the world bank for official use only · board presentation: may 29, 2008 (expected) • none...

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 42737-HT

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR9.6 MILLION (US$15.7 MILLION EQUIVALENT)

TO THE

REPUBLIC OF HAITI

FOR AN

URBAN COMMUNITY-DRIVEN DEVELOPMENT PROJECT (PRODEPUR)

April 29, 2008

Sustainable Development Department Caribbean 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 of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 12, 2008)

Currency Unit = Gourdes US$1 = 37 Gourdes

1 Gourde = US$0.027

FISCAL YEAR October 1 – September 30

ABBREVIATIONS AND ACRONYMS

APG Adaptable Program Grant ASEC Communal Section Assembly (Assemblée Section Communale) AVSI Volunteer Association for International Service (Associazone Volontari per il Servicio

Internazionale) BCOIZP Office for the Operational Coordination of Interventions in Priority Zones (Bureau de

Coordination Opérationnelle des Interventions dans les Zones Prioritaires) BMPAD Office of Monetization of Development Aid Programs (Bureau de Monétisation des Programmes

d’Aide au Développement, or Bureau de Monétisation) (formerly the PL-480 Management Office)

BND Nutrition and Development Bureau (Bureau de Nutrition et de Developpement) BTC Technical Coordination Bureau (Bureau Technique de Coordination) CAS Country Assistance Strategy CASEC Administrative Council of the Communal Section (Conseil d’Administration de la Section

Communale) CBO Community-Based Organization CDB Caribbean Development Bank CDD Community-Driven Development CEM Country Economic Memorandum CFAA Country Financial Accountability Assessment CGF Center for the Administration of Local Funds (Centre de Gestion des Fond Loceaux) CHF Cooperative Housing Foundation CNDDR National Commission for Disarmament, Demobilization, and Reintegration COPRODEP Project Development Council (Conseil du Projet de Développement Participatif) CPAR Country Procurement Assessment Review DA Designated Account DDR Disarmament, Demobilization, and Reintegration DSNCRP Poverty Reduction Strategy Paper (Document de Stratégie Nationale pour la Croissance et la

Réduction de la Pauvreté) EGRO Economic Governance and Reform Operation EGTAG Economic Governance Technical Assistance Grant EMF Environmental Management Framework EMP Environmental Management Plan EPCA Emergency Post-Conflict Assistance ERDMP Emergency Recovery and Disaster Management FIRR Financial Internal Rate of Return FMR Financial Monitoring Report GDP Gross Domestic Product GoH Government of Haiti HSI Haiti Stabilization Initiative HTG Haitian Gourde ICF Interim Cooperation Framework

ICRC International Committee of the Red Cross IDA International Development Association IDB Inter-American Development Bank IEC Information, Education, and Communication IEG Independent Evaluation Group IFR Interim Unaudited Financial Report IMF International Monetary Fund IOM International Organization for Migration ISN Interim Strategy Note ITC Information Technology Center LICUS Low-income Country Under Stress M&E Monitoring and Evaluation MCPE Ministry of Planning and External Cooperation MDOD Service Providers (Maîtres d’Ouvrage Délégués) MEF Ministry of Economy and Finance MINUSTAH United Nations Stabilization Mission in Haiti (Mission des Nations Unies pour la Stabilisation en

Haiti) MIS Management Information System NGO Non-Governmental Organization O&M Operation and Maintenance PADF Pan-American Development Foundation PAHO Pan-American Health Organization PCF Post-Conflict Fund PCU Project Coordination Unit (Unité de Coordination du Projet) PEMFAR Public Expenditure Management and Financial Accountability Review PER Public Expenditure Review PFM Public Financial Management PHR Protecting Human Rights in Haiti Program POM Project Operations Manual PMP Pest Management Plan PREPEP Program for Revitalization and Promotion of Peace and Understanding (Programme de

Revitalisation et de Promotion de l’Entente et de la Paix) PRODEP Community Participation Development Project (Projet de Développement Communautaire

Participatif) PRODEPAP Pilot Community-Driven Development Project in Port-au-Prince Area (Projet Pilote de

Développment CommunataireParticipatif dans l’aire Metropolitaine de Port-au-Prince) PRODEPUR Urban Community-Driven Development Project (Projet de Développement Communautaire

Participatif en Milieu Urbain) PRSP Poverty Reduction Strategy Paper RAP Resettlement Action Plan SBD Standard Bidding Document TSS Transitional Support Strategy UN United Nations UNDP United Nations Development Programme UNOPS United Nations Office for Project Services USAID United States Agency for International Development

Vice President: Pamela Cox Country Director: Yvonne M. Tsikata Country Manager Mathurin Gbetibouo Sector Manager: Ethel Sennhauser

Task Team Leader: Garry Charlier Co-Task Team Leader: Bernice van Bronkhorst

HAITI Urban Community-Driven Development Project (PRODEPUR)

CONTENTS

Page

I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 9 A. Country and sector issues.................................................................................................... 9

B. Rationale for Bank involvement ....................................................................................... 16

C. Higher-level objectives to which the project contributes ................................................. 16

II. PROJECT DESCRIPTION ............................................................................................... 17 A. Lending instrument ........................................................................................................... 17

B. Project development objective and key indicators............................................................ 17

Project components................................................................................................................... 18

C. Lessons learned and reflected in the project design.......................................................... 21

D. Alternatives considered and reasons for rejection ............................................................ 23

III. IMPLEMENTATION ........................................................................................................ 24 A. Partnership arrangements (if applicable) .......................................................................... 24

B. Institutional and implementation arrangements................................................................ 24

C. Monitoring and evaluation of outcomes/results................................................................ 28

D. Sustainability..................................................................................................................... 30

E. Critical risks and possible controversial aspects............................................................... 31

F. Grant conditions and covenants ........................................................................................ 32

IV. APPRAISAL SUMMARY ................................................................................................. 33 A. Economic and financial analyses ...................................................................................... 33

B. Technical........................................................................................................................... 34

C. Governance ....................................................................................................................... 35

D. Fiduciary ........................................................................................................................... 35

E. Social................................................................................................................................. 35

F. Environment...................................................................................................................... 38

G. Safeguard policies............................................................................................................. 39

H. Policy Exceptions and Readiness...................................................................................... 39

Annex 1: Country and Sector or Program Background ......................................................... 40

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 55

Annex 3: Results Framework and Monitoring ........................................................................ 56

Annex 4: Detailed Project Description...................................................................................... 63

Annex 5: Project Costs ............................................................................................................... 69

Annex 6: Implementation Arrangements ................................................................................. 70

Annex 7: Financial Management and Disbursement Arrangements..................................... 75

Annex 8: Procurement Arrangements ...................................................................................... 86

Annex 9: Economic and Financial Analysis ............................................................................. 90

Annex 10: Safeguard Policy Issues............................................................................................ 95

Annex 11: Project Preparation and Supervision ................................................................... 104

Annex 12: Documents in the Project File ............................................................................... 105

Annex 13: Statement of Loans and Credits............................................................................ 106

Annex 14: Country at a Glance ............................................................................................... 107

Annex 15: Risk Identification Worksheet............................................................................... 110

Annex 16: Sketches ................................................................................................................... 114

Annex 17: Government of Haiti List of Priority Zones......................................................... 121

Annex 18: Map – HAI36099..................................................................................................... 122

6

HAITI

URBAN COMMUNITY-DRIVEN DEVELOPMENT PROJECT (PRODEPUR)

PROJECT APPRAISAL DOCUMENT

LATIN AMERICA AND CARIBBEAN

LCSAR

Date: April 29, 2008 Team Leaders: Garry Charlier, Bernice K. Van Bronkhorst

Country Director: Yvonne M. Tsikata Sector Manager/Director: Ethel Sennhauser

Sectors: General water, sanitation, and flood protection sector (30%); Roads and highways (30%); General education sector (25%); General agriculture, fishing, and forestry sector (10%); Central government administration (5%) Themes: Participation and civic engagement (P); Conflict prevention and post-conflict reconstruction (S); Municipal governance and institution building (S); Managing for development results (S)

Project ID: P106699 Environmental screening category: Partial Assessment

Lending Instrument: IDA grant

Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$M.): 15.70 Proposed terms: Standard IDA Grant

Financing Plan (US$M) Source Local Foreign Total

BORROWER/RECIPIENT 0.00 0.00 0.00 IDA Grant 11.10 4.60 15.70 Local Communities 0.80 0.00 0.80 Total: 11.90 4.60 16.50 Borrower/Recipient: Republic of Haiti Responsible Agency: Bureau de Monétisation des Programmes d’Aide au Développement / Bureau de Monétisation (formerly the PL-480 Management Office) Boulevard Harry Truman, Ancien Immeuble Casino International P.O. Box 2488

7

Haiti Tel: 509-223-8625 Fax: 509-221-2149 [email protected] http://www.bureaudegestion.gouv.ht/

Estimated Disbursements (Bank FY/US$m) FY 9 10 11 12 13 14 0 0 0 Annual 1.50 3.00 4.00 3.20 2.90 1.10 0.00 0.00 0.00 Cumulative 1.50 4.50 8.50 11.70 14.60 15.70 0.00 0.00 0.00 Project implementation period: Start: October 1, 2008 End: September 30, 2013 Expected effectiveness date: September 1, 2008 Expected closing date: March 31, 2014

Does the project depart from the CAS in content or other significant respects? Ref. PAD A.3 [ ]Yes [X] No

Does the project require any exceptions from Bank policies? Ref. PAD D.7 Have these been approved by Bank management? Is approval for any policy exception sought from the Board?

[ ]Yes [X] No [ ]Yes [X] No [ ]Yes [X] No

Does the project include any critical risks rated “substantial” or “high”? Ref. PAD C.5 [X]Yes [ ] No

Does the project meet the Regional criteria for readiness for implementation? Ref. PAD D.7 [X ]Yes [ ] No

Project development objective Ref. PAD B.2, Technical Annex 3 To improve access to, and satisfaction with, (a) basic and social infrastructure and services, and (b) income-generating opportunities for residents of targeted disadvantaged urban areas. This objective will be achieved through a participatory process in which community-based organizations propose, select, implement, and maintain subprojects. Project description Ref. PAD B.3.a, Technical Annex 4 Building on Haiti’s positive experience with the ongoing Rural CDD Project (PRODEP) and Urban CDD Pilot Project (PRODEPAP), the proposed project would support the GoH to replicate and/or scale-up the CDD approach and benefits in 10 targeted disadvantaged urban areas—identified as Priority Zones (“Flash Points”) that have been both victim and cause of explosive and violent conflicts—in five urban centers in Haiti.

- Component 1: Community Subproject Funding, Management, and Support (US$13.5 million; IDA US$12.70 million) would finance: (a) small-scale socioeconomic infrastructure and productive/income-generating subprojects; and (b) contracting of service providers.

