Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 79517 VN

INTERNATIONAL DEVELOPMENT ASSOCIATION

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PROJECT APPRAISAL DOCUMENT

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ON A

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PROPOSED CREDIT

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IN THE AMOUNT OF SDR 97.6 MILLION (US$ 150.00 MILLION EQUIVALENT)

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TO THE

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SOCIALIST REPUBLIC OF VIETNAM

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FOR A

CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT

November 18, 2013

Social, Environment, and Rural Sustainable Development Unit Sustainable Development Department

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.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 2013)

Currency Unit = Vietnamese Dong VND 21,100 = US$ 1

US$ 1.537 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ABs Agro-businesses ACP Agriculture Competitiveness Project AMT Aligned Monitoring Tool BDO Business Development Officer CBRIP Community-based Rural Infrastructure Development Project CDB Commune Development Board CDD community-driven development CEM Committee for Ethnic Minorities CF Commune Facilitator CFMP Community Forestry Management Plan CHPov Central Highlands Poverty Reduction Project CPC Commune People’s Committee CPO Central Project Coordination Office CSB Commune Supervision Board DA Designated Account DARD (Provincial) Department of Agriculture and Rural Development DOH (Provincial) Department of Health DPC District People’s Committee DPI (Provincial) Department of Planning and Investment DPMU District Project Management Unit DTE Department of Local and Territorial Economies (of MPI) ECOP Environmental Codes of Practice EM Ethnic Minority ESMF Environmental and Social Management Framework FIRR Financial Internal Rate of Return FM financial management GRM Grievance Handling and Redress Mechanism GoV Government of Vietnam GSO Government Statistics Office IE impact evaluation IDA International Development Association IFAD International Fund for Agricultural Development

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IFR interim financial report IPs Indigenous Peoples IPF Investment Project Financing LEG Livelihood enhancement group M&E monitoring and evaluation MARD Ministry of Agriculture and Rural Development MIS management information system MOF Ministry of Finance MOLISA Ministry of Labor, Invalids and Social Affairs MPI Ministry of Planning and Investment NMPRP-1 First Northern Mountains Poverty Reduction Project NMPRP-2 Second Northern Mountains Poverty Reduction Project NTP national targeted program NTP-NU National Targeted Program for Nutrition O&M operation and maintenance ODA official development assistance OP Operational Policy ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PCRA Procurement Capacity and Risk Assessment PDO project development objective PIA Project implementing agency PIM Project Implementation Manual PPC Provincial People’s Committee PPMU Provincial Project Management Unit PPs RP

Productive Partnerships Resettlement Plan

RPF Resettlement Policy Framework SA Social Assessment SDV Social Development network (of World Bank) SOE Statement of Expenditures SEDP Socio-Economic Development Plan TAT Technical Assistance Team VHLSS Vietnam Household Living Standard Survey VND Vietnamese Dong WU Women’s Union

Regional Vice President : Axel van Trotsenburg Country Director : Victoria Kwakwa

Sector Director : John Roome Sector Manager : Jennifer Sara

Task Team Leaders : Sean Bradley and Son Thanh Vo

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Socialist Republic of Vietnam

Central Highlands Poverty Reduction Project

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT .................................................................................................1

A. Country Context ............................................................................................................ 1

B. Sectoral and Institutional Context ................................................................................. 2

C. Higher Level Objectives to which the Project Contributes .......................................... 4

II. PROJECT DEVELOPMENT OBJECTIVES ................................................................4

A. Project Development Objective .................................................................................... 4

B. Project Beneficiaries ..................................................................................................... 4

C. PDO Level Results Indicators ....................................................................................... 4

III. PROJECT DESCRIPTION ..............................................................................................5

A. Project Components ...................................................................................................... 5

B. Project Financing .......................................................................................................... 7

C. Lessons Learned and Reflected in the Project Design .................................................. 7

IV. IMPLEMENTATION .......................................................................................................9

A. Institutional and Implementation Arrangements .......................................................... 9

B. Results Monitoring and Evaluation ............................................................................ 13

C. Sustainability............................................................................................................... 14

V. KEY RISKS AND MITIGATION MEASURES ..........................................................15

A. Risk Ratings Summary Table ..................................................................................... 15

B. Overall Risk Rating Explanation ................................................................................ 15

VI. APPRAISAL SUMMARY ..............................................................................................16

A. Economic and Financial Analyses .............................................................................. 16

B. Technical ..................................................................................................................... 16

C. Financial Management ................................................................................................ 17

D. Procurement ................................................................................................................ 18

E. Social (including Safeguards) ..................................................................................... 18

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F. Environment (including Safeguards) .......................................................................... 19

Annex 1: Results Framework and Monitoring Arrangements ................................................21

Annex 2: Detailed Project Description .......................................................................................24

A. Context ........................................................................................................................ 24

B. Geographic Targeting ................................................................................................. 25

C. Project Components .................................................................................................... 26

Annex 3: Implementation Arrangements ..................................................................................35

A. Project Institutional Arrangements ............................................................................. 35

B. Implementation Arrangements.................................................................................... 39

Annex 4: Operational Risk Assessment Framework (ORAF) .................................................49

Annex 5: Implementation Support Plan ....................................................................................54

A. Strategy and Approach for Implementation Support .................................................. 54

B. Implementation Support Plan ..................................................................................... 54

Annex 6: Findings and Arrangements to Enhance Ethnic Minority Participation ...............57

A. Empowering ethnic minority people in project context .............................................. 57

B. Implementation, Monitoring and Evaluation .............................................................. 61

MAP ............................................................................................................................................62

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PAD DATA SHEET

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Vietnam

Central Highlands Poverty Reduction Project (CHPov) (P128072) PROJECT APPRAISAL DOCUMENT

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EAST ASIA AND PACIFIC

EASVS

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Basic Information

Project ID Lending Instrument EA Category Team Leaders

P128072 Investment Project Financing

B - Partial Assessment Sean Bradley and Son Thanh Vo

Project Implementation Start Date Project Implementation End Date

01-Apr-2014 30-Jun-2019

Expected Effectiveness Date Expected Closing Date

01-Apr-2014 31-Dec-2019

Joint IFC No

Sector Manager Sector Director Country Director Regional Vice President

Jennifer J. Sara John A. Roome Victoria Kwakwa Axel van Trotsenburg .

Borrower: Socialist Republic of Vietnam

Responsible Agency: Ministry of Planning and Investment

Contact: Do Thanh Trung Title: Head of Division, Local and Regional Economy Department

Telephone No.:

8408044363 Email: dotrung@mpi.gov.vn

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Project Financing Data(in USD Million)

[ ] Loan [ ] Grant [ ] Other

[ X ] Credit [ ] Guarantee

Total Project Cost: 159.40 Total Bank Financing: 150.00

Financing Gap: 0.00 .

Financing Source Amount

BORROWER/RECIPIENT 9.40

International Development Association (IDA) 150.00

Total 159.40 .

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Expected Disbursements (in USD Million)

Fiscal Year

2014 2015 2016 2017 2018 2019 2020 0000 0000

Annual 5.00 15.00 35.00 40.00 40.00 10.00 5.00 0.00 0.00

Cumulative

5.00 20.00 55.00 95.00 135.00 145.00 150.00 0.00 0.00

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Proposed Development Objective(s)

The proposed project development objective of the Central Highlands Poverty Reduction project is to: enhance living standards by improving livelihood opportunities in Project Communes of upland Districts of the central highlands of Vietnam. .

Components

Component Name Cost (USD Millions)

Village and Commune Infrastructure Development 52.40

Sustainable Livelihoods Development 35.20

Connective Infrastructure Development, Capacity Building and Communications

51.40

Project Management 11.00 .

Institutional Data

Sector Board

Social Development .

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Agriculture, fishing, and forestry General agriculture, fishing and forestry sector

40

Health and other social services Other social services 30

Public Administration, Law, and Justice

Sub-national government administration

20

Public Administration, Law, and Justice

Public administration- Other social services

10

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. .

Themes

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Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Rural development Rural services and infrastructure 40

Human development Other human development 30

Social dev/gender/inclusion Participation and civic engagement 30

Total 100 .

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects?

Yes [ ] No [ X ]

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Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ X ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X .

Legal Covenants

Name Recurrent Due Date Frequency

Section I of Schedule 2 X CONTINUOUS

Description of Covenant

The recipient shall maintain the implementation arrangements as described in Section I of Schedule 2 to the Financing Agreement. .

Team Composition

Bank Staff

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Name Title Specialization Unit

Sean Bradley Senior Social Development Specialist

Co-Task Team Leader EASER

Steven M. Jaffee Lead Rural Development Specialist

Rural Livelihoods EASER

David Tuchschneider Senior Rural Development Specialist

Peer Reviewer LCSAR

Carolyn Turk Country Manager Peer Reviewer AFMRW

Lan Thi Thu Nguyen Natural Resources Economist NRM and Forestry Link to Livelihoods

EASVS

Gayatri Acharya Sector Leader Peer Reviewer LCSSD

Silvia Del Pilar Larreamendy Ricardo

Safeguards and EMs EASVS

Hisham A. Abdo Kahin Lead Counsel Legal LEGES

Nina Masako Eejima Senior Counsel Legal LEGES

Ngozi Blessing Obi Malife

Program Assistant Admin. and Operational Support EASER

Miguel-Santiago da Silva Oliveira

Senior Finance Officer Disbursement CTRLN

Andrew Beath Economist Impact Evaluation/Monitoring & Evaluation

EAPCE

Christopher Paul Jackson Lead Rural Development Specialist

EASVS

Son Thanh Vo Senior Rural Development Specialist

Co-TTL and CDD/Nat Ops EASVS

Cung Van Pham Sr Financial Management Specialist

Financial Management EASFM

Trang Huyen Hoang Team Assistant Team Assistant EACVF

Hoai Van Nguyen Procurement Specialist Procurement EASR2

Tam Thi Do Team Assistant Team Assistant EACVF

Nghi Quy Nguyen Social Development Specialist Social Safeguards and EMs EASVS

Nguyen Hoai An Consultant E T Consultant EASVS

Huong Thi Mai Nong Associate Counsel Legal EACVF

Non Bank Staff

Name Title Office Phone City

Soren Theilgaard Consultant (Livelihoods) Ha Noi

Aidan Gulliver Agriculture Economist (FAO)

Bangkok

Ida Christensen Nutrition and Food Rome

x

Security Specialist (FAO)

Bert Maertens Dep. Country Manager (Oxfam)

Hanoi

Taka Hagiwara Livelihoods and Market Linkages Specialist (FAO)

Rome

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Locations

Country First Administrative Division

Location Planned Actual Comments

Vietnam Kon Tum Tinh Kon Tum X

Vietnam Quang Ngai Tinh Quang Ngai X

Vietnam Gia Lai Tinh Gia Lai X

Vietnam Dac Lak Tinh Dak Lak X

Vietnam Dak Nong Dak Nong X

Vietnam Quang Nam Tinh Quang Nam X

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I. STRATEGIC CONTEXT

A. Country Context

1. Vietnam has achieved remarkable poverty reduction results over the past two decades. During the 1990’s, sustained and broad-based economic growth followed from land and market reforms as well as widespread improvements in access to basic education and health services. Reform momentum continued into the 2000’s and growth rates remained consistently high. Pro-poor programs became more varied to address the needs of an increasingly diversified rural population and new initiatives were introduced to address concerns about rising inequality between regions and socio-economic groups.

2. Recent evidence suggests that overall progress in further reducing poverty has slowed and there is a large and growing gap between some of the poorest households and the better off, as well as a persistent gap between different regions of the country and well as households living in urban and rural areas. While the overall rate of poverty for the country in 2012 as a whole was 9.6 percent (with an additional 6.6 percent near poor),1 there is a marked difference between the rate of urban poverty (6 percent) and that of the rural population (27 percent). Moreover, there is a stark difference in well-being between the Kinh/Hoa majority and the country’s ethnic minorities (EMs). In 2010, EMs accounted for 70 percent of individuals in the lowest income decile, up from 53 percent in 2006, even though they make up less than 15 percent of the total population. Average income among EM households is only equal to one sixth of the national average.2 The poverty gap in the two poorest and predominantly EM regions in Vietnam stands at 15.6 percent for the Northern Mountains and 11.5 percent for the Central Highlands, compared with a national average of 5.9 percent.3

3. Slower progress in the gains of ethnic minority groups is also reflected in other (non-income or expenditure) measures of welfare. Although education levels have improved, in 2008, 45 percent of EM household heads still had not completed primary school (compared to 25 percent of Kinh/Hoa household heads) and less than 10 percent of ethnic minority heads had completed upper secondary school or tertiary education. In light of their limited education achievements, it is not surprising that most members of ethnic minority households still work primarily in agriculture and as unskilled labor. This stands in sharp contrast to the Kinh/Hoa majority who continue to move out of agriculture and into (higher paid, higher skill) industrial and service activities. According to the 2008 VHLSS, 83 percent of workers from ethnic minority households still reported agriculture as being their primary source of employment, as compared to only 44 percent of workers from Kinh/Hoa households. Nutritional outcomes also diverge. In 2010, some 37 percent of EM children less than five years old were stunted, compared with a 22 percent incidence among Kinh children.4

1 Ministry of Labor, Invalids and Social Assistance’s Decision 749/QD-LDTBXH, dated May 13, 2013 on approving of survey results for poor and near-poor households for 2012. 2 Committee on Ethnic Minority’s report to MOLISA, 2013. 3 Vietnam Household Living Standards Survey 2010 data and calculation, Government Statistics Office. 4 According to the National Institute of Nutrition, in 2010 the Central Highlands had the highest regional incidence of underweight and stunted children under 5 years of age. The region's incidence of underweight children was 24.7 percent, compared with the national average of 17.5 percent. The region's stunting rate was 35.2 percent compared

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4. In terms of landholding, ownership of assets and access to essential public goods and services such as clean water and electricity, EMs are also demonstrably lagging behind. While total landholdings of EMs are actually larger than for the majority group, the quality of their land is generally poorer and more susceptible to weather-related stresses and shocks that in turn negatively affect traditional livelihood strategies and returns. Analysis of EMs living in the extremely difficult communes shows that they are far less mobile and less integrated into labor markets than their majority neighbors, and much less likely to be producing higher value or industrial crops for which the economic return is far higher.5 The welfare of EM households has improved more slowly than that of the general population and remains highly concentrated around the poverty line. As such, a high percentage of EM households are at greater risk of falling back into poverty as a result of financial shocks, adverse weather, family member illness, commodity price shifts or agriculture-related pests or diseases.

5. The Central Highlands (CH) of Vietnam present some specific challenges in terms of the overall welfare of the population and in particular among EM groups. The Central Highlands ranks at the top in terms of income inequality,6 has the worst rates of stunting and wasting among children in the country,7 the lowest rate of primary school enrollment and less than half of EM children enrolling in lower secondary school. With an estimated 73.6 percent of the CH minorities living below the Government Statistics Office-World Bank (GSO-WB) poverty line,8 the situation for these groups in this region is considered to be the worst in the country.9 Many EM households eke out a precarious livelihood combining various activities and, quite commonly, recurrent patterns of indebtedness. Yet, all this happens in a region that has experienced almost double the national average rate of economic growth over the past 10 years (at 12 percent), and has featured rapid growth in multiple sectors (including tourism, mining, coffee, industrial crops, and horticulture), some of which provide widespread employment opportunities.10 The region also lies in close proximity to coastal growth poles (for instance, Da Nang for manufacturing and logistics; Nha Trang for tourism and fish processing), that represent significant opportunities.

B. Sectoral and Institutional Context

6. The Government of Vietnam’s (GoV) poverty reduction efforts have included targeted with the national average of 29.3 percent. Given close correlations between stunting and poverty rates in Vietnam, the proportion of under 5 children in our targeted communes who are stunted is likely to be 50 percent or more. 5 Poverty of Ethnic Minorities in Viet Nam: Situation and Challenges in Programme 135 Phase II Communes, 2006-07 (2011). 6 An absolute inequality measure which is the ratio of income level at the 95th percentile over the income level at the 10th percentile reveals that the dispersion of income between the top “rich” and the “poorest” is the highest in the CH. 7 According to the Vietnam Household Living Standards Survey (VHLSS) and Nutrition Surveillance data. 8 The new poverty line has been set at VND 400,000 (US$20) per person per month for rural households and VND 500,000 (US$25) per person per month for urban households. 9 As estimated by the Chronic Poverty Research Centre in Ethnic Minority Poverty in Vietnam, Working Paper No. 169 (February 2010), based on 2006 VHLSS data. 10 Several sub-sectors (including horticulture and coffee) are experiencing problems in recruiting and maintaining workers from local areas and are increasingly relying upon migrant labor from the coast and northern mountains areas. This implies a mismatch, either in skills or seasonal availability, between local EM communities and this labor demand, or there are other factors explaining the limited EM participation in this labor segment—despite rising wages.

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area development programs and related policies to improve the living conditions of ethnic minorities. Programs were also developed to address rising household vulnerability, such as the Hunger and Poverty Eradication Program, health insurance for the poor, and monthly social protection allowances paid to the most vulnerable under Decree 67. A new budget law went into effect in 2004 that facilitated rapid decentralization; 45 percent of public spending decisions are now made at provincial and lower levels. Equalization grants were put in place to ensure adequate funding for capital and recurrent costs in lagging provinces. For some of the poorest provinces, these grants from the central budget comprise more than 90 percent of the overall provincial budget.

7. A focal effort bridging the growth and poverty reduction agendas in the CH region fits within the context of several (past and present) programs and plans of the Government. Resolution 80, issued by the Government in late 2010 presents a common framework for sustainable poverty reduction to be coordinated by the Ministry of Labor, Invalids and Social Assistance (MOLISA). MOLISA also oversees the program to support the poorest 62 districts in Viet Nam (the “30A” program). The Committee on Ethnic Minorities (CEM) has also proposed an investment program for the poorest communes in upland and ethnic minority areas, which is a follow-up of the Bank supported P-135 Phase 2 program.11 At the same time, the Ministry of Agriculture and Rural Development (MARD) is coordinating a new national targeted program for “New Rural Areas” (NRA) featuring a broad set of infrastructure and access to services targets for each rural commune in the country. This multi-sectoral strategy for rural poverty reduction presents an opportunity for synergies and to leverage other complementary inputs to achieve better development outcomes.12

8. Despite these and efforts, several gaps remain. One relates to the degree and quality of participation of indigenous EM groups in decisions regarding local development initiatives that directly affect them. This stems, in part, from the unique demographics of the Central Highlands in which many communes feature a mixed population of Kinh, migrant EM and indigenous EM households, with the latter frequently being underrepresented within commune leadership. A second gap is the typical lack of synergy between efforts to upgrade community infrastructure and those to strengthen livelihood opportunities. A third gap relates to the still poor ‘connectivity’ between many EM communities and regional economic centers/growth poles. Physical connectivity—via communal access roads and linkages between these and the broader district/provincial road network—remains limited for some communities. Yet, just as important are various forms of socio-economic connectivity, such as marketplaces, product supply chains, and other linkages. Nonetheless, it is also important to note that while the Project will provide a good entry point for the Bank to engage closely with Government, communities and other stakeholders to achieve some important improvements in livelihood conditions, it will not be able to resolve some of the deeper structural, institutional and policy constraints faced by these target communities and beneficiary groups. The Project should, however, help expand

11 The CEM is a national Government agency with ministerial status that oversees policies and programs that directly target ethnic minority areas and populations. Program 135 (P-135) is Government’s program of support to poor and disadvantaged communes identified based on the percentage of EM groups in each commune. The program is implemented by CEM, is in its third phase and is part of the overall National Targeted Program for Sustainable Poverty Reduction overseen by MOLISA. 12 At the same time, it presents challenges of coordination across multiple agencies at the local and provincial levels to ensure optimal use of these development resources.

