considered only if there were funding gaps in on-going IDA-financed health and education projects. A total of 469 buildings were completed and functional before the end of project implementation out of an appraisal target of 260 which was revised to 400 at MTR. The building repairs and reconstruction were carried out in a timely manner and to a generally high standard, and have already begun to greatly benefit the returnees and have undoubtedly made a major contribution to restoring efficient public services in the Northern Province. The number of buildings completed by district and by type of public building is shown in the following table. Number of Buildings Rehabilitated by Type and District Type of Building Jaffna Kilinochichi Mullaitivu Vavuniya Mannar Total Schools 43 53 21 17 9 143 Health Centers 18 8 1 4 3 34 Agrarian Service Centers 2 3 5 2 4 16 Seed Production Farms 0 3 0 0 0 3 Agricultural Training Centers 0 1 0 1 0 2 Cooperative Societies Stores 9 27 11 7 3 57 Paddy Stores 1 4 3 7 3 18 Fertilizer Stores 0 5 9 4 12 30 Market Buildings 6 6 3 2 2 19 Post Offices 1 4 4 1 1 11 Divisional Secretariats 3 2 5 0 0 10 Local Government Buildings 1 3 7 0 3 14 Other Government Buildings 26 31 20 19 16 112 Totals 126 150 89 64 56 469 26 Schools and medical centers accounted for 177 out of the 469 buildings completed and accounted for 24% of the total buildings expenditure. They were included in the project because of the high priority accorded to them by the provincial and district councils, and because other Bank projects in the education and health sectors did not have sufficient funds available to allocate to these. SEIA records the positive impacts and benefits that the restoration of these social and economic infrastructures have had, and will continue to have in future, on restoring basic public services in the Northern Province. The actual allocation of expenditure in Rs. millions on buildings by district and by type of building is tabulated below. Buildings Costs (Costs Rs. Mn and %'s) Total %'s Rs of Type of Building Jaffna Kilinochichi Mullaitivu Vavuniya Mannar Million totals Schools 215.6 147.21 57.76 51.34 13.53 485.44 19% Health Centers 70.17 27.79 1.06 13.73 18.11 130.86 5% Agrarian Service Centers 24.8 19.73 23.91 6.13 28.73 103.3 4% Seed Production Farms 0 23.82 0 0 0 23.82 1% Agricultural Training Centers 0 4.88 0 27.03 0 31.91 1% Cooperative Societies Stores 37.92 99.29 37.58 27.45 15.6 217.84 9% Paddy Stores 7.87 19.52 11.84 28.74 16.17 84.14 3% Fertilizer Stores 0 10.65 22.7 9.91 39.36 82.62 3% Market Buildings 58.3 25.27 25.02 32.46 7.73 148.78 6% Post Offices 5.2 65.32 44.17 8.07 5.72 128.48 5% Divisional Secretariats 43.47 31.35 154.95 0 0 229.77 9% Local Government Buildings 4.33 27.34 70.81 0 31.56 134.04 5% Other Government Buildings 162.8 174.67 150.12 122.38 84.8 694.77 28% Totals – Rs. Million 630.46 676.84 599.92 327.24 261.31 2495.77 100% %'s 25% 27% 24% 13% 10% 100% Component D: Centralizing procurement administration and financial management at the PMU proved to be appropriate. The PMU-level Procurement Committee assisted by five Technical Evaluation Committees, in addition to the district-level (in each of the five project districts) Procurement and Technical Evaluation Committees ensured that procurement of civil works proceeded smoothly. The District-level technical teams were effective in coordinating project activities. There was third party continuous internal auditing, as well as internal auditing by the Northern Provincial Council and general audits by the Sri Lanka Auditor General. 27 The outsourced consultancy services for financial and technical audits were effective and ensured financial management was for most of the implementation period satisfactory, and that all infrastructure financed by the project, once these consultancy services were in place, satisfactorily met Bank technical and quality standards. Financial audit was in place during the first quarter of 2010 soon after the project started, and technical audit in the final quarter of 2010. Environmental audit commenced in July 2011. Technical planning, in terms of planning tools and capacity, in all of the implementation agencies, which included 10 provincial-level agencies, was sufficient and functioned well. Project design appropriately recognized that the operation would require close monitoring. Sufficient resources were allocated within this component to ensure M&E would be given priority and be sufficiently resourced to provide management with timely information on the progress of the project. See Section 2.3 for detailed assessment. A total of six special studies were carried out during project implementation which were funded through the project: (i) a baseline survey of CFW by Sri Lanka Business Development Corporation completed June 3, 2010 although the report was not finalized until February 15, 2011; (ii) an environmental assessment for the rehabilitation of the Kalmadu Irrigation Scheme (the dam for which was destroyed during the war) in July 2010; (iii) impact assessment report dated December 2012 by an external consultant of Phase II of CFW (implemented during 2011); CSIA report of the project by the PMU completed January 2012; (v) socio- economic impact assessment (SEIA) completed in the last three months of project implementation by an external consultancy service; and (vi) an independent post project environmental impact assessment. During project implementation Bank contracted an independent agency to execute CSIAs directly reporting to the Bank. Bank financed this consultancy because, although part of project design, CSIAs were a condition for Board approval to mitigate project risks by providing comprehensive understanding of the social processes, risks and outcomes. Consultancy services commenced June end 2010 due to unforeseen delays in the hiring process. By MTR (May 2011) three quarterly reports had been received as well as a final report completed in April 2011, and the contract between the Bank and the Consultants ended. The key findings of the CSIAs were set out in the MTR report and provided very useful feedback information from project beneficiaries on the project’s activities under all three project components. In view of the recognized need for social assessments, it was agreed at MTR to internalize CSIAs into the PMU to inculcate ownership by Government, and that continuous social assessments would concentrate more on livelihood restoration. There was an independent assessment of the Cash for Work Program also financed by the Bank published as a World Bank document in January 2012. This study provides a social assessment of the CFW program of ENREP comparing it to other CFW programs that were operating in the project area financed by other donor agencies. M&E: Actual M&E staffing of the PMU and PICs is detailed in the next table. M&E staff was independent from those directly involved in implementation which was important for ensuring integrity of the information generated. The role played by the MED and the District Secretaries (Government Agents) in the monitoring of the project activities had been extraordinary. Staffing on M&E during ENREP Implementation Location Position Start Date End Date PMU M&E Officer 01.08.2010 01.07.2013 Project Secretary 05.07.2013 To project end Jaffna M&E Coordinator 01.08.2010 To project end Kilinochchi M&E Coordinator 01.12.2010 25.12.2013 Mannar Management Assistant 11.11.2010 12.01.2011 M&E Coordinator 09.05.2011 31.12.2013 Vavuniya M&E Coordinator 01.12.2010 13.03.2013 Management Assistant 13.03.2013 To project end 28 Mullaitivu M&E Coordinator 01.12.2010 To project end M&E was considered satisfactory by all Bank supervision missions except the third (November 2010) when it was down-rated to moderately satisfactory. The down-rating was due to the need for the PMU to put in place a more effective arrangement for M&E. An integrated financial management/procurement/M&E system envisaged at the time the project was prepared was not developed as it was considered that the cost of developing the system could not be justified for an emergency recovery operation. Instead, separate financial management, procurement and M&E systems were developed that were EXCEL-based. These proved to be adequate and robust. The systems were developed by PMU staff who took ownership of them. Bank supervision missions assisted in suggesting improvements to the systems which were easily modified and improved during project implementation. Initially the M&E system was seen as a vehicle for generating quarterly reports, but this quickly changed, as frequent Bank supervision missions worked constructively with project management and M&E staff convincing them of the need for, and usefulness, of the information generated. It was agreed at the time of the third Bank supervision (November 2010) that the PMU would put in place an effective M&E system based on the Results Framework in the PP to ensure improved planning, targeting, and feedback to stakeholders and timely decision making to increase the effectiveness of the project. The need to validate data soon became apparent and this quickly became routine practice. Beneficiary satisfaction and gender disaggregated data were incorporated towards the end of project