Peru - Social Development and Compensation Fund Project (FONCODES)

Document of The World Bank FOR OFFICIAL USE ONLY Report No.: 18016 IMPLEMENTATION COMPLETION REPORT P]ERU SOCIAL DEVELOPMENT AND COMPENSATION FUND PROJECT (FONCODES) ILN. # 3684-PE] June 15, 1998 Sector Management Unit Human Developement Latin America and the Caribbean Regional Office 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 authorization.  Currency Equivalent Current Unit = Nuevo sol (S/.) US$1.00 = S/. 2.6 Fiscal Year January 1 - December 31 GLOSSARY OF ACRONYMS CONAM National Council for the Environment COPOOP National Office of Popular Cooperation DC Direct Contracting FONAVI National Housing Fund FONCODES National Fund for Social Compensation and Development GTZ German Technical Cooperation and Development Agency IBRD International Bank for Reconstruction and Development IDB Interamerican Development Bank IIP Instituto Indigenista Peruano INADE National Development Institute INFES National Institute for Infrastructure in Education and Health INRENA National Institute for Natural Resources KfW Kreditanstalt fur Wiederaufbau LSMS Living Standards Measurement Survey MIS Management Information Systems NGO Non-Governmental Organization PAD Articulated Development Project PREDES Economic and Social Development Project PRIDER Integrated Rural Development Project PRONAA National Program for Food Assistance PRONAMACHCS National Program for the Management and Conservation of Water and Land Resources SAR Staff Appraisal Report UNDP United Nations Developent Programme UNICEF United Nations Children's Fund UTE Specialized Technical Unit of FONAVI WID Women in Development Vice President Shahid Javed Burki Country Unit Director Isabel Guerrero Country Sector Leader Evangeline Javier Task Manager - Proj. Juliana Weissman Task Manager - ICR Charles Szymanski  FOR OFFICIAL USE ONLY Table of Contents PREFACE ....................................................... i EVALUATION SUMMARY ........................................................ ii PART L PROJECT IMPLEMENTATION ASSESSMENT ........................................................ 1 PROJECT OBJECTIVES AND DESCRIPTION ........................................................ 1 ACHIEVEMENT OF PROJECT OBJECTIVES ....................................................... 2 EX-POST EVALUATION RESULTS ....................................................... 3 IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT ......................................... 5 PROJECT SUSTAINABILITY ........................................................, 7 BANK PERFORMANCE ....................................................... 8 BORROWER PERFORMANCE ....................................................... 9 ASSESSMENT OF OUTCOME ....................................................... 10 CURRENT AND FUTURE OPERATIONS ....................................................... 10 KEY LESSONS LEARNED AND RECOMMENDATIONS FOR FUTURE OPERATIONS ....................................... 1 1 PART IL STATISTICAL ANNEXES ...........13..................,; 13 Table 1: Summary ofAssessments ............................ 13 Table 2: Related Bank Loans/Credits ............................ 14 Table 3: IBRD Project Timetable ............................ 14 Table 4: Loan Disbursements: Cumulative Estimated and Actual ................................................... 14 Table S: Key Indicators for Project Implementation ............................................................. 15 Table 6: Key Indicatorsfor Project Operation ............................................................. 15 Table 7: Studies Completed .............................................................. 16 Table 8A: Global Project Costs ............................................................. 16 Table 8B: Global Project Financing ............................................................. 17 Table 8C: Initial IBRD AUlocations and Actwal Disbursements by Category ..................................... 17 Table 8D: IBRID Funded Subprojects by Category ............................................................. 18 Table 8E: Number of Projects Presented aid Approved According to Poverty Levels ...................... 19 Table 8F, Ratio of Approved Projects in Relation to Presented Projects According to Poverty Levels ............................................................. 19 Table 8G: Committed BudgetforApproved Projects .............................................................. 19 Table 9: Economic Costs and Benefits ............................................................. 20 Table 10: Status of Legal Covenants ............................................................. 21 Table 11: Compliance with Operational Manual Statements ............................................................ 22 Table 12: Bank Resources: Staff Inputs (SW, Actual) ......................................................... .... 22 Table 13: Bank Resources: Missions ............................................................. 23 APPENDIX: BORROWER CONTRIBUTION TO THE ICIR MAP OF PERU .This document has a restricted distribution and may be used by recipients only in the performnance of their official duties. Its contents may not oth'erwise be disclosed without World Banlc authorization.  IMPLEMENTATION COMPLETION REPORT PERU SOCIAL COMPENSATION AND DEVELOPEMENT FUND PROJECT (LOAN 3684 PERU) PREFACE This is the Implementation Completion Report (ICR) for the Social Development and Compensation Fund Project (FONCODES), for which Loan 3684-PE in the amount of US$100 million was approved on December 16, 1993, signed on December 22, 1993, and declared effective on March 8, 1994. The Loan was closed oni June 30, 1997. It was fully disbursed, and the last disbursement took place on November 24, 1997. Parallel financing for the project was provided by the Interamnerican Development Bank (US$ 94 million), and foreign donors (US$ 29 million). The ICR was prepared by Charles Szymanski, Human Development Division of the Latin American and Caribbean Regional Office with extensive input from Juliana Weissman, Senior Operations Officer, and assistance from Aracelly Woodall, Task Assistant. The ICR was reviewed by Alexandre Abrantes (LCC7C) and Evangeline Javier (LCSHD). The Borrower prepared a separate report which is included as an appendix to the ICR. Preparation for this ICR is based, inter alia, on the Bank's final supervision/ICR mission, which took place in July, 1997; the Loan Agreement; supervision reports; interviews with relevant Bank staff; the mid-term review; correspondLence between the Bank and the Borrower; four independent ex-post evaluations (conducted each year of the project); and FONCODES reports. In addition, preparation of the ICR was discussed with FONCODES during the mission for the annual implementation review (of FONCODES II) conducted in July, 1997.  ii SOCIAL COMPENSATION AND DEVELOPEMENT FUND PROJECT (LOAN 3684-PE) PERU EVALUATION SUMMARY Introduction i. This was the first IBRD-assisted social investment fund project. It was approved by the Board on December 16, 1993, signed on I)ecember 22, 1993, and declared effective on March 8, 1994. At the time of appraisal total project costs were estimated at US$495 million equivalent, of which US$100 million was to be financed by the IBRD loan, with the balance to be financed by the Government of Peru, beneficiaries and the IDB. This project required 3 years and 7 months for completion, which is shorter than the average completion period for social investment fund projects. The final disbursement was effected in November, 1997. Project Objectives ii. The objectives of the project were to assist the Borrower in (a) sustaining its poverty alleviation efforts, (b) mitigating the social costs of its macroeconomic adjustment, and (c) strengthening the institutional capabilities of FONCODES. In addition, the project aimed at (i) generating employment and improving access to social services; (ii) promoting strong and self- reliant community organizations; (iii) complementing other nation-wide projects in education and health; and (iv) maximizing support from other potential donors. These objectives were clear, realistic, and consistent with the Bank's CAS. Above all, at the time of project preparation, these objectives were crucial to Government of 'Peru (GOP) poverty alleviation efforts and to the re- establishment of social cohesion and gove:rnment presence in areas of the country which had suffered the worst affects of years of civil disturbance. iii. Project Content: The project was designed to support the overall operation of FONCODES for the period 1994 to 1997. To achieve the objectives described above, the project included two core components: (a) Poverly Alleviation--supporting FONCODES' poverty alleviation efforts through the execution of community-based subprojects (representing 95.5 percent of project costs) and (b) FONCOI)ES Institutional Strengthening--to improve the institutional capabilities of FONCODES (4.5 percent of project costs). The Poverty Alleviation component supported the financing and supervision of a range of community-based, labor intensive subprojects, with a strong focus on educalion, health, sanitation, and nutrition along with other activities to assist poor rural and peri-urban populations. The Institutional Strengthening component was designed to support the rehabilitation and refurbishing of FONCODES' facilities, training of FONCODES staff in project mranagement, organizational analysis for addressing poverty issues, and technical assistance related to the implementation and supervision of the project including ex-post evaluations of completed subprojects and support for the preparation and implementation of subprojects.  