Zambia - Second Social Recovery Project

Docment of The World Bank Report No. 14329-ZA STAFF APPRAISAL REPORT REPUBLIC OF ZAMBIA SECOND SOCIAL RECOVERY PROJECT JUNE 5, 1995 Human Resources Operations Division Southern Africa Department Africa Regional Office  CURRENCY EQUIVALENTS April 1995 Currency Unit: Zambian Kwacha (ZMK) US$1.00 = ZMK 700 ZMK 100 = US$0.14 FISCAL YEARS IDA Fiscal Year = July 1 - June 30 Government Fiscal Year January 1 - December 31 ABBREVIATIONS AND ACRONYMS BAT Beneficiary Assessment Team CAS Country Assistance Strategy CMMU Community Mobilisation Monitoring Unit CSO Central Statistics Office DANIDA Danish International Development Agency DDCC District Development coordinating Committee DIMS Drought Indicator Monitoring System EU European Union FHANIS Nutrition and Health Monitoring System GRZ Government of the Republic of Zambia HBS Household Budget Survey ICB International Competitive Bidding IDA International Development Association LCB Local Competitive Bidding LCMS Living Conditions Monitoring Survey LCMU Living Conditions Monitoring Unit MPP Micro-projects Program (EU funded co-project) MPU Microprojects Unit (MPP/SRF joint administrative structure) NCDP National Commission for Development Planning NFNC National Food and Nutrition Council NHFS Nutrition and Household Food Security ODA British Overseas Development Administration PAG Participatory Assessment Group PAM Program Against Malnutrition PLW Project Launch Workshop PMS Preventive Maintenance System PPA Participator y Poverty Assessment PPM Program to Prevent Malnutrition PPU Provincial Planning Unit PUSH Project Urban Self-Help SAP Social Action Program SIDA Swedish International Development Agency SRF Social Recovery Fund (IDA funded micro-projects component) UNICEF United Nations Children's Fund WASHE Water and Sanitation Health Education ZDHS Zambia Demographic and Health Survey  -i1- ZAMBIA SECOND SOCIAL RECOVERY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of the Republic of Zambia Implementing Agency: Microprojects Unit, Office of the President Beneficiaries: Rural and Urban communities, Social Sector Agencies Poverty: Program of targeted interventions to poor communities and part of Government program for devolution of safety net activities to local groups Amount: SDR 19.1 million (US$30.0 million equivalent). Terms: Standard IDA terms with a maturity of 40 years including a 10- year grace period. Commitment Fee: 0.50 percent on undisbursed balances beginning 60 days after signing less any waiver Financing Plan: IDA will finance 45 percent, the Government 6 percent, Bencficiaries 16 percent, and Donors the remainder Net Present Value: Not Applicable. Project design based on cost-effectiveness Staff Appraisal Report: 14329-ZA Project ID: ZM-PA-32 10   -ii- ZAMBIA SECOND SOCIAL RECOVERY PROJECT STAFF APPRAISAL REPORT' Table of Contents Chapter 1: BACKGROUND AND LESSONS LEARNT ..................................................................1 A. Macro Economic Background ...............................................................................1 B. Poverty in Zambia ...............................................................................2 C. Sectoral Background ...................... .4 D. Institutional Background .....................7 E. First Social Recovery Project (Cr. No. 2273): Lessons Learnt .......................................................8 Chapter 2: THE PROPOSED PROJECT .............................................................................. 15 A. Objectives and Summary Description .............................................................................. 15 B. Detailed Project Description .............................................................................. 16 C. Project Coordination and Management .............................................................................. 30 D. Sustainability .............................................................................. 30 E. Special Project Issues .............................................................................. 31 F. Reporting and Reviews .............................................................................. 32 Chapter 3: PROJECT COSTS, FINANCING, PROCUREMENT AND DISBURSEMENTS ...... 33 A. Costs .............................................................................. 33 B. Financing .............................................................................. 33 C. Procurement .............................................................................. 34 D. Disbursements .............................................................................. 36 E. Accounts and Audit .............................................................................. 38 Chapter 4: PROJECT BENEFITS AND RISKS ............................................................................. 