- Component 2: Capacity-Building and Technical Assistance (US$0.90 million – IDA only) would finance: (a) training-of-trainer events; (b) capacity-building and technical assistance; (c) workshops with service providers to harmonize practices to accompany CBOs and Project Development Councils in carrying out the activities under Component 1; (d) training of Bureau

8

de Monétisation staff in order to effectively supervise overall project implementation; (e) various consultant services; and (f) policy dialogue to engage GoH and other relevant stakeholders on a medium- to long-term national strategy to facilitate the mainstreaming of the urban CDD approach and mechanisms.

- Component 3: Project Administration, Supervision, and Monitoring and Evaluation (US$2.1 million – IDA only) would finance incremental costs associated with project implementation, administration, supervision, and monitoring and evaluation by the Bureau de Monétisation through its Project Coordination Unit (PCU/Bureau de Monétisation), which operates under the oversight of the Ministry of Economy and Finance. Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 10 Environmental Assessment (OP/BP 4.01) Significant, nonstandard conditions, if any, for: Ref. PAD C.7 Board presentation: May 29, 2008 (expected)

• None Loan/credit effectiveness: September 1, 2008 (expected)

• None Negotiations:

• A Project Operations Manual (POM) satisfactory to the Association is adopted by the Recipient.

• A short-list acceptable to the Association of qualified MDODs is prepared by the Recipient.

• First Year internal audit plan is prepared by the Recipient. • Update of Bureau de Monétisation’s accounting software.

Covenants applicable to project implementation:

• Within one month of the Effective Date, the Recipient shall execute the first MDOD contract satisfactory to the Association for the provision of services needed for the implementation of Component 1: Community Subproject Investment and Management.

• Within one month of the Effective Date, the Recipient shall ensure that the financial management/accountant assistant has been appointed.

• Within one month of the Effective Date, the Recipient shall execute the contract, satisfactory to the Association, for the establishment of the baseline of the project.

• Within three months of the Effective Date, the Recipient shall execute the contracts, satisfactory to the Association, for (a) the provision of the external financial audit of the project, and (b) the external technical audit of the project.

9

I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

Overall country context

1. In the last few years, Haiti has made significant progress in stabilizing its security situation and economy and restoring the population’s faith in political institutions. The economic reforms first introduced by the transitional government have continued to be implemented by the Préval Administration and are showing positive results. For fiscal year 2006, real gross domestic product (GDP) growth was 2.1 percent. GDP growth is expected to continue to accelerate, to an annual average of 4 percent from 2007 to 2011. Inflation has been curbed, from a high of nearly 40 percent in 2003 to 8 percent in March 2007.

2. A national dialogue among the government, the private sector, and civil society resulted in the adoption of a Poverty Reduction Strategy Paper (PRSP) in November 2007. Haiti’s Poverty Reduction Strategy consists of three pillars: (a) drivers of growth (agriculture and rural development, tourism, infrastructure); (b) human development (education and training, health, water and sanitation, the handicapped, children in poverty, youth, HIV/AIDS, gender equality); and (c) democratic governance (justice, security, modernization of the state, territorial management, macroeconomic framework).

3. Nevertheless, Haiti continues to be the poorest country in the Western Hemisphere, and one of the most disadvantaged in the world. According to 2001 data, 78 percent of Haitians are poor (living on less than US$2 a day), and more than half (54 percent) live in extreme poverty (living on less than US$1 a day). With an infant mortality rate of 75 per 1,000 births, illiteracy of 47 percent, and the highest incidence of HIV/AIDS outside of sub-Saharan Africa, Haiti ranks 146th out of 177 countries in the United Nations 2007 Human Development Index.

4. Security improved considerably in Haiti in 2007, but crime and violence continue to pose serious challenges to the country’s development. Poor urban neighborhoods in Haiti have been both victim and cause of explosive conflicts combining demographic, socioeconomic, institutional, and political risk factors.1 Violent crime rates within Haitian disadvantaged urban areas are high, and the politicized armed gangs in the major disadvantaged urban areas—particularly those of the capital, Port-au-Prince—have used them as a base for kidnapping and other criminal activities across the city. The criminal activities of these groups extend across the capital and beyond, with negative impacts on human welfare and economic activity. Violence and insecurity in the Port-au-Prince disadvantaged urban areas in particular2 has undermined the political process, fueled conflict, impeded economic activity, imposed costs on residents and 1 These findings are highlighted in the 2006 “Country Social Analysis: Social Resilience and State Fragility in Haiti,” (World Bank, April 2006), which examines the triangle of key factors contributing to the country’s “conflict-poverty trap”: (a) demographic and socioeconomic factors at the individual and household levels; (b) the role of the so-called “entrepreneurs of violence,” capable and willing to engineer violence for political, financial, and other purposes; and (c) the State’s institutional capacity to provide public goods and contain/manage social and violence risks arising from (a) and (b). 2 It is well documented (including in the above-mentioned Country Social Analysis) that the geographic sources of violence are highly concentrated in Port-au-Prince’s major disadvantaged urban areas of Cité-Soleil, Bel-Air, La Saline, and others (although gangs operate out of these areas and across the city).

10

businesses, increased migration abroad, and negatively affected development and reconstruction efforts. Living conditions in Cité-Soleil, Bel-Air, Martissant, and the other violent, impoverished urban areas in Haiti’s cities are among the worst in the Americas. Amid high unemployment and acute poverty, malnutrition is prevalent. Insufficient access to safe water and sanitation, and a lack of solid waste collection, threaten human health and the environment. There are few public facilities or services and only a nascent presence of state institutions of any kind, including law enforcement.

5. Since December 2006, when gang-related crime and violence was at its peak, joint actions between the Haitian Government and United Nations Stabilization Mission (MINUSTAH) forces, particularly in the Port-au-Prince metropolitan area, have resulted in the arrest or removal of many gang leaders and a significant drop in levels of crime and violence and a relative return to “normalcy” in the capital area and disadvantaged urban areas such as Cité-Soleil and Bel-Air. Nevertheless, it is recognized that while this represents a window of opportunity for development interventions in disadvantaged urban areas, this is a fragile “peace,” dependent in large part on the continued presence of MINUSTAH, and that the underlying causes of the instability remain to be addressed.3

6. The reform and strengthening of the Haitian National Police, which is acting together with MINUSTAH in the pacification of areas of Port-au-Prince and other cities that have been notorious for gang activities mentioned above, has been one of the government’s top priorities. Progress has also been achieved in restoring political institutions, as evidenced by the successful parliamentary, municipal, and local elections held in 2006. A key element of the government’s drive to restore security in disadvantaged urban areas throughout the country has also included the Disarmament, Demobilization, and Reintegration (DDR) Program, implemented through the National Commission for Disarmament, Demobilization, and Reintegration (CNDDR).

7. Overall, it is the Government of Haiti’s strategy to focus many of its interventions and those of donors on what it has defined as “Priority Zones.”4 As a result, these are the disadvantaged urban areas that the proposed project will be covering. The government’s strategy is based on the understanding that restoring basic services and creating opportunities for the residents of these neighborhoods go hand in hand with maintaining political stability. In turn, reducing violence and improving security conditions are of paramount importance to foster sustainable development in Haiti. Activities in these Priority Zones are coordinated by a special office and coordinator in the Office of the Prime Minister, the Bureau de Coordination Opérationnelle des Interventions dans les Zones Prioritaires (BCOIZP).

8. In addition to directing efforts to strengthen law enforcement and combat crime, cementing a lasting peace requires efforts to address the socioeconomic drivers of gang membership and violence: poverty, unemployment, and the weakness of community groups and other legitimate social organizations in disadvantaged urban areas. There is a particularly urgent

3 The events of April 2008, where violent demonstrations occurred in several of Haiti’s cities in response to rising food prices, serve as reminders of the fragility of the political and economic progress already achieved in recent years. While the rise in food prices is a global phenomenon, the impact on Haiti has been particularly significant due to its heavy dependence on imports. 4 Formerly known as “no-go zones” or “red zones,” due to their high levels of violence. See list of government priority zones in Annex 17.

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need to provide visible results—a peace dividend—in the form of jobs and improved services and living conditions in poor urban areas where gang control has recently weakened or has never taken strong hold, in an effort to help prevent a resurgence or strengthening of that power. In addition, measures to establish a positive presence of the State, as a provider of public goods, would promote a stronger and more durable peace.5

9. While urban planning was well established in Haiti up until the 1970s, in recent decades the sector has been undermined by high political volatility and instability that has resulted in unchecked urban development. However, the government is reengaging in this area. Urban development is included as one the cross-cutting policies and strategies included in its PRSP.

Socioeconomic Situation within Disadvantaged Urban Areas of Haiti

10. As mentioned, living conditions in violent and disadvantaged urban areas in Haiti are among the worst in the Americas. As more people move from rural to urban areas, the strong social cohesion that characterizes the countryside becomes less effective in reducing the likelihood of dislocation and in reducing the opportunity costs for young migrants to engage in criminal and violent activities.

11. In particular, the disadvantaged urban areas of Cité-Soleil and Bel-Air highlight the key challenges faced by Haiti today: high demographic pressure on poor metropolitan areas, without accompanied access to basic infrastructure and services, such as health and education. Similar socioeconomic conditions exist in the other disadvantaged urban areas targeted by the project. More detailed information on the socioeconomic situation of some of the project’s selected disadvantaged urban areas can be found in Annex 1.

Decentralization in Haiti

12. Haiti set forth an incipient legal framework for decentralization under the 1987 Constitution, in response to two needs: (a) to give citizens a voice in local politics, and (b) to provide citizens with basic services through the establishment of a functional local administration. The 1987 Constitution defined three categories of local governments (collectivités territoriales), each with both executive (councils/conseils) and legislative (assemblies/assemblées) bodies, as described here from the bottom up: (a) the section communale, with an Administrative Council of the Communal Section (Conseil d’Administration de la Section Communale, CASEC) and a Communal Section Assembly (Assemblée Section Communale, ASEC); (b) the commune,6 or municipality, with a three-member municipal council (headed by a mayor) and a municipal assembly; and (c) the départment, with a departmental council and a departmental assembly. All bodies are to be elected every four years and would exercise financial and administrative autonomy; only the commune, however, is empowered to levy taxes; the other decentralized structures (that is, the section communale, the department) are

5 For further analysis of the social and institutional causes of violence in Haiti, see the “Country Social Analysis: Social Resilience and State Fragility in Haiti” (World Bank 2006). For a discussion of the strategic rationale and design of targeted interventions in violence-prone urban areas, see the Country Economic Memorandum (2006). 6 Administrative changes in recent years increased the number of departments from 9 to 10, the number of communes from 133 to 140, and the number of sections communales from 565 to 570.

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therefore fully dependent on budget appropriations from the central government.7 Table 1 presents the framework of local governments.

Table 1. Framework of Local Governments Level Elected Bodies Appointed Representatives of

Central Government 1. Departments: 10 Assemblée Départmental (Departmental

Assembly) Délégués/Delegates (Ministry of Interior); Departmental Directors of other Ministries.

2. Communes (Municipalities): 140

Conseil Municipal (Municipal Council) • 1 Maire (Mayor) • 2 Adjoints (Deputies)

Assemblée Municipale (Municipal Assembly)

• Representatives of the Conseil Section Communal

• Délégues de villes8 (City delegates)

Local representation (when in place) varies among line ministries.