iii Implementation Experience and Results iv. Over the course of the project, FONCODES approved a total of 12,630 subprojects for US$520 million. Of this total, the Bank loan financed 5,472 subprojects for US$148.9 million-- about 29 percent of FONCODES' subproject expenditures. (Note: Each subproject financed out of the Bank loan required 30 percent counterpart financing). The loan financed the construction or rehabilitation of more than 2,000 primary schools, 1300 water and sewerage systems, 340 rural roads, 300 irrigation systems, and a variety of other efforts. In addition, the loan financed the purchase of equipment, materials and training for the new MIS, and part of the cost of the expost evaluations of completed subprojects. v. As indicated by Table 1 in the Statistical Annexes, the overall outcome of the project was rated satisfactory or highly satisfactory in every major area. The project achieved all of its major development objectives with few shortcomings. The project played a crucial role in sustaining the GOP's poverty alleviation efforts by broadening access to social services through the implementation of subprojects in most of Peru's poorest areas, while strengthening local civil society and participation. It helped to mitigate the social costs of macroeconomic adjustment by stimulating private contracting and providing short-term employment to beneficiaries. Subprojects were well targeted to poor areas, demand-driven, and locally executed. The technical quality of subproject appraisals was good and largely free from political interference. Significant short term employment was generated. Finally, the project contributed significantly to strengthening FONCODES' institutional capabilities, promoting decentralization of its functions, and leveraging support from other donors. FONCODES' operations were well managed and improved over the project term. In retrospect, the design of the project appears to have been thoroughly appropriate for achieving the established objectives. vi. By 1996, 70 percent of approved subprojects were for "extremely poor" or "very poor" communities, versus 26 percent for "poor" communities, 4 percent for "regular" communities, and less than 1 percent for "acceptable" communities. The latest ex-post evaluation and beneficiary assessment found that: * 85 percent of beneficiaries reported that the subproject implemented had improved the standard of living in their zone. * 57 percent of beneficiaries reported that FONCODES is the organization which has helped their community most, (compared with 36 percent reporting it was the district or municipal government, 15 percent the local mothers club, and 8 percent the church). * 84 percent of beneficiaries recognized their community's commitment to maintain the works. * 86 percent of beneficiaries who reported that the subproject in their community was functioning stated that it was functioning well versus 11 percent who reported it was functioning poorly. vii. When FONCODES was created in 1991, large areas of Peru were still considered insecure due to the continuation of terrorist activities. As the authorities brought the rural areas under control, FONCODES was able to expand its programs to the most remote rural areas, thus increasing its investments in the poorest communities and making an important contribution to stability and social cohesion in these areas. The experience of being involved in the planning and execution of subprojects forged new links between these communities and the various levels of government, and reduced their sense of isolation and marginalization from mainstream society. The widespread recognition of FONCODES' name and achievements in rural areas has provided a  iv tangible link between isolated rural communities and the government of Peru--in many areas for the first time. viii. With the exception of some of the water and sanitation projects and irrigation systems, subprojects in all FONCODES categories showed substantial prospects for sustainability. This result has been confirmed by the ex-post evaluations and by an ongoing inventory and review of the operation and maintenance status of all completed subprojects which FONCODES initiated in mid- 1997. ix. Bank performance was highly satisfactory at every stage of the project cycle, though it should be noted that strong performance and collaboration by FONCODES facilitated Bank involvement. Mostly due to the foresigAht of both Bank and FONCODES staff involved in project preparation, the actual project timeline adhered very closely to the projected timeline. Bank supervision resources were supplemented by IDB staff and consultants. Joint supervision missions began early in 1995 and continued through project completion. x. Borrower performance was highly satisfactory for both identification/preparation and implementation. The Bank official who prepared and appraised the project stated that the fact that this project was prepared in record time was mostly due to FONCODES' high degree of efficiency and commitment. FONCODES' ability to perform economic analyses was somewhat weak at inception, but improved rapidly in the first years of the project. Audits, indicators, and evaluation reporting were generally complete and punctual. Visiting missions were given full support and extensive field visits were encouraged and well facilitated. FONCODES staff continually improve the institution's operations through an ongoing informal process of review and fine-tuning, implementing recommendations generated by FONCODES personnel in Lima and the 23 regional offices, by Bank missions, and through lessons learned from ex-post evaluations of completed subprojects and from other social funds. xi. Building on the successes of the first project, the Second Social Development and Compensation Fund Project (Foncodes II) is currently underway. The total project cost is expected to be $US 430 million, of which $USl150 million is being financed by the Bank. Many of the lessons leamed in this project have bee incorporated into the design of the second project. The preparation of the second project while the first project was still under implementation contributed to a situation in which FONCODES and the banks were highly motivated to continue to improve the institution's performance during project implementation and to continue this process of renewal and change during the second project. The ability to adapt FONCODES' operations on the basis of experience and the findings of the annual expost evaluations of completed subprojects has contributed to the high level of credibility enjoyed by FONCODES in poor communities and has created a dynamic working environment for the two banks and, more importantly, for FONCODES staff and consultants. Summary of Key Findings and Lessons Learned * The ex-post evaluations of large samples of completed subprojects, which were conducted by independent consultants, have been extremely valuable both for FONCODES and the Bank in assessing project perfomiance and impact. The value of these evaluations (four in all) increased when the later iterations were modified to include beneficiary assessments, which identified areas for improvement, such as the participation of women and community training in project operations and maintenance to enhance project sustainability.  