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OFFICIAL USE ONLYIDA/R2004-0079/1
April 15, 2004
Streamlined ProcedureFor meeting of
Board: Tuesday, May 4, 2004
FROM: Vice President and Corporate Secretary
Honduras: Nuestras Raices Project
Project Appraisal Document
Attached is the Project Appraisal Document regarding a proposed credit to the Republic
of Honduras for a Nuestra Raices Project (IDA/R2004-0079). This project will be taken up at a
meeting of the Executive Directors on Tuesday, May 4, 2004 under the Streamlined
Procedure.
Distribution:Executive Directors and AlternatesPresidentBank Group Senior ManagementVice Presidents, Bank, IFC and MIGADirectors and Department Heads, Bank, IFC and MIGA
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contentsmay not otherwise be disclosed without World Bank Group authorization.
Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 27771-HO
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 10.1 MILLION (US$15.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF HONDURAS
FOR A
NUESTRAS RAiCES PROJECT
Human Development Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 4,2004)
CAS CDD CFAA CMU DO ESA F H I S FMR GNI GOH ICR IDA IDB ILO IP IP KFW LAC MIS NR OED PAPIN PDO PEC PECINH PEDM PIC PPARs PRODDEL PRONEEAAH PRSP REPEPIN SEFIN SOPTRAVI TA TSC UNDP
Currency Unit = Honduran Lempiras (HNL) 1 L = US$0.06
US$l.OO = *L 17.81
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS Country Assistance Strategy Community Driven Development Country Financial Accountability Assessment Country Management Unit Development Objective Economia, Sociedad, Ambiente-ESA Consultores Fondo Hondureiio de Inversidn Social Financial Monitoring Report Gross Net Income Government of Honduras Implementation Completion Report International Development Association Interamerican Development Bank International Labour Organization Implementation Progress Indigenous Peoples KFW Group (KfW Bankengruppe in German) Latin America and the Caribbean Region Management Information System Nuestras Raices Operations Evaluation Department Programa de Apoyo para Pueblos Indigenas y Negros Project Development Objectives Operation Manual for Community Sub Projects Proyectos Ejecutados por Comunidades Indigenas y Negras de Honduras Strategic Municipal Development Plans Project Implementation Committee Project Performance Assessment Reports Decentralization and Local Development Program National Education Program for Ethnic Groups in Honduras Poverty Reduction Strategy Paper Reduccidn de la Pobreza Enfocada a Pueblos Indigenas y Negros Secretaria de Finanzas Sistema de Obras Pdblicas, Transporte y Vivienda Technical Assistance Tribunal Superior de Cuentas (Audit Court) The United Nations Development Program
Vice President: David de Ferranti
Sector Leader: Helena Ribe Country ManagedDirector: Jane Armitage
Task Team Leader: Andrea Vermehren
FOR OFFICIAL USE ONLY HONDURAS
This document has a restricted distribution and may be used by recipients only in the performance of their official duties . I t s contents may not be otherwise disclosed without W o r l d Bank authorization . .
Nuestras Raices Program
CONTENTS
Page A . STRATEGIC CONTEXT AND RATIONALE ..................................................................... 1
Country and sector issues (for more detail. see Annex 1) ............................................... 1
Rationale for Bank involvement .................................................................................. 2 Higher level objectives to which the project contributes ................................................ 3
1 . 2 . 3 .
B . PROJECT DESCRIPTION ..................................................................................................... 4 Lending instrument .................................................................................................... 4 Project development objective and key indicators ......................................................... 4
1 . 2 . 3 . 4 .
Project components .................................................................................................... 4
Lessons learned and reflected in the project design ....................................................... 5 5 . Alternatives considered and reasons for rejection .......................................................... 7
C . IMPLEMENTATION ..................................................................... ........................................ 7 Partnership arrangements ............................................................................................ 7 1 .
2 . 3 . Monitoring and evaluation of outcomes/results ............................................................. 9 4 . Sustainability ............................................................................................................. 9
5 . Critical r isks and possible controversial aspects .......................................................... 10 6 . Credit conditions and covenants ................................................................................ 12
Institutional and implementation arrangements (for details see annex 6) ......................... 7
D . APPRAISAL SUMMARY ..................................................................................................... 12
Economic and financial analysis ................................................................................ 12 1 . 2 . Technical ................................................................................................................. 12 3 . Fiduciary ................................................................................................................. 12 4 . Social ...................................................................................................................... 13
5 . Environment ............................................................................................................ 15 6 . Safeguard policies .................................................................................................... 15 7 . Policy Exceptions and Readiness ............................................................................... 16
Annexes
Annex 1: Country and Sector o r Program Background .......................................................... 17 Annex 2: Majo r Related Projects Financed b y the Bank and/or other Agencies .................. 22 Annex 3: Results Framework and Monitoring ......................................................................... 24
Annex 5: Project Costs ................................................................................................................ 36
Annex 7: Financial Management and Disbursement Arrangements ...................................... 40
Annex 8: Procurement ................................................................................................................ 47
Annex 4: Detailed Project Description ...................................................................................... 30
Annex 6: Implementation Arrangements .................................................................................. 37
Annex 9: Economic and Financial Analysis .............................................................................. 55 Annex 10: Safeguard Policy Issues ............................................................................................. 58 Annex 11: Project Preparation and Supervision ...................................................................... 62
Annex 12: Summary o f Results f rom Ex post Evaluation ....................................................... 63 Annex 13: Documents in the Project F i le .................................................................................. 65 Annex 14: Statement o f Loans and Credits ............................................................................... 66
Annex 15: Country at a Glance .................................................................................................. 67
A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues (for more detail, see Annex 1)
1. o f income disparity. With a per capita Gross Net Income (GNI) o f US$920 in 2002, the country i s the third poorest in Latin America. Given i t s high income inequality (the national Gini coefficient i s 0.6), poverty i s widespread. Nearly two-thirds o f the population i s poor and nearly half i s extremely poor.’
Honduras i s one o f the poorest countries in Latin America and i s characterized by a high degree
2. Indigenous and Afro-Honduran peoples number over 440,000 (7.2 percent o f the total population) and consist o f nine distinct ethnic groups (Lenca, Gm’funa, Miskito, Chorti, Pech, Tawahka, Tolupfin, English-speaking Black, and Nahoa). The ethnic communities are among the poorest in the country, with much higher than average rates of malnutrition and illiteracy and unsatisfied basic needs? The participation o f these groups in the democratic processes at the central and local government levels i s limited. A more active participation in these government structures i s key to reducing poverty and improving the l iving conditions o f Honduras’ ethnic communities.
3. In 2001, the Government o f Honduras (GOH) presented its Poverty Reduction Strategy Paper (PRSP), which seeks to reduce poverty by 24 percent during 2001-2015 through a comprehensive set of measures or pillars, including: (1) accelerating equitable and sustainable economic growth; (2) reducing poverty in rural areas; (3) reducing urban poverty; (4) investing in human capital; (5) strengthening social protection for specific groups; and (6) guaranteeing the sustainability o f the strategy.
4. conditions o f people in extreme poverty, particularly children, adolescents, senior citizens, women, persons with disabilities and ethnic groups, in order to enable their social integration and development through equitable access to opportunities. The PRSP also calls for programs and projects that support: (a) socio-economic development o f ethnic communities, and (b) ethnic and ecological tourism.
The objective o f “Social Protection for Specific Groups” (pillar 5) i s to improve the l iving
5. decentralize and strengthen local development. Through the Decentralization and Local Development Program (PRODDEL), the GOH has created an instrument to implement this strategy, fostering the role o f communities, local governments and local service providers in the economic and social development process o f the country.
In order to guarantee the sustainability o f the strategy (pillar 6), the GOH stresses the need to
6. As part o f this strategy, the GOH has strengthened i ts efforts to address the persistent problems affecting the indigenous and Afro-Honduran peoples. I t reactivated the National Cultural Council, created the Office o f the Special Prosecution for Ethnic and Cultural Heritage, and promoted a process of sustainable human development through a variety o f complementary programs and projects (see Annex 2). Other planned policy measures include the creation o f the National Ethnic Council, which w i l l define a national agenda to facilitate coordination o f the programs benefiting ethnic communities, and bring national legislation in line with L O Convention 169 regarding indigenous peoples, signed by Honduras, so i t s provisions can be enforced.
’ The extreme poor are those living below the extreme poverty line, which i s the cost o f a food basket designed to meet basic nutritional needs. According to the Honduras CAS (pg. 4), “All Poor” in 2002 represented 63.3 percent o f households and “Extremely Poor” 45.2 percent of households. ESA Consultores - Evaluacidn de Proyecto Nuestras Raices IV, Tegucigalpa, 2002.
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2. Rationale for Bank involvement
7. During the Bank’s Country Assistance Strategy consultations in 2003, the GOH reiterated i t s commitment to improving the l iving conditions o f the country’s most vulnerable groups, particularly the ethnic communities, and asked the Bank to continue i t s support to one o f the most prominent and successful programs in this area, the Nuestrus Ruices (Our Roots) Program (NR), implemented by the Honduras Social Investment Fund (FHIS).
8. Since 1995, FHIS has implemented the Nuestras Raices Program to address the specific needs o f ethnic communities. In 1997, the Bank was invited to support the program. During i t s most recent phase (2000-2002), the NR Program invested US$13.6 million under the Bank-financed F H I S V Project in over 4,650 small-scale subprojects benefiting about 125,500 families in Honduras’ ethnic communities. The proposed Nuestras Raices Program Project-self-standing for the f i rst time-will build on the strengths o f the previous phases and expand the program’s coverage and impact. Through the NR Program, the GOH seeks the Bank’s support in implementing the PRSP’s Social Protection and Specific Groups pillar, and the GOH’s efforts to strengthen local development, particularly o f highly vulnerable, ethnic communities.
9. that the program was very successful in meeting i t s objectives (see Annex 12). The report noted that NR was highly effective in targeting i ts resources to benefit extremely poor communities and households. Seventy-three percent o f beneficiary households were found to belong to the bottom three income categories (national average: 50 percent). Furthermore, the evaluation confirmed that the subprojects represented the priorities identified by the communities and the program promoted gender equity, with roughly equal male and female participation in the ethnic groups.
A recent ex-post evaluation of the NR Program, conducted by ESA Consultores, concluded
10. track record, the GOH’s commitment to improving and expanding the program as part o f the PRSP implementation, and the Bank’s experience with the program. Therefore, alternative program approaches were not considered. However, some important changes to the previous design o f the NR Program have been introduced and are described in the following sections.
The proposed operation wi l l be processed as a “repeater project” due to the program’s excellent
11. Other projects. The NR Program i s only one o f the initiatives supported by the Bank in Honduras to improve the socio-economic development o f indigenous and Afro-Honduran communities. Other Bank projects address complementary areas, such as land titling, training o f human resources in health, disaster prevention and mitigation, sustainable tourism, bilingual and intercultural education, and training at the Intibucg Indigenous Handcraft Center. However, these initiatives are not exclusively directed to indigenous communities, but are designed as components o f larger programs (See Annex 2 for more detail).
12. Other projects financed by the international community targeting indigenous and Afro-Honduran populations include the Inter-American Development Bank (1DB)-financed pilot project PAPIN (US$1.5 mill ion IDB, US$l.3 mill ion GOH, US$225,000 Canadian funds), which i s being implemented through the Ministry o f the Interior and Justice in partnership with the ethnic federations. Components include: ethno-engineering; indigenous law and gender; and monitoring and evaluation. A new IDB operation called REPEPIN wi l l provide financing (US$lO.O mill ion in a f i rst phase) for institutional strengthening o f the ethnic federations, for productive activities benefiting ethnic communities, and for improving human development services in indigenous areas. It i s very complementary to the NR project and wi l l finance institutional strengthening activities o f the ethnic federations, human develop service delivery interventions, and income generating projects (see Annex 2 for a l i s t o f relevant projects).
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13. Comparative advantage of the Bank’s involvement. The Bank’s long-term relationship with FHIS and the indigenous and Afro-Honduran federations and their peoples through FHIS Projects with financing for NR (NR I1 - US$6.4 mill ion and NR IV - $13.6 million) exceeds that o f other international agencies and i s key to the successful implementation o f the program. Basic rules between FHIS, the Bank and the ethnic federations on participation in decision-making, transparency and social auditing are well established. This strong foundation and trust among all parties allows the Bank to strengthen-through new design features-the democratic relationship between the federations and their respective communities. Finally, due to the Bank’s knowledge o f and FHIS’ involvement with local governments, it was possible to establish, as part o f the new NR design, a link between local governments and ethnic federations, which are historically competing forces.
3. Higher level objectives to which the project contributes
14. strengthening the social protection of indigenous and Afro-Honduran communities by empowering them to manage and implement their own projects to improve their l iv ing conditions with respect for their ethnic identity. The project w i l l provide ethnic communities with the opportunity to develop Strategic Ethnic Development Plans that wi l l complement and feed into the Strategic Municipal Development Plans (Planes Estratkgicos de Desarrollo Municipal, PEDM), thus enabling them to participate more equitably in the local development planning process.
The proposed Nuestras Raices Project wi l l contribute to the country’s higher-level objective o f
15. human and social capital. The project w i l l provide training to ethnic communities, federations, local facilitators and supervisors. Communities wi l l be trained to formulate Strategic Ethnic Development Plans, plan and execute subprojects, and administer funds and materials conferred to their Project Committees.
The Nuestras Raices Project also supports the higher-level objective o f enhancing investment in
16. prioritize, design, manage, execute, monitor and evaluate subprojects that respond to urgent needs, regardless o f project size. As an important indirect effect, it w i l l create temporary local employment opportunities for the participating communities and promote local contracting. I t i s expected that this w i l l contribute to reduced rural poverty and increased equity between urban and rural areas.
The project w i l l provide communities and groups of communities with the opportunity to
17. The gender strategy o f Nuestras Raices w i l l continue to promote equal opportunities for women and men through contractual services, training opportunities, and the selection o f projects benefiting the most vulnerable segments o f ethnic communities.
18. The environmental sustainability strategy o f the Nuestras Raices Project wi l l promote environmental awareness among beneficiaries, increase ethnic communities’ knowledge about the application of environmental guidelines and regulations (forestry, water and sanitation, etc.), and address environmental issues during project implementation through mitigation and risk management measures agreed with and carried out by beneficiaries.
19. protection for specific vulnerable groups; (b) reducing rural poverty; and (c) enhancing investment in human capital. The CAS states that a core strategic objective o f pillar 5 o f the PRSP i s “to support Afro- Honduran and indigenous groups to develop their communities, in part through the Bank-supported Nuestras Raices Pr~gram.”~ This objective i s entirely consistent with the overall CAS objective o f
CAS objectives. The CAS objectives supported by the project are: (a) strengthening social
Honduras: Country Assistance Strategy. Strengthening Social Protection for Specific Groups. Pg. 17
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poverty reduction through addressing the needs o f one o f most vulnerable groups as identified in the PRSP.
B. PROJECT D E S C R I P T I O N
1. Lending instrument
20. appropriate for this type o f project.
The GOH has requested a Specific Investment Loan since this flexible instrument i s most
2. Project development objective and key indicators
21. participation in the holistic development processes o f their communities and their nation. This wi l l be achieved by strengthening the communities' local capacity to build sustainable organizations, development projects, and cultural identity. Progress towards achieving this objective wi l l be measured against the"fo1lowing outcome indicators:
The project development objective i s that indigenous and Afro-Honduran groups have increased
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0
0
0
0
0
0
At least 400 indigenous and Afro-Honduran Community Development Plans wi l l be incorporated into Strategic Municipal Development Plans (PEDM). At least 5 institutions finance part of the nine Strategic Ethnic Development Plans. At least 50 municipalities w i l l finance subprojects included in the Community Development Plans prepared by the indigenous and Afro-Honduran communities. At least 40 percent o f the project's beneficiaries are women. At least 70 percent o f the subprojects financed w i l l have sustainable maintenance systems in operation. At least 70 percent o f subprojects are implemented in accordance with the established parameters o f time, quality and budget. Each of the 9 indigenous and Afro-Honduran peoples w i l l have developed and implemented at least two cross-cutting subprojects that serve to strengthen the ethnic people as a whole (i.e. cultural, linguistic, historical).
22. targets have been achieved.
Semi-annual progress reports and an ex-post evaluation w i l l measure the degree to which these
3. Project components
23. for more details):
The proposed project has three components and w i l l have a duration o f three years (see Annex 4
Component 1. Participatory Development Planning b y Ethnic Group (US$0.49 million; I D A US$0.46 mill ion equivalent).
24. This component w i l l support a process o f participatory development planning among the indigenous and Afro-Honduran communities and the federations in order to: (a) train and prepare ethnic communities and their ethnic representations to actively participate in the local development planning process; (b) identify subprojects to be financed under Nuestras Rakes and other programs; and (c) encourage ethnic federations to work more closely with municipalities to leverage funds. Facilitators trained by the NR unit wi l l assist approximately 2,000 communities to carry out a participatory community needs assessment and planning process that wi l l result in a Community Development Plan for
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each community and a list o f priority subprojects. The subprojects w i l l be further prioritized in micro- regional meetings and, subsequently, at the level o f each ethnic group, using a fixed set o f selection criteria (e.g. poverty, land tenure, significance). Each o f the nine ethnic groups w i l l then prepare strategic development plans outlining the vision, mission, and strategic goals for i t s membership over a three to five year period. The development o f the strategic plans wi l l be led by the ethnic federations, based on an agreed participatory and democratic methodology, and wi l l use already existing plans as a starting point if they are available. Aspects o f these strategic development plans are expected to feed into the national and municipal development plans. Environmental and gender aspects wi l l continue to be an integral part o f the planning methodology and w i l l be addressed through the planning process.
Component 2. Grants for Subprojects (US$13.8 million; IDA US$13.3 mill ion equivalent).
25. averaging $20,000. Subprojects w i l l only be financed if they have been prioritized through the participatory development planning process. The resources w i l l be allocated proportionately among the nine ethnic groups, based upon the 2001 census data, while guaranteeing a minimum allocation for the five smallest ethnic groups. Projects w i l l be executed by the ethnic communities, using a Community Driven Development (CDD) methodology, outlined in the program’s Operational Manual (Projectos Ejecutados por las Comunidades Indigenas y Negras Hondureiias - PECINH) which addresses important gender and environmental aspects. Project funds wi l l be transferred directly to a community-based Project Implementation Committee (PIC) with an elected leadership or, in those cases where a committee already exists, confirmed, by the entire community.
This component w i l l finance approximately 600-700 community-executed subprojects, each
Component 3. Capacity Building and Institutional Strengthening (US$1.3 1 million; IDA US$1.24 mill ion equivalent).
26. This component w i l l finance capacity building o f ethnic communities to lead their own development process, institutional strengthening o f the Nuestras Raices Unit, located within FHIS, and monitoring and evaluation. The main capacity building activities include training and technical assistance to the communities in participatory development planning, project identification, planning, execution, operation and maintenance, and funds and materials management. The Nuestras Raices Unit, as in previous phases, w i l l be responsible for managing the project. I t w i l l coordinate closely with the ethnic federations, the community-level Project Implementation Committees (PICs), the locally-contracted Subproject Formulators and Community Facilitators, and the FHIS-contracted Supervisors and Inspectors. The NR Unit and the FHIS Environmental Unit w i l l closely coordinate the implementation o f the project’s Environmental Action Plan ensure that environmental safeguards are observed.
