Colombia - Social Safety Net Loan Project

Report No. PID8647 Project Name Colombia-Community Works and Employment (@) Project (Manos a la Obra: Proyectos Comunitarios) Region Latin America and Caribbean Region Sector Social Funds & Social Assistance; Labor Markets & Employment Project ID COPE68762 Borrower(s) GOVERNMENT OF COLOMBIA Implementing Agency Address DAPRE (ADMINISTRATIVE DEPARTMENT OF THE PRESIDENCY) Contact Person: Manuel Salazar Tel: (57-7) 334-9763; 334-4405; 334-0031 Fax: 57-1-334-0221 Email: mlsalazar@dnp.gov.co Bogota, Colombia Environment Category B Date PID Prepared October 20, 2000 Projected Appraisal Date March 21, 2000 Projected Board Date May 11, 2000 1. Country and Sector Background The economic crisis and its effects. Colombia is currently experiencing one of the most difficult periods of its recent history, and its most severe economic crisis in over sixty years. Economic activity is expected to have declined by 4.5 percent in 1999; the economic crisis has led to a historically high unemployment rate which reached 20 percent in urban areas in September 1999. The fiscal deficit is expected to surpass 6 percent of GDP in 1999. While the recession has negatively affected almost all productive sectors, the impact has been particularly severe in construction and manufacturing, which contracted by 24 percent and 17 percent respectively between the second quarters of 1998 and 1999. In its effort to implement the needed adjustment measures, the Government has committed itself to a 7 percent real reduction in its budget for 2000 as compared with its 1999 budget. The costs are expected to be concentrated in investment expenditures and salaries.The economic crisis has a number of implications for the population. One is its direct impact on welfare through income reduction. In the short-term, this may affect nutrition, access to health services and education; for children, these effects are often irreversible. Recent surveys in urban areas found that Colombians are reducing their food intake at all income levels, especially among the poorest quintile. More than half (52 percent) of the households in this quintile have reduced expenditure on food items. In addition, preliminary results of a World Bank study in Cali show that 61 percent of the households of the bottom quintile have suffered from hunger during the past year. In the medium and longer term, income reduction may negatively affect human capital, perpetuating the vicious cycle of poverty. Students who withdraw from school to contribute to family income, for example,  seriously endanger their human capital. In the case of the unemployed, long periods outside the labor market reduce future employability and also contribute to the deterioration of human capital. An indirect effect of economic crises relates to the impact of tightening of budgets for public expenditures on coverage and the quality of essential public services in health and education. For example, the rise in unemployment has led to a huge reduction in the number of workers affiliated with the contributive health insurance system. The decline appears to be more than 25 percent in the last year alone. Moreover, reduced public health spending could lead to delayed immunizations and heighten children's vulnerability to disease. Finally, as highlighted in the recent Bank report, "Managing the Social Dimension of Crises: Good Practices in Social Policy," economic crises could provoke "breakdowns in family and social structures that can lead to permanent declines in social cohesion and rises in family and communal violence". In Colombia, where violence and social cohesion are serious issues, this effect is of great concern.The structure of unemployment. The above-mentioned unemployment rate of 20 percent is the highest in Colombia's recorded history and far above its traditional natural rate of 11 percent. Unemployment is higher among women than men (23.2 percent vs. 16.4 percent). It is highest for those in the 15-19 year age-group (36.7 percent) and descends steeply and continuously with age, reaching 8.7 percent for those 60-69 years of age. In terms of educational attainment, workers with incomplete secondary school suffer the highest rates (19.1 percent) of unemployment, while those with completed college (0.9 percent) and without any education whatsoever (12.4 percent) experience the lowest rates. In terms of geographic distribution, more than 80 percent of the unemployed are located in 78 municipalities with a population of 100,000 or more.Poverty and income distribution. While economic crises affect people in all strata of life, they can have a particularly devastating impact on those living below or close to the poverty line. The current recession has especially affected those in the most vulnerable families, which consist of the bottom quintile of the income distribution. This group is in a particularly precarious situation due to its limited human capital which constrains people's ability to compete in the labor market during times of recession. In addition, since they possess few physical assets and financial savings, the loss of a job may lead to the disappearance of their sole source of income. Finally, the lack of unemployment insurance