Zambia - Social Recovery Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-5527-ZA MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO US$20 MILLION TO THE REPUBLIC OF ZAMBIA FOR A SOCIAL RECOVERY PROJECT MAY 21, 1991 TIs 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. C=RCY AND WquzvaEr uNITS Currency Unit - Zambian Evacha (K) & US (annual average) 1985 2.71 1986 7.30 1987 8.89 1988 8.22 1989 12.90 1990 47.40 (end-December) FISCAL YEAR Government - January 1 - December 31 ABBREVIATIONS AND ACRONYMS EC European Community MOF Ministry of Finance MPU Microprojects Unit NGO Non-governmental Organization SAP Social Action Program FOR OFFICIAL USE ONLY ZAMBIA SOCIAL RECOVERY PROJECT CREDIT AND PROJECT SMOMARY Borrowers Republic of Zambia Beneficiarys Ministry of Finance Amounts SDR 14.8 million Terms: Standard IDA terms, 40-year maturity, with a 10- year grace period Financing Plan: Zambia US$9.1 million IDA US$20.0 million European Community US$15.0 million Norway US$2.2 million TOTAL US$46.3 million Rate of Return: Not applicable Staff Appraisal Report: Report No. 9471-EA Maps IBRD No. 11542R 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 authortation. MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE IDA TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO ZAMBIA FOR A SOCIAL RECOVERY PROJECT 1. I submit for your approval the following memorandum and recommendation of a proposed credit to Zambia for the equivalent of US$20.0 million. The proposed credit would be on standard IDA terms with 40 years maturity, including 10 years of grace, and would help finance a Social Recovery Project. The Project would be cofinanced by the European Community (EC) for US$15.0 million equivalent (parallel cofinancing), and the Government of Norway for US$2.2 million equivalent (joint cofinancing). 2. Country/Sector Background. After a three year hiatus, Zambia has normalized its relations with the World Bank Group. It has followed a Fund-monitored adjustment program since September 1988 and cleared its arrears to the World Bank Group on March 13, 1991. IDA has recently approved an Economic Recovery Credit to support the program. As part of the adjustment program, the Government has developed a Social Action Program (SAP) designed to assist the poor until they begin to feel the positive effects of the adjustment program. Further, it has mobilized the donor community to support the SAP. Specifically, in each sector of the SAP, it has identified lead donors to coordinate assistance. The lead donors are the governments of the Netherlands, Sweden, Norway, Germany and EC. 3. Immediate action under the SAP is necessary because of the severe deterioration of public services and social indicators over the past de- cade. Schools, in dire need of rehabilitation after years of no maintenance, are overcrowded and under-equippeds class sizes in primary schools are over 75 in rural areas and 120 in urban areas, and textbook supplies are so limited that the best-supplied schools have only 1 book for every 6 students. Health services are barely functioning. Lack of adequate supplies and maintenance has severely reduced effectiveness--at a time when health problems are worsening with rampant childhood diseases compounded by epidemics of cholera and other water-borne diseases. Malnutrition is widespread. More than 40 percent of hospital deaths among children are from malnutrition (up from 13 percent in 1980), and the majority of households are unable to produce, store or . purchase sufficient amounts of food. Deteriorating feeder roads and poor water supply and sanitation are significant obstacles to social and economic development, especially to improving nutrition and food security. 4. To facilitate immediate interventions to address these urgent problems, the Government has requested IDA's support for small-scale, labor-intensive, community-based initiatives under the framework of the SAP. Such support will build on the successful experience of the EC-funded Microprojects Programme and be administered by the Microprojects Unit (MPU) of the Ministry of Finance (MOF). S. Project Objectives. The primary project objective is to finance community initiatives to protect the poor during the structural 2 adjustment program. To this end, the Project would support the rehabil- itation and improvement of existing infrastructure and service delivery through the SRF. This would strengthen communities' ability to address their own needs and support a revival of a spirit of self-help. Further, the Project would improve the information base and provide analyses to enhance the Government's planning and policy making in the social sectors. 