27. FHIS staff costs as well as recurrent costs for offices, mobilization, equipment etc.. These funds would be provided as counterpart funds by the Government o f Honduras. In addition, the Government o f Honduras would provide US$0.5 mill ion for financing o f grants for subprojects.
The Operational Costs for implementing the project amount to US$ 1.1 mill ion and include
4. Lessons learned and reflected in the project design
28. More Sustainable Subproject Investments. One o f the findings o f the ex-post evaluation was that the subprojects camed out by the ethnic groups showed insufficient sustainability, mainly since the subproject paid only for labor costs and did not make funding available for materials or technical assistance. The new NR Project w i l l fund both materials and labor. Subprojects are expected to average $20,000 a piece, compared to less than $5,000 in past phases. In addition, subproject proposals w i l l include plans for financing operations and maintenance costs.
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29. evaluation also found that the training provided to local facilitators was not effective in penetrating down to the working groups at the community-level, where i t was most needed. For this project, since communities w i l l be directly involved in managing subproject resources, capacity-building efforts wi l l be intensified at the community-level. Communities wi l l have access to funds to contract training and technical assistance support, both at the planning and implementation phases, in the form o f a community facilitator or technician relevant to the subproject type. In addition, well-trained FHIS supervisors wi l l visit subprojects regularly to ensure that the capacity-building, including environmental and gender awareness, i s being translated into successful project management by the Project Implementation Committees at the community-level.
More Intensive and Ambitious Capacity-building at the Community Level. The ex-post
30. seems to be an increasing divide between the representatives o f the ethnic federations and local governments in some areas o f the country. Previous phases o f the NR Program were carried out independent o f local officials, who were, in some cases, not even informed about project plans. For this project, i t was agreed that the NR Program should complement not replace the local planning processes. The revised project design takes this lesson into account by making sure that the planning process undertaken in the ethnic communities i s compatible with the process carried out by the municipalities. Further, it requires that the Ethnic Development Plans developed under the program be shared with the relevant local government authorities. I t i s hoped that these steps w i l l help pave the way for increased t rust and collaboration between the ethnic communities and the municipal government structures, which w i l l lead to local governments incorporating projects and strategies defined through the ethnic planning process into their own development plans.
Bridging the Growing Divide between Ethnic Federations and Local Government. There
3 1. the nine ethnic groups. During recent years, however, several new ethnic federations have been created, totaling 14 at present. In order to discourage further splintering o f ethnic representations, i t was agreed with the federations that the NR Program would only admit participation o f one representation per ethnic group. Hence, nine representations o f the nine ethnic groups w i l l participate in the program, on behalf o f all the ethnic peoples o f Honduras. Another measure designed to promote unity within each ethnic group i s the allowance that up to 10 percent o f subproject funds may be used for activities designed to strengthen the ethnic group as a whole. Each ethnic group w i l l identify these activities in their strategic development plan.
Promoting Ethnic Unity. In the past, the NR Program worked with the ten ethnic federations o f
32. indigenous and Afro-Honduran groups since 1995. Past performance o f the NR component o f FHIS I11 and I V Projects has been rated as “Satisfactory” or ”Highly Satisfactory.” The 2002 OED evaluation Results of Selected World Bank Interventions on the Indigenous and Afro-Caribbean Populations in Honduras, concluded that the NR Program had “provided substantial benefits to the IP (Indigenous Peoples) communities throughout the country. Government commitment and IP ownership are high, making the sustainability o f activities likely.” Among OED’s recommendations was the need to expand the subproject menu to respond to a broader range o f needs and to increase training to communities. Both recommendations are reflected in the project design.
Past Performance in Sector. The NR Program has invested in the social protection o f all
33. improve coordination o f the country’s environmental and indigenous peoples’ policies and regulations with local governments and beneficiaries. In response to this, the project intends to build on the knowledge o f existing municipal environmental units and involve them, as much as possible, during project implementation, where needed. Recently, the GOH has increased i t s support to municipal environmental units, supported by i t s decentralization plan (PRODDEL).
Despite OED’s favorable review of the NR Program, it also noted that there i s a need to
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5. Alternatives considered and reasons for rejection
34. evaluations, the basic design o f the NR Program was preserved. In addition, as noted above, some improvements were introduced to enhance sustainability o f subprojects, accountability and harmonization with local development efforts. During preparation, consideration was given to two alternative design options as below:
Following the recommendations o f the GOH, and given the results from the ex-post and OED
Option 1 would disburse funds through the municipalities to the ethnic groups to reinforce decentralization efforts and strengthen local governments. This approach was proposed by the FHIS Minister to the ethnic representations and soundly vetoed, due to the negative experience in the NR Program phases I and 11 when municipalities administered the program funds. However, it was agreed that the project would include seminars and workshops to promote communication and synergies between ethnic federations and municipal governments to pave the road for future joint work and more active participation o f ethnic groups in the local development process.
Option 2 would include a Financial Intermediation component to continue the promotion and creation of rural savings and credit mechanisms (cujus rurules) formed under the Nuestras Rakes Program in previous phases. However, i t was agreed among the ethnic federations, FHIS, and the Bank to not include any “mandatory” savings and stop promoting the creation of cujas rurales for the following reasons: (a) there i s no legal framework in the country governing these cujus, (b) FHIS i s not the appropriate institution to carry on this work, and (c) the ethnic federations should not have a double function o f being the political representation o f the ethnic groups and managing credit and savings funds. Any major effort to strengthen and build up the cujus system would go beyond the project’s comparative advantage. Instead, i t was decided that FHIS would seek to engage other donors that are better suited to build up the cuju system, such as UNDP, which i s already supporting some ethnic federations on the topic. Specifically, UNDP would support the consolidation of the cujus and assist them to establish a legal framework to regulate their operations.
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C. I M P L E M E N T A T I O N
1. Partnership arrangements
35. In the past, the World Bank has been the major institution financing the NR Program, apart from the GOH, which provided counterpart funds, and the beneficiary communities’ contributions. Other partners have participated including, the IDB, which provided funding to NR (US$l. 1 million) to support the creation of micro-enterprises managed by ethnic communities and UNDP has engaged in activities to strengthen the most promising o f the approximately 3,500 cujus rurules financed during earlier phases.
36. Nuestras Rakes Project (for more detail, see Annex 2). The IDB and World Bank task teams have been coordinating closely in the preparation o f both operations, and w i l l continue to do so during project implementation, to ensure full capitalization o f expected synergies o f both operations.
2. Institutional and implementation arrangements (for details see Annex 6) 37. this project w i l l be with the Minister o f FHIS and his staff. The Nuestras Rakes Unit wi l l be responsible for coordinating and supervising project activities, and working with the various departments o f FHIS to ensure that the project evolves according to plan. The NR Unit w i l l also be responsible for coordinating
The IDB i s currently preparing REPEPIN, a new project that w i l l largely complement the
As in the past, FHIS w i l l be the implementing agency for the project. Overall responsibility for
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and supervising project activities with different actors: nine ethnic representations, local community facilitators, local technical assistance providers, FHIS supervisors and inspectors, and community-level Project Implementation Committees. External experts wi l l be contracted to audit and evaluate the program.
38. FHIS, which was created by Law No. 12-90 on February 22, 1990, has capital and administrative, technical and financial autonomy. A Board of Directors chaired by the President of the Republic oversees FHIS, which i s led by an Executive Director, who has the rank o f Minister. The NR Project i s an integral part o f FHIS’ efforts to introduce community execution o f projects. The Operational Manual that w i l l be used for the NR Program i s very similar to the one used for all other subprojects implemented by communities and has benefited from the NR unit’s experience in working with communities and transferring resources to them. In that respect, this new NR approach has contributed considerably to the cohesion o f FHIS’ operations and modalities.
39. phases o f the NR Program and on FHIS’s and the Bank’s experience with CDD in Honduras and elsewhere. FHIS has more than 10 years o f experience implementing donor-financed programs and subprojects efficiently and effectively. The institution’s annual expenditures average between US$35-40 million, thus FHIS i s the second largest implementing agency in the country, following the Ministry o f Transportation (SOPTRAVI). Financial management and procurement units are well established and respective Bank guidelines are being followed without difficulty. The Nuestras Raices Unit has very experienced and motivated personnel. The NR component (US$13.0 million) under the FHIS V Project was implemented within one-and-a-half years, demonstrating the capacity o f FHIS and the NR unit to deliver efficiently and effectively.
Rationale. The institutional arrangements were selected based on the experience with previous
40. recruiting members to round out the team’s s k i l l base and prepare i t to manage strategic development planning activities (Component 1) and the more diverse and higher value subproject portfolio under Component 2. Under the new community execution methodology, adequate training o f the community- based Project Implementation Committees to cany out their subprojects w i l l be key to successful implementation. Community committees w i l l be trained in project management and administration, including accounting, procurement o f goods and materials, contracting o f services, environmental aspects, maintenance, etc.
In order to carry out the project, it was agreed that FHIS would strengthen the NR unit by
41. disbursement procedures, both under “traditional” and FMR procedures. FHIS also has sufficient knowledge on procedures for disbursing counterpart funds and other external resources.
Flow of Funds. FHIS’ financial management staff has gained sufficient experience in IDA credit
42. Under the Nuestras Raices Project, funds for subprojects w i l l be disbursed to communities to implement subprojects. This procedure w i l l be regulated through the project’s Operational Manual, which incorporates many of the experiences from other community-executed and FHIS-funded projects and includes the principles in the Bank’s Reference Guide: Fiduciary Management for Community Driven Development Projects (April 2002). Once a community subproject has been approved for funding, a portion o f the approved budget wi l l be advanced by FHIS to the Project Implementation Committee, in accordance with the subproject’s disbursement plan. Subsequent disbursements would be contingent upon progress made in subproject implementation and acceptable resource management and reporting.
43. Special Account of FHIS, which w i l l be maintained at the Central Bank o f Honduras, and funds may be transferred to the local currency accounts managed by FHIS for further transfer to communities. Furthermore, in maintaining the operation o f bank accounts under the FHIS V Project, i t was agreed that
In order to minimize delays in the flow o f funds to communities, FHIS w i l l have access to a
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FHIS would be permitted to utilize the Special Account 30 day Advance Procedure (for more detail, see Annex 7).
44. normal procedures with social fund projects. FHIS’ internal auditors w i l l regularly audit a sample o f subprojects and analyze the application o f the Operational Manual’s procedures. Finally, biannual operational audits, carried out by independent auditors, w i l l audit communities’ financial management, subproject implementation, as well as supervision and FHIS archiving.
Financial audits for the project and FHIS w i l l be carried out annually by external auditors, as per
3. Monitoring and evaluation of outcomes/results 45. Monitoring o f project indicators in the Results Framework (Annex 3) w i l l occur mainly through FHIS’s well established Management Information System (MIS) which has just been updated and improved considerably, and i s known to be o f high quality. This system wi l l be used to monitor Nuestras Rakes project implementation, including subproject execution progress. The system wi l l have the capacity to generate reports that separate out the NR subprojects from the rest o f FHIS portfolio, so that timely information w i l l be available for project monitoring. In addition, FHIS i s in the process o f revamping and adjusting i t s management reporting, based on a revised set o f key performance indicators.
46. in implementing the project, identify and address problems, and fine-tune the methodology to achieve improved project outcomes.
FHIS and the ethnic federations w i l l also conduct joint site visits and meetings to review progress
47. During the last year o f project implementation, an ex-post evaluation wi l l be carried out, comparing not only the results o f the 2002 ex-post evaluation with the new results, but adding important elements such as measuring social capital and the effectiveness o f the training and capacity building activities at the community level and communities’ linkages and relationship with local govemments.
4. Sustainability
48. request from the GOH during the Bank’s CAS consultations in 2003. The GOH’s request was, in part, motivated by demands from the ethnic representations for a continuation o f the NR Program and also by the very positive results o f the ex-post evaluation o f the program. Since the NR operation i s embedded in the Government’s implementation o f the PRSP, it i s expected that ownership w i l l continue to be high as long as there i s commitment to the PRSP process. In previous FHIS operations, the borrower’s commitment to and ownership o f the project has been rated ‘satisfactory’ (see OED evaluation). The recent FHIS IV ICR rates the implementation o f the NR component as “highly satisfactory” which was confirmed by OED.
Borrower Commitment. The proposed Bank financing o f this new operation responds to a
49. Critical Factors. Sustainability w i l l be enhanced at several levels:
0 Subprojects. In addition to labor costs, the program wi l l finance goods/materials and technical assistance to ensure that projects are technically, environmentally and economically sound. Subproject plans wi l l also be required to address long-term operations and maintenance issues.
Communities. Community members w i l l be trained in managing and implementing the entire subproject, including project accounting. They w i l l be able to purchase technical assistance as needed and receive orientation for community development planning which w i l l enable and empower them in the future to participate more effectively in local development planning
0
9
processes. Communities wi l l contribute in cash andor in-kind to each subproject equivalent to 10 percent o f the subproject value.
Indigenous Federations. The ethnic federations w i l l be trained and guided in participatory strategic planning, which wi l l provide them with a useful tool for future activities and planning exercises. They w i l l also gain experience in delivering project-related services that benefit the communities they represent.
50. supporting communities and their ethnic representations in preparing ethnic development plans that w i l l define priorities and engage them in the local development planning processes; (b) supporting training and technical assistance activities to strengthen the community-based organizations directly to plan and implement projects; and (c) financing entire subprojects, not just the unskilled labor component.
For the f i rs t time, the NR Program goes beyond the implementation o f subprojects by: (a)
5. Crit ical risks and possible controversial aspects
5 1. Ethnic federations and local governments. Nuestras Raices i s defined as a program for and run by the autochthonous peoples o f Honduras and ownership o f the program i s very high among ethnic groups. The goal o f bringing ethnic groups closer to local governments (particularly through the strategic planning process) might not be easy to achieve given the resistance o f ethnic groups and their representations to work with local governments. This historical hesitance, which i s found in many countries, i s no doubt, in part, the result o f bad experiences, including during previous phases o f the NR Program, when the municipal governments controlled and, in some cases, used the NR resources for other purposes. The ethnic federations’ hesitance to collaborating with local government may also relate to political concerns about losing their influence and legitimacy achieved through the involvement with the project. Nonetheless, the ethnic federations have agreed to share the Ethnic Development Plans they prepare with the relevant local government officials (and others). Likewise, ethnic communities w i l l share their Community Development Plans with their respective local government authorities and others. To facilitate this process, the program i s shaping the planning process and format to match that o f the municipal planning process. There i s a risk that a lack o f responsiveness on the part o f municipal governments wil l undermine the project’s goal o f increasing collaboration between the ethnic
10
communities and local government authorities. FHIS has therefore intensified its communication with local governments about the NR Program and wil l serve as a facilitator between the two groups, building on i t s exhaustive work with local governments.
The major r isks that may affect the components are:
52. within ethnic groups. The participatory planning exercise for each ethnic group i s intended to counteract such tendencies. While, in principle, the ethnic federations have accepted the idea that each ethnic group must present a unified front when dealing with the NR Program, in reality, some difficulties may arise as they work through the details of a shared Ethnic Development Plan with competing federations. Nonetheless, FHIS and the NR team have gained the trust and respect o f the federations’ leadership, which has made it possible to work with the federations to resolve conflicts diplomatically in the past and wi l l continue to serve them well in this new phase.
The proliferation of new ethnic federations. This reflects increasing divisions and controversies
53. communities was only provided for unskilled labor costs, and consequently, the subprojects financed were technically simple and easy to implement based on the knowledge o f each indigenous group. The proposed operation i s more demanding in that i t intends to create more sustainable projects, which w i l l involve the introduction of new subproject types, new technologies, and new procedures and rules (project accounting, external audits, etc.). These new, more complex subprojects w i l l not only require that communities learn how to manage cash and material resources, but also to develop and implement realistic plans for covering the recurrent operating and maintenance costs. The ethnic federations are very positive about this new approach and do not foresee any difficulties. To minimize this risk, the project w i l l clearly communicate the new approach to ethnic communities during the planning phase and invest heavily in building capacity at the community level to ensure that targeted communities have the sk i l l s required to successfully implement, operate, and maintain these more complex subprojects.
Increased complexity of subprojects. In previous phases o f the NR Program, financing to
54. by the communities and Project Implementation Committees at the community-level. This, in turn, depends upon the project’s success in developing a roster o f qualified community facilitators and technically skilled specialists who are able to work in a culturally sensitive way with ethnic communities. Identifying qualified individuals and organizations to deliver training and technical assistance i s often a challenge. To mitigate this risk, the project includes resources to finance training o f trainers as well as training o f communities, which should enhance the consistency o f training content and quality across sites.
Quality of Training. The success o f the subprojects depends on the quality o f training received
55. groups o f the one o f the poorest countries in the Latin America region. The high profile o f the NR Program in the country, and the high expectations, particularly among ethnic federations pose a risk for the Bank, particularly if conflicts among the ethnic federations or between the federations and local governments intensify. In the past, the NR Program was carried out in parallel with the existing local development process. Now, the NR Program i s designed to contribute to an increased integration o f ethnic communities and local governments. This has already raised concerns among some representatives o f ethnic federations who see this integration as a risk to their own status and the social movement that they represent.
Possible Controversial Aspects. The project supports one o f the most disadvantaged population
11
6. Credit conditions and covenants
56. There are four effectiveness conditions: a) that the Subsidiary Agreement has been entered into between the Borrower and FHIS;
b) that the Operational Manual, including an operating plan for the first year o f Project
implementation and a detailed procurement plan satisfactory to the Association, has been
adopted and put into effect and the standard forms set forth in the Operational Manual are
integrated into MIS;
c) that the financial auditors have been properly appointed; and
d) that the guidelines for using the FHIS’ contractors database have been approved by the Association.
D. APPRAISAL S U M M A R Y
1. Economic and financial analysis
57. investments are not identified or designed before effectiveness; rather, what i s appraised ex-ante i s the mechanism for delivering the outputs. Because o f the demand-driven nature o f this project, the specific social rate o f return cannot be known ex-ante. The economic analysis assesses the mechanisms and methodology in place to ensure that the subprojects implemented are part of a macro strategic development plan, which reflects the vision and needs o f each one o f the nine ethnic groups in Honduras.
58. The financial analysis shows that fiscal implications during and after implementation are expected to be manageable and in general, no recurrent cost increases are expected for the public sector. Operations and maintenance costs are expected to be borne largely by communities in accordance with the subproject maintenance plans agreed with the beneficiaries before subproject implementation (see Annex 9 for more details).
The Nuestras Raices Project includes “framework” type subprojects, in which most o f the major
2. Technical
59. respective public agencies to ensure technical coherence and compatibility. These norms have been incorporated into FHIS’s Operational Manuals and complementary guidelines. Technical appraisal for NR subprojects would follow this logic and be undertaken by the FHIS Evaluation Department, which has qualified and experienced staff. Supervision o f subproject implementation would be carried out intensively to ensure that supervisors can advise communities in a timely manner. The supervisors w i l l be trained specifically on socially, technically and culturally appropriate ways o f working with ethnic communities.
