Madagascar - Community Development Project - Supplemental Credit

Documentof TheWorldBank FOROFFICIAL USEONLY ReportNo. P7630-MG SUPPLEMENTALCREDIT DOCUMENT INTERNATIONALDEVELOPMENT ASSOCIATION PROPOSEDSUPPLEMENTALCREDIT INTHEAMOUNT OFSDR34.2 MILLION (US$SO MILLIONEQUIVALENT) TO THE REPUBLIC OF MADAGASCAR FORTHE COMMUNITY DEVELOPMENTPROJECT June 16,2004 HumanResourcesDevelopmentI11 CountryDepartment8 Africa Region This document has restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization.  CURRENCYEQUIVALENTS (Exchange Rate as o fApril 30,2004) Currency Unit - Malagasy Franc US$ 1.00 - MGF8,450 SDR 1.00 - - US$1.45 FISCAL YEAR January 1-December 31 ABBREVIATIONSAND ACRONYMS CAS CountryAssistance Strategy CNS Conseil~utionulde Secours NationalDisasters Management Agency FID Fonds d'interventionpour le dbveloppement (FID) Community Development Fund HIV/AIDS HumanImmunodeficiency Virus/ AcquiredImmuneDeficiency Syndrome ICR Implementation CompletionReport IDA International Development Association IEC Information, Education and Communication NGO NonGovernmental Organization PRSC Poverty Reduction Strategy Credit PRSP Poverty Reduction Strategy Paper SDR Special DrawingRights SOE Statement o fExpenditures STI Sexually Transmitted Infections UN UnitedNations UNICEF UnitedNationsChildren's Fund WFP World FoodProgram Regional Vice President Callisto E.Madavo CountryDirector Hafez Ghanem Sector Manager LauraFrigenti Task Team Leader Nadine Poupart 2  FOROFFICIAL USEONLY THE REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FOR THE COMMUNITY DEVELOPMENTPROJECT ClREDITAND PROJECTSUMMARY Borrower: Republic o fMadagascar ImplementingAgency: Fonds d'interventionpour le dkveloppement (FID) (Community Development Fund) Beneficiaries: Communities affectedby the cyclones throughout Madagascar CreditAmount: SDR 34.2 million (US$50 million equivalent) Terms: StandardIDAterms with 40 years maturity FinancingPlan: IDA: 50.0 million (inUS$million) Community Contribution : 0.8 million Total : 50.8 million EconomicRateofReturn: Not applicable PovertyCategory: Poverty Reduction ProjectIDNumber: PE-PO88978 Map: BRD20035R1 There is no Project Appraisal Document. This memorandum is based on the findings o f a supervision mission (March 2004) of the ongoing operation. The preparation team included: Messrs./Mmes. Nadine Poupart, Sr. Economist and Team Leader (AFTH3); Maryanne Sharp, Operations Officer (AFTH3); Slaheddine Ben-Halima, Sr. Procurement Specialist, and Sylvain Rambeloson, Procurement Specialist (AFTPC); Gervais Rakotoarimanana, Sr. Financial Management Specialist (AFTFM); Patrice Joachim Nirina Rakotoniaina, Municipal Engineer (AFTUl), h a van der Wouden, Operations Analyst (AFCMG); Frank-Borge Wietzke (Consultant); Neil Neate, Engineer (Consultant); Tania Mansour, Environmental Specialist (Consultant); and Astania Kamau, Team Assistant (AFTH3). Mr.Hafez Ghanem i s the Country Director, and Ms. LauraFrigentii s the Sector Manager, This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. -   SUPPLEMENTALCREDIT DOCUMENT INTERNATIONALDEVELOPMENT ASSOCIATION PROPOSEDSUPPLEMENTALCRIIDIT TO THE REPUBLICOFMADAGASCARFOR THE COMMUNITY DEVELOPMENT PROJECT 1. The following report proposes a Supplemental Credit to the Republic o f Madagascar for SDR 34.2 million (US$50 million equivalent). The proposed Supplemental Credit would be on standardInternational Development Association (IDA) terms with a maturity of 40 years. The credit would supplement the ongoing Community Development Project (Credit 3498-MAG) to respond to the most urgent needs o f the populationandrestore basic infrastructure following the passage o f the two cyclones (Elita and Gafilo) that hit the country from Januaryto March 2004. The Supplemental Credit is consistent with the initial project development objectives and components andcan befblly executedduringthe implementation period o fthe initial operation. I. COUNTRYBACKGROUND 2. Madagascar i s one of the poorest countries in the world, with a high vulnerability to external shocks, and a large percentage o f its population living under the poverty line. National per capita income is around US$240 andapproximately 70 percent o fthe populationi s estimated to be poor, i.e. cannot afford to buy a basic food basket even if they spent all their income on food items. Forty-eight percent o f children under five are stunted. Infant and under five mortality rates are very highat 8.5 percent and 13.6 percent respectively. Education outlook is also bleak, with a national gross enrolment rate standing at 70 percent, and barely reaching 50 percent inrural areas in2002. Only about one thirdo f children complete primaryschool, andjust over half the population can read and write. Access to safe drinking water i s limited to 35 percent o fthe population, andelectricity connectivityi s only 15percent. 