6. Program Objective Categories. The Project is a key element in Zambia's anti-poverty efforts. By directly involving poor beneficiaries, it addresses poor's needs in a manner which complements their own survival strategies. The Project also supports human resource development through the rehabilitation of education and health facilities. Finally, the Project supports the devolution of social services away from central government, a key component of the Government's public sector management strategy. 7. Project Design. The Project will achieve its objectives by working with and building on an effective program already being implemented by the MPU in the MOF that allows communities and NGOs to implement sub-projects. This arrangement helps to insure its institutional sustainability. 8. Project Description. The Project will support the following components: (a) Community Initiatives. (89 percent of project cost) Through the MPU the Project would finance a series of small, simple and locally-generated sub-projects in health, nutrition, education and economic infrastructure. To ensure the sub-projects' sustainability and community involvement, communities would be required to contribute to sub-project cost in the form of labor, materials or cash. (b) Institutional Support (6 percent of project cost) for the MPV. (c) Analysis and Monitoring. (5 percent of project cost) This includes support for national statistical surveys, a beneficiary assessment and a studies fund that would finance a series of local studies related to poverty. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursement, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Zambia are given in Schedules C and D, respectively. The Staff Appraisal Report, No. 9471-AM, is also attached. 9. Proiect Implementation. The MPU in the MOP will implement the Community Initiatives Component of the Project. In this capacity it will collect sub-project proposals that communities and Non-governmental Organizations (NG0s) have identified and local governments have approved, will appraise these sub-projects, and will supervise their 3 implementation by communities and NGOs. The Institutional Support component will provid. resources that will bolster the MPU's ability to handle the expanded responsibilites that the Project will entail. Because of its demonstrated capacity to collect survey data, the Central Statistical Office will implement the survey sub-component of the Analysis and Monitoring component. The studies that constitute the studies sub-component will be undertaken by research and other institutions within the country. The MPU will coordinate these studies. 10. Lessons Learned from Previous Bank Group and EC Involvement. The Bank Group*s support to the social sectors in Zambia is limited to five education projects, the last one signed in 1982. Because these were all designed when copper revenues were high, they reflect the Government's earlier norms for education facilities in particular and infrastructure in general. These projects financed complex facilities that no longer fulfill high-priority needs. In contrast, this Project will focus on simple facilities and infrastructure. A project that takes a similar approach to supporting community initiatives was implemented in Bolivia (Emergency Social Fund Project). The lessons from the Project Performance Audit Report have been incorporated in the design of the Project. These lessons include: (a) desirability of financing small, technologically simple projects with a substantial coummunity involvement, (b) the need to involve Government, NGOs, and communities in sub-project implementation, and (c) the need to attract high caliber staff for the central implementing agency (the MPU in this case). Finally, the Project is based on the successful experience of the EC-funded Microprojects Programme. In an interim evaluation, the EC suggested that its program use more refined evaluation criteria, install a computer-based accounting system, and improve procurement procedures to allow for more large supply contracts. The Project takes these suggestions fully into account. 11. Rationale for Bank Involvement. IDA's involvement is important because (a) the Government has asked for IDA to support small-scale, immediate impact projects as these are seen as quick and efficient ways of responding to the needs of the poor and vulnerable; (b) other donors presently have a comparative advantage in more traditional social sector projects and are looking to IDA for leadership and coordination on the small projects side; (c) IDA has experience in such interventions from other countries (it has completed two such projects in Bolivia and is beginning to implement others in several other African countries); and (d) in the production and analysis of data the lessons learned from these small projects could provide important guidance to future interventions in the social sectors. 