Algeria - Social Safety Net Support Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No: 22237-AL IMPLEMENTATION COMPLETION REPORT (CPL-40060; SCL-4006A; SCPD-4006S) ONA LOAN IN THE AMOUNT OF US$50.0 MILLION TO THE DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA FOR A SOCIAL SAFETY NET SUPPORT PROJECT June 28, 2001 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2001) Currency Unit = Algerian Dinar 77.06 DZD = US$ 1.00 US$ 1.00 = DZD 77.06 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ADS Agence de Developpement Social (Social Development Agency) AFS Allocation Forfaitaire de Solidarite (Contractual Solidarity AUlocation) AIG Acivitis d'Interet Getneral (Activities in the public interest) APC Assemblie Populaire Communale (Community Council) BASC Bureaux d'Action Sociale Communautaire (Community Social Action Offices) CDP Ceilules de Proximite (Community-level social service units) CPE Contrats de Pre-Emploi (Pre-employment contracts) DAS Direction de l'Action Sociale (Directorate for Social Action) CD Community Development DEJ Direction de l'Emploi des Jeunes (Directorate for the Employment of Young People) SDF Social Development Fund 1IAG Indemniti pour Activiti d'Interit General (Indemnity for activities in the public interest) MC Micro-Credit MTPS Ministere du Travail et de la Protection Sociale (Ministry of Labor and Social Protection) PAIG Programme d'Activiti d'Intirit General (Program of Public Interest Activities) PTT Poste, Tiligraphe et Teliphone (Postal & Telephone Service) IRR Internal Rate of Return ERR Economic Rate of Return TUP-HIMO Travaux d'Utiliti Publique a Haute Intensiti de Main d'Oeuvre (Labor-intensive public works program) Vice President: Jean-Louis Sarbib Country Manager/Director. Christan Delvoie Sector Manager/Director. Jaques Baudouy Task Team Leader/Task Manager: David Steel  ALGERIA SOCLAL SAFETY NET SUPPORT PROJECT TABLE OF CONTENTS Page No. 1. Project Data ................. 1 2. Performance Ratings. 1 3. Assessment of Objectives, Design and Project Quality .2 4. Achievement of Objectives .4 5. Major Factors Affecting Implementation and Outcome .13 6. Project Sustainability .14 7. Bank and Borrower Performance .......... ......................................... 15 8. Lessons Learned ...................... 16 9. Partner Comments ....................... 17 Annex 1. Performance Indicators ...................... 18 Annex 2. Project Costs and Financing ...................... 20 Annex 3. Economic Costs and Benefits ....................... 22 Annex 4. Bank Inputs.......... ..... 25 Annex 5. Ratings for Achievement of Objectives .26 Annex 6. Ratings of Bank and Borrower Performance .27 Annex 7. Supporting Documents .28   Project ID: P004978 Pro ect Name: SOCIAL SAFETY I Team Leader: David J. Steel TL Unit: MNSHD ICR Type: Core ICR Report Date: June 2 7, 2001 1. Project Data Name: SOCIAL SAFETY I L/CITF Number. CPL-40060; SCL-4006A; SCPD-4006S Country/Department: ALGERIA Region: Middle East and North Africa Region Sector/subsector: SE - Labor Markets & Employment KEY DATES Original Revised/Actual PCD: 08/25/94 Effective: 11/01/96 Appraisal: 02/05/96 MTR: 03/16/98 Approval: 04/25/96 Closing: 12/31/2000 03/31/2001 Borrower/Implementing Agency: GOVT OF ALGERLAMINISTRY OF LABOR Other Partners: STAFF Current At Appraisal Vice President: Jean-Louis Sarbib Kemal Dervi, Country Manager: Christian Delvoie Christian Delvoie Sector Manager: Jacques Baudouy Roslyn Hees Team Leader at ICR: David Steel Lawrence Wolff ICR Primary Author: Eileen Brainne Sullivan; Setareh Razmara 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: H Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: Yes  3. ASSESSMENT OF DEVELOPMENT OBJECTIVES, DESIGN AND QUALITY AT ENTRY 3.1 Original objective: The project would pilot new ideas and institutional arrangements for delivery of social protection prograns, which, if successful, could eventually be broadened and generalized. The first and most important project objective was to create employment and improve infrastructure and services in disadvantaged areas, and demonstrate the Government's commitment to mitigate the impact of economic reforms on the poor. The second objective was to enhance the effectiveness of Algeria's social safety net system. The third objective was to prepare, on a pilot basis, social development programs aimed at developing social infrastructure and alleviating poverty. The project was prepared as a complement to the 1996 Structural Adjustment operation, in order to improve the social safety net system. 3.2 REVISED OBJECTIVE: The project was not restructured, and the objectives were retained for the duration of the project. 