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understanding of the issues and binding constraints to alleviating poverty particularly among EMs and, therefore, to further influence policies and programs aimed at addressing this emerging challenge for the GoV.

C. Higher Level Objectives to which the Project Contributes

9. The proposed Project would make an important contribution to the Bank’s support under the “Opportunity” pillar of the FY12-16 CPS, by improving the provision of basic infrastructure and public services to poorer communities/districts (Outcome 3.2), and by increasing the economic opportunities available to poor EM households through various livelihood support and stabilizing interventions (Outcome 3.1). Experience gained in this Project, especially in the application of a ‘territorial’ approach to link poorer communities with surrounding economic opportunities/growth poles, may then be applied by the GoV in its poverty-reduction interventions in other regions. Some of the livelihood-related interventions are likely to promote more sustainable land management and agricultural practices and thus the Project will also contribute to the attainment of objectives under the CPS “Sustainability” pillar. As noted above, the Project is also consistent with and contributes to the Government’s own poverty reduction efforts as described in the NRA strategy, the poverty reduction framework of MOLISA, the on-going work of CEM and the National Targeted Program for Nutrition (NTP-NU).

II. PROJECT DEVELOPMENT OBJECTIVES

A. Project Development Objective

10. The proposed Project development objective of the Central Highlands Poverty Reduction Project is to: enhance living standards by improving livelihood opportunities in Project Communes of upland Districts of the central highlands of Vietnam.

B. Project Beneficiaries

11. The Project would target the 26 poorest districts in the provinces of Dak Lak, Dak Nong, Kon Tum, Gia Lai, Quang Nam and Quang Ngai. Current targeting strategies propose to reach approximately 120,000 households in the poorest 130 communes in this area. A majority of these beneficiaries would be members of the various ethnic minority groups from these areas.

C. PDO Level Results Indicators

12. Achievement of the PDO would be measured based on the following indicators: percent change in food and non-food consumption of poor households, and proportion of poor villagers whose identified development priorities are satisfied. In addition, the Project will track the total number of direct beneficiaries as a key outcome. These key performance indicators will be measured through a robust “difference-in-difference” impact evaluation that will track changes in results from base-line, at the mid-term and end of project, and will compare changes between areas that receive project support and those that do not (treatment and control). All results measures will be disaggregated by gender and major ethnic groups.

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III. PROJECT DESCRIPTION

A. Project Components

13. The Project will have four components: village and commune infrastructure development; sustainable livelihoods development; connective infrastructure development, capacity building and communications; and project management. A summary description of these components is presented below. A more detailed description of these components and subcomponents is found in Annex 2.

14. COMPONENT 1: VILLAGE AND COMMUNE INFRASTRUCTURE DEVELOPMENT (consisting of two sub-components and estimated to cost US$ 54.7 million, of which US$ 52.4 million would be financed by IDA13). Sub-component 1.1 would support the design, construction or repair of small-scale village and commune-level infrastructure (such as simple access roads, terracing, irrigation/water supply, basic social infrastructure, etc.) through the provision of block grants. Building upon recently completed NRA communal plans, sub-projects would be prioritized through a participatory planning process and managed by commune and village authorities with the help of community facilitators. Depending on the size and complexity of the identified sub-project investments, community groups would take direct responsibility for managing construction of infrastructure (for sub-projects valued at less than VND 300 million, or US$ 15,000). This participatory process is modeled on community-driven development (CDD) approaches used effectively throughout the world and successfully adapted under local projects such as the Northern Mountains Poverty Reduction Project (1 and 2) and the Program 135, both of which have received support from the World Bank. Sub-component 1.2 would finance sub-projects for the repair, operation and maintenance (O&M) of communal infrastructure. Such sub-projects could include routine maintenance and small repair activities for both existing and new investments (which have been financed by the Project). The O&M would contribute to the sustainable use of invested infrastructure and ensure lasting impacts on improving access and connectivity in the Project areas.

15. COMPONENT 2: SUSTAINABLE LIVELIHOODS DEVELOPMENT (consisting of two subcomponents and estimated to cost US$ 35.2 million, all of which would be financed by IDA). Component 2 would support EMs and other households in the targeted areas to enhance their food security and nutrition, their productive capacities for more diversified income sources, and their linkages to selected agricultural markets. Sub-component 2.1 (“Self-reliance and Income Generation”) would target chronically poor and at risk households and include activities to: (a) strengthen household and community food security and nutrition (via improved practices for staple food crops and small livestock-raising, soil management on sloped land, home garden development, nutrition awareness etc.); and (b) sustain/diversify income sources by enhancing the productive capacities of beneficiaries (small-scale cash crop production, forestry management and development, livestock development, etc.). Sub-component 2.2 (“Market Linkage Initiatives”) would aim to develop productive partnerships (PP) between farmer groups and agribusinesses (ABs) operating in the targeted areas for proven commercially viable agriculture/agro-forestry endeavors. The Department of Agriculture and Rural Development

13 Estimates of total costs and financing per component include a proportional amount of unallocated funds under the project.

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(DARD), the NTP-NU and the Women’s Union (WU) would play key roles in advising on and supporting implementation of sub-component 2.1, and DARD, the technical assistance team and the private and commercial sector would be engaged as appropriate under sub-component 2.2.

16. Support and assistance under component 2 would be provided through block grants to “livelihoods enhancement groups” (LEGs) that would be registered legal entities and would consist of 10-20 member households, depending on the nature of the livelihood activity. LEGs would prepare specific and detailed livelihoods proposals that would be assessed by district level PMU and other staff (relevant technical sections such as agriculture, forestry, trade, finance, etc.), with assistance from the Project’s technical assistance team (discussed below). Financing and support under component 2 would vary by the type of livelihood activity.

17. COMPONENT 3: CONNECTIVE INFRASTRUCTURE DEVELOPMENT, CAPACITY BUILDING AND COMMUNICATIONS (consisting of three sub-components and estimated to cost US$ 53.0 million, of which US$ 51.4 million is financed by IDA). Sub-component 3.1 would finance selective intra- and inter-commune level infrastructure that would strengthen physical connectivity within and between local economic zones (such as roads, bridges, irrigation systems, etc.). Due to the likely size and costs of these investments, district-level entities would manage their implementation. However, their identification and prioritization would happen as a result of the commune-level analysis and sub-project planning process. The component would prioritize investments that enhance synergies with Component 1 and/or 2 investments. While initially emphasizing productive connectivity, investments in other infrastructure (or services) deemed to be critical to expanding the networks or linkages EMs may have with areas outside their communes (such as secondary school residential facilities) could be considered. The Project would finance civil works, consultant services and operating costs associated with sub-component 3.1 activities.

18. Sub-component 3.2 would support training and capacity building at all project levels for all aspects of project management (planning, financial management, procurement, monitoring and evaluation, etc.). The sub-component would include the financing of a technical assistance team (TAT), consisting of international and national specialists in project management, livelihoods and agricultural market linkages, capacity building, M&E, etc. A summary description of the TAT is presented in Annex 3. Sub-component 3.3 would support communications activities to ensure beneficiaries, project staff, key stakeholders and the public at large are aware of the Project objectives and operational principles. These activities would pay special attention to communication and outreach activities to EM beneficiaries where it will be important to adapt the form and language of messages to local contexts and abilities. An estimated one-third of the total budget under component 3 would be dedicated to sub-components 3.2 and 3.3. The resources and activities for these two sub-components would be managed by the provincial and district management units, except for the TAT, which would be managed by the Central Project Coordination Office (CPO). The Project would finance consultant services, operating costs and training under these two sub-components.

19. COMPONENT 4: PROJECT MANAGEMENT (estimated US$ 16.5 million, of which US$ 11.0 million would be financed by IDA). Sub-component 4.1, project coordination and implementation would include the set-up and operation of coordination structures at national level and implementation units/teams at provincial, district and commune levels, and operational

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costs associated with project management. At commune level existing structures would be strengthened to support project implementation. Sub-component 4.2, monitoring and evaluation, would include the design and implementation of a simple management information system (MIS) for project monitoring, the design and contracting of a rigorous impact evaluation, the recruitment of key personnel at central, provincial and district level to support M&E activities, and would support various knowledge exchange and learning activities between participating provinces, with other similar projects in Vietnam and within the region. This would also include the set-up and maintenance of a Project website to disseminate key project documents and reports, and to provide regular updates on project activities and progress. Project financing would cover consultant services, goods, training and operating costs for this component.

B. Project Financing

20. Lending Instrument. The proposed Project would be supported by the World Bank through an Investment Project Financing in the form of an IDA Credit on Blend terms (maturity of 25 years, including a five year grace period) in the amount of SDR 97.6 million, approximately US$ 150.0 million equivalent.

21. Project Costs and Financing. The table below presents the total costs and indicated IDA financing for the CHPov. In addition to the proposed IDA credit, the Government would provide an estimated US$ 9.4 million in counterpart financing for the Project.

Table 1.1: Total Project Costs and Financing by Component

US$ (million) Project Components Project cost IDA Financing

1. Village and Commune Infrastructure Dev. 2. Sustainable Livelihoods Development 3. Connective Infrastructure, Capacity Building and

Communications 4. Project Management, Monitoring and Evaluation Total Baseline Costs Physical contingencies Price contingencies

54.70 35.20 53.00 16.50

------------ 159.40

0.00 0.00

========

52.40 35.20 51.40 11.00

------------ 150.00

0.00 0.00

======= Total Project Costs 159.40 150.00

C. Lessons Learned and Reflected in the Project Design

22. Over the past three years the Bank has carried out a number of analytical activities relating to poverty, linkages and livelihoods that has informed the design of the CHPov.14 Specifically, the CHPov task team directly oversaw three qualitative studies in preparing for the lending operation: a local level institutional analysis (assessing the patterns of leadership, participation and decision making at local levels), a labor market study for Central Highlands with specific attention to the market participation of EMs, and a livelihoods strategies and

14 This includes the World Bank/VASS Poverty Assessment, the Rural Connectivity Study and a feasibility study for sustainable cacao development.

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options paper with particular reference to poor CH communities.15 A summary of the most relevant findings of each is presented immediately below.

(a) Institutional analysis highlighted that cultural biases of local (Kinh) leadership, skill gaps of EM leaders and learned passive behaviors of EM groups toward public programs represent risks to effective engagement and efforts to strengthen ownership of and commitment to local development processes. Special measures will need to be taken to ensure the participation of EM and the poor in (project) planning processes, with considerable attention needed to matters of communication and consultation. Involving local youth could be an effective way to close language and communication gaps, and involving WU representatives for better EM’s participation.

(b) Labor Market study showed the limits of off-farm strategies to EM livelihoods and therefore the need to emphasize measures to improve EM agricultural practices and extend skills. The study also showed that while labor shortages in several sectors (and especially during coffee harvesting) persist, there is a mismatch in vocational training supply and the demand for labor, limited job placement services, and a strong preference of local EM youth to find work in/near their residential localities. This suggests that the Project should consider how to enhance opportunities for seasonal/other employment in public works programs and through information exchange.

(c) Livelihoods study showed the diverse nature of the strategies employed by poor EM households (combining crop and livestock production, use of nearby forest resources, off-farm labor, various forms of credit, transfers, etc.). The study also highlighted the relatively large proportion of staple foods that are purchased rather than self-produced, therefore making food security a cash-liquidity issue. The study recommends an integrated approach to investments to optimize potential synergies, allowing the demand-driven aspects of the Project to respond to the “diversity” of livelihoods strategies and enhancing advisory services to increase production and market interface for those poor groups already active with perennial crops (coffee, pepper, fruits, etc.).

23. The Project design also draws on several lessons learned from global, regional and national-level programs of similar design and strategies. These include:

(a) Regional CDD programs have been shown to be effective in reducing poverty especially when financial support is provided to communities over the course of several cycles, and the greatest level of benefits (in terms of household consumption increases) are shown to accrue to the poorest households.

(b) Nationally, community groups and villages have been shown to be able to directly manage sub-project procurement and implementation, however, capacity building at all levels to ensure quality of construction is critical.

15 See summary report: “Pro-poor Rural Development Initiatives for Central Highlands of Vietnam” by Steven Jaffee and Son Thanh Vo; World Bank, 2013.

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(c) Experiences with productive alliances (in Latin America) point to the importance of (i) working with existing/experienced producers, (ii) technical support to productive groups to ensure technical viability of activities, and (iii) independence of financial feasibility assessments of potential alliances.

(d) Locally, under the Agriculture Competitiveness Project (ACP), where agro-enterprises lack prior experience working with targeted producer groups, development of functional 'productive alliances' takes time and effective intermediation to help build trust and to work out technical difficulties. Productive alliances have developed best in circumstances where the company is willing to provide technical advisory services to farmer groups.

(e) Political engagement with and commitment of the Vice Chairperson of the Provincial People’s Committee (responsible for poverty reduction) is critical to ensure effective project start–up, and that key partners such as DARD, DOLISA, CEM and others will support implementation.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

Institutional Arrangements

24. The Project’s institutional arrangements have been designed in line with the following principles:

(a) use of existing structures and procedures where possible (be they existing GoV or other structures already established by donor projects in the same locations) in order to minimize the introduction of new project-specific administrative requirements;

(b) strengthen local accountability and decentralized decision-making processes by strengthening local-level governance structures (a key element of CDD principles); and

(c) subsidiarity, by delegating decision-making to the lowest appropriate level of administrative unit.

25. Project design has sought to maximize the use of existing structures. However, in line with GoV norms, effective implementation of the Project’s innovative features requires augmented capabilities at various levels of the Project administrative structure to ensure (cost-) effective delivery. In the majority of cases, this TA and additional structures are expected to be temporary as the existing administrative structures gradually take on the relevant responsibilities. The Project will involve a number of actions to further streamline these project management arrangements, including: (i) using existing staff of the Department of Planning and Investment (DPI) or other departments to fill a number of management unit positions, (ii) training these existing staff in specialized Bank requirements (such as safeguards) rather than hiring consultants to undertake this work, and (iii) where existing arrangements and workloads allow, consolidating existing Project Management Units (PMUs) or key functions (such as financial

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management, procurement or supervision of infrastructure investments) particularly where the Project requirements are similar.

26. The Ministry of Planning and Investment (MPI) is the Project “owner” and implementing agency on behalf of the Government. The Department of Local and Territorial Economies (DTE) of MPI would coordinate the overall Project and ensure that provinces implement the Project in accordance with agreements reached between the World Bank and the Government. A Central Project Coordination Office (CPO) will be set up to monitor overall implementation, coordinate among the participating provinces and other key partners (such as MARD, the Nutrition Institute of Vietnam, CEM, etc.), and report on technical and financial progress of the Project to both Government authorities and the World Bank. The CPO will focus on coordination and monitoring, while management units at provincial level will ensure appropriate technical support is provided to districts (in the areas of capacity building, safeguards, financial management and procurement of works activities). Districts and communes will have the main responsibility for day-to-day implementation of project activities. The CPO is overseen by the Deputy Director of the Department, and would be staffed by a combination of appointed civil servants from MPI and consultants recruited especially for the Project.

27. At provincial level, Provincial Project Management Units (PPMUs) would be set up or combined with existing management units within the DPI to oversee the implementation of the Project. At district level, the District Project Management Units (DPMUs), established within the Division of Finance and Planning, would be responsible for the day-to-day execution of the Project in their districts and target communes. Staff of both PPMUs and DPMUs will be a combination of appointed staff from DPI, seconded staff from other relevant departments (such as DARD) and project consultants.16 Given variations in experience and existing “implementation units” in a number of the target provinces and districts, the Bank and Government have agreed to allow certain flexibility in how the staffing is arranged in each locale based on existing structures and the feasibility of combining management unit activities. It was also agreed that the appointment or hiring of project staff would be the responsibility of the relevant level to ensure effective human resource management.

28. At commune level, the existing Commune Development Board (CDB) would be responsible for organizing village groups and facilitating participation in the prioritization process, consolidating and endorsing commune plans, ensuring technical input for sub-project design and implementation, and monitoring the work of contractors and village groups for investments under their control. The existing staff of the CDB (generally Chairman, Vice-chair, accountant, cadastral/infrastructure officer and agriculture officer) would be strengthened under the Project through capacity building and support on technical and project management issues. Each commune would also have a Supervisory Board (CSB), consisting of representatives of the Commune People’s Committee, mass organizations (i.e., women’s union, farmers’ union, etc.), village representatives and possibly respected local civil servants (such as the teachers), which oversees the work of the CDB and community groups who are financed under the Project. Different structures would be established at village level—either project implementation groups

16 Appointed or seconded Government staff would receive an “ODA Allowance” paid from Government counterpart funds.

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or LEGs, depending on the types of activities being supported-- and would be provided training and support to fulfill their respective project implementation responsibilities.

29. These management units referred to above are overseen by the relevant People’s Committees at provincial, district and commune levels. These Committees are responsible for ensuring sufficient and timely counterpart funding, ensuring appropriate coordination across departments and integration with local development plans, and resolving technical, administrative or political constraints that may arise. Each participating district and provincial People’s Committee would issue a formal decree to establish the relevant PMUs and to appoint the Director, vice-Director, and key staff of the management unit.

Implementation Arrangements

30. As a project that builds on a foundation of community-driven development, a process of bottom-up planning will be used to identify component 1 (commune and village level infrastructure) and component 2.1 (livelihoods) investments, and to recommend those financed under component 3.1 (connective infrastructure) investments. Component 2.2 investments that would promote livelihoods activities with market linkages will be prepared in a different manner discussed below. Sub-project investments under components 1 and 2.1 must be identified, prepared and proposed annually at village level. The process for developing and approval of these sub-project plans will involve four stages: participatory needs assessment at village level, sub-project concept identification and recommendation by villages, technical review and prioritization by communes, and district endorsement of commune plans. Once annual plans are approved by the district, communes and villages are notified and relevant technical staff would assist the CDBs or village groups to prepare detailed sub-project plans that would then be the basis for sub-project agreements, release of funds and implementation.