FHIS has developed technical criteria for each subproject type, based on existing norms from the
3. Fiduciary
60. Financial Management (see Annex 7 for more details). The Country Financial Accountability Assessment (CFAA) was conducted in 2003 and the GOH i s currently finalizing the proposed action plan. The diagnostic work concluded that the quality of budget reporting by decentralized and deconcentrated agencies was in need of improvement. The country specific r i sk has been assessed as high due the identified structural weaknesses in the public financial management system, in spite o f a generally sound and complete legal and governing framework for public financial management. The government has taken
12
active measures to improve transparency and governance, and once these actions are completed, it i s expected that the specific risk assessment would be mitigated.
61. i t to develop a sound financial management system to meet the Bank’s minimum requirements. The NR unit wi l l rely on the existing financial management department within FHIS to handle all aspects of financial management and reporting. T h i s department i s experienced in implementing and managing Bank-financed projects .
FHIS’s experience with previous and current IDA and other agency-financed projects has allowed
62. The project wi l l advance the majority o f financing to communities for community-led development. However, many communities have limited financial management experience. Thus, the project w i l l invest heavily in building capacity at the community-level. FHIS has the appropriate personnel, a sound Operational Manual for community-executed projects, as well as an excellent management information system to supervise community financial management carefully.
63. Procurement. Bank-financed works, goods and consulting services wi l l be procured in accordance with World Bank procedures. Project activities and procurement contracts not financed by the Bank would be procured in accordance with national regulation. The project inputs, estimated costs and procurement methods are summarized in Table A and A1 o f Annex 8.
64. procurement procedures, criteria and documentation agreed with the Bank are satisfactorily complied with, including procurement under subprojects implemented by the ethnic communities. Grant agreements between FHIS and the communities would stipulate these procurement responsibilities and procedures. FHIS i s staffed with a procurement department supported by procurement assistants and a new director i s currently in the process o f being hired.
FHIS W i l l have responsibility for overall procurement management and w i l l ensure that
65. reflect progress and changes in procurement processes. Any revisionshpdates in the Procurement Plan would be agreed with the Bank prior to i t s implementation. The procedures used for each type o f procurement would be consistent with those described in the Credit Agreement and in the PAD as well as with the stipulations o f the Operational Manual.
A Procurement Plan has been agreed for the project. The Plan wi l l be updated every six months to
66. All subprojects financed under the project w i l l be community-executed and be procured under the Bank’s “Community Participation” modality to allow for the participation o f local communities, increase the utilization o f local know-how and employ labor-intensive and other appropriate technologies, as stated in paragraph 3.15 o f the Procurement Guidelines. The grant amounts are estimated at under US$50,000 equivalent. Any subproject over US$lOO,OOO would be subject to special approval by IDA. Other procurement modalities (for works, goods, etc.) are described in Annex 8.
4. Social
67. Honduran society-they have been under-represented in political institutions and, in turn, receive less than their fair share of public resources. One of the reasons the NR Program was created was the perception that ethnic communities were not benefiting equally from public resources. Initially, the resources set aside for the NR Program were channeled through the mayors’ offices. However, the ethnic federations, who had begun to play an increasingly active role in defending the rights o f the ethnic communities, complained that this approach was not working. In response, FHIS, in agreement with the Bank, began channeling project funds directly to ethnic communities during the last two FHIS projects. The proposed operation w i l l continue to channel funds directly to the ethnic communities, but in parallel it w i l l seek to reconstruct the links between the ethnic communities and local governments in the hopes
The ethnic populations o f Honduras have traditionally been marginalized from mainstream
13
that, in the future, these communities wi l l have the ski l ls and the authority to negotiate their fair share in the municipal planning process.
68. Some o f the most important social issues are:
Differential access to project benefits. The NR project resources are earmarked for Honduras’ ethnic communities, which suffer from much higher levels o f poverty than non- ethnic communities, due to centuries o f social and economic marginalization. Adequacy of Targeting and Delivery Mechanisms. Resources wil l be allocated among the ethnic groups based upon the 2001 census figures. Very small ethnic groups w i l l receive slightly more than their share to ensure that they have enough funding to implement at least a few subprojects. Funds wi l l be allocated to ethnic communities within an ethnic group, through a democratic subproject prioritization process described in detail in Annex 4.
9
69. Stakeholder Participation. The NR Program has been characterized by a highly participatory approach during al l of its phases and for its respect for cultural heritage. Decisions on all aspects o f the program were made jointly among representations o f the nine ethnic groups, FHIS, and the Bank. During the project preparation process, FHIS and the Bank organized seven planning meetings with the ethnic federations to ensure active involvement in the design o f the project. These sessions helped identify the modifications required in this new phase and establish the project objectives and components, the Logframe, and the Operating Manual.
70. participation o f men and women differs from one ethnic group to another. Since the overall objective o f the NR Program i s to increase participation o f the ethnic groups and their access to resources, i t i s important to incorporate gender equity into the approach. Since i t s inception, the NR Program has had a gender focus. Results from the ex-post evaluation showed 43 percent o f women’s participation in the general coverage o f beneficiarie~.~ Building on prior gender practice in the program and in consultation with the ethnic groups, the NR team developed a gender strategy6 (see Annex 10). NR training programs, methodologies, and materials systematically incorporate gender to ensure that i t i s addressed throughout the project cycle. The Operational Manual determines the following measures to ensure equal participation o f men and women throughout the project cycle: (i) A t least 40 percent o f the participants in the community assembly that approves the community development plan must be women; (ii) at least 25 percent o f subprojects must cater directly to women; (iii) the project execution committee must include at least 40 percent women, (iv) 50 percent o f payments for labor must be given to women; (v) equal “wages” must be paid for men and women; and (vi) supervisors must interview at least 50 percent women when they visit a project. Equally, the monitoring and evaluation system for the project includes gender-specific indicators to
The gender4 roles and responsibilities in ethnic groups in Honduras are culturally specific and the
While sex refers to the biological state o f being male or female, gender refers to the social state o f being a man or woman. Gender i s a variable - like class, ethnicity, nationality, and religion - used to “identify and measure differences in the roles o f men and women, the activities they undertake, the responsibilities they have, the opportunities and constraints they face, and ultimately, their well-being. Gender is dynamic because men’s and women’s roles - as dictated by changing social and cultural norms and values - also vary over time’. Moser, C., Tomqvist, A., van Bronkhorst, B.1998. Mainstreaming Gender and DeveloDment in the World Bank. ProQress and Recommendations. T h e World Bank. ESSD, Washington D.C.
ESA Consultores, “Evaluacibn del Programa “Nuestras Rakes” -Etapa IV (January 2003). The gender strategy was developed in collaboration with PROGENIAL, the “Program for Gender Mainstreaming
in World Bank-financed Projects in Central America” which was created by the World Bank‘s Latin America region in 2000.
14
document changes over time. Finally, the NR team in FHIS w i l l continue to include a gender specialist to ensure that gender i s implemented throughout the project cycle.
7 1. success o f the project in integrating ethnic communities into the mainstream Honduran society (see Annex 3). FHIS Supervisors w i l l collect this data on an ongoing basis during their project monitoring activities. The final impact evaluation wi l l also review this data for a randomly selected sample o f beneficiary communities.
Monitoring and Evaluation. The project wi l l monitor the achievement o f targets to measure the
5. Environment
72. ethnic communities’ knowledge about the application o f environmental guidelines and regulations (forestry, water and sanitation, etc.), and address environmental issues during project implementation through mitigation and risk management measures agreed with and carried out by beneficiaries. In the planned participatory development planning process (Component l), environmental aspects w i l l carefully be taken into account and awareness on environmental issues wi l l be raised in ethnic communities.
The Nuestras Raices Project w i l l promote environmental awareness among beneficiaries, increase
6. Safeguard policies
Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [ I [ I Pest Management (OP 4.09) [ I [ I Cultural Property (OPN 1 I .03, being revised as OP 4.1 1) E l [ I Involuntary Resettlement (OPBP 4.12) [ I [ I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [XI [ I Forests (OP/BP 4.36) [ I [ I Safety of Dams (OP/BP 4.37) [ I [ I Projects in Disputed Areas (OP/BP/GP 7.60)* [ I [ I Projects on International Waterways (OP/BP/GP 7.50) [ I [ I
73. The project i s classified as Category B for Environmental Assessment since small-scale infrastructure subprojects in sensitive areas w i l l need to be environmentally assessed. The safeguard screening i s Sf since the project i s a social fund and involves CDD. The project, through i t s Operational Manual, has made appropriate provisions to address the environmental aspects o f project implementation. The project cycle includes all the necessary provisions to ensure that subprojects are carried out in an environmentally sound way. Training modules designed to support communities and other involved actors (supervisors, community facilitators, etc.) include environmental aspects. FHIS has presented an Environmental Assessment for the project. The NR unit i s working with the FHIS’s environmental unit to ensure that FHIS’s environmental standards are applied to the NR Project.
74. project i tself i s considered to be an Indigenous Peoples Development Plan (JPDP) consistent with the O.D. 4.20 (or the revised O.D. 4.10).
The NR Project i s targeted entirely to indigenous and Afro-Honduran peoples, therefore the
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas
15
7. Policy Exceptions and Readiness
75. management and procurement arrangements are in place; (b) the NR Unit i s in place; (c) counterpart funds are in the budget for this fiscal year; (d) the Procurement Plan has been prepared and reviewed by the Bank; (e) all disclosure requirements are met; and (f) monitoring and evaluation systems are in place and have been reviewed by the Bank.
The proposed operation i s ready for implementation based on the following criteria: (a) financial
,-
A. Jane Armitage
Team Leader Country Manager
16
Annex 1: Country and Sector o r Program Background
Ethnic Group Population 2001 Census Data
Lenca 279,507
ToluDan 9.617
H O N D U R A S : Nuestras Raices Program
Percent of Total Ethnic Population
62
2
1. o f income disparity. With a per capita GNI o f US$920 in 2002, the country i s the third poorest in Latin America. Given i t s high income inequality (the national Gini coefficient i s 0.6), poverty i s widespread. Nearly two-thirds o f the population i s poor and nearly half i s extremely poor.7 To be able to approach the Millennium Development Goal (MDG) of cutting extreme poverty in half by 2015, Honduras w i l l have to grow substantially faster than i t s historic growth performance, which has been among the least dynamic in Latin and Central America. Growth wi l l not be enough given the unequal distribution of assets in the country. More equitable and inclusive growth wi l l be necessary to reduce extreme poverty.
Honduras i s one o f the poorest countries in Latin America and i s characterized by a high degree
Pech
Chorti
Garifuna
English-speaking Black
Miskito
Tawahka
3,848 1
34,453 8
46,448 10
12,370 3
5 1,607 11
2,463 1
’ The “extremely poor” are those l iving below the extreme poverty line, which i s the cost o f a food basket designed to meet basic nutritional needs. According to the Honduras CAS (pg. 4), “All Poor” in 2002 represented 63.3 percent of Honduran households and “extremely poor” 45.2 percent o f households. ’ ESA Consultores - Evaluaci6n de Proyecto Nuestras Raices IV, Tegucigalpa, 2002.
17
Ethnic Group
Nahoas
TOTAL
18
Population 2001 Census Data Percent of Total Ethnic Population
* * 440,313
equitable access to opportunities. The proposed Nuestras Raices Project w i l l provide participating communities with the opportunity to prioritize cost-effective projects likely to solve the most urgent needs affecting the above-mentioned groups. Moreover, the nine ethnic groups w i l l have the opportunity to select cross-cutting (horizontal) projects that respond to cultural, patrimonial, legal, environmental, or gender problems affecting the entire ethnicity.
9. In order to guarantee the sustainability o f the strategy (pillar 6), the GOH stresses the need to decentralize and strengthen local development, such i s with the “Decentralization and Local Development Program (PRODDEL).” In the same spirit, NR decentralizes project management to the Project Implementing Committees selected by the beneficiary community to represent it in the administration and management o f projects at the local level. The participation o f ethnic communities in the local development planning process wi l l further train communities to manage and implement their own projects thus improving their l iving conditions while preserving their identity. To accomplish this objective, the proposed project wi l l seek opportunities to improve communications and restore trust between federations and local governments, and between ethnic communities and municipal authorities. Since 1997, NR i s the program that has created the platform o f cooperation between the ethnic federations and the government o f Honduras. Other projects and donors follow the same successful strategy.
10. participatory planning, managing and monitoring projects. Nuestras Raices’ substantial contribution to reverse that situation w i l l be the capacity building o f 2,000 ethnic communities to carry out participatory planning, 600-700 o f which w i l l be implementing their own projects with the assistance o f a Facilitator, a social auditor, and contractors hired by the community itself.
1 1. The Nuestras Raices Project supports the higher-level PRSP objective o f enhancing investment in human and social capital. The backbone o f Nuestras Raices i s the formation o f human and social capital to promote self-development and cultural identity. The project w i l l seek to strengthen the relationship of ethnic groups with local governments. It w i l l promote synergies with other Ministries, i.e. Education, Health, Tourism, Interior and Justice, to capitalize on joint efforts to achieve CAS objectives. Finally, an MIS system, which builds on the M&E system used for the PRSP, w i l l be implemented as a participatory tool for financial and social auditing o f the project.
12. The PRSP comments on the lack o f income-generating opportunities among ethnic peoples. To contribute to solve that problem, an important benefit o f the project i s the creation o f local temporary employment opportunities for the participating communities. The Project Implementation Committee selected by the community w i l l be responsible for managing the subproject and for contracting technical assistance as needed. An open project menu with a standard negative l i s t w i l l provide ample opportunities to satisfy their priority needs. I t i s expected that this w i l l contribute to reduce the gap between urban and rural poverty, and increase equity between those areas. In the past, as the CAS points out, income inequality between urban and rural areas increased by 3 percentage points nationally from 1991 to 1999.
13. political, cultural and socio-economic development o f ethnic groups. As part o f the Government’s strategy to address the persistent problems affecting the indigenous and Afro-Honduran peoples, it has created the Office o f the Special Prosecution for Ethnic and Cultural Heritage (Fiscalia de Etnias), and the National Ethnic Council (Consejo Nacional Indigena or CNI). The latter would define a national agenda to facilitate coordination o f programs and projects benefiting ethnic communities, and bringing national legislation in line with the L O Convention 169 regarding indigenous people. The Nuestras Raices Project wi l l also coordinate an institutional strengthening plan for the ethnic representations and project collaborators with the Ministry o f Interior and Justice. Likewise, as in previous phases, it w i l l continue to coordinate closely with the Fiscalia de Etnias.
The PRSP refers to the limited capacity o f local governments and communities for carrying out
The Ministry o f Interior and Justice i s responsible for coordinating policies and projects related to
19
Contribution to CAS Objectives
14. the October 2001 PRSP. The CAS objectives supported by the project are (i) strengthening social protection for specific vulnerable groups, (ii) reducing rural poverty, and (iii) enhancing investment in human capital. The CAS states that a core strategic objective o f pillar 5 o f the PRSP i s “to support Afro- Honduran and indigenous groups to develop their communities, in part through the Bank-supported “Nuestras Raices” program.”’ T h i s objective i s entirely consistent with the overall CAS objective o f poverty reduction through addressing the needs o f the ethnic communities, one o f the most vulnerable groups as identified in the PRSP.
15. As in previous NR Programs, one o f the main contributions o f the new project w i l l be the enhanced investment in physical, social and human capital o f ethnic communities and their representations. With the full participation o f men, women, elders and youths, the Nuestras Rakes Project w i l l facilitate the establishment o f approximately 2,000 community development plans which w i l l be consolidated into regional plans to be merged finally into nine culturally-appropriate Strategic Ethnic Development Plans. The latter w i l l include cross-cutting issues (education, health, environment, land tenure, gender) affecting the entire ethnic group, as well as individual community development plans.
16. According to the CAS, female-headed households have per capita incomes that are 15 to 30 percent lower than male-headed households, suggesting lower human capital and asset ownership of women. The gender strategy o f NR wi l l continue to promote equal opportunities for women and men through contractual services, training opportunities, and the selection o f projects benefiting the most vulnerable segments o f ethnic communities. Rationale for Bank Involvement
17. Credit to continue financing the Nuestras Rakes Program. Given the proven success o f the program and i t s compatibility with the country’s development goals, the Bank agreed to finance the proposed US$lO.O mill ion operation as a self-standing project.
18. Program to address the specific needs o f ethnic communities. In 1997, the Bank was invited to support the program. Until 1999, the focus o f NR was on community-based construction and maintenance o f rural access roads, pathways, and navigation canals. During i t s most recent phase (2000-2002), the NR Program invested US$13.6 mill ion under the FHIS V project for over 4,650 small-scale projects benefiting roughly 125,500 families l iving in Honduras’ ethnic communities. Projects during this phase included the construction and maintenance o f roads, social infrastructure, housing rehabilitation aimed at the eradication o f the ‘chagas’ disease, potable water, and, in a few cases, productive and cultural activities and tourism. A considerable portion o f the credit funds was invested in the training o f community facilitators, FHIS and ethnic liaisons, institutional strengthening o f the ethnic federations, toolkits for the communities, and monitoring and Cvaluation activities.
19. worked through the ethnic federations to organize groups at the community level. Each group identified a community project it wished to implement based on i t s priorities. Most o f the projects selected were labor intensive, since the program only provided funds to cover labor costs. Each member o f the group was paid for 15 days o f labor, part o f which was used to strengthen an existing community-based savings and credit groups (caju rural) or to open a new one. The training and technical assistance delivered to the community groups were designed to stimulate the formation o f cajas rurales. Approximately 3,000 cajas were created and/or strengthened with previous Nuestras Raices Programs implemented by FHIS since 1995.
The project i s consistent with the 2003 Country Assistance Strategy (CAS) objectives, based on
During the CAS consultations in 2003, the GOH expressed interest in receiving a World Bank
Since 1995, the Honduras Social Investment Fund (FHIS) has implemented the Nuestras Raices
The Nuestras Raices’ methodology in previous phases was relatively simple. The program
Honduras: Country Assistance Strategy. Strengthening Social Protection for Specific Groups. Pg. 17.
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20. that the program was very successful in meeting its objectives (for more details, see Annex 12). The proposed project builds on the results and recommendations of this evaluation, as well as on the experience with the previous programs. The operation intends to take N R from a social assistance approach (cash payments for work) to a development orientation. Changes to the former concept include:
The ex-post evaluation of the NR Program, conducted by ESA Consultores in 2002, concluded
the introduction of a participatory planning process with each ethnic group, which w i l l feed into the municipal planning process presently underway in the country;
the financing o f more complex subprojects (CDD) to be executed by the communities;
the introduction of a community-based accounting system for each subproject; and
strengthening ethnic federations in a new role as service providers.
9
9
. These changes are designed to achieve greater sustainability of the investments on several levels:
Subprojects: In addition to labor costs, the program wi l l finance gooddmaterials and technical assistance to ensure that projects are technically, environmentally and economically sound.
Communities: Community members w i l l be trained to manage and implement the entire project, including project accounting. They w i l l be able to purchase technical assistance as needed and receive orientation on strategic community planning, which w i l l enable and empower them in the future to participate more effectively in local development planning processes.
Indigenous Federations: The ethnic federations w i l l be trained and guided in participatory strategic planning, which wil l provide them with a useful tool for future activities and planning exercises.
21.
.
. 22. and their peoples through previous FHIS Projects exceeds that o f other international agencies and i s key to the successful implementation o f the program. Basic rules between FHIS, the Bank and the ethnic federations on participation in decision-making, transparency and social auditing are well established. This strong foundation and trust among all parties allows the Bank to strengthen-through new design features-the democratic relationship between the federations and their respective communities. Finally, due to the Bank’s knowledge of and FHIS’ involvement with local governments, i t was possible to establish, as part of the new NR design, a link between local governments and ethnic federations, which historically have been competing forces.