3.3 ORIGINAL COMPONENTS The project had three components : a) labor-intensive public works ; b) strengthening of the existing social safety net; and c) pilot implementation of a program to improve social infrastructure, including feasibility studies on the development of a social fund. The summary description of components is as follows: Component 1: Labor-intensive public works programs: The project was to support labor intensive public works programs (travaux d'utilite publique, or TUP) in rural roadside maintenance, agriculture, water supply and sanitation, in underserved urban and rural areas. These programs (geared to the unemployed), accounted for over 80 percent of project costs, and would differ significantly from the Program of Indemnities for Public Interest Activities (IAIG) (which targets the poor), in that there would be increased emphasis on social and economic value added, with closer supervision of works, and greater private sector participation. The programs were expected to provide short-term employment, encourage the growth of small enterprises, maintain basic infrastructure and services, and improve the environment in selected poor communities. In most cases, local authorities were to identify the specific works, which would be undertaken on a contract basis by small firms. Component 2 : Strengthening of the social safety net Two sub-components were identified to strengthen the Government's social safety net program. The first was to focus on improving management, targeting and monitoring of the Govemment's social assistance programs. The second sub-component was to strengthen the Government's pilot community social service program (Cellules de proximite), which would identify problems faced by slum dwellers, provide guidance and basic health services, and link slum dwellers with other public social services. Sub-component a) Improvement of the existing social safety net. In order to assist in the Government's program, the project would build institutional capacity by financing technical assistance, training, studies, equipment, and documentation. The study financed under the project made recommendations to improve the social safety net programs primarily by setting-up an MIS and related improved computerization, - 2 -  communication and training programs. The study, completed in December 1996, would build on the monitoring indicators that had been agreed upon with the Bank during appraisal. At the completion of the study, purchases of computer equipment, software, fax machines, and photocopiers were made including the implementation of a training program. Vehicles were to be supplied for about 20 provinces, and funds were to be made available to the agency and the wilayas for the purchase of documentation (including books and journals). Sub-component b) Community Social Service Units (Cellules de proximite). The Govermnent had established mobile social service units in 20 locations. Each unit was comprised of a health professional, an educator, a social worker/psychologist, and a representative of the Ministries of Sports and Culture. The units would identify local community problems, link poor communities with existing social services, and provide certain key social services, at a relatively low cost. The project provided support by strengthening the existing 20 social service units, as well as wilayas and central management. At the local level, assistance consisted of about US$5,000 per unit. Each unit, with community participation, prepared a proposal for the necessary assistance. The project financed the purchase of computers and related software, and vehicles for each of the seven wilaya coordinating units. At the central level, the project financed the purchase of a vehicle, national seminars, and a national training program. Component 3: Testing and preparation of a social fund The third component supported small-scale testing of a community development program and the preparation of a social fund. Sub-comDonent a) Pilot community development project. The project would support a pilot program for community development. The communities were selected on the basis of a selection criteria. The pilot program included a study to identify the needs of three communities, and to determine the Government's capacity to deliver services. On the basis of this study, a pilot program of social and infrastructure interventions was identified, including implementation arrangements to be financed under the project. These interventions could include the construction of community infrastructure (pre-school, wells, community development centers, school expansion and repair), community road improvement, sites and services, etc., as well as social services such as training and institutional support. Sub-Component b) Preparation of a social fund. The Government established an autonomous agency, the Agence de Developpement Social (ADS), to manage the social fund. In order to define the nature of the Agency and the activities of the social fund, the project financed a number of preparatory studies. In particular, a study was planned to identify, on the basis of a national sample, community needs for social infrastructure, and the means of undertaking a demand-based program of local infrastructure development. 3.4 REVISED COMPONENTS: N/A -3 -  3.5 QUALITY AT ENTRY: The project was not subject to quality review (QAG) nor a performance rating for quality at entry. 