31. A slightly different process would apply for component 2.2, which would necessarily be more selective. Investment activities would be identified through a process where demand for support by villagers is matched by an analysis of natural resource conditions and viable commercial interest and market outlets. Business development officers (BDOs), based in each DPMU, will be responsible to appraise the sub-project concepts. The Project would finance preparation of businesses plans, organization of farmers into LEGs, development of LEG network to aggregate production for supply to agro-businesses in quantity, and technical and financial support to LEGs to improve their production capacity and quality. ABs would be identified through a competitive process that has been used under the Second Northern Mountains Poverty Reduction Project (NMPRP-2) and the ACP. The Technical Assistance Team (discussed below) would support districts and provinces in this area. District PMUs would have responsibility for prioritizing component 3.1 “connective” investments based on priority recommendations that emerge from the commune plans and through their own analysis of what investments could optimize “connectivity” in their project area.

32. These village, commune and district plans would be consolidated and submitted to the provincial and central PMUs as part of the Project management process. However, formal authorization to undertake work at a given level (village, commune or district) is only provided by the next immediate level up. Annual district plans would also be integrated into the Socio-Economic Development Plans of the district. Provincial PMUs would prepare annual capacity

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building, communications, monitoring and reporting plans based on the consolidated district plans. Annually, PPMUs would also be responsible for preparing the consolidated resettlement actions plans based on a survey of the proposed sub-project investments. The CPO and the World Bank would review and approve annual Provincial Resettlement plans prior to sub-project implementation. The Project Implementation Manual (PIM) describes in greater detail and provides relevant criteria, guidelines and time-frames for the implementation of the processes summarized above.

33. Financial management, disbursements and procurement. MPI will delegate responsibilities for FM and procurement to the CPO at central level, and the PPCs delegate responsibility to the PPMUs at provincial level, and DPMUs at district levels. At commune level, the existing commune development boards would be responsible for all project management and fiduciary responsibilities. Seconded Government staff and project consultants hired at national, provincial and district level will be charged with day-to-day management of the relevant actions, systems and reporting requirements of the Project’s fiduciary arrangements. The CPO and each PPMU would open and maintain a separate designated account for the purposes of the Project. Specific regulations, procedures and requirements to operationalize the fiduciary systems are described in detail in the PIM. Existing staff at commune level would be trained in the basic requirements of systems, particularly relating to community procurement and financial management, which are outlined in separate sub-manuals. Additional staff at district level would be specifically charged in assisting communes with bookkeeping and record keeping (including those relating to procurement) responsibilities and community facilitators would have basic training in these same areas so that they could assist communes and villages in their respective responsibilities. Existing, management-level Government staff at national, provincial and district levels would oversee and ensure the accuracy of the work of these project consultants. Internal audits would be conducted annually by the Inspectorate of MPI at central level and of DPI at local level, and reports submitted to MPI and the World Bank within 3 months of the completion of the internal audit. The Project would also be audited annually by an independent agency acceptable to the Bank.

34. Block grants. Financing for components 1 and 2 of the Project will be disbursed (by the DPMU) to the Commune Development Boards on a lump-sum basis upon the contract award for the sub-project, and will be categorized as sub-grants. The World Bank will account for the eligible expenditures (i.e. record that the eligible expenditures are documented) when the amounts are paid to the CDBs by the DPMU, as there are mechanism and procedures in place, overseen by the DPMU, PPMU and ultimately the CPO (with World Bank oversight), to ensure that grants are being implemented as planned and are being used for the purposes intended. All activities to be financed by the block grants will need to be completed by the Closing Date of the Project, and any funds remaining to be used by the CDB by the Closing Date would need to be refunded.

35. Safeguards. As a CDD project where, for the most part, relevant investments are demand driven and not known at the time of appraisal, the Project will apply two framework documents to ensure that World Bank and GoV safeguard policies and procedures are applied. These instruments are the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF). MPI has experience with Bank-financed projects and is familiar with the World Bank’s social and environmental safeguard policies. At central level,

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MPI will hire qualified consultants to assist in training provincial, district and commune level staff (who would be designated by the relevant authorities) to oversee and ensure the application of the ESMF and the RPF for the sub-projects. These designated provincial and district staff will have responsibility for ensuring that relevant safeguard frameworks are applied, instruments developed and measures undertaken to minimize any negative social or environmental impacts. The national-level consultants will be hired to periodically monitor the application of the safeguard frameworks and to provide annual refresher training to the relevant, designated, staff. At commune level, the CSBs will also be trained in safeguards screening and monitoring to ensure that potential negative impacts are identified and relevant mitigation measures are implemented.

36. The Technical Assistance Team (TAT) would provide critical advice and support services to the Government and Project. The TAT would be headed up by an experienced project management specialist as chief technical advisor ideally with knowledge and experience in community driven development or livelihoods support. The remaining team of predominantly national advisors would cover most of the implementation and technical areas of the Project with a particular emphasis on livelihoods and market linkages (where the need for further support to MPI and provincial and district teams is considered greater). The TAT would be located in the region (possibly Plei Ku) to have better access to the implementing units.

B. Results Monitoring and Evaluation

37. Monitoring and Evaluation (M&E) System. The Project’s M&E system will operate at the commune, district, provincial and national levels and will combine impact, outcome, output and process measures of performance. Much of the data collected will be disaggregated by ethnicity and gender. The system is guided by the Project’s results framework, presented in Annex 1.

38. Impact Evaluation. The CHPov will implement a robust impact evaluation (IE) that will provide evidence of the impacts of the Project’s interventions at both the development objective and component outcome levels. The CHPov is one of several IDA-16 projects in the region mandated to undertake a rigorous IE featuring both a baseline survey and a plausible projection of the counter-factual (i.e., an assessment of and comparison with what happens in areas that do not receive project support, or “treatment”) through the use of control groups. The World Bank is working closely with the Government to ensure the quality of the design and execution of the evaluation (which will be financed under the Project). The base-line survey is projected to begin in early 2014, prior to the time of expected project effectiveness. The IE team will consult with provincial and district offices of CEM to inform survey and questionnaire design and conduct of the baseline.

39. Monitoring and Management Information System (MIS). Project management units will monitor and report on project inputs and outputs consistent with Government regulations and agreement with the World Bank. This will include the tracking of funding and physical progress in project implementation. Reporting will be done on a monthly basis between commune and district, and on a quarterly basis between districts, provinces, and central level, and with the World Bank. These quarterly reports would also include interim financial reports, the form and substance of which would be agreed upon between the Bank and MPI. The Project would

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support the development and roll-out of a project-specific management information system (MIS), the training of staff at provincial and district levels in MIS management and analysis, and the training of community members and facilitators to monitor and report basic sub-project progress data to complement district-level monitoring. Given the high level of mobile phone coverage, the Project will investigate the application of smart-phone technologies for monitoring purposes (including grievance reporting and geo-tagging). Government has agreed to pilot test a model MIS for CDD operations developed by the World Bank Social Development network that includes a grievance monitoring module, and smart-phone interface to simplify and speed up data input and processing. The Project’s MIS would be developed to complement existing reporting requirements of Government, and would draw on lessons learned from the NMPRP-2.

C. Sustainability 40. Sustainability under CHPov can be viewed from two perspectives—the sustainability of the new approaches being applied under the Project, and the sustainability of the specific investments. The Project’s new approaches include efforts to enhance the inclusion and participation of poor EM households in development resource planning and to empower them through direct project implementation, adapting the NRA strategy to the context of the poorest communes, and linking infrastructure investments with livelihoods support. These approaches should be sustained if adequate capacity building is provided under the Project at village, commune and district levels, and if the results of these efforts are as expected (thereby reinforcing their application). These new “ways” of approaching poverty reduction have the potential to influence “business as usual”, particular in the targeted districts and communes that are the beneficiaries of several other poverty reduction efforts (including program 30A and B, P-135, etc.). The Project’s IE, which will both measure outcomes of project interventions as well as test certain design variations, should help to demonstrate the value of these alternative approaches to national and local level Government authorities (especially MPI) and should, therefore, help to influence future policies and programs, thereby helping to sustain the Project strategies.

41. In terms of the sustainability of project investments, the livelihoods component of the Project will, by its nature, be sustained for those (private) activities that prove successful and profitable. Investments under the first and third components, however, will present challenges if local governments do not or cannot commit to supporting the on-going operation and maintenance of this infrastructure beyond the life of the Project. This is a particular concern for poorer communes that lack the local revenues and transfers to support the maintenance of basic infrastructure. This continues to be a challenge for World Bank supported investments in many areas of the country. In response, CHPov will allow a 10 percent set-aside under sub-component 1.2 for O&M activities on either new or existing infrastructure. This will be a pilot initiative, which builds on experiences under NMPRP-2, and which would be evaluated as part of the Project. The hope is that this pilot will prove effective and thereby encourage MPI and sub-national administrative levels to similarly set aside an agreed percentage of investment funds for O&M in the future. In relation, the recent decision to establish a Maintenance Fund drawing from vehicle registration fees suggests that the need for this type of sustainable financing and the possible solution to the problem may be more readily available. User fee schemes, particularly for potential “toll” goods such as irrigation systems, will also be explored under the Project.

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V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

RISKS RATING

Stakeholder Risk Moderate

Implementing Agency Risk

- Capacity Substantial

- Governance Moderate

Project Risk

- Design Substantial

- Social and Environmental Moderate

- Program and Donor Moderate

- Delivery Monitoring and Sustainability Substantial

Overall Implementation Risk Substantial

B. Overall Risk Rating Explanation

42. The Project builds on tried and tested strategies for reducing poverty in rural areas among EM communities in Vietnam, and will be overseen and implemented by a strong overall Ministry counterpart. However, project implementation will face a number of key challenges including: a high degree of inter-departmental coordination required for effective project implementation (between DPI, DARD and DOH), the relatively low capacity of, in particular, the target districts, the limited experience of the designated overseeing department of MPI (DTE) and the yet unknown efficacy of several livelihoods strategies (under component 2). In addition to the sustainability issues noted above, the Project is also heavily dependent on the successful implementation of the IE to provide data on project performance at outcome and impact levels. Finally, given the strongly decentralized nature of the Project and the use of investment strategies not standard to communes and districts (livelihoods support and community procurement), certain governance risks are also present. As such, the overall implementation risks are considered to be substantial.

43. MPI and the Bank will mitigate these risks by: (i) drawing on experiences and expertise of the NMPRP-2 project, (ii) formalized linkages with DARD and DOH for component 2 implementation; (iii) increased training and implementation support for project fiduciary staff, (iv) development of a clear PIM that guides in particular the more innovative aspects of project implementation; (v) enhancing supply driven accountability mechanisms such as internal audit, procurement and technical audits; and (vi) application of an MIS that includes an SMS-based grievance handling and redress system and allows for geo-tagging and uploading of digital photos of sub-projects.

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VI. APPRAISAL SUMMARY

A. Economic and Financial Analyses

44. Project Costs. The total cost of the project over the six year implementation period is calculated at USD 194 million; US$ 150 million (77 percent) in IDA resources, US$ 9.4 million (5 percent) from the Government of Vietnam, and US$ 34.6 million (18 percent) from beneficiaries – primarily as labor and as on-farm livelihoods investments. If all beneficiary labor costs are excluded, the total cost of the Project is reduced to US$ 148.3 million, however a portion of these costs are paid by the Project (e.g. road construction).17 The largest portion of allocated costs (approximately US$ 75 million or 43 percent of allocated resources) is accounted for by infrastructure development – largely upgrading and repair of roads and irrigation.

45. Project Benefits. Given the largely demand-driven nature of the Project, estimation of project benefits required extrapolation of investment priorities identified through a participatory process at local level for the initial 18 months of implementation and can thus only be considered indicative. The identified rural investment priorities, together with detailed estimates of costs and financial returns for all significant quantifiable activities, were available in a Project Feasibility Study previously prepared by national consultants. Numerical estimates were prepared for all productive rural infrastructure, self-reliance and income diversification activities, market linkage activities, and district connective infrastructure. Significant benefits are expected to arise from activities related to social infrastructure (e.g. schools and potable water supply), technical assistance, training and communications, however these were not quantified. Among the key areas of uncertainty which will impact the scale of benefits arising from the Project are the sustainability of infrastructure and agricultural activities supported by the Project, as well as rates of traffic growth on newly constructed or rehabilitated access roads. 46. Returns to Project Investment. The financial internal rate of return on project investment over a 15 year time span yields a very high FIRR of 46 percent. In large part, this is due to high rates of return to livelihood investments (50 percent), where unpaid labor accounts for a high proportion of costs, and benefits are assumed to be repeated through subsequent investments financed by beneficiary producers. A considerable portion of local infrastructure costs are also accounted for by unpaid labor. The EIRR, adjusted principally for the cost of unpaid labor for both local infrastructure construction and sustainable livelihood activities, shows returns of 13 percent for infrastructure and 38 percent for sustainable livelihoods activities, resulting in an overall return of 15 percent.

B. Technical

47. The approaches proposed under the CHPov are considered technically appropriate and feasible. Evidence suggests that the challenges of EM poverty in the Central Highlands do not lend themselves to simple, top-down and standardized (hardware investment) solutions that have to date been the main strategy applied by Government. Nor will the larger trends in Vietnam’s economic development—urbanization, industrialization and mobility—have a significant short term impact on the poorest communities in the region. Therefore, the Project’s locally focused,

17 The difference in project costs between that which is presented in this section and under the project financing section of the PAD reflects the treatment of labor costs in the analyses of rates of return.

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demand-driven and integrated (public and private) investment strategies are seen as critical to the successful poverty reduction in this area. The Project’s considerable efforts to enhance participation of EM groups and to build capacity of local authorities to facilitate such participation are expected to help address social connectivity constraints. The diverse agro-ecological nature of the region and the primary beneficiaries equally diverse livelihoods strategies suggest a project approach that needs to be flexible and opportunistic. The use of predominantly CDD approaches best allows for such a response. The proposed “intermediation” for market opportunities is also seen as a critical element for project success, and the inclusion of a nutrition and food security focused sub-component is a realistic response to the reality of the marginal assets of many communes and beneficiary households and the limited market oriented livelihoods opportunities available. The Project’s explicit poverty targeting (at the level of communes and households) will deepen the level of investments in the poorest and most disadvantaged communes and should result in greater returns.

48. The Bank has also found the institutional arrangements under the Project satisfactory. MPI is a strong and technically capable Ministry, the Department for Territorial and Local Economies has shown strong commitment to the preparation of the Project, and provincial and district departments and staff have the knowledge and skills to, in particular, oversee and implement components 1 and 3. Additional support for component 2 would be provided through enhanced collaboration with DARD and DOH, as well as from the TAT. To cater for the additional implementation requirements, the Government will establish management units at central, provincial and district levels (that would be composed of existing Government staff and project consultants), and will strengthen the existing bodies at commune level. A review of the CMU’s “readiness filter” found the Project to have completed, or to have finalized in draft, all major elements.

C. Financial Management

49. A financial management (FM) assessment carried out from October to December 2012, and in August 2013, has concluded that the Project meets the minimum Bank FM requirements, as stipulated in OP/BP 10.00. Based on this assessment, the team believes that the Project will maintain adequate financial management arrangements acceptable to the Bank and, as part of these overall arrangements that the borrower has in place for implementing the operation, provide reasonable assurance that the proceeds of the credit will be used for the purposes for which it will be made. The FM assessment identified the following key risks: (a) FM staff at all levels may not have adequate FM capacities, (b) FM procedures may not be properly set up, and (c) the monitoring mechanism for the use of the Community (block) Grants may not be properly developed. The main actions required to mitigate these risks are (i) appoint and provide FM training to chief accountants or at least one accountant at CPO, PPMUs and DPMUs; (ii) develop a FM Manual that provides procedures and guidance on FM and disbursement procedures of the Bank and the Government and, in particular, the monitoring mechanism for the use of the Community Grants, and (iii) develop accounting software to fit the operations and reporting requirements of the Project, installing in all PPMUs and DPMUs, and training on the use of the software to all CPO, PPMUs and DPMUs.

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D. Procurement

50. The Procurement Capacity and Risk Assessment (PCRA) of the Project implementing agencies (PIAs) found that the PIAs at the district level up to the central level have reasonable public procurement knowledge and considerable experience in implementing procurement in accordance with national public procurement law and regulations. Nevertheless, these implementing agencies do not have prior experience with World Bank funded projects and are not familiar with Bank procurement procedures and policies. In addition, the commune administrative structure is generally weak as they lack staff having procurement experience or relevant technical expertise. Overall, the preliminary PCRA considered the procurement risk as high. To mitigate the associated risks, the Bank agreed with Government that the Project would: (a) detail relevant procurement procedures in the PIM; (b) ensure intensive training on procurement and contract administration for all PIAs staff; (c) either assign qualified staff or recruit procurement consultants to assist the PIAs to conduct procurement activities. The Bank would also undertake regular implementation support and procurement post reviews or hire independent procurement auditing consultant to carry out the review if needed. An initial 18-month procurement plan for the Project has been prepared by each Provincial PMU and the CPO.

E. Social (including Safeguards)

51. The Project triggers the World Bank’s Social Safeguards Operational Policies for Indigenous Peoples (OP 4.10) and Involuntary Resettlement (OP 4.12). In response, the Government has undertaken appropriate actions and agreed on adequate arrangements to address the key social issues and safeguard requirements under the CHPov. Annex 3 provides further details on these arrangements, which include extensive consultations with beneficiary communities on the Project’s design and specific investments for the first 18 months, the conduct of an SA, and the preparation of both an ESMF and a RPF. All three of these safeguard instruments were found acceptable to the Bank and disclosed in accordance with Bank policy.

52. Ethnic Minorities are the overwhelming majority among the project targeted beneficiaries. Therefore that no separate IPP was developed as all the relevant elements of OP 4.10 have been directly integrated into the design of the project, project documents and Project Implementation Manual and are described in details in Annex 6 of this document.

53. The RPF specifically outlines the principles, eligibility criteria, consultation methods, modes of compensation, and other aspects of the Project’s land acquisition and resettlement requirements. The RPF was approved by the Prime Minister prior to project negotiations. On an annual basis, provinces will survey preliminary sub-project lists and will confirm to MPI and the World Bank if any land acquisition would be required and how this would be addressed (either thru compensation or identification of an alternative investment). Each year, provinces will prepare a consolidated Resettlement Plan based on a survey of all sub-projects proposed for that year. Once detailed sub-project designs are completed, if called for specific Resettlement Plans would be prepared for each affected sub-project prior to financing.