The Bank‘s long-term relationship with FHIS and the indigenous and Afro-Honduran federations
21
Annex 2: M a j o r Related Projects Financed by the Bank a n d o r other Agencies
HONDURAS: Nuestras Raices Program
DO/IP Ratings ICR
1. socio-economic development of indigenous and Afro-Honduran communities. Other Bank projects address complementary areas, such as land management and administration, health reform, road construction and improvement, sustainable tourism, community-based education, etc. The Nuestras Raices project i s part o f an agenda that also includes projects such as:
The Nuestras Raices Project i s one of several initiatives supported by the Bank to improve the
Sector Issue
Continuation o f the successful FHIS Program,
Related Projects sup Project Name
Fourth Social Investment Fund Project
DO-S IP-S
DO-S IP-s
Community-based Education Project (34970-HO)
Fifth Social Investment Fund
Health System Reform Project
Land Administration Program (PO 55991) Mesoamerican Barrier Reef System
Regional Development o f Cop611 Valley
Road Reconstruction and Improvement
Rural Land Management Project
(34430-HO)
(36400-HO)
(Mult-27739)
(37640-HO)
(34320-HO)
- P U R (02940-HO)
Sustainable Coastal Tourism Project
Trade Facilitation and Productivity
(3558 1-HO)
Sustainable tourism development based on the cultural and natural patrimony o f the Copan Valley and surroundings through the Honduras Institute o f Tourism. Restore roads damaged by Hurricane Mitch.
orted by the World Bank G
DO-S IP-S
US$41.5 M
Demarcation, cadastre, census o f territories. Benefited indigenous territories belonging to 23 Tolupan tribes. Training on land rights done for Pech in Colon and Olancho.
IDA
US$12.22 M GEF
~
US$32.31 M I IDA
Rating S, confir med by OED
with supplemental financing for addressing needs from Hurricane Mitch
DO-S IP-s
DO-S IP-s
DO-S IP-s
Improve quality o f preschool and basic education in rural areas. Intercultural Bilingual Education. Continue collaboration o f FHIS and PRONEEAAH-EIB at Ministrv o f Education. Increase access to small-scale social and economic infrastructure. Municipal decentralization/ CDD. Reform o f Health System. Component 2 provides opportunity to submit health proposals.
provide users with accurate information on arcels and land administration services.
DO-S IP-s
DO-S IP-s
Develop and manage sustainable coastal tourism along North Coast mainland and offshore Bay islands through learningiparticipatory process. Increase productivity o f Honduran private sector comuetitiveness.
22
Related projects by other international agencies include:
2. The Inter-American Development Bank (IDB). In the past three years, IDB has funded interventions as part o f the Poverty Reduction Strategy that are complementary to Nuestras Raices. In 2003, the IDB-funded Nuestras Raices Micro-Enterprises Project was successfully implemented by FHIS. The IDB-funded “Programa de Apoyo para Pueblos Indigenas y Negros” (PAPIN, US$1.5 mill ion IDB, US$1.3 mill ion GOH, US$225,000 Canadian funds) i s being implemented through the Ministry o f the Interior and Justice.
3. Pueblos Indigenas y Negros” (REPEPIN). An important objective o f this project i s to support the Indigenous National Council whose role i s to coordinate all activities pertaining to indigenous and Afro- Honduran peoples in the country. The Ministry of the Interior and Justice i s the government counterpart and ethnic federations are participating in the preparation o f the operation. The project w i l l consist of two phases, one for US$lO.O million (2005-2007), and a possible second phase o f US$20.0 mill ion (2008- 2010). Three main components are: (1) Institutional Strengthening o f indigenous organizations (local, regional and national level) and related Government Agencies; (2) implementation of projects designed to increase productivity and family income; (3) promotion o f human development through interventions in health, education, and communications. The components o f this project complement and enhance the Nuestras Raices Project and both task teams are coordinating project preparation to achieve optimal synergies.
In addition, the IDB i s currently preparing the “Programa de ReducciQ de la Pobreza Enfocada a
23
Annex 3: Results Framework and Monitoring
Honduran groups have increased participation in the holistic development processes o f their communities and their nation.
Intermediate Results One per Component
Participatory Development Planning by Ethnic Groups Each o f the nine indigenous 3r Afro-Honduran groups has jeveloped i t s own Strategic Plan.
HONDURAS: Nuestras Rakes Program
Results Framework Outcome Indicators
At least 400 Ethnic Community Development Plans wi l l be incorporated into Municipal Development Plans.
A t least 5 institutions finance part o f the nine Strategic Ethnic Development Plans.
At least 50 municipalities w i l l finance subprojects included in the Community Development Plans prepared by the indigenous and Afro-Honduran communities.
At least 40 percent o f the project's beneficiaries are women.
At least 70 percent o f the subprojects financed wi l l have sustainable maintenance systems in operation.
At least 70 percent o f subprojects are implemented in accordance with the established parameters o f time, quality and budget.
Each o f the 9 indigenous and Afro-Honduran peoples w i l l have developed and implemented at least two cross-cutting subprojects that serve to strengthen the ethnic people as a whole (i.e. cultural, linguistic, historical).
nic communities w i l l finalize development plans for their villages, which will, in turn, be incorporated in one o f nine Ethnic Development Plans.
9 Strategic Development Plans developed and being implemented.
Use of Outcome Information If this target i s not achieved, i t wi l l indicate that the municipal governments continue to pay little attention to ethnic communities, not giving them equal access to public resources. To minimize this risk, the F'HIS/NR team wi l l need to encourage dialogue between the mayors o f the participating municipalities, the relevant sectoral ministries and the representations o f the ethnic groups to promote a more cooperative relationship.
If not achieved within six months o f subproject completion, it w i l l indicate that there were serious flaws in the subproject design and process. Furthermore, i t w i l l suggest the need to redesign the training module on subproject operations and maintenance and improve the quality o f the community facilitators, either by providing additional training or by replacing them with consultants with a higher level o f skills and experience. To minimize this risk, FHIS w i l l ensure that the training program for the subproject formulators and community facilitators puts emphasis on the need to anticipate and plan for the recurrent costs of operations and maintenance.
Use of Results Monitoring
If this target i s not fulfilled, i t w i l l indicate that there were significant weaknesses in the training and selection o f strategic planning facilitators and in the leadership provided by the organizations contracted to coordinate the strategic planning process. To minimize this risk, FHIS and the federations w i l l develop a rigorous training program with high standards required for facilitator certification and supervise the planning process closely at each phase o f the planning process.
24
Grants for Subprojects Prioritized subprojects have been successfully implemented and are being managed and maintained successfully benefiting poor communities with a significant population of indigenous and Afro- Honduran people.
Capacity Building and Institutional Strengthening Success in achieving the outcomes and indicators for the project as a whole and for aach o f the other two :omponents wi l l indicate that NR has successfully implemented this component.
A t least 40 percent o f the participants i n the community assembly, approving the plan, are women. A t least 500 community subprojects have been successfully completed by ethnic communities.
A t least 80 percent o f the communities report that the subproject financed by the project was their top priority.
A t least 70 percent o f the subprojects are benefiting communities in the bottom f i f th o f the poverty ranking scale.
At least, 80 percent o f the subprojects included in the audit sample show no accounting problems.
At least 20 percent o f community residents have participated in two or more o f the nine community training modules.
At least 25 percent o f subproject 2ater directly to women.
The Project Implementation Committees include at least 40 percent women.
At least 50 percent o f payments For labor are made to women. 4t least 50 percent o f the Ieneficiaries have been trained in Zommunity development Ilanning, at least 40 percent o f :rained beneficiaries are women.
i t least 50 percent o f the external iupervisors contracted by FHIS to iupervise these subprojects ,eceive an evaluation rating o f 50 iercent or more, by men and vomen.
If significant progress towards these targets has not been made within the first eighteen months o f the project, i t would suggest the need to make significant revisions in strategic planning process outlined in the PEC Manual before it i s applied in additional communities.
If the first semi-annual audit shows that this target i s not being met, the sections o f the Operational Manual describing funds and materials management at the community level needs to be reviewed and strengthened. These changes need to be incorporated into the training materials for the community facilitators, who should be retrained and, in some cases, replaced by consultants with a better understanding o f accounting.
If this indicator i s not achieved within the first year o f the project, i t w i l l suggest that FHIS and the Ethnic Representations have fallen in the trap o f focusing on the production o f subprojects, rather than the more important goal o f building human capital. To minimize this risk, the NR project cycle has incorporated key capacity-building targets that must be met in order to move to the stage within the M I S system.
If these targets are not fulfilled within the first year o f the project, i t wi l l indicate that there were significant weaknesses in the training and selection o f the facilitators, technical assistance providers and the supervisors. To minimize this risk, FHIS and the federations w i l l develop a rigorous training program for
25
~
A t least 60 percent o f the facilitators contracted by the communities receive an evaluation rating o f 80 percent or more, by men and women.
A t least 60 percent o f the technical assistance providers contracted by the communities receive an evaluation rating o f 80 percent or more.
The NR project cycle has been incorporated in FHIS’ overall MIS.
each group with high standards required for participant certification and supervise them closely as they carry out their responsibilities.
This wi l l be required o f FHIS as a condition o f effectiveness.
26
At least 400 Ethnic Community Development Plans will be incorporated into Municipal Development Plans;
At least 5 institutions finance part of the nine Strategic Ethnic Development Plans.
At least 50 municipalities will finance subprojects included in the Community Development Plans prepared by the indigenous and Afro- Honduran communities. At least 40 percent of the project’s beneficiaries are women
At least 70 percent of the subprojects financed will have sustainable maintenance systems in operation At least 70 percent of subprojects are implemented in accordance with the Established parameters of time, quality and budget. Each of the 9 indigenous and Afro- Honduran peoples w i l l have developed md implemented at least two cross- xtting subprojects .hat serve to strengthen the ethnic Jeople as a whole j.e. cultural,
A
Baseline
0 Ethnic Community Development Plans incorporated into Municipal Development Plans 1 (FHIS) institution financing the strategic plans.
0 Community subprojects included in Community Development Plans financed by municipalities
41 percent of project beneficiaries are women (earlier phases of NR)
0% of subprojects financed are sustainable
0% of subprojects financed are implemented
0 cross-cutting subprojects
.angr T
YR2
150 -
- 2
- 20
> 40%
- 50%
- 50%
ents
YR3
150
a -
- 2
- 20
9 0 %
- 60%
- 60%
r res1 es YR4
100
-
-
- 1
- 10
> 40%
- 70%
- 70%
ts monitoring Dah
Frequency and Reports
Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank
Planning and Evaluation Unit
Federations MIS FHIS - Nuestras Raices unit
FHIS MIS FHIS - Planning and Evaluation Unit
FHIS MIS and F H I S - Final ex-post Planning and supervision site Evaluation Unit visit report
FHIS MIS and FHIS - Final ex-post Planning and supervision site Evaluation Unit visit report
final ex-post Planning and
visit report
27
Outcome
Component #1:
-1500 ethnic communities will prepare community development plans for their villages, which will, in turn, be incorporated in one of nine Ethnic Development Plans;
-9 Strategic Plans developed and being implemented.
Component #2:
-At least 20 percent of community residents have participated in two or more of the nine community training modules.
- At least 600 community subprojects have been successfully completed by ethnic communities.
- At least 80 percent of the communities report that the sub- project financed by the project was their top priority.
- At least 70 percent o f the subprojects are benefiting communities in the bottom fifth of the poverty ranking scale.
-At least, 80 percent of the subprojects included in the audit
Baseline
0 community development plans prepared.
0 Strategic plans developed
0 %
0 community subprojects completed
NA
NA
NA
- T
0%
200
0
0
60%
- -
500
3
10%
200
80%
0
60%
- \
-
0
0
20%
200
80%
70%
80%
Data Frequency and
Reports
Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi-Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank
Semi- Annual Progress Reports submitted by FHIS to World Bank
Ex-post Evaluation Report
Semi- Annus Audit Reports
MIS
Receipt of Strategic Pian from each Ethnic Representation
Workshop Facilitator Reports for each communitylMIS
MIS
Nuestras Raices Team - Subproject Completion Checklist
Ex-post Evaluation Beneficiary Survey Results
Subproject Audit Results
ting Responsibilities Data Collection
FHIS - Planning and Evaluation Unit
Nuestras Raices Team
Workshop Facilitators and FHIS - Unidad de Planificacion y Evaluacion Tecnica
FHIS - Unidad de Planificacion y Evaluacion Tecnica
Nuestras Raices Team
Consulting firm contracted to conduct the ex- post evaluation
Firm contracted to conduct audit
28
Outcome Indicators:
sample show no accounting problems.
-At least 25 percent of subprojects enter directly to women.
-The Project Implementation committee include at least 40 percent women.
-At least 50 percent of payments for labor are made to women. Component #3: - At least 50 percent of the extemal supervisors contracted by FHIS to supervise these subprojects receive an evaluation rating of 50 percent or more, from men and women
- At least 60 % of the facilitators contracted by the communities receive an evaluation rating of 80 percent or more, from men and women.
- At least 60 % of the technical assistance providers contracted by communities receive evaluation rating of 80 % or more, from men and women.
Baseline
NA
NA
NA
NA
NA
NA
T ;et Va YR2
25%
40%
50%
- 40%
50%
50%
YR3 - 25%
40%
50%
- 40%
55%
50%
es YR4 - 25%
40%
50%
- 50%
60%
60%
Data
Ex-post Evaluation Report
Ex-post Evaluation Report
Ex-post Evaluation Report
Annual Supervisor Evaluations (by FHIS or by communities?)
Annual evaluations of Community Facilitators
Annual evaluations of Technical Assistance Providers
:ollection and Rep
Ex-post Evaluation Beneficiary Survey Results
Evaluation Beneficiary Survey Results
Ex-post
Ex-post Evaluation Beneficiary Survey Results
Supervisor Evaluation Results, MIS
Community Facilitator Evaluation Results, M I S
Technical Assistance Provider Evaluation Results, MIS
ting Responsibilities Data Collection
Consulting firm contracted to conduct the ex- post evaluation Consulting firm contracted to conduct the ex- post evaluation
Consulting firm contracted to conduct the ex- post evaluation
FHIS Personnel Dept.
FHIS Personnel Dept.
FHIS Personnel Dept.
29
Annex 4: Detailed Project Description
HONDURAS: Nuestras Rakes Program
1. Project Development and Key Indicators
1. The objective of the Nuestras Rakes Project i s that indigenous and Afro-Honduran groups have increased participation in the integrated development processes of their communities and their nation. This objective wi l l be achieved by strengthening the communities’ local capacity to build sustainable organizations, development projects and cultural identity. To this end, the project w i l l actively promote interaction between the ethnic communities, local governments and central government agencies and programs. During the three-year project, Nuestras Raices wi l l seek to strengthen the participation and influence of Honduras’ ethnic groups in local development processes. The project wi l l have three components, each described in more detail below:
Project Component 1. Participatory Development Planning by Ethnic Group - US$0.49 million
2. This component w i l l support a process o f participatory development planning among the indigenous and Afro-Honduran communities and the federations in order to: (a) train and prepare ethnic communities and their ethnic representations to actively participate in the local development planning process; (b) identify subprojects to be financed under Nuestras Raices and other programs; and (c) encourage ethnic federations to work more closely with municipalities to leverage funds.
3. described below. The project w i l l finance the cost of a facilitator in each community to help it to conduct a participatory needs assessment and planning process designed to identify and analyze problems, recommend solutions and prioritize activities and projects that could be financed under the NR project or other funding options. The community development plans w i l l include a history o f the community, a mapping o f socio-economic resources-past, present, and future-an inventory o f the community’s social capital, and a l i s t o f prioritized problems and suggested solutions. The “ethnic profiles” developed in 2001 under a Japanese Grant (“Indigenous Peoples Development Project”) and other existing community development plans (if available) w i l l serve as a starting point for this process.
Approximately 2,000 community development plans wi l l be generated, following the process
4. subprojects w i l l be prioritized in micro-regional meetings involving 20 communities each. Subprojects prioritized by the micro-regions wi l l be further screened at the level of each ethnic group. In both cases, the selection criteria used in the prioritization process led by a trained facilitator w i l l include, inter alia, :
Once the communities have completed their participatory needs assessment and planning process,
Poverty level (Poorer i s better) Sustainability (Longer i s better) Gender (More women i s better) Protection o f the Environment (Higher i s better) Number of sectors favored (Higher i s better) Percent of Community Households that are Direct Beneficiaries (Higher i s better) Investment cost per capita (Lower i s better) Length of Project Implementation Period (Shorter i s better) Community Contribution (Higher i s better) Distance from municipal center (Farther i s better)
30
5. member communities as well as several “horizontal” subprojects that support activities beneficial to the ethnic people as a whole. Such projects wi l l serve to strengthen social capital, to preserve linguistic and cultural heritage (organization o f fairs and cultural events, construction o f museums to house ethnic artifacts, etc.) and to address land rights issues and other issues o f shared interest to the group. Each ethnic group may use up to ten percent of i t s fund allocation to support these subprojects, which wi l l be identified in a meeting involving representatives o f each micro-region.
Each Ethnic Development Plan wi l l include a prioritized l i s t o f subprojects identified by their
6. integral community development approach instead o f a “project identification” focus. I t w i l l produce an important and useful instrument for ethnic communities to become actively involved in the country’s municipal development planning efforts. The project w i l l strongly encourage each ethnic group to share both its strategic and community development plan with local governments and to work with local governments so that their subprojects be integrated into the relevant Municipal Development Plans. In addition, i t w i l l serve communities structure and communicate their needs with other potential financiers (line ministries, local governments, NGOs, other donors, etc.). Finally, these plans w i l l enable communities to monitor their development progress and provide an opportunity to continue the discussion about their development priorities.
The methodology for the strategic planning process has been carefully crafted and employs an
7. for the ethnic communities belonging to their ethnic group. For eight o f the nine ethnic groups, NR wi l l contract directly with the ethnic group’s technical unit (UTEFIN) to lead the strategic planning process for i t s member communities. Due to the large number of Lenca communities, it w i l l be necessary to split up the planning processes into different regions, and thus use competitive bidding to select the provider best able to lead the strategic planning process in each region. The planning process w i l l be supervised by the FHISLNR team as well as external supervisors who w i l l receive specialized training to carry out this duty.
The ethnic representations wi l l be contracted and trained to guide the strategic planning process
8. Each o f the nine ethnic groups wi l l then prepare a strategic development plan outlining the vision, mission, and strategic goals for i t s membership over a 3 to 5 year period. These plans w i l l be developed based on a culturally adapted methodology, which i s used by Honduran local governments to develop Strategic Municipal Development Plans (PEDM). The strategic planning process starts at the community level. The results o f this exercise are then elevated to the micro-regional level and finally consolidated into a Strategic Ethnic Development Plan by each of the 9 ethnic peoples.
Project Component 2. Grants for Subprojects US$13.8 million
9. community-executed subprojects. These resources would be allocated proportionately among the nine ethnic groups, based upon the 2001 census data, while guaranteeing a minimum allocation for the five smallest ethnic groups and adjusting for the high cost o f l iv ing in the Moskitia and Bay Islands. The allocations appearing in the table below were established in discussion with the representatives of each ethnic group during the project planning workshop in Comayagua.