v * The support of the President of Peru and the Ministries of the Presidency and Finance combined with the problem-solving environment fostered by the leadership of FONCODES have facilitated ongoing adjustments in procedures and programs. They have also enabled FONCODES to maintain a high level of credibility among its staff in regional offices and in the poor communities by demonstrating the institution's willingness to listen and adapt. * The decentralization and delegation of responsibility to the zonal offices, including project approval and release of funds, brought FONCODES closer to the communities it served and enabled the local staff to adapt their approach as needed to suit local conditions. * By raising the ceiling for direct contracting with communities to US$60,000 midway through the project, a greater level of community participation in projects was achieved and FONCODES was able to reach more of the remote areas where contractors are scarce and government presence is low to non-existent. The rapid response made possible by direct contracting and the greater number and variety of projects which could be contracted to the community served to build local capacity to plan and implement projects and increase communities' sense of ownership. a More emphasis needs to be placed on educating beneficiaries concerning their role in the project cycle and the use of services offered by the project. Training in the operation and maintenance of completed projects should become systematic and, perhaps most importantly, should be included in the costs of the project. This is particularly true in the case of water and sanitation projects. T There is a risk that FONCODES may in a sense become a victim of its own success. Based on its demonstrated ability to finance and supervise tens of thousands of subprojects for poor communities effectively and efficiently, FONCODES is under pressure to assume responsibility for a larger share of the GOP's poverty alleviation programs. This temptation should be resisted--FONCODES should be permitted to continue to focus on its strengths of financing and supervising small-scale, demand driven, poverty alleviation subprojects identified and implemented at the local level.  IMPLEMENTATION COMPLETION REPORT PERU SOCIAL DEVELOPMENT AND COMPENSATION FUND PROJECT I LOAN 3684-PE) PART I. PROJECT IMPLEMENTATION ASSESSMENT I. Project Objectives and Description 1. Project Objectives: The objectives of the Social Development and Compensation Fund Project were to (a) sustain the GOP's poverty alleviation efforts, (b) mitigate the social costs of macroeconomic adjustment, and (c) strengthen the institutional capabilities of FONCODES. In conjunction with these objectives, the project sought to (i) generate employment and improve access to social services; (ii) promote strong and self-reliant community organizations; (iii) complement other nation-wide projects in education and health; and (iv) maximize support from other potential donors. These objectives were clear, realistic, and consistent with the Bank's CAS. Above all, at the time of project preparation, these objectives were crucial to Government of Peru (GOP) poverty alleviation efforts and to ithe re-establishment of social cohesion and government presence in areas of the country which had suffered the worst affects of years of civil disturbance. 2. Project Components: The project was designed to support the overall operation of FONCODES for the period 1994 to 1997. To achieve the objectives described above, the project included two core components~: (a) Povercty Alleviation--supporting FONCODES' poverty alleviation efforts through the execution of community-based subprojects (representing 95.5 percent of project costs) and (b) FONCODES Institutional Strengthening--to improve the institutional capabilities of FONCODES (4.5 percent of project costs). The Poverty Alleviation component supported the financing and supervision of a range of community-based, labor intensive subprojects, with a strong focus on education, health, sanitation, and nutrition along with other activities to assist poor rural and peri-urban populations. The subproject menu included four broad categories of investment: social assistance, social infrastructure, economic infrastructure and income/employment generation. The: Institutional Strengthening component was designed to support the rehabilitation and refurbishing of FONCODES' facilities, training of FONCODES staff in project management, studies on poverty, organizational analysis for addressing poverty issues, and technical assistance related to, the implementation and supervision of the project including ex-post evaluations of completed subprojects and support for the preparation and implementation of subprojects. 3. Linkage with Sector Strategies: IBRD's overall strategy for Peru supports the GOP objective of laying the basis for sustained economic growth and improving living conditions for the majority of the population. The IBRD strategy for assistance in the social sectors is focused on long-term institutional strengthening, development of appropriate sector policies and strategies, and concentration of resources on primary health and education. As part of this strategy, IBRD is currently financing loans for the Basic Health and Nutrition Project (US$34 million), the Primary  2 Education Project (US$146 million), the Sierra Natural Resources Project (US$51 million), and the Rural Roads Project (US$90 million), as well as a Second FONCODES Project for US$150 million. FONCODES is the institution which spearheads the GOP's poverty alleviation efforts. Other poverty alleviation programs are executed by a number of GOP agencies including PRONAA, INFES, INADE, the Vaso de Leche (Glass of Milk) Program, and specific programs and projects of the Ministries of Health and Education. FONCODES helps to assure effective translation of GOP social policies into investment and community level actions through its strong emphasis on community participation and its specific mandate to identify and help satisfy the basic needs of the poorest segments of the population. 4. Background: Unlike many social fund projects, FONCODES was not established with World Bank or other international financing. FONCODES was created in 1991 by the Fujimori Government to serve as the focal point for Peruvian public sector investments in poverty alleviation, and as the principal social development component of the government's structural adjustment program. The economic difficulties, precarious security situation and declining public investments of the 1980s had left the social and economic infrastructure of the country in an advanced state of decay. To help address this challenge, FONCODES was designed to finance social investment projects prepared by local communities in poor areas of the country, to promote temporary employment, and to assist in emergency situations. Between 1991 and 1993, the only external support for FONCODES was a 1992 institutional development grant from the Inter- American Development Bank (IDB). FONCODES had learned certain lessons prior to the preparation of this project, including the need for effective targeting, definition of the subproject menu, establishment of objective criteria for subproject evaluation and approval, and regular supervision of subproject implementation. The Bank and IDB projects were prepared with a view to institutionalizing these lessons, increasing the scale of impact, ensuring the establishment of adequate project administration and financial management procedures, and strengthening project monitoring and evaluation activities to reinforce continuous quality improvement in FONCODES' operations. .I. Achievement of Project Objectives 5. Over the course of the project, FONCODES approved a total of 12,630 subprojects for US$520 million. Of this total, the Bank loan financed 5,472 subprojects for US$148.9 million-- about 29 percent of FONCODES' subproject expenditures. (Note: Each subproject financed out of the Bank loan required 30 percent counterpart financing). The average cost of subprojects financed by the Bank loan was about US$27,000. Since its inception, FONCODES has implemented an average of about 4,000 subprojects per year and generated an average of about roughly 4 million days of employment each year. About 75% of projects financed from 1991 - 1995 were social infrastructure, the vast majority of which were primary schools, water and sanitation; 7% were social assistance; 15% were economic infrastructure, including small rural roads, bridges, electricity, and irrigation systems; and 3% were productive projects. The loan financed the construction or rehabilitation of more than 2,000 primary schools, 1300 water and sewerage systems, 340 rural roads, 300 irrigation systems, and a variety of other efforts. In addition, the loan financed the purchase of equipment, materials and training for the new MIS, and part of the cost of the expost evaluations of completed subprojects (which were co-financed by the IDB). Please refer to Table 8D of the Statistical Annexes which indicates the breakdown of expenditures from the loan by category and subcategory.  