54. The overall project design complies with the Bank’s policy on Indigenous Peoples (IPs) given that more than 72 percent of project beneficiaries are members of EM groups, that the Project specifically targets these groups to benefit from the Project, and that the main project

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strategy is based on participatory development approaches that specifically engage these groups in consultative processes. In compliance with OP 4.10, the Government carried out an SA which informed project design, including elements aimed at enhancing participation and inclusion of EMs. These include: a communications strategy and materials that apply different and literacy appropriate media forms, preferred recruitment of key field staff (community facilitators) from local communities, the use of indigenous languages in communications at village level when facilitating local decision making, inclusion of elders and traditional leaders as part of village level planning, minimum requirements for EM participation in decision meetings and livelihoods groups (which will be monitored), and technical support and capacity building (including for village groups) around participatory processes. A summary of the findings of the SA and the agreed-upon actions to enhance EM participation and to respond to the Bank’s safeguard policy on IPs are presented in Annex 6, which was also disclosed locally and through the Bank’s InfoShop prior to the conclusion of project appraisal.

55. The SA also included a gender analysis and assessment and the Project includes the following gender informed design elements: minimum requirements for female participation in planning and decision making meetings at village level, a designated female position (of Vice-Chair) for the commune-level decision making board, specifically targeted/ear-marked support for women’s livelihoods activities under one of the Project’s sub-components, and monitoring and evaluation data will be disaggregated by gender (and ethnicity).

56. Project preparation involved wide-spread consultations and participatory planning exercises from June 2012 until June 2013 with all target communes, district and provincial personnel and other key stakeholders. This process led to broad understanding and community support for the Project design, approaches and activities. Formal public consultations were carried out during June 2013 in all 6 project provinces with the participation of key stakeholders: representatives of provincial Departments of Planning and Investment, district peoples’ committee members, and local civil society organizations (e.g. women’s union, farmers’ association, and fatherland front).

F. Environment (including Safeguards)

57. The Project triggers the World Bank’s Environmental Safeguards Operational Policies for Environmental Assessment (4.01), Forests (4.36) and Pest Management (4.09). Overall, the Bank concludes that the impact of the Projects’ investments will be positive given their emphasis on repair, upgrading or construction of critical community infrastructure, and in supporting basic livelihoods activities of poor predominantly EM households and communities. The Government has met the requirements for the Bank’s policy on Environmental Assessment through the development of an ESMF document, found acceptable to the Bank. The ESMF details the specific safeguard policies triggered under the Project, and provides guidance and standard procedures to assess the environmental impacts of sub-projects identified, approved and executed during project implementation. It also includes screening of sub-projects for impacts on natural habitats. In addition, given the small-scale and dispersed nature of the likely investments under the Project, any negative environmental impacts are most likely to be minor, temporary, site-specific, reversible and limited to the construction phase of the sub-projects. In this case, such impacts would be addressed through the application of a set of technical guidelines and practices that are outlined in a set of Environmental Codes of Practice (ECOPs) that are included in the

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ESMF. These ECOPs include a set of guidelines on sustainable use of pesticides and fertilizers which respond to OP 4.09 on Pest Management. In addition, the PIM includes basic guidelines and a simplified template for community forest management plans to address the requirements of OP 4.36 on Forests. 58. The Government provided to the Bank for review and comment the first draft of the safeguard instruments (ESMF, RPF and SA) in August 2013, which were disclosed locally and through the InfoShop per Bank guidelines. Prior to the completion of appraisal, the Government updated and re-disclosed these same documents locally. The updated ESMF, RPF and SA were disclosed through InfoShop on September 16, 2013, September 18, 2013 and August 28, 2013 respectively. In addition, Annex 6 of the PAD "Findings and Arrangements to Enhance Ethnic Minority Participation" was disclosed on September 27, 2013. The proposed institutional arrangements to ensure the appropriate application and monitoring of the various safeguard instruments and requirements were also found to be acceptable by the Bank.

21

Annex 1: Results Framework and Monitoring Arrangements

VIETNAM: Central Highlands Poverty Reduction Project

Project Development Objective: To enhance living standards by improving livelihood opportunities in Project Communes of upland Districts of the central highlands of Vietnam

No. CHPoV Outcomes and Indicators18

Target/Program Years Data Collection and Reporting

Yr 1 2014

Yr 2 2015

Yr 3 2016

Yr 4 2017

Yr 5 2018

Yr 6 2019

Reports and

Frequency

Data Collection Instrument

Responsible for Data

Collection and Analysis

Overall Program Outcome

1 Number of Direct Beneficiaries ^ 0 Annual targets to be agreed upon 540,472 Annual progress

report

Sub-Project Database

Provincial PMU

2 Proportion of Poor Villagers Whose Identified Development Priorities are Satisfied *19

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

3 Percent Change in Food and Non-Food Consumption of Poor Households *

0 - 5% - - 10% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

Intermediate / Component Outcomes and Output Indicators

Component 1: Commune / Village Infrastructure Development

4 Percent Change in Access of Poor Households to Services, Infrastructure, and Utilities 20*^

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

^ An “^” indicates that the given indicator is a core sector indicator of the World Bank as per OPCS Guidelines. Due to the participatory/demand driven nature of the project annual targets cannot be determined a priori. * An asterisk “*” indicates that the given indicator would be measured against a control group as part of the impact evaluation. 18 Data for indicators will be disaggregated by gender and ethnicity (indigenous ethnic minorities, other ethnic minorities, and Kinh). 19 This will be measured by asking villagers at baseline to identify local development priorities and then comparing this to the types of sub-projects financed in the same communes.

22

No. CHPoV Outcomes and Indicators18

Target/Program Years Data Collection and Reporting

Yr 1 2014

Yr 2 2015

Yr 3 2016

Yr 4 2017

Yr 5 2018

Yr 6 2019

Reports and

Frequency

Data Collection Instrument

Responsible for Data

Collection and Analysis

5

Annual planned versus completed:21 • Kms. roads repaired/improved • Meters irrigation systems constructed/

repaired • # bridges constructed/upgraded • # water systems (wells, gravity fed, etc.)

constructed • # classrooms (other social infra)

constructed

To Be Determined Annually Annual

Progress Report

Sub-Project Database

Provincial PMU

6 Percent Change in Proportion of Villagers Satisfied with Support Received from the Project ^

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

7 Percent Increase in Participation of Women in Decision-Making on Local Public Investments

0 5% 10% 15% 20% 25% Annual

Progress Report

Sub-Project Database

Provincial PMU

Component 2: Sustainable Livelihood Development

8 Number of Livelihoods Enhancement Groups (LEGs) and Market Link Partnerships (MLPs) 22 Established

To Be Determined Annually Annual

Progress Report

Sub-Project Database

Provincial PMU

9 Percent Change in Productive and Durable Assets of Households Participating in LEGs *

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

20 This will be measured by an index of various outcome measures pertaining to transportation (male and female travel frequency; duration and cost of travel; vehicular movements; frequency of blockages; subjective and/or objective assessments of quality), and irrigation (sufficiency of irrigation), drinking water (usage of protected sources; objective and/or subjective measures of quality; average duration of water collection), education (increase in nos. of school age children in school), etc., weighted by the frequency by which investments in such activities are funded. 21 Proposed to track top four types of infrastructure investments. 22 Market link partnerships are defined as signed commercial contracts between producers groups and enterprises, middlemen, companies, etc.

23

No. CHPoV Outcomes and Indicators18

Target/Program Years Data Collection and Reporting

Yr 1 2014

Yr 2 2015

Yr 3 2016

Yr 4 2017

Yr 5 2018

Yr 6 2019

Reports and

Frequency

Data Collection Instrument

Responsible for Data

Collection and Analysis

10 Percent Change Dietary Diversity of Poor Households *

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

Component 3: Connective Infrastructure Development, Capacity Buidling and Communications

11 Percent Change of Transport Connectivity Index *23

0 - 10% - - 20% Baseline,

Midline & Endline

Household Survey

Impact Evaluation

12 Number of People Trained [and person-days of training provided] by the Project ^

To Be Determined Annually

Quarterly and Annual

Progress Report

Sub-Project Database

Provincial PMU

23 The index will aggregate a matrix of measures of time, cost, visits, blockages, and road quality of commune-village, commune-district, and commune-province travel, weighted by z-scores.

24

Annex 2: Detailed Project Description

VIETNAM: Central Highlands Poverty Reduction Project

A. Context

1. The Project area and the Central Highlands in general present a paradoxical situation of some of the highest incidence of both income and non-income poverty, coupled with twice the rate of economic growth and an abundance of economic opportunities. According to calculations presented in the Government’s feasibility study that drew on the VHLSS (2010), around 73.6 percent of the ethnic minorities from the Central Highlands live under the poverty line, and the Central Highlands is one of the two areas with the highest poverty rate in Vietnam (22.2 percent). The prevalence of children suffering from malnutrition in CH, as measured by height for age and weight for age, is also at the alarming level (over 40 percent and 20 percent respectively) as compared with national rates;24 the rate of primary school entrance, though very high overall at almost 96 percent, is still the lowest in the country (national average of 97.5 percent);25 and less than half of the number of children of secondary school age are attending secondary school. These statistics are particularly worrying given that the region’s economic growth over the past two decades (at 12 percent) is almost twice as high as the national average. Given these rates of growth, and the abundance of economic activity in tourism, mining and commercial crops (coffee, rubber, pepper), the persistent high rates of poverty among, in particular, indigenous EMs is especially worrying for the Government. The numerous government initiatives and National Targeted Programs that have attempted to address these issues and this persistent gap, have met with only marginal success.

2. The Project covers 6 provinces of Dak Lak, Dak Nong, Gia Lai, Kon Tum, Quang Ngai and Quang Nam. Quang Ngai and Quang Nam are coastal provinces but project districts are located in mountainous areas. The Project area consists of several adjacent highlands, from 500 to 1500 meters above the sea level, all of which are adjacent to the Nam Truong Son mountain range to the east. Located in the tropical savannah, the climate in the Central Highlands is divided into two seasons: the rainy season from May to October and the dry season from November to April. The climate characteristics play an important role in the selection of livelihood in the Project area. While the CH is famous for its high-value industrial crops the Project districts are not most favorably endowed with weather condition and land for such potential development. The region is generally characterized by a diverse ethnic population, with more than 41 groups throughout the 26 project districts (accounting for 60 percent of the population). In the 120 project communes, EMs constitute 72 percent of total population, some of whom have immigrated to the Central Highlands region from other areas of the country (primarily the north). The SA found low rates of participation of community members, especially vulnerable groups (e.g. ethnic minority, women), in the planning, implementation and monitoring of local socio-economic development. Besides low education level and a generally passive attitude toward Government development efforts, limited understanding of Vietnamese will constitute important barriers to ensure full participation and equitable access to project benefits.

24

Nutrition Institute and General Statistic Office, figures in 2010 25

Ministry of Education and Training, figures in 2010

25

B. Geographic Targeting

3. The Project targets the second poorest region in Vietnam and will cover the poorest and more isolated areas where a majority of project beneficiaries are ethnic minorities. Specifically, the Project targets 130 communes in the 26 poorest districts in the provinces of Dak Lak, Dak Nong, Kon Tum, Gia Lai, Quang Nam and Quang Ngai. The Government’s (MOLISA) rural poverty line of VND 400,000 per person per month was used to prioritize the participating districts and communes, and a minimum poverty rate of 30 percent of households was used to select districts. MPI, with the provinces and district authorities, also considered the following issues in identifying the participating communes: restricting the total number of communes per district at 5 to increase the level of per-capita investments and to optimize management support, prioritizing communes that had higher percentage of EM populations, and seeking communes with contiguous borders in order to facilitate connective investments. The table below lists the participating districts (by province) and indicates their overall population, EM population and household poverty rates. The Project file contains detailed maps and tables with the same information for each participating province, district and commune.

Table 2.1: Overview of the Central Highlands Poverty Reduction Project Area

No Province/District Population Households Proportion of ethnic minorities (%)

Household poverty rate (%)

EM household poverty rate (%)

26 Project districts in total 1,259,969 284,633 58 46.31 63.51

130 Project communes in total 540,472 119,492 72.18 56.60 67.07

I Dak Lak – 5 Project districts 353,804 78,813 44.76 32.88 46.97

Dak Lak – 25 Project communes 162,850 35,713 62.73 45.45 53.75

1 Buon Don dist. 39,306 9,138 48.66 42.49 53.52

2 Ea Sup dist. 31,921 7,663 52.86 58.74 68.95

3 Krong Bong dist. 36,686 7,104 67.95 34.98 43.61

4 Lak dist 24,078 5,368 81.67 52.38 60.04

5 M'Dak dist. 30,859 6,440 72.87 39.58 45.39

II Dak Nong – 4 Project districts 207,323 46,533 36.99 43.64 72.90

Dak Nông – 20 Project communes 115,901 25,160 48.99 51.70 73.39

1 Dak Glong dist. 24,212 5,100 73.43 76.14 90.97

2 Dak Song dist. 31,958 7,066 26.61 37.50 56.28

3 Krong No dist. 25,654 5,610 50.77 43.99 66.01

4 Tuy Duc dist. 34,077 7,384 52.18 54.25 70.10

III Gia Lai – 5 Project districts 292,469 60,839 57.35 46.18 63.35

Gia Lai – 25 Project communes 78,088 26,256 85.39 59.77 64.06

1 K Bang dist. 16,903 14,697 76.28 81.67 87.84

2 Krong Chro dist. 16,521 2,737 62.69 47.35 65.25

3 Krong Pa dist. 22,005 4,119 83.81 66.50 69.62

4 Mang Yang dist. 18,461 3,898 87.48 42.77 48.21

5 Ia Pa dist. 26,458 5,141 83.78 50.34 56.95

IV Kon Tum – 6 Project districts 195,120 44,360 72.89 52.64 67.42

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No Province/District Population Households Proportion of ethnic minorities (%)

Household poverty rate (%)

EM household poverty rate (%)

Kon Tum – 30 Project communes 85,814 19,396 87.62 65.17 73.19

1 Dak Glei dist. 11,696 3,033 92.68 69.86 74.17

2 Kon Plong dist. 11,206 2,583 92.07 77.23 74.95

3 Kon Ray dist. 14,467 3,169 80.62 63.17 74.64

4 Ngoc Hoi dist. 20,444 4,760 72.31 44.18 56.22

5 Sa Thay dist. 16,462 3,538 90.96 75.35 80.05

6 Tu Mo Rong dist. 11,539 2,313 98.05 76.68 84.39

V Quang Nam – 3 Project districts 72,134 16,836 81.85 71.58 82.26

Quang Nam – 15 Project communes

28,453 6,698 93.42 79.94 85.57

1 Nam Giang dist. 9,770 2,218 95.36 78.43 82.32

2 Nam Tra My dist. 11,582 2,808 91.38 79.38 86.87

3 Phuoc Sơn dist. 7,101 1,672 94.26 82.89 87.82

VI Quang Ngai – 3 Project districts 139,119 37,252 84.99 59.29 64.85

Quang Ngai – 15 Project communes

35,830 12,914 89.33 67.32 71.69

1 Ba To dist. 12,302 3,086 91.41 65.62 71.43

2 Son Ha dist. 26,196 7,341 86.09 67.88 72.34

3 Son Tay dist. 9,634 2,487 96.43 67.80 70.23

Source: Reported from the provincial PPUs

C. Project Components

Project Strategy

4. The Project applies three key strategies to optimize support for ethnic minorities to address livelihoods and, in turn, poverty: (i) as noted above, a strong emphasis on poverty targeting at district, commune and household levels; (ii) the application of a bottom-up participatory planning and implementation approach to better engage local communities and groups in investment decisions that directly affect them; and (iii) a more holistic approach to development support that combines infrastructure investments, basic food security and market-oriented agriculture support in a way that would seek to emphasize the particular priorities of ethnic minorities.

5. The Project will cover the poorest and more isolated areas of CH where a majority of project beneficiaries are ethnic minorities. MPI, together with provincial and district authorities, also opted to restrict the total number of targeted communes per district to 5 in order to increase the level of per-capita investments and to optimize management support. Also prioritized were communes that have higher percentage of EM populations, and communes with contiguous borders in order to facilitate connective investments. Finally, within specific livelihood sub-components, target participation rates will seek to maximize the inclusion of the poorest households. Sub-component 2.1 will seek an overall participation rate of 75 percent of poor

27

households (with 100 percent coverage of food insecure households for the food security and nutrition activities). Sub-component 2.2 would seek to include 50 percent of poor households.26

6. The Project would also apply a CDD approach to guide investments in infrastructure and services at village and commune levels. The process whereby sub-projects will be identified will be based on participatory planning processes used and promoted under the NMPRP-2 and Program 135 II, and other relevant community-based projects supported by the Government and development partners. Specifically, the CHPov has drawn on the procedures currently being applied under NMPRP-2. In keeping with best-practices for CDD, the menu of potential sub-project investments will be open—meaning that communities may chose whatever type of investment they believe best responds to their priority needs. Certain sub-project types or expenses (generally related to safeguards and other funding or technical restrictions) would be included on a “negative list” (deemed ineligible) and provided to communes to guide sub-project selection.

7. The Project also adopts an integrating and holistic approach that is applied in two ways: horizontally across sectors and vertically between levels of economic activity. In terms of sectors, investment decisions are primarily open (different types of economic and social investments) to the local level priorities and opportunities, thereby enhancing allocation efficiencies and allowing for better synergies with local realities and on-going activities. In practice, villages and communes are given the principal role to determine the types of investments they believe best suit their local-level development needs. In addition, the program provides for different levels of support—from households, to villages, and communes—and will seek to promote vertical linkages between basic economic investments at household level and infrastructure investments between and among communes to best serve those local level support activities.

8. The Project will consist of four components, namely: (i) village and commune infrastructure development; (ii) sustainable livelihoods development; (ii) connective infrastructure development, capacity building and communications; and (iv) project management.

9. Component 1: Village and Commune infrastructure development (estimated to cost US$ 54.7 million, of which US$ 52.4 million would be financed by IDA). Component 1 would support the design, construction or repair of small-scale village and commune level infrastructure (such as simple access roads, terracing; irrigation/water supply, basic/essential social infrastructure, etc.) which have been identified through a participatory needs assessment and prioritization process facilitated at village level. Building on the recently completed NRA communal plans, the component would finance sub-project investments (sub-grants) that are identified, prioritized and managed by commune and village authorities with the help of community facilitators. These sub-grants would also support training and capacity building for village, commune and district level personnel, the recruitment and financing of community facilitators, and all costs associated with planning and implementation of village and commune infrastructure.

26 To be based on the official commune lists of poor households that are used by MOLISA to determine poverty incidence, to be augmented through further community level screening.

28

10. Sub-component 1.2 would also support sub-projects that finance O&M of new (project supported) or existing civil works at commune and village level. These sub-projects would include routine maintenance and small repair activities. The annual plan would include a list of O&M sub-projects identified and proposed by the communities. The sub-component financing is currently capped at 10 percent of the total investment cost for the component, per commune. The scale for O&M sub-projects is expected to be small, and an initial limit of US$1,500 per sub-project will be applied. Larger scale sub-projects would be considered an upgrading and would fit the sub-component 1.1. All sub-component thresholds will be reviewed at the Project’s mid-term review. Specific guidelines for these O&M sub-projects will be outlined in the PIM, however, eligible requirements would include a multi-year O&M plan for the specific infrastructure, a village or commune commitment to cost-share (in cash or in-kind) in future O&M activities, and, where relevant, an additional commitment from the appropriate line agency to provide technical support for the repaired/maintained investment.

