Morocco - Social Development Agency Project

Report No. PID10235 Project Name MOROCCO-Social Development Agency Region Middle East and North Africa Region Sector Social Funds Project ID MAPE73531 Borrower(s) GOVERNMENT OF MOROCCO Implementing Agency Address SOCIAL DEVELOPMENT AGENCY Agence de Developpement Social (ADS) Address: 22 Rue Jbel Ayachi, Agdal. Rabat. Contact Person: Mr. Najib Guedira Director General - ADS Tel: 212-37-779-771 Fax: 212-37-682-389 Email: ads@iam.net.ma Environment Category B Date PID Prepared October 2, 2001 Projected Appraisal Date October 15, 2001 Projected Board Date March 28, 2002 1. Country and Sector Background Poverty, vulnerability and urban-rural disparitiesAlthough access to basic services has improved in recent years, poverty and vulnerability increased. Poverty increased from 13% of the population in 90/91 to 19% in 98-99 (or, from 3.4 to 5.3 million) and vulnerability (defined as those who are at or below 50% above the poverty line) increased from 35% to 44% during the same period. The wide disparities and gaps in social services between rural and urban areas (or poor and rich areas) remain one of the main challenges the country is facing. Morocco has very unfavorable social indicators compared to lower-middle income countries with similar GDP. These indicators reflect the huge disparity between urban and rural areas in Morocco (for example: less than 15% of rural households with piped potable water versus over 90% in urban households, less than 20% rural access to electricity versus more than 85% in urban areas, 47% rural female primary enrollment as % of school-age population versus over 80% in urban areas).Lack of economic infrastructure in rural areasThe unavailability of economic infrastructure in rural areas restricts rural population from effectively benefiting from agricultural-based activities or diversifying their sources of income. This is manifested in the lack of markets, access to main roads (especially in rainy seasons when some areas are cut off from the main roads) and weak infrastructure like irrigation canals and water harvesting projects. This situation continues to fuel rural-urban migration and increases the pressure on urban slum areas where people are already living in very harsh circumstances.Potential demand for Micro Finance (MF) that is much greater than the supplyDue to the instability and seasonaility of agricultural income and the weak economic infrastructure mentioned above, a lot of the poor and vulnerable groups in both rural and slum urban areas are involved in micro enterprises to increase and diversify their income. These micro entrepreneurs are in need of both financial and nonfinancial services to support their activities. A number of NGOs embarked on micro credit programs since the early 90s and  over the years developed sound programs reaching a significant number of poor families in rural and urban areas. However, the current programs responds to less than 5t of the estimated potential needs in this area (Making Micro Finance Work in the Middle East and North Africa, World Bank, 1999). Ineffectiveness of public programsUrban rural disparities have been the focus of the government in recent years. However, the results have been limited in terms of better access to social services by poor rural and urban slum population. There are many reasons for this: Most government programs are single-sector interventions; Second, a top-down approach characterizes most government interventions; andThird, a very centralized approach is being used in delivering social services. Involving civil society and NGOsThere is a need for innovative and comprehensive approaches to be used by government agencies in tackling developmental issues using multidisciplinary approaches, particularly in rural areas. Approaches are needed that would allow local communities to express their needs, participate in putting plans together and help in their implementation. Experiences, across the world and in Morocco, show that these participative approaches, beside being more cost effective in the delivery of social services, provide a good starting point for local ownership and better chances for the sustainability of these development activities.Government strategyThe Bank is finalizing with the Government a comprehensive social protection note which will form the basis for establishing a social protection strategy. The note identifies the specific target population and assesses the effectiveness of the instruments of the social protection system. It provides specific recommendations for each government sponsored program for the future (some programs are recommended to be expanded, others to be phased out and others are recommended to be restructured). In the Micro Finance area, the government has been supportive of the excellent initiatives of a number of local NGOs who have initiated successful "best-practice" micro credit programs since the early 90s. The government issued a micro finance law in 1999 which regulate the work of Micro Finance Institutions (MFIs) and has not hampered the development of this industry since it did not restrict the application of commercial interest rates to allow MFIs to cover their operational costs. The law required that NGOs involved in MF and other social sectors should have their MF operations separately registered (all active NGOs in the country comply now with this rule). Micro savings is still a gap that needs to be filled as NGOs are not allowed to mobilize savings. 2. Objectives The overall goal of the "Agence de Developpement Social" (ADS) is to introduce new approaches and mechanisms for reaching poor communities and vulnerable groups.The project supports this goal and its specific objectives are to: a)Test new approaches for delivering social services in a more relevant and cost effective manner by supporting the establishment of a participative demand-driven mechanism that will reach out to poor communities; and b) Better organize local communities to take charge of setting development priorities and implementing development activities by strengthening the capacity of local NGOs 3. Rationale for Bank's Involvement The Bank's main value added in this project is its accumulated experience with Social Funds' type projects and in the human development sector in Morocco. The Bank would provide "best practice" experience in two main - 2-  areas; institutional aspects related to the design of the ADS (which has already been going on in the dialogue with the government so far to establish the agency and during the identification and preparation phases). The other area would be related to different modalities of community driven development and participatory approaches. The Bank will provide lessons learned in other countries (especially regional lessons from Egypt and Yemen) in terms of possible scope of activities for the ADS, possible intermediaries to be used for sub-projects implementation, different procurement methods to be used, etc. 4. Description 1- Community Development & social infrastructure (US$ 9 million): this component will support sub-projects to enhance the social infrastructure of selected poor rural and urban slum areas. 