3. Sections Communales (Communal Sections): 570

Conseil d’Administration de la Section Communale (Administrative Council of the Communal Section, CASEC)

• 3 Conseillers (Councilmen) Assemblée Section Communale (Communal Section Assembly, ASEC)

13. In spite of this framework, Haiti has no adequately functional decentralization system, due to the following reasons:

• The legal and regulatory framework is still incomplete: The 1987 Constitution was to be followed by detailed laws comprehensively defining all aspects of the decentralization process. Few of these laws were enacted, and those that were enacted were sometimes in contradiction of the 1987 Law. Gaps and inconsistencies continue to exist between the constitutional prescriptions and actual progress of the ongoing decentralization processes on the ground. At the section communale level, CASECs and ASECs are generally in existence, but their operational status varies widely.

• Day-to-day operation of the existing decentralized bodies is severely hampered by the lack of human and financial resources: Operating and investment budget allocations are severely insufficient; taxes collected by communes are grossly inadequate; and the decentralization fund established in the 1990s remains weak with limited operational capacity, and has experienced delays in disbursing its funds.

7 The following national ministries have parallel decentralized structures, at varying levels, across the country: the Ministry of the Interior, the Ministry of Planning and External Cooperation, the Ministry of Agriculture, Natural Resources and Rural Development (MARNDR), the Ministry of Health, and the Ministry of Education. 8 Délégués de villes are only in “traditional” urban centers. Due to rapid and unregulated urban expansion, many disadvantaged urban areas can fall either within or outside of these traditional town boundaries, or straddle both.

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• The decentralized bodies have often operated in a context of bitter internal struggle between political parties vying to enlist the support of local constituencies: As a result, they often lack political clout since they are the product of a political process that is typically polarized and does not lend itself to the required collaborative management style.

14. Local government involvement in disadvantaged urban areas is particularly uneven and suffers from lack of a clear legal and regulatory framework that can give coherence and supervision to the multiple municipal development initiatives in urban areas or take responsibility for planning and technical issues. In addition, in large urban centers there exists a large distance between the community initiatives at the local neighborhood level and the commune structure. Complicating this is the fact that no official subdivisions exist within cities; the municipal council and the municipal assemblies technically represent the entire commune, not just the city itself.

Overview of Community-Driven Development Approach

15. Community-Driven Development (CDD) is a development approach whereby communities and their institutions are empowered with decision-making authority and control of financial resources for investments affecting their livelihoods. The CDD approach should be seen in the broader context of—and as complementary to—other development initiatives that are targeted at the municipal, departmental, and national levels. The CDD approach is based on the following principles: (a) communities are best positioned to determine their development priorities; (b) communities themselves are capable of managing financial resources and implementing projects (up to a certain scale), given appropriate technical assistance and training from local counterparts; and (c) prioritization and approval of community-scale investment subprojects are best handled through decentralized local governance structures.

16. Although different models of CDD projects exist, some typical factors include: (a) a participatory approach to determine community priorities; (b) training and organizational assistance to allow communities to manage subproject resources; (c) subproject implementation with direct participation by communities, including management of their own contributions (labor, materials, or cash), hiring of contractors, acquisition of goods, monitoring, and accounting; and (d) close interaction with local governance structures, such as district or municipal councils, oversight committees, or similar entities where project beneficiaries have direct participation.

17. CDD projects can have several positive impacts, including: (a) empowerment of communities; (b) building of “social capital,” as it strengthens social organization, promotes trust, and encourages collective action related to public investments and local development policy; (c) ability to increase cost-effectiveness, reduce implementation time, and increase the sustainability of subproject investments as a result of community ownership of subprojects; (d) increase in transparency in the use of public resources, and potentially an increase in the democratic accountability of local government officials and institutions; and (e) potential to be scaled-up effectively and have an aggregate impact on the provision of basic public infrastructure and services, targeted interventions for the benefit of marginalized populations, and overall poverty reduction.

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Potential Contribution of Community-Driven Development Projects in Disadvantaged Urban Areas in Haiti

18. Although challenging, the Haitian context holds potential for CDD projects and approaches due to the following factors:

• CDD can contribute to service delivery and infrastructure needs: Public provision of services in Haitian disadvantaged urban areas is minimal. As a result, private parties (nongovernmental organizations [NGOs], charitable organizations) have tried to fill the gap (particularly in the case of health and education) or through commercially driven microenterprises (as in the case of housing, water, waste collection, and access to electricity). Even so, the service and infrastructure needs in the disadvantaged urban areas outweigh the supply. Subprojects selected and implemented under the Community Participation Development Project (Projet de Développement Communautaire Participatif, PRODEP) and the Pilot Community-Driven Development Project in Port-au-Prince Area (Projet Pilote de Développment Communataire Participatif dans l’aire Metropolitaine de Port-au-Prince, PRODEPAP) addressing these gaps include improved access to water, road rehabilitation, and marketplace improvement.

• CDD can promote social cohesion and build on the resilience of Haitian

communities: CDD can protect and promote social cohesion by fostering collective action, joint communal responsibility, and transparent access to information and decision-making. In a disadvantaged urban area context, CDD can be a way to bring community members together to form a collective vision for their local area that may also promote a greater sense of cohesion. In a short time, PRODEPAP facilitated the creation of two Project Development Councils (COPRODEPs), which were able to identify, prioritize, and implement several subprojects within a highly polarized and politicized setting, along with broad acceptance and wide participation of various community stakeholders.

• CDD can foster and build capacity among existing and legitimate community-based

organizations (CBOs): CDD can help strengthen the resource base and social capital of legitimate CBOs through capacity building by connecting them to funding opportunities, creating vertical links between grassroots organizations and wider governance structures, and allowing horizontal alliances to develop among CBOs that work on similar issues. Strengthening legitimate CBOs in disadvantaged urban areas can also contribute to undermining the power base of “illegitimate” ones. Under PRODEP and PRODEPAP, one of the elements that the project beneficiaries most value (as per beneficiary feedback) is the emphasis on training and capacity building of CBOs.9

• CDD can serve as an entry point for community-based public safety and security

initiatives: CDD in the Haitian disadvantaged urban area context has the potential to be the entry point for community-based crime and violence prevention activities. Mobilizing a community around the relatively neutral subject of small-scale infrastructure provision

9 This emphasis on capacity building and promotion of social cohesion in a mid- to long-term development framework is one of the key ways in which this project distinguishes itself and adds value from other government and donor activities within disadvantaged urban areas.

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can help establish a starting point for a community-based development project that, over time, can tackle more sensitive topics like the management of crime, violence, and gangs, intra-family violence, and conflict resolution. Table 2 demonstrates CDD’s role among a set of public policy approaches and interventions to address urban violence. (For a more detailed table see Annex 1). The CDD experience in Haiti has shown the approach to be very resilient under extremely challenging conditions, as evidenced by the successful implementation of PRODEP’s pilot and PRODEPAP during some of the worst political upheaval and violence in the country.

Table 2: Public Policy Approaches and Interventions to Address Urban Violence

Policy Approach Goal Types of Violence Addressed

Typical Interventions

Cross-sectoral Crime prevention through environmental design (CPTED) /urban renewal

Reducing violence by focusing on the settings of crime rather than the perpetrators

• Economic violence • Social violence

Local-level programs Urban renewal programs Integrated disadvantaged urban area upgrading programs

Citizen security/ public safety

Using cross-sector measures to prevent or reduce violence


National-level programs Local-level programs

• Youth gangs Community-based solutions Community-driven development (CDD)

Social capital

Rebuilding social capital, trust, and cohesion in informal and formal social institutions

• Gender-based violence Crisis services for victims Ongoing support and prevention Communication campaigns School programs Programs for perpetrators

Source: Adapted from Moser and others (2005); and Moser and Winton (2002) as cited in World Bank, Crime, Violence, and Development in the Caribbean, 2007. • CDD can serve as an entry point for strengthening of local government: CDD is a

promising methodology to get nascent municipal governments to work more closely with their constituencies, as evidenced by the active and enthusiastic participation of local government authorities of Cité-Soleil and Port-au-Prince in the COPRODEPs of PRODEPAP. CDD can also foster and build capacity of local government authorities through a variety of institutional strengthening activities and Technical Assistance related to the project, as planned under Component 2.10

10 This emphasis on municipal capacity building in a mid- to long-term development framework is one of the key ways in which this project distinguishes itself and adds value from other government and donor activities within disadvantaged urban areas.

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B. Rationale for Bank involvement 19. The proposed urban CDD project seeks to build on recent and successful Bank-funded CDD interventions in Haiti, including (a) the Rural CDD Pilot Project, implemented in 2004 with the support of a US$1 million Post-Conflict Fund (PCF) grant; (b) a Labor-Intensive and Basic Infrastructure Rehabilitation Pilot Project, financed by a US$1 million Low-income Country Under Stress (LICUS) grant in 2005; (c) a US$38 million International Development Association (IDA)-funded Rural CDD Project (PRODEP), currently being implemented; and (d) an Urban CDD Pilot Project (PRODEPAP), financed by a US$1.25 million PCF grant, which is being implemented until September 2008 in two disadvantaged urban areas of Port-au-Prince (Cité-Soleil and Bel-Air) by the Pan-American Development Foundation (PADF), with oversight from the Ministry of Planning and External Cooperation (MCPE/PL-480), now the Office of Monetization of Development Aid Programs) (Bureau de Monétisation des Programmes d’Aide au Développement, or in short Bureau de Monétisation) (formerly the PL-480 Management Office). As of January 2008, PRODEPAP has successfully supported the formation of two Project Development Councils (COPRODEPs)—one in each disadvantaged urban area—through an open, democratic, and participatory process, and financed a total of 17 subprojects (9 in Cité-Soleil and 8 in Bel-Air)—the majority of which are income-generating subprojects.

20. The proposed project will also draw on the extensive experience accumulated in the Latin America and Caribbean region—specifically of the Bank’s successive generations of Rural Poverty Reduction projects in Northeast Brazil, the participatory methodology of which was successfully adapted to meet the unique circumstances of the Haitian context—the recent experiences of urban crime and violence prevention in Bank-financed disadvantaged urban area upgrading projects in Brazil, Honduras, and Jamaica, and on the experiences of CDD projects in post-conflict/fragile states such as those in Afghanistan, Liberia, and the West Bank/Gaza.

21. Also, in order to assist the Government of Haiti with medium- and long-term planning for urban development and disadvantaged urban area upgrading, the World Bank together with UN-Habitat and Cities Alliance is engaged in a process of formulating a disadvantaged urban area upgrading strategy. The aim of the proposed strategy is to put a comprehensive framework in place that addresses the many challenges of integrated disadvantaged urban area upgrading and urban development and preparation for future disadvantaged urban area development in the Haitian context. Therefore, the aim of this strategy is to be complementary to the proposed urban CDD project and will coordinate with the project, specifically with regard to institutional strengthening, development of comprehensive disadvantaged urban area upgrading plans, and pilot initiatives.