11. Component 1 resources were initially allocated to districts on a per-capita basis using an incremental scale based on poverty rates.27 The districts then prioritized communes within their jurisdiction to receive support under the Project (using poverty and percentage of EM populations as the main criteria) and reallocated funds per commune. This led to a per commune per capita allocation of between $8 and $48 for each (of four) funding cycles, or a range from $33,000 to $175,000 per commune per cycle (with an average of $85,000 per commune per funding cycle). Sub-projects were preliminarily identified for the first funding cycle based on the NRA communal plans. These sub-project plans are currently being validated and further prioritized prior to approval by Districts. The preliminary sub-project plans are summarized in the table on the following page. As can be seen, the vast majority of prioritized sub-projects are for road repairs and irrigation.

12. Component 1 implementation is based on CDD principles of bottom-up planning and management of development resources by community members. The method used to identify sub-projects will be based on participatory planning processes used and promoted under the NMPRP-2 and the P-135 II program, and other relevant community-based projects supported by the Government and development partners. Specifically, the CHPov has drawn on the procedures currently being applied under NMPRP-2. In keeping with best-practices for CDD, the menu of potential sub-project investments will be open—meaning that communities may chose whatever type of investment they believe best responds to their priority needs. Certain criteria-- or a list of ineligible sub-project types (generally related to safeguards and other funding or technical restrictions)-- will be provided to guide the commune’s selection. The identification, selection and implementation of sub-project investments will follow an eight stage process that includes preparation/sensitization of villages, participatory needs assessment and identification/ prioritization of sub-project concepts, analysis and endorsement by commune development board and approval by district PMU, detailed design, sub-project execution and community monitoring, and operation and maintenance. Based on experiences from both P-135 and NMPRP, an initial ceiling value of VND 1 billion (~$50,000) will be placed on component 1 sub-projects to limit

27 Poverty incidence in the selected communes ranges from below 30% to above 80%; with an overall average of 46.3%. Per capita allocations were initially scaled from $7.50 to $17.50 in decile increments (i.e., $7.50/person allocation for those districts with a poverty incidence below 40%, $9.50/person for districts with between 40% and 50% poverty, etc.).

29

the potential technical or fiduciary risks associated with commune-led implementation, while village-level investments to be procured using community participation procedures would initially be capped at VND 300 million (~$15,000). This limit will be reviewed after the completion of the first round of sub-project implementation.

13. Component 2: Sustainable livelihoods development (estimated to cost US$ 35.2 million, all of which would be financed by IDA) Component 2 of the Project would support EMs and other households in the Central Highlands to enhance food security and nutrition; productive capacities to create diversified income sources; and agriculture market linkages to create sustainable incomes. The component would consist of two sub-components: (i) self-reliance and income generation; and (ii) market linkages initiatives. Sub-component 2.1 would include two broad sets of activities: strengthening food security and nutrition (such crops as rice, maize, vegetables and fruits through developing home gardens, and small livestock raising); and diversifying income sources through enhancing the productive capacities of beneficiaries to improve either existing or additional income sources targeting at local, small-scale and niche markets. Sub-component 2.2 will promote market linkages initiatives for a number of commodities that have potential significant markets. This sub- component will aim to develop productive partnerships between farmers and agribusinesses.

14. Opportunities under sub-component 2.1 would be initially identified through the commune-level participatory problem analysis and planning (described under component 1). Specific interest groups (for instance, of women or farmers) may be established as part of the planning process to identify jointly the main sub-project concept for submission to the commune. This sub-component would support a majority of chronically poor or at risk households to increase food security through intensified food crop production, soil management, home gardens, small animal raising and nutrition awareness applying farmer to farmer extension techniques. Sub-component 2.2 would support a small number of proven commercially viable agriculture/agro-forestry endeavors for which there is farmer interest, adequate and appropriate local natural resources and a viable commercial linkage.

15. The main model for delivering support under the component will be block grants to LEGs, which would receive both institutional/organization and technical support to enhance basic household production and to establish market linkages where appropriate. These LEGs would be formed either as part of village-level participatory planning process (for component 2.1) or through direct engagement with the Project staff (business development and livelihoods officers at district and provincial level. LEGs would need to be formally constituted (as cooperates with defined legal foundation and well-established governance structures and group regulations) and registered according to local laws, allowing them to open bank accounts and to sign contracts with the Project and private sector companies. LEGs would prepare specific and detailed livelihoods proposals that would be assessed by district level (relevant technical sections at district such as agriculture, trade, finance, etc.). Financing and support under component 2 would vary by the type of livelihood activity, but would taper off over time (moving from direct financing and input support to training and advisory services). A separate and detailed operations sub-manual would provide guidance on the operations and implementation of the LEGs. Formation of and membership in LEGs (that would initially range from 10-20 members/

30

Table 2.2: Preliminary investment plan for village and commune infrastructure (first 18 months)

Unit: Billion VND

No Provinces

Transportation works Irrigation schemes

Others

Total number of

constructions

Total Investment

Bridges Water supply schemes

Quantity Value Quantity Value Quantity Value Quantity Value

1 Dak Lak 17 28.5 11 18.5 2 3.2 0 0.0 30 50.2

2 Dak Nong 18 33.5 4 7.5 1 2.0 1 1.0 24 44.0

3 Gia Lai 12 17.5 16 23.4 0 0.0 0 0.0 28 40.9

4 Kon Tum 10 15.3 22 35.6 1 1.5 1 1.5 34 53.9

5 Quang Nam 8 10.2 3 4.4 3 5.3 4 6.0 18 25.9

6 Quang Ngai 9 14.0 6 11.0 2 2.7 1 2.0 18 29.7

Total 74 119.0 62 100.4 9 14.7 7 10.5 152 244.6

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households) would be fully voluntary. Training, technical assistance and provision of inputs would be provided to the group as a whole, while individual households would be responsible for individual productive activities.

16. The main activities to be financed through block grants under sub-component 2.1 would be training and input support to beneficiaries and the development of a supporting system including training curriculum and technical supporting mechanism. In order to ensure that improved access to food translates into sound consumption patterns that improve the nutritional status of rural households, the Project would also support nutrition education activities. The Project would be closely coordinated with the NTP for Nutrition, which has a network of MOH nutrition officers and nutrition collaborators at commune and village levels, and with the Women’s Union where they support the NTP-NU. The Project would complement the NTP-NU sensitization, training and behavior change efforts through support and financing for increased and diversified production that would support improved household nutrition. LEGs working successfully to address basic food security issues would be supported (in the second and third year of project assistance) to increase production and/or take advantage of niche market opportunities to increase incomes of group members.

17. In the case of sub-component 2.2, a more market driven approach would be used to identify opportunities to support nascent or potential commercially oriented agriculture-based livelihoods activities. Business development officers based in each DPMU will be responsible to support LEGs in developing sub-project proposals under sub-component 2.2. Block grants would finance the preparation of businesses plans, organization of farmers into LEGs, development of LEG network to aggregate the produce to supply to ABs in quantity, and technical and financial support to LEGs to improve their production capacity. An independent review of business proposals for component 2.2 will be required for final approval and sub-project financing. An appraisal committee would be established at district level for this purpose, the composition of which would be detailed in the livelihoods sub-manual of the PIM. Upon having the appraisal note of endorsement from said committee, DPMU will proceed to implement the sup-project.

18. ABs would be identified through a competitive process that is based on lessons learned from similar market linkages activities supported under NMPRP-2 and ACP. Each sector and AB would have a different approach in developing business. In addition, some ABs would need to have partner/associate ABs in developing a PP (e.g. large coffee exporters and traders who form a part of a chain of custody to acquire a coffee certificate). Therefore, it is fundamental for the Project to respect the development approaches of ABs, while acting as an honest broker and ensuring necessary information is constantly given to LEGs in developing trustworthy relationships between the ABs and LEGs. Preliminary analysis carried out during the preparation process suggests areas/crops suitable for support under sub-component 2.2 would include coffee, cassava, cocoa and acasia.

19. Given the likely need for larger scale production, it is expected that 2.2 sub-projects will involve several LEGs to meet likely market demands and to attract private sector companies. Thus, the selected private sector company would have to work with several communes and LEGs. To enable the effective coordination, the DPMU would assume the investment ownership for the 2.2 sub-project on behalf of the CBDs and LEGs. In that way, there will be one economic contract to be signed between the DPMU and the partner firm. The DPMU, in turn, will sign

32

commitment contracts with involved CDBs to make sure the CBDs and LEGs follow the terms and agreements set forth in the contract between the DPMU and the partner firm.

20. All LEGs will be encouraged and anticipated to engage in their own savings after the first cycle of production. These savings will form the base for their re-investment to the next cycles as well as to expand their memberships to other interested poor households in the villages or communes. The Project could provide assistance to the LEGs in technical guidance for keeping savings, managing their own revolving funds, if any and if required by the LEGs.

21. Given the extent of forest cover in the target districts and communes, and the importance of forests in livelihoods strategies of many EM groups, component 2 would also support livelihoods activities based on allocated forestry land. This would be done on a demand-basis (meaning activities would be supported if specific community groups identified the opportunities and indicated the interest for the support) through the application of sustainable farming and agro forestry techniques to develop productive forest lands, forest protection and enhancement by the households for protected forests, on demand basis. In accordance with World Bank policies on Forests, communities would be required to first prepare a community forest management plan for review and approval by MPI and the World Bank, prior to sub-project financing.

22. Component 3: Connective infrastructure development, capacity building and communications (estimated to cost US$ 53.0 million, of which US$ 51.4 million is financed by IDA). Component 3 would finance selective inter-commune infrastructure that would seek to support productive inter-connections within and related to local economic zones, capacity building of project staff and stakeholders, and communications and outreach/knowledge sharing activities. At present, the majority of infrastructure investments being considered are road repair or expansion and bridges in strategic locations that would help to link several communes to the district center or productive areas to markets. Irrigation works and markets have also been identified as potential areas of investment under this component. Consideration would also be given to areas of social investment that are seen as supporting the concept of “connectivity”. For instance, a junior secondary school might be prioritized if it helps to ensure that local EM students would attend this level of schooling.28

23. An overall budget of US$ 2 million per district for the Project life has been allocated for this component (although, initially, districts only have access to 85 percent or US$ 1.7 million of these funds). Thus, available fund will not allow for significant district-level infrastructure investments. As such, the prioritization of investments would need to be selective and strategic in terms of the impact it may have on connectivity. In all likelihood, the investments will be more at the commune, or possibly inter-commune level. During preparation, efforts have been considered to link these resources with others at the disposal of the districts, however, the task team has noted that co-financing would require the application of Bank safeguard policies for all aspects of the proposed investment (and not just that portion financed by the World Bank). The size/value of these investments imply that the districts would manage their implementation (i.e., be the investment owners). Proposals for sub-project investments would be derived from the commune-level analysis and recommendations, which would then be verified and analyzed by

28 Lower secondary schooling completion rates for EMs in Central Highlands is one of the lowest in the country and such a school was specifically identified by commune officials during one of the preparation support missions.

33

district authorities to determine their relative effectiveness at achieving the desired outcome of the component (and to compare with overall socio-economic development plans that may already cater for the prioritized investment). Component 3 investments that build on or enhance the effectiveness of component 1 and 2 investments in the district would be further prioritized.

24. This component would build on and seek to support the findings of the study commissioned by the World Bank relating to rural connectivity.29 This study proposes an index for overall rural connectivity that includes measures regarding labor, capital and commodity markets interaction; off-farm enterprises; access to key infrastructure (electricity, water and roads); and access to public services (health, agriculture extension and telecommunications). This study indicates that overall, the Central Highlands region is the third-worst connected region of the country (after the Northwest and Northeast).

25. Component 3 would also include capacity building for district and commune level personnel in basic project management (including procurement, financial management and M&E), participatory processes, and socio-economic development planning. It is expected that this support will result in both better project management and improved working relations and attitudes between district, commune and village authorities and citizens. Communications activities would also be covered under this Component. The Project would develop its own Communications Strategy to ensure project outreach to its targeted beneficiaries and to facilitate informed decisions by communities to identify, prioritize, plan, implement, operate and maintain the Project’s investments. Results from the Project’s SA clearly indicate the importance of using local languages in village-level consultations, facilitation and decision making, and experience from NMPRP-2 point to recruiting local individuals as CFs to help bridge both the language and trust gaps. Approximately one-third of the overall component budget would be dedicated to capacity building and communication activities.

26. Component 4: Project management (estimated US$ 16.5 million, of which US$ 11.0 million would be financed by IDA). The component is organized in two sub-components addressing (i) project management, and (ii) project monitoring, evaluation and learning. Sub-component 4.1 would include the set-up and operation of coordination structures at national level and implementation units/teams at provincial and district level. These units are embedded in and accountable to the organic structures of MPI at central level, DPI at provincial level and the administrative structure of the districts. These units would be responsible for planning, overseeing implementation, procurement and financial management, monitoring and evaluation, ensuring internal and external audit, and coordination with other partner departments and agencies. The component would finance consultant services for the conduct and analysis of the impact evaluation, project staff costs and relevant operational costs for staff, consultants and all management units overseeing and implementing the Project, etc. Implementation arrangements that are supported under component 4 are described in greater detail in Annex 3, and will be detailed in the Project Operations Manual.

27. Sub-component 4.2 also includes the design and implementation of a simple management information system for project monitoring, the design and contracting of a rigorous impact

29 The Rural Connectivity Index; Final Report. Center for Agriculture Policy (Ministry of Agriculture and Development) and the World Bank, Hanoi, April 2013.

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evaluation, and the recruitment of key personnel at central and provincial level to support the M&E activities. Monitoring data would be compiled and reviewed regularly (at least quarterly) by relevant project management units and evaluation date would be shared widely with the key Government and development partner stakeholders concerned with poverty and EM issues.

28. An estimated $22.2 million in project financing (of which $21.1 is IDA) would not be initially programmed under the Project. The purpose of this set-aside is to provide for a fund that would be used as an incentive to Provinces and Districts to accelerate implementation under the Project. Allocation of these funds would be decided at the mid-term of the CHPov based on disbursement rates and other measures of progress (as outlined in the Project results framework).

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Annex 3: Implementation Arrangements

VIETNAM: Central Highlands Poverty Reduction Project

A. Project Institutional Arrangements

Overview 1. The Project’s institutional arrangements have been designed in line with the following principles:

(a) use of existing structures and procedures where possible (be they existing GoV or other structures already established by donor projects in the same locations) in order to minimize the introduction of new project-specific administrative requirements;

(b) strengthen local accountability and decentralized decision-making processes by strengthening local-level governance structures (a key element of CDD principles); and

(c) subsidiarity, by delegating decision-making to the lowest appropriate level of administrative unit.

2. The Project introduces a number of innovations with respect to existing community development mechanisms. While the Project will seek to maximize the use of existing structures, effective implementation of these innovative features requires augmented capabilities at various levels of the Project administrative structure, in line with GoV norms. For instance, as noted elsewhere in the PAD, the introduction of livelihood-related interventions is a key innovative feature of the Project that complements the more traditional community infrastructure-based interventions of existing commune development planning. As such, current commune authorities are poorly equipped to design and monitor these activities to ensure (cost-) effective delivery, and additional capacity is therefore required. In the majority of cases, this TA and additional structures are expected to be temporary as the existing administrative structures gradually take on the relevant responsibility. The Project will involve additional actions to further streamline these project management arrangements, including: (i) using existing staff of DPI or other departments to fill a number of management unit positions, (ii) training these existing staff in specialized Bank requirements (such as safeguards) rather than hiring consultants to undertake this work, and (iii) where existing arrangements and workloads allow, consolidating existing PMUs or key functions (such as financial management, procurement or supervision of infrastructure investments) particularly where the Project requirements are similar.

3. The Ministry of Planning and Investment is the designated project “owner” of CHPov for the Government, and the Department of Local and Territorial Economies of MPI will be specifically responsible for overall coordination and oversight of project execution. The Director of DTE oversees the project on behalf of MPI and also delegates responsibility for provincial level project coordination, management and implementation through the Provincial Peoples’ Committee to the Department of Planning and Investment. The PPC, in turn, delegates responsibility for project implementation at district and commune levels to the respective Peoples’ Committees at these levels.

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4. At central level, MPI will establish a Central Project Coordination Office to act on behalf of the DTE for overall project coordination, management and implementation, and to liaise with the World Bank. At provincial level, the PPCs establish Provincial Project Management Units, DPCs establish District PMUs and the CPCs delegate responsibility to the existing Commune Development Boards. These People’s Committees will approve annual workplans and targets, set aside and make available required counterpart resources, ensure coordination between relevant departments and stakeholders (such as DARD, DOH, CEM, etc.), and monitor progress of the Project in their geographic area of interest. To ensure effective coordination at provincial level, and in the absence of the Provincial Steering Committee, a Vice-Chairperson of the PPC would be assigned to oversee the Project. S/he would direct and specifically help resolve inter-departmental issues or coordination of project activities in relation with other programs and projects in the same location. Figure 3.1 immediately below presents the overall Project structure.

Figure 3.1: Project Organizational Structures

Note

: Authority

: Cooperation

: Guideline/technical support

Project Coordination and Management

5. The CPO is responsible to oversee and coordinate overall project management. In acting as focal point for the World Bank and other central agencies, it will work to make sure the Project is implemented as designed and stipulated in the PAD and the related Project Implementation Manual. Specifically the CPO will be responsible to: (a) review and consolidate overall annual project plans; (b) hire and supervise the Project’s Technical Assistance Team; (c) manage the Project’s M&E system (MIS, reporting, project website, etc) and provide regular progress reports to World Bank and GoV authorities; (d) support overall capacity building, and provision of technical, institutional and policy support to provinces and lower levels; (e) manage the overall project FM system including regular accounting and reporting on the use of project

CDB of project communes (Commune Supervisory

Board)

PMUs of provinces

PMUs of districts PCs of Project districts

PCs of Project comunes

MPI Central Project Coordination

Board

PCs of Project provinces

World Bank

37

funds, financing and oversight of independent audits, internal audit, technical and procurement audits; and (f) collect and share lessons learned, good practices and other evidence from the Project (including from IE findings) to contribute to analysis, design and implementation of GoV’s poverty reduction policies and programs.