3. InAugust 2003, the Government finalized its Poverty ReductionStrategy Paper (PRSP) following a broad and inclusive participatory process. The overarching goal o f the PRSP is to cut the poverty rate by half in ten years, from 70 percent in 2003 to 35 percent in 2013. To achieve this objective, the strategy has three main axes based on the principle o f public private partnership: (i) restoring rule o f law and ensuring a well-governed society; (ii) promoting economic growth with a large social base; and (iii) establishing humansecurity and enlarging social protection. The strategy was developed over three years, starting under the previous administration andcontinued bythe current government. 4. The November 2003 Country Assistance Strategy (CAS) is designed to support the implementation o f Madagascar's PRSP. The CAS refocuses the existingportfolio to better align itself to the PRSP objectives, and address the key constraints to broad-based growth. It also reflects a gradual transition from investment to programmatic lending with the introduction o f a series o f Poverty Reduction Strategy Credits (PRSCs). The Community Development Project supports the strategic orientations of the CAS by financing: (i) community investment in rural areas where 77 percent o f the population i s poor; (ii) support to local governments; and (iii) safety net activities. 4  11. IMPACT OFTHE CYCLONES 5. Between January 26 and February 4, 2004, tropical cyclone Elita hit Madagascar several times causing havoc in a number o f districts, leaving 29 people dead and 100 injured, Barely a month after cyclone Elita, intense tropical cyclone Gafilo hit the country on March 7, 2004 killing76people. Itis estimatedthat the cyclones left around 306,000 people homeless. Cyclone Gafilo struck near the city o f Antalaha, in the northeastern part o f the island, and crossed northern Madagascar. A day later, it retumed as a tropical storm and hit the westem coast before turningsouth andleavingthrough the south-eastpartofthe country. At theheight ofthe cyclone, it was estimated that the diameter o f the area o f impact was some 400 kilometers wide with recorded wind gusts of over 250 kilometers an hour. Gafilo is one o f the strongest cyclones to have hit Madagascarintwenty years. While northeasterncoastal areas felt the full force of Gafilo with highwinds andrain, much o fthe rest ofthe northemand southern interior have beenmore affected byrains and flooding from risingtidal waters combined with swollenrivers. 6. Initial information collected by the Conseil Nationul de Secours (CNS) from local authorities as well as from assessments undertaken by the intemational community and organizations working in Madagascar (IN,NGOs and donors) indicate that, out of a total number o f 111districts, 3 districts were severely affected, 16 seriously and 50 moderately so. A national survey o f public infkastructure in the impacted areas was conducted by the Fonds dtinte~entio~ pour edheloppement (FID) inMarch 2004, anda summary o f damage as well as anestimateofthe rehabilitationor reconstructioncostswas issuedinearly April. The evaluation o f infkastructure damage was carried out over a period o f three weeks in 968 communes, using FID staff as well as accredited local contractors. Total reconstruction and rehabilitation costs havebeenestimated at about US$62million. 7. The cyclones have caused serious damage to the agricultural production system in large areas o f the country. It i s estimated that a total o f 300,000 hectares or 10 percent o f the total agricultural cultivated area o f Madagascar have been affected. An estimated 150,000 hectares of crops are lost, representing a food quantity o f 300,000 tons of cereals o f an estimated worth o f US$92 million. Since the flooding will take several weeks or months to recede, agricultural production will take some time to be realised. The damage to rural infrastructure will place additional stress on an already strained food security situation. In addition to the cereal crop losses, the loss o f export earnings from vanilla producing areas, livestock and the impact on fisheries will have a devastating impact on the economy. Around 1,150 economic infrastructures (bridges, irrigationschemes etc.) havebeendamagedor destroyed. 