makes the poor particularly vulnerable to the economic crisis.Data indicate that all of the gains of the first part of the present decade in terms of poverty reduction have been lost as a result of the recession. During the second half of this decade, extreme poverty -- defined in terms of minimum food intake -- in the urban areas has increased by more than 4 percentage points, reaching 18.2 percent in the first quarter of 1999. During the same period poverty, as measured by domestic standards, increased by seven points, reaching a level of 60.4 percent.Income inequality also rose dramatically from 1997 to 1999. The relative earnings of the richest quintile with respect to the poorest went from 13.6 times in 1995 to 21.8 times in 1998; correspondingly the Gini coefficient rose from 0.50 to 0.55. While the income of the fifth quintile grew by more than 50 percent between 1990 and 1998, the poorest quintile suffered a net loss of 20 percent during the same period. Overall, as a result of the current economic recession, the welfare level of the poorest quintile is substantially below that enjoyed by the same group two decades ago. Public and social expenditures. During the 1990's, -2 -  public expenditure on the social sectors as a proportion of GDP has more than doubled, increasing from 3.8 percent of GDP in 1990 to a projected 7.7 percent for 1999. Public social expenditures comprise expenditures on health, education, the Instituto Colombiano de Bienestar Familiar (ICBF), and the national training institute (SENA), and do not include expenditures on pensions. The increase is mainly due to the result of larger transfers from the Central Government to departments and municipalities, as stipulated by the 1991 Constitution, and a result of the Government's policy of increasing coverage of social services. Nevertheless, despite this dramatic increase, the level of public social expenditure in Colombia remains low by Latin American standards. A disaggregation of public social expenditures by sector shows that during the 1990's, some changes in the composition of these transfers have taken place, with the proportion directed towards health increasing at the expense of spending on public education, whose participation in social expenditures fell from 61 percent in 1990 to an estimated 54 percent in 1999. Over two-thirds of public spending on the social sectors now takes place at the sub-national level. An important component of the GOC's current adjustment program, whose goal is the reduction of the non-financial public sector deficit, is the control of transfers to local governments, which have grown at an average real rate of nearly 12 percent annually during this decade. To this effect, a constitutional amendment draft has been presented to Congress which proposes the maintenance of the real value of transfers to local Governments at the level reached in 2002 (maximum proportion of current revenues). In other words, transfers would increase annually with inflation, but their link to the Government's current revenues would be severed. This and the projected resumption of growth, explains the decline in the proportion of GDP directed to social expenditures in the coming years. The need to rationalize government expenditures, and the resulting tightening of budgetary constraints and pressure on municipal and departmental transfers, highlights the importance of protecting expenditures that target the most vulnerable populations and the imperative of increasing the efficiency of social sector expenditures. A number of initiatives are under consideration to increase the efficiency of public expenditures, e.g. a reform of Law 60 to introduce the concept of capitation (student enrollment) into the formulas used to calculate transfers, rather than basing them on historical expenditures which rely on teacher distribution, and merely reinforce inequities in access to resources; these reforms, however, have progressed rather slowly. Regarding the protection of expenditures for the most vulnerable, the GOC has made it clear that an additional 0.3 percent of GDP per year, over and above current public social expenditures, will be targeted to the provision of social safety net programs during the next three years (2000-2002). 2. Objectives In order to alleviate the impact of the current economic crisis on the poor and vulnerable population, the Project would finance small, labor intensive public works to provide temporary employment to poor workers, increase the net labor income of their families, and prevent deterioration of living standards in poor communities. Deterioration of living standards in poor communities would be ameliorated not only through increased income from temporary work but also through improved basic services in poor communities. It is expected that at least 70 percent of the workers hired by the Project would come from households in the first - 3 -  quintile of the household income distribution. In addition, the projects would be located in communities in the first and second quintiles, of the Indice de Calidad de Vida (ICV).This employment generation project contributes directly to the Government's evolving Red de Apoyo Social (RAS) program to expand and strengthen Colombia's