Announcement of the World Bank's First East Asia Social Fund Launched in Cambodia on June 9, 1995

FOR IMEIAT EES The World Bank East Asia & Pacific Region 1818 H Street, NW Washington, DC 20433. USA Press Release no. 95/45EAP Contact: Rachel McColgan-Mohamed (202) 458-0358 fax (202) 522-3405 East Asia's First Social Fund Launched in Cambodia Washington, June 9, 1995-- The World Bank yesterday approved the first investment in urgently-needed basic infrastructure in Cambodia, empowering the poor to play an active role in the country's rehabilitation and reconstruction. The Social Fund Project-the first of its kind in the East Asia region-will bring schools, clinics, roads, and a safe and reliable source of water to this country ofjust over nine million people It will inject S20 million of IDA funds into one of the poorest countries in the world, where life expectancy is a mere 52 years; infant mortality is nore than triple the regional average; and less than a fifth of the population has access to clean water, Following two decades of civil conflict which destroyed much of Cambodia's infrastructure, the coalition Government-clected in 1993-embarked on a program to provide a framework for economic and social development. Basic services such as schools, water supply and roads are in disrepair or destroyed, and the problem is exacerbated by a lack of reconstruction experience in the central ministries. Development on a national scale will take time, leaving the task of meeting basic social needs to the rural communities (who make up SO percent of the population), and provincial authorities. Reconstruction has already begun at the grassroots level: * Communities have banded together to rebuild schools, and progress is being made in enrolling children and adults in education and literacy programs; * The availability of pharmaccuticals and basic public health services has increased over the past 3 years: and * NGOs and UNICEF are working closely with local populations to improve the water supply and sanitation systems, which had been cut off completely during the 1975-79 period. Infant Mortality in Cambodia above East Asian average 200- - 180- Infant Mortality 160- LO Under 5 mortality rate 140- 120- 100- 80- Cambodia China Indonesia Philippines Korea Viet Nam Camo:a Sc~lalud IForld Bank - of Archives/Records Center, H B1-001 ( 1) What is a Social Fund? Less than 20 percent of the population has access to safe water A social fund is a mechanism that channels funds in response to local needs, It is autonomous from government, can operate quickly and efficiently, and is demand-driven. Communities request funds for projects that they have identified. Task Manager Christopher Chamberlin explains Urban % Rural why a Social Fund Project was the approach taken rather than the traditional sector project Phihppmes 92 72 implemented by Government authorities: "It is an ideal tool-while a Government builds its China 87 67 capacity to implement national development programs-for financing small-scale projects in the poorest areas and helping local groups take ownership ofassets that they consider priorities. Thailand 57 85 Since asking the World Bank for assistance in establishing the fund, the Government of Cambodia has worked hard to ensure that it was established as soon as possible, with due Cambodia 20 12 safeguards for autonomy and transparency." Proiect Description The project has two components: Social Fund Seed ("Start Up") Capital ($18.9 million) will provide grant financing for small-scale projects, up to a maximum cost of $250,000 each, although the average project will cost around $25,000. Projects will be ranked according to priorities identified by the Social Fund Executive Committee. A strict set of eligibility criteria is in place to ensure that, for example, a request for a new school comes from the school parents' committee or a school director, or that a rural roads project is submitted for consideration by the district authority. A project may be "sponsored" by an outside entity which would play the role of a facilitator, assisting applicants who lack the technical knowledge and/or resources to design the project. An example of this would be a NGO sponsoring an application for a communal water project. Five percent of the project costs must be contributed by the Government and Social Fund projects beneficiaries. Once a project has been screened for eligibility, it is appraised by the Social Fund of the Kingdom of Cambodia (SFKC). If approved, funds are disbursed to the implementing agency (e.g. a contractor in the case of civil works). Supervision is ongoing, and a database has been designed to ensure that: * Identified projects for funding are competitive in terms of costs; * There is a ceiling of $300,000 for contracts awarded to any one contractor; * Projects will be monitored at each step of processing; and * Disbursements are made only after physical progress of the projects is verified. Cambodia Social Fund / JVorld Bank 2 of 3 Institutional Support for SFKC ($2.3 million) will finance staff salaries, vehicles, office equipment and operating expenses as well as technical assistance and training. An important aspect of the Social Fund has been Cambodian expatriates returning to work on the Social Fund Project, providing assistance in its establishment and administration. As the Social Fund is implemented, it is expected that the demand for its services will soon exceed the original budget of $20 million, and it will be able to attract additional financing. This has been taken into account in developing its institutional capacity. Learning from Latin American Experience Mr. Chamberlin highlighted the collaboration which has taken place within the Bank: "Over the past eight years, the Bank has financed nearly 30 social fund operations, mainly in Latin America and Africa. This project incorporates the lessons from these operations and the Cambodian Social Fund Team included technical assistance from staff of Latin American Social Funds." The loan is on standard IDA terms with 40 years' maturity. Cambodia Social Fund / World Bank 3 of 3