implementation. The ICR mission was impressed with the general quality of the data and found very little discrepancy between data held at the PICs and at the PMU confirming the high quality of data and information. The M&E system that evolved during project implementation, proved to be very useful and robust. The simplicity and appropriateness of the project outcome and output indicators provided a clear framework for M&E. From the first supervision mission, useful tables were prepared which were continuously updated, modified and new tables emerged throughout project implementation. These covered progress on Components (A), (B) and (C), as well as progress on the resettlement of IDPs. At MTR, the project results matrix was updated and from that mission onwards, the results matrix was updated for each subsequent Bank supervision mission. The M&E system functioned particularly well for monitoring Component (C) infrastructure rehabilitation, enabling sound tracking of contracts and, combined with the technical audits, resulted in works being completed on schedule and the quality of works improved over time to a high standard. The monitoring and reporting of procurement processes such as new works, payment recovery upon termination of work, action taken on unsatisfactory performance by contractors, retendering etc. were extremely useful. Data were collected by M&E staff and entered into computers at the PICs. These data were continuously consolidated by the PMU and used for preparing quarterly monthly reports and for providing up-to-date information for Bank supervision missions. It also proved to be a very useful source of information for monthly meetings between the Additional Project Director and the District Project Directors. Constant feedback of this information to the various implementing agencies kept them updated on project implementation progress and this also proved very useful. Once the Results Framework was incorporated into the M&E system, not only were the main results indicator and the 11 intermediate results indicators monitored, but also very usefully sub-indicators were defined and continuously tracked, such as reporting on the type of buildings, type of activity of cash for work. Monitoring and reporting of the project inputs was done rigorously for both financial and human resources. Process monitoring however remained quite weak. 29 A number of specific features of the M&E system deserve particular mention to draw lessons for future emergency recovery operations. GIS mapping was put to good use in particular for monitoring DS division- wise resettlement progress as well as the activities of ENREP and those of other development partners. However, during the latter part of project implementation, the project PMU failed to keep track of the project budgets as the PMU awarded a large number of civil works contracts exceeding the available budgets and outside the agreed six monthly work plans even though these works were needed for the returnees. This also affected the compliance with six monthly work plans that the Bank and the PMU agreed for project funding. Also, there were many slip-offs on contract management. The level of monitoring of the utility of the large number of government offices and other assets created by the project was weak. Although most of the risks envisaged at appraisal and included in the risk matrix did not materialize during the implementation, the PMU did not monitor the incidence and prevalence of those risks systematically. The PMU and the Bank missions had to exert pressure on the implementing agencies to comply with the observations and recommendations of the technical audits on construction quality. Despite the recommendations of the technical audits, construction planning and scheduling for medium scale civil works such as medium irrigation schemes, large buildings, etc remained weak as the PMU did not emphasize and adopt detailed construction plans for monitoring the construction progress of such works by contractors and consequently most of such works got unnecessarily delayed. But the positive part was, once the Bank supervision missions intervened, the PMU and implementing agencies responded quickly and took corrective action in order to complete all contracted works within the budget to a satisfactory manner. Unfortunately the M&E system did not sufficiently disaggregate by gender beneficiaries of project activities, especially of CFW, nor track sufficiently well throughout project implementation, the extent of labor generation for local people especially IDPs (by community organization, gender and ages) from the project supported activities. O&M: The appropriate government authorities and producer cooperatives will be responsible for maintaining the buildings reconstructed or rehabilitated through the project under their own jurisdictions. The appropriate irrigation departments and local authorities will maintain the irrigation schemes rehabilitated through ENREP. No problems are foreseen with these infrastructures being adequately maintained as budgetary provision for O&M are in place and standards of maintenance in Northern Province are generally quite satisfactory. Concerns remain in the case of the ten water supply schemes constructed through the project. A lack of coordinated support between the implementing Agency (National Water and Drainage Board) and the local government agencies and communities, raised in Bank supervision missions, raises concerns over these schemes being adequately maintained. Although the Northern Province has rebounded incredibly quickly after a long period of warfare, and the particularly devastating final phase of fighting before Government regained control, ENREP as well as other on-going Bank-assisted and other donor-supported projects, will not be sufficient for ensuring returnees can realize and sustain internationally acceptable standards of living. The project has provided immediate relief to returnees. The complementary parallel on-going RAP project, scheduled to end December 31, 2014, has provided valuable support for establishing sustainable livelihoods particularly the most vulnerable households, but more support is needed. There exists tremendous untapped potential for improving the agriculture and fisheries production and marketing systems in the North East of the country. This potential for improvement could be unleashed by introducing appropriate low-cost production and processing innovations and technologies that have been proven in other developing countries in similar agro-ecological zonings. In conjunction with livelihood support interventions that have already been successfully demonstrated through other projects in the North, in particular the NEIAP and RAP, an innovation and technology development project could substantially improve the productivity and competitiveness of the rural sector and enhance social inclusion, incomes and employment opportunities of rural families. Improved access to credit to sustain these initiatives, including consolidation of micro-finance and agri-business initiatives for small and medium sized enterprises, will be essential complementary interventions. These initiatives constitute integral parts of the Sri Lanka Country Partnership Strategy (CPS) for FY2013-FY2016 30 through on-going or new pipeline projects where priority will be given to the restoration of livelihoods of IDPs and others affected by the conflict. Social: Following MTR, internal CSIAs highlighted the following social development issues many of which laid outside of the scope of ENREP, viz: (i) 15% of those IDPs interviewed pointed towards land ownership issues, which were not within the project implementation; (ii) 65% were able to fully cultivate their land while some were suffering from a lack of capital or water; (iii) 30% did not have sufficient agricultural tools and implements; (iv) there was a large proportion of female headed households (25%); and (v) 73% of houses were badly damaged and were still requiring repairing. Land clearing and improvements made to irrigation schemes were already increasing agricultural production and incomes for the beneficiaries directly impacted by these project activities. Institutional: ENREP has had other important institutional strengthening impacts. Needs assessments at community level have been strengthened through the project, and the capacity of CRPs and Community Committees has been strengthened to plan and implement community based activities. Community based organizations have been reactivated to implement project activities, in particular Farmer Organizations and Rural Cooperatives. It should not be underestimated the impact the project has had on up-skilling contractors for improving the quality of infrastructure works, in environmental protection measures and in employing local unskilled workers, who have in turn, learnt new skills increasing their opportunities for future employment as construction workers. The project prepared a detailed CFW operational manual before project start-up elaborating the concept, implementation arrangements, processes and mechanisms, fiduciary compliance and monitoring of CFW program. It has now been adopted as a policy paper by Government. Several NGOs/INGOs use the manual