social safety net system to respond better to the crisis. The Bank, IDB, and CAF are committed to support the program through a series of lending operations and analytical studies. The Bank, IDB and CAF lending operations are part of an agreement reached with the Government of Colombia that will provide an additional 0.3 percent of GDP per year, from 2000-2002, over and above current public social expenditures for a safety net project (about US$250-$300 million annually). The Bank strategy is based on a three-pronged response comprised of: this emergency employment generation project; a conditional income transfer project; and analytical work to support Government efforts to protect the most vulnerable groups during this crisis. To this end, the Bank plans to immediately follow this employment generation loan of $100 million with another social safety net project of $150 million, which would include welfare assistance components. Meanwhile, the IDB, in close collaboration with the Bank, is preparing a separate $250 million loan to be submitted to their Board around July 2000 to support complementary employment generation and welfare assistance initiatives as well as a pilot training component for young adults. 3. Rationale for Bank's Involvement Bank support adds value in several areas. First, given the Bank's international experience and analysis of factors determining project success, the mission was able to convince the Government to focus the Project on a small number of strategic components. Second, as mentioned, the design of Manos a la Obra: Proyectos Comunitarios has specifically benefited from the Bank's experience in Trabajar. The Government sent a study tour, arranged by the Bank, to Argentina to learn from the experience of Trabajar. Many of the lessons learned are reflected in the design of the Project. Finally, the mission's cost-effectiveness analysis, based on earlier studies of international programs by Bank staff, has helped to focus Government attention on key issues that affect the ability of the Project to reach its objectives efficiently. 4. Description 1. Manos a la Obra: Proyectos Comunitarios Sub-Projects* 2. Project Management 3. Monitoring and Evaluation 4. Unallocated 5. Financing Total ( US$m) Government 2.98 IBRD 100 IDA LOCAL CONTRIBUTION 90 Total Project Cost 192.98 6. Implementation Overall Project implementation responsibility. The Departamento Administrativo de la Presidencia de la Republica through the Fondo de - 4 -  Inversi6n para la Paz (DAPRE-FIP) or Investment for Peace Fund would be responsible for Manos a la Obra: Proyectos Comunitarios and other Red de Apoyo Social (RAS) projects. To provide oversight of the FIP, the Government has established a Board consisting of the heads of DAPRE, the Ministry of Foreign Affairs, DNP, and other departments.DAPRE-FIP would be responsible not only for the RAS but also for other programs, which have different objectives and agenda. Consequently, it has been agreed that operationally and financially the RAS would be maintained separate from the other FIP programs. To this effect, the RAS would have its own Bank accounts and accounting system. Moreover, a Steering Committee, which would be composed of high level representatives from stakeholders such as the Departments of Planning, Education and Health as well as ICBF and SENA, would be established to ensure that RAS operations are technically sound and well coordinated. The principal responsibilities of the Committee are to provide technical orientation, coordination of the various RAS projects, and supervision of their performance. A National Coordinating Unit (NCU), which would be the Project management unit with full-time and relatively autonomous staff, would be instituted under the DAPRE-FIP. The NCU would be responsible for ensuring implementation of project objectives and guidelines as well as loan administration, including procurement, disbursement and accounting. The DNP, which would be in charge of the actual monitoring and technical review of the project's progress, would report its evaluation to the Executive Committee. Most of the Project execution would be done through outsourcing arrangements with several national and sub-national entities. These arrangements would involve the Financiera de Desarrollo Territorial (FINDETER, a local development bank) for sub-project evaluation and selection; NGOs and EATs (Empresas Asociativas de Trabajo or workers' cooperatives) acting as Sub-project Implementing Entities for managing sub-projects and selecting/paying their workers; and a Management Information System (MIS) company for keeping track of sub-projects and workers. Municipal and departmental governments, NGOs, EATs and public service companies are eligible to propose sub-projects. In the case of municipalities, however, they will have to choose and work with an NGO or EAT, which will act as a Sub-project Implementing Unit. Guidelines and Manual of Operations. The functions and responsibilities of the above project participants would be governed by several manuals, guidelines and related documents. These include an Operations Manual (Project File) along with other guidelines for sub-project identification, preparation, selection, supervision, reporting, procurement