6. Provincial Project Management Units will be responsible to (a) act on behalf of the provincial authorities to coordinate overall project implementation in the province; (b) review and consolidate district plans and prepare overall provincial annual project plans; (c) provide capacity building and technical support to districts and communes; (d) act as account holder of the designated account at the province; managing the overall provincial project budget and disbursements with the World Bank, and supervising fund flows and ensuring FM procedures are followed for secondary accounts at lower level (districts), including allocating sufficient counterpart funds to project implementation; (e) coordinate with other related line agencies/departments at provincial level for effective collaboration and synergy of the joint efforts in project implementation; (f) report on progress and updating the Project MIS as regulated; (g) conduct technical supervision of districts and communes, and regularly check project implementation progress at these levels; (h) ensure the application of environmental and social safeguard measures for sub-projects in the province; (i) manage and implement the communication and outreach strategy; and (j) consolidate lessons learned and knowledge management at the provincial level to facilitate horizontal learning as well as informing relevant policy dialogue. PPMUs will be established at DPI and will report to the PPC. PPMUs ensure the quality of overall project implementation at provincial level and are responsible to the CPO for the delivery of agreed upon overall targets. PPMUs do not review, approve or have direct responsibility for implementing individual sub-projects. This rests with the units and groups at district and commune level.

7. The directors or deputy directors of DPI will head up the PPMUs on a part-time basis. The unit will consist of a team of seconded and contracted staff working on both full-time and part-time basis. Some positions will be phased down or out gradually between the second and fourth year as project implementation progresses (and project performance is found to be adequate). Experienced staff from donor-funded projects in the province will be identified to work for the PPMUs to take advantage of their relevant experience. This is particularly relevant in Quang Nam and Quang Ngai provinces where a number of World Bank-funded projects are or have been operating.30 Options for integrating project management arrangements (as is done in Lao Cai province of Northern Mountains) or streamlining other management units in other provinces (including with IFAD in Kon Tum and Gia Lai) will be assessed and pursued during project implementation.

8. District Project Management Units at district level will be housed at the Finance and Planning Section of District government. DPMUs will: (a) act on behalf of the district authorities to implement the Project in the district (serve as “investment owners” for Sub-component 2.2 and 3.1); (b) develop annual district plans, and review and consolidate commune plans; (c) provide capacity building and technical support to communes in project implementation; (d) act as account holder of the secondary account at the district and manage fund flows to lower sub-

30 In Quang Nam province, the current ODA Management Board under the DPI will be used to manage the project. In Quang Ngai, the former PPMU that managed the World Bank funded CBRIP and AusAID funded project will be revived to manage CHPov.

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project accounts at communes; (e) coordinate with other related sections for effective appraisal of sub-projects submitted by CDBs; (f) manage lowest level MIS; ensure proper collection of basic project data and report regularly on progress as regulated; (g) conduct technical supervision of district and commune project activities; (h) implement environmental and social safeguard screening of sub-projects and mitigation measures if any; (i) support PPMUs in implementation of the communication and outreach strategy at district and lower levels; and (j) provide direct support to communes in project implementation, especially related to the livelihood support activities.

9. DPMUs will be headed by a Vice Chairperson of the DPC and manned with district staffs seconded from relevant sections such as agriculture, finance and planning, infrastructure, preventive healthcare, ethnic minority affairs, etc., and/or contracted staff. In certain districts where there are existing PMUs for managing infrastructure investments funded by GoV sources, some of experienced staff members in charge of procurement, FM, works supervision, etc. could be seconded part-time to work in the DPMUs (in addition to the livelihoods, business developments, M&E and communications officers) to take advantage of existing experienced staff. The DPMUs will oversee the commune facilitators who will be assigned to each commune as the key focal person for the Project. The CF would have the responsibility to support village participatory needs assessment and planning, commune review and approval of sub-project proposals, and ensuring relevant technical input is available in support of sub-projects.

10. Given the emphasis on commune-level investments and participatory planning and implementation, two structures would be reinforced (or established if not yet in place) at this level to support project implementation: a Commune Development Board and a Commune Supervisory Board. The CDB is composed of existing commune-level staff/representatives and would have the following responsibilities: (a) sensitize villages on the Project and mobilize community participation, (b) support the CF and villages in the process of identifying, prioritizing and implementing relevant sub-project investments, (c) help ensure that adequate technical support is provided by Districts and specialized agencies/partners in support of sub-project investments, (d) manage investments (i.e., undertake procurement and supervise contractors) that fall under their control, (e) oversee and report on project finances made available under the Project, (f) monitor and report on physical and financial progress under components 1 and 2, and (g) assist villages in implementing activities at commune level. The CDB is composed of a head, (who would be the Chair or Deputy Chair of the CPC), a deputy head (who would be the head of the WU), the land administration officer; the agriculture officer/extension worker; the head of commune healthcare clinic, and an accountant. The CF would provide direct support to the CDB in carrying out its responsibilities. Depending on staffing capacities at commune level, a roving district accountant advisor would be considered to support the sub-project financial management requirements. Two representatives from each village in the commune would also be members of the CDB, one of whom must be a woman.

11. The Commune Supervisory Board is independent of the CDB and would: (i) conduct community monitoring of project activities for which the commune is the investment owner, (ii) report to the LEG and CBD on any issues regarding implementation including progress and performance of private constructors; and (iii) provide recommendations to the competent authorities to solve problems and resolve community complaints (if any). The CSB consists of representatives from the Commune People’s Council; heads of the commune’s mass

39

organizations such as the Motherland Front, Veteran’s Association, Farmer’s Union; village elders; etc. The CSB, a statutory body that generally exist in a majority of target communes, would be further strengthened under the Project.

12. A Technical Assistant Team would be set up to support key innovative areas of project assistance such as livelihoods, market linkages, capacity building, and communications, as well as core project management responsibilities, particularly as they related to World Bank requirements, such as procurement, financial management and M&E. The TAT will be located in the CH region (Plei Ku or Buon Ma Thuot) to allow for more direct interactions with the provincial and district management units, DARD and other relevant government partners, and the private sector under sub-component 2.2.

B. Implementation Arrangements

Financial Management, Disbursements and Procurement

13. Taking into account the risk-mitigation measures proposed under the Project, a “Substantial” FM risk rating was assigned to the Project at the appraisal stage. The following key risks have been identified (a) Financial Management staff at all levels may not have adequate FM capacities, (b) FM systems and procedures may not be properly set up, and (c) the monitoring mechanism for the use of the Community (block) Grants may not be properly developed. Therefore, the main mitigating actions agreed to (and undertaken prior to negotiations) are presented table 3.2 below.

Table 3.2: Summary of Mitigating Actions Taken to address key FM risks

Action Responsibility Completed By 1- Staffing and training Appointing and FM training providing to chief accountants or at least one accountant CPO, PPMUs and DPMUs.

CPO, PPMUs and DPMUs

Negotiation

2- Financial Management Manual (FMM) Developing FMM to provide procedures and guidance on FM and disbursement procedures of the Bank and the Government and in particular, the Monitoring mechanism for the use of the Community Grants.

CPO Negotiation

II1- Accounting software Developing accounting software to fit the operations and reporting requirements, installing in all PPMUs and DPMUs, training on use of the software to all CPO, PPMUs and DPMUs.

CPO, PPMUs and DPMUs

Negotiation

14. Seven Segregated Designated Accounts (DAs) (one for CPO and one for each of the six PPMUs) will be opened at a commercial bank acceptable to the World Bank. The DAs will be denominated in United States Dollars (US$). Based on estimated cash-flow requirements, the ceiling of DAs will be fixed as follows: CPO - US$1,700,000; Dak Lak PPMU - US$5,700,000; Dak Nong PPMU – US$3,800,000; Kon Tum PPMU – US$4,700,000; Gia Lai PPMU – US$5,400,000; Quang Nam PPMU – US$2,100,000; and Quang Ngai PPMU – US$3,000,000. Supporting documentation required for documenting eligible expenditures paid from the DAs will be Statements of Expenditure (SOE) (one customized for block grants) and a list of payment against the contracts that are subject to the Bank’s prior review, together with relevant records.

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The frequency for documenting expenditures paid from the DAs will be at least quarterly. Reimbursement, Special Commitment and Direct Payment disbursement methods would also be used under the Project. Supporting documentation required for Reimbursements will be SOEs (one customized for block grants) and a list of payment against the contracts that are subject to the Bank’s prior review, together with relevant records. Direct Payments will be documented by Records and Special Commitments by Letters of Credit and the supporting Contract. The Minimum Application Size for Reimbursement, Special Commitment and Direct Payment disbursements will be as follows: CPO - US$170,000; Dak Lak PPMU - US$570,000; Dak Nong PPMU – US$380,000; Kon Tum PPMU – US$470,000; Gia Lai PPMU – US$540,000; Quang Nam PPMU – US$210,000; and Quang Ngai PPMU – US$300,000 equivalent. Each District DPMU would establish a Vietnamese Dong (VND) sub-account into which provincial PMUs would transfer funds for all relevant project activities quarterly, based on annual plans and budgets and quarterly statements of expenditure and six-month projections of subsequent financing requirements. Initial caps will be placed on DPMU sub-accounts to ensure adequate cash-flow for all provincial (including district and commune) level activities. These caps would be reviewed regularly to ensure adequate funding availability. Where communes or community groups would act as “investment owner”, resources would be further transferred by the DPMUs to local accounts managed by CDBs for the purposes of implementing specific activities based on specific subproject plans, tranching and financial reporting agreements. Operating funds would also be transferred to CDBs by DPMUs based on annual plans, quarterly expenditure reports (SOEs) and projections of subsequent expenses. The specific arrangement for fund flow to district and commune level will be described in the FM manual of the PIM, which will be available by Negotiation.

15. Block grants. The World Bank will account for the eligible sub-project block grant expenditures (i.e. record that the eligible expenditures are documented) when the amounts are paid to the CDBs by the DPMUs, as there are mechanism and procedures in place, overseen by the DPMU, PPMU and ultimately the CPO (with World Bank oversight), to ensure that grants are being implemented as planned and are being used for the purposes intended. All activities to be financed by the block grants will need to be completed by the Closing Date of the Project, and any funds remaining to be used by the CDB by the Closing Date will also need to be refunded.

16. The Project Financial Statements and will be audited by independent auditors acceptable to the Bank in accordance with TORs acceptable to the Bank. The cost of the audit will be funded by the Project. The Audited Financial Statement will be sent to the Bank within six months after the end of each calendar year. In addition, quarterly Interim Financial Reports (IFRs) will be prepared by the CPO and PPMUs using the Aligned Monitoring Tools under Decision 803 of MPI and sent to the Bank within 45 days after the quarter end.

17. Internal Audit will be done by MPI Inspectorate at central level (for CPO), DPI at provincial level (for PPMUs) and Finance and Planning Department at district (for DPMUs) and commune (for CDBs) levels. The Internal Audit reports will be consolidated by each province and submitted to the PPCs, MPI, MOF and the World Bank on an annual basis within 3 months after the year end.

18. Project financing shall be disbursed over a period of six years based on the following categories of expenditures:

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Category Amount of Financing

(Expressed in US Dollars)

Amount of Financing

(Expressed in SDR)

% of Expenditures to be Financed

(inclusive of taxes)

(1) Goods (including vehicles), Works, Non-consulting services, Consultants’ services, Training and Workshops, and Incremental Operating Costs under Parts 3 and 4 of the Project

62,430,000 40,620,000 100%

(2) Grants under Parts 1 and 2 of the Project

87,570,000 56,980,000 100% of amount

disbursed

TOTAL 150,000,000 97,600,000

19. Eligible expenditure means the reasonable cost of goods, works, services and block grants to communities required for the Project to be financed out of the proceeds of the Credit and procured, all in accordance with the legal agreement and during the Credit disbursing period.

20. The Project will have a Disbursement Deadline Date four months after the Project Closing Date. The Disbursement Deadline Date would be the final date on which World Bank will accept applications for withdrawal from the Recipient or documentation on the use of Credit proceeds already advanced by the World Bank. This "Grace Period" is granted in order to permit the orderly project completion and closure of the Credit account via the submission of applications and supporting documentation for expenditures incurred on or before the Closing Date. Expenditures incurred between the Closing Date and the Disbursement Deadline Date are not eligible for disbursement, except as otherwise agreed with the World Bank.

Procurement

21. For contracts financed in whole or in part by the IDA Credit under the Project, procurement shall be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-consulting services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011 (the Procurement Guidelines) and “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011 (the Consultant Guidelines); and the provisions stipulated in the Financing Agreement. For contracts procured through National Competitive Bidding (NCB), the additional provisions as listed in the Attachment to Schedule 2 of the Financing Agreement will also apply.

22. Procurement of project inputs would be done at four levels of project implementation: commune, district, provincial and national. Communes would primarily apply community procurement procedures (as defined in the PIM), shopping or direct contracting (conditional on Bank no objection). Districts would primarily use shopping, national competitive bidding, direct contracting and individual consultant selection procedures. Provinces and the national CPO would be responsible primarily for the procurement of goods (using shopping and national competitive bidding procedures) and services (using the full range of consultant services selection procedures.

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23. Procurement Capacity and Risk Assessments (PCRA) of the Project implementing agencies (PIAs)31 in project provinces were conducted in October and November 2012, and August 2013. This assessment found that the PIAs at the district level up to the central level have reasonable public procurement knowledge and considerable experience in implementing procurement in accordance with national public procurement law and regulations. Nevertheless, these agencies do not have prior experience with World Bank funded projects and are not familiar with Bank procurement procedures and policies, and commune level administrative structures are generally weak. Therefore, overall the preliminary PCRA considered the procurement risk as high with potential for non-compliance with agreed procedures, unsatisfactory quality of contract deliverables, and implementation delays relating to procurement. To mitigate these risks, the Bank agreed with Government that the Project would: (a) detail relevant procurement procedures in the PIM; (b) ensure intensive training on procurement and contract administration for all PIAs staff; and (c) either assign qualified staff or recruit procurement consultants to assist the PIAs to conduct procurement activities. The Bank would also undertake regular implementation support and procurement post reviews or hire independent procurement auditing consultant to carry out the review if needed.

24. Table 3.3 below indicates the thresholds for the different procurement methods and Bank prior review.

Table 3.3 Thresholds for procurement methods and Bank prior review

Expenditure Category

Contract Value (US$)

Procurement Method Bank Prior Review

Goods

≥1,000,000 ICB All ICB contracts

<1,000,000 NCB First 2 contracts for each PIA

<100,000 Shopping Not applicable

NA DC All DC contracts

Works

≥10,000,000 ICB All ICB contracts

<10,000,000 NCB First 2 contract for each PIA

<200,000 Shopping Not applicable

<15,000 Community participation* Not applicable

NA DC All DC contracts ≥ $15,000

Consultant Services

≥300,000 QCBS, QBS, FBS, LCS Firms: ≥$300,000 (for competitive selection) plus the first contract per PIA for each method regardless of value. For SSS, all contracts ≥ $50,000 (Para 3.9 of Consultant Guidelines, January 2011)

Individuals: only in exceptional cases (for competitive selection); for SSS, all contracts ≥$20,000 (Para 5.6 of Consultant Guidelines, January 2011)

Audit contracts: all

<300,000 QCBS, QBS, FBS, LCS or CQS

NA SSS

NA IC

31 PIAs refer to MPI Department of Territorial Economies, Provincial DPIs and District Project Management Units.

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Expenditure Category

Contract Value (US$)

Procurement Method Bank Prior Review

Notes: ICB: International Competitive Bidding NCB: National Competitive Bidding DC: Direct Contracting QCBS: Quality and Cost Based Selection QBS: Quality Based Selection FBS: Fixed Budget Selection

LCS: Least Cost Selection CQS: Selection Based on Consultants’ Qualification SSS: Single (or Sole) Source Selection IC: Individual Consultant selection procedure NA – Not Applicable

*Note: The procedures and the Project activities to be carried out/procured using community participation methods shall be sufficiently specified in the Project Implementation Manual approved by the Bank.

25. As a community-driven development project, the Government does not yet know the complete set of works and other procurement activities for the life of the CHPov. Therefore, only a preliminary 18-month procurement plans for goods and services has been prepared by the PIAs. These Procurement Plans will be updated annually or as needed and each update will be subject to the Bank’s prior review. Procurement under the Project will be carried out in accordance with the agreed procurement plan. All procurement plans (including updates) shall be published on the Bank’s external website, as well as on MPI’s website for the same purpose.

26. Under component 1, given the very small scale of the works (current threshold of approximately US$ 50,000) and the application of CDD procedures, the Bank would only require review and approval of procurement plans for this component for the first two years of project implementation. Unless reviews suggested otherwise, the DPMUs (with support from PPMUs and the CPO) will subsequently provide needed guidance and assistance to the CDBs to ensure that procurement plans for activities under component 1 would be prepared properly and conducted in accordance with the procedures set forth in the PIM. The CPMU/PPMUs will provide to the Bank for information and records all procurement plans of the contracts under component 1 after they are approved by the competent authorities of the government.

27. Contracts not subject to prior review will be subject to post-review as per procedures set forth in paragraph 5 of Appendix 1 of the Procurement Guidelines and Consultant Guidelines. Initially, the Bank will post-review 20 percent of contracts not subject to prior review. This rate may be adjusted during project implementation based on the procurement performance.

Environmental and Social Safeguards

28. The Project is classified as Category B and triggers three environmental safeguard policies: Environmental Assessment (OP/BP 4.01), Forests (OP/BP 4.36) and Pest Management (OP 4.09), and two social safeguard policies: Indigenous Peoples (OP/BP 4.10) and Involuntary Resettlement (OP/BP 4.12). Given the demand-driven nature of most of the Project’s investments, the requirement for Environmental Assessment will be addressed through the use of an ESMF document. Based on a review of preliminary subproject investments identified in the Government’s feasibility studies, the potential environmental impacts of project investments are felt to be minor, temporary, site-specific and reversible, and generally limited to the construction phase of the sub-projects. As such, these impacts would be addressed through the application of basic ECOPs, technical guidance on appropriate construction designs and practices, and a negative list of ineligible sub-project types and expenditure items. These ECOPs are included in the ESMF (which also include guidelines for chance find procedures in the event that project

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activities accidently encounter artifacts or sites of cultural value and screening for sub-project impacts on natural habitats). In accordance with the Bank safeguards policies and Government’s environmental protection commitments procedures, investment owners (districts or communes) would be responsible for preparing a short Environmental Management Plan for any subproject for which impacts could not be adequately addressed through the application of the ECOPs.

29. OP 4.09 on Pest Management has been triggered since potential investments in irrigation infrastructure under components 1 and 3, and proposed agricultural livelihood models under component 2, may directly involve (or indirectly lead to) an increased use of fertilizers and pesticides. The ECOP for agricultural livelihoods includes a set of guidelines on sustainable use of pesticides and fertilizers.