for implementing similar CFW programs. Performance: Government responded to early requests by the Bank to ensure adequate staffing of the PMUs and the district PICs. By November 2010, nine months after project start-up, 80% of the PMU and districts PIC staff had been recruited and were evenly gender-balanced. The project was fully funded by the IDA Credit and AUSAID grant funds so there was never any problem concerning counterpart funding. However, the CFW program was suspended for almost one year for reasons described in Section 2.2. Meantime demining operations were gaining pace and the demand from returning IDPs was increasing. Fortunately during this period other agencies supporting Government’s resettlement plan were increasingly active and were able to satisfy some of the increasing demand at the time for cash for work payments to returning IDPs. The ICR team was unable to obtain data on the number of returnees who received payments from CFW programs supported by other agencies during ENREP implementation. Having MED as the implementing agency ensured that all of the Provincial, District and local level implementation agencies were well coordinated and political interference was minimized. The Provincial and District level project coordination committees were effective in coordinating development initiatives of the various donor agencies operating in the Northern Province. Government remained proactive throughout project implementation in addressing issues and recommendations raised by the Bank supervision missions. Government’s mine awareness and demining programs were commendable. Demining rapidly increased in pace as more demining teams were trained and fielded. The fact that there were no reported mine accidents confirms that these programs were highly successful and gave returnees confidence to leave camps and return to their lands. The January 2013 Bank implementation review and support mission noted that project commitments had exceeded the IDA Credit amount for Component (C), US$65 million by about Rs615 million (approximately US$5 million) as project management tried to respond to the priority demands for rehabilitating public services and infrastructure where needs were still great, on the understanding that these could be accommodated from savings of on-going contracts. PMU had awarded several new large works contracts 31 without prior Bank approval of the contracts nor of the revised project work plan to meet the immediate needs of the returnees. Once the over-commitment was realized, Bank insisted that no more new contracts could be issued and carefully monitored the situation so as to keep within the approved IDA credit limit. The AUSAID Grant Agreement closed on December 31, 2011. Had the suspension been resolved more quickly, and had more grant funds been allocated to the CFW program, IDPs could have carried out still much needed works and have benefited to a greater extent, particularly the later returning IDPs from camps who did not receive any project assistance, even though, as noted earlier in the report, an unquantifiable number of returnees received CFW support through other development agency projects. Government requested in June 2013 to use project funds to assist “old” IDPs to clear their lands and to resettle them. Only very limited assistance could be provided due to a lack of funds. Efficiency: Economic rates of return and net economic benefits, for each of the project sub-components, and for the overall project, are tabulated below and detailed in Annex 3. The costs of each of the sub- components are included in the respective net economic benefit figures. The overall project rate of return includes all project costs, inclusive of the full costs of Component (D), viz. for project management and oversight, M&E and special studies. Whilst many of the benefits that will arise from the most expensive component, (Component C), will be generated over the medium to longer term, the economic analysis has been conservative and included only those readily quantifiable benefits realized as at the end of project implementation. Substantially greater benefits will be realized in the future providing political stability in the region is maintained and market opportunities expand. Summary of ENREP Economic Analysis Component/Sub-component ERR Net Economic % of Total Net (%) Benefits Economic (US$million) Benefits Cash for Work (Component B) 38.8 4.6 4 Jungle clearing (1) 84.3 27.9 22 Irrigation rehabilitation 47.5 66.8 53 Roads rehabilitation 26.5 45.4 36 Water supply schemes (2) -2.6 -2.7 -2 Other economic infrastructure (3) 1 -16.4 -13 Overall project (4) 16.8 122.3 100 (1) Includes total costs of Component (A). (2) ERR of -2.7% is based on number of connection applications made by the end of project implementation Dec. 31, 2013. This will turn to be positive and a huge once all household connections are completed. (3) Includes total costs of Component (C) minus the costs of the water supply schemes. (4) Includes total project costs inclusive of all Component D costs. Overall the project has been efficient from an economic perspective except for the water supply sub- component. Jungle clearing has a high economic rate of return at 84%, and accounted for 22% of the net economic benefits of the project while costs were only 3% of the total project cost. This rate of return incorporated all of the costs of Component (A), which included the costs of land clearing plus the costs of seeds, fertilizer and equipment distributed free through ENREP to IDPs to restart their cropping. Although Component (B) – CFW- was a relatively small component of the project in terms of costs (14%), it has been highly economic with an economic rate of return of 39%. SEIA highlighted the significant social and economic impacts of land clearing and the provision of farm and fishing inputs, and CFW, which allowed returnee families to immediately restart their agricultural, fishing and other livelihood activities. Investment in rehabilitating irrigation schemes and access roads has also been economic with estimated economic rates of return of 48% and 27% respectively. The economic rate of return as at the end of project implementation for the water supply schemes has been very low at -3%, while that of all the public buildings has been very conservatively estimated at 1% (see Annex 3 for details). The costs allocated to restoring agricultural 32 services totaled 27%, those allocated to education and health totaled 24% and those to other government buildings 42%. While the economic benefits arising from the restoration of essential agricultural, health and education services will undoubtedly exceed the project costs, the economic justification for allocating such a high amount of project funds to other government buildings should have been questioned and evaluated during project implementation. The numbers of people who have directly benefited from the project activities, by district and for the total project, are shown in the following table. Number of Direct ENREP Beneficiaries (1) Component/Sub- component Jaffna Kilinochichi Mullaitivu Vavuniya Mannar Total Component (A) 20,032 70,419 8,961 5,501 26,390 132,103 Component (B) 23,501 35,117 68,184 11,646 14,607 152,515 Component (C) Irrigation schemes 14,291 3,763 7,385 3,971 29,410 Access roads 33,155 118,301 69,131 36,267 31,699 288,553 Water supply schemes 5,683 24,124 4,241 11,565 45,613 Buildings Totals 83,171 238,128 174,163 65,040 87,693 648,195 (1) The numbers of direct beneficiaries of buildings are not shown in this table due to unavoidable double-accounting of beneficiaries as many people benefit from more than one public building rehabilitated by ENREP. There is also a non-quantifiable amount of double-accounting of beneficiaries in the numbers shown across components/sub-component in the table. The costs per beneficiary of project components and sub-components are shown in the following table. Costs per direct beneficiary vary from US$16 for Component (A) to US$2,191 for the new water supply systems built through the project. At the end of project implementation 17% of the potential users of the water schemes had applied to be connected. Should the full potential of the water supply schemes be realized, cost per beneficiary would reduce to US$293, which would make it a more reasonable investment when compared to the average per beneficiary cost of US$409 of other recently constructed water supply schemes in Sri Lanka. Cost Effectiveness of ENREP Components/Sub-Components Component/Sub-component Cost per direct beneficiary (US$) Component A 16 Component B 69 Component C Irrigation 293 Roads 49 Water Supply Schemes 1/ 2,191 end of implementation (252 potential) 1/ An analysis by the ICR mission of 8 other water supply schemes recently completed in Sri Lanka indicated that costs per potential beneficiary vary from US$65 to US$1280 and average US$409. These figures can be compared to US$252 for the ENREP schemes. 