39 A. Project Benefits .............................................................................. 39 B. Monitorable Indicators .............................................................................. 40 C. Project Risks .............................................................................. 41 Chapter 5: AGREEMENTS AND RECOMMENDATION ............................................................ 43 A. Conditions .............................................................................. 43 B. Agreements .............................................................................. 43 C. Recommendation .............................................................................. 44 This report is based on the findings of a appraisal mission which visited Zambia in March, 1995. The extemal participants in the appraisal were Alan Dock (Task Manager, AFIHR), Daniel Owen (Beneficiary Assessment Specialist, AFIDSMz), Ingeborg Kleppe (Economist/Social Survey specialist, AFTHR), Margerite Salah (Operations Officer AFIlHR), Alexandria Valerio (Policy Analyst, AFIHR), David Booth (SIDA Consultant), Anne-Kristina Hermansen (Norwegian Ministry Foreign Affairs), Gertrude Ssali (Admin support, AFlIHR). The mission was joined in all discussions and in the report preparation by Govemment counterparts: Mrs. Irene Kamanga, Team Leader and Permanent Secretary NCDP, Cosmas Mambo (SRPI Coordinator), Clare Barkworth (TA, SRPI), Geoff Chipota (SRPI Finance), Wedex Ilunga (I lead Tech Services SRPI), Ed Mwale (Head Field Services SRPI), Ben Zulu (Project Coordinator MPP), Mel Jones (TA MPP), Emmanuel Silanda (Director Soc Research CSO), Ms. Chulu (CSO), John Milimo (Poverty Assessment Group). Lead Advisor is Steen Jorgensen(AFRCA). Peer Reviewers are Julie Van Domelen (LAIHR), Mary Barton-Dock (AF3AE), and Alexandre Marc (EC4HR). Gertrude Ssali assisted in report production. Messrs/Mmes Roger Grawe, Phyllis Pomerantz and Katherine Marshall are, respectively, the Division Chief, Countrn Operations Manager, and Department Director for this operation.  -iii- Tables Table 3.1: Financing Plan ....................................... 33 Table 3.2: Procurement Table ....................................... 35 Table 3.3: Disbursement Schedule ....................................... 36 Table 3.4: Disbursement Profile ....................................... 37 Figures Figure 1: SRP Disbursemcnts ....................................... 8 Figure 2: SRF Disbursements by Sector ....................................... .8 Figure 3: No. of Projects bv Province ........................................9 Annexes Annex 1: Organization Chart for Project ....................................... 45 Annex 2: Participatory Assessment Group (PAG) ....................................... 46 Annex 3: Living Conditions Monitoring Survey ....................................... 57 Annex 4: The Poverty Analysis Component ....................................... 62 Annex 5: M icroprojects Unit Organizational Chan ....................................... 67 Annex 6: Annual Reporting Requirements ....................................... 68 Annex 7: Supervision Schedule ....................................... 70 Annex 8: Documents Available on File ....................................... 73 Annex 9: MIS Monitoring System ....................................... 74  Chapter 1: BACKGROUND AND LESSONS LEARNT A. Macro Economic Background 1.1 Over the past 20 years, economic growth in Zambia has been amongst the lowest in Africa. The standard of living of most Zambians has deteriorated sharply since its peak in the early 1970s. These conditions have come about mainly due to worsening terms of trade, low efficiency and decreasing levels of investment. Inefficiencies in the economy have been caused by the dominance of parastatals and their capital/import - intensive strategies, price controls, and the increasing share of public spending going to lvages. These have reduced public investment and the efficiencv of public services. During the 1980's rural and urban incomes fell by 50 percent as agriculture stagnated due to lack of incentives caused by price distortions and falling fornal sector real wages. The government attempted several times to restructure the economy. The most ambitious of these in 1985 - 87 was abandoned on the grounds that it generated excessive economic and political instability and social unrest. The economy became more unstable between 1987 and 1989 with inflation rising from 35 percent in 1986 to 64 percent in 1988 and to 154 percent in 1989. 1.2 A new government was elected in 1991 and has committed itself to an ambitious economic reform programme. The reforms include: * reduction of inflation; * privatization of parastatals;