C. Higher-level objectives to which the project contributes 22. The higher-level objectives to which the project contributes include: (a) providing basic services, and (b) restoring hope and promoting social cohesion in the poorest and most violent disadvantaged urban areas. The proposed project is fully consistent with the Bank’s Interim Strategy Note (ISN), which covers the period December 2006 through June 30, 2008, and which follows the Bank’s 2005 Transitional Support Strategy (TSS) of delivering hope to the population and to restore credibility in government institutions by helping the government deliver quick wins in the provision of basic services and job creation. The proposed project is

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also in line with the ISN’s strategy to help the government improve the living conditions of the most vulnerable groups, by supporting targeted interventions in disadvantaged urban areas.

23. A full Country Assistance Strategy (CAS) document is being formulated on the basis of the PRSP that the government completed in December 2007, and will be finalized in early FY09. It is expected that the proposed project will be in line with the poverty reduction and improved governance objectives of the CAS and the PRSP. In addition, the proposed project will address some of the key recommendations of the 2006 Country Economic Memorandum (CEM), which highlighted: (a) the need to address the socioeconomic causes of violence in Haiti’s disadvantaged urban areas—due to the implications for state building and national stability—through the targeting of disadvantaged urban areas with multidimensional development interventions, with an emphasis on providing basic infrastructure; and (b) for the government and donor investments to focus on equalizing access to productive assets for the poorest residents in disadvantaged urban areas. Finally, Haiti’s basic fiscal year 2008 allocation is US$21 million, of which US$15 million is earmarked for the Urban Community-Driven Development Project (PRODEPUR).

24. In addition, a Country Financial Accountability Assessment (CFAA) was undertaken as part of the integrated Public Expenditure Review (PER), Country Procurement Assessment Review (CPAR), and CFAA, referred to as Public Expenditure Management and Financial Accountability Review (PEMFAR), in 2007. The report noted that Haiti has made significant progress in reforming the legal and institutional framework for procurement, and in strengthening fiscal discipline and improving the efficiency of its Public Financial Management (PFM) system in the last three years, in a relatively difficult context. Despite the improvements, there remain significant weaknesses and challenges. Although, the project will not be implemented directly through the PFM system of the country, it will contribute to strengthening the PFM systems at the local and municipal levels and to addressing some of these challenges. It will also contribute to strengthening the capacity and awareness of Haitian communities on the topic of procurement, hence broadening the understanding and application of transparency principles in the implementation of public expenditures.

II. PROJECT DESCRIPTION

A. Lending instrument 25. Total project cost is estimated to be US$16.5 million. An IDA-funded grant of US$15.7 million is proposed, with an additional US$800,000 in beneficiary contributions.

B. Project development objective and key indicators 26. The Project Development Objective (PDO) is to improve access to and satisfaction with: (a) basic and social infrastructures and services, and (b) income-generating opportunities for residents of targeted disadvantaged urban areas. This objective will be achieved through a participatory process in which CBOs propose, select, implement, and maintain subprojects, and is built on the successful experiences of the Haiti Rural CDD Project (PRODEP) and the Pilot Urban CDD Project (PRODEPAP).

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27. The key indicators for this project would include: (a) increased access to water in disadvantaged urban areas that selected such subprojects (that is, water kiosks, standpipes, community cisterns, rainwater capture, and so forth); (b) increased access to sanitation in disadvantaged urban areas that selected such subprojects (that is, garbage collection, solid waste disposal, recycling, composting, sanitary blocks, and so forth); (c) increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (that is, clear and rehabilitated drainage canals, ditches, rehabilitated street and/or footpaths, and so forth); (d) increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (that is, daycare centers, primary and secondary schools, health clinics, job training centers, and so forth); (e) the number of productive/income-generating subprojects that are self-sustaining six months after being fully operational; and (f) the percentage of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms).

28. Scope of intervention: The proposed project will intervene in 10 of the 17 “Priority Zones” identified by the Government of Haiti (GoH) (approximately 60 percent) across five municipalities. (See Annex 17 for a complete list of GoH Priority Zones). Based on a cost of US$20,000 (US$22,000 including counterpart contributions) for subprojects proposed solely by CBOs, and US$50,000 for subprojects proposed jointly by CBOs and municipal governments, it is expected that the project will finance approximately 380 subprojects (370 proposed solely by CBOs and 10 proposed jointly by CBOs and municipal governments) during the entire life of the project.11

29. Estimated number of beneficiaries: It is estimated that the proposed project will directly benefit approximately 85,000 individuals (approximately 17,000 households), and indirectly benefit approximately 490,000 individuals for a total number of approximately 575,000 individuals. It is estimated that the project will benefit (directly or indirectly) around 85 percent of the population in the targeted priority zone, which themselves account for 27 percent of the overall urban population of the participating municipalities.

Project components 30. Component 1: Community Subproject Funding, Management, and Support (US$13.5 million; IDA US$12.70 million) would finance subprojects in 10 targeted Priority Zones of 5 municipalities. Disadvantaged urban areas identified that fulfill poverty/urban criteria and are traditional “flash-point” communities include: Bel-Air/Solino/Ticheri, Martissant/Grand-Ravine/Cité de Dieu/Cité l’Eternel/Cité Plus, the disadvantaged urban area of Cité-Soleil (Metropolitan Area of Port-au-Prince); La Fossette/Nan Bannann/Shada, Bas-Ravine/Rival/Fort Bourgeois/Bande du Nord, (Cap Haïtien); Kasoley, Raboteau/Jubile Blanc, Descahos/Trousable (Gonaïves); and Portail Guêpe/Blockhaus/La Scierie, Portail Montrouis/Fressinaut (St Marc). 11 In the context of this operation, the Caribbean Development Bank (CDB) has expressed a strong interest in providing additional financing of up to US$4 million. A delegation from the CDB joined the Appraisal Mission. This financing would follow the same program design, implementation, and fiduciary arrangements to maximize harmonization. If confirmed, this would allow the project to cover up to three extra priority zones, tentatively defined as Carrefour-Feuille (in Port-au-Prince), Simon-Pelé and Delmas 32 (in Delmas), and Ste.-Philomène/Kiteyo/Bel-Air (in Cap-Haïtien).

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Specifically, subproject funding would finance: (a) small-scale socioeconomic infrastructure and productive/income-generating subprojects, which are identified either by CBOs or jointly by CBOs and municipal governments, and later prioritized by representative Project Development Councils (COPRODEPs) as a function of available resources under the project; and (b) contracting of service providers to mobilize CBOs to participate in the project, and to provide the necessary training and technical assistance to CBOs in the preparation and subsequent execution of subproject investments.

31. Subproject selection will be demand-driven and will follow procedures detailed in a Project Operations Manual (POM), which is based on the Rural Community Participation Development Project (Projet de Développement Communautaire Participatif, PRODEP) Operations Manual and revised to reflect the urban context. Subprojects proposed solely by CBOs would have a limit of US$20,000 in financing, and subprojects proposed jointly by CBOs and municipal governments would have a financing limit of US$50,000 per subproject and be expected to benefit the public good. Community contributions to subprojects implemented solely by CBOs—and to subprojects implemented jointly by CBOs and municipal governments—must be at least 10 percent of total subproject cost (in cash or in-kind). The minimum 10 percent contribution will be kept the same for both public good and income-generating subprojects for the sake of simplicity, but may be reviewed during project implementation.

32. In contrast to the rural CDD project and as a way to mitigate the potential higher risk of mismanagement and/or capture in poor urban areas, community subproject funds in PRODEPUR will be managed jointly by the Service Providers (Maîtres D’Ouvrage Délégués, MDOD) and the CBOs, which together will be responsible for subproject financial management and expense reporting (in the form of Statements of Expenditure) following subproject completion. Although subproject proposal, prioritization, and selection will be carried out via a participatory and demand-driven approach, the project will incorporate the use of “negative” and indicative “positive” lists of subprojects to better inform the decision-making process of communities. The negative list will include, for example, subprojects having to do with religious beliefs and illegal activities, and the positive list will make an effort to guide project beneficiaries into proposing subprojects that will provide the most public good. To better assist CBOs in the implementation of their subprojects, the service provider(s) will create regional technical offices—MDODs/Technical Coordination Bureaus (Bureaus Technique de Coordination, BTCs)—in the participating cities, as needed.

33. Component 2: Capacity-Building and Technical Assistance (US$0.90 million – IDA only): Implemented by the Bureau de Monétisation, through its Project Coordination Unit (PCU/Bureau de Monétisation), this component would finance: (a) training-of-trainer events in basic management, administration, accounting, and financial management for Project Development Councils and municipal government officials; (b) capacity building and technical assistance to strengthen governance, participatory development, supervision, and coordination capacity at the municipal-government level and to relevant ministerial staff; (c) workshops with service providers to harmonize practices to accompany CBOs and Project Development Councils in carrying out the activities under Component 1; (d) training of Bureau de Monétisation staff to effectively supervise overall project implementation; (e) various consultant services, including possible preparation of future operation and assessment of ways through which the Haitian Diaspora might be mobilized to finance and provide technical expertise to the community

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subprojects; and (f) policy dialogue to engage the GoH and other relevant stakeholders on a medium- to long-term national strategy to facilitate the mainstreaming of the urban CDD approach and mechanisms.

34. Based on lessons learned from PRODEPAP (urban pilot project), the proposed project seeks to incorporate the following additional capacity-building activities, all of which are tailored to the context of disadvantaged urban areas: (a) training on local and participatory governance, public administration, social accountability, transparency, and reporting; (b) training on how to facilitate donor coordination at the disadvantaged urban area level, especially in disadvantaged urban areas where many donors are active (that is, donor coordination could go hand in hand with a participatory planning process in the community); and (c) training on participatory processes for geographic and administrative demarcation of the disadvantaged urban areas as needed.

35. Furthermore, given the high levels of violence in the targeted disadvantaged urban areas, specific training courses that have been shown to prevent and/or reduce violent behavior in similar contexts will be offered via the COPRODEPs, including: parenting training, life skills training for at-risk adolescents/youth, youth leadership training, conflict resolution skills, crime prevention through environmental design, and specific courses on domestic violence prevention. Efforts will also be made to offer, and deliver via the COPRODEPs and jointly with the local authorities, the existing Bank-designed Municipal Capacity-Building Course on Violence Prevention.

36. Component 3: Project Administration, Supervision, Monitoring and Evaluation (US$2.1 million – IDA only): This component would finance incremental costs associated with project implementation, administration, supervision, monitoring and evaluation (including the establishment and operation of a Management Information System [MIS]) by the Bureau de Monétisation through its Project Coordination Unit (PCU/Bureau de Monétisation), which operates under the oversight of the Ministry of Economy and Finance.12

37. Table 3 provides an overview of total costs per project component.

Table 3: Summary of Project Costs per Component

12 The Bureau de Monétisation (formerly the PL-480 Management Office) is also the implementing agency for the IDA-funded Haiti Rural CDD (PRODEP) project, the PCF-funded Urban CDD Pilot Project (PRODEPAP), and the IDA-funded Haiti Emergency Recovery and Disaster Management Project.

Component

Indicative Costs, Incl.