8. With respect to social infrastructure, it is estimated that around 3,977 schools have sustained some type o f damage, primarily water damage from the flooding and the loss o f roofs due to wind, but in some cases complete destruction o f the building. An estimated 637 health centers have also been damaged or destroyed by highwinds and subsequent flooding. Access to safe drinking water and adequate sanitation conditions have been severely compromised, increasing public health risks in the most affected districts. Sanitation i s likely to become an even more critical problem in these flooded areas, increasing the cases o f diarrhea and other communicable diseases and the risk o f a cholera outbreak. Finally, about 1,040 administrative buildingshavebeenaffected. 5  111. RATIONALEFORA SUPPLEMENTALCREDIT 9. Project Background: The Community Development Project was approved on April 19, 2001, became effective on October 23, 2001, andwill close on June 30,2007. The total amount of the credit i s SDR 85.2 million or US$110million equivalent. To date, around US$78 million of the IDA Credit amount has been disbursed, which is about 71 percent o f the total credit. The undisbursed funds o f around US$43 million are almost fully committed. Project funds are expected to be fully disbursed by the project closing date. The legal documents o f the project have been amended twice during implementation, The first amendment occurred following the political crisis in2002, when the entire IDA portfolio was restructured to respond to the urgent social and economic needs o f the Government following the six-month crisis. To do so, a component was added to the project to provide a permanent social safety net mechanism. The project was also expanded to include urban areas that were most affected by the crisis, thereby modifymg the project development objective. InApril 2004, the credit was again amendedto add a new component to the project allowing for financing o f emergency activities following the passage o f the Elita and Gafilo cyclones. The objective o f the new component was to improve the livingconditions of the most affected households for six months after the cyclones, including distribution o f nutritional supplements and other provisions for pregnant and lactating women as well as childrenunder five; critical medicines to combat outbreaks o f disease, such as respiratory infections, pneumonia and malaria; and distributiono f drinkingwater, soap and water treatment kits. The development objectives o fthe project were not affected bythis amendment. 10. The development objective o f the project i s to contribute to the improved use of, and satisfaction with, social and economic services inparticipatingrural andurbancommunities. The project fmances six components: (i) transfers o f funds to community associations /community sub-projects; (ii) capacity building activities; (iii) transfers o f funds to communes; (iv) project administration and supervision; (v) social safety nets; and (vi) cyclone emergency and disaster relief activities. Boththe development objective and implementation progress are currently rated satisfactory. 11. Rationale for use of this project: The Community Development Project is the ideal vehicle for responding rapidly to the stricken population. The project has developed into a key instrument for community-level intervention in the health, education, agricultural and transport sectors notably. The executing unit o f the project, the Fonds d'intewention pour le dkveloppement (FID), operating since 1993, has gained extensive experience and built solid capacity in managing community development projects and rehabilitating social and economic infrastructure. In addition, buildings constructed by the project in recent years have not been damaged by cyclones because the project was able to enforce adequate quality standards for design and workmanship. To date, the project has completed 1,447 sub-projects (mostly new infrastructure). Approximately 418 primary schools, 140 health facilities, 589 kilometers o f feeder roads and 9,135 hectares o f agricultural lands have been rehabilitated. About 4,503,750 million person days o f temporary employment have been created. Currently, there are another 804 sub-projects underway. More importantly, the project is experienced in working with community associations, NGOs and local governments and only supports rehabilitation or reconstruction requestedby the communities. The project can serve the damaged areas from six regionaloffices. On this basis, FIDi s well-placed to respond to emergency situations quickly and efficiently. 