4. ACHIEVEMENT OF OBJECTIVES AND OUTPUTS 4.1 Achievement of objectives: In 1992, the Government launched a radical revamping of the social policy framework. The new social policy framework was to encompass a coherent set of social service programs targeted to beneficiary groups. Created in 1996, the Agence de DIveloppement Social (ADS) undertook the responsibility of rationalizing the social safety net program, which had been introduced in 1994 and managed until 1996 by the Central Administration of the Ministry of Labor and Social Protection (MTPS), including the programs identified under the Social Safety Net Support Project. In 1997, a pilot project was undertaken with World Bank financing - << Support to the Social Safety Net >> . Aside from improved management of the Social Safety Net as such, three other programs were to be launched in the context of this project : a) a labor-intensive public works program (Travaux d'Utilite Publique ai Haute Intensite de Main d'CEuvre, TUP-HIMO) ; b) a pilot community development (CD) program; and c) a program of community social action relying upon community social service units (Cellules de Proximite-CDPs) responsible for outreach services to disadvantaged groups. In 1998, two new programs, not financed by the World Bank, were added to the ADS's portfolio: a) the Pre-Employment Contracts program (Contrats de Pre-Emploi-CPE) aimed at fostering the professional insertion of university graduates seeking employment ; and b) the Micro-Credit (MC) program, which was open to all unemployed persons who could generate income with the help of a small loan at preferential interest rates. The project's objectives were achieved in a satisfactory manner. The first objective was attained, as the number of jobs created exceeds projections made at the time of appraisal, and unit costs achieved were lower than the norms established at appraisal ; the second objective, i.e., improvement of the social safety net, was achieved, since program management was significantly improved and the rationalization of the AFS and IAIG programs were implemented, although the information management system could be further strengthened; and the third objective on pilot community development programs, yielded satisfactory results to the extent that this project was prepared under difficult circumstances, and in the context of a reluctance on the part of communities to take responsibility for their own developmental needs. The project was designed as a pilot operation. The activities undertaken were tested, evaluated, modified and improved, in order to achieve the objectives of each program and derive lessons for the eventual preparation of a second phase. The ADS took the initiative of conducting several studies, analyses and impact evaluations, as well as an operational audit, in order to improve internal management and implementation of its programs - this was very much appreciated by the World Bank team. -4-  4.2 Output by component: COMPONENT 1: Labor-Intensive Public Works Proeram (TUP-HIMO) Objective #1 : Creation ofjobs and improvement of infrastructure and services to the most disadvantaged communMies. During the 1990s, the absence of economic growth led to a decline in job creation in the formal and public sectors, which until the 1980s had absorbed about 60 percent of jobseekers. With the number of jobs growing at a rate significantly lower than that of the working-age population, the unemployment rate rose from 17 percent to 29 percent between 1985 and 2000. Unemployment was particularly high (56 percent for those aged 16 to 24 years) among first-job seekers. During the 1990s, however, unemployment increased among older adults and there was a trend towards greater unemployment among young people with lower levels of education. This, combined with a decline in living standards and the acute shortage of housing, were at the root of increased social unrest. Although Algeria's unemployment is a structural problem requiring medium- to long-term remedies, short-term remedies such as temporary employment programs constitute an essential stopgap measure. In this connection, the project was one of the first of its type developed in Algeria. The project was all the more important considering the country's increased unemployment, especially in the countryside, and growing internal violence. The TUP-HIMO program targeted three sectors: road maintenance, agriculture and forestry, and water and sanitation. Each sub-component had two objectives: development of public works to improve social infrastructure; and creation of a maximum number of temporary jobs. Overall, the program's rate of return was positive, since the average internal rate of return (IRR) for the roads sector reached 12 percent and exceeds the rate of pure time preference of 10 percent which was set at appraisal. The rate of return covers internal as well as external project costs which leads to a positive result. The labor-intensive public works (TUP-HIMO) took up the major share of the loan (87 percent). The main thrust of the TUP-HIMO program was to generate a large number of temporary jobs in a relatively short timeframe. With this in mind, the project relied upon labor- intensive methods carried out by local entrepreneurs in rural and urban areas. While creating temporary jobs geared towards the maintenance of basic infrastructure and services in disadvantaged communities, the construction works undertaken promoted the development and/or growth of small enterprises. Since the simple works envisaged under this program required little training or prior experience, the target population consisted of unskilled unemployed individuals. Initially, the program was expected to create 148,563 temporary jobs, or the equivalent of 20,000 full time jobs/year, while respecting a labor rate of 60%. For lack of adequate tools to measure the actual number of jobs created during project implementation, it was necessary to resort to a theoretical hypothesis to