3 6. As indicated by Table 1 in the Statistical Annexes, the overall outcome of the project was rated satisfactory or highly satisfactory in every major area. The project maintained satisfactory or highly satisfactory ratings since its approval. Subprojects were well targeted to poor areas, demand-driven, and locally executed. The ltechnical quality of subproject appraisals was good and largely free from political interference. Significant short term employment was generated. FONCODES' operations were well managed and improved over the project term. In retrospect, the design of the project appears to have been thoroughly appropriate for achieving the established objectives. Though the SAR criteria for judging achievement of project objectives were not impact-oriented, this was compensated for by the inclusion of semi-annual expost evaluations of completed subprojects, (see below). The semi-annual evaluations were expanded to include the evaluation of subprojects financed by the II)B and became annual rather than semi-annual in order to allow for greater scope and more time to assess the results, test innovations, and incorporate the findings into FONCODES ongoing operations. 7. The 1996 Living Standards Measurement Survey revealed that 40 percent of improvements in infrastructure and services in poor rural communities during the previous four years had been financed by FONCODES. 'From 1994 to 1996, people in rural areas gained significantly greater access to basic services. During this period the percentage of the population with access to health services increased from 33% to 56%, with access to potable water from 33.3% to 42.1%, with access to sewerage services from 2.8% to 6%, and with access to electricity from 25.9% to 29.2%. By financing the construction of works in each of these categories, FONCODES played a major role in these improvements. 8. FONCODES' ability to reach the poorest communities with its services was strong initially and improved over the course of the- project. The resource allocation (i.e. targeting) system used to identify poor communities was refined by increasing the number of socioeconomic indicators applied and by disaggregating poverty data from the provincial to the district level, (the smallest political unit in Peru). The ex-ante evaluation of project proposals carried out by the regional offices includes a socioeconomic assessment and a mandatory field visit to the community. Between 1991 and 1995, 31 percent of all projects approved were located in "extremely poor" or "very poor communities". By 1996, 70 percent of approved subprojects were for "extremely poor" or "very poor" communities, versus 26 percent for "poor" communities, and 4 percent for "regular" communities, and less than 1 percent for "acceptable" communities. Furthermore, 58 percent of the project proposals submitted by the "extremely poor" in 1996 were approved, versus 51 percent for the "very poor", 49 percent for the "poor", and 41 percent for the "regular". III. Ex-post Evaluation Results 9. Since FONCODES' inception, four external expost evaluations of completed subprojects have been carried out by independent public research NGOs. Each evaluation included a stratified random sample of 200 to 350 completed supbrojects. In all, about 850 of more than 9,000 projects financed by the two Banks were included in these evaluations. The most recent evaluations (1994, 1995, and 1997) were jointly financed by the Bank and the IDB. The evaluations included interviews with the principal stakeholders of FONCODES subprojects, including beneficiaries, members of the nucleo ejecutor (a four person project management committee which is elected at a community assembly to which all potential beneficiaries are invited), project operators, and officials in FONCODES' regional and central offices. The  4 following excerpts summarize the major finding of the fourth evaluation (1997) which included a sample of 350 subprojects financed during the 1994-1996 period: Development Impact: * 85 percent of beneficiaries reported that the subproject implemented had improved the standard of living in their zone. * 57 percent of beneficiaries reported that FONCODES is the organization which has helped their community most, compared with 36 percent reporting it was the district or municipal government, 15 percent the local mothers club, and 8 percent the church. * 48 percent of nucleo ejecutor members interviewed reported that the subproject executed in their community created more than 20 temporary jobs, 21 percent reported 10 to 20 jobs were created, and 14 percent between 6 to 10 jobs. * 66 percent of beneficiaries did not believe that their personal income had risen as a result of the project. l Of those who believed their incomes had increased, 73 percent reported that they had spent the increase on food, 19 percent on clothing or shoes, and 15 percent on health expenses. * 64 percent of the beneficiaries of water and sanitation projects reported that there had been a noticeable decline in the incidence of diarrhea in their communities. * 90 percent of the beneficiaries of education projects reported that the quality of education had improved since the execution of the project. * With regard to electrification projects, the percentage of beneficiaries without daily electricity access diminished from 84 to 3 percent. * With regard to potable water system projects, the percentage of beneficiaries without daily access diminished from 95 to 7 percent. + The majority of beneficiaries of irrigation and agricultural subprojects reported little or no improvement in productivity as a result of the project.2 Quality and Sustainability of Works: * 76 percent of beneficiaries reported no problems in the execution of the works versus 13 percent who reported problems. Of the latter group, 28 percent reported that the problem resulted due to the poor performance of the individuals charged with the execution of the work, 15 percent due to a lack of adequate materials, and 13 percent due to a lack of money for additional works. Twenty-two percent of those surveyed did not qualify their response. lIncreasing personal income is not a major objective of most FONCODES projects. 2Ex-post evaluations were typically undertaken less than a year after subproject completion. A longer term measure of project outcomes would likely be needed to assess changes in agricultural productivity.  5 * 84 percent of beneficiaries recognized their community's comniutment to maintain the works. * 86 percent of beneficiaries who reported that the subproject in their community was functioning stated that it was functioning well versus 11 percent who reported it was functioning poorly. * 85 percent of beneficiaries reported that 1he people charged with the operation of the subproject work (schools, health posts, community centers, etc.) were either adequately or well qualified. * 55 percent of those surveyed reported that FONCODES had taught them how to care for the implemented works versus 20 percent who mentioned that they were not, though 25 percent did not respond. (This 55 percent is a significant improvement over the 34 percent recorded during the previous ex-post evaluation.) Participation: * 57 percent of beneficiaries affirmed that the idea to implement a subproject came from the general population or a community group, while 8 percent reported it being an idea of one of the nucleo ejecutor members, and 21 percent didn't qualify their response. * 60 percent of the population surveyed were present in the community assembly where the subproject was decided upon. * 47 percent of beneficiaries surveyed reported that they had participated in the maintenance of their community subproject. IV. Implementation Record and Major Factors Affecting the Project Factors not generally subject to government control. 10. When FONCODES was created in 1991, large areas of Peru were still considered insecure due to the continuation of terrorist activities. As the authorities brought the rural areas under control, FONCODES was able to expand its programs to the most remote rural areas, thus increasing its investments in the poorest comrnunities and making an important contribution to stability and social cohesion in these areas. T'he experience of being involved in the planning and execution of subprojects forged new links between these communities and the various levels of government, and reduced their sense of isolation and marginalization from mainstream society. The widespread recognition of FONCODES' name and achievements in rural areas has provided a tangible link between isolated rural communities and the government of Peru--in many areas for the first time. Factors generally subject to government control. 