6  12. The proposed Supplemental Credit meetsthe following requirements and conditions o f OPlBP 13.20: (i) The cost overrun is due to exceptional circumstances beyond the Borrower's control: The project development targets have increased from the 2,850 sub-projects initially expected to be implemented to over 8,357 sub-projects that are now expectedto be implemented by the end o f the project. This has resulted in a cost overrun of around US$50 million. Supplementary financing is therefore necessary in order for the project to achieve its development objectives. (ii) Thecreditisbeingimplementedincompliancewith covenants: Theexisting Community Development Project is being implemented in compliance with its legal and financial covenants. Overall project performance has been satisfactory during implementation, including during the cyclones. Project and fmancial management, compliance with agreed procurement schedules, and compliance with safeguards have also all been satisfactory throughout implementation. There are no outstanding audit reports. (iii) It is impossible to reduce the scope of theproject to$t the available resources without s i ~ ~ c a impairing the project's economic viability or capacity to achieve its n t ~ objectives: It is not possible to reduce the scope o f the project at this point. Although the credit i s only 71 percent disbursed, the remaining funds o f around US$43 million are almost fully committed and are expected to be disbursed by the project closing date. Of that, around US$33 million will be used for sub-projects that are in different stages o f implementation, and US$10 million will be used to fmance the operating costs, planned equipment and vehicle purchases, and technical assistance and audits until project closing. The project's average monthly disbursement rate i s around US$4 - US$4.5 million. Inlight o f the changed circumstances and the damage resulting from the cyclones, without supplemental financing the ability o f the project to achieve its objective would be jeopardized. The Government has thus requested a supplemental credit o fUS$50million. (iv) The Government is unable tofinance the additional costs and to obtain additional funds from other lenders on reasonable terms or reasonable time. Estimated infrastructure damage is around US$62 million. The existing World Bank-financed Rural Development Project is expected to use US$5 million to support the reconstruction o f all damaged irrigation schemes. Most other donors are focusing their interventions in the form o f food supply and emergency kits. Therefore, it is expected that only about US$7 million will be contributed for infrastructure repair andreconstruction, leaving a gap o f around USS50 million. (v) The time available is too short to process a further freestanding Bank loan. Given the emergency situation in Madagascar and the need to move as quickly as possible to address the critical needs of the population, there i s insufficient time to prepare a freestanding operation. Moreover, as the Community Development Project is currently under implementation and can be mobilized rapidly, it is more feasible to seek supplemental financing and use the existingimplementation modalities. Were a follow-up or stand-alone project to be considered, it would feature the same objective, design, components, and implementation arrangements as the current project. 7  (vi) The borrower is committed to the project, and the implementing agencies have demonstrated competence in carrying it out. FID is an autonomous implementingagency that has ten years o f experience and demonstratedcapacity to effectively andrapidly intervene at the community level and to undertake large scale interventions. Further, FID can take advantage o f its autonomy to (i) enforce certain minimum standards o f implementation; (ii) to a tight adhere timetable; and (iii) undertake timely procurement following Bank rules but without going through Central Procurement Board, and contracting out major emergency activities to civil society partners and intemational organizations. The project unit employs well-defined and transparent management and accounting procedures, and undertakes regular and frequent financial, managerial and technical audits. There is also strong support from govemment on the use o f FID to implement these types o f activities in urgent circumstances. The Supplemental Credit would be implemented by FID through contracting o f partners (private sector, NGOs, engineering firms, international organizations etc.) under the same arrangements as the current project. n7. PROJECTOBJECTIVES DESCRIPTION AND 13. The objective o f the Supplemental Credit i s to cover the cost overrun associated with increased number o f development targets and hence, higher costs o f inputs. The additional financing will be used to assist inthe post-cyclone reconstruction efforts, targeting communities inthe affected areas. The proposed activities are consistent withthe original project objectives and components. The Supplemental Credit will finance all of the project's six existing components: Component I: Transfers of funds to community