33 Output: Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or Target documents) Values Years Component A – Immediate assistance for the return IDPs A2. Area of Hectares 19,000 ha of 7,600 7,207 ha cleared farmland cleared farm lands and cultivated in all cannot be the five districts of farmed due to North. In addition thick vegetative to this based on the growth urgent requirement of the people 406.5 km defense bunds and rural roads were cleared A3. Farmers/ Number Zero – 15,000 6,600 Total 14,796. fishers receiving Returnees do 2,523 farming seeds or not have cash households agricultural and to purchase received seeds for fishing seeds and first cultivation implements implements after return. 72,010 coconut seedlings have been distributed to IDP returnees. 12,273 families were benefitted by received plants through coconut nursery. Component B – Work-fare Program (Cash for work) Person days of Families Zero – No 45,000 40,000 44,671 families work provided to employment benefitted returnees and opportunities conflict affected for IDPS in the households first 50-60 days after return Person- Zero – No 1,070,000 2,132,048 person days employment days generated opportunities for IDPS in the first 50-60 days after return 34 Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or Target documents) Values Years Component C – Rehabilitation and Reconstruction of Essential Public and Economic Infrastructure C1. Hectares of Hectares 53,000 ha of 12,000 16,200 Rehabilitation of farm lands paddy land had 109 irrigation cultivated after not been schemes totaling rehabilitation of cultivated 19,086 hectares Irrigation tanks, (abandoned) completed canals and ponds due to unavailability of irrigation water supply C2. Km of rural Km About 1,200 650 875 Rehabilitation of road rehabilitated Km of rural 686 km roads roads badly completed damaged C3. No of people Number About 80, 000 30,000 30,000 51, 226 people provided with IDPs do not targeted by access to safe have safe and NWSDB. 1,590 drinking water regular water applications had supply supply as 20 been received by water supply the end of project schemes are implementation dysfunctional benefiting an due to internal estimated 5,247 conflict people which damage represents 16% of the schemes’ potential. C4. Number of Number Large number 260 400 469 public public buildings of public buildings including restored and buildings 174 schools have functional severely been rehabilitated damaged and put to use by the students Component D – Project Management Support Number of Number Comprehensive 6 6 2 documents CSIAs completed social prepared after and lessons assessments to project learned evaluate social restructuring held incorporated qualitative and used by PMU; aspects of the 1 by a consultant IDP return and and 1 by PMU project impacts staff. are urgently 3 quarterly reports required and one final report submitted by consultants to Bank prior to MTR not shared with PMU. 35 Annex 3. Economic Analysis Introduction ENREP was conceived as a major building block of the Government’s resettlement plan for about 290,000 IDPs held in welfare centers at the end of the conflict in 2009. Overall, it enabled their rapid resettlement by substantially contributing to restoring normal economic and social life through prompt assistance and reconstruction after the area had been systematically emptied of people residing in rural villages, and private and collective assets had been destroyed on a large-scale. Because it was prepared rapidly as an emergency recovery operation, time did not permit an ex-ante economic analysis to be undertaken. Although the locations where the people were resettled were known, much of those areas were heavily mined and not accessible until mine action surveys were carried out, and the demining was completed and access was declared safe. The project mostly financed the repair and rehabilitation/improvement/reconstruction of existing but partially or fully damaged infrastructure which were either dysfunctional or partially functional. Nevertheless, the nature of the project interventions and achieved outcomes resulted in significant social and economic benefits to the IDPs both in the short and medium terms. However, because substantial economic benefits could be documented and measured during implementation, an ex-post economic analysis as at the end of the project’s implementation phase, was carried out to assess the economic costs and benefits from the country’s viewpoint. The purpose of this Annex is therefore to document and quantify these benefits and, when relevant, carry out a cost benefit analysis based on actual data and figures collected during the project implementation phase or as at the time of the ICR mission. This analysis was performed for each main component and sub-component separately and for the project overall. Summary of Results Component / Cost in US$ Main Quantified Benefits ERR Sub-Component (% of total) A. Jungle Clearing US$ 2.15 million Restored production on 3,410 ha of 84.3% (3.0 %) agricultural land (out of 7,558 ha of cleared land) B. Cash for Work US$ 10.40 million Effective and planned resettlement 38.8% (14.7 %) leading to reduced cost of maintaining people in camps C1. Irrigation Rehabilitation US$ 8.39 million Increased areas under irrigation and 47.5% (11.9 %) increased average yields C2. Road Rehabilitation US$ 13.79 million 365 roads totaling 686.36 km 26.5% (19.5%) Increased value added of commodities transported C3. Water Supply US$ 11.55 million Decreased cost of water supply -2.6% (16.3%) (impact on health was not quantified) C4. (a) Reconstruction of US$ 5.15 million Increased sales of products, restored 1.0% economic assets (stores, (7.3%) business activities, etc. markets, post offices etc.) C4. (b) Social and US$ 16.08 million Not quantified NA Institutional Infrastructure (22.7%) D5. Project Management US$ 3.25 million Not applicable NA (4.6%) TOTAL US$ 70.75 million Aggregation of above benefits 16.8% (100%) 36 Expected Benefits The aggregate benefit of the project has been to rapidly restore the necessary conditions (income opportunities, services, infrastructure, access to assets, etc.) for returning IDPs to resume normal social and economic life. For the purpose of this analysis, the following benefits were quantified: • Benefits from the rapid resettlement of the 44,671 IDPs who otherwise (without the project) would have continued to incur costs (food and basic needs) for the country in the welfare camps. The Cash for Work component was essential; • Agricultural benefits for the jungle clearance component (Component A) and the irrigation rehabilitation sub-component; • Direct social and economic benefits from the rehabilitation of various infrastructures, such as increased product market values and reduced losses of produce (from roads, markets, storage facilities), increased access and reduced cost of water (from water supply schemes), and restored business activities (from shops, post offices, etc.); The benefits from the rehabilitation of social and institutional infrastructure such as schools, public administration buildings, were not quantified. However, these activities were indispensable enablers of the three main categories of benefits above: rapid resettlement, agricultural benefits, and other social and economic benefits. Main Sources of Data This ex-post analysis uses the following source of data: • The project monitoring data, including the project quarterly progress reports (in particular the final one dated 31 December 2013 that provides all physical quantities at the completion of the project) and the financial monitoring data for actual annual costs per activity and year; • Comprehensive ICR Tables that were prepared by the district project teams on the basis of guidance and a template prepared by a pre-ICR team that visited ENREP in October and December 2013. They contain district-level outputs as well as data on quantifiable impacts that were collected locally through various means such as field visits, interviews, staff measurements. They were discussed, checked, and augmented by field visits during the full ICR mission in January 2014. Two external reports on the “Social and Economic Impact Assessment of the ENREP” (February 2014) and the “Impact Assessment Report of Cash for Work 2011 – Phase II”, They were carried out by an independent company in order to capture social and economic benefits in more detail based on interviews with a sample of stakeholders and focus group discussions. Some of the data from this report was extrapolated to the entire project to quantify benefits that were not covered in the above sources of information. Methodology Costs and benefits were quantified in two ways using the above sources of information. The financial analysis uses market prices at the time of the ICR mission. The economic analysis adjusts prices when necessary to account for the economic values of items, for example, price distortions, taxes, and subsidies. The economic analysis captures the true costs and benefits of the project from the Government’s perspective. The following adjustments were included in the economic analysis: 37 • Most investment costs under component C consist of contracts for civil work on which a 12% Value Added Tax (VAT) was applied, with the exception of community-based contracts for smaller works (up to Rs 5 million) that are exempted from VAT. These exemptions represent up to 20% of total contractor spend, thus an average 90% rate was applied to convert financial cost into economic value (in which