and disbursement. The experience of the Bank in similar programs in other countries (e.g., Argentina) has been used to improve such tasks as program definition, scope, administrative systems, responsibilities, and monitoring.Apart from various measures aimed at ensuring active beneficiary participation in the choice of sub-projects and workers, several evaluation and screening systems would be established to ensure that the works would be technically sound and that they would comply with all of the applicable environmental, operational and other criteria. The role of FINDETER in reviewing and assisting in the approval of sub-projects within the program would be very pivotal in the ensuring that sub-projects are well-prepared.In general, eligible projects include minor construction, repair, expansion, or remodeling of schools, health facilities, basic sanitation facilities, cultural facilitie, small roads and bridges, culverts and canals, environmental urban infrastructure, community centers, and pilot housing. The Operations Manual describes eligible projects by type of sub-projects; - 5 -  and for each type it defines in detail applicable restrictions, if any. All sub-projects will be evaluated by professionals according to a methodology specified in the Operations Manual. The assessment would include economic, technical, financial, institutional, environmental and social aspects. Guidelines on needed information to be submitted with proposals are detailed in the Operations Manual. Unit costs for specific types of sub-projects and a data base for updating them would be established to guide their assessment. The size of the sub-project is limited to between $20,000 - $100,000 and up to 50 workers, if it receives financing of materials from the loan. If it does not, its cost could go up to $150,000. Given that more than 80 percent of the unemployed are located in 78 municipalities (these include municipalities with more than 100,000 inhabitants, departmental capitals and metropolitan areas), it was decided to allocate 80 percent of the loan to these areas. The other 20 percent would be earmarked for the rest of the municipalities. The project would give economic assistance (wage contributions) of about $90 per month for six hours of work per unskilled laborer working in approved sub-projects. This is equivalent to about 70 percent of the take home minimum wage for normal hours of work. The NCU would assign a budget for each region based proportionally on the regional distribution of unemployment and poverty. This quota system is aimed at preventing the concentration of project benefits in a few regions. Within each region proposed sub-projects would be evaluated, ranked and visited by the Regional FINDETER Office (Unidad Regional de FINDETER or URF). The sub-project ranking system is based on a formula that considers: the poverty strata of the localities in which a sub-project would be undertaken (using the Indice de Calidad de Vida); compliance with agreements regarding satisfactory delivery of funded sub-projects; the labor-intensity of the proposed sub-projects; and the amount of non-public sector contributions. The formula, described in the Operations Manual, is designed to leverage the loan to maximize its effect on employment and to ensure that the expected benefits would actually be generated and directed to the poorest communities.The NCU would establish a list of pre-qualified non-governmental entities based on agreed criteria (included in the Operations Manual). The list will be an open registration, which will be updated regularly. Sub-project funding would require a "convenio" (agreement) among the FIP, the proponent and its selected Sub-project Implementing Unit in accordance with the Operations Manual. The agreement would follow a "Modelo de Convenio" acceptable to the Bank. This model will be incorporated in the Operations Manual. Supervisors would be hired by the NCU based on agreed terms of reference to ensure technical quality and good management of the Project. They will review the budget of the sub-projects, technical specifications, compliance with environmental guidelines, and site visits during project implementation . Guidelines will be included in the Operations Manual.A management information system (MIS) would be established to ensure reliable and quickly available information needed for monitoring of sub-projects and efficient payment of salaries and minimization of abuses (e.g. payment of "ghost workers" and non-completion of sub-projects). The design of the MIS as well as operations will be outsourced based on competitive bidding. Financial management. The National Coordination Unit (NCU) under DAPRE-FIP will be responsible for maintaining project management arrangements acceptable to the Bank. A LAC Financial Management Officer (FMO), under supervision of a Financial Management Specialist (FMS), has visited and assisted the Project Management Unit to establish a project financial system as required by the Bank, per OP.BP 10.02 and to - 6-  complete Bank financial requirements. Included among the requirements is an Operations Manual for the Project. In this regard, it was recommended that the Operations Manual should