Allocation of Funds among Ethnic Groups. An estimated $13.8 mill ion w i l l be invested in
31
Table: Honduras' Ethnic Populations by Group"
Ethnic Group Population Percent of Total 2001 Census Ethnic
Data Population
Lenca 279,507 62 Tolupan 9,617 2 Pech 3,848 1 Chorti 34,453 8
Subproject Percent of Allocation Total
Subproject Budget
$7,574,400 55 $30 1,100 2 $275,400 2 $893,500 7
~
Garifma**
Miskito** Tawahka ** Nahoas TOTAL
English-speaking Black**
*The Nahoas were identified as mestizos by the census, since they have lost their language, and now only speak Spanish. According to FHIS calculations, the Nahoas are approximately 9,500 representing approximately 2% o f Honduras' total ethnic population. ** The English-speaking Black communities w i l l receive a cost o f l iv ing adjustment o f 68 percent; the Tawahka, Pech, Miskito, and 30 percent o f the Garifuna communities w i l l receive a cost o f l iv ing adjustment of 54 percent. *** $13.3 from IDA and the balance from Government Counterpart funding.
46,448 10 $1,572,600 12 12,370 3 $455,600 3 5 1,607 11 $1.983,200 14 2,463 1 $44 1,600 3
9,254* 2 $302,600 2 449,567 100 $13,800,000*** 100
10. Project Formulation. Upon completion of the subproject prioritization process, communities whose subproject i s among those selected for implementation wi l l contract a consultant to assist them with project formulation. These consultants must be selected from a l i s t of consultants trained and certified by FHIS. Subprojects wi l l only be financed if they have been prioritized through a participatory development planning exercise.
11. Communities wi l l be expected to finance, through cash or in-kind contributions, at least 10 percent o f their subproject's value. Community contributions w i l l be equivalent to at least $1.380,000. N o project minimum or maximum value w i l l be established. Nonetheless, i t i s expected that the average project value w i l l be approximately $20,000,25 percent less than the FHIS average. Any type o f community subproject (infrastructure, social assistance, productive, cultural heritage, etc.) w i l l be eligible for financing, as long as it i s not included on the negative menu outlined in the Operational Manual.
12. Committee (PIC), whether it i s the existing Tribal Council or Committee o f Elders or a newly-formed group created for subproject execution. In addition, each community w i l l select an Oversight Committee that wi l l help guarantee the transparent management o f subproject funds. Each committee w i l l have a leadership that i s elected or, in those cases where the group already exists, confirmed, by the entire community. FHIS wi l l not require that project committees have legal status; nonetheless, it w i l l encourage each community to apply for legal status from the Ministry o f Justice and Governance.
Prior to submitting i t s subproject proposal, each community must select a Project Implementation
13. Project Appraisal and Approval. Once formulated, the prioritized subprojects w i l l be appraised in accordance with FHIS's technical criteria, such as: legal status o f project site, construction standards, environmental standards, sector-specific regulations, internal rates o f return for productive projects, etc. FHIS w i l l also analyze the project budgets to ensure that they represent the best solution at the lowest cost. FHIS evaluators (staff) w i l l first conduct a desk review, and for those subprojects that pass, w i l l
lo ESA Consultores - Evaluaci6n de Proyecto Nuestras Raices IV, Tegucigalpa, 2002.
32
follow-up with a field visit, including a general assembly to discuss any project improvements deemed necessary for approval. Subprojects passing both types o f review w i l l be approved. Communities, whose projects do not pass the review, wi l l be given specific feedback on the improvements required and the opportunity to revise the project plan to pass the technical review within a one-month timeframe.
14. and the Project Implementation Committee identified in the project plan. I t i s desirable, but not necessary that this committee has legal status. The contract wi l l include funding for the subproject itself (goods, works, materials, etc.) as well as the training and technical assistance required for successful subproject implementation, a l l of which i s considered a grant to the community. The contract w i l l clearly state that all tools, facilities, and other materials and assets produced by the project are property o f the community.
Contracting. Once a subproject has been approved, FHIS w i l l prepare a contract between FHIS
15. budget w i l l support activities identified by each ethnic group to strengthen i t s cultural integrity. FHIS w i l l require competitive bidding to select the contractors who w i l l supply the goods and services included in these cross-cutting subprojects.
As noted above, in addition to the community-level subprojects, ten percent o f the subproject
16. community contracting methodology in accordance with FHIS’s Operational Manual “Proyectos Ejecutados por la Comunidad (PEC).” Project funds wi l l be transferred directly to the Project Implementation Committee Bank account in tranches, or through other payment mechanisms defined in the Operational Manual. Each project committee w i l l select and contract a facilitator from a l i s t of pre- qualified consultants to support i t throughout the implementation phase. If necessary, the project may also contract a technical specialist, such as a construction coordinator, to assist with technical aspects o f project implementation.
Implementation, Procurement, Disbursement. Subprojects w i l l be executed using a CDD
17. w i l l procure all goods and services required to implement the subproject in accordance with Bank guidelines and outlined in the PEC Manual. The PIC wi l l also recruit and manage all community labor required and ensure that commitments for community contributions are fulfil led in a timely manner, so that all inputs are available when needed.
The Project Implementation Committee (PIC), with vigilance from the Oversight Committee,
18. With help from their contracted Community Facilitator, the Community Project Implementation Committee (PIC) w i l l be required to prepare regular project implementation reports updating “HIS on progress implementing the approved project plan and justifying the use o f funds advanced by FHIS. The PIC w i l l also be required to meet at least monthly with the entire community to report on progress in implementing the approved subproject and to present a summary o f subproject revenues and expenditures.
19. functioning Operations and Maintenance Committee by the time the subproject has been fully implemented. Non-infrastructure subprojects, such as a community services subproject, may require an Operations Committee earlier to take responsibility for managing the delivery o f subproject services.
The PIC must also ensure that all infrastructure subprojects have a democratically elected and
20. Supervision of subproject implementation wi l l be carried out by a FHIS-contracted supervisor who w i l l be required to visit the subproject every two weeks and more frequently, if necessary, to objectively assess the evolution o f project implementation. Subsequent disbursements w i l l be authorized by FHIS based upon subproject implementation progress and the recommendations o f the Supervisors. (More detail on the roles and responsibilities o f each of these key actors i s included in Annex 6.)
33
Project Component 3. Capacity Building and Institutional Strengthening - US$1.31 million
21. This component wi l l finance capacity building o f ethnic communities to lead their own development process, institutional strengthening o f the Nuestras Rakes team, located within FHIS, and monitoring and evaluation. The main capacity building activities include training and technical assistance to the communities in participatory development planning, project identification, planning, execution, operation and maintenance, and funds and materials management.
22. the project, in coordination with the respective specialized FHIS departments (planning, procurement, financial management, evaluation, etc.). It w i l l coordinate closely with the ethnic representations, the community-level Project Implementation Committees, the locally-contracted Community Facilitators and Technical Specialists, and the FHIS-contracted Supervisors and Inspectors for the successful implemen- tation of the program. The role o f each of these key actors i s described more in detail in Annex 6.
Project Management: A small project unit located within FHIS w i l l be responsible for managing
23. ethnic communities to implement their own subprojects, the Nuestras Rakes Program wi l l provide training and technical assistance to the communities in al l aspects o f subproject management. NR wi l l train and certify a network of Community Facilitators in each o f the following topics:
Capacity Building in Planning and Subproject Implementation: To strengthen the capacity o f
Organizing and operating a democratic and efficient Project Implementation Committee; The role o f women in community development; Selecting and managing contractors; Monitoring the subproject implementation progress; Managing subproject funds and materials; Collecting, managing, and reporting community contributions; Reporting on subproject expenditures and implementation progress; Protecting the local environment; and Negotiation and conflict prevention.
24. The targeted communities w i l l use a portion o f their subproject budget to contract a Community Facilitator o f their choice to replicate the training at the community level. NR wi l l contract an NGO or a consulting firm to develop the curriculum and training materials and to deliver the training to candidates recruited and screened by FHIS in coordination with representatives of each ethnic group.
25. Strengthen Unity Among Ethnic Groups: NR wi l l support the ethnic representatives in their efforts to discourage further splintering within their groups and forge new linkages across ethnic groups- within Honduras and internationally-around issues o f shared interest. Specifically, NR wi l l support travel, meeting, and workshop costs for the representatives of the nine ethnic groups for this purpose.
34
26. indicators w i l l be tracked at various stages of the project cycle. Local ethnic specialists trained by the Bank in monitoring and evaluation of the implementation o f the Poverty Reduction Strategy w i l l be consulted as FHIS/NR fine-tunes i t s monitoring and evaluation strategy for this project. In addition, FHIS/NR wi l l organize bi-monthly participatory monitoring activities that may involve joint field visits by the nine ethnic representatives, the FHIS/NR staff and prominent anthropologists and/or other academics to share experience, identify and discuss implementation progress, and propose any necessary adjustments. Funds wi l l be set aside for an external ex-post evaluation o f the program, the results of which w i l l be compared with those o f the 2002 evaluation o f the Nuestras Rakes program.
Monitoring and Evaluation: The program wi l l be monitored by FHIS’ M IS and project
27. operational audits (spot checks) w i l l be carried out based on a randomly select sample of subprojects. The operational auditors wi l l assess the quality o f the completed subprojects, the accuracy o f the community’s bookkeeping and records, and the degree to which the procedures outlined in the Operational Manual were followed. The auditors wi l l also check that the FHIS’ MIS has an up-to-date cost database for all the regions of the country.
Audits: The project wi l l be included in FHIS’ annual financial audits. In addition, biannual
28. FHIS staff costs as well as recurrent costs for offices, mobilization, equipment etc.. These funds would be provided as counterpart funds by the Government o f Honduras. In addition, the Government o f Honduras would provide US$0.5 million for financing o f grants for subprojects.
The Operational Costs for implementing the project amount to US$ 1.1 mill ion and include
35
Annex 5: Project Costs
HONDURAS: Nuestras Rakes Program
Local Foreign Total U S $million US $million US $million Project Cost B y Component and/or Activity
1. Develop Planning by Ethnic Group 0.48 0.00 0.48 2. Grants for Sub-projects 12.20 1.30 13.50 3. Capacity Building and Institutional Strengthening .97 0.21 1.18
Total Baseline Cost 14.75 1.51 16.26 Physical Contingencies 0.32 0.03 0.35
4. Operating Cost 1.10 0.00 1.10
Price Contingencies 0.08 0.01 0.09 Total Project Costs' 15.15 1.55 16.70
Interest during construction 0.0 0.0 0.0 Front-end Fee 0.0 0.0 0.0
Total Financing Required 15.15 1.55 16.70
36
Annex 6: Implementation Arrangements
HONDURAS: Nuestras Raices Program
1. As in the past, the Honduras Social Investment Fund (FHIS) wi l l be the implementing agency for the project. Overall responsibility for this project w i l l be with the Minister o f FHIS and his staff. The Nuestras Raices team wil l be responsible for coordinating and supervising project activities, and working with the various departments o f FHIS to ensure that the project evolves according to plan.
2. investments in poor and marginalized communities. Since 1990, the government has extended and substantively modified the institutional mandate of FHIS several times, allowing the organization to respond to emergent needs (such as post-Mitch reconstruction) and extend i t s successful operations to more communities.
FHIS was created in 1990 as a deconcentrated agency o f limited duration to finance small-scale
3. o f FHIS through 2012 and marked a new direction in i t s institutional orientation. This legislation explicitly calls for the restructuring o f FHIS to support the process o f decentralization and municipal capacity building. Specifically, FHIS i s to plan and execute the transfer o f i t s operational, technical and financial functions to municipalities.
The most recent Congressional reforms o f FHIS (Decreto 166-99 in 1999) extended the duration
4. To support this effort, the Bank’s current FHIS V Project includes a local institutional strengthening component that pilots activities in: participatory local planning, delegation o f the FHIS project cycle to municipal governments and strengthening local systems for preventive maintenance. These activities represent a considerable departure from the centralized mode o f previous FHIS operations and coincide with the preparation o f two new Bank projects that touch on the same issue o f local institutional capacity and the traditional FHIS domain o f small-scale c iv i l works. A Board of Directors chaired by the President o f the Republic oversees FHIS, which i s led by an Executive Director, who has the rank o f Minister.
5. FHIS has more than 14 years experience implementing donor-financed programs and subprojects efficiently and effectively. The institution’s annual expenditures average between US$ 35-40 million, thus FHIS i s the second largest implementing agency in the country, following the Ministry o f Transportation (SOPTRAVI). Financial management and procurement units are well established and respective Bank guidelines are being followed without major difficulty.
6. The NR unit in FHIS has experienced and motivated personnel. The NR component under the FHIS V Project, totaling US$ 13.6 million, was implemented within one-and-a-half years, demonstrating the capacity o f FHIS and the NR team to be efficient and effective. The NR team i s composed o f five professionals, two technicians and two support staff. In order to carry out the new project, it was agreed that FHIS would recruit additional staff members with specific sk i l ls to complement the NR team and prepare it to manage participatory strategic planning activities in Component 1 and the more diverse and higher value subproject portfolio under Component 2. The cost o f the NR team wi l l be financed as part o f the GOH counterpart funding.
7. The NR team wi l l have the responsibility within FHIS to ensure that the project outlined in this document i s implemented according to plan and based on the guidelines set out in the PEC Manual. They w i l l take the lead role in coordinating the relationships with the representatives o f the ethnic groups and all o f FHIS’s departments involved in the successful implementation o f the project. These departments include Training, Procurement, Contracting, Finance and Administration, and Monitoring and Control. The N R unit w i l l also coordinate with external partners to monitor the progress o f activities financed by
37
other partners that are related to this project, but not included as part o f the project budget (ie. PAPIN and REPEPJN, and the work on the legal framework o f the rural credit and savings groups being financed and led by UNDP).
8. responsibilities are outlined below:
NR wi l l collaborate closely with each of the following key players, whose roles and
0 The representatives o f each o f the nine ethnic groups (whether it be a federation or confederation o f federations representing the same ethnic group) w i l l develop a Multi-year Strategic Plan and Annual Plans for each o f the years the project i s active. As explained in more detail above, these plans wi l l be the basis for allocating project funds among communities within an ethnic group. NR wi l l contract directly with the eight of the nine ethnic representations to lead the strategic planning process within their group. In the case o f the Lenca, given the large size o f the contract, competitive bidding wi l l be used to select a service provider.
The General Assembly involving a majority o f all indigenous or Afro-Honduran community residents (men and women) over 18 years o f age i s the supreme authority in each community participating in the Nuestras Raices Project. The Assembly w i l l be responsible for all key decisions related to the community needs assessment and planning process and for the successful implementation o f subprojects financed by FHIS. I t w i l l elect from among i t s members a Project Implementation Committee, which i s described in more detail below, to which it w i l l delegate the day-to-day responsibilities o f the needs assessment, planning, and project implementation process.
The Project Implementation Committees (PZCs) wi l l have responsibility for leading the need assessment and planning process, executing the community projects and managing project funds. At least 40% of the PIC members must be women. While Nuestras Raices wi l l encourage each community to establish itself as a legal entity, it w i l l not be a pre-requisite for receiving subproject funds. Alternative informal options acceptable both to the GOH and the World Bank have been defined.
The Community Oversight Committee i s a social control mechanism at the community level designed to ensure the transparency o f the Project Implementation Committee’s activities. The role o f these two actors i s described in more detail in the section on Component 2 and in the PEC Manual.
The Community Facilitator wi l l initially be contracted to assist each targeted community in a participatory community needs assessment and project planning process. The community w i l l select and contract the Community Facilitators from a l i s t o f consultants who have been trained and pre-qualified by FHIS for this purpose. FHIS w i l l seek to recruit qualified Community Facilitators from the nine ethnic groups served by the NR Program. Later on, once a community project has been approved, a Community Facilitator may be contracted to provide training and technical assistance to the Project Implementation Committee and the Oversight Committee to ensure that the project i s implemented in accordance with the approved plan and the PEC Manual and that funds and materials are managed transparently. During the project identification and planning phase, the cost o f the Community Facilitator w i l l be paid for by FHIS. During the project implementation phase, the cost o f the Community Facilitator w i l l be included in the approved subproject budget.
A Project Formulator, trained to formulate subprojects to meet all FHIS requirements, w i l l be selected from a l i s t o f pre-qualified consultants and contracted by the community to assist it in the process o f completing the subproject proposal. This activity w i l l be done in close collaboration with the Community Assembly and the Project Implementation Committee,
0
0
0
0
38
which will need to give final approval to the proposal, before it i s submitted to FHIS for approval.
0 The Technical Specialists, l ike the Community Facilitators, wi l l be available to the participating communities both during the project identification and implementation phases. They wil l offer technical input to ensure the quality o f the project design and plan and, once a project has been approved, to ensure that technical standards are met during the implementation phase. These costs wi l l be charged to the NR Consultant line during the project-planning phase and included as part o f the subproject budget during the implementation phase.
FHIS wil l assign each approved project a FHIS-contracted Supervisor, who w i l l visit the project at least once every two weeks to verify the progress stated in project reports and approve the disbursement o f additional subproject funds, based upon an acceptable advance o f the subproject.
0 The Supervisors w i l l report to a full-time FHIS Inspector. The cost o f the Supervisors w i l l be charged to the NR Project consultant line, while the cost of the Inspector wi l l be financed out o f government counterpart funding.
39
Annex 7: Financial Management and Disbursement Arrangements
HONDURAS: Nuestras Raices Program
1. 2003 and the GOH i s currently working to finalize the proposed action plan. The diagnostic work concluded that the quality o f budget reporting by decentralized and deconcentrated agencies was in need o f improvement, and that in the interim, disaggregated budget execution reports would be required to permit for greater participation in budget monitoring and evaluation, and to further facilitate poverty reduction expenditure tracking.
Country Issues. The Country Financial Accountability Assessment (CFAA) was conducted in
2. o f experience implementing and managing Bank-financed projects. The unit also has received training as recently as August 2003, and i s well versed in the recent policy changes affecting project financial management.
Strengths and Weaknesses. FHIS has established a strong administrative unit with many years
3. component under the FHIS V Project), and has in place the appropriate personnel to supervise community financial management.
Additionally, FHIS has experience in managing programs similar to Nuestras Raices (this was a
4. development, however many communities have never managed an amount o f financing as significant as this project purports.
The project wi l l advance the majority o f financing to community for community-led
5. Country Risk. The country-specific risk (country risk assessment was included under the CFAA in 2003) has been assessed as high due the identified structural weaknesses in the public financial management system, in spite o f a generally sound and complete legal and governing framework for public financial management. The GOH has taken active measures to improve transparency and governance, and once these actions are completed, it i s envisioned that the specific r isk assessment would be mitigated. Additionally, the GOH i s contemplating a series o f further actions to improve the public oversight mechanisms and fiscal classification to permit greater social involvement in the analysis o f public investment.
Risk assessment (project risk)
6. assume that there were no internal controls. In part because o f the politicized nature o f the FHIS, and the poor rating o f Honduras in Transparency International’s Corruption index, inherent risk i s considered to be high.
Inherent risk. Inherent risk i s the susceptibility o f project funds not being used as intended, if we
7. managemendinternal control arrangements are in place to provide reasonable assurance that misuse o f funds would be prevented or detected and corrected on a timely basis. Even so, the control risk i s moderate.