30. OP 4.36 on Forests has also been triggered given the fact that approximately 50 percent of the Project area is forests or forest lands. Analysis of rural livelihoods in the Project area indicates that access to forest resources (including non-timber forest products) is an important strategy for poor ethnic minority households. Potential livelihood activities (under component 2) that would require consideration of this policy include tree crops (acacia, litsea or cacao) or other agriculture activities to be undertaken on production forest lands. For these purposes, the Project will require that community groups prepare a community forest management plan (CFMP) that would be reviewed by local authorities (forest extension services) at district level to ensure that proposed activities comply with pertinent national laws on the use of these lands. Guidelines for the CFMP are included in the PIM. The CFMP aims to assist communities to (a) sustainably manage forests and forest lands, (b) stabilize forests and protect water sources, and (c) steadily improve livelihoods by ensuring a stable supply of forest products. The CFMP includes socio-economic information of the project area and a brief assessment of the land use allocations for the management, conservation, and sustainable development of forests. The socio-economic assessment reviews (a) the extent to which the livelihoods of local communities depend on and use trees, (b) the institutional, policy, and conflict management issues involved in improving the participation of ethnic minorities and poor people in the management of the trees and forests; and (c) forest product and forest service issues relevant to ethnic minority people and poor people, as well as opportunities for promoting the involvement of women. The CFMP is developed using the participatory planning approach and with the support of the project community facilitator.

31. The Government has also prepared a Resettlement Policy Framework which, in accordance with OP 4.12 on Involuntary Resettlement, addresses issues relating to land acquisition under the Project. The RPF, which has been approved by the Prime Minister, presents the principles and objectives, eligibility criteria of displaced persons, modes of compensation and rehabilitation, participation features and grievance procedures that will guide the compensation and potential resettlement of affected persons. Voluntary land donation would be allowed under very specific guidelines/limitations and would be monitored closely. Prior to final approval by Government of the annual subproject investment plans, provinces will review subproject designs, screening the social impacts of these subprojects and, if required, prepare a provincial annual resettlement plan (RP) based on guidance stipulated in RPF. The annual RPs are reviewed by IDA. CPO, each PPMU and DPMU has asocial safeguard specialist on its staff whose tasks are to prepare and implement the RPs and ensure project’s social safeguards compliance.

32. .

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33. Given that the majority of project beneficiaries will be members of EM groups and the Project has been designed to specifically respond to their needs, the overall project design is considered responsive to the requirements of the Bank’s policy on Indigenous Peoples (OP 4.10). Consistent with this policy, a social assessment (SA) has been undertaken and its findings used to inform the Project’s design. These design features include a communications strategy and materials that apply different and literacy appropriate media forms, preferred recruitment of key field staff (community facilitators) from local communities, the use of indigenous languages in communications at village level when facilitating local decision making, inclusion of elders and traditional leaders as part of village level planning, minimum requirements for EM participation in decision meetings and livelihoods groups (which will be monitored), technical support and capacity building (including for village groups) around participatory processes, etc. The Project will also specifically monitor results and evaluate impacts by ethnic groups. Annex 6 contains a more detailed discussion of the SA's findings and the specific actions or design features of the CHPov in response.

34. In addition, the SA included a gender analysis and assessment and the Project will include the following gender informed design elements: minimum requirements for female participation in planning and decision making meetings at village level, a designated female position (of Vice-Chair) for the commune-level decision making board, specifically targeted/ear-marked support for women’s livelihoods activities under one of the Project’s sub-components, and monitoring and evaluation data will be gender disaggregated.

Table 3.4: Key Dimensions on Gender/Participation in project design

Component 1. Commune and Village infrastructure development Sub-component 1.1. Commune and Village infrastructure development

- Bottom-up annual planning process - Community procurement - Using local unskilled labor - Training for local labor in construction

Sub-component 1.2. Operation and Maintenance

- Annual participatory planning - Mobilization of women and ethnic minority people in performing O&M

Component 2. Sustainable Livelihoods Development Sub-component 2.1. Self-reliance and income diversification

- Bottom-up annual planning process - Over 80% of beneficiaries are ethnic minority households - Women (via women’s union) take lead in implementing this sub-component

Sub-component 2.2. Market Linkages Initiatives

- Bottom-up annual planning process - 50% of beneficiaries are ethnic minority households

Component 3. District level connective infrastructure development, capacity building and communication

Sub-component 3.1. District connective infrastructure development

- Bottom-up annual planning process - Recommended target of 80% of unskilled labor to be sourced locally

Sub-component 3.2. Capacity building - Participation of women and ethnic minority people in the capacity activities

Sub-component 3.3. Communications - Participation of women and ethnic minority people in communication and knowledge sharing activities.

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- Specific use of local languages to engage communities 35. A broad consultation process was undertaken as part of the Project preparation that included the application of participatory processes at village and commune levels to identify or confirm the list of the first 18-month investments. Moreover, as a participatory demand-driven project, free, prior and informed consultation that would result in broad community support for project investments will be undertaken before any subproject is approved. This participatory process that explicitly engages with local communities and EM groups would help to ensure that project benefits are culturally appropriate. Training in facilitation and participatory processes that would target commune officials and community facilitators will begin in late 2013 in time for projected project effectiveness in early 2014.

36. MPI will hire qualified consultants at CPO level to assist in training provincial, district and commune level staff (who would be designated by the relevant authorities) to oversee and ensure the application of the ESMF and the RPF for the subprojects. These same consultants will be hired to periodically monitor the application of the safeguard frameworks and to provide annual refresher training to the relevant, designated, staff. Project staff and beneficiaries at provincial, district and commune level will be provided training on the relevant World Bank safeguards policies, safeguards coordinators will be designated at district level among the Project staff, and safeguards champions will be trained and given responsibility at commune and village level to ensure that relevant mitigating measures for individual sub-projects are implemented.

37. The Government provided to the Bank for review and comment the first draft of the safeguard documents (ESMF, RPF and SA) in August 2013. These drafts were disclosed by Government and the Bank in accordance with Bank requirements on August 12, 2013. The Government updated all safeguard documents and re-disclosed them on September 23, 2013. All subsequent safeguard instruments to be prepared as outlined in the ESMF and RPF (e.g., Environmental Management Plan or Resettlement Plans) as part of project implementation will disclosed at national and local levels as per guidelines.

Monitoring & Evaluation

38. M&E System. The CHPov will have a comprehensive monitoring and evaluation framework and system to provide stakeholders with timely data regarding the progress and results of the Project. The results framework that will guide this system is presented in Annex 1 of this document. The system will operate at the commune, district, provincial and national levels. The key performance indicators to measure the overall achievement of the project development objective are: (i) percentage increase in food and non-food consumption of poor households, (ii) percentage of beneficiaries satisfied with project support, and (iii) numbers of beneficiaries disaggregated by major EM groups and gender.

39. Impact Evaluation. The CHPov will undertake a robust IE that will provide evidence of the impacts of the Project’s interventions at both the development objective and component outcome levels. The CHPov is one of several IDA-16 projects in the region mandated to undertake a rigorous IE featuring both a baseline survey and a plausible projection of the counter-factual (i.e., an assessment of and comparison with what happens in areas that do not receive project support, or “treatment”, through the use of control groups). The World Bank is working closely with the Government to ensure the quality of the design and execution of the

47

evaluation (which will be financed under the Project), and agreed to assist the Government in seeking complementary trust fund resources to supplement financing of the mid-term and end-line surveys if necessary. The base-line survey is projected to begin in early 2014, prior to the time of expected project effectiveness.

40. In addition to the rigorous quantitative IE, the Project will also support specialized targeted studies and qualitative assessments. Targeted studies would be identified during project implementation to provide direct inputs at important project milestones (such as at the end of the first 18 month implementation and at the mid-term review) to shed specific light on important issues—such as quality of infrastructure or market potentials for certain agriculture products. On the qualitative side, a process evaluation of the participatory planning and implementation work under component 1, or communications efforts under component 3, would be used to help to better understand how these elements of the Project are working. It is also proposed to have a qualitative survey running in parallel with the IE to shed light on the possible reasons why certain changes recorded by the IE are happening. “Photo Story” techniques, the use of subproject photos to engage beneficiaries in participant evaluation of project activities, applied successfully under NMPRP-2, will also be used.

41. Monitoring and MIS. The M&E results framework identifies a number of performance measures that would not be the subject of the impact evaluation but rather regular monitoring and reporting on project outputs and processes. These include standard measures for sub-project investments (e.g., kms. of roads built/expanded/repaired, meters of bridges constructed, numbers of wells constructed, numbers of farmers trained, etc.), participation rates for village meetings, costs and quality of sub-project investments, etc. These data will be collected at different levels of project management and in accordance with prevailing Government regulations including Decision 80/2005/QD-TT which mandates community participation in monitoring of commune-level investments through CSBs. Reporting of this physical progress will be done on a monthly basis between commune and district, and on a quarterly basis between districts, provinces, and central level, and with the World Bank. These quarterly reports would also include interim financial reports, the form and substance of which would be agreed upon between the Bank and MPI.

42. The Project would support the development and roll-out of a project-specific MIS, the training of staff at provincial and district levels in MIS management and analysis, and the training of community members and facilitators to monitor and report basic sub-project progress data to complement district-level monitoring. Given the high level of mobile phone coverage, the Project will investigate the application of smart-phone technologies for monitoring purposes (including grievance reporting). Government has agreed to pilot test a model MIS for CDD operations developed by the World Bank Social Development network that includes smart-phone interface to simplify and speed up data input and processing. The Project’s MIS would be developed to complement existing reporting requirements of Government, and would draw on lessons learned from the NMPRP-2.

43. Grievance Redress. A grievance handling and redress mechanism (GRM) that would cover all aspects of project management and implementation, including the application of relevant social and environmental safeguards and mitigation measures, would also be included in the Project and described in the PIM. The model MIS to be developed with support from the

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Social Development network will include a grievance redress module that, among other things, allows for recording and processing of questions, concerns and complaints concerning the Project submitted via text messages.

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Annex 4: Operational Risk Assessment Framework (ORAF)

VIETNAM: Central Highlands Poverty Reduction Project

Appraisal Stage

Risks .

Project Stakeholder Risks

Stakeholder Risk Rating Moderate

Risk Description: Risk Management:

The demand for and interest in the Project on the part of Government is very high—MPI has specifically sought this support from the Bank, key agencies (CEM, MARD and MOLISA) as well support it, and it would fit well with several national programs including the NRA Strategy, P-135-III, NTP-NU, and the sustainable poverty reduction strategy. The Project also fits well with the strategies of key development partners including IFAD, ADB and JICA. Local stakeholders at provincial, district and commune levels are strongly in support, and initial contacts with representatives of NGOs and universities suggests a similar level of support. Earlier differences between the center and some of the provincial and district authorities regarding the most appropriate mix of project have been resolved. Specifics are still to be worked out but linkages with both MARD and MOH (on the livelihoods activities) appear reasonably secure at provincial and lower levels with integration of relevant staff in PMUs. Attitudes of Kinh Government staff toward key beneficiary populations and their capacities could make implementing truly participatory strategies more difficult.

Task team to maintain relevant links with partners (IFAD, ADB, JICA, Irish Aid, etc.) working in same geographic area and on similar (EM) targeting strategies; explicit engagement of DARD and DOH at provincial and lower levels to be sought as part of implementation arrangements and capacity building targeting local officials on participatory processes.

Resp: Both Status: In Progress

Stage: Implementation

Due Date: 30-Jun-2015

Frequency:

Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Substantial

Risk Description: Risk Management:

MPI is well acquainted with WB projects and procedures and can draw on existing institutional know-how to help with both

Experiences from NMPRP-2 are being used to inform implementation arrangements and good linkages between the two departments will be maintained. Early capacity building in Bank

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the design and implementation and designated Dept. of Local and Territorial Economies has quickly become knowledgeable of Bank requirements. DPI at provincial and lower levels generally more experienced w/ previous exposure to the CBRIP and other ODA financed projects. However, participation of various entities at Provincial and lower levels that lack exposure to Bank procedures may pose challenges and result in delays. The expectation is that Government systems, which are generally considered adequate, would be used to oversee project implementation, though persistent problems with monitoring, evaluation and reporting pose risks. Moreover, variation between GoV and Bank procurement procedures may result in delays and potential misprocurement. While commitment is high, capacities at provincial and district levels vary, as do experiences with similar, previous, initiatives. Weak technical capacity at the provincial level and limited experience in implementing the kind of pro-poor yet market-oriented livelihoods strategy envisaged in the Project present further challenges.

fiduciary arrangements have been agreed and are being supported under the PPTAF. Enhanced supervision will be put in place especially at the beginning of project implementation to ensure full comprehension of PIM particularly where Bank and GoV procedures differ.

Resp: Both

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2014

Frequency:

Governance Rating Moderate

Risk Description: Commitment is high given the Project responds to a number of objectives that resonate with both MPI and provincial governments (poverty reduction, implementing the NRA strategy, med-term dev. plng, livelihood support and infra. investments). MPI has relatively strong influence in the provinces given its role in supporting the capital budget, and strong oversight from Peoples’ Cmts helps to ensure overall accountability at provincial and district levels. Lines of decision and control are generally clear (tho across sectoral departments is less certain) and fiduciary systems are generally considered adequate (tho experience with Bank requirements less so). However, little downward accountability exists in the systems and there is risk of token participation and elite capture at the commune and village level. In addition, while no significant irregularities have been found in similar operations in N. Mtns, given the decentralized nature of the Project, the capacity constraints of some of the districts and communes, and the still-being-developed internal audit

Risk Management:

Capacity building of commune and village representatives to monitor works and disclosure of sub-project budgets, execution and delivery, of district teams for contract management of district-level investments, and feedback/complaint systems will be tested (possibly using mobile phone/SMS technology) to improve upon downward accountability. The Project will support training in participatory planning, and strengthen social accountability systems to develop early warning indicators for elite capture of institutions and benefits. The IE would also institute some design variations aimed at testing mitigation measures for abuses by contractors.

Resp: Both

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2015

Frequency:

Risk Management:

The Project will include social accountability mechanisms (including community oversight of works), and a grievance redress system integrated into MIS and geo-tagging of sub-projects activities (through use of smart phone technology) to be carried out by CFs. On the supply side, internal audits will be conducted (by the newly established MPI. Annual financial audits will be conducted on all district investments and 20% of commune investments, and periodic procurement audit of 20% of all sub-projects. Lessons learned in Indonesia, Philippines and Africa (Kenya) on the use of various accountability mechanisms under CDD operations will be pursued

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capacities of MPI, there are some concerns that will require attention during implementation.

Resp: Client

Status: In Progress

Stage: Implementation

Recurrent:

Frequency: CONTINUOUS

Project Risks

Design Rating Substantial

Risk Description: Risk Management:

The Project consists of three core components; two of which (for community and inter-communal infrastructure investments—components 1 and 3) are both the largest and are based on well-established processes and strategies. These therefore present little design risk. The second component regarding livelihoods, however, is more complex and less well understood by MPI and DPI. The intended scope of the Project and dispersed nature of the activities (across 26 districts) will pose some challenges in terms of implementation. Certain inter-departmental dependencies (for design and supervision of larger infrastructure and for the livelihoods comp.) present challenges that could affect implementation. Some geographic areas will also present topographical or natural hazard constraints to implementation, management and supervision.

The main risk regarding component 2 will be addressed in three ways: districts and communes will first focus efforts on production activities where there are existing and reasonably successful models that can be scaled up (or extended to new groups of beneficiaries). Second, agreed linkages with DARD and DOH strengthens the implementation capacity of DPI. Third, the technical assistance team will have a specific focus on the livelihoods component.

Resp: Client

Status: In Progress

Stage: Implementation

Recurrent:

Frequency: CONTINUOUS

Social and Environmental Rating Moderate

Risk Description: Risk Management:

The Project finances widely dispersed and small scale productive and social infrastructure. In most cases the negative impacts of such sub-projects (if any) are expected to be minor, temporary, site-specific and reversible, and limited to the construction phase (in the form of noise, dust, waste, or run-off; damage/loss of vegetation; and safety or health risks). To address these issues, the Project has prepared an Environmental and Social Management Framework (ESMF) with related Environmental Codes of Practice, as well as a Resettlement Policy Framework (RPF) to address issues of land acquisition (not expected to be large) and compensation for loss of assets. The RPF also governs requirements for voluntary land donation, which has in the past been misused by officials. As a significant majority of project beneficiaries are EMs, an EM Plan or Planning Framework was not required as the Project is considered responsive to the OP on Indigenous Peoples. The Governments own regulating Decree 29 and and Circular 26 were reissued in 2011 and have improved the overall regulatory approach to impact assessment and mitigation.

Recommendation of the Social Assessment have been incorporated into the Project design, appropriate training in the ESMF and the RPF will be prioritized under the Project (using the PPTAF funds) and follow-up support by CPO-hired consultants to ensure that agreed-upon procedures are applied. The Bank would also closely monitor the use of voluntary land donations (which is limited to a minimal proportion of a households’ land assets) for sub-project investments.

Resp: Both

Status: In Progress

Stage: Implementation

Recurrent:

Frequency: CONTINUOUS

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Program and Donor Rating Moderate

Risk Description: Risk Management:

The Project is not dependent on the implementation or success of other projects or activities and counterpart funding requirements are minimal (slightly less than 6% of total project value). However, the uncoordinated implementation of certain national targeted programs or strategies (in particular the NRA) could create confusion and adversely affect implementation at provincial levels.

Implementation arrangements to clarify how commune plans will be integrated with SEDP process to help ensure close ties with key NTPs. Seconding of staff from DARD and DOH to strengthen these linkages also important.

Resp: Client

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2014

Frequency:

Delivery, Monitoring and Sustainability Rating Substantial

Risk Description: Capacities to procure and monitor the delivery of intended project support will vary across province and districts. In general, adequate management and administrative systems exist but the potential application of new (Bank) procurement and FM procedures may create bottlenecks or challenges for the Project, and a tendency for lower-level (District and Commune) personnel to revert to VN procurement laws and procedures risks misprocurement. Monitoring and Evaluation: Current Government systems to systematically monitor ODA project outputs from commune level up, have been plagued by problems. In addition, MPI lacks the experience and capacity to deliver on the IDA-16 commitment to undertake a robust impact evaluation. The processes to be disseminated under the Project (participatory planning, community management and monitoring of basic infra, med-term dev plng) can be sustained relatively easily assuming adequate capacity building is provided. And sustainability of the livelihoods/private goods component of the Project will by nature be sustained for those activities that prove successful. Aspects of the first and third component, however, will present challenges if provinces do not commit to supporting the operation and maintenance of this infrastructure beyond the life of the Project. This is a particular concern for poorer communes that lack the local revenues and transfers to support the maintenance of basic infrastructure.

Risk Management: Early training for Provincial and District level staff on Bank's procurement procedures (using PPTAF funds); assigning/hiring qualified engineer and procurement staff at district level; ensuring clearly developed implementation manual that draws on experiences from similar projects in country

Resp: Client

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2014

Frequency:

Risk Management:

Bank to support design and application of customized database/MIS for CDD project developed by SDV (which includes an SMS module for grievances) to run in parallel with Government's own ODA MIS to ensure timely collection and use of monitoring data. Bank to also support implementation of IE through parallel WB/AusAid funding.