11. It is notable that availability of GOP counterpart funding was never at issue in this project. In fact, from FONCODES' inception in 1991 through the completion of this project in June, 1997, expenditures totaled almost US$ 883 million, of which 71% was financed out of the public  6 treasury and 24% by the World Bank and IDB. The consistent support of the President of Peru, the Ministry of Finance, most of the line ministries, and other public and private sector organizations has bolstered the credibility of FONCODES. The President provided unequivocal support for FONCODES through a Board of Directors headed by the well known and widely respected Archbishop of Ayacucho and top business leaders. Key positions in FONCODES were consistently staffed by experienced officials from the public and private sectors who contributed considerable managerial and technical expertise to the project. Factors generally subject to implementing agency control. 12. Institutional: FONCODES staff in headquarters and regional offices worked long hours and showed a high degree of commitment to institutional goals and objectives. Despite somewhat rapid turnover in key positions during the project period (including three changes of executive director), FONCODES was able to maintain a highly qualified staff which allowed it to continually function efficiently and effectively. FONCODES staff has been managed on a performance basis with strong performers being promoted through the ranks and those who prove unequal to the task at hand being moved aside. (All FONCODES staff are hired on a contract basis and can be terminated quickly if performance is unsatisfactory). Overall, management of FONCODES has been consistently strong. 13. FONCODES as an organization has clear objectives which have been supported by a well- defined project cycle, transparency in project identification, selection and evaluation, specific guidelines for field staff regarding project preparation and supervision during implementation, and straightforward financial management, procurement and administrative procedures. The stability and coherence of operations have contributed a great deal to maintaining equilibrium and effectiveness within the organization even during periods of relatively high staff turnover. 14. Targeting: FONCODES targeting capabilities evolved over the course of the project into some of the strongest of any social investment fund. By 1996, FONCODES had combined geographic targeting with individual assessments and incentives for self-selection of the poor. The allocation combines informnation about the number of people living in populated centers which have between 40 and 300 households with a district-level poverty index from the poverty map used in previous years. (The district is the smallest political geographic division so targeting is in effect specific to the local level). Small correlations to the allocations were then made to reflect the spending capacity of regional offices, flows of funds from directed donations, and the special needs of border regions. A computerized system helps to prioritize projects according to poverty level, lack of basic services and the absorptive capacity of communities. Promotion and outreach activities are directed at areas of extreme poverty where communities have little or no capacity to propose projects on their own. In most cases, all of this is accompanied by an individual assessment mechanism such as a mandatory on-site visit to verify informally the poverty level of the community in question, providing additional information for refined targeting. Finally, self- targeting by low wages is a mechanism employed to ensure that only the poor have the incentive to take the temporary employment created by the project. 15. In 1995, FONCODES identified all of the poor and extremely poor communities which had never requested a project and initiated a special promotional effort in those communities. It was apparent that these communities would require special attention and assistance due to their inherent institutional weakness. FONCODES began to allow some communities to present a "project profile" for pre-screening rather than a full fledged project proposal, thus reducing  7 preparation costs. Through the Promotion Unit, FONCODES also began helping some communities in project design and preparation. The result of these efforts can be seen over time in the increased allocation of FONCODES resources to the poor and extremely poor communities. (See Tables 8E, 8F, and 8G of the Statistical Annexes) 16. Training: Training financed by the project was limited to assisting FONCODES headquarters and regional office staff in the use of the new MIS. There was no formal training program for staff in project operations other than on-the-job training by colleagues. The need for community/beneficiary training in project operations and maintenance was not fully recognized in 1993, in part because the majority of subprojects financed in the early years were primary school or health post rehabilitation and construction which were tumed over to the Ministry of Education or Health upon completion. The 1995 expost evaluation of completed subprojects revealed that project sustainability was not automatically Iguaranteed by the line ministries, local government or the poor communities. FONCODES revised, its project cycle to include the cost of beneficiary training in operations and maintenance if needed to enhance project sustainability. 17. Management Information Systems: When the project was prepared in 1993, the IDB had already contracted a consultant to plan the design of an upgraded and expanded MIS because the expansion of FONCODES was stretching the capacity of the original system. The World Bank agreed to co-finance with IDB the equipment for the new MIS based on the IDB consultant proposal. The Bank did not appraise this cojmponent because the work had already been initiated by the IDB. The proposal was unsatisfactory and FONCODES worked for almost two years with joint IDB and IBRD technical and financial support to develop a second, then a third plan which was deemed acceptable by FONCODES and the banks. FONCODES decided to use UNOPS support for the acquisition of the new system. This required a loan amendment and interagency agreement which contributed to the delays. In retrospect, it seems that the banks and FONCODES underestimated the time required for development of the new MIS design and for transition to the new system. The outcome, however, was favorable--during the final six months of the project, FONCODES installed the new system at headquarters and in the 23 regional offices and trained staff in its use. The new system supports the extensive decentralization of operations which has occurred since 1993 and permits project and financial data to be entered, transmitted to Lima and automatically updated on a daily basis. V. Project Sustainability 18. With the exception of certain water amd sanitation projects and irrigation systems, subprojects in all FONCODES categories showed substantial prospects for sustainability. This result has been confirmed by the ex-post evaluations and by an ongoing inventory and review of the operation and maintenance status of all completed subprojects which FONCODES initiated in mid- 1997. The evaluations identified a need for enhanced community training in operations and maintenance, particularly for water and sanitation projects. The development and execution of these training activities were incorporated into the design of the second Bank financed project. However, the design and pilot testing of the training activities were initiated during the final months of the first project, with technical support provided by the preparation of the second project. 19. The risk of significant negative environmental impact of FONCODES' activities was minimal due to the relatively small size of subprojects. However, due to the sheer number of such projects, the aggregate effect is of concern and the Bank monitored FONCODES' environmental  8 activities periodically during the supervision phase. FONCODES used an operations manual and technical guidelines acceptable to the Bank for the environmental assessment of subproject proposals. These guidelines were not applied evenly to all projects however, and staff had received little or no training in their use. In early 1996, FONCODES hired consultants to update the guidelines and to train staff in their use. For the second Bank financed project, agreement was reached by the banks and FONCODES that a full-time environmental specialist would be contracted to oversee these activities. The guidelines were updated and staff trained with minor delays. 