the VAT is removed); • The major agricultural commodity benefiting from the project is rice. Overall, Sri Lanka is a net importer of rice, though in relatively small quantities compared to its national production. An import parity price was calculated on the basis of the international price of rice to deduct a corresponding economic value at farm gate of paddy after having counted for the cost of transport and milling. The market price of paddy ranges from Rs 28-32 (average Rs 30), and an import parity price of Rp 28.9 was calculated, indicating a lack of distortion; • Fertilizer prices paid by farmers are highly subsidized by the Government. Producers are entitled to pre-determined quantities of fertilizers to cover their needs at a price that was fixed and frozen a few years ago. In the meantime, international prices have sharply increased. The economic cost of fertilizer is assumed to correspond to market prices that are free of control and are five times higher than the subsided price, i.e. Rs 2500 per 50kg bag of urea vs. Rs 500. • Farm labor has no financial cost for the family, but has an economic value that has been quantified at Rs 750/ labour day. This is mid-way between Rs 500 paid under the CFW programme (offered during the immediate resettlement crisis but below the real opportunity cost after the immediate recovery phase) and Rs 1000, which is the current market rate for unskilled labour paid by farmers during sowing and harvesting. Following is a summary of the methodology by component / sub-component. Irrigation (Table 4) The total cost of irrigation rehabilitation was US$ 8.39 million that benefited an area of 13,943 ha. This corresponds to a cost per hectare of about US$ 602. The main benefits are documented by the ICR result tables that show the following increases in both average yields and actual irrigated areas. Without project, it is estimated that crop performances would have remained the same as the ones immediately before rehabilitation. The reason is that this degraded situation has been the result of a lack of maintenance due to the long lasting war during decades, the production having been disrupted in some parts of the command areas due to breaches in the dikes. Improved performances could not have materialized without rehabilitation. Without With Project Difference Project Maha Cropped Area 6,769 13,943 +106% Yala Cropped Area 2,704 3,749 +39% Maha Average Yield 4.4 5.0 +14% Yala Average Yield 4.8 5.5 +17% Source: ICR Result Tables. Under these assumptions, the ERR is calculated at 47.5% (calculation in Table 4). 38 Road Rehabilitation (Tables 5) The project rehabilitated 365 roads totaling 686.36 km benefiting 86,909 households for an estimated cost of US$ 13.79 million. This corresponds to a average cost of 20,091 per km of road or an investment of about US$ 159 per household. The main benefits are: (i) more secure roads (3 children were reported to have been killed by snakes before roads were cleaned from jungle and repaired); (ii) better access to social services (schools, shops, public services) and therefore improved health and education as well as social life; (iii) time saved when accessing these services or transporting items from or to the village. For the purpose of the economic analysis, the impact of road on the increased value of transported commodities has been documented and quantified: they result from the combination of reduced losses in transportation; improved access by traders to production sites; improved quality due to better transportation conditions. The concerned quantities of products as well as the their increased value added were collected for 4 representative roads (three by the ICR result tables and 1 by the ICR team) on which cereals, fruits, vegetables and fish are transported. For each of them, an annual benefit expressed in Rs per km of road was estimated. A weighted average was then calculated and extrapolated to the entire project. Calculations are provided in Table 5. Under these assumptions, the ERR is estimated at 26.6% Water Supply (Table 6) Nine water supply schemes that were destroyed during the war were rebuilt for a total cost of US$ 11.55 million. Benefits from the water supply schemes are: (i) improved human heath as a result of better quality water with less risks of contamination and therefore of diseases; (ii) reduced cost of water for a proportion of users who are purchasing mineral water for their drinking purposes; (iii) time spent saved to fetch water from other sources that can be distant by few hundred meters to few kilo meters depending on the cases. For the purpose of the analysis, only the reduced cost of water supply (point (ii) above) were quantified. The reasons are that human health benefits are difficult to quantify due to the lack of data of water prone diseases in the area; time saved is also difficult to measure due to the fact that many households would anyway have access to smaller wells in the vicinity of their houses. Detailed assumptions and calculations are provided in Table 6a and 6b. The calculated ERR is very low at -2.6%. This is due to three reasons: (i) some of the above benefits were not quantified; (ii) the construction cost is very high (aver US$ 1 million per water scheme); (iii) more importantly, the number of households benefiting from the schemes is still very limited to a small number of households who can afford it. According to the last quarterly report, as of 24 January 2014, only 1590 applications for connection were received, ranging from 0 to 512 requests per scheme. Out of these, only 773 connections were effective at that date (ranging from 0 to 405 per scheme), while this number was 630 in 2013. This reflects the very slow pace with which benefits are realized due to the initial connection fee established at about 17,000 (about US$ 130), which is out of reach for a large percentage of the population, in particular during this recovery period. This rate is fixed on a national basis by the water board but the project staff has made every possible efforts to increase the proportion of the population eligible to a connection at the lower rate of 5000 (US$38) on the family income criteria. This would make the connection more affordable and increase the economic impact of the construction. Unless this is undertaken, the economic effectiveness of this sub-component is negative. Economic Infrastructure (Table 7) District PIC staff was able to collect cash benefits from four categories of infrastructure rehabilitated by the project: 39 • 61 cooperative stores for a total cost of Rs.223 million (US$ 1.7 million), corresponding to a unit cost of US$ 28,121 per store. These stores sell all types of basic daily products and are owned by community societies (MPCS) who reported their annual profit margins, which were used to estimate the economic return of this subcomponent: the ERR is estimated at -9.9% as the above analysis only captures a fraction of the real economic impact of these stores in time of recovery. However, it also illustrates that some of these stores face challenges in ensuring profitable business during the reconstruction period; • 13 post offices for a total cost of Rs.128 million (US$ 1.0 million), corresponding to a unit cost of US$ 76,018 per post office. These rehabilitated post offices provides considerable benefits to the population, including access to mail, payment, money transfers, payment of pension and other welfare. The annual profit of these post offices were collected and used to estimate on a conservative basis the economic return of this activity. The ERR is estimated at 8.5%; • 20 market buildings for a total cost of Rs.149 million (US$ 1.1 million), corresponding to a unit cost of US$ 57,212 per market building. The market fees paid by traders and users was used to assess economic returns of this activities. The ERR is estimated at -4.3% • 50 paddy and fertilizer stores for a total cost of Rs.167 million (US$ 1.3 million), corresponding to a unit cost of US$ 25,692 per store. As a result of reduced losses and increased market value, benefits were calculated by multiplying the annual quantities of paddy and fertilizers stored by an estimated average increased market value of the goods. The ERR is estimated at 7.6%. Overall Economic Analysis (Table 8) The above analyzes were aggregated and other costs such as social and institutional infrastructure and project management were added. The overall ERR is calculated at 16.8% 40 Annex: 5 Appendix Table 1. Cash for Work Programme - Ressettlement Cost of Maintaining one person in camp 300 Incremental Benefits Exchange rate 130 1.a With Project Situation: 1.b. Without Project Situation: Benefitting Households 44,671 Northern Sri Lanka (2009 - 2012) (1) Eastern Sri Lanka 2006 - 2010 (2) Benefitting people (2.5 per HH) 102,743 Total Number of People 290,000 Total Number of People 159,000 1.c Calculation of Benefit from Rapid Resettlement Resettled Resettled Percentages of resettlement Difference in Benefits per Number Proportion Number Proportion with without Difference People (3) quarter (4) Annual Benefits 4th quarter 2009 0 0% 3rd quarter 2006 0 0% Quarter 1 0% 0% 0% - 1st quarter 2010 (1) 40,759 14% 4th quarter 2006 0 0% Quarter 2 14% 0% 14% 14,440 3,041 Year 