concretely specify internal controls over project transactions, including control procedures for project flow of funds. In addition, the Manual should include specific administrative and accounting procedures to assure sufficient control and accurate information.Just prior to negotiations, Bank financial assessment indicated that the Project was not ready for immediate implementation. Bank minimum financial management requirements has not been satisfied due to the fact that the NCU has not yet been staffed and the Operations Manual still needs some details regarding controls over project flow of funds. The Operations Manual has now addressed many of the concerns expressed in the financial management assessment report. In this regard, the Government has agreed to a time-bound Action Plan designed to address the remaining concerns described in the financial management report. The conditions of effectiveness to which the Government has agreed to are summarized in Section G (Main Loan Conditions). Fulfillment of these conditions will ensure that Project funds can be accounted for opportunely and that they will be used in accordance with the purposes of the loan.Accounting, financial reporting and auditing arrangements. The National Coordination Unit (NCU) under DAPRE-FIP will be responsible for the management of project funds including national counterpart funds and for keeping track of local counterpart resources. In order to assure accurate and timely information about project funds, the NCU would install an integrated financial system acceptable to the Bank. This system would include planning, internal controls, accounting, and financial reporting. Project Chart of Accounts would be structured accordingly.During each year, the NCU shall prepare and submit to the Bank quarterly Project Management Reports (PMRs) linking project expenditures to key monitoring indicators of activities carried out during the quarter. The formats and basis to produce those reports would be in accordance with the Bank's Financial Management Manual and LACI procedures.In addition to PMRs, external audits of project financial statements will be required on an annual basis. Auditing of project accounts will be carried out by an independent private sector firm acceptable to the Bank. A specific shortlist of audit firms and Terms of Reference for audits (TOR) should be prepared by the NCU and a no-objection letter should be issued by the Bank. The Terms of Reference for audits has been prepared; however, it would include evaluation of NGO/EAT performance based on specific audit procedures. Employment and payment of workers. Through an output-based contract, the Sub-project Implementing Entities would receive contributions from the project for salaries and, some cases, materials in return for undertaking and satisfactorily completing agreed sub-projects. No employer-employee relationship between the Project and the workers will be established either explicitly or implicitly. The selection and payment of workers would be the responsibility of the contractors. It is assumed in good faith that they will comply with Colombian labor laws. Under this arrangement, the Project would pay Sub-project Implementing Entities fees for management services. It has been agreed, however, that not more than 10. of the loan amount would be used to finance these fees and other administrative expenses. Much of the cost of these services could be avoided, if municipalities were allowed to directly execute sub-projects. The Government, however, stressed that the use of NGO or EAT management services is necessary to reduce political manipulation and corruption.Wage -7 -  contributions to workers for approved sub-projects would be paid monthly to Sub-project Implementing Entities. Only workers with "cedula" (national identity number), which by law is required of persons 18 years old and over, would be paid. Government would make an effort to facilitate rapid acquisition of valid identification cards. Other than the requirements that a worker should have a "cedula", a non-student status, and a SISBEN 1 or 2 classification, there are no other restrictions on who can be hired by the sub-projects. Information in the MIS would be used to control and cross-check the payroll. 7. Sustainability This Project is an emergency response to the rise in unemployment due to the economic crisis. Unlike standard Bank projects, therefore, Manos a la Obra: Proyectos Comunitarios is expected to fade away, as normal employment levels return. At the end of the three-year project period, it is expected that the unemployment rate would be significantly lower than it is today, because of the reforms that the Government is currently pushing to solve the economic crisis. These reforms, whose implementation is being facilitated by this project, are expected to stimulate economic growth and, therefore, increase employment. Still, it remains uncertain whether the unemployment rate will go down to historically low levels three years from now. If it does not, Manos a la Obra: Proyectos Comunitarios , if it works well, would probably be continued by the Government (as has been Argentina's experience with Trabajar) -- perhaps at a scaled down level. If on the contrary it