Cont. (US$M) %

Total IDA

(US$M) % Bank

Financing 1. Community subproject funds, mgt., and support 13.50 82% 12.70 94% 2. Capacity building and technical assistance 0.90 5% 0.90 100% 3. Project Administration, Supervision, Monitoring and Evaluation

2.1 13% 2.1 100%

TOTAL 16.50 100% 15.7 95%

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Targeting 38. As requested by the Government of Haiti, the project will intervene in 10 out of 17 of the government’s Priority Zones (see Section 1). In addition, consistent with the project’s overarching objective of poverty reduction, the selected project areas also conform to standard eligibility criteria: (a) poverty level, (b) population density, and (c) current and past levels of violence. Additional preliminary socioeconomic studies and field visits confirm that the selected disadvantaged urban areas all qualify under the poverty/density/violence criteria.

39. Level of funding per disadvantaged urban area. The level of funding per project area will be calculated on the basis of the population size of the disadvantaged urban area, using an approximate per capita allocation of 4.5 subprojects per 10,000 people in the Port-au-Prince region and 7 subprojects per 10,000 people in the three other cities to ensure an equitable distribution of resources. In total, it is estimated that PRODEPUR will finance between 360 and 400 community subprojects, with an average of US$20,000 per subproject (US$22,000 including counterpart contributions).

40. Indicative budget envelopes would be allocated to each eligible area for the purposes of prioritizing subproject proposals from their respective CBOs. Over the five-year horizon of project implementation, budget envelopes to the areas would be assigned biannually. In order to provide a simple and transparent rule for determining funding allocations, which will be perceived of as fair by the resident population, the amount of project funds allocated to each area will be based on an equitable geographic distribution. It is also expected that given the level of participation and counterpart contributions required, there will be a process of self-selection by the CBOs, contributing to the targeting of the project.

C. Lessons learned and reflected in the project design 41. The design of the proposed project takes into account lessons learned from the following projects: the PCF-funded Rural CDD Pilot Project, the national Rural CDD Project (PRODEP), the Urban CDD Pilot Project (PRODEPAP), from CDD projects that have been implemented in other areas of the world; and from the Independent Evaluation Group’s (IEG) evaluation of Community-based and Community Driven Development13 . These include:

42. Specific lessons learned from PRODEPAP include:

• Need for an indicative positive list: The process of determining the communities’ priority needs and desirable “public goods”-type interventions would benefit from better information on eligible subprojects. For example, showcasing successful projects from the pilot intervention would help raise the quality of proposed subprojects and expand people’s horizon about the variety of eligible projects.

13 World Bank. 2005. “The Effectiveness of World Bank Support for Community-Based and Driven Development.”

Independent Evaluation Group. Washington, D.C.

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• Flexibility in delineation of intervention areas: Introducing a flexible and participatory demarcation method in disadvantaged urban areas during project preparation and implementation is key in disadvantaged urban areas where official demarcations barely exist.

• Use of jointly managed bank accounts (MDODs and CBOs): Experience from

PRODEPAP has shown that co-managed community subproject funds is a key tool to mitigate financial mismanagement and/or capture.

• Enhanced participation of local government representatives: Experience from

PRODEPAP demonstrates that explicit participation of local government representatives in COPRODEPs aids the successful implementation and sustainability of community subprojects, increases trust among community members and local government, and builds capacity.

43. General lessons learned from CDD projects:

• Poverty-targeting methods should be simple, straightforward, and easy to monitor. • A carefully designed and tailored communication and information campaign that is

intensive and widely disseminated before project implementation is critical for ensuring transparency and adequate knowledge about the project by potential beneficiaries, and for minimizing the chances of “elite capture.”

44. In addition to incorporating the above lessons learned, the rural CDD methodology is revised further to reflect the urban context, including: (a) an enhanced relationship with local government officials, as a function of the recently elected local authorities and their closer proximity to their constituencies; (b) a more transient and greater population that requires a different mobilization/communication strategy that relies more heavily on the use of community leaders; and (c) a greater risk of elite (and gang) capture and misuse of funds by the Project Development Councils, which requires the co-management of the funds by the supervising agency rather than the sole management by the community.

45. Specific lessons learned from the Independent Evaluation Group’s (IEG) evaluation of Community-based and-Driven Development include:

• In order to address the identified need to strengthen operational guidance and oversight for the application of Bank safeguard and fiduciary compliance, the Bureau de Monétisation, the Service Providers, as well as the Community-based Organizations will receive ongoing training and supervision in social, environmental, and fiduciary safeguards. In addition, in order to strengthen fiduciary safeguards, Community Bank accounts will be held jointly with the Service Providers, as mentioned above.

• Monitoring and evaluation systems are not systematically assessing qualitative goals of the interventions. In order to ensure the evaluation of the qualitative goals, the project’s monitoring and evaluation system will put in place a number of different methodologies at the baseline, mid-term, and completion stages that, in addition to the more traditional

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survey that will be used to gather data on access to infrastructure, services, and income-generating opportunities, will also use: additional survey tools to measure beneficiary satisfaction with subprojects, and the capacity of beneficiary CBOs.; a qualitative beneficiary assessment, and an evaluation of the effectiveness of the various accountability mechanisms used throughout the project (financial and social); and the final project evaluation, will repeat the baseline survey, as well as the qualitative beneficiary assessment carried out during the midterm review. Sample tools for the baseline survey, beneficiary satisfaction and capacity of CBO assessments, and effectiveness of accountability mechanisms will be included in the POM.

• The CDD program should be an integral part of the overall assistance strategy. In the case of Haiti, this urban CDD operation is only one of a series of CDD operations in the country, with the objective of building a tradition of, and solid capacity and support for, CDD with the Haitian authorities and communities alike.

D. Alternatives considered and reasons for rejection 46. The project team considered two alternatives for this project: (a) a traditional disadvantaged urban area upgrading program; and (b) within the context of a CDD project, including a larger window for subprojects proposed and implemented by municipal governments. Both of these alternatives were rejected due to the high level of implementation and administrative capacity on the part of the local and central government that these two alternatives would require, compared to the low level of capacity that currently exists. Instead, the proposed project seeks to gradually build the capacity of municipal governments, by requiring their participation in Project Development Councils (COPRODEPs), encouraging them to propose and implement subprojects (jointly with CBOs), and specific institutional strengthening activities. Furthermore, the recent Independent Evaluation Group (IEG) Report, “Engaging with Fragile States,” also states as one of its key lessons that small improvements through incremental steps are the most appropriate strategy for engaging with fragile states. Choosing the CDD model over a traditional disadvantaged urban area upgrading approach is in line with the recommendation of this report.

47. Additional reasons for choosing a CDD project over the two alternatives described above include: (a) CDD now has a successful track record in rural Haiti and in other troubled/urban conflict contexts and there exists strong institutional support and capacity for CDD; (b) community-based initiatives can fill the service provision gap and help to extend services among the very poor more rapidly than if centrally provided, that is, via a traditional disadvantaged urban area upgrading program; (c) the CDD model can provide opportunities to strengthen legitimate community groups and enhance social cohesion, reinforce a positive presence of the State, and begin to address the socioeconomic causes/risk factors of crime, violence, and gang membership; (d) CDD can increase transparency in the use of public resources and potentially can have an impact in increasing democratic accountability of local government officials and institutions; (e) CDD can increase efficiency and sustainability of subproject investments, due to community ownership; and (f) the 2002 Haiti Country Assistance Evaluation indicates that in the Haiti context it is better to focus on small, community-supported, bottom-up interventions rather than big, top-down infrastructure projects.

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III. IMPLEMENTATION

A. Partnership arrangements (if applicable) 48. Donor coordination remains a critical issue and a significant challenge in Haiti. In the case of PRODEPUR, examples of relevant existing and planned initiatives by other donors in the proposed project areas include: (a) the Disarmament, Demobilization, and Reintegration (DDR) Program, implemented through the National Commission for Disarmament, Demobilization, and Reintegration (CNDDR), with support from UNDP and MINUSTAH; (b) the USAID/State Department-funded Haiti Stabilization Initiative, PREPEP, and Project KATA (implemented by CHF, the International Organization for Migration (IOM), and the Pan-American Development Foundation (PADF); (c) UNDP’s Community Security Project; (d) MINUSTAH’s Reduction in Community Violence Program; (e) the Inter-American Development Bank’s (IDB’s) Urban Rehabilitation Program and Program for Rehabilitation of Basic Economic Infrastructure; (f) Project EAuCap, executed by Oxfam Great Britain/PROTOS/GTIH, and funded by the European Union (EU), and (f) the PADF/USAID’s Protecting Human Rights (PHR) in Haiti Program. See Annex 1 for a detailed description of each program.

49. At the level of disadvantaged urban areas, donor coordination is a particular concern in Cité-Soleil, where many donors are currently active. Examples are the Associazone Volontari per il Servicio Internazionale (AVSI) and the EU in the area of basic infrastructure, the Bureau de Nutrition et de Developpement (BND) in the area of nutrition and development, the International Committee of the Red Cross (ICRC) and the Pan-American Health Organization (PAHO) in the area of health and potable water, the International Crisis Group in conflict resolution, Les Salesiens in education and nutrition, and Fondation Roussan Camille and the United Nations Office for Project Services (UNOPS) in sanitation.

50. The value added of PRODEPUR lies in several key areas. First, PRODEPUR will be implemented in several cities with large disadvantaged urban areas where there are currently not many donors present, such St. Marc, Gonaïves, and Cap-Haïtien. Second, many of the activities funded through the above-mentioned donor initiatives focus on providing rapid impact physical infrastructure. While PRODEPUR intends to build on this infrastructure, PRODEPUR places great emphasis on the capacity building of CBOs and municipal governments, which, ultimately, also seek to promote social cohesion. Third, PRODEPUR seeks to contribute to donor coordination both at the central government level (via the Bureau de Coordination Opérationnelle des Interventions dans les Zones Prioritaires [BCOIZP]), and at the municipal level (via the participation of municipal government representatives in the COPRODEPs (Project Development Councils).

B. Institutional and implementation arrangements Implementation period: Five years Executing Entities: 51. On behalf of the Government of Haiti, the Bureau de Monétisation des Programmes d’Aide au Développement (Office of Monetization of Development Aid Programs) (formerly the

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PL-480 Management Office), under the Ministry of Economy and Finance (MEF) and through its existing Project Coordination Unit (PCU/Bureau de Monétisation), will have overall responsibility for project implementation. The other entities involved in project implementation include Community-Based Organizations (CBOs), Project Development Councils (COPRODEPs), the Service Providers (MDODs), and the municipal government. These implementation arrangements are the same as those being used in both PRODEP and PRODEPAP, with the exception of the municipal government’s role, which has been slightly altered in the proposed project to reflect the realities of the urban context in Haiti. The roles and responsibilities of each of these entities are described below.