2010 3,116 2nd quarter 2010 (1) 80,000 28% 1st quarter 2007 17,600 11% Quarter 3 28% 11% 17% 16,970 3,574 3rd quarter 2010 119,105 41% 2nd quarter 2007 68,971 43% Quarter 4 41% 43% -2% - 2,371 - 499 4th quarter 2010 158,209 55% 3rd quarter 2007 108,784 68% Quarter 5 55% 68% -14% - 14,243 - 2,999 1st quarter 2011 197,314 68% 4th quarter 2007 119,527 75% Quarter 6 68% 75% -7% - 7,331 - 1,544 Year 2011 2,483 2nd quarter 2011 (1) 236,418 82% 1st quarter 2008 120,742 76% Quarter 7 82% 76% 6% 5,738 1,208 3rd quarter 2011 249,814 86% 2nd quarter 2008 127,837 80% Quarter 8 86% 80% 6% 5,899 1,242 4th quarter 2011 263,209 91% 3rd quarter 2008 132,728 83% Quarter 9 91% 83% 7% 7,485 1,576 1st quarter 2012 276,605 95% 4th quarter 2008 136,282 86% Quarter 10 95% 86% 10% 9,934 2,092 Year 2012 8,100 2nd quarter 2012 290,000 100% 1st quarter 2009 140,282 88% Quarter 11 100% 88% 12% 12,095 2,547 3rd quarter 2012 290,000 100% 2nd quarter 2009 144,282 91% Quarter 12 100% 91% 9% 9,511 2,003 4th quarter 2012 290,000 100% 3rd quarter 2009 148,282 93% Quarter 13 100% 93% 7% 6,926 1,458 4th quarter 2009 152,282 96% Quarter 14 100% 96% 4% 4,341 914 Year 2013 1,284 (1) Source: World Bank aide-memoire 1st quarter 2010 156,282 98% Quarter 15 100% 98% 2% 1,756 370 2nd quarter 2010 159,000 100% Quarter 16 100% 100% 0% - - (2) Source: UNHCR data and extrapolation after 2009 (3) Ot of the total number of people targeted by the project (102,743 people) (4) Number of people * 300 * 365 / 4 / 130 41 1.d Economic Analysis 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021… Investment Cost 000 US$ 7,520 2,844 41 Benefits 000 US$ 3,116 2,483 8,100 1,284 Net Benefits 000 US$ - 4,404 - 361 8,059 1,284 - - - - - - - - ERR (20 years) 38.8% 100% 90% 80% 70% 60% 50% 40% with 30% without 20% 10% 0% Table 2 Crop Budgets Units: Tons; hectares; Rupees Maha Rice Financial Model Economic Model Without Project With Project Without Project With Project Item Unit Unit Price Quantity Value Quantity Value Unit Price Quantity Value Quantity Value Output (Paddy) (1) kg 30 4400 132,000 5000 150,000 28.9 4400 127,072 5000 144,400 Inputs Seeds kg 40 125 5,000 125 5,000 40 125 5,000 125 5,000 Land Preparation LS 8,000 8,000 8,000 8,000 Urea kg 10 200 2,000 250 2,500 50 200 10,000 250 12,500 TSP kg 10 60 600 70 700 50 60 3,000 70 3,500 MOP kg 10 60 600 70 700 50 60 3,000 70 3,500 Manure kg 5 20 100 46 230 5 20 100 46 230 Bullock pairs day 1000 3 3,000 - 1000 3 3,000 - Chemicals LS 5,000 6,250 5,000 6,250 Machinary LS 5,000 10,000 5,000 10,000 Harvest LS 20,000 20,000 20,000 20,000 Miscellaneous (transportationLS 1 1,000 1,000 1 1,000 1,000 Paid Labour person day 1000 8 8,000 8 8,000 750 8 6,000 8 6,000 Farm Labour person day 12 - 12 - 750 12 9,000 12 9,000 Sub-total Input Cost 58,300 62,380 78,100 84,980 Net Benefit per hectare 73,700 87,620 48,972 59,420 Net incremental benefit 13,920 10,448 (1) Source: Table xxx on average yields in the project area Yala Rice Financial Model Economic Model Without Project With Project Without Project With Project Item Unit Unit Price Quantity Value Quantity Value Unit Price Quantity Value Quantity Value Output (Paddy) (1) kg 30 4800 144,000 5600 168,000 28.9 4800 138,624 5600 161,728 Inputs Seeds kg 40 125 5,000 125 5,000 40 125 5,000 125 5,000 Land Preparation LS 8,000 8,000 8,000 8,000 Urea kg 10 150 1,500 200 2,000 50 150 7,500 200 10,000 TSP kg 10 50 500 60 600 50 50 2,500 60 3,000 MOP kg 10 38 380 50 500 50 38 1,900 50 2,500 Manure kg 5 20 100 46 230 5 20 100 46 230 Bullock pairs day 1000 3 3,000 - 1000 3 3,000 - Chemicals LS 5,000 6,250 5,000 6,250 Machinary LS 5,000 12,500 5,000 12,500 Harvest LS 20,000 20,000 20,000 20,000 Miscellaneous (transportationLS 1 1,000 1,000 1 1,000 1,000 Paid Labour person day 1000 8 8,000 8 8,000 750 8 6,000 8 6,000 Farm Labour person day 12 - 12 - 750 12 9,000 12 9,000 Sub-total Input Cost 57,480 64,080 74,000 83,480 Net Benefit per hectare 86,520 103,920 64,624 78,248 17,400 Calculation of Rice Import Parity Price Parity (1) (I) Unit Value 2014 World Price US$/ton 400 International shipping incl.inUS$/ton 40 CIF Sri Lanka port US$/ton 440 Exchange Rate (4) Rp/US$ 130 CIF Sri Lanka port Rp/ton 57200 Port charges Rp/ton 1000 Internal transport Rp/ton 1000 Internal handling Rp/MT 600 Processed value Rp/MT 59800 Processing ratio % 60 Processing costs Rp/ton -5000 Wholesale value Rp/ton 30880 Local marketing/transport Rp/ton -2000 Farmgate Price Rp/ton 28880 Economic Farmgate Price Rs/KG 28.9 42 43 44 Table 5. Economic Analysis of the Road Sub-Component 5.a Road No 1: Mullatitivu District Unit value 5.c Road No 3: Vavunyia district Unit value Major commodities transported Major commodities transported Paddy ton 950 Paddy ton 9,428.00 Vegetables ton 110 Vegetables ton 397.68 Fertilizers ton 450 Other crops ton 711.63 Building Material ton 450 Total ton 1960 Total ton 10,537.31 Increased economic value per ton Rp/ton 2000 Increased economic value per ton Rp/ton 4,000.00 Annual Economic Benefit 000 Rupee 3920 Annual Economic Benefit 000 Rupee 42,149.24 Length of the Road km 5 Length of the Road km 40.97 Annual Benefit per km of road 000 Rupee 784 Annual Benefit per km of road 000 Rupee 1,028.78 Annual Benefit per km of road 000 US$ 6.03 Annual Benefit per km of road 000 US$ 7.91 Source ICR Result Sheet Mullativu District Source ICR Result Sheet Vavunyia District 5.b Road No 2: Uppumaveli (1.5 km) Unit value 5.dRoad No 4: 42.23 km in Jafna district Unit value Major commodities transported Major commodities transported Fruits ton 2,355.00 Fish Production kg per day 250 Vegetables ton 2,168.00 Fishing Season month 8 Paddy ton 248.00 Average Annual Fish Production kg/year 60000 Total ton 4,771.00 Estimated increased value per kg Rp/kg 60 Increased economic value per ton Rp/ton 2,400.00 Annual Economic Benefit from Road Construction 000 Rp 3600 Annual Economic Benefit 000 Rupee 11,450.40 Length of the Road km 1.5 Length of the Road km 42.23 Annual Benefit per km of road 000 Rupee 2400 Annual Benefit per km of road 000 Rupee 271.14 Annual Benefit per km of road 000 US$ 18.46 Annual Benefit per km of road 000 US$ 2.09 45 Source: ICR mission Field Visit 6 February 2014 Source ICR Result Sheet Jafna District Weighted average annual benefit per km of road 000 US$ 5.24 Exchange rate Rp/US$ 130 (weighted average between the 4 roads) Cost Benefit Analysis Unit 2010 2011 2012 2013 2014 2015 2016 2017-2029 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Total Road Rehabilitation Cost (1) 000 US$ 13,792.93 Annual Road Rehabilitation Financial Cost (1) 000 US$ 1,488.12 4,358.18 4,246.87 3,699.76 Annual Road Rehabilitation Economic Cost (2) 000 US$ 1,339.30 3,922.36 3,822.19 3,329.78 Completion of Road Rehabilitation (3) % 10.8% 42.4% 73.2% 100.0% Maintenance Cost (2% of economic rehabilitation cost) 26.79 105.23 181.68 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 248.27 Total Length of road rehabilitation km 686.36 Completion of Road Rehabilitation km 74.05 290.92 502.25 686.36 Average Incremental Benefit per km of road (4) 000 US$/km 5.24 Annual Economic Benefit from Road (5) 388.13 1,524.83 2,632.50 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 3,597.47 Annual Net Economic Stream (6) - 1,339.30 - 3,561.02 - 2,402.59 - 878.96 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 3,349.20 Economic Rate of Return (ERR) (20 years) 26.5% (1) PMU Final Disbusrement Data (2) Equals financial cost times 90% as VAT by 12% is collected on the majority of civil work (3) In proportion of disbursements (4) see calculations above Table 6 Water Supply 6.a Annual Cost Saving per Household Water Cost without project Monthly Consumption (20 liters bottles) (1) bottle / month 5 Yearly consumption bottle / year 60 Cost of this bottled water RP / bottle 240 Total Annual Cost of bottled water RP/HH/year 14,400 Water Cost with Project Monthly Cost (2) RP/HH/month 250 Yearly Cost RP/HH/year 3,000 Annual Cost Saving (3) Average Cost saving per household RP/HH/year 11,400 exchange Rate RP/US$ 130 Average Cost saving per household (US$) US$/HH/year 87.69 (1) Average data collected from consumers by the impact assessment team 46 (2) Provided by the water management authorities (3) Water cost without project minus water cost with project 6.b Economic Analysis of Water Supply Schemes Unit 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021… 2022 2023 2024 2025 2026 2027 2028 2029 2030 Financial Investment Cost (4) 000 US$ 1,444.19 2,846.29 4,936.49 2,326.37 Economic Investment Cost (5) 000 US$ 1,270.89 2,504.74 4,344.11 2,047.21 Households connected (6) No 630 1174 1718 2262 2806 3350 3894 4438 4982 5526 6070 6614 7158 7702 8246 8790 9334 9878 Annual Benefits (7) 000 US$ - - - 55.25 102.95 150.66 198.36 246.06 293.77 341.47 389.18 436.88 484.59 532.29 580.00 627.70 675.41 723.11 770.82 818.52 866.22 Net Economic Cash Flow 000 US$ - 1,270.89 - 2,504.74 - 4,344.11 - 1,991.96 102.95 150.66 198.36 246.06 293.77 341.47 389.18 436.88 484.59 532.29 580.00 627.70 675.41 723.11 770.82 818.52 866.22 Economic Rate of Return -2.6% (4) Project Financial Data (5) Financial Cost multiplied by 88% in order to adjust for a 12% VAT (6) Source: Water Management authorities projections of expected connections (7) Number of connected households times average cost saving per household 