20. FONCODES improved its coordination with other public sector agencies substantially during the life of the project, and the following legal coordination agreements were signed: Ministry of Education and INFES (1994), Ministry of Health (1993), UTE and FONAVI for sanitation (1995), Rural Roads Program (1995), the Ministry of Agriculture's PRONAMACHCS Program (1995), Ministry of the Interior (1995), National Institute of Statistics and Information (1995), and National Superintendency of Customs (1995). Clarity in the division of responsibilities between FONCODES and these other institutions contributed a great deal to their success. For instance, the agreement with the Ministry of Transport specifies that FONCODES only finances projects with a total cost of less than $US250,000; the agreement with INFES specifies that it builds secondary schools and FONCODES builds primary and specialty schools in rural and marginalized urban areas; and the agreement with the Ministry of Energy and Mines specifies that FONCODES only finance secondary electricity networks when a primary network is already in place. 21. As long as FONCODES remams committed to an ongoing process of continuous quality and organizational improvements, its immediate future as an institution looks promising. Until the government has overcome the existing weaknesses in its public sector management and expenditure systems and increased its capacity to provide social services and socioeconomic infrastructure throughout the country, the Ministry of the Presidency will continue to complement the efforts of the line ministries and the regional and local governments. The role of FONCODES in the implementation of demand-driven, small-scale projects is expected to remain unchanged for at least the next four years as its work is considered an important contribution to the government's effort to reduce poverty and improve living conditions in poor communities. VI. Bank Performance 22. Bank performance was highly satisfactory at every stage of the project cycle-- identification, preparation, appraisal, and supervision, though it should be noted that strong performance and collaboration by FONCODES facilitated Bank involvement. Mostly due to the foresight of both Bank and FONCODES staff involved in project preparation, the actual project timeline adhered very closely to the projected timeline. Bank supervision resources were supplemented by IDB staff and consultants. Joint supervision missions began early in 1995 and continued through project completion. 23. Some disbursement delays during project implementation arose due to the use of different disbursement systems for the separate World Bank and IDB projects. In addition, retroactive financing was agreed at negotiations but could not be used as much as anticipated because the government could not apply the planned amount of loan proceeds to subprojects which had been  9 approved during the previous calendar year. The second project intends to address this problem by providing for the establishment of a local bank account to disburse the proceeds of both loans. 24. The total time allocation on pre-board activities was 60 staff weeks (SW) during the FY 93-94 period, slightly below the Bank-wvide average of 87 for project preparation. The average time allocated to supervision from both headquarters and the field was 15 SW per year, including pre-board and completion activities (as compared to the LAC average of 19.5 in social projects). The cost of supervision was below the Bank-wide average--the average supervision cost for FONCODES was US$45,000 per year, as compared to the Bank-wide average cost of social sector supervision of roughly US$65,000 per year. On average, two supervision missions per year were carried out, in which the task manager was accompanied by various staff and consultants, including a social assessment specialist, a financial specialist, procurement specialists, engineers and economists. In addition, IDB provided specialists in WID, education, poverty economics and infrastructure. Supervision missions examined an array of administrative and technical issues, though special attention was granted to targeting, subproject impact and sustainability, and coordination of the project with line ministries and local govermments. VII. Borrower Performance 25. Borrower perforrnance was highly satisfactory for both identification/preparation and implementation. The Bank official who prepared and appraised the project stated that the fact that this project was prepared in record time was mostly due to FONCODES' high degree of efficiency and commitment. FONCODES' ability to perform economic analyses was somewhat weak at inception, but improved rapidly in the first years of the project. Audits, indicators, and evaluation reporting were generally complete and punctual. Visiting missions were given full support and extensive field visits were encouraged and well facilitated. 26. In 1995, there was a backlog of projects awaiting appraisal which reflected the strong demand for FONCODES' support which was generated by its demonstrated responsiveness to poor community needs. This was alleviated by special efforts undertaken in 1996.to clear the project backlog. For several months, no new project applications were accepted by FONCODES. During the final year of the project, and in response to a request by the Bank, FONCODES carried out a procurement audit of 33 projects in which there had been some violation of Bank procurement guidelines and would therefore not otherwise have been eligible for Bank financing. Results of the audit showed that those projects suffered either from insufficient appraisal, irregular inspections by contractors, , or high contract administrative costs which required extensions or defaults. FONCODES has since undertaken measures to minimize these risks in future subprojects. 27. At the time of project completion, FONCODES had a core staff of about 300 individuals which was supplemented by about 250 external project evaluators, supervisors and a small number of individuals who work on short term contracts as needed. The latter include local project inspectors whose responsibility it is to ensure that the technical portion of the implementation phase is properly executed. Finally, there is the temporary formation of a nucleo ejecutor, an administrative mechanism/feature unique to FONCODES among social funds. While not officially part of FONCODES' administrative stnicture, the nucleo ejecutor is a group of four unpaid individuals (typically a president, secretary, comptroller, and treasurer) who are members of the community, are elected by the community, and are charged with the responsibility of overseeing the  10 financial and operational execution of the local subprojects. The nucleo is granted temporary legal status (personeriajuridica) which allows it to receive and expend public sector funds. 28. FONCODES staff continued to improve the institution's operations through an ongoing informal process of review and fine-tuning, implementing recommendations generated by FONCODES personnel in Lima and the 23 regional offices, by Bank missions, and through lessons learned from ex-post evaluations of completed subprojects and from other social funds. Monthly meetings at headquarters with all zonal office heads and constant field visits by managers from Lima ensure a continuous exchange of information and ideas. 29. FONCODES' achieved significant economies' of scale in administrative and supervisory functions and was able to maintain administrative costs at roughly 8 percent of total costs. This was partially due to sufficient technical capacity in Peru which allowed FONCODES to contract out much of the subproject evaluation and supervisory work. (FONCODES uses a register of engineers to identify qualified consultants throughout the country and maintains blacklists in each zone of contractors who don't perform up to standard). The decentralization of decision-making also aided in this respect. By the end of the project, the 23 regional offices had been delegated much of the authority to evaluate and approve subprojects, disburse funds, and approve small changes in the size of contracts for subprojects. VIII. Assessment of Outcome 30. The outcome of this project was judged to be highly satisfactory. The project achieved all of the major development objectives with few shortcomings. The project played a crucial role in sustaining the GOP's poverty alleviation efforts by broadening access to social services through the implementation of subprojects in most of Peru's poorest areas, while strengthening local civil society and participation. It helped to mitigate the social costs of macroeconomic adjustment by stimulating private contracting and providing short-term employment to low income beneficiaries. The proportion of resources reaching poor communities was high due to the extensive use of direct