12. Actions to be Agreed. During appraisal, agreement was reached on the operating procedures of the MPU, including appraisal and accounting systems, and staffing requirements. During negotiations, agreement was reached with the Government on the conditions of effectiveness and dated covenants. As conditions for effectiveness: (a) the MPU would present a finalized appraisal guide, acceptable to IDA; (b) the MPU would present final terms of reference for MPU staff and an action plan for hiring staff; and (c) the MPU would demonstrate that a sufficient pipeline of sub-project proposals are available to cover the 4 activities of the first quarter of operations. As dated covenants, b January 1992 and every year thereafter the Government would show that there has been an increase in real terms in the budget for non- remuneration recurrent costs for health and education. 13. Environmental Aspects. The Project has an only minor impact on the environment due to its focus on rehabilitation of existing infrastructure in education and health. Sub-project appraisal criteria include an assessment of environmental effects. 14. Project Benefits. The direct benefits of the proposed project would be the physical and human capital improvements generated by the sub-projects. The indirect benefits fall in three categories. First, concerted donor support would help sustain Zambia's overall adjustment efforts. Second, as the Project supports local self-help activities, it would help to promote decentralized initiatives and devolve respon- sibility for providing services and maintaining infrastructure away from the central government. Third, the Analysis and Monitoring Component would provide a means to collect information and conduct analysis that would inform the Government's efforts to design social policies. 15. Risks. The main risk is that the Project could be hampered by the Government's limited implementation capacity. This risk would be minimized by encouraging simplicity in sub-project design, building on local and regional initiatives, providing institutional support for the Microprojects Unit, and basing the Project on the EC's succesful experience. 16. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. May 21, 1991 S SCHEDULE A ZAMBIA SOCIAL RECOVERY PROJECT Estimated Costs and Financing Plan Proiect Costs (in million US$) 2 2 of Local Foreign Total Foreign Total Community Initiatives 39.6 1.6 41.2 3.92 88.82 institutional Support 1.1 1.6 2.7 59.2Z 5.72 Analysis and Monitoring 1.1 0.8 1.9 41.9? 4.22 ------------------------------ ---------- Total Base Costs 41.8 4.0 45. 8.7X 98.7? Price Contingencies 0.1 0.1 0.2 54.52 0.62 Physical Contingencies 0.2 0.2 0.4 48.3Z 0.72 -------------------------------- --- --------- Total Project Cost 42.1 4.3 46.4 9.3? 100.0? Financing Plan (US$ million, including contingencies) Zambia IDA EC Norway Total - --------------------------------------- Sub-projects 9.1 18.2 13.9 0 41.2 Institutional Support 0 1.8 1.1 0 2.9 Analysis and Monitoring 0 0 0 2.2 2.2 .------------------------------------ Total 9.1 20.0 15.0 2.2 46.4 6 SCHEDULE 8 Page 1 of 2 ZAMBIA SOCIAL RECOVERY PROJECT PROCUREMENT METHOD AND DISBURSEMETS Procurement Method (US$Millions) Project Element ICa LC9 Other/ N.A./ Total 1. Sub-projects: a. Goods for Sub-projects 1.5 3.3 - - 4.8 (1.5) (0.5) (2.0) b. Civil Works for Large and 1.5 14.9 - 6.5 22.9 Other Sub-projects (1.5) (10.7) - * (12.2) c. Self-help and Social - - 11.0 2.5 13.5 Services Sub-projects - - (4.0) - (4.0) 2. Consultant Services - - 3.5 - 3.5 and Studies - - (0.8) - (0.8) 3. Vehicles and Equipment - 0.3 0.2 - 0.5 - (0.3) - - (0.3) 4. Operations and - - - 1.2 1.2 Administration - - - (0.7) (0.7) TOTAL 3.0 20.0 14.7 10.3 46.4 (3.0) (11.5) (4.8) (0.7) 20.0 Notess 1 Includes: (a) Self-help and Social Services Sub-Projects which are implemented by the PC directly; (b) consultant services procured according to IDA Guidelines; and (c) items to be financed by the EC and procured using their procedures. 