47 48 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Gajanand Pathmanathan Operations Manager SASDO Operations Manager Nihal Fernando Senior Rural Development Specialist SASDO Task Team Leader Seenithamby Manoharan Senior Rural Development Specialist SASDO Task Team Leader Qaiser Khan Lead Human Development Specialist SASSP Cash For Work Manual Claus Astrup Senior Country Economist SASEP Economics Sumith Pilapitya Lead Environmental Specialist SASDI Environment Minneh M. Kane Lead Legal Counsel LEGES Legal Chau-Ching Shen Senior Finance Officer CTRFC Disbursement Social Protection Specialist Khalanidi Subarrao SASHD Cash For Work Manual (Consultant) Senior Financial Management Specialist Hiran Herat SARPS Financial Management (Consultant) Enoka Wijegunawardene Financial Management Specialist SARFM Financial Management Asta Olesen Senior Social Development Specialist SASDI Social Safeguards Suryanarayan Satish Sr. Social Development Specialist SASDS Social Development Edward Fairfax Bell Senior Operations Officer SASCL Conflict Miriam Witana Procurement Specialist SASPS Procurement Susrutha Gooansekera Social Protection Specialist SASSP Social Protection Samantha Prasada Wijesundera Operations Officer SASDU Infrastructure Dora Cudjoe Environmental Specialist SASDO Environment Rohan Selvaratnam Operations Analyst SASDU Operations Analysis Lashantha Jayawardena Operations Anayst (Consultant) SASDI Operations Analysis Shane Andrew Ferdinandus Team Assistant SASDO Team Assistant Supervision/ICR Responsibility/ Names Title Unit Specialty Senior Water Resources Development Task Team Leader / Nihal Fernando AFTA2 Specialist Infrastructure Edward Fairfax Bell Consultant EASPS Conflict Darshani De Silva Environmental Specialist SASDI Environment Monitoring and Evalution Consultant - Monitoring & Azhar Khan FAO Evaluations Samanmalee Sirimanne Team Assistant SASDL Team Assistant Susrutha Pradeep Goonesekera E T Consultant SASDS Social Protection Hisham A. Abdo Kahin Lead Counsel LEGES Legal Seenithamby Manoharan Senior Rural Development Specialist SASDL Task Team Leader 49 Responsibility/ Names Title Unit Specialty Mohamed Ghani Razaak Senior Social Development Specialist SASDS Social Development Mokshana Nerandika Wijeyeratne Consultant- Environment SASDI Environment Brenda Lee Scott Information Assistant SASDO Team Assistant Enoka Wijegunawardene Financial Management Specialist SARFM Financial Management Sunethra Samarakoon Procurement Specialist SARPS Procurement Samantha de Silva Sr. Social Protection Specialist SASED Social Protection Suryanarayan Satish Sr. Social Development Specialist SASDS Social Development (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle US$ Thousands (including No. of staff weeks travel and consultant costs) Lending 2010 52.58 225,039 Supervision/ICR 2010 8.5 66,299 2011 44.77 197,993 2012 31.09 101,020 2013 21.8 70,308 2014 12.74 47,980 50 Annex 5. Beneficiary Survey Results A Socio-economic Impact Assessment (SEIA) has been carried out for ENREP from July to November 2013. The prolonged conflict as well as the resulting displacement of large numbers of people has had several negative social impacts. One is that it resulted in the dislocation or dismantling of traditional social arrangements that were closely connected with social norms attached to the village community, inter-caste relations, social class systems, and leadership structures. Thus, the village community as an integrated and fully functional social entity with its own identity and location ceased to exist (at least temporarily) and instead displaced people had to adjust to the heterogeneous social aggregate that was inevitable in so-called welfare centers. The principal objective of this assessment was to assess the effectiveness and overall performance of the Project taking into consideration its principal project components and the impact that the Project has had on reaching its overall development objective which is to support Government of Sri Lanka’s efforts to rapidly resettle the IDPs in the Northern Province by creating an enabling environment. The Project commenced implementation within an emergency environment created by the concentration of over 290,000 people who were being held in welfare camps in the immediate aftermath of the civil war. There was concern in both national and international circles about the Government’s intentions to allow these people to return home and have freedom of movement. The situation changed dramatically with approximately 140,000 people being released from camps from November 2009. Additional returns were expected in the coming weeks. Moreover, the Government announced on November 23, 2009, that all movement restrictions both in and out of the camps and in the Northern Province will be lifted from December 1, 2009. Consequently, the immediate challenge was shifted from moving the people out of the camps to putting in place arrangements to help the returnees restore their livelihoods and get access to minimal levels of services in their communities. The SEIA focused on several parameters including implementation arrangements put in place by the Project Management Unit, achievements of the Project under its 3 principal components which were (a) to clear land for cultivation and habitation by the resettling population, (b) to institute a system of paying returnees to give their labor for clearing land and constructing infrastructure projects and thereby provide them with a source of income during the early period of resettlement and (c) to undertake the restoration of public assets such as roads, public building and other facilities such as marketplaces and bus stands as a means of enabling relevant agencies to assist the returnees to reestablish their livelihoods. The methodology of the SEIA was based on in-depth consultations held with stakeholders of the Project covering a representative sample of 22 sub-projects by the team of consultants and focus group discussions with beneficiary and non-beneficiary communities. 1369 beneficiary households selected on a random basis from all 5 Project districts implemented by a team of about 30 trained enumerators. Emergency Assistance (Component A) included a number of activities: (i) meet costs related to the operation of mobile land task forces, surveys and studies required to rapidly restore contested property rights of the returned people; (ii) conduct demining awareness programs to IDPs, project staff and contractors; (iii) clear thick vegetative growth of paddy lands to be able to resume land preparation for cultivation; and (iv) provide seeds, basic and miscellaneous agricultural and fishing implements to the people to be able to start paddy farming and marine fishing immediately after the return. The total cost of implementing this component was LKR 244.1 million as of June 2013. Land ownership and Restoration of property rights is one of the key tasks that was to be address by the project. Although the project could not establish mobile land task force as expected at the beginning, the restoration of property rights has apparently been done satisfactorily through accelerated procedure adopted by the District and Divisional Secretaries to resolve any outstanding property issues including rights of people who did not have proper documents to support their claims. 51 The Cash for Work (CfW) or workfare program under Component B is the key highlight of the project. According to the Project Paper: “Until the harvest comes in, which could take about three months, depending on the crop, other non-farm livelihood activities fully resume, and contractors start the execution of infrastructure rehabilitation works, there would be a shortage of employment opportunities for the returnees in the villages. The workfare program was the instrument used by the project to bridge this income gap. The work-fare program executed small scale labor intensive repair and rehabilitation works of village level infrastructure and facilities by employing one member from each household as daily wage laborers. It provided a minimum of 50 labor days of guaranteed work employment for one person from each IDP household (about LKR 25,000 per household for 50 days of work). A total of 44,671 returnee households (or 52.8% of the resettled population) were beneficiaries of the Cash for Work Component contributing 2,132,049 person days to the effort with a total cash disbursement of LKR 1,170.77 million. Only a fourth (23.2%) stated that the assistance received from the Project through Cash for Work and other income generating activities was sufficient to restore their original homes completely. Not only the SEIA, but other independent assessments by external consultants and WB missions found that the CFW is the most beneficial activity of the project to create a conducive environment to resettle a large number of returnees who had no means to survive soon after their return to home places. The CFW helped not only for the economic recovery of households but also to rebuild social capital and network for returned communities to sustain their lives under harsh conditions. Out of the total numbers that have resettled up to June 2013, the project’s direct beneficiaries under the cash for work program have