52. Project Coordination Unit (PCU/Bureau de Monétisation): The Bureau de Monétisation, under the oversight of the MEF, is an autonomous public institution created in 2007 to replace the 22-year-old PL-480 Management Office to: (a) receive and monetize food aid from the international donors, and (b) identify and fund government development projects with relevant institutions and/or agencies in areas such as road construction, agriculture, education, health, and commerce. As the national executing agency of the project on behalf of the Government of Haiti (GoH), the PCU/Bureau de Monétisation will be responsible for overall project coordination and oversight, and will delegate day-to-day project execution to the MDODs under Component 1. Additional duties of the Bureau de Monétisation would include: (a) continuous oversight of the execution of information campaigns, in coordination with the MDODs; (b) project reporting, as needed, to the Bank; (c) overall project financial management; (d) maintenance and updating of the project Management Information System (MIS); and (e) project evaluation. As indicated previously, the PCU/Bureau de Monétisation is also currently the implementing agency for the IDA-funded Haiti Rural CDD Project (PRODEP), the PCF-funded urban CDD Pilot Project (PRODEPAP), and the IDA-funded Emergency Recovery and Disaster Management Project. Furthermore, as currently is the case for PRODEP and PRODEPAP, the PCU/Bureau de Monétisation will also have direct responsibility for the implementation of Components 2 and 3 of the proposed project (Capacity Building and Technical Assistance and Project Administration, Supervision, Monitoring, and Evaluation).

53. Maîtres d’Ouvrage Délégués (Service Providers, MDODs): Under the overall guidance of the PCU/BUREAU DE MONÉTISATION (see below), MDODs are service providers (for example, NGOs) whose primary responsibility is the implementation of the activities under Component 1 of the project (Community Subproject Funds, Management, and Support), via: (a) assisting CBOs and COPRODEPs in strengthening their organizational and operational capacities, (b) accompanying CBOs and COPRODEPS in the “on-the-ground” execution of subproject activities, (c) providing technical assistance to CBOs throughout the subproject cycle, (d) technically appraising subproject proposals approved by the COPRODEPs, (e) entering into subproject agreements (contracts) with CBOs for the financing of subprojects, and (f) transferring funds for subproject execution directly to the joint MDOD/CBO bank account. To work more effectively with CBOs and COPRODEPs, and based on the positive results from the Rural CDD project (PRODEP), MDODs will establish one field office (Technical Coordination Bureau (Bureau Technique de Coordination, BTC) in each city included in the project. MDODs will be recruited through a competitive bidding process. Proper arrangements are needed to ensure a smooth transition from the pilot project (PRODEPAP) to the proposed scaled-up PRODEPUR in Cité-Soleil and Bel-Air.

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54. Community-Based Organizations (CBOs): CBOs are groups of disadvantaged urban area residents (approximately 100 to 200 individuals) with common interests that organize into formally constituted civil associations. Within the subproject cycle, CBOs are responsible for the identification, preparation, implementation, supervision, operation, and maintenance of community subprojects, with technical assistance and training from the service providers/MDODs and Project Development Councils (COPRODEPs). CBOs are also responsible for the hiring of consultants and/or contractors throughout the subproject cycle, as needed. See below for details.

55. Project Development Councils (COPRODEPs): COPRODEPs are formed by elected representatives of CBOs (a minimum of 80 percent of total membership), civil society, and local/municipal government representatives (up to a maximum of 20 percent of membership). As the principal entity for targeting benefits and allocating project resources at the communal level, COPRODEPs also provide a critical link to local government and have the potential to engage in other non-project activities. COPRODEPs play a fundamental role in mobilizing communities and promoting their participation in local decision-making. They receive, prioritize, and approve subproject proposals from the CBOs, and consequently submit the prioritized subproject proposals to the MDODs and BUREAU DE MONÉTISATION for technical appraisal. COPRODEPs (together with MDODs/BTCs) also accompany CBOs during subproject implementation and operation and maintenance (O&M).

56. Municipal Governments: In the proposed project, municipal government representatives will play a more active role throughout the subproject cycle, and in the operation and management of the COPRODEPs. For example, municipal government representatives will have a permanent seat in the Executive Committee of the COPRODEPs, and will also be able to present subproject proposals jointly with CBOs and be directly involved in the management and implementation of these initiatives. It is expected that this enhanced role in PRODEPUR will allow local government officials to better coordinate and integrate PRODEPUR activities in the overall development agenda of the municipality.

Subproject Cycle

57. Following is a step-by-step explanation of the subproject cycle. (See Annex 6 Figure A6.1 for a detailed graphic representation.)

(1) An information, education, and communication (IEC) campaign (carried out by the MDODs through locally tailored mediums), is targeted to disadvantaged urban area residents, with the goal of increasing public awareness about the project, its objectives, the “rules of the game,” and expected outcomes.

(2) MDODs and their BTCs (Technical Coordination Bureaus/regional offices of MDODs) carry out diagnostics to identify existing CBOs and help get official recognition when needed.

(3) COPRODEPs (Project Development Councils) are constituted by representatives from CBOs (at least 80 percent of total membership) and the municipal/central government (up to 20 percent of total membership), all of whom are elected in a democratic and participatory process.

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(4) CBOs identify their local investment needs and priorities, prepare subproject proposals, (following procedures detailed in the Project Operations Manual [POM]), and submit subproject proposals to their respective COPRODEP.

(5) COPRODEPs prioritize and approve subproject proposals and forward approved subproject proposals to MDOD/BTCs for technical appraisal.

(6) MDODs/BTCs evaluate approved subproject proposals in terms of technical, social, environmental, and financial guidelines established in the POM.

(7) Upon approval by MDOD of technical aspects of subproject proposals, the CBO hires an external consultant to carry out the technical design of the subproject.

(8) MDODs/BTCs evaluate technical design carried out by external consultant. (9) If technical design is approved, contract between MDOD/CBO is signed and

countersigned by the COPRODEP. The contract lays out the terms and conditions for the funding, execution, ownership, operation, and maintenance of the approved subprojects. If technical design is not approved, subproject proposal goes back to COPRODEP for reprioritization.

(10) Once contract is signed, CBOs open a joint bank account with the MDOD/BTC. (11) MDOD/BTC transfers the first tranche (50 percent of the proposal) for subproject

implementation to joint CBO/MDOD bank account for the first quarter. (12) CBOs implement subprojects and are responsible for their operation and

maintenance. (13) MDOD/BTC transfers the second tranche (50 percent of the proposal) for

subproject implementation to joint CBO/MDOD bank account for the second quarter.

(14) MDODs/BTCs and COPRODEPs supervise adequate technical and financial implementation of subprojects by CBOs.

58. Operational Procedures: The proposed project would be implemented according to detailed procedures defined in the POM. The POM to be used is based on the ones developed for the Rural CDD Project (PRODEP) and the Urban Pilot CDD Project (PRODEPAP), and revised to reflect lessons learned and adjustments needed for the urban context.

59. Accounting, financial reporting, and auditing arrangements: The financial management system to be used under the proposed project has been evaluated by a Bank Financial Management Specialist during the project preparation for compliance with OP/BP 10.02 and the new Guidelines for Assessment of Financial Management Arrangements. The Guidelines of Fiduciary Management for Community-Driven Development Projects (CDD Guidelines) also have been taken into consideration, where applicable. Based on these evaluations and improvements introduced under an action plan (see Annex 7) agreed with the Bank, the financial management system is considered satisfactory.

60. Financial Management: The Bureau de Monétisation will have overall financial management responsibility for the project. The Bureau de Monétisation will transfer subproject funds to the MDODs, which, in turn, will transfer these funds to the CBOs under terms detailed in the subproject agreements. In addition, the Bureau de Monétisation will provide funds to the MDODs for the carrying out of their activities under the project. The CBOs will directly handle the funds for the implementation of the subprojects.

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61. Disbursement/Flow of Funds: A designated account (DA) of US$0.5 million will be opened and managed by the PCU/Bureau de Monétisation. Funds deposited in the DA will be used to finance: (a) the activities implemented directly by the PCU/Bureau de Monétisation, (b) costs incurred by MDODs to provide support to CBOs, and (c) the costs of the subprojects implemented by CBOs. The MDODs will prepare consolidated financial reports on a quarterly basis. These quarterly reports will be reviewed by the Bureau de Monétisation. The Bureau de Monétisation will then send the request along with its clearance to the World Bank for payments to the MDODs. The PCU/Bureau de Monétisation will also be able to transfer the subproject funds to the MDOD account on the basis of a financing agreement, including an implementation and disbursement schedule (the MDODs will have their own bank account dedicated to subproject funds). The MDOD will then transfer these funds to the joint MDOD/CBO bank account under terms detailed in the subproject agreements, which will require the CBO to have an account in a commercial bank or a credit union.

62. Reporting: Periodic reporting will consist of: (a) quarterly Interim Unaudited Financial Reports (IFRs) submitted by the PCU/Bureau de Monétisation to the Bank no later than 45 days after the end of each quarter; (b) monthly reports submitted by the MDOD to the PCU/Bureau de Monétisation; (c) financial reports submitted by the CBO to the MDOD along with their payment requests; (d) quarterly consolidated financial reports submitted by the MDODs; and (e) progress reports. The PCU/Bureau de Monétisation will prepare semiannual and annual financial statements for the entire project consisting of a statement of resources and uses of funds by project activity for bank review.

63. Auditing: The project’s financial statements will be audited on a semiannual basis by independent external auditors acceptable to the Bank, in accordance with consistently applied auditing standards acceptable to the Bank. The audit report of the project’s financial statement will be submitted to the Bank no later than four months after the end of the period audited. The Bureau de Monétisation will submit to the Bank the audit report of its own financial statements no later than six months after the end of each of its fiscal years. The Agreement signed with the MDOD will specify that the MDODs are required to submit their audit report to the PCU/Bureau de Monétisation and the World Bank. Efforts will be made to align the cycles of PRODEP and PRODEPUR.

64. Retroactive Financing: Payments for eligible expenditures made prior to the date of signature of the Financing Agreement may be made on the condition that the payments were made on or after May 1, 2008 and do not exceed an aggregate amount of US$1.5 million.

C. Monitoring and evaluation of outcomes/results 65. The proposed project would use various monitoring and evaluation tools to assess the impact of the project on direct beneficiaries (member households of CBOs participating in COPRODEPs), and to provide feedback to improve future project operations. These tools would include: (a) a baseline survey, to be carried out within the first six months of project effectiveness, which would seek to assess the impact of the proposed project on direct beneficiaries in terms of their access to basic infrastructure, social services, and income-generating opportunities. In addition to the more traditional survey that will be used to gather data on access to infrastructure, services, and income-generating opportunities, additional survey

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tools will be used to measure beneficiary satisfaction with subprojects, and the capacity of beneficiary CBOs. The Terms of Reference for the baseline survey are included in the POM; (b) semiannual technical audits, submitted within 120 days of the end of the six-month period being assessed; (c) a midterm review, which will include a qualitative beneficiary assessment, and an evaluation of the effectiveness of the various accountability mechanisms used throughout the project (financial and social); and (d) a final project evaluation, which will repeat the baseline survey, as well as the qualitative beneficiary assessment carried out during the midterm review. Sample tools for the baseline survey, beneficiary satisfaction and capacity of CBO assessments, and effectiveness of accountability mechanisms will be included in the POM.