Resp: Both

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2014

Frequency:

Risk Management:

Establishment of fund under component 1 and implementation arrangements (outlined in PIM) to enhance O&M based on community engagement and commune and district government commitment. Newly established Transport Fund may also prove critical in addressing this risk.

Resp: Client

Status: In Progress

Stage: Implementation

Due Date: 31-Dec-2014

Frequency:

Overall Risk

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Overall Implementation Risk: Substantial

Risk Description: The VPU’s Development Effectiveness group endorsed the overall risk rating and assessment of FM risk as Substantial. The team recommended the installation of a robust M&E/MIS to help mitigate a number of risks identified, and specifically promoted the use of geo-tagging of sub-project activities. The risk team also suggested that the team should clarify oversight responsibilities of the different levels of implementation (and consider additional social accountability mechanisms), clarify the FM reporting and auditing requirements, and consider recommending to Government the use of an Independent Verification Agent.

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Annex 5: Implementation Support Plan

VIETNAM: Central Highlands Poverty Reduction Project

A. Strategy and Approach for Implementation Support

1. The implementation support strategy of the CHPov will be based on the moderate to substantial risks and challenges identified in the ORAF and overall design discussion for the Project. These involve (i) governance risks relating to fraud and corruption, (ii) design (particularly the component 2 of livelihood support and market linkages), monitoring and sustainability issues, and (iii) coordination with other on-going programs and projects in the same areas for synergy and potential mainstreaming.

2. Though CDD operations have been on-going in Vietnam for the past decades, there are still risks as presented in the Project’s ORAF that a comprehensive supervision approach is warranted. First of all, this is a decentralized operation where most activities and transactions will take place in the poorest communes and districts of the Central Highlands, whose capabilities are considered lower than similar administrative levels in other areas of the country. Project activities and transactions will be small, numerous and highly dispersed throughout the hundreds of villages in the 130 target communes, making the Project difficult to monitor and supervise. While CDD operations have built in local “accountability” mechanisms, the pushing downward of activities and fiduciary responsibilities strains traditional financial, procurement, audit and other accountability systems, opening up the prospects for governance and anti-corruption (GAC) risks. In addition, the inclusion of the livelihood support will require a different set of skills that call for greater inter-disciplinary coordination and cross-support. At the same time, it would take time for the staff of implementing agencies to be trained and familiarize themselves with new ways of doing things.

3. In response, the task team proposes an implementation support strategy that combines a standard semi-annual supervision mission approach with more frequent and less formal field thematic missions to be carried out by in-country experts or consultants. In addition, the task team will agree with Government on special studies and analysis relating to specific areas of interest or concern to help shed greater light on implementation issues. For this purpose, the implementing ministry, MPI, has secured a US$4 million sub-project from the Bank-financed Project Preparation and Technical Assistance Facility that would support such studies, analysis and technical assistance for the initial period of project implementation.

B. Implementation Support Plan

4. The Bank’s implementation support plan consists of frequently scheduled (semi-annual) supervision and monitoring missions, site visits to project areas and fiduciary and safeguard compliance reviews. A Mid-Term Review would also be carried out, after approximately 3 years of implementation, which will identify and recommend any structural changes. The mid-term review would include a follow-up household survey of baseline indicators for the Project.

5. World Bank implementation support will focus on providing technical assistance and guidance primarily to support the decentralization of project’s activities to communes as

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investment owners of the Component 1 and 2, the implementation of the livelihood support, capacity building, communication strategy and the connectivity-focused infrastructure investment.

6. In order to ensure effective implementation support, the Bank team will be multi-disciplinary and include strong membership from the Vietnam Country office. This will be particularly critical to provide just-in-time advice on the rapidly evolving local government agenda. National and international consultants will be mobilized as needed to provide targeted support on key technical issues. FAO/CP resources are expected to cover, in particular, technical and implementation support for livelihoods related activities.

7. Procurement. The Bank shall carry out procurement supervision missions and would conduct post reviews of contracts that are not subject to the prior review (see Annex 3) every six months. These post reviews will cover at least 10 percent of contracts not previously reviewed by the Bank.

8. Financial Management implementation support missions will also be conducted twice a year focusing on the adequacy of the FM system. Based on the level of FM risks at time of FM supervision, the reviews may include any or all of the following: (i) review and verification of specific transactions, (ii) review of bank reconciliations, (iii) analysis of the financial statements in relation to funds disbursed by the Bank, and (iv) physical verification of project outputs in relation to claimed expenses. Desk reviews will also be conducted on a regular basis and upon submission of the annual external audit of the Project and the quarterly IFRs. Issues arising from these reports will be used to revise and adjust the scope of the planned FM implementation support.

9. The tables below indicate the expected focus of implementation support during the different phases of the Project, and the skills needed.

Main Focus in Terms of Support to Implementation

Time Focus Skills Needed Resource Estimate

Partner Role

First twelve months

• Project Management Units set up and properly manned

• Capacity building • Financial Management and

disbursements • Procurement • Safeguards

• Review of community facilitation manuals and context-specific enhancements

Management specialist (workflows, staffing, control) Training specialist Financial Management, Disbursement Procurement training and adaptation to comm. Proc. Procedures Safeguards training Social development and CDD Specialist(s)

• 4 s/weeks

• 2 s/weeks

• 2 s/weeks

• 2 s/weeks

• 2 s/weeks

• 6 s/weeks

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• Launch and oversight of baseline survey

M&E Specialist • 8 s/weeks

12-48 months

• Financial management & disbursement and procurement review and support

• Review safeguards

implementation

• Technical support on project expansion

• Periodic reviews of process

evaluation results with CPO, PPMUs and DPMUs to discuss and address quality and implementation issues

• Take stock of lessons-

learned from project implementation and consider potential adaptations to project procedures

FM; DS; Procurement Safeguards Project Management CDD; livelihoods; engineering Project Management

• FM 2-3 s/weeks/year

• Procurement 2-3 s/weeks/year

• Social; 3-4 s/weeks/year; Env; 2-3 s/weeks/year

• 8 s/weeks/year

• CDD 8 s/weeks /year; l/hoods 4 s/weeks/year; mkt links 4 s/weeks/year; engineer 4 s/weeks/year

• (Included above)

Skills Mix Required (FY’14-’15)

Skills Needed Number of Staff

Weeks Number of Trips Comments Overall project supervision and coordination

14 4 int’l; 8 domestic TTL (DC based) and co-TTL (Ha Noi based)

Project management (workflows, staffing, control)

10 8 domestic ditto

Training/capacity building/communications

4 2 int’l; 2 domestic Independent consultant

Financial Management, Disbursement

8 8 domestic Ha Noi based staff

Procurement training and adaptation to comm. Proc. Procedures

8 8 domestic Ditto

Safeguards implementation 8 8 domestic Ditto Livelihoods 8 4 int’l; 8 domestic FAO/CP ? CDD Specialist(s) 12 4 domestic TTL and co-TTL Engineer 8 4 domestic Ha Noi based staff M&E/MIS Specialist 8 2 int’l; 4 domestic Cost-shared with other

Bank supported act.

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Annex 6: Findings and Arrangements to Enhance Ethnic Minority Participation

VIETNAM: Central Highlands Poverty Reduction Project

A. Empowering ethnic minority people in project context

1. The Central Highlands Poverty Reduction Project triggers the World Bank’s Social Safeguards Operational Policy for Indigenous Peoples (OP 4.10). However, as a significant majority of project beneficiaries are members of ethnic minority groups, and given that the Project has been designed specifically to identify and address their development concerns through a consultative and participatory process, the Project is considered responsive to the requirements of OP 4.10. Therefore, the PAD itself is considered an Indigenous Peoples Plan or Framework. Consistent with OP 4.10, a Social Assessment (SA) was also carried out as part of the preparatory analytical work that went into project design. This document is prepared to summarize the findings of that SA, and to indicate how that assessment and other good practices have been applied under the Project to address the requirements of OP 4.10. This document will also be disclosed through the World Bank’s InfoShop prior to project appraisal, per Bank’s requirement.

2. Ethnic Minorities in the project areas will receive culturally appropriate benefits and that free and prior informed consultations are followed with broad community support. Although the Project is expected to have no negative impact on ethnic minority communities in the project area, the Government took a rigorous approach in an effort to enhance the informed consultation and maximize the participation of local communities, especially ethnic minority people. The approach contains 3 key areas of action, including (i) wide-spread consultation at local level; (ii) conducting the social assessment; (iii) translating the findings into project design. The discussion below provides more detailed information on each action.

3. First, the Project preparation involved wide-spread consultations and participatory planning exercises from June 2012, until June 2013, with all targeted communes, district and provincial personnel and other key stakeholders. This process led to broad understanding and community support for the Project design, approaches and activities. Formal public consultations were carried out during June 2013 in all 6 project provinces with the participation of key stakeholders: representatives of provincial Departments of Planning and Investment, district peoples’ committee members, and local civil society organizations (e.g. women’s union, farmers’ association, and fatherland front).

4. Second, a Social Assessment was conducted as part of the preparatory work for the Project.32 The assessment was carried out in one district of each of the six project provinces (Krong No in Dak Nong, M’Drak in Dak Lak, Ia Pa in Gia Lai, Kon Ray in Kon Tum, Ba To in Quang Ngai, and Phuoc Son in Quang Nam). An SA is an analysis that combines different analytical methods to better understand the social and cultural factors of a project’s beneficiary groups that will affect both positively and negatively development activities. This is to ensure

32 Consultant report: “Social Assessment Report: The Central Highlands Poverty Reduction Project, Draft 2” MPI, August 2013.

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that a project’s strategies and objectives are well defined and the proposed means to achieve them are appropriate to the social context of the Project. The SA provides the baseline information for designing the social strategy of the Project. It is also a process and means to incorporate social information and stakeholders’ participation/views in the Project design. Main findings of the SA conducted for the CHPov are summarized immediately below.

• Economic status. The SA confirmed that the CHPov is targeting those who have higher poverty rate in terms of income and other aspects (such as access to basic services including clean water, sanitation), which mainly include indigenous ethnic minorities, ethnic minority migrants who have come to CH in recent years (within the past 5 years), and women (from both patriarchal and matriarchal systems). The SA provides a regional comparison between the project areas (130 selected communes in 26 districts in 6 provinces) with other areas that are not covered by the Project and with the national average so that the vulnerability of the Project’s beneficiaries, their gap/difference in economic, social status and their disadvantaged accessibility to specific resources for livelihood development are highlighted.

• Livelihood development. The Assessment shows that capital (natural, human, physical, financial and social) are key to EM household livelihood development, but that land per se is not a limiting factor—rather technology and traditional practices for cultivating the land that EMs have access to. Indigenous EMs have also been negatively affected through land loss due to sales to cover shocks. The study also notes that EMs enjoy generally high social capital, which proves important in relative successes especially among women. Women are also considered to play an important role in a household’s economic development and their participation in community projects is accepted. Migrant ethnic groups have exhibited a willingness to improve production practices (such as small irrigation, application of techniques). Therefore, their possibility of escaping from poverty and vulnerability is relatively high, if the current polices on resettlement for the migrant ethnic groups in some localities are more inclusive and effective.

• EM vulnerabilities. The study also showed that EM (especially indigenous) households were more susceptible to shocks (including weather, disease, price fluctuations of cash crops, loss of income earner, etc.), which also include in-migration of other groups and land-trading that at times results. In-migration was also found to bring some positive benefits to EM households in terms of production practices, investments and accessing information.

• Key socio-cultural issues. Certain cultural practices relating to cultivation methods, festivals, and other practices present barriers to some strategies being recommended under the Project and will therefore need to be understood clearly to identify possible solutions. A general respect for elders and other known “prestigious” persons can be used to the advantage of the Project. Participatory development approaches, though used widely in the project area, are still weak (especially among indigenous ethnic groups and women) and mostly initiated by communes rather than people themselves. Limited participation is felt to shyness, habits of not raising voices, inadequate technical skills, on the part of the targeted groups. However, the SA indicates that language does not appear to be a barrier hindering participation as the Kinh language is reported to be commonly used, and/or there are indigenous EMs within Government structure (at commune and

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village levels) to ensure adequate connection between local authority and people in meetings, consultation activities, etc.

• Government support. The study indicates that while Government agencies are aware of and express strong indications of commitment (including from key collaborating agencies DARD and DOLISA), there are concerns that capacities may not match the requirements of the Project, particularly at commune level.

• Other stakeholders. The SA confirmed that ‘mass’ organizations (e.g., Women’s Union, Farmer’s Union) have made positive contributions to past and present programs/projects. These organizations are important and their roles need to be promoted in the CHPov. Private sector (construction) groups were also reported to be supportive (and willing to mobilize local labor in infrastructure works), however, agribusinesses expressed concerns about the effective involvement of indigenous EMs due to differing attitudes toward formal working environments. Lastly, the study came across only limited cases of successful community groups working on common interest activities—most often women’s groups established with support from the local WU.

5. Based on these findings, the SA recommended a number of specific actions to be taken under the CHPov. These are summarized below:

(d) Ensure the active participation of vulnerable groups in the consultation and planning process of the Project. The Project should consider to require a minimum proportion participation of the poor and EMs households (both indigenous and migrants), and also women in the participatory village meetings. The community consultation meetings should be accompanied by group sessions for indigenous peoples and must be deployed in their native languages. Trainings on participatory planning procedure for the officials at all levels should place due focus on CDD approach, improving their skills to mobilize community participation. A specific framework for community consultations is recommended in the SA.

(e) Ensure the participation of vulnerable households in the livelihood activities of the Project. Detailed regulations on the participation proportion of each target groups (for examples, EM households, female-headed households) in the Project beneficial groups are necessary. The Project should form separated groups of women.

(f) Ensure that the priorities in infrastructure investment reflect the expectation of vulnerable beneficiaries. The vulnerable beneficiaries tend to have more socially oriented priorities (e.g. female beneficiaries want water supply and constructing supplementary classrooms).

(g) Promote information dissemination and motivation to encourage participation of most vulnerable groups. The participation of the poorest households is hindered by reluctant attitudes or doubtfulness about efficiency of support. Therefore, information dissemination and motivation must be used to promote change and willingness to access new livelihood models. Mass media (radio, television, newspaper) should be combined with non-traditional channels (such as using respected village members (elders, successful farmers, etc.). Local EM languages and simple formats should be used.

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(h) Encourage involvement and approval of influential individuals in the community (elders, heads of socio-political, religious organizations and agencies) to promote project roll-out in communes and villages. This will reinforce the consensus and approval of community to the Project implementation and increase social capital for beneficiaries.

(i) Existing cultural biases should be openly discussed among project management levels to reflect on how these may hinder full participation of target beneficiaries and identify mitigating measures.

(j) Training for indigenous EM beneficiaries needs to be designed properly so that they can absorb the technology. The presenters and demonstration models should be from EM people (preferably indigenous ones). Technical trainings should be repeated, especially for indigenous EM groups and training material should be translated in to local languages; in case that writing system of some EM is not available, material should be transformed into recordings and illustration. In addition, in order to ensure the continuing development of skills and knowledge, it is necessary to reinforce the demonstration models deployed at prestigious households in the community who are able to absorb, quickly buy in, and implement the models sustainably in the long run.

(k) Carry out regular consultations at community/village level to monitor beneficiary assessment of the Project’s activities.

6. Third, the findings of the SA were used to inform project design with specific actions included in Project Appraisal Document. These actions include: a communications strategy and materials that apply different and literacy appropriate media forms, preferred recruitment of key field staff (community facilitators) from local communities, the use of indigenous languages in communications at village level when facilitating local decision making, inclusion of elders and traditional leaders (and other influential persons) as part of village level planning, minimum requirements for EM participation in decision meetings and livelihoods groups (and monitoring of the same), and technical support and capacity building (including for village groups) around participatory processes.

7. Based on the SA’s finding the Project also includes the following gender informed design elements: minimum requirements for female participation in planning and decision making meetings at village level, a designated female position (of Vice-Chair) for the commune-level decision making board, specifically targeted/ear-marked support for women’s livelihoods activities under one of the Project’s sub-components, and monitoring and evaluation data will be disaggregated by gender (and ethnicity). Key dimensions on gender and participation are summarized in the table below.

Key Dimensions on Gender/Participation in project design

Component 1. Commune and Village infrastructure development Sub-component 1.1. Commune and Village infrastructure development

- Bottom-up annual planning process - Community procurement - Using local unskilled labor - Training for local labor in construction

Sub-component 1.2. Operation and - Annual participatory planning

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Maintenance - Mobilization of women and ethnic minority people in performing O&M

Component 2. Sustainable Livelihoods Development Sub-component 2.1. Self-reliance and income diversification

- Bottom-up annual planning process - Over 80% of beneficiaries are ethnic minority households - Women (via women’s union) take lead in implementing this sub-component

Sub-component 2.2. Market Linkages Initiatives

- Bottom-up annual planning process - 50% of beneficiaries are ethnic minority households

Component 3. District level connective infrastructure development, capacity building and communication

Sub-component 3.1. District connective infrastructure development

- Bottom-up annual planning process - Recommended target of 80% of unskilled labor to be sourced locally

Sub-component 3.2. Capacity building

- Participation of women and ethnic minority people in the capacity activities

Sub-component 3.3. Communications

- Participation of women and ethnic minority people in communication and knowledge sharing activities. - Specific use of local languages to engage communities

B. Implementation, Monitoring and Evaluation

8. There are a number of provisions in project design to ensure proper implementation of proposed activities and approaches. These include (i) Project Implementation Manual; (ii) M&E system; and (iii) Impact Evaluation.

• Project Implementation Manual (PIM). The PIM contains 13 volumes of which 5 volumes address various issues related to ethnic minority people, including safeguard policies (vol. 13), planning process (vol. 2), communication strategy (vol. 6), capacity building (vol. 5), and M&E (vol. 4). All volumes provide practical measures to ensure participation of EMs, which will guide project implementation in the field.

• M&E System. The Project will have a comprehensive monitoring and evaluation (M&E) framework and system to provide stakeholders with timely data regarding the progress and results of the Project. Gender and Ethnicity are two mandatory variables in all M&E forms developed under this Project. The M&E system will also include a Grievance Reporting and Redress System that will allow all stakeholders to comment on or submit complaints regarding project implementation through several different channels, including SMS/text messages. The M&E system will compile and report on the locations and types of complaints, and their resolution.

• Evaluation (Baseline, Mid-term and Final Evaluation), supplemental qualitative assessment will be conducted throughout the Project cycle. The reports will contain dedicated discussion/analysis on gender and ethnic minority people.

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PROVINCES:

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 39040

SEPTEMBER 2013

VIETNAM

CENTRAL HIGHLANDS

POVERTY REDUCTION PROJECT

PROJECT PROVINCES

PROVINCE CAPITALS

NATIONAL CAPITAL

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

GSDPMMap Design Unit