contracting and limited use of intermediaries. Finally, the project contributed significantly to strengthening FONCODES' institutional capabilities, promoting decentralization of its functions, and leveraging support from other donors. IX. Current and Future Operations 31. Building on the successes of the first project, the Second Social Development and Compensation Fund Project (Foncodes II) is currently underway. The total project cost is expected to be $US 430 million, of which $US 150 million is being financed by the Bank. Many of the lessons learned in this project (see below) have been incorporated into the design of the second project. The preparation of the second project while the first project was still under implementation contributed to a situation in which FONCODES and the banks were highly motivated to continue to improve the institution's performance during project implementation and to continue this process of renewal and change during the second project. The ability to adapt FONCODES operations on the basis of experience and the findings of the annual expost evaluations of completed subprojects has contributed to the high level of credibility enjoyed by FONCODES in poor communities and has created a dynamic working environment for the two banks and, more importantly, for FONCODES staff and consultants.  11 X. Key Lessons Learned and Recommendations for Future Operations 32. Some of the key lessons learned from FONCODES' experience and recommendations for future operations may be summarized as follows: * The ex-post evaluations for large samples of completed subprojects, which were conducted by independent consultants, have been extremely valuable both for FONCODES and the Bank in assessing project performance and impact. The value of these evaluations (four in all) increased when the later iterations were modified to include beneficiary assessments, which identified areas for improvement, such as the participation of women and community training in project operations and maintenance to enhance project sustainability. * The support of the President of Penr and the Ministries of the Presidency and Finance combined with the problem-solving environment fostered by the leadership of FONCODES have facilitated ongoing adjustments in procedures and programs. They have also enabled FONCODES to maintain a high level of credibility among its staff in regional offices and in the poor communities by demonstraiting the institution's willingness to listen and adapt. * The decentralization and delegation of responsibility to the zonal offices, including project approval and release of funds, brought FONCODES closer to the communities it served and enabled the local staff to adapt their approach as needed to suit local conditions. * Transition to the new MIS was slower than estimated by the banks and FONCODES, and its installment in regional and central offices proved difficult. Greater attention to the development of the MIS during the project preparation phase would likely have facilitated this process. - FONCODES' largely successful efforts to target the poorest demonstrates the importance of employing (a) an objective allocation system which provides for the selection of projects based on technical rather than political criteria, (b) promotion activities in the poorest areas, given that the poorest are often the least awvare of the resources available to them, and (c) simplified procedural requirements for the poorest communities, i.e. the use of a "project profile" rather than the more technical and elaborate "technical proposal". * By raising the ceiling for direct contracting with communities to US$60,000 midway through the project, a greater level of community participation in projects was achieved and FONCODES was able to reach more of the remote areas where contractors are scarce and government presence is low to non-existent. The rapid response made possible by direct contracting and the greater number and variety of projects which could be contracted to the community served to build local capacity to plan and implement projects and increase communities' sense of ownership. * More emphasis needs to be placed on educating beneficiaries concerning their role in the project cycle and the use of services offered by the project. Training in the operation and maintenance of completed projects should become systematic and, perhaps most importantly,  12 should be included in the costs of the project. This is particularly true in the case of water and sanitation projects. * To enhance subproject quality and sustainability, greater emphasis should be placed on training of individuals contracted by FONCODES as supervisors and inspectors. * To cover recurrent costs and to enhance the operation and sustainability of certain types of projects, further efforts are needed to improve coordination with line ministries and local governments, and to improve relevant agency compliance with handover agreements. * More attention should be paid to environmental impact concerns during the design phase of subprojects to ensure that they are environmentally sustainable and that their execution and operation will not hinder future economic development in the community. * Within its current operating framework, FONCODES should incorporate a more structured gender perspective in its subproject promotion, implementation, and training activities. There is a risk that FONCODES may in a sense become a victim of its own success. Based on its demonstrated ability to finance and supervise tens of thousands of subprojects for poor communities effectively and efficiently, FONCODES is under pressure to assume responsibility for more and more of the GOP's poverty alleviation programs. This temptation should be resisted-- FONCODES should be permitted to continue to focus on its strength of financing and supervising small-scale, poverty alleviation subprojects identified and implemented at the local level.  13 PART II. STATISTICAL ANNEXES Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Negligible Not Applicable Macro policies O0 0 0 0 Sector policies 0 0 O 0 Financial objectives 0 0 0 0 Institutional development 0 0 0 0 Physical objectives 0 0 0 OJ Poverty reduction 0 0 0 O Gender issues 0 El 0 0 Other social objectives el 0 0 0 Environmental objectives 0 0 0 0 Public sector management 0 0 0 0 Private sector development 0 00 0 B. Project sustainability Likely Unlikely Uncertain Sustainability 0 0 0 Subproject Sustainability 0 0 0 Highly C. Bank performance satisfactory Satisfactorv Deficient ('/) (/) (1) Identification 0 0 0 Preparation assistance l0 0 0 Appraisal 0 0 0 Supervision 0 0 0 Highly D. Borrower performance satisfactory Satisfactorv Deficient V() (/) (/) Identification 0 0 0 Preparation assistance 0 0 O Appraisal 0 O E Supervision 0 0 El Highly Highly E. Assessment of outcome satisfactory Satisfactory Deficient unsatisfactory ( 0 0 0  14 Table 2: Related Bank Loans/Credits t.X. f.Xl....000,EE-... - . . .......... ........"f''0"E,"tTS''"''0;'0''''k'ttTt'S.T'XST0"tdX'0S"0l'l' 1 ,.,, , ,, ~~~~~. . . . . . . . . . . . . . .. .. . . . .. Preceding Operations in lending progam: Loan 3437-PE Trade Policy Reform Loan 1992 Closed Loan 3452-PE Structural Adjustment Loan 1992 Closed Loan 3489-PE Financial Sector Adjustment 1992 Closed Loan 354PE Privatization Technical Assistance 1992 Closed Following operations in lending program: Loan 3701-PE Basic Health and Nutrition 1994 In operation Loan 3826-PE Primary Education 1994 In operation Loan 4068-PE FONCODES II 1996 In operation Loan 4130-PE Sierra Natural Resources 1997 In operation Loan 4250-PE El Nifto Emergency Loan 1997 In operation Table 3: IBRD Project Timetable 1000-00:-0-y ~ ~ ~~~~ ~ ~ ~ ~ ~ ... ... . ..tE ... .. ..1. .. .. .. .. .. .. ..... .. ........ .. .. .. .. .. . ............. . .... D'ate Plan izd' DateActua Identification (Executive Project Summary) March 1993 February 1993 Preparation April 1993 April 1993 Appraisal July 1993 July 1993 Negotiations October 1993 October 1993 Board Presentation December 1993 December 1993 Signing December 1993 December 1993 Effectiveness March 1994 March 1994 Midterm Assessment November 1995 March 1995 Loan Closing December 1997 June 1997 Final Disbursement September 1997 November 1997 Table 4: Loan Disbursements: Cumulative Estimated and Actual (US$ thousands) 11 ~~ . .. .. .. .. .. .. .. ... .. ... ..........i -.E Appraisal estimate 12,500 45,000 77,500 95,000 100,000 Actual 9,970 43,230 77,410 99,890 99,964 1 Actual as percent of estimate 1 80% 1 96% 100% 105% 100% Date of final disbursement: November, 1997  15 Table 5: Key Ladicators for Project Implementation IN:: CATOR UNITS . 1994 1995 999-6: Jwe-997. 