associations (US$42 million equivalent): The Supplemental Credit will finance 5,507 community sub-projects, 60 percent o f which will be rehabilitationo f damagedinfrastructure (mostly roofs, windows, andupper walls), and40 percent reconstruction offilly destroyed infrastructure. Sub-projects will include: health facilities, schools, rural water supply and sanitation, feeder roads, bridges, markets, and administrative infrastructure. These works will be contracted out by FID to the private sector andlor to qualified and experienced NGOs, or will be implemented by community associations directly wherever the capacity exists. Works must conform to FID's regular anti-cyclone standards. Component 2: Capacity Building Activities (US$0.5 million equivalent). Under this component, the project will finance: (i)Information, Education and Communication (IEC) activities to ensure that communities can manage and maintain the infrastructures that will be rebuilt or rehabilitated; and (ii) training on selectedthemes such as hygiene, preventionof short communicable diseases, STIand HIV/AIDS. Component 3: Transfers of funds to communes (US$OS million equivalent). On an exceptional basis and only if local capacities already exists, project finds will be transferred to communes to carry out reconstruction and rehabilitation activities, using small contractors or NGOs. The limited scope o f this component is due to the fact that the emergency situation created by the cyclones requires rapid action that needs to be implemented without prior or parallel capacity building interventions. Works completed under this component must also conformto FID's regular anti-cyclone standards. 8  Component 4: Project Administration and Supervision (US$O.S million equivalent). The project will mainly finance the following elements under this component: (i) periodic technical audits o f the works implemented under the Supplemental Credit; (ii) measures to strengthen FID's capacity to ensure compliance with the World Bank's environmental safeguards; (iii)financial audits; and(iv) incremental operating costs. Component 5: Social Safety Net Activities (US$5.O million equivalent): The Supplemental Credit will finance social safety net sub-projects implemented by accredited fajth and non-faith NGOs and associations, with the objective o f creating short-term employment and provide revenues for the most affected families. These activities will take the form o f food-for- work or cash-for-work under the minimum wage. Eligible sub-projects under this component consist primarily o f rehabilitation o f damaged public infrastructure that can be implemented usinglabor intensive techniques (such as feeder roads). Component 6: Cyclone Emergency and Disaster Relief Activities (US$OS million equivalent): This component seeks to improve the living conditions of the most affected households for six months after the cyclones, including reducing the risk of malnutrition, ensuring availability o f drinking water, protecting affected households from risk o f disease outbreaks and supporting local health services. These interventions fall outside FID's standard range of activities, such as the distribution o f food and non food items. Intemational organizations andNGOs will be contracted to implement these activities. Free food distribution will only be provided on an exceptional basis for the vulnerable population who is unable to work (for amaximumamount o f $200,000). Beneficiaries 14. The Supplemental Credit i s expectedto benefit about 1.2 millionpeople livinginthe affected parts ofthe country (see map inSchedule G). Project Cost and Financing 15. The total project cost, net of taxes and duties, is estimated at US$50.8 million, with the following breakdown: US$50.0 million provided by IDA and US$O.8 million from community contributions. The breakdown o f estimated costs i s shown in Schedule A. Schedule B lays out the project's financing plan and disbursement schedule. A summary o f procurement arrangements i s given in Schedule C. The timetable o f key project processing events and the status o f Bank Operations in Madagascar are attached in Schedule D and Schedule E respectively. v. PROJECT IMPLEMENTATION, FINANCIALMANAGEMENT PROCUREMENT AND ARRANGEMENTS 16. Implementation mechanisms of the ongoing Community Development Project will continue to be used. FID was established as a non-profit association for public service (une association CE but non lucrative reconnue d'intbrkt public) and is autonomous. FIDwill continue to operate on a decentralizedbasis through six regionaloffices, inaccordance with the provisions 9  of its Articles o f Agreement, by-laws, Manuals o f Procedures and o f the Framework Agreement (Convention) betweenFIDandthe Government. 