Tajikistan - Pilot Poverty Alleviation Project (Formerly listed as Social Investment Fund Project)

Report No. PIC3205 Project Name Tajikistan-Pilot Poverty Alleviation (@) Project Region Europe and Central Asia Sector Poverty Reduction Project ID TJPA44202 Borrower Republic of Tajikistan Implementing Agency Tajikistan Social Investment Fund (TASIF) (to be established) Date this PID prepared 10/31/96 Appraisal Date November 1996 Board Date March 20, 1997 Country and Sector Background 1. Three basic problems face Tajikistan: considerable poverty among the people, massive economic problems to be addressed, and a fragile political situation and some continuing civil strife. (a) Tajikistan is a small country (six million population) with an estimated per capita income of around $350 in 1994. The low income levels are mainly due to inherited poverty, the breakup of the Soviet Union and economic decline since then. But for some groups, the situation has also been made worse by the early stages of the reform process, owing to the processes of price liberalization, the removal of generalized subsidies, inadequately funded targeted compensation measures. (b) There are two fundamental economic problems: (i) the country has a massive external debt with minimal export earnings; and (ii) the economy is not yet stabilized and structural reforms are only just getting started. Most industrial firms are currently operating below one-third of their capacity. The state budget and the current account deficit are unsustainably large, and inflation has been rampant. The real value of monthly wages, when actually paid, in 1995 was only about 5 percent of their level in 1990. There are nearly one million workers who are either openly unemployed or under/partially employed. There is also a very fragile political situation. Severe internal conflict lasted from May 1992 to early 1993. Over 50,000 people were killed in the civil war and 850,000 became refugees. The heaviest fighting was in Khatlon, where there was extensive infrastructural destruction. The general security situation has improved over the last year or so, but the military is still omni- present and there are still outbreaks of fighting. Peace talks are now taking place between the Government and the opposition. 2. In considering the extent of the social problems, three other  factors are important: (a) The country is far from homogeneous: internal communications are stretched thin; the industrialized north (Leninabad oblast) is in deep economic stagnation; the more agricultural southern oblast of Khatlon suffered some of the worst fighting and extensive destruction in the recent political unrest; the east is relatively isolated and sparsely populated, while parts of the center are still under contested authority. These internal economic divisions are compounded by ethnic tensions in the competition for state power. In the last two years, there has been a significant increase in externally supported relief and increasingly some development activities. In particular, various international NGOs have started starting to implement development projects and activities. some of which have demonstrated considerable potential for sustainable poverty alleviation. Overall, there is considerable need for developmental and labor-intensive projects, as much external assistance effort is essentially relief in nature. There is need to build up of national, indigenous institutions and NGOs, many of which exist but which are still very limited in scope, and to support the government in its efforts to address the crucial problems of poverty and national integration. Although there is some deep urban poverty, by far the greatest incidence of poverty is in the rural areas. Basic needs of security, shelter, food and clothing are widely unmet, and the restoration of family incomes and basic livelihood needs take priority over the collapsed health and education systems. Objectives 3. The project objectives are (i) to create a rapid, although modest, positive impact on the incomes of the poor (reaching about 5 percent of the population), and general purpose of the project will be to alleviate poverty and create gainful employment for the poorest groups of the population; (ii) to develop national and local capacity to implement participatory approaches to poverty alleviation and (iii) to demonstrate successful poverty alleviation initiatives and programs for further replication. Project Description 4. The two-year project has two linked components: (a) the scaling up of selected existing poverty alleviation programs carried out by certain international NGOs, together with documentation and training for wider replication, and (b) the establishment of the TASIF, and the funding of an initial set of about 70 microprojects which it will support. (a) Four NGO projects were selected for scaling up: (i) shelter and housing for 2000 families (Save the Children-US [SCF-US])); (ii) micro-credit Group Guarantee Loans and Savings program (SCF- US); (iii) economic support to productive activities of female- headed households (Save The Children-UK [SCF-UK]); (iv) - 2 -  Agricultural reform and Seed Multiplication Programme (Aga Khan Foundation [AKFI and Pamir Relief and Development Programme [PRDPI). Further NGO activities may be identified for support during the second year of the project. (b) The TASIF component has two sub-components: (i) institutional development of the TASIF through provision of vehicles, equipment and salaries to an organization set up within the Prime Minister+s Office but operating under a board and independently of the civil service; and (ii) support to about 70 micro-projects, of which 10- 15 would be implemented during the first year of the project, to be implemented by local communities or organizations, and expected to cover: essential rehabilitation needs including social infrastructure (housing, waste water canal cleaning, irrigation systems repair, reconstruction of schools and health points; environmental projects such as reforestation, terracing, flood and mud-slide prevention); and small-scale entrepreneurial activities. Implementation 5. Implementation of the first project component would be by the respective NGOs under service contract to TASIF, and using standard procurement procedures; implementation of the second component would be by local communities or local/regional governments or NGOs, under direct contract with TASIF. Financing 6. Financing would be by US$10 million IDA credit with [about $1.4 million local financing]. Poverty Category 7. Program of targeted Interventions. Environmental Aspects 8. The project has been rated Category B. Each project sub-component has individual environmental aspects. The SCF shelter and house program restores the built environment, replaces the past use of asbestos roofing sheets with environmentally sounder tiles, and has no adverse environmental impacts. The Group Savings sub-component and the support to Female-Headed households encourages small-scale income generation activities which are either environmentally neutral, or beneficial as in the case of encouragement of low external input farming systems and food production in place of high agrochemical input cotton production. The farming systems and seed multiplication program in the east does make minimal use of fertilizers and chemicals for seed preservation, which will be monitored in the context of a program that aiming to promote sustainable agricultural systems for small farmers. 9. Institutional support to TASIF is environmentally neutral; microprojects to be supported under TASIF will be individually screened for environmental impacts according to criteria to be included in the Operations Manual, which will exclude support for projects with adverse -3 -  environmental impact unsupported by mitigatory actions. Sustainability 10. The project aims at rehabilitation and sustained poverty reduction; many of the interventions are therefore +one-off+ removal of constraints to poverty alleviation and the encouragement of a participatory development process that, in the long run, should prove sustainable. The program as a whole, however, will depend on external inputs if the process and coverage is to continue beyond the two years pilot phase. Social Aspects 11. The project is based on the findings of a social assessment, and has major elements explicitly targeted at assisting the most vulnerable (women, ethnic minorities, female headed households, disadvantaged regions). It aims to foster social integration, reconciliation, and strengthening of local elements of civil society, including NGOs. Program Objective Categories 12. Poverty Reduction Contact Point: Michael Mills, Task Manager, EC3HR The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202) 473-7870 Fax No.: (202) 477-0954 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending February 7, 1997. - 4 -