2 Includes the community contribution to the sub-projects and Operations and Administration costs to be procured using local procedures acceptable to IDA a SCHEDULE C ZAMBIA SOCIAL RECOVERY PROJECT TIMETABLE AND KEY PROCESSING EVENTS (a) Time taken to prepare: Five months (b) Prepared bys Government with IDA assistance (c) Identification Missions September/October 1990 (d) Appraisal Mission: February 1991 (e) Negotiations: April 1991 (f) Planned Date of Effectiveness: July 1991 (g) List of Relevant PCRs and PPARss BOLIVIA: Emergency Social Fund Project (Credit No. 1829-BO) BOLIVIA: Emergency Social Fund Project Performance Audit Report (Report no. 8449) 7 SCHEDULE B Page 2 of 2 Allocation and Disbursement of IDA Credit Disbursement Category IDA Allocation 2 of Expenditure (US$ million) to be Financed 1. Civil Works fort a. Large Sub-projects 5.0 1002 of foreign 90% of local b. Other Sub-projects 5.2 1002 of foreign 90Z of local c. Self-help Sub-projects 2.0 80Z of sub- project cost 2. Goods for Sub-projects 2.0 100% of foreign 902 of local 3. Social Services Sub-projects 2.0 802 of sub- project cost 4. Consultant Services and Studies 0.7 1002 5. Vehicles and Equipment 0.3 1002 of foreign 6. Operations and Administration 0.4 852 7. Refunding Project Preparation Fac. 0.4 N.A. 8. Unallocated 2.0 TOTAL 20.0 Estimated Disbursement of IDA Credit (US$ million) IDA Fiscal Year FY92 FY93 FY94 FY95 FY96 FY97 Annual 2.1 3.3 4.4 4.6 4.2 1.4 Cumulative 2.1 5.4 9.8 14.4 18.6 20.0 Cumulative (2) 10.42 26.82 48.92 72.02 93.02 100.02 9 SCHEDULE D Status Of Bank Grow Operat ions in ZAMIA Page 1 of 3 PFOOR25 - Sumary Statement Of Loans and 1A Credits (LOA data as of 4/30/91 - MIS data as of M5/16/91) Aiunt In US$ mIllIon (less cancel lat ions) Loan or Fiscal LJndis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date Credits . 14 Credits(s) closed 210.84 C11930-ZAM 1982 ZAMBIA AS. II I(SO.PROV.) 18.00 14.48 06/30/91(R) CF0020-ZAM 1983 ZMBIA RURAL W/SUPPLY 6.00 3.32 04/30/88 . C13620-ZAM 1983 ZAMIA RURAL W/SUPPLY 10.00 1.84 06/30/91(R) C14370-ZAM 1984 ZAMBIA FORESTRY III 22.40 9.28 09/30/91 C15290-ZAM 1985 ZAIA FISHERIES 7.10 7.52 06/30/91(R) C15750-ZAM 1985 ZMIA RWYS.IV 20.00 23.27 08/30/91(R) C16790-ZAM 1986 ZMIA TAS II 8.00 9.08 12/31/92 C17430-ZAM 1987 ZAMIA COFFEE II 20.40 22.54 06/30/95 C17460-ZAM 1987 ZAMIA AGR. RES.& EXT. 13.00 14.41 1/31/95 C17530-ZAM 1987 ZAMBIA DBZ III 10.00 11.07 06/30/92 C22140-ZAM(S) 1991 ZAMBIA RECOVERY CREDIT 210.00 78.04 06/30/92 C22141-ZAM(S) 1991 ZAMBIA RECOVERY CREDIT 27.20 06/30/92 TOTAL nuaber Credits - 12 372.10 192.83 Loans 28 Loans(s) closed 582.13 All closed for ZAMBIA TOTAL nugber Loans - 0 TOTAL** 582.13 582.94 of which repaid 321.50 .65 TOTAL held by Bank & IDA 260.63 582.29 Amount sold 28.58 of which repaid 28.58 TOTAL adisbursed 192.85 Notes: Not yet effective Not yet signed #* Total Approved, Repaymnts, and outstanding balance represent both active and Inactive Loans and Credits. (R) Indicates formaIly revised Closing Date. (S) Indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are hIstorical value, all others are market value. The SigiIng, Effective, and Closing dates are based upon the Loan Departent off ical data and are not taken from the Task Budget file. - 10 - SCHEDULE D Status Of Ban Group Operations in ZAMIA Page 2 of 3 PFOR2SB - List of Closed SALS and SeaIs amst in US$ at iIon (less cancelatlans) Loan or Fiscal Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date C1545iZAM 1985 ZAMBIA AGRI REAM. 24.15 .00 06/30/88 CA0050-ZAM 1986 ZAW IA AGRI REHAB. 9.85 .00 06/30/88 CAQ040-ZAM 1986 ZAMIA IND.REORIENTATION 42.00 .00 1231/88 C16300-ZAM 1986 ZAMIA IND.REORIENTATION 19.46 .00 12/31/88 C17200-ZAM 1986 ZAMBIA RECOVERY CREDIT 50.00 .00 06/30/91(R) L23910-ZAM 1984 ZAMIA E)(PORT REHAB & DIVER 71.92 .00 09/30/88 Total ZABIA 71.92 145.46 .00 - 11 - SCHEDULE D Page 3 of 3 hte: 01May-Si Statoaeut of lIC Iunetanta u of march 31, 1991 laest TyMe of aber If Obligor kIDaS Las Iqity Total 216-2 1972 250-2 1973 abia Bata Shoe Sioem 2.1 0.2 2.3 307-i 1975 394-å 1978 Century Prodets ltd Plastic frap 0.9 0.2 1.1 324- 197 D,t Bank of Zabia Dnt ?an 0.5 0.5 32-U 1982 Ithanol Co of abia Che/Petroch 3.7 0.6 4.3 1001-ä 1988 Ge~mbe lalley De't Iood/ood Pro 3.7 0.8 4.5 1132-4 1989 Baatock (ambia) Iood/Jood Proc 8.0 8.0 527-a 1980 721-2 1985 afO textila Tetiles 10.7 10.7 743-2 1985 Dpongmev tCo Yood/ond Proc 1.8 0.3 2.1 709-2* 1984 2159-ä 1991 Zabia sotol frop Touri 22.3 22.3 483-å 1980 0- 1982 UCs iing 53.1 53.1 Total rosm Cmit~oats 106.3 2.6 108.9 Ieas: Cancellatios, ter~iaations, e#~base adtaents, repumute, trit-offs, ad ale 57.5 1.6 59.1 total comitments held by liC 48.8 1.0 49.8 Total Udibrud 8.5 0.0 .5 total Diabursed 42.3 1.0 43.3 IBRD 11542R REPUBUC O ZAMBIA . POPULATION DISTRIBUTION TANZANIA 1969 CENSUS: -Roc-ds* One dot represents 500 pernon- Roilways Town popultion S10,000 Rivers .0 50,000 -- Swamps 0 100,000 Airfields 200,000 -----Provinciol boundaries --.--.Intentlanl boundaries 0 so [oI 1o0 So i Mo ES [0 290 250 KIOMETERS- k< R, LIi..bsh u noe .aZAIRE A N G, pNLiAL i bm N O R T. H' W E S T E R N Kas 24E T' R-A L> M 0 Z A M B QUE à - r,,ZA]gl RIVER ee W E T-'E R: N NRR,. - 0 UN-..DR s Capme c KA AGL ANGOLAA .- N A M l B l A ",/,roTsw~ 1 G'3