66. Analysis of project implementation will depend on a database of subproject information from the project Management Information System (MIS), to be operated and maintained by the PCU/Bureau de Monétisation. The MIS put in place for PRODEP will serve as a basis for PRODEPUR. The MIS would accompany all aspects of project implementation and specifically include: (a) subproject information, such as pertinent physical and financial information for each community subproject; (b) financial management data, from which Statements of Expenditure (SOEs) and financial reports would be generated and submitted to the Bank; and (c) project management information, from which all project reports would be generated.

67. The PCU/Bureau de Monétisation will be responsible for maintaining and regularly updating the MIS, including key Project information. Through periodic processing of database information, combined with field visits from MDODs and inputs from project supervision reports, project-contracted studies and audits, the PCU/Bureau de Monétisation, in coordination with the MDODs operating in the field, would monitor project characteristics and trends, identify implementation problems and accomplishments, and undertake or promote appropriate actions to improve project implementation.

68. The PCU/Bureau de Monétisation would make available trimestral summary MIS reports with which the Bank would monitor project performance indicators, review disbursements, and supervise subproject implementation progress, based on a sample of subprojects assessed in the field during regularly scheduled supervision missions.

69. Selected Project Monitoring Indicators:

• Percentage of eligible CBOs joining COPRODEPs; • Percentage of member CBOs participating in COPRODEP meetings; • Number of subproject proposals proposed; • Number of subproject proposals prioritized; • Percentage of subprojects successfully implemented, operated, and maintained (as

per technical audits); • Percentage of municipal governments successfully proposing and implementing

subprojects in coordination with CBOs; • Percentage of women, youth, and elderly participating in CBOs and COPRODEPs

(as measured by the percent of members in CBOs who are participating; CBO attendance at COPRODEP prioritization meetings);

• Percentage of subprojects specifically targeting women, youth, and the elderly (subprojects proposed, managed, and/or benefiting these groups);

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• Percentage of subprojects obtaining additional financing from non-project sources • Timely completion of baseline survey and M&E reports; • Percentage of subprojects completed in a timely manner.

70. Selected Project Outcome Indicators:

• Increased access to water in disadvantaged urban areas that selected such subprojects (that is, water kiosks, standpipes, community cisterns, rainwater capture, and so forth);

• Increased access to sanitation in disadvantaged urban areas that selected such subprojects (that is, garbage collection, solid waste disposal, recycling, composting, sanitary blocks, and so forth);

• Increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (that is, cleared and rehabilitated drainage canals, ditches, rehabilitated street and/or footpaths, and so forth);

• Increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (that is, daycare centers, primary school and secondary schools, health clinics, job training centers, and so forth);

• Number of productive/income-generating subprojects that are self-sustaining six months after being fully operational;

• Percent of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms).

D. Sustainability 71. The sustainability of project activities, particularly subprojects, should be assessed within the overall context of Haiti as a fragile state, and in light of the likely tradeoff between the urgency of achieving quick-wins over the long-term viability of subproject investments. Nevertheless, the solid technical design of subprojects and strong linkages proposed under PRODEPUR in terms of participatory and inclusive approaches are expected to reduce such risks and thereby increase the prospect for the project’s successful implementation.

Institutional Sustainability 72. The positive results of the implementation of the Rural CDD project (PRODEP) and the Pilot Urban CDD Project (PRODEPAP) indicate that, by delegating greater decision-making responsibility to both CBOs and the COPRODEPs for local-level investments, the project can successfully promote decentralized resource allocation and social capital formation in urban areas. The proposed project also seeks to strengthen the linkages between CBOs, COPRODEPs, and municipal government structures. The ongoing technical support from the MDODs for CBOs, COPRODEPs, and municipal government authorities will continue to strengthen local organizations.

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Financial sustainability 73. The result of the financial analysis that was carried out for each of the different types of subprojects that have been implemented so far under the Pilot Urban CDD Project (PRODEPAP)—that is, provision of services (cybercafés), income-generating (community stores), or productive activities (candle-making)—showed that the subprojects are all financially viable. The financial rate of return ranged from 14 to 33 percent, which suggests that the income-generating activities were profitable. The sensitivity analysis, however, shows that the types of subprojects carried out so far under PRODEPAP are very sensitive to variations in income. Since most of the participating CBOs are not experienced in managing businesses, technical assistance in business development—especially in financial management, marketing promotion, quality control, and production design—should be provided to ensure sustainability.

Physical sustainability 74. Beneficiary participation at all stages of the subproject cycle, together with significant levels of community counterpart contributions, will promote a sense of collective ownership and raise the prospects that subprojects will be maintained. Also, the democratic process that forms part of the project participatory approach through the COPRODEPs will ensure better selection and prioritization of subprojects by beneficiary CBOs, thereby enhancing long-term sustainability. MDODs will continue to provide the technical support and training required for subproject implementation and follow-up. The technical quality of subproject designs will improve the physical durability of these investments. To ensure availability of resources, subproject contracts require the establishment of subproject maintenance plans and attendant community-funded O&M budgets, which will be monitored by the MDODs during project implementation.

E. Critical risks and possible controversial aspects 75. Table 4 provides an overview of the operation-specific risks affecting PRODEPUR. For more detail on overall country and sector risks, see the extended version of the Risk Identification Worksheet in Annex 15.

Table 4. Overview of Risks

Risk Risk Rating

Risk Mitigation Measures/Factors Rating of

Residual Risk

Operation-specific Risks • CDD model does not function well

in disadvantaged urban areas: weakness of social capital/community organization in disadvantaged urban areas makes it more difficult to mobilize community groups.

S • Methodology has been tested through rural CDD (PRODEP) and adapted to urban setting through ongoing pilot PRODEPAP in Port-au-Prince metropolitan area.

M

• Overall weak project planning and management capacities of

S • Combination of skills between Bureau de Monétisation and service providers (MDOD)

M

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Risk Risk Rating


Residual Risk

implementing agencies may result in excessive delays in project implementation and low quality of subprojects, including hiring of MDODs.

found satisfactory in previous and ongoing CDD operations (since 2004).

• Additional training in project planning and management will be provided.

• Significant Technical Assistance is provided under the project. Community associations formally agree to be responsible for the operation and maintenance of subprojects. PCU will provide training for the management of subprojects by CBOs.

• Early initiation and timely execution of procurement process for the hiring of MDODs.

• Politicization of project councils. S • Membership of the COPRODEP is at least 80% comprised of representatives from CBOs.

M

• Elite/gang capture of Project Development Councils; project councils co-opted by local government.

H • Ensure membership is at least 80% comprised of representatives of legitimate CBOs (with the remaining 20% maximum allocated to representatives of municipal government, civil society, etc.); transparent CDD process in place at all times; subprojects will be co-managed with Service Provider/PADF; close project supervision.

S

• Difficult to find contractors/ consultants to work in these volatile areas, which may lead to higher costs and delays.

H • The CDD model implies that community groups and project development councils themselves contract and supervise the works and will be more likely to use small contractors based in the community.

S

• Project preparation/implementation delayed due to deteriorating security situation/political instability, particularly in the project areas.

H • Continuous, active engagement of the government and the broader range of stakeholders on the CDD approach. Broad dissemination of the positive outcomes of the CDD pilot project.

S

Overall Risk (including Reputational Risks) Sa

a. Considering the accumulation of experience with CDD in Haiti in general and of the Bureau de Monétisation in particular, and considering the mitigation measures in place—effectively ring-fencing the project—it is felt that the project itself merits a risk rating of M. However, given the overall country and sector context, the overall risk rating of S is deemed more appropriate. F. Grant conditions and covenants 76. Negotiations:

• A POM satisfactory to the Association is adopted by the Recipient. • A short-list acceptable to the Association of qualified MDODs is prepared by the

Recipient. First Year internal audit plan is prepared by the Recipient. Update of Bureau de Monétisation’s accounting software.

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77. Covenants:

• Within one month of the Effective Date, the Recipient shall execute the first MDOD contract satisfactory to the Association for the provision of services needed for the implementation of Component 1: Community Subproject Investment and Management.

• Within one month of the Effective Date, the Recipient shall ensure that an accountant assistant and a financial analyst have been appointed according to Terms of Reference satisfactory to the Association.

• Within one months of the Effective Date, the Recipient shall execute the contract, satisfactory to the Association, for the establishment of the baseline survey of the project.

• Within three months of the Effective Date, the Recipient shall execute the contracts, satisfactory to the Association, for (a) the provision of the external financial audit of the project, and (b) the external technical audit of the project.

IV. APPRAISAL SUMMARY

A. Economic and financial analyses 78. The major economic benefits to be gained from the proposed project would be generated from improved infrastructure (roads, drainage, potable water, and so forth) in the targeted disadvantaged urban areas, and from the income-generating subprojects selected and managed by the CBOs, and jointly with the municipal governments. The demand-driven and participatory approach would build the capacity of community members, while the financial support to the subprojects would build a foundation for increasing income opportunities for community members.

79. Specific subprojects under the proposed project will be selected and implemented by CBOs over the life of the project. It is therefore not possible to know a priori precisely how resources will be allocated or to determine their cost-effectiveness, rate of return, and fiscal impact. However, many of the subprojects would, in general, be similar to those financed under the Post-Conflict Fund (PCF)-funded Urban CDD Pilot Project (PRODEPAP) currently being implemented in Port-au-Prince (Cité-Soleil and Bel-Air). The economic analysis evaluates the subproject investments in terms of the following factors: (a) cost-effectiveness of infrastructure and social subprojects, (b) financial viability of productive subprojects, and (c) the overall fiscal impact of the project.

80. The subproject investments under the proposed project would support infrastructure (for example, rehabilitation of streets, drainage, and construction of potable water systems) and social facilities subprojects (for example, rehabilitation of schools, medical clinics, and construction of community training centers). The larger investments (up to US$50,000) would be proposed and implemented by the municipal government jointly with at least two CBOs. Subproject design would ensure that these investments represent the least-cost and best alternative. First, the demand-driven nature of the subproject cycle would allocate scarce financial resources to where they are most needed by the communities. The Project Development Council (COPRODEP) would ensure that subproject proposals presented by the CBOs are prioritized and that the best

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alternative in terms of technical design and cost savings are chosen for financing. Second, the technical assistance provided under the project for technical design would decrease search costs. Third, direct subproject implementation by CBOs has proven to generate cost savings compared with project management by public sector agencies. All of these characteristics would contribute to the cost-effectiveness of the subprojects financed by the Project.

81. A financial analysis was carried out using data from the productive subprojects financed under the PCF-funded Urban CDD Pilot Project (PRODEPAP). Financial models were constructed using costs and benefits flows over a 15-year period. Overall, financial internal rates of return (FIRR) of these investments ranged from 14 to 33 percent, and were found both satisfactory and robust when subjected to sensitivity analysis.

82. In the absence of the proposed project, the central government would have to devote public funds in order to improve infrastructure (roads, drinking water, communication, and so forth), and to provide social service facilities (health clinics, schools, and so forth). However, due to the constraints of the central government’s budget, it is not expected that it would be able to make these public investments in the near future. Furthermore, if the central government would allocate funds to the construction or improvement of infrastructure and social facilities in disadvantage urban areas, it would most likely use public sector or private companies to carry out the works, which would typically be more costly than if they were implemented using the CDD approach.