estimate the quantity of labor actually utilized. Under all hypotheses, the number of jobs created proves to have exceeded projections. Under the hypothesis that labor costs account for at least 50 percent of total project costs, it was estimated that about 24,500 person-years were created under the TUP-HIMO component. In addition, according to the operational audit report, the average actual cost of a job created under the TUP- - 5-  HIMO did not exceed US$2,600/year, which is below the amount estimated at project appraisal (US$2,800/year). Strong points * Temporary job creation; * Strengthening of program management capacity at the decentralized level of the Ministry of Labor (Directorate for Employment and Young People (DEJ)) by the ADS; * Adherence to World Bank procedures; * Opening of the public works program to the private sector through the use of public announcements, transparency in procurement methods, contract management, etc.; * Development of small enterprises; * Works carried out with private contractors at a cost two to three times lower than works undertaken under force account, and with better quality. Points to improve * Monitoring of the small works contractor (tacheronnat) or micro-enterprises needs to be strengthened in order to have a better overview of the program's viability over time; * Preparation of projects and bid packages by local consulting firms rather than by government agencies (in order to encourage the development of local consulting firms); * Supervision of works by local technicians rather than by firms directly affiliated to the different ministries (in order to reduce costs and encourage local employment); * Improved targeting of regions with high rates of unemployment (on the basis of an updated and reliable poverty map); * Enhanced data collection on actual number of jobs created, actual salaries paid and actual duration of employment; * Better coordination between TUP-HIMO and IAIG programs in order to avoid duplication. * Greater community participation in the identification of projects and the development of TUP-HIMO technical information forms in order to ensure project sustainability. In general, the TUP-HIMO program is well managed by the ADS and the local authorities, who benefited from management training supplemented by computer equipment and software. The program consumed about 90 percent of the loan due to the reorganization of loan categories and the fluctuation in the parity of the local currency (the dinar). The ADS introduced corrective measures to improve its management, and revised the technical project information forms, which would allow for better monitoring of micro-enterprise development, including the collection of data and information which is not currently being tracked. Under the second phase, the ADS intends to use consulting firms to monitor work sites which will enable the collection of reliable data on the number of jobs created and salaries actually paid. The management information system will also be strengthened. The ADS also intends to use a participatory approach similar to the one developed under the Community Development Programs, in order to obtain a better appreciation of the demands expressed by communities. In addition, future -6-  TUP-HIMO projects would be undertaken which would benefit bordering communities and/or areas (for example, hydraulic or forestry projects). COMPONENT 2: Stren2thenine the social safetv net Sub-component a) Improvement of the existing social safety net: The purpose of the social safety net program, introduced in 1994 was to: (i) provide transfers of funds (Allocations Forfaitaires de Solidarite - AFS) to the elderly (i.e., those aged 60 and over) and low-income handicapped persons not covered by the traditional social assistance programs; and (ii) create temporary job programs for the poor unemployed at a salary below the minimum wage (Indemnites pour Activites d'Interet General - IAIG). However, since the eligibility criteria were not always respected, (e.g., half of the minimum wage is paid for a half day's work instead of for an 8-hour day, and the activities are not always labor-intensive), many IAIG beneficiaries are young unemployed urban dwellers, usually living at home with their parents, and who do not necessarily fall in the poverty category. The financing mechanism functions in a decentralized environment and requires the participation of elected community officials (Assemblees populaires communales (APC) - and the Directions de l'Action Sociale (DAS) of each wilaya, which, in every community, falls under the aegis of the Community Social Action Offices (Bureaux d'Action Sociale Communautaire, BASC). Strone Points * In order to assess the impact of the social safety net program on beneficiaries, a study was undertaken and a series of measures introduced to improve the efficacy of the programs (AFS and LIUG); * Many unintended beneficiaries were identified through an annual rationalization process of beneficiary lists; . The system has become more transparent with the public dissemination of beneficiary lists; * Timely monthly payments, rather than quarterly, are made to beneficiaries; * Financial management of the AFS program was significantly improved (using the postal service); * Managers of the social safety net program received training, albeit towards the end of the project;