been 44,671 families or 223,060 individuals assuming a ratio of 5 persons per family. This means that the Project has been able to reach a little over half or 52.8% of the resettled population. When one adds the numbers of people who are potential users of infrastructure projects, it is reasonable to assume that the project coverage would be nearly all people of the Province. It is also noteworthy that of the total respondents from the household survey, 88.3% stated they had lived at Menik Farm Camp prior to resettling in their present homes. This means that in a large majority of instances, the Project has been able to satisfy one of its original objectives which were to resettle the displaced population living at that particular camp before the Project commenced operations. Component C was expected to repair, reconstruct and restore vital infrastructure and facilities damaged by the internal armed conflict. This helped to reestablish inter-village connectivity; provide access to schools, clinics, markets, and safe drinking water; and access to essential public and technical services from the Government’s civil administration. Under Component C, the Project awarded 752 works to contractors with a value of LKR 8,085 million under component C for rehabilitation and reconstruction of essential public and economic infrastructure. In addition, contracts have been signed with the National Water Supply & Drainage Board for the construction of 9 Water Supply Schemes with a value of LKR 1,600.96 million. 122 private sector contractors registered under ICTAD were involved in the project. Key outcome of this activity was that it generated employment for local people mostly in unskilled and informal sector work. The construction related development interventions also provided many young and male people to earn extra income for their families until they restore livelihood based of agriculture an fishing. According to the sample survey, 97.2% of respondents stated that they have returned to the original places of residence thus fulfilling another core Project objective. Furthermore, 85.9% also occupy the same amounts of land they had prior to displacement and, in the case of the remaining 14.1%, they have occupied a lesser extent of land primarily due to the subdivision of land among co-owners and not due to any other reason. It is also noteworthy that a very high proportion of respondents (95.4%) stated that they are happy with their present place of resettlement. During field interviews, some stated that, whatever the limitations they are having at present, it was good to back home after so many years of displacement. Another factor contributing to this perception could be that a large proportion (65.2%) has other relatives such as in-laws or grandparents living in other houses although in the same compound and a further 87.6% have other relatives living in the 52 same community. The resettlement process has therefore contributed to producing a spirit of community and social cohesion that people had before displacement. Kinship networks are also a strong source of social capital through mutual help given in times of need such as to obtain credit for house-building activities and to engage in the construction of common agro wells as was seen during fieldwork undertaken in rural communities. Nevertheless, the SEIA observes a number of limitations in the project scope in addressing the needs of resettled population. The coverage of Project activities has been limited by its inability to reach several hundreds of returnees who have settled lately, especially some of the vulnerable groups including those from Open Welfare Camps and long term IDPs. At present, there are a total of 7 such camps located in the DS Divisions of Point Pedro, Tellipalai, Kopay, Nallur, Karveddy and Sandilipay in the Jaffna district containing a total of 1195 households or 4205 persons according to data supplied by respective Divisional Secretariat areas. Secondly, although the Project Paper categorically includes fishing communities to receive material benefits such as fishing equipment to “re-engage in livelihood activities” (from Component A), the Government did not utilize this facility. Although they benefited from Cash for Work programs and infrastructure development, the explanations given by some Project staff are that deep sea fishing is not possible under the current security restrictions and that only agricultural communities could benefit as this particular component’s stress was on promoting food security. These explanations do not appear to hold ground firstly in view of the fact that basic fishing equipment such as boats fitted with outboard motors and nets to undertake fishing in areas closer to land could have been provided by other projects. Women headed households comprise nearly one tenth of total resettled households. The project along with RAP addressed their livelihood and economic needs but there was no systematic approach to address them as a vulnerable population. Special attention should be given to the war widows who have been facing more difficulties than others. Some are very young with 2 or 3 children and do not have permanent income sources. They are unable to look after their children and unable to educate their children very well. Lack of income is key economic problem for their life. The SEIA recommends that a special project targeted war widow program is urgently needed to prevent socio- economic problems of widow and their children in future. Such a project should not be as welfare based project. Instead, it should be as project to make them a productive and permanent income generating human resource. Taking all of the above factors into consideration, it can be concluded that the Project has been a qualified success. While it has achieved clear social and economic results through the implementation of its three principal components (A, B and C) and contributed to uplifting the status of women in all Project districts, there are observable limitations in the extent of the population covered through its programs, degree of gender inclusiveness, degree of people participation in the decision making process and O&M activities, and relevance of certain infrastructure projects to addressing the emergency needs of the resettled population. In view of its limitations, the Project has to ensure that avenues for people participation for the monitoring and O&M activities required for project created assets are set in place before or at its conclusion. This was claimed achieved by launching a capacity development program for CBOs with the focus on the newly- formed Village Development Organizations that could undertake follow up local development with beneficiaries under RAP. The final remark is that without the timely implementation of the ENREP soon after the completion of the war in 2009, none of the other development interventions were possible. The ENREP was the pioneer in taking the challenges of rapid resettlement of IDPs in a condition that there was no systematic administrative or physical infrastructure in place. 53 Annex 6. List of Supporting Documents 01. International Development Association Project Paper on the Proposed Emergency Recovery Credit, December 2, 2009 02. Financing Agreement Emergency Northern Recovery Project between Democratic Socialist Republic of Sri Lanka and International Development Association, January 11,2010 03. Project Restructuring Paper, dated February 7, 2010 04. Resettlement Plan of the Government of Sri Lanka 05. Baseline Survey of Cash for Work Beneficiaries – By Sri Lanka Business Development Corporation 06. Continuous Social Impact Assessment, Ministry of Economic Development, Emergency Northern Recovery Project, January 2012 07. Cash for Work Manual, Emergency Northern Recovery Project 08. Cash for Work. (For Resettlement and Reintegration of War Affected Displaced Persons in Sri Lanka) by World Bank 09. Cash for Work Implementation and Monitoring Manual. (28th of July 2011) By ENREP 10. Mid Term Review Final Report. (ENREP) 11. Environmental and Social Assessment and Management Framework 12. World Bank Supervision Mission Aide Memoires (10 in total) dated February 2010, July 2010, November 2010, May 2011 (Mid Term Review), November 2011, May 2012, January 2013, June 2013 (combined aide-memoire with RAP and NELSIP), August 2013, December 2013. 13. Environmental Assessment for Rehabilitation of Kalmadu Scheme. (July 2010) By - ECL 14. Mission Report. (Revision of the needs to be financed under Component 1 ) – Fransisco Gamarro – FAO 15. Post Project Environmental Impact Assessment of the Project – By External Consultant 16. Impact Assessment Report of Cash for Work 2011 – Phase II – By External Consultant 17. 4th Quarter Progress Report – ENREP 18. Progress Report as at December 31st 2013 19. ENREP: Economic Impact Assessment. (Questionnaire) By ENREP 20. Economic and Social Impact Assessment – By external consultants 21. Continuous Social Impact Assessment Reports by RDC Consultants 22. Borrower’s Implementation Completion and Results Report – ENREP 23. Statistical hand book Mannar district 2009 Kilinochchi district 2012 Jaffna district 2013 Vavuniya district 2013 Vavuniya district 2009 Mullaitivu district 2012 54 Map 55