Control risk. As described in the Internal Controls section, adequate financial
8. detection risk need to be lower, so as to reduce the overall risk level. The call for quarterly internal and external audit reports aims at this objective.
Detection risk. Given the combination o f inherent and control rkks, acceptable levels o f
40
Implementing Entity
9. that reports to the Minister o f FHIS. Principal administrative units are:
FHIS’ organizational chart i s in the project files. Each main department i s headed by a Director
Financial Management: In charge o f finances, accounting, financial reporting, and treasury for subprojects. Contracting: Responsible for procurement and contracting o f services for subprojects and other major procurement processes. Administration: In charge of human resources management, operational expenses and transportation.
10. Since the early 1990s, FHIS has been the principal Government agency for financing small-scale civi l works in the social sectors. IDA, in cooperation with other donors (mainly IDB and KfW), has supported FHIS through four credits, including the ongoing FHIS V Project (Cr. 31 18-HO). This project was the f i rst in the Central America Country Management Unit to be certified for FMR-based disbursements by the World Bank.
1 1. members have gained substantial experience (5-10 years) to properly fulfill their tasks. Moreover, they possess pertinent professional background and receive competitive compensation.
Through their participation in previous and ongoing projects, FHIS’ financial management staff
12. Procurement and Disbursement, and most recently received training at the August 2003 (project) fiduciary workshop held in Tegucigalpa). Furthermore, FHIS staff also i s knowledgeable with the Bank’s Guidelines on Financial Monitoring Reports and the Guidelines and Terms of Reference for Audits of Projects with Financing by the World Bank in LCR.
Training. Financial management staff members have received World Bank training in
13. experienced and capable personnel have been contracted, the human resources management function FHIS-wide presents some weaknesses, such as: incomplete use o f position classifications, salary gaps, procedures for recruitment and personnel evaluation not being followed, and lack o f a formal training program. The risk o f political influence in hiring decisions was also identified.
Human resources management. A study camed out by a consultant in 1999 found that, while
14. and the following documents were produced: Manual descriptivo de clases de puestos, Manual de evaluacidn del desempeiio, Plan de capacitacidn y desarrollo, Manual y Normas de reclutamiento y seleccidn, Manual de valoracidn de puestos, y Plan de Remuneraciones.
The study proposed a series o f recommendations to overcome the above-mentioned weaknesses
Internal Controls
15. Operational Manual. FHIS recently engaged a consultant to update FHIS’ Operational Manual. The manual now includes for procedures relevant to “new” components @e., those substantially different from the ones in the ongoing F H I S V Project), such as those to be financed under the Nuestras Raices Program. The manual has been presented and distributed to pertinent staff. I t s contents wi l l need to be updated periodically (to remain current with changes in delivery platforms for development aid) and fulfillment with its conditions monitored regularly (e.g., external audits would include selective reviews of compliance with the procedures established in the manual).
16. departments (e.g., Accounting, Contracting, Personnel, Travel Expenses, etc.).
In addition to the Operational Manual, norms and procedures exist for the main administrative
41
17. detailed series o f steps known as the Project Cycle, which includes all stages from receipt o f proposals for subprojects until their closure. The Project Cycle i s supported by a comprehensive management information system (MIS) that allows for processing o f subprojects in accordance with the procedures and approval levels established.
Segregation of duties and levels of approval. Subprojects are processed in accordance with a
18. For key decision-making steps in the Project Cycle, various Committees have been established, such as: Project Evaluation, Award o f Contracts, and Registration o f Contractors. Even so, there i s s t i l l inadequate segregation o f functions, such as the Director for Control and Monitoring (who oversees contractors’ performance) participates in the award and registration committees. I t was recommended that, while Control and Monitoring should report regularly on negligent contractors and contribute to the creation o f a “black list,” i t should not participate in award decisions.
19. recently created to handle complaints received from the communities. However, its structure and procedures have not been formalized yet. This task needs to be completed, so as to provide for an independent, documented, and timely processing o f community allegations.
Handling of complaints. In order to help promote the idea o f “social controllership,” a unit was
20. program FHIS executes. Under the ongoing FHIS V Project, a Special Account for credit funds i s held at the Central Bank and managed by the Secretary o f Finance (SEFIN). Actual payments are made from FHIS’ operational accounts held in commercial banks. Signatories to these accounts are the FHIS Minister in conjunction with one o f five authorized Directors. The bank account reconciliations are timely prepared on a monthly basis.
Bank accounts. Several accounts have been opened for the managing o f funds relating to each
21. Fixed assets. A detailed subsidiary record o f assets i s kept up-to-date in the accounting system. It identifies each good, i t s inventory number, location, responsible employee, and cost (properly reconciled to the accounting balance). It i s supported by signed forms confirming receipt o f goods.
Flow of funds
22. procedures, both under “traditional” and FMR methods and experience has also been acquired on procedures for disbursing of counterpart funds and other external resources.
FHIS’s financial management staff have gained sufficient experience in IDA credit disbursement
23. Under the Nuestras Rakes Project, more than 80 percent o f the funds wi l l be disbursed to communities to exclusively implement subproject prioritized in community development and strategic ethnic plans. FHIS has already developed a thorough Operational Manual for the project, which has been reviewed by the Bank, and which has incorporated many o f the experiences from prior community and FHIS funded projects, and relies heavily on the principles in the Bank Reference Guide: Fiduciary Management for Community Driven Development Projects (April 2002).
24. Special Account, which wi l l be maintained at the Central Bank o f Honduras, and funds may be transferred to the local currency accounts managed by FHIS for further transfer to communities. Furthermore, in maintaining the operation o f bank accounts under the FHIS V project, it i s proposed that FHIS would be permitted to utilize the Special Account 30 day Advance Procedure.
In order to minimize delays in the flow o f funds to communities, FHIS w i l l have access to the
42
Planning, budgeting and financial reporting
25. Plans and budgets. Communities w i l l prepare their own development plans, and in addition wi l l undergo a self-diagnostic assessment to evaluate their capacity to manage the finances. The results o f the self diagnostic w i l l also determine the sequencing and timing o f capacity building training sessions, which w i l l cover the general areas o f planning, resource management, supervision, monitoring and evaluation.
26. and w i l l include government counterpart contribution, community contributions, and Bank financing. The aggregation o f these plans w i l l be summarized in basic budgetary and physical figures for submission to the Ministry o f Finance (SEFTN) (and subsequently to the Congress), and w i l l follow the budget nomenclature issued by the Vice Ministry o f Budgeting.
The annual operational plan i s based on the approved programs submitted by the communities,
27. information, including stages in the Project Cycle. The same system links the accounting and budgeting modules so as to allow for preparation o f the financial section o f quarterly Financial Monitoring Reports (FMRs). Due to the experience that FHIS has accumulated with the two most recent Bank financed projects, the general format for FMRs wi l l remain the same. However, i t w i l l be essential that FHIS regularly report section 2 (output monitoring) and include a listing o f subprojects classified by region or indigenous grouping; and section 3 (procurement), to report a summary o f procurement executed by the communities, even though these contracts wi l l most probably fal l below the prior review threshold. Bank supervision and independent ex-post review (including independent audits) w i l l be greatly facilitated by regular reporting the community based procurement.
FHIS’ sophisticated MIS provides the basis needed for tracking project activities and financial
28. Financial reports. The basic financial statements and supplementary financial information are prepared on a monthly basis for discussion by FHIS management, but meetings are not part o f a formal schedule. Although FMRs are prepared quarterly, these have not yet been used as a management tool per se. Given these circumstances, FHIS was advised o f the need to establish formal procedures for distribution, review, analysis and approval o f the monthly, quarterly and annual project management information (including FMRs). -
Accounting system
29. Chart of accounts. The current chart o f accounts complies with minimum Bank guidelines, as i t allows for the classification o f expenditures by disbursement category, project component and source o f funds. I t also provides for reporting budgetary execution in terms o f governmental requirements.
30. statements can be issued within 10 days of the cut-off date. Supporting documents are properly filed and maintained in a room created exclusively for that purpose. Such documents are maintained for a minimum period of five years in accordance with local norms.
Accounting records. Transactions are recorded in a timely way in the system, so that financial
31. Accounting software. The computerized system was developed internally by FHIS. The software includes enough functions to properly manage and track accounting records and produce financial reports in accordance with Bank requirements.
32. consequence of the linkages with the accounting module. These matters have been widely discussed with FHIS and a final version of the FMRs was agreed. Furthermore, national funds related to the project w i l l be maintained separately (both in terms o f bank account and accounting records) from other funds and the
Despite the above, data provided in the FMRs have included certain inaccuracies, mainly as a
43
accounting-FMR linkages w i l l be revised so that the FMRs only reflect those funds relating exclusively to the project.
33. implementation o f FMR section 2; (iii) upgrading o f the procurement module; (iv) preparation of user manuals; and (v) decentralization of the Project Cycle.
Other enhancements included in the MIS Action Plan are: (i) multi-currency capability; (ii)
Internal and External Audits
34. Auditor i s appointed by the Tribunal Superior de Cuentas (TSC - Audit Court). The TSC i s the auxiliary branch o f the Congress that constitutes Honduras’ Supreme Audit Institution. Along with public sector internal auditors, i t i s in charge o f ex-post fiscal control and audit functions in the public sector.
Internal Audit. In accordance with the General Public Administration Law, FHIS’s Internal
35. Among i ts responsibilities, the TSC must present the annual report to the Congress within 40 days after the end o f the year. On the other hand, the Internal Auditors report directly to the TSC and present biannual summaries o f activities performed, and their annual work plans.
36. administrative, approval, accounting, or decision-making processes in the entities. However, they do not have the benefit o f budgetary independence that the TSC enjoys.
To help ensure independence, the Internal Audit units are not allowed to participate in any
37. documentation o f subprojects. Other administrative issues have also been identified, like some instances o f noncompliance with the Operational Manual o f Labor.
Recent internal audit reports show some deficiencies in the physical implementation and/or
38. overcome weaknesses reported by the TSC, the process needed to enforce this requirement takes substantial time, thus preventing i t s efficient implementation. To help with this situation, i t was recommended that FHIS management implement formal procedures for following up on internal audit reports. Moreover, the Bank would request a copy o f the quarterly reports the Internal Auditor must present to FHIS’ Board of Directors in accordance with article 22 o f the FHIS Law.
Even though the (new) TSC Law requires Government officials to carry on the actions required to
39. previous external auditor. The short l i s t o f firms and Terms o f Reference for the audit o f the ongoing FHIS V Project have been prepared and considered acceptable to the Bank. In addition to the regular financial audit requirements, the external auditors w i l l be required to perform an operational review o f a sample o f subprojects. This review wi l l consider issues such as compliance with financiaYprocurement clauses o f the credit agreement and physical implementation, and compliance with the Manual PEC.
External Audit. FHIS has taken steps to prevent some quality issues that were raised with i t s
40. During 2002, the external auditors performed quarterly subproject visits and reported accordingly (for the FHIS V Project), in addition to the legally required annual audit report. For Nuestras Raices, similar audit arrangements would be in place, with biannual subproject visits by the auditors. The auditors would need to be properly appointed before the effectiveness date. The annual audit would be required to be submitted to the Bank no later than 4 months after the end o f the fiscal year (January - December).
Disbursement arrangements
Method. Since adequate FM capacity and procedures are in place (see para. 61), including report-based disbursement experience (see para.4 l), and per agreement with FHIS, credit proceeds w i l l be withdrawn
44
on a quarterly basis under the report-based disbursement method. During project implementation, FHIS w i l l (a) sustain satisfactory FM arrangements to be verified through project supervision; (b) submit FMRs consistent with the form, content and due date agreed with the Bank; and (c) submit acceptable Audit Reports by their due date. If FHIS does not continue to meet these criteria during project implementation, the method w i l l be changed to transaction-based disbursements only (provided the Bank does not suspend disbursements because o f non-compliance with the obligation to maintain an adequate FM system).
Special Account. FHIS wi l l open and maintain a Special Account in US Dollars in the Central Bank to be used exclusively for deposits and withdrawals o f credit proceeds for eligible expenditures. After the conditions o f effectiveness and disbursement have been met, and the Special Account has been opened, FHIS w i l l submit the f i rs t disbursement request (Form 1903B) to the Bank, together with the project’s expenditure forecast for the next six months. For subsequent withdrawals, FHIS w i l l submit Form 1903B to the Bank, along with the FMR for the quarter just ended.
Disbursement schedule.
Category
(1) Goods
(2) Services a) Consultants, including audits
b) Other services
(3) Payments made to
Beneficiaries by FHIS as Sub-projects Grants
(4) Training
(5) Unallocated
TOTAL
Credit Allocated % of
(USD) Expenditures to be Financed
220,000 100% of foreign expenditures and 88% o f local expenditures
930,000
160,000
98%
100% of foreign expenditures and
88% of local expenditures
12,300,000 100%
390,000
1,000,000
15,000,000
100%
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Retroactive financing
41. expenditures incurred between project appraisal and effectiveness.
An amount of up to US$ 1.5 million wil l be made available for retroactive financing o f eligible
46
Annex 8: Procurement
- HONDURAS: Nuestras Raices Program
1. Project. Bank-financed works and goods contracts wi l l be procured in accordance with the World Bank Guidelines: Procurement under IBRD Loans and IDA credits, dated January 1995, revised in January I999 (henceforth referred to as Procurement Guidelines). Bank financed contracts for consulting services w i l l be awarded following the World Bank Guidelines Selection and Employment of Consultants by World Bank Borrowers, dated January 1997, revised September 1997, January 1999 and May 2002 (henceforth referred to as Consultant Guidelines). Project activities and procurement contracts not financed by the Bank would be procured in accordance with national regulation. The project inputs, estimated costs and procurement methods under the project are summarized in Table A and A l .
This section describes the procurement arrangements under the Honduras: Nuestras Raices
Procurement Responsibilities
2. FHIS w i l l have responsibility for overall procurement management and wi l l ensure that procurement procedures, criteria and documentation agreed with the Bank are satisfactorily complied with. This w i l l include procurement under subprojects implemented by the Recipients o f the Project and their intermediaries, such as indigenous groups/federations, NGOs, etc. These responsibilities are described in Annex 4 and developed in further detail in the Operational Manual. Grant agreements between FHIS and the communities would stipulate these procurement responsibilities and procedures. FHIS i s staffed with a Procurement unit supported by procurement assistants and headed by a Director of Contracting.
3. refresher workshop for relevant FHIS personnel. Beneficiary representatives w i l l receive procurement training before subproject implementation.
A Project Launch Seminar w i l l be scheduled after Board approval and w i l l include a procurement
Procurement Plan
4. A draft Procurement Plan has been prepared for the project and w i l l form the basis for procurement. The Plan, which i s part o f the Operational Manual, w i l l be updated every six months to reflect changes in procurement process, which could significantly affect the timely and successful implementation o f the project. The procedures used for each type o f procurement would be consistent with those described in the Credit Agreement and in the PAD as well as with the stipulations o f the Operational Manual. The revisiondupdates in the Procurement plan would be agreed with the Bank prior to i t s implementation.
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Table A: Project Costs by Procurement Arrangements (US$ million equivalent)
Procurement Method
Expenditure Category 1. Subprojects (Community Participation Procurement )
2. Goods
ICB NCB Other N.B.F." Total Cost 13.30b' 0.50 13.80
(13.30) (0.00) (13.30) 0.24'' 0.24
3. Consulting Services
4. Other Services
(0.22) (0.22) 1 .ood/ 1 .oo (0.95) (0.95) 0.1.5@ 0.15
Note: Figures may not add up due to rounding. Figures in parenthesis are the amounts o f the Credit.
5. Training
6. Operating Costs
Total
a/ NBF- Non Bank Financed. b' Subprojects wi l l consist o f Works, Goods and Services up to an aggregate amount o f US$ 13.80 equivalent. Minor Civ i l Works (MCW) contracts o f less than $50,000 per contract wi l l be awarded on the basis o f quotations obtained from three qualified domestic contractors in response to a written invitation. Goods contracts under $50,000 per contract wi l l be procured through National Shopping and subproject services under $50,000 per contract w i l l be awarded through a competitive selection process. Direct contracting may be used for goods contracts under $5,000. Subproject Grants wi l l also include payments for labor costs under community arrangements. ' Goods for FHISfNuestras Rakes consisting o f furniture, computer and office equipment procured through shopping. Printing and reproduction o f materials may also be procured under the shopping method. ' Consultant services as detailed i n Table Al . g/ Other services such as participatory monitoring, auto-diagnostics and other communitylfederations involvement services.
Project related costs and expenses for study tours, seminars, workshops and other training activities including travel, accommodations, per diem, etc, for participants as well as cost for premises where training i s held. f' salary and other expenditures o f FHIS procured according to national procedures.
(0.14) (0.14) O.4le' 0.41 (0.39) (0.39)
1. I O W 1.10 (0.0) (0.0)
15.10 1.60 16.70 (15.00) (0.00) ( 15 .OO)
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Communitv Participation in Procurement
5. and composition o f subprojects financed under the Project i s described in Annex 4. All subprojects w i l l be demand-driven initiatives (aggregate amount $13.80 equivalent). Indigenous and Afro-Hondurans communities throughout Honduras are expected to submit proposals for grant funding using resources provided under the Project. Subprojects’ proposals wi l l follow criteria specified in the Operational Manual, which provides a negative l i s t of types o f subprojects not eligible for funding under the project. In the interest o f certain specific social objectives o f the Project, i t i s desirable to call for the participation of local communities and NGOs, increase the utilization o f local know-how and employ labor-intensive and other appropriate technologies as stated in paragraph 3.15 in the “Guidelines”.
Procurement under Demand-Driven Subprojects (Community Participation). The nature
6. during implementation. The criteria for the preparation, appraisal and approval o f these subproject grants by the FHIS/NR are described in Annex 4 and the Operational Manual. The grant amounts are estimated at under US$50,000 equivalent (average subproject i s estimated at US$20,000). Subproject proposals may include minor works, small quantities o f goods, minor technical expertisehervices, or any combination o f these elements. The composition, dispersed origin and implementation timing o f the approved subprojects do not make i t feasible or practical to aggregate or consolidate the small procurement items in these grants into large packages suitable for International Competitive Bidding (ICB) or National Competitive Bidding (NCB) by a centralized procurement unit. Minor works may be procured under lump sum, fixed price contracts awarded on the basis o f quotations obtained from at least three qualified domestic contractors in response to a written invitation. In general i t i s expected that the community wil l contribute with labor/technical knowledge as well as materials and goods. Goods packages may be procured through Shopping procedures and awarded on the basis o f comparison o f quotations obtained from at least three domestic suppliers in response to a written invitation. In exceptional cases, goods up to an amount not to exceed US$5,000 equivalent per Grant may, be procured through direct contracting procedures with prior agreement with FHIS/NR, if the value o f direct contracting i s above US$5,000 i t w i l l require Bank’s prior review. Minor services contracts under subprojects would be procured using competitive selection procedures. Sample bidding documents developed in the LAC Region would be adapted for these procurement procedures. These procurement procedures for subprojects are described in detail in the Operational Manual, and w i l l be set forth in the Grant Agreements between the FHIS and the Communities.