2- Support to economic infrastructure and income generation (US$ 3.75) : This component will support three kinds of activities; Sub-projects that enhance the economic infrastructure in rural and urban slum areas. Examples are irrigation, small markets and rural roads sub-projects; Sub-projects that finance training and nonfinancial support to activities that are directly related to creating employment opportunities or expanding existing micro or small businesses; and Sub-projects that support the expansion of the existing micro finance operations to new geographical areas. 3- Institutional Development for Intermediaries (US$ 1.5 million): this component supports and increases the effectiveness of the first two components by supporting the capacity of ADS' intermediaries to identify, appraise and implement sub-projects. 4- Studies and ADS Capacity Building (US$ 0.75 million): this component will provide support to different institutional and operational aspects of the ADS to learn from experiences with similar operations in other countries. It will also help enhance the ADS management and Board of Directors' understanding of specific technical areas like micro finance. The component will finance studies that are directly related to the operational activities of the ADS. The component will also support the establishment of a comprehensive monitoring system for the ADS to monitor its sub-projects. 5. Financing Total ( US$m) BORROWER 8.00 IBRD 5.00 LOCAL COMMUNITIES 2.00 Total Project Cost 15.00 6. Implementation The ADS set-up The ADS has already been established by law in 1999 as a public establishment. The ADS' highest authority is Its Board of Directors. The Board is headed by the Prime Minister and has Six representatives from the Government (Ministers of Interior, Social Development, Finance, Agriculture, equipment and trade and industry); Three representatives from the private sector; and Three representatives from the NGOs' sector.For the approval of sub-projects, a Sub-Project Committee is formed as part of the Board. The committee has four representatives from the Government (representatives from Ministries of Interior, Social Development, Finance and Equipment), two from the private sector and two from NGOs. The DG of the ADS manages its day-to-day operations including recruitment of personnel, dealing with external -3 -  parties and acts as the secretary of the Board. A draft operational manual laying out the funding criteria for sub-projects and eligibility criteria for intermediaries has been developed and approved by the Board of Directors. The manual will guide the work of the ADS and help the sub-projects approval committee decide on sub-projects.The ADS will start with a small core group of staff in Rabat and the regions. A "statut du personnel" for the ADS has already been developed and approved by the Board of Directors and the Ministry of Finance. The ADS finalized the process of recruiting the first group of personnel. Regional representation will start with three-four coordinators, who are already recruited, representing the ADS in different regions who will eventually form the nucleus for regional offices.Implementation mechanismsThe ADS works based on demand. The ADS embarked on a promotional campaign covering all the country to inform national, regional and local NGOs as well as local authorities of its activities and eligibility criteria. NGOs have already started to submit sub-project proposals to the ADS for consideration. Fifteen sub-projects are being appraised with local communities and should be contracted by the end of 2001. Sub-projects will be implemented by local NGOs/communities in collaboration with local governments with several modalities used. In case of sub-projects with relatively big infrastructure components, local contractors will be used (with the ADS helping in procurement if needed). 7. Sustainability The sustainability of the ADS will be ensured as the government will be financing its administrative structure as well as its investment funds till 2004. It will then depend on how efficient the ADS will be in the coming years in terms of reaching poor population and supporting different kinds of development projects, in a cost-effective manner, to ensure the availability of funds whether from outside donors or from the general budget of the country. Another dimension of sustainability, is the sustainability of sub-projects supported by the ADS. Communities will contribute to the costs of sub-projects (with different percentages of the cost depending on the nature of the activity financed). This has proven to be a good way to ensure communities will sustain the facility/activity in other parts of the world in similar projects and also in community-based projects sponsored by NGOs in Morocco. 8. Lessons learned from past operations in the country/sector There are two dimensions to lessons learned that are reflected in the proposed design of the project; the Bank's experience in Social Funds and its experience in Morocco. On the first one, lessons learned from global social fund experience were already reflected in the design of the ADS (like private sector and NGO representation on the Board, the ex post financial control rather than ex ante, the separation of authorities and responsibilities between the Board and the DG, etc.). During implementation, the finalization of the Operational Manual and the modalities of implementation mechanisms to be used are areas where other lessons learned will be applied. At the country level, other lessons have been learned, especially from the BAJ program, as follows; Deciding on what to finance has to come from local communities. This point largely affects the chances of sub-projects' sustainability. Some priorities that may look clear to some development practitioners may not be so obvious to villagers. The use of local consultants enhances the closeness between the project and local communities and the technical quality of -4 -  projects.Current arrangements for disbursement are lengthy and cause delays. It was agreed with the Government that the ADS will be able to directly send Statements of Expenses for replenishment to the Bank. 9. Program of Targeted Intervention (PTI) Y 10. Environment Aspects (including any public consultation) Issues There is no foreseen environmental impacts for components 3, and 4.Under components 1, and 2 the ADS will support sub-projects in several areas. Some of these sub-projects will have very minor environmental impact while others will have a more important one (some of which are negative). The approach of dealing with this would be for ADS, within the operational manual, to develop a simple checklist within the sub-projects cycle (in component A) . This checklist will be used to determine whether the sub-project in question does or does not have major environmental impact. For projects requiring special attention in dealing with environmental impact, consultants will be hired to develop mitigation measures for the negative impact foreseen.TA is being provided, using PHRD funds, to ensure that an environmental section is developed in the operational manual that tackles this issue adequately and to ensure that there is enough capacity in the ADS to identify the sub-projects with potential negative impact. It will be assessed also if projects could be categorized in advance according to their potential environmental impact. 11. Contact Point: Task Manager Yasser El-Gammal The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone:202 473 2187 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 5, 2001. - 5 -