94m-- .. .. . : - June Projects Presen ted Number 10,845 5,271 8,963 4,456 29,535 Amount (U$S) 550 283 642 214 1,689 Projects Evaluated Number 6,410 4,673 5,938 2,177 19,198 Amount (U$S) 278 214 272 129 893 Projects Financed Number 4,681 3,211 4,396 2,121 14,409 Amount (U$S) 152 128 167 116 563 Projects Financed Number 13,965 17,176 21,572 23,693 n.a. (Accumulated since 1991) Amount (U$S) 476 604 771 887 Projects in Execution Number 5,813 4,762 5,920 3,724 n.a. Amount (U$S) 241 251 278 220 Proyectos paralizados 2,001 425 29 36 n.a. Projects concluded2 Nunber 5,035 4,386 3,854 4,226 17,501 ____________ Amount (US$) 145 129 147 114 536 Projects liquidated 4' Number 3,339 5,161 3,380 5,455 17,335 Amount (US$) 81 140 157 157 535 Disbursements** Amount (U$S) 153 178 155 64 550 1/ Project in execution during the year 21 Includes special projects 3/ Depending on year of completion 4/ Includes pending disbursements 5/ 1997 includes 1779 approved projects for US$43 million and disbursements of US$20 thousand from FONCODES II Table 6: Key Indicators for Project Operation INDIC :T . 0BJECT.IE UNTS 1994 -95- 1996 197 Proportion of Evaluation Percentage 14.3 2.5 0.13 0.15 cancelled quality projects/approved Time between Efficiency Calendar Days n.a n.a. n.a. n.a. project presentation and approval Time between Effieciency Caleindar Days n.a. n.a. n.a. n.a. project approval and first disbursement _ Human Resources: Efficiency Evaluators External Personnel 269 259 123 159 Supervisors External Personnel 358 508 487 520  16 Table 7: Studies Completed January 1994 - June 1997 . .. .. . .. .-.. .. ...... . . ... .. .. .. .... . .. . STUDY PURPOSE STATUS O~~~~~~~~~~~~~~~~~ .. ... UTCOME...... Ex-post Evaluations To ascertain the results of Periodic examinahion of theI (Consecutive Studies) projects financed by FONCODES methodological focus on _______________FONCODES, on the basis targeting, prioritizathon, evaluation l First Evaluation (1994) of representative samples. Completed procedures, monitoring, and controls.l ___________________ ~~Also, confirmation of thel , , l0 Second Evaluation (1994) Completed anticipated socioeconomic profile of l _____________________ ~~~~~~~~extreme poverty, the high correlation l Third Evaluation (1995) Completed betwveen lines of credit and the needsl ____________________ ~~~~~~~most in demand; the high levels of l Fourth Evaluation (1997) Completed participation in the project; and the Alegitimacy of the latter. SOURCE: Planning Office Table 8A: Global Project Costs SS milhioetremepovery th *lig orrlto Item Local Foreign Local Foreign r l ~~~~~~~~~costs costs Total costs Costs Totall F1. Community Based Projects CopeeI the project andt__ Social Assistance 60 11 71 106 106 I Social InvestmTenet 338.5 59 397.5 424 ProjetCs424s I Subtotal 399 70 469 530 530I |2. S1F Institutional Development__ _ _ __ _ _ _ __ _ _ __ _ _ __ _ _ _ Works and rehabilitation 1.5 0 2 0.5 ____ 0.5 Equipment, 2 4 6 0.7 .08 1.5 l vehicles,l maintenance____ __ ___ l Technical 7 3 10 3.3 3.3l Assistance ______ ____ __ _ Subtotal 18 9 27 47 0.8 47 TOTALS 416 79 495 577 0.8 577  17 Table 8B: Global Project Financing Apprasal estimate Actual l (WS$on mfl W oi g Local Foreign Local Foreign Item costs costs Total costs Costs Total Government of Peru 200 0 200 355 0 355 Beneficiaries* 42 42 0 I13RD 80 20 100 100 0 100 IDB 80 20 100 93 0.6 94 Other Donors 14 39 53 29 0.2 29 TOTAL 416 79 495 577 0.8 577 *Beneficiary contribution was not registered in the system for this project before 1997. This will show in the second progress report of FONCODES II. Table 8C: Initial IBRD Allocations and Actual Disbursements by Category Category Description Amount of the Loan Alocated Disbursements in SUS .eLxpressed in DoUat Equivatenf- Part A of the project- Subprojects (a) Works acquired by direct 24,000,000 62,617,434.02 contracting (b) Works other than under (a) above 45,500,000 26,570,723.04 (c) Goods acquired by direct 5,000,000 427,866.43 contracting (d) Goods other than under (c) above 14,000,000 2,840,788.42 (e) Technical assistance 7,000,000 3,077,352.76 Part B of the Project- Institutional Strengthening (a) Works 750,000 149,164.07 (b) Goods 750,000 982,424.93 (c) Technical assistance 3,000,000 3,333,701.40 SPECIAL ACCOUNT 0 -35,563.67 Total 100,000,000 99,963,871.40  18 Table SD: IBRI) Funded Subprojects by Category* , FNANCING AREAS / SECTORS / No. of Amount LINES OF INVESTMENT Projects Approved IBRD Local SOCIAL ASSISTANCE 278 7.1 4.8 2.2 NUTRITION 1 0.0 0.0 0.0 Pre-School and day care centers 1 0.0 0.0 0.0 HEALTH 158 4.5 3.1 1.4 Packages of medicine 76 0.6 0.4 0.2 Health Prevention Campaigns 31 1.6 1.1 0.5 Family Planning 6 0.2 0.1 0.0 Integral Health Care 45 2.1 1.5 0.6 EDUCATION 119 2.6 1.7 0.8 Litteracy 104 2.3 1.5 0.7 Training 15 0.3 0.2 0.1 SOCIAL INFRASTRUCTURE 3.608 88.2 57.1 31.1 NUTRITION 20 0.7 0.5 0.2 Soup kitchen construction and rehabilitation 20 0.7 0.5 0.2 HEALTH 143 3.8 2.3 1.4 Construction and rehabilitation of health posts 129 3.3 2.1 1.3 Construction and rehabilitation of health centers 14 0.4 0.3 0.1 EDUCATION 2,060 49.2 33.7 15.5 Classroom construction and rehabilitation 1,678 37.8 25.7 12.1 Construction and rehabilitation of sports centers 31 0.5 0.3 0.2 Construction and rehabilitation of community centers 351 10.9 7.6 3.2 Sanitation 1,385 34.6 20.6 14.0 Water supply and sewage 1,115 26.2 19.9 6.3 Sanitation 270 8.4 0.6 7.8 CAPITAL INFRASTRUCTURE 1.296 48.3 30.6 17.6 AGRICULTURE 497 18.2 10.9 7.3 Forestation and reforestation 96 2.7 1.8 0.9 Small irrigation systems 317 14.0 8.0 5.9 Land rehabilitation 26 0.7 0.5 0.3 Economic infrastructure 15 0.6 0.4 0.2 Construction and improvement of wells 43 0.2 0.2 0.1 ENERGY 460 15.2 10.0 5.2 Secondary electric networks 455 15.1 9.9 5.2 Small electrification 5 0.2 0.1 0.0 TRANSPORTATION 339 14.8 9.7 5.1 Roads 339 14.8 9.7 5.1 PRODUCTIVE DEVELOPMENT 290 5.3 3.0 2.3 AGRICULTURE 229 4.8 2.7 2.1 Productive subprojects 229 4.8 2.7 2.1 MULTISECTORAL 61 0.5 0.3 0.2 Microenterprises 2 0.1 0.0 0.1 Small-Scale processing activities/transformation 59 0.4 0.3 0.1 TOTAL 5,472 148.9 95.6 53.3 Source: Operations Division - Foncodes  19 TARGETTING TABLES (Global Program) Table 8E: Number of Projects Presented and Approved According to Poverty Levels Poverty Level 1994 1995:: 1996 . ________ __ - Presented - Approved Presented. Approyed ented Approved Extreme Poverty 1,312 362 718 331 1,728 1,007 Very Poor 4,576 1,825 2,208 1,187 4,128 2,140 Poor 3,485 1,615 1,697 1,134 2,375 1,170 Regular 1,489 865 599 520 446 183 Acceptable 50 29 19 22 3 3 Multiregional 19 9 11 7 7 8 TOTAL 10,931 4,705 5,252 3,201 8,687 4,511 Table 8F: Ratio of Approved Projects in Relation to Presented Projects According to Poverty Levels .___ ._ _ 1994' 199-m9- ::1995 1996 Extreme Poverty 27 46 58 Very Poor 39 54 51 Poor 46 67 49 Regular 58 87 41 Acceptable 58 100 100 Multiregional 47 64 100 Table 8G: Coiniimitted Budget for Approved Projects (In Millions of New Soles) _______1_ 1994 1995 1996 Extreme Poverty 18,4 21,2 55,3 Very Poor 114,5 79,9 132,7 Poor 104,9 90,9 86,4 Regular 63,8 43,4 11,4 Acceptable 2,7 2,4 0,3 Multiregional 62,5 72,9 104,4 TOTAL 366,8 310,7 390,4  20 Table 9: Economic Costs and Benefits No co-t beneitM analysis was' included in this project  21 Table 10: Status of Legal Covenants Pern: Social Investment Fund Project Loan 3684-PE 2.04(c) 5 C Prepare and submit No comments. progress report. 2.05(a) 5 C 06/30/95 Hold Mid-Term Review. No comments. 2.5(c) 5 C 09/30/95 Take action on No comments. recommendation of Mid- Term Review. 2.06(b) 5 C Refrain form providing No comments. loan guarantees. 2.06(c) 2 C Commitmnents for No comments. financing loans for Small Enterprise Subprojects shall at all times be 10% or less of the aggregate amount of funds committed by FONCODES. 2.07 13 C 06/30/94 Retain independent entiy No comments. for carrying out impact evaluations of Subprojects which have been completed. 3.01(b) 5 C Maintain an executive No comments. director, general manager and line managers with experience and qualifications acceptable to the Bank. 3.01(c) 5 C Maintain salaries of No comments. FONCODES mangers and professional staff at competitive market levels. 4.01(b) 2 C 06/30/95 Independent audit of No comments. records, accounts and financial statements. 4.02 2 C Independent audit of No comments. sample of Subprojects.  22 Table 11: Compliance with Operational Manual Statements Tall:Bank Resources: Staff Inputs (SW,cul ____________93 94 95 96 97 98 Total Preparation 26.5 26.5 Appraisal 24.5 24.5 Negotiations = 8.7 = = = = 8.7 Supervision 40.5 10.8 2.7 54.0 Completion _- 3.8 3.8 TOTAL 26.5 24.5 40.5 19.8 2.7 = 117.5  23 Table 13: Bank Resources: Missions Number: <-PefrmanceRat::g-:.> Monthl of.. . ays In Specializd Staff- Implementation ve}opment . Stageof Project Ccle Year Perons. Field k... Sills Ueppesneted Status:.. . Objectiv