About 600 subproject proposals are expected to be received and processed by the FHIS/NR
Goods
7. items consist of a limited quantity o f office equipment, computer equipment and off-the-shelf software, and vehicles, as well as miscellaneous supplies for the operations o f the FHIS/NR. Printing services are also to be procured under the project. Such procurement w i l l be undertaken as follows: (a) Shopping for packages estimated at less than US$50,000 based on comparing quotations solicited from at least three qualified suppliers. (b) for contracts above US$50,000 and below US$ 150,000 National Competitive Bidding procedures wi l l be used.
Goods procured for the FHIS/NR and used for i ts operations w i l l be financed by the Bank. These
Consulting Services and Other Services
8. plans for the federations, evaluation ex-post of the programs, auditing services, implementation of strategies and design o f training.
Consulting Services contracts wi l l consist of, but are not limited to, development o f strategic
49
9. and other community involved services not included in the cost o f the subproject as well as promotion and visualization services. These services wi l l be contracted as per the stipulations o f the Operational Manual. They are small value contracts and expected to be awarded to the qualified members o f the federations.
Contracts for the services o f the federations w i l l consist o f participatory monitoring, diagnostics
Quality and Cost Based Selection (QCBS) may be used for the larger contracts for strategic planning and the evaluation ex-post.
Least Cost Selection (LCS) would be used for the auditing services.
Consultants Qualifications (CQ) may be used for the smaller strategic plans where there i s enough competition within the federation, and for the Visualization o f the Program.
Sole Source (SS) wi l l be used for the strategic plans o f the federations that because o f i t s remoteness, size o f population and languages requirements, does not merit competition.
Other Services
Services contracted to the Federations (SCF) wi l l consist o f participatory monitoring, promotion o f the program or other related services. These services may be contracted to qualified individuals or groups within the federations as the case may be. Procedures and sample contractdagreements are contained in the Operational Manual and in accordance with paragraph 3.19 o f the Consultant Guidelines.
Individual
10. programs) provided by individual consultants w i l l be selected on the basis o f their qualifications for the assignment comparing CVs in response to an advertisement, and according to the provisions o f the paragraphs 5.1 through 5.4 o f the Consultant’s Guidelines.
Specialized advisory services (engineering, agriculture, anthropologist or others related to the
Training 1 1. other participants in connection with the training/workshops as well as fees charged by academic or other institutions. Training services include, but are not limited to, training o f trainers for participatory planning process, to develop and cany out the strategic plans, training for sound implementation o f approved subprojects as well as capacity building for FHISNR and stakeholders.
Includes expenditures for cost o f travel, accommodations and per diem incurred by trainees and
Operational Costs
12. procured through regular GOH procedures.
Salaries for the FHISNR personnel and operational costs would be government financed and
Custom Duties and Taxes 13. All goods specifically imported for the project w i l l be subject to the payments o f custom duties and local value added taxes. Works contracts are likewise subject to taxes (percentage built into the contract price). Consulting firms and individual consultants are also liable for the applicable taxes. The aggregate value o f taxes under the project i s estimated at U S 0.1 million. All duties and taxes are paid from the Government contribution.
50
Annex 8, Table A I : Consultant Selection Arrangements (optional) (in US million equivalent)
(0.14) (0.07) (0.21) (0.15)
Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants’ Qualifications SS = Sole Source Selection Other = Selection o f individual consultants (per Section V o f Consultants
Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed.
Figures in parenthesis are the amounts to be financed by the Bank credit.
Capacitv Assessment of the Agency to Implement Procurement:
Action Plan for Strengthening the FHIS/NR Capacity to Implement Procurement
14. implemented under the Fourth and Fif th Social Investment Fund Projects. Therefore this project i s considered a repeater project and does not merit a new capacity assessment. FHIS has been implementing subprojects with nearly the same organization since 2001. With the appointment o f a new general manager, FHIS i s undergoing a positive restructuring of i t s organization for a more agile implementation o f the programs that FHIS manages. Since most o f the procurement under the project w i l l be carried out by the indigenous communities, the role o f FHISNR i s more o f a facilitator and advisor to the communities. FHIS i s in the process o f recruiting a Contracting Director (Director de Contratacih) with extensive experience in procurement under subprojects. The following action plan has been agreed:
The Nuestras Raices Project was developed from the Mi component which was successfully
15. a condition of negotiations. An advertisement was placed in the local newspaper and evaluation of the qualified candidates was completed by the end of February.
The Director of the Procurement unit (Director de Contratacibn) has been hired and i s in place as
16. Compliance and coordination with the Credit Agreement w i l l need to be ensured.
The Operational Manual has been prepared and a draft has been reviewed by the Bank.
51
17. procurement arrangements under the project.
A Project Launch seminar w i l l be organized before June 2004, with a special segment on the
18. l i fe of the project, to keep the communities updated on the different processes and guidelines under their specific subprojects.
Additional seminars on procurement issues w i l l be organized by the FHISLNR unit throughout the
Review bv the Bank of Procurement Decisions
Prior Bank review would be required before final decisions on contract awards are made on Bank- financed activities, for the following procurement actions:
Subproject grants: The first three grants regardless o f value w i l l be subject to prior review by the Bank, for consistency with the agreed criteria. Under these subprojects, the Bank wi l l also conduct a prior review o f the following contracts procured by the grant recipients:
-small works: the first contract and all works contracts above US$50,000; -goods: the f i rst goods contract and all goods contracts above US$50,000 per contract; as well as any direct contracting above US $5,000; -consultant services: the first three contracts.
Procurement by the FHIS/NR:
-training: the proposed annual spending program for training . -consultant services: (a) all contracts with f i r m s o f US$lOO,OOO and above; (b) all contracts with individuals of US$50,000 and above; and (c) Full review o f RFP, technical and financial evaluation and the contract for the provision o f audit services selected in accordance with Least Cost selection method and all contracts under single source selection regardless of value. Terms o f Reference for all assignments w i l l be subject for prior review regardless o f value. -goods: (a) the first contract procured through NCB and the f i rs t under Shopping.
19. Ex-post review o f all other contracts w i l l be carried out by Bank supervision missions. Table C summarizes applicable procurement procedures and review requirements. Ex-post reviews on a random basis would also be undertaken by the FHISLNR and the Bank, o f the procurement carried out by the Recipients in the process of implementing their subprojects.
52
Annex 8, Table B: Thresholds for Procurement Methods and Prior Review
US $ thousands 1. Works
2. Goods
US $ millions
ICB None expected NCB None expected
Three Quotations Above US$50,000
ICB None expected NCB First contract
Shopping Above US$50,000
3. Consultants Firms >loo QCBS All
< 100 QCBS, LCS, CQ None (Post Review), TORS only
Individuals
Other Services
Overall Procurement Risk Assessment: High Average ~
Low
> 50 See Section V of All (TOR, contract,
c 50 > 50 See Section 3.19 of All
Guidelines cv> Review of TOR only
the Guidelines
Frequency of procurement supervision missions proposed: One every 6 month(s) (includes special procurement supervision for post-review) reviewing a sample of 1 in 5 contracts signed.
e 50
53
I None (Post Review)
~
Table C: Summary of Procurement Activities Section 1: Procurement Review Subvroiects Procurement thresholds [ndividual and aggregate
Ex-post Review
Goods Procurement Lhresholds: [ndividual and aggregate Prior Review
Ex-post review mechanism: Review carried out in accordance with Para. 4 o f Appendix 1 o f the Bank's Guidelines and reviews during supervision missions.
Consultants
Prior Review
I C B
QBCS (firms)
$0.39
Full review
NCB
Above $50,000
First contract
QB
Shopping
Below $50,000
Aggregate: $300,000 First contract and a l l contract for Subprojects above $50,000 Direct :ontracting for goods above $5.000 Least Cost
<0:15 million
Full review
Small Works
Consultant Qualificatio ns $0.08 mil l ion All TORs TOR, qualification S and contract for a l l assignments Above $100,000
3ther Methods
?ara.3.15 o f hidelines. MCW under 650,000 3oods under 550,000 Services under E50,OOO kggregate: $ 13.80 mil l ion
First 3 Grants And the first 3 :ontracts for services under the subprojects
Single- Source
$0.22
Full review
Percentage of credit amount subject to prior review
Individual Consultants
$0.16
All TORs TOR,qualifi cations anc contract foi al l assignment contracts above $50,000
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Annex 9: Economic and Financial Analysis
HONDURAS: Nuestras Raices Program
Economic Analysis
1. The Nuestras Raices Project includes “framework” type projects, that is, those in which most o f the major investments are not identified or designed before credit effectiveness; rather, what i s appraised ex-ante i s the mechanism for delivering the outputs. Because of the demand-driven nature o f Nuestras Raices, the specific social rate of return cannot be known ex-ante. T h i s economic analysis assesses the mechanisms and methodology in place to ensure that the subprojects implemented are part o f a macro strategic development plan which reflects the vision and needs o f each one o f the nine ethnic groups in Honduras.
Economic Analysis of the Nuestras Raices Program as a Delivery Mechanism of the Micro-planning Strategy
2. At the macro level, the local planning process in Honduras i s carried out by municipalities. Given that local governments do not always respond to the needs o f ethnic groups, the proposed project uses two mechanisms to reach the disadvantaged ethnic peoples: (i) through the micro- and macro-planning processes; and (ii) through the actual implementation o f their Ethnic Development Plans which are informed by Regional Ethnic Development Plans and Ethnic Community Development Plans.
3. preserving its culture and identity. Strategic Development Plans may include subprojects involving infrastructure as well as other aspects o f social and economic development. The process o f elaboration o f the above-mentioned development plans w i l l serve three economic purposes: (a) it w i l l prepare communities to participate in and benefit from the annualhi-annual municipal planning processes; (b) i t w i l l implement approximately 600 - 700 priority subprojects; and (c) it w i l l leave the Community Development Plans in the hands of the beneficiaries and provide them with managerial ski l ls to capture other public and private investments.
Strategic planning i s a mechanism geared towards integrated planning within each ethnic group,
4. Units o f ethnic federations representing the nine ethnic peoples (Lenca,Tawahka, Chorti, English- speaking Black, Miskito, Tolupanes, Pech, Nahoa, and Garifuna) following participatory procedures which legitimize the process.
For the purpose o f cultural sensitivity, the planning process w i l l be carried out by the Technical
5. Raices subprojects selected for implementation w i l l be conducted. Technical and social ex-ante evaluation i s based on the participatory diagnostic analysis executed a priori.
In accordance with the project’s Operational Manual, an ex-ante appraisal o f all the Nuestras
6. beneficiaries; (ii) health and education infrastructure follows norms for operation and maintenance dictated by the corresponding line ministries which must guarantee a sustainable operation; (iii) legal tenure of the land on which the project w i l l be built; (iv) vulnerability and risk o f natural disasters; (v) approximate cost, to compare i t with the linea de corte; (vi) in case o f water and sanitation subprojects, the appropriate technical and environmental feasibility studies wi l l be needed; and (vii) community commitment and financial proof of intended maintenance.
Some technical aspects determining the feasibility o f the investment are: (i) number o f
7. Subproject selection criteria i s not based entirely on cost but rather on i t s social impact and ability to respond to specific needs, as decided by beneficiaries. The total cost per subproject should only exceed
55
US$50,000 in exceptional cases (e.g. horizontal subprojects). All subproject types are eligible for funding except for those in the “negative l ist” included in the project’s Operational Manual (chapter 2, e.g. cemeteries, guns, drugs).
8. and economically justified. These mechanisms are described in the Nuestras Raices Operational Manual, chapters 3 and 4. Several criteria for project selection includes: (i) the subproject must benefit the entire community; (ii) the subproject has been identified and prioritized by the community assembly and i s part of the community development plan; (iii) the subproject does not depend on other projects for i t s efficient operation; (iv) the community must be willing to contribute 10 percent or more of the total cost of the subproject in cash or in kind; and (v) the location o f the project i s accessible by the beneficiary community.
Several social mechanisms for screening projects wi l l be undertaken to ensure that they are social
9. Both a desk and a field appraisal w i l l cover the technical and social feasibility, economic analysis, financial soundness, community participation, environmental impact and sustainability . The selection of the Committee (or Association, or Cooperative) responsible for project implementation wi l l be carried out by the community based on a set of a priori-established criteria. The Nuestras Raices Program i s responsible for training such Committees in project management and administration and ensuring i ts institutional soundness.
10. Project Implementation Committee, or through other payment procedures. General norms and procedures for transferring o f resources and submission o f financial reports are described in chapter 12 o f the Operational Manual.
Project funds wi l l be disbursed directly to restricted accounts open at a Bank under the name o f
11. MIS and tracking o f project indicators at various stages o f the projects cycle; and (ii) FHIS’s annual financial audits. In addition, biannual operational audits (spot checks) w i l l be carried out based on a randomly selected sample o f subprojects.
The economic soundness o f Nuestras Raices subprojects w i l l be monitored through: (i) FHIS’s
Financial Analysis:
12. Public sector expenditure in Honduras represents approximately 30 percent (excluding central government wages and salaries) of the GDP (2002, CAS). However, according to the ECLAC report (December 2003)”, Honduras’ per capita social expenditures are the lowest in Latin America ($57 pp in 1997), and only respond to 7.4 percent o f the PIB. Although the largest annual public investment i s in education ($32 per capita) and health ($16 per capita), even in these sectors, Honduras’ deficit of education in rural areas i s as high as 29.3 percent for the population in general and over 40 percent for ethnic groups. Among these groups, illiteracy runs as high as 46 percent for the Tolupan (Census 2001). Social spending programs fall short o f covering basic needs particularly in remote rural areas where the bulk o f the ethnic groups live.
13. manageable. Fiscal implications during project implementation would include: (a) covering the administrative costs o f FHIS, particularly the Nuestras Raices unit, over the project period; and (b) partial financing o f subprojects. The GOH counterpart requirement for the Nuestras Raices Project over the three-year implementation period i s estimated at US$1,2 mill ion or 8% o f total project costs. The law
Fiscal implications, both during and after implementation o f the project, are expected to be
I’ Naciones Unidas. Comisi6n Econ6mica para AmCrica Latina y el Caribe - CEPAL. Pobreza y Vulnerabilidad Social: Mercado de Trabajo e Inversi6n Social en el Istmo Centroamericano a Inicios del Milenio. LC/MEX/L.586. 22 de diciembre de 2003.
56
establishing FHIS specifies that the budget o f the fund i s guaranteed by Government funds once the project i s approved by Congress.
14. In the case that communities prioritize the financing o f social and economic infrastructure, these would be coordinated with the respective line ministries and be replacements so that, in general, no additional recurrent costs would be created. For those exceptional subprojects that entail an increase in Government expenditures on recurrent costs, prior endorsement o f the subproject by the relevant line ministry would continue to be required. Such inter-institutional coordination has considerably improved during recent years so that the financial implications are manageable.
15. Contributions from communities who receive grants for subprojects are calculated at twelve percent (in cash or in kind) o f the total cost o f each community subproject, based on previous experience with Nuestras Raices and other FHIS projects which indicate that such contribution tends to exceed 20 percent.
16. of investment costs, which i s expected to bome largely by communities (in accordance with subproject maintenance plans developed based on the training communities receive in O&M issues). Operation and maintenance o f subprojects are important criteria for subproject selection. These issues w i l l be discussed prior to subproject implementation with each eligible community and agreements w i l l be made as part o f the grant agreement on how to operate and maintain the project. FHIS/NR w i l l assess the institutional capacity o f the Project Implementation Committees to carry out the subprojects and to ensure subsequent financial and technical sustainability of subprojects. As the Committees are able to procure and contract goods and services locally, a positive impact on savings i s expected. Communities are trained to use savings for purposes agreed on by the community group, including a maintenance fund or enhancement of the project itself.
Operation and maintenance (O&M) o f completed subprojects i s estimated to average 2 percent
57
Annex 10: Safeguard Policy Issues HONDURAS: Nuestras Raices Program
1. SOCIAL SAFEGUARDS
Social Analysis
1. The Nuestras Raices Project i s targeted entirely to indigenous and Afro-Honduran peoples, therefore the project itself i s considered to be an Indigenous Peoples Development Plan (IPDP) consistent with the O.D. 4.20 (or the revised O.D. 4.10).
2. evaluation o f the previous projects (NR IV and V), carried out in 2002; and (b) a series o f seven 1 to 5- day workshops with the indigenous and Afro Honduran representations in different parts o f the country, as part o f project preparation. The ex-post evaluation included a household survey o f beneficiary and non- beneficiary households and focus groups with direct beneficiaries and interviews with stakeholders, to measure social and economic impact. The evaluation was used to identify strengths and weaknesses o f the program, capitalize on lessons learned, re-evaluate development priorities with participants, and set out a long-term plan o f interventions for indigenous and Afro-Honduran peoples.
The elements used for the social analysis o f this project included: (a) the results o f the ex-post
3. the participation o f the nine ethnic representations, FHIS, and frequent Bank presence, as follows:
Seven project preparation workshops were carried out between July 2003 to January 2004, with
July 2003: Discussion o f results o f Nuestras Raices ex-post evaluation and lessons learned. Tegucigalpa. August and September 2003: Informed consultation on Nuestras Raices V objectives and strategies. Tegucigalpa. October 2003: Discussion o f the program’s philosophical and conceptual framework, basic principles and concepts o f project design. L a Esperanza, Intibuch. October and November 2003: Elaboration o f PEC Manual by O M Task Force. January 2004: Revisions o f PECINH Manual and review o f project design, legal and operational guidelines, and logical framework. Siguatepeque, Comayagua.
. - = =
4. project design. After every workshop, the delegates o f each group consulted with their respective assemblies. In order to develop the Operational Manual (OM), that would be acceptable and culturally adapted to the needs o f the ethnic groups, an “OM Commission” was created, made up o f nine representatives o f the ethnic federations. This commission worked out the details o f the O M with a local consultant. In the sixth workshop, i t was agreed that further adaptation o f the methodological guidelines and forms may be needed to satisfy language and logistics requirements o f each group. Beneficiaries w i l l continue to participate through implementation, monitoring and evaluation o f the project.
During project preparation, the representations o f ethnic groups participated in every step o f the
Identification of Risks
5. minimized, but need to be continuously monitored during project. For instance:
Given the participatory nature o f project preparation, the safeguards-related r isks have been
6. ethnic federations, Bank team) decision was made to maintain ‘one representation per ethnic group’ for
Proliferation offederutions. To support the unity o f the ethnic representations, a tripartite (FHIS,
58
the purposes o f the Nuestras Raices Project. This strategy also supports efforts o f the ethnic peoples for the future reconfiguration o f the latent Confederation o f Autochthonous Peoples of Honduras (CONPAH) .
7. Legal status agreement. Following the Bank’s Fiduciary Management for Community-Driven Development Projects: A Reference Guide (May 2002), and in agreement with all involved parties, the “legal status” o f the Project Implementation Committees (PIC) w i l l be an option-encouraged and facilitated by the project-but not a requirement. Consistent with the OD 4.20, communities w i l l be encouraged to select already existing organizations that fulfill minimal requirements as the PIC for the purposes o f the project, instead o f creating new ones.