17. FID has an Implementation Manual which clearly define identification, preparation, appraisal, selection andimplementation modalities for eachtype o f sub-project. Beneficiaries are expected to contribute a percentageo f the cost o f each sub-project inkind (materials and labor) or in cash. Under the Supplemental Credit, which is destined to support repair o f cyclone damage, beneficiarycontributions willnot be requiredinthe zones that were severely affected in terms o f infrastructure damage (according to the classification by the FID). Incommunities that were moderately or less affected, a beneficiary contributionwill be required under components one andthree. However the percentagewill be smaller thanthat for the original project. InApril 2004, the Implementation Manual was updated. A new volume was added to allow FID to respond quickly and efficiently with rehabilitationandreconstruction o f damaged infrastructure, safety nets, and emergencyreliefactivities insimilar situations. 18. Financial management arrangements will be the same as for the original project and are working satisfactorily. FIDhas established an acceptablecomputerized accounting andreporting system for the project, including arrangements for audits, which will continue for the Supplemental Credit. Independent auditors acceptable to IDA will audit the use of all funds available under the Supplemental Credit, including the Special Account and the statements o f expenditures. Audit reports will be submitted to IDA no later than six months after the end o f the fiscal year. The format andthe frequency o fperiodicreportingwill be maintained as defined in the project implementation Manual. An Implementation Completion Report (ICR) will be preparedwithin six months after Credit closing. The same special account will be usedas for the original credit but the authorized allocation amount will be increased fi-om US$9 million to US$15 million. Statements o f Expenditures (SOEs) would be used for all expenditures under contracts below the Association's prior review limits. 19. Procurement of goods and services will be carried out as stated in the Development Credit Agreement and the Project Agreement o f May 22, 2001 (as amended) and FID's Implementation Manual, and will be undertaken in accordance to World Bank Guidelines for procurement of goods and works under IDA Credits (as revised on January 1999) and World Bank Guidelines for Selection and Employment of Consultants by World Bank Borrowers (as revised on January 1999). The same procurement methods used under the ongoing project will be applied to the Supplemental Credit, namely international competitive bidding, national competitive bidding, national shopping, procurement o f small works and community participation. 20. The closing date remains unchanged, namelyJune 30,2007. Effectiveness Conditions 21. The following are conditions of effectiveness: (a) the execution o f an amendment to: (i) the Convention, i.e. the agreement bywhich the Borrower transfers on a grant basis the proceeds of the Credit to FID, to ensure that the supplemental financing is also transferred to FID and (ii) the Project Agreement entered into between the Association and FID; and (b) submission o f a 10  satisfactory legal opinion on the Agreement Amendingthe Development Credit Agreement, the amendmentto the Convention andthe amendment to the Project Agreement. Participatory Approach 22. Inkeeping with the principlesandmodus operandi ofFID, the proposedSupplemental Credit would be implemented with maximum community involvement in all phases o f the project cycle, including maintenance of infrastructure investments. Identificationo f sub-projects to be rehabilitated or reconstructed is based on FID's damage assessment that was completed in cooperation with communes. Provisions have also been made to involve communities as much as possible during implementation, wherever capacity exists. In addition, in partnership with NGOs, FID will implement IEC activities on operations and maintenance and on selected sectoral themes. A smaller thanusual community contribution(inlabor, materialor incash) will be required in the moderately or less affected zones. No community contribution will be required inthe severely affected zoneswhere people have lost their homes andfield crops. VI. ENVIRONMENTAL ASPECTS 23, As part of the preparation for a Supplemental Credit to the Community Development Project, a supervision mission was undertaken between April 21 and May 6, 2004 to identify possible environmental and social safeguard risks associated with sub-projects being funded under the project and evaluate the capacity of FID to address the World Bank's safeguard requirements. 