does, the Bank and the Government will have to discuss how to make use of the "software" and experience developed by Manos a la Obra: Proyectos Comunitarios to enable the Government to more quickly respond to emergency employment demands in the future. The bottom line is that a successful implementation of the Project would encourage the Government to include workfare (as enriched by Colombia's experience with Manos a la Obra: Proyectos Comunitarios) in its arsenal of weapons for providing emergency assistance to the poor. The sub-projects would likely be sustained after project completion. The process of identification, evaluation, selection, implementation and supervision of Manos a la Obra: Proyectos Comunitarios sub-projects is designed so that proposals that are not technically, economically, and financially viable are screened out. Equally important, the Project would seek to encourage local participation in the identification and preparation of proposals in order to build local ownership and interest in completing, operating and maintaining sub-projects funded by the program. Finally, the cost of operations and maintenance of the sub-projects is projected to be small on the whole. (Annex 5). 8. Lessons learned from past operations in the country/sector There is broad experience with labor intensive public works programs aimed at generating employment. The lessons from this experience are succinctly summarized in the aforementioned IBRD paper, "Managing the Social Dimensions of the Crises: Good Practices in Social Policy." These lessons, which are reflected in the design of the Project and the choice of workfare as an instrument for strengthening Colombia's social safety net, are: (i) Workfare has several intuitively appealing features. It does not provide disincentives to work. It also enables the positive features of workforce participation to be maintained and thus, possibly, aids social cohesion.(ii) Workfare programs can be considered cost-effective only if, in addition to serving as a self-targeting mechanism for distributing cash - 8 -  in the form of wages (or food, in food-for-works programs), the public works provide substantial benefits in themselves. It is possible to target the works performed so that the assets created benefit the poor in the long run. Given the costs for administration, equipment and materials, skilled labor, and targeting errors and allowing for foregone earnings, the share of a dollar spent that reaches the target group in net benefit is low. It is often on the order of 20 to 30 cents.(iii) It is possible to get good rates of return with labor-intensive methods; however, the labor share is likely to be no more than 40-60 percent in a large portfolio of sound projects.(iv) The higher the share of unskilled labor in total costs, the greater will be the contribution to current benefits.(v) If the wage is set at a low level (at or below the effective market wage for heavy, unskilled labor), only the poor will choose to work on the jobs, and errors of inclusion will tend to be low.(vi) Good workfare programs are complex to run, and hence, they require good preparation. Additional lessons are further reflected in the decision to keep the objective of Manos a la Obra: Proyectos Comunitarios limited in scope and to include in the next project complementary approaches, such as conditional income transfers, to both broaden and strengthen Colombia's social safety net. These lessons are:(vii) Labor-intensive public works programs have rarely employed a very large fraction of the poor -- e.g., the Maharashtra Employment Guarantee scheme in the 1980s, widely regarded as one of the most successful and relatively large public works scheme, did not cover more that 18 percent of households in the bottom income quintile.(viii) Workfare programs do not help all groups -- they are not suitable instruments to reach the elderly or children; they usually do not reach the working poor, for whom the opportunity costs of participating are higher; and explicit design features need to be incorporated to get substantial rates of participation by women. The above lessons are consistent with the observations of the project's study team that went to Argentina to study that country's Trabajar program. 9. Program of Targeted Intervention (PTI) Y 10. Environment Aspects (including any public consultation) Issues : During project preparation, Bank environmental specialists and consultants worked closely with the borrower to insure that project's design is consistent with Bank environmental guidelines and policies. The borrower has completed an Environmental Guidebook (EG) which identifies key environmental issues and sets in place a process to insure compliance with Colombian laws along with mitigating potential environmental impacts. The Borrower has also included detailed environmental criteria in the two key sub-project documents: the Manual de Evaluaci6n Ex-Ante de Proyectos and the Manual de Preparaci6n y Presentaci6n de Proyectos Manos a la Obra: Proyectos Comunitarios. A summary of the EG can be found in Annex ll.The sub-project investments that would be financed under the Loan are expected to be small (about $50,000 on average) with a cost ceiling of US$150,000 per