Gender Equity12
8. participation o f men and women differ from one ethnic group to another. Since the overall objective of the Nuestras Raices Program i s to increase participation of the ethnic groups and their access to resources, i t i s important to integrate gender equity into the approach. Since i t s inception, the NR Program has had a gender focus. Results from the ex-post evaluation showed women made up 43 percent of the general coverage o f benefi~iaries.’~
The gender roles and responsibilities in ethnic groups in Honduras are culturally specific and the
9. Nuestras Raices team developed a gender strategy with the objective to14:
Building on past gender practice in the program and in consultation with the ethnic groups, the
(a) Ensure equal participation of men and women at the beneficiary level-targeting women in some ethnic groups where they often have been excluded in the past (Mayas, Chortis, Pech) and men where they have been excluded in the past (Garifuna and Miskito);
levels), thereby supporting equal participation o f men and women in the training o f human resources. This would support the activities throughout the project cycle from design through monitoring and evaluation with a goal o f 50 percent participation o f women and 50 percent participation o f men in all program activities; and
variety o f issues including community leadership, project management, as members o f the implementation committee, and managerial positions.
(b) Address gender in the capacity-building efforts that cut across program activities (at all
(c) Address gender specific needs-this would include leadership training for women on a
l2 While sex refers to the biological state of being male or female, gender refers to the social state of being a man or woman. Gender i s a variable - like class, ethnicity, nationality, and religion - used to “identify and measure differences in the roles of men and women, the activities they undertake, the responsibilities they have, the opportunities and constraints they face, and ultimately, their well-being. Gender i s dynamic because men’s and women’s roles - as dictated by changing social and cultural norms and values - also vary over time’. Moser, C., Tornqvist, A,, van Bronkhorst, B.1998. Mainstreaming Gender and Development in the World Bar& Progress and Recommendations. The World Bank, ESSD, Washington D.C. l3 ESA Consultores, “Evaluacion del Programa “Nuestras Raices” -Etapa I V (January 2003). l4 The gender strategy was developed in collaboration with “Program for Gender Mainstreaming in World Bank- financed Projects in Central America-PROGENIAL” which was created by the World Banks Latin America region in 2000. The purpose of the program i s to address the challenges related to gender equality and equity in the sub- region by providing targeted technical assistance to 38 government projects benefiting from World Bank financing. PROGENIAL has been funded by a Japan Policy and Human Resources Development (PHRD) Grant (2000-03) and i s at present sponsored by the Bank - Netherlands Partnership’s window for Capacity building (2003-2005).
59
10. Consequently, training programs, methodologies and materials w i l l incorporate gender systematically to ensure that gender i s addressed throughout the project cycle. Equally, the monitoring and evaluation system for the project includes gender specific indicators to document changes over time. Finally, the NR team in FHIS w i l l continue to include a gender specialist to ensure that gender i s implemented throughout the project cycle.
2. ENVIRONMENTAL SAFEGUARDS
1 1. though the Nuestras Rakes Project has been conceived to contribute to the development o f indigenous and Afro-Honduran communities, empowering them to manage and implement their own projects to improve their living conditions, the possibility to finance small-scale infrastructure in sensitive areas might cause potentially adverse environmental impacts.
The project has been classified as Category B with safeguard screening category of Sf. Even
12. process, which includes training modules to increase environmental awareness. The project w i l l allow communities to select subprojects in accordance to their priorities, only restricted by a “negative” list of subprojects which are not eligible for financing. Communities are expected to identify, among others, small vertical infrastructure subprojects (reconstructionhehabilitation of schools, health centers, small markets), water and sanitation services (reconstruction/ rehabilitation o f piped systems, powered or hand water pumps, latrines, septic tanks), domestic solid waste management subprojects, as well as environmental and risk management infrastructure, activities and services (forestation, reforestation, erosion control, flood prevention), or environment friendly productive projects (environment friendly coffee mi l l s , waste water reuse, etc.). Given the nature o f these subprojects, it i s expected that negative environmental impacts would be site-specific due to the nature o f the respective subproject.
The identification o f subprojects wil l be carried out through a participatory development planning
13. team reviewed the scope and instruments for environmental assessment incorporated in the PEC Operations Manual. Reviews included comparison with existing Social Fund Environmental guidelines and the FHIS environmental criteria for project assessment. I t i s concluded that the PEC Operations Manual includes the necessary steps to ensure that environmental assessment issues are adequately addressed in the subproject cycle. These are:
Environmental Instruments included in the Operational Manual. The project preparation
Environmental protection policy outlined throughout the Operational Manual. The O M clearly states the environmental protection w i l l be enforced throughout the different possible interventions financed by the NR Project, including community training, enforcing environmental norms and standards available in the country. Communities w i l l select and appoint, as part o f their responsibilities for managing grant funds, an environmental watch man (“vigilante ambiental”) who w i l l be trained under the project and who w i l l be responsible for the subprojects environmental audit (“contraloria ambiental”).
e Environmental Monitoring Indicators. Based on FHIS’s already existing and tested ex-ante and ex-post evaluation criteria for water and sanitation, environmental indicators for subproject appraisal wi l l be applied during the respective project cycle stages and wi l l be included in the ex post monitoring and in the final project evaluation.
e Community training modules that accompany the implementation o f the subprojects are designed to raise environmental awareness and protect the environment. Three out o f nine community training modules address environmental issues such as sustainability and mitigation measures, and environmental risk management.
60
0 Environmental topics addressed throughout the project cycle. The environmental assessment o f subproject i s integrated in the pre-appraisal and appraisal stages o f the sub project cycle. The methodology used to elaborate the community development plans w i l l help communities identify their environmental surroundings and environmental issues associated with any chosen subprojects. The design and evaluation phase o f the subprojects w i l l ensure that environmentally sound projects are prepared, and that environmental mitigation and risk management measures are included where necessary. Subproject supervision and monitoring w i l l ensure the implementation o f training modules and mitigation measures defined in the subproject design. Post-construction monitoring w i l l reinforce the community’s environmental sustainability commitments, and if needed, the project wi l l finance additional training (the maintenance training module addresses environmental sustainability in three sessions: El Futuro de la Comunidad, El U s 0 y el Mantenimiento Preventivo and Comunidad y la Protecci6n de su Ambiente).
14. Implementation arrangements. The NR team and FHIS Environmental Unit (FHIS UGA) wi l l coordinate for the preparation o f training modules and to carry out the environmental instruments designed for subproject appraisal and monitoring. The PEC Operational Manual incorporates instruments that w i l l be employed as part o f the implementation process o f the NR Program, which can be adjusted in accordance with the subproject’s needs. In addition, the NR team, with support from FHIS’s UGA, wi l l coordinate, when possible, with the municipal environmental units in the environmental assessment o f subprojects and in the monitoring o f the mitigation measures financed by the program.
15. by FHIS identifies the costs o f activities associated with the capacity building, translation and reproduction o f materials, and monitoring costs required for adequately addressing environmental aspects o f the project.
Nuestras Rakes Program Environmental Action Plan (EAP). The project’s EAP developed
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Annex 11: Project Preparation and Supervision
HONDURAS: Nuestras Raices Program
Planned Actual PCN review September 8,2003 Initial PID to PIC February 19,2004 Initial ISDS to PIC February 19,2004 Appraisal March 8,2004 Negotiations March 8,2004 Board/RVP approval May 4,2004 Planned date o f effectiveness Planned date of mid-term review Planned closing date May 31,2008
September 15,2004 December, 2005
Key institutions responsible for preparation of the project:
Fondo Hondurefio de Inversidn Social (FHIS)
Bank staff and consultants who worked on the project included:
Name Title Unit Andrea Vermehren Sr. Social Protection Specialist & LCSHD
Helena Ribe Country Sector Leader LCSHD Pilar E. Gonzalez Country Counsel LEGLA Fabiola Altimari Consultant LEGLA
Evelyn Villatoro Sr. Procurement Specialist LCOPR Catherine Gibbons Social Development Specialist LCSHD Ximena Traa-Valarezo Social Evaluation Specialist LCSHD R e d Rodriguez Social Fund Specialist LCSHD Martin Ochoa Water & Sanitation Specialist EWDAN Patricia Oma Language Program Assistant LCSHD
Team Leader
Rajeev Swami Financial Mgmt. Specialist LCOAA
Bank funds expended to date on project preparation: 1. Bank resources: 50,000 2. Trust funds: $0 3. Total: 50,000
Estimated Approval and Supervision costs: 1. Remaining costs to approval: $25,000 2. Estimated annual supervision cost: US$80,000
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Annex 12: Summary of Results from Ex post Evaluation
HONDURAS: Nuestras Raices Program
1. concluded that the NR program was very successful in meeting i t s objectives. More specifically, i t presented the following findings:
An ex post evaluation of the Nuestras Raices (NR) program, conducted by ESA Consultores,
2. Program Strengths:
9 The Nuestras Raices was highly effective in targeting i t s resources to benefit extremely poor communities and households. 73percent o f beneficiary households belong to the bottom three income categories (national average: 50%).
9 The Ethnic Federations were effective in promoting the program in the ethnic communities and the program served to increase their legitimacy and build their management capacity.
9 The evaluation confirmed that the projects selected represented the priorities identified by the communities. I t also found that 76percent o f the community members interviewed felt that they had or would benefit from the project implemented.
9 The project was effective in executing small-scale projects that satisfied community needs for social and economic infrastructure.
9 The program was effective in putting cash in the hands o f the group members and in promoting the culture o f savings, with 56 percent o f the groups organizing Cajas Rurales.
9 The project promoted gender equity, with male and female participation in the groups roughly equal and women representing 41 percent o f the Caja membership and 60 percent o f the Caja elected leadership.
3. The evaluation also noted some aspects o f the program that required strengthening.
4. Weaknesses were found in the following areas:
9 There was no funding available for project materials. This limited communities to implementing projects that required only labor and were, in turn, less sustainable.
k The training provided to coordinators for dissemination among working groups was not effective in penetrating down to the local community level, where it was needed.
9 The communities’ understanding o f the Caja Rural management was insufficient.
5. made the following recommendations:
To build on the strengths o f the program and address these short-comings, the evaluation team
9 Continue to use the targeting strategy that has proven highly effective in reaching extremely poor households.
9 Allow investments in larger scale infrastructure projects (increase amount assigned per
9 Transform the program to a community-based investment and development program. 9 Allow the communities to use a portion o f the resources to purchase materials and technical
assistance to carry out more complex and better quality projects. 9 Through the Ethnic Federations, promote the concept o f donated community labor for project
execution and maintenance. Provide training and, possibly, resources (tools, etc.) for project maintenance.
group).
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> The training strategy should be revised so that it serves to build the self-management capacities o f the communities. On-going technical assistance should be provided to the communities as they progress through each phase of the project cycle.
9 Rethink the caja rural component, while building upon the foundations that have already been established.
> Promote the creation o f regional level cajas to achieve greater economies o f scale and to facilitate the delivery o f training and technical assistance.
9 Promote the involvement o f an organization that i s specialized in microfinance to strengthen the caja rural component o f the program
64
1.
2. 3. 4.
5.
6. 7.
8. 9.
Annex 13: Documents in the Project File HONDURAS: Nuestras Raices Program
Operational Manual for “Proyectos Ejecutados por la Comunidad” (Draft), Honduras, August 13,
Impact Evaluation Report, May 19, 2003 - ESA Consultants
Expert Report on “Cajas Rurales / Microfinance”, June 2-14, 2003 - Norah Becerra
OED Evaluation Nuestras Raices as part of the Evaluation of the OD 4.20 -Summary Report: Results o f Selected World Bank Interventions on the Indigenous and Afro Caribbean Populations in Honduras
Report on Gender on Nuestras Raices, Agosto 2003 - PROGENIAL and FHIS
Nuestras Rakes - Spectrum (article)
“Thinking Out Loud”, Empowering Autochthonous Peoples in Honduras with Knowledge and Mechanisms for Social Auditing: The Nuestras Raices (Our Roots) Program - Ximena Traa- Valarezo / World Bank, Washington D.C. and Jorge Rodriguez / FHIS, Honduras
Summary of Workshop with Ethnic Federations, August 2003 - Aide-Memoire, Annex 1
Project Appraisal Document for the Honduras Fifth Social Investment Fund, Washington D.C., November 20, 2000 - Report No. 21355-HO / World Bank
2003 - FHIS
10. Pobreza y Vulnerabilidad Social: Mercado de Trabajo e Inversi6n Social en el Istmo Centroamericano a Inicios del Milenio, Naciones Unidas, December 22, 2003 - CEPAL
65
Annex 14: Statement of Loans and Credits
HONDURAS: Nuestras Rakes Program Difference between expected and actual
disbursements Original Amount in US$ Millions
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d
PO40177 2003 PO81172 2003
PO57859 2002
PO53575 2002
PO60785 2001
PO07397 2001
PO64895 2001
PO73035 2001 PO57538 2001
PO64913 2000 PO57350 1999 PO44343 1998
PO07398 1997
HN Financial Sector Technical Assistance
HN Regional Dev in the Copan Valley HN SUST COASTAL TOURISM PROJECT (LIL) HN- HEALTH SYSTEM REFORM PROJECT HN ECONOMIC & “.MANAGEMENT PROJECT HN COMMUNITY-BASED EDUCATION PROJECT HN FIFTH SOCIAL INVESTMENT FUND PROJECT HN Access to Land Pilot (PACTA) HN ROAD RECONSTRUCTION AND IMPROVEMENT HN EMERG DISASTER MGMT (TAL) HN PROFUTURO
GEF HN-BIODIVERSITY CONSERVATION HN RURAL LAND MGMT
0.00 0.00 0.00
0.00
0.00
0.00
0.00
0.00 0.00
0.00 0.00 0.00
0.00
9.90 12.00 5.00
27.10
19.00
4 1.50
60.00
8.00 66.50
10.82 8.30
0.00
34.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 7.00
0.00 0.00
0.00 0.00 0.00
0.00
0.00
0.00
0.00
0.00 0.00
0.00 0.00 0.00
0.00
10.09 12.10 4.17
28.48
12.69
37.38
23.86
6.45 42.18
7.18 3.78 2.44
0.74
0.00 0.00 0.00 0.00 1.30 1.97
-1.52 0.00
14.53 0.00
15.42 0.00
-1.37 0.00
3.52 0.00 3.33 0.00
0.94 0.00 -0.49 3.41 7 00 0.00
-5.43 -5.42
Total: 0.00 302.12 0.00 7.00 0.00 191.54 37.23 - 0.04
HONDURAS STATEMENT OF IFC’s
Held and Disbursed Portfolio
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.
1998 Camino Real Plaz 1.07 0.00 0.00 0.00 7.07 0.00 0.00 0.00 Elcosa
0195 0.00 0.63 0.00 0.00 0.00 0.63 0.00 0.00
1986199 Granjas Marinas 4.50 0.00 0.00 0.00 4.50 0.00 0.00 0.00
Total portfilio: 11.57 0.63 0.00 0.00 11.57 0.63 0.00 0.00
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
Total pending commitment: 0.00 0.00 0.00 0.00
66
Annex 15: Country at a Glance
HONDURAS: Nuestras Rakes Program
1982-92 1992-02 2o02 (average annualgrowth) Agriculture 3.5 15 -0.9 Industry 3.5 3.2 16 ..
Manufacturing 4.1 4.1 5.2, .. Services 3.0 3.6 4.5 .. Private consumption 3.0 2.9 3.8 .. General government consumption 2.4 4.6 11.3 .. Gross domestic investment 9.0 3.9 -3.9 Imports of goods and services 4.1 3.3 3.6
Lat in POVERTY and SOCIAL America
Honduras &Car ib .
Growth of expor ts and impor ts ( O h )
M
5
0
-5
-10
.15
-Exports -Imports - -
2002 (millions) 6 8 527 method, US$) 3280
1,727 GNI (Atlas method, US$ tntlions)
Average annual growth, 1996-02
Population (“A) 2 6 15 Laborforce (%) 3 7 2 2
M o s t recent es t imate ( la tes t year available, 1996-02)
5 76 66 71 31 27
Lo we r- middle- income
spn 1,390
3,352
10 12
49 69 30
%of children under5) n 9
24 n 86 86
106 x)5 107
)evelopment diamond*
Life expectancy
T 3NI Gross )er primary :apita nroliment
1
Access to imDroved water source
-Honduras _ _ Lo wer-middle-income group
1982 1992 2001
2.9 3.4 141 260 30.5
P O 8.0 5.9 15.8
-7.9 -7.5 3.8 4 7
25.9 29.8
5 lt38 78.9
.. 493
.. 102.0 Indebtedness
~ H o n d u r a s
STRUCTURE o f the ECONOMY
(“’%of GDP) Agriculture Industry
Services
Private consumption General government consumption Imports of goods and services
Manufacturing
1982 1992 2001 2002
21.6 20.4 t3.7 24.4 29.6 315 14.7 V.8 20.3 53.9 50.0 54.8
75.0 69.4 72.3 t3.1 115 x3.8 28.1 36.6 54.9
I Growth of investment and GDP (%)
10
0
5
-5 I -GDI &GDP
67
Honduras PRICES and GOVERNMENT FINANCE
Domes t i c p r i ces (%change) Consumer prices Implicit GDP deflator 44
Government f inance (“A of GDP, includes current grants) Current revenue u 5 Current budget balance -15 Overall sumlus/deficit -x3 1
1982
TRADE
(US5 millions) Total exports (fob)
Bananas Coffee Manufactures
Total imports (cif) Food Fuel and energy Capital goods
Ewort price index (1995=X)O) Import price index (?395=X)O) T e n s of trade (?395=X)O)
1982
677 2 8 153
739 134 167 115
BALANCE of PAYMENTS 1982
(US5 millions) Exports of goods and sewices 767 Imports of goods andsewices 823 Resource balance -56
Net income Net current transfers
-202 n
Current account balance -228
Financing items (net) Changes in net reserves
144 84
Memo: Resewes including gold (US5 millions) Conversion rate (DEC, local/US$) 2.0
EXTERNAL DEBT and RESOURCE FLOWS
(US5 millions) 1982
1,844 IBRD 2 7 IDA 79
Total debt outstanding and disbursed
Total debt sewice IBRD IDA
Compositionof net resourceflow Official grants Official creditors Private credRors Foreign direct investment Portfolio equity
World Bank program Commitments Disbursements Principal repayments
244 21 1
34 163
1 14 0
30 51 7
1992
8.8 9.1
n.7 16
-3.8
1992
833 256 147
1,086 a4 161 201
81 79
x)3
1992
1,002 1234 -232
-169 63
-258
299 -41
299 5.5
1992
3,893 489 m2
377 89 2
162 221 -16 48 0
54 63 47
2001
9.7 8.6
18.2 -0.4 -8.1
2001
1,379 204 161
2,997 480 402 867
90 110 82
2001
2,447 3,5P
-1,064
-141 550
-325
405 -80
1386 15.5
2001
5,050 P8 901
343 8 x)
8 7 209 -69 8 5
0
201 98 9
2002
8.1 7.3
19.7 0.3
-7.0
2002
1,435
2,979
904
89 x)9 82
2002
2,584 3,621
-1,037
-e9 603
-60
l,U2 16.4
2002
5,395 x)5
to14
4x) 33 U
69 4 3
27 51 28
In f la t ion (%) I
97 98 99 w 01
-GDPdeflatOr -CPI
Export and impor t levels (US$ mill.)
2.645
0
I O2 I 96 97 98 99 00 01
Exports Imports
Current account balance to GDP (%)
0 1
-2 -3 -4 -5 -6 -7 -8 -9
.
Sompos i t i on of 2002 debt (US$ mill.
4 - iBRD E - Bilateral I . IDA D ~ Other mitilateral F - Private ; - IMF G - Short-terr
68
MAP SECTION
A