24. Findings from the field visits and stakeholder interviews suggest that there are potential safeguard risks associated with ongoing sub-projects which need to be addressed by FID. The mainissuesidentified include: inadequatewaste managementprocedures for healthcenters and schools; lack o f erosion control measuresbeingused for feeder roads, particularlyinareas prone to erosion; and potential cumulative impacts associated with improved access to natural habitats and forests via rural roads resultinginhabitat degradation. To address these issues, training will be provided to FID staff and implementing partners, such as NGOs, local consulting firrns and subcontractors on the application o f goodpractice measures for environmental protectionduring the construction and operation o f sub-projects; and on monitoring sub-projects for safeguard compliance. In addition, the FID will revise the Implementation Manual to comply more effectivelywith the World Bank safeguardpolicies andprovide more adequate guidelines for the environmental evaluation of small-scale social infrastructure projects. Appropriate good practice measureswill be integrated into the subproject technical specifications, and additionaltraining i s plannedfor FID staff andimplementingpartners on safeguard compliance. These measureswill be financed under the Supplemental Credit. An environment supervision missionwill be held six months after effectiveness to assess ifall the necessary measures have been undertaken. Finally, each o f FID's regional offices will subcontract an environmental specialist (NGO or consultant) to ensure that appropriate safeguard measures are being implemented and guidelines are being applied. 11  VII. PROJECT SUSTAINABILITY 25. Under the proposed Supplemental Credit, FID will continue to deepen its focus on sustainability. The sustainability o f FID sub-projects will be enhanced by ensuring maximum community involvement at implementation, and post-completion stages. Special IEC activities will be carried out by NGOs on operations and maintenance including through user fees when applicable (e.g. water schemes). In addition, beneficiary communities may contribute in cash, in-kind, through labor, or a combination thereof, which further ensures ownership and sustainability o fprojects. Finally, FIDwill systematically usepost-completion visits to heighten awarenessamongbeneficiaries andto provide guidance on operations andmaintenance. VIII. PROJECTRISKSANDMITIGATING MEASURES 26. There are several possible risks associated with the project. The first risk pertains to FID's capacity. The goal o f the Supplemental Credit i s to respond to critical needs over a six- month period in order to limit disruption o f services and provide timely assistance to the most vulnerable groups. Although FID i s an experienced implementation unit, there is always the danger that FIDwould be overburdened bythe volume o fwork to be carried out ina short period of time. However, this risk is mitigatedby the recruitment o f additional technical staff by FID underthe existingcredit for the most affectedregionaloffices. A periodic technical audit by an international consultant will identify possible bottlenecks and remedial measures will be implemented. 27. The second risk is related to the capacity o f the private sector inthe construction sector. FID's contractors mayreach saturationpoint inat least a few provinces. Thisrisk ismitigatedby contracting out the constructionwork as muchas possible to all qualifiedNGOs. 28. Third, a sudden large demand of certain construction materials such as cement, steel and roof, may cause price increases inthe most affected regions. This risk is reflected inthe costing of the project activities. Inaddition, the unallocated category may beused for cost overruns, 29. Finally, repeatedreconstruction andrehabilitationof infrastructure ina country subject to frequent cyclone damage i s not cost-effective inthe long-run. Thus, it will be important for the Government to identify mechanisms to reduce andor transfer the risks o f cyclone lossesto avoid losing these new investments to another cyclone. This risk i s beingmitigatedby the work being done by the Government, and with all partners, on designing a social protection strategy that outlines measures to be taken at the national level to deal with these types o f shocks and reduce the impact on affected areas. In addition, the works planned under the project will be cyclone- resistant, which will limitthe impact o f fbture cyclones onpublic or infrastructure. FIDwill also paymore attention than inthe past to erosion control. 