sub-project. No major infrastructure works would be undertaken. Investments would include neighborhood improvement, water supply connections, road improvement and building construction (health centers, housing, schools and recreational facilities). All investments would be subject to an environmental screening process to insure compliance with Colombian environmental laws, including recently enacted legislation on land use planning. None of the proposed project site locations are near National Parks/protected areas or -9-  areas where indigenous peoples reside. Also, sub-projects which are proposed in high risk locations such as flood plains and areas of high earthquake risk will be rejected. A completed list of sub-project types can be found in Annex 11. The GOC recognizes that even small infrastructure investments so crucial to the economic recovery should comply with national environmental laws. This is especially important in poor urban and rural areas where public health and environmental conditions are often more serious than in the middle and upper class neighborhoods. At the same time, new investments such as those contemplated in this project would provide the opportunity to redress some of the most pressing environmental problems. To the extent possible the results of project investments should have an overall positive impact on neighborhood environmental conditions. Community level environmental sub-projects such as the development or recovery of public green space would be eligible for funding. In order to insure adequate environmental analysis and sub-project monitoring, the Project would hire during the first year an Environmental Specialist as a regular Consultant who would be based in the National Coordinating Unit (NCU). In year 2 and 3, the Specialist would be hired as a consultant as needed. The requirements of the position will include solid background on the legal and institutional framework currently in place in Colombia, along with previous experience with environmental management and training. The Specialist will be responsible for providing environmental oversight on sub-project approval and implementation. He will make sub-project site visits, review sub-project assessments and approvals undertaken by the FINDETER evaluators, and be available as a resource person on environmental issues related to project implementation. The Specialist will also be the key resource person for both the NCU and FINDETER on environmental screening and review procedures along with similar procedures identified in each participating municipality's POT (Plan Ordenamiento Territorial). In addition, the Specialist will oversee the implementation of the environmental training program that all sub-project evaluators will be required to take prior to assuming their positions with FINDETER. The Specialist will provide substantive input on environmental sub-project criteria to the Project team charged with overseeing the promotion of the Project throughout Colombia. Specific terms of reference for the Specialist have been included in the final version of both the EG and OM. Environmental criteria will be fully incorporated into the project's monitoring and evaluation plan. During project supervision, required site visits will include an assessment of environmental impact. FINDETER, with support from national, regional and local environmental agencies, will introduce specific sectoral environmental guides and manuals into communities to help them to improve neighborhood level environmental management. Various government agencies including the Ministry of Environment has prepared guides/manuals for: (i) housing/building construction; (ii) materials transport/roads; (iii) civil works; (iv) water supply and sewer systems; (v) solid and liquid waste management; and (vi) natural resources use and exploitation.FINDETERUnder current operating guidelines, FINDETER is responsible for insuring that infrastructure investments are screened for environmental impact by the legally responsible agencies (national, regional or urban). FINDETER's management has the capacity to review proposed investments to insure that project proponents have adhered to the legally binding screening and review process. Proponents must submit, as needed, documents such as environmental licenses, permits and management plans before an investment - 10 -  project can be approved for funding. FINDETER is currently receiving support from the Bank under loan CO-PE 6861, Colombia Second Municipal Development project. Component 3 (Institutional Strengthening) of that loan provides support to FINDETER to improve its overall project management capacity. One of the activities which has been undertaken was the preparation of a plan to improve its capacity to review compliance with environmental laws and to evaluate on an ongoing basis the environmental performance of investment projects. It is expected that resources will be directed at developing monitoring and evaluation methodologies and information systems for assessing environmental performance. 11. Contact Point: Task Manager Vicente B. Paqueo The World Bank 1818 H Street, NW Washington D.C. 20433 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending October 20, 2000.