12   SCHEDULEA Page 1or 1 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEVELOPMENTPROJECT ESTIMATED PROJECTCOSTS (in US$million equivalent) Category Local Foreign Total Foreignas % Of total Grantsfor sub-projects a) underPart E of the project 5.00 5.00 0.00 b) under Part Fof the project 0.50 0.50 100.00 c) other 43.80 43.80 0.00 Technicalassistance,training, 0.50 0.50 100.00 IVehicles, equipment,furniture, I I I I I Materials* Operatingcost 0.30 0.30 0.00 Unallocated 0.70 0.70 0.00 Total projectCosts 49.80 1.oo 50.80 SOURCE OF FINANCING (in US$million equivalent) r- Local Foreign Total Percentageof ForeignExpenditures IDA 49.00 1.oo 50.00 2.00 COMMUNITIES/BENEFICIARIES 0.80 0.80 0.00 Total 49.8 I.oo 50.80 2.00 1 3   SCHEDULEB Page 1of2 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEVELOPMENTPROJECT FINANCINGPLAN(by ProjectComponent) (in US$million equivalent) TotalI 50.0I 0.8 DISBURSEMENTSCHEDULE (in US$ illi ion e q ~ i v ~ l e n ~ IDA FY 2005 2006 2007 Annual 30 20 0 Cumulative 30 50 50 14  SCHEDULEB Page 2 o f2 ALLOCATION AND DISBURSEMENTOFSUPPLEMENTALIDA CREDIT (in US$million) %of expenditures to be financed for Supplemental Amount (as of Credit Amount amendment of April 2004) Grants for sub-projects .OO% of amount of grants disbursed (a) under Part Eofthe (a) 15.71 5.00 project (b)under PartFofthe (b) 4.50 0.5 project (c) other (c) 67.28 43.00 Technical assistance, 17.00 0.50 100%offoreign expenditures and training, audits 85% o flocal expenditures for original financing; 85% o f foreign expenditures and75% of local expenditures for consultants' services (including audits) and 100%o ftraining expenditures for additional financing Vehicles, equipment, 1.51I 0.00 100% o fforeign expenditures and furniture, mitirials 80%oflocal expenditures Operating cost 4.00 0.30 90% Unallocated 0.00I 0.70 15  SCHEDULE C Page 1of 1 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEVELOPMENT PROJECT PROCUREMENTARRANGEMENTS (in US$million equivalent) Category ProcurementMethod International National Other N.1.F Total Competitive Competitive Methods Bidding Bidding 1. Grantsfor sub-projects a) under Part E of the project 5.00 5.00 b) under Part F of the project 0.5 0.5 c) other 43.80 43.80 2. Consultantservices Technicalassistance,training, audits 0.50 O S 0 3. Vehicles, equipment, furniture, materials 0.00 4. Operatingcosts 0.30 0.30 5. Unallocated 0.70 0.70 Total 0.00 0.00 50.80 0.00 50.80 Of which IDA 0.00 0.00 50.00 0.00 50.00 N.I.F.=Not IDA-financed. Figures inparenthesis are the amounts to be financed bythe IDA Supplemental Credit. Slight differences may result fromrounding o f figures. 16  SCHEDULED Page 1of 1 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEVELOPMENTPROJECT TIMETABLE OFKEYPROJECTPROCESSINGEVENTS Time taken to prepare: 3 months Preparedby: Governmentwith assistanceofWorld BankStaff Appraisal: May 20,2004 Negotiations: June 3,2004 PlannedBoard Presentation: July 20,2004 PlannedDateofEffectiveness: August 23,2004 Project Completion: December 31,2006 Credit Closing: June 30,2007 17  w w - o! 9 2 o - m b o m - w b m m ~ m ~ r - o o m o o o o m o m o o m o m " r N m c u c u - N r C 4 a - N - o o m o o o o m o m o o m o m c f h v) - (D .-Y n e a u a  SCHEDULEF Page 1of 1 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEWLOPMENT PROJECT PERFORMANCEINDICATORS PerformanceIndicators Community Supplemental TotalByProject Developmentproject Credit(Planned) Closing(Planned) (actualto 3111212004) Community sub projects Numberofclassrooms(re)constructed 3,284 4,025 7,309 Numberofclassroomsrehabilitated 584 1,745 2,329 Numberofhealthposts(re)constructed 959 171 1,130 Numberofhealthpostsrehabilitated 159 326 485 Numberof water schemes(re)constructed 156 32 188 Number of water schemes rehabilitated 89 38 127 N b --- 190 0 190 Numberofmarketsrehabilitated 96 186 282 Kmofroadrehabilitated 1,257 342 1,599 Numberof economic infrastructuresreconstructed 225 0 225 Numberofeconomic infrastructuresrehabilitated 105 964 1,069 Numberofadministrative infrastructuresreconstructed 12 354 366 Numberof administrative infrastructures rehabilitated 1 686 687 % ofsub-projects directly implementedbycommunities 52 20 36 Safetynet activities Numberof man-daysofemployment created 3,065,316 5,543,630 8,608,946 Numberofbeneficiaries (by gender) 6,130,632 8,315,445 14,446,077 Cyclone emergencyand disaster relief activities Number of beneficiaries by gender andage groups <5yrs NIA 54 000 54 000 Pregnantwomen NIA 15 000 15 000 Lactating women: NJA 12000 12000 For food items distributed(tlrice) NIA 70,000 70,000 For non-food items distributed NIA 300,000 300,000 Capacity building activities Numberof beneficiaries ofIECtrainingprogram 19  SCHEDULEG Page 1of2 REPUBLICOFMADAGASCAR SUPPLEMENTALCREDIT FORTHE COMMUNITY DEVELOPmNT PROJECT 20  SCHEDULEG 21  MAP SECTION