83. By reaching an estimated 85,000 direct—and an estimated 490,000 indirect—beneficiaries, and creating approximately 2,000 jobs in targeted project areas, the proposed project would help improve income and living standards and contribute to social stability.

B. Technical 84. The technical feasibility of the proposed project has been demonstrated by results already achieved under the predecessor PCF-funded Urban CDD Pilot Project (PRODEPAP). Community subprojects will be limited in scope (micro grant) with simple and conventional design and without major complex civil works. In addition, lessons learned regarding needed technical improvements (for example, allowing greater time for subproject execution and the finalizing of O&M arrangements) have also been incorporated into the design of this scaled-up operation.

85. Estimates of investment costs, physical contingencies, and prices of inputs and outputs are based on actual data from the pilot project and are considered accurate. Technical standards of specific subprojects, particularly those for which community demand is high, will be ensured through standardized designs (including engineering aspects, technical, financial, and economic feasibility, O&M, simple environmental guidelines, and cost parameters). All subprojects will be screened by qualified MDOD technical staff; technical assistance will be made available to CBOs to assist in subproject design and implementation. Semiannual technical audits will also monitor subproject quality and make recommendations for improvements as needed. Training programs will also be offered to develop community capacity to prepare, implement, operate, and maintain subprojects, and acquaint them with existing environmental regulations, as detailed in the Environmental Management Plan.

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C. Governance 86. The proposed project seeks to promote good governance in several ways: (a) institutional arrangements are participatory and democratic in nature: CBOs are made up of community members; COPRODEPs (Project Development Councils) are formed by elected representatives of CBOs (a minimum of 80 percent of total membership), civil society, and local/municipal government representatives (up to a maximum of 20 percent of membership); and municipal government representatives have a permanent seat in the Executive Committee of the COPRODEPs; (b) inclusion of transparency/social accountability mechanisms, such as the incorporation of a communication and information campaign that is carried out by the service provider/MDOD at the beginning of the project in the targeted neighborhoods; the election process of COPRODEPs and the democratic prioritization process of subprojects to be funded; and the allocation of funds, which is based on population size of targeted disadvantaged urban areas; (c) institutional strengthening of municipal and central government in participatory development, donor coordination, and basic management, procurement, and financial management skills; and (d) fiduciary arrangements, such as the joint signing of bank accounts between the CBOs and the service provider/MDOD.

D. Fiduciary 87. Financial Management. The Bank conducted a Country Financial Accountability Assessment (CFAA) for Haiti in 2007, which provided a complete overview of Haitian Public Financial Management (PFM) systems. Although the country has made significant progress in recent years, the PFM system remains weak, with significant challenges, particularly with regard to budget execution and controls. The impact of these weaknesses on the project should be limited. Although the project will not be implemented directly through the PFM system of the country, it will strengthen the PFM systems of selected municipalities. During the appraisal mission, a review of the implementation of the financial management action plan (see Annex 7) was undertaken, and overall, good progress was made in its implementation. Specifically, (a) the POM and the accounting software were updated, (b) the first year’s internal audit plan was elaborated, and (c) agreement was reached on the content and format of the Interim Unaudited Financial Reports (IFRs). The other actions of the financial management action plan, notably (a) the recruitment of the accountant and the financial analyst, and (b) the recruitment of the external auditor, will be implemented, respectively, not later than one month and four months after effectiveness. In addition, an assessment of the MDOD’s financial management capacity will be conducted prior to signing of their contract.

E. Social 88. The proposed project seeks to reproduce, in disadvantaged urban areas of Haiti, the field-tested participatory approach of CDD, which has been implemented for poverty reduction in rural Haiti and in Northeast Brazil with substantial success in: (a) reducing the interference of politics and clientelism in the distribution of resources; (b) increasing the confidence of the beneficiary population in its capacity to intervene and collectively act on their own behalf; and (c) increasing (and reorienting) the interaction of organized local communities with government agencies at the municipal and central level, thus strengthening the social capital and raising the

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level of governance in the municipal sphere. Some 17,000 families (or 85,000 individuals) are expected to benefit directly from community investments financed under the project.

89. The advantages of this urban CDD project have been proven by the successful execution of the Pilot Urban CDD Project (PRODEPAP), which has been operating in Cité-Soleil and Bel-Air since the first trimester of 2007 and has already achieved positive results. In both disadvantaged urban areas, COPRODEPs have been established and are operational; and subproject prioritization has been completed in a transparent, participatory, and inclusive manner. As of January 2008, 17 subprojects were under execution (9 in Cité-Soleil and 8 in Bel-Air), contributing to community ownership. Field visits were undertaken to subprojects during project preparation and indicate that access to basic services has been improved and that CBOs are actively participating in project execution.

90. PRODEPUR will continue operating in the same disadvantaged urban areas included in PRODEPAP (Cité-Soleil and Bel-Air, which are recognized as some the poorest and most violent areas in Haiti). The project will also target other urban areas where it can have great impact reducing poverty and contributing to the development of social capital. In addition to the disadvantaged urban areas of Port-au-Prince, the project will include the quartiers of the following cities: Port-au-Prince, Gonaïves, St. Marc, and Cap-Haïtien. All of these cities suffer from unemployment and lack of adequate housing and basic services, but mainly from social polarization and insecurity. Some 17,000 households are expected to benefit from community investments financed under the Project. Poverty targeting is simple, verifiable, and based on objective criteria.

91. The socio economic background studies carried out during project preparation helped to define the physical delimitation of the target areas and produced socioeconomic data and information about CBOs working in those areas; it also identified social issues that can affect project implementation. The assessment will also contribute to the integration of the project’s baseline into the MIS, to be finalized during the first six months of project effectiveness.

92. More specifically, the project seeks to reach the most vulnerable populations, such as the elderly, women, children, and youth, who frequently suffer more intensely the effects of poverty and lack the ability to influence the decisions that are taken in hierarchical societies. Issues that impact them are frequently neglected: poor communities are conceived of as homogenous, or at least homogenized, in terms of poverty. CDD has, in general, shown itself to be especially favorable in the inclusion of these groups. The concentration of CDD projects in the Northeast of Brazil in basic infrastructure demonstrates the significant influence that the elderly and women can effectively exert on CBOs; this experience is being taken into account in PRODEPUR.

93. Gender equity: Women have been playing an important role in the execution of both PRODEP and PRODEPAP: around 30 percent of subprojects are being implemented by CBOs led by women. Women also have a significant representation in the COPRODEPs. Therefore, the project will incorporate a gender perspective to consolidate women’s participation under PRODEPUR, particularly in the provision of training, technical assistance, and subproject selection criteria.

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Participatory Instruments

94. The identification and implementation of investments are facilitated through the mobilization of community organizations (CBOs) and their representation on Project Development Councils (COPRODEPs), which provide a forum for these organizations, along with other stakeholders (i.e. NGOs, local authorities, service providers, etc.), to discuss local needs, rank investment priorities, and leverage resources. The decentralized, inclusive, and participatory nature of the CDD approach seeks to ensure that the poorest communities and traditionally marginalized groups have unimpeded access to project benefits. PRODEPUR will build on the participatory instruments developed under PRODEP and PRODEPAP, and will incorporate the lessons learned from these operations.

95. Communication and Dissemination Campaigns: These campaigns, which have incorporated activities linked to local history and culture (music, dancing, and so forth) have been very useful to promote community participation. The recruitment of local consultants to support this activity has contributed to its success. PRODEPUR will continue these activities, incorporating a general strategy targeting selected groups (youth, women, and so forth) to better use the resources and have greater impact. These campaigns will build awareness of project objectives, operating guidelines, and how organized community organizations can participate in the project.

96. Community-Based Organizations (CBOs): CBOs will continue to be the foundation of the Project under PRODEPUR. The Project will reinforce selection criteria, improve training, and address some logistical problems hindering participation (transport costs, timing of training, and so forth). All subprojects are identified, prepared, implemented (including procurement and contracting of works), supervised, operated, and maintained by CBOs. Technical assistance can be accessed from NGOs, private firms, and other civil groups to facilitate information dissemination (as under the information campaign discussed above) to CBOs and assist in mobilizing and organizing other communities in the project area. MDODs, particularly in their field offices, will offer capacity building and training to CBOs and COPRODEPs to foster and extend social capital.

97. Project Development Councils (COPRODEPs). COPRODEPs will receive support under the project to better perform its functions: assessment, approval, and follow-up of subprojects. Training and technical assistance will be provided to reinforce their role to promote social cohesion and address conflicts. By creating opportunities for communities to meet their needs through participatory decision-making and oversight, the COPRODEPs have the potential, as evidenced under the pilot experience in Cité-Soleil and Bel-Air, as well as in PRODEP, to: (a) reduce clientelism and political interference; (b) strengthen communities and municipal governments in their capacity to select, prioritize, and implement investment decisions; (c) create partnerships between communities, COPRODEPs, and municipal governments; and, more generally, increase communities’ voice in the use of public resources; and (d) foster communities’ independence through a growing awareness of their capacity to act, and social responsibilities of citizens, their representatives, and public authorities.

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Institutional Arrangements 98. PRODEPUR will continue to use the PRODEP/PRODEPAP institutional scheme comprising an intermediary (MDOD) that is responsible for providing assistance to CBOs and COPRODEPs for the implementation of subprojects. The project will promote closer partnerships with municipal governments in order to create synergies and complement efforts.

99. From the social point of view, MDOD/BTCs, to be located near the project implementation sites, are critical to strengthening the capacity of CBOs and COPRODEPs. The structure, technical composition, and capacity of the BTC will be reinforced under PRODEPUR.

F. Environment 100. The project is rated as a category B project. It intends to finance a variety of small-scale infrastructure works and income-generating activities that could have adverse environmental impacts. An Environmental Management Framework (EMF) was prepared for the Project and checklists are designed to identify these potential impacts and direct communities and implementation partners to practical ways of avoiding or mitigating them. Should local government entities and implementation partners determine that more detailed planning work is required, they will require that an acceptable Environmental Management Plan (EMP) be prepared before project application can be considered further (see Annex 10). The EMF was undertaken in accordance with OP 4.01 and with the Environmental Decree of Haiti (2006).

101. Given the poor environmental conditions of urban areas, (that is, lack of waste management systems), many of the rehabilitation works would improve the environmental health of the zones of influence. The environmental management activities that will be supported through the Project represent a significant environmental improvement relative to both the status quo and to the pilot project. All subprojects will be screened to ensure that they are site appropriate, that impacts are adequately identified and assessed, and that mitigation measures (with their associated costs) are put in place. Potential negative impacts (direct, indirect, and cumulative) related to the construction and O&M phases of any subproject, in particular for civil works, would be mitigated and/or avoided, where possible. In addition, the technical assistance provided by the project will emphasize capacity building for environmental management. The capacity-building efforts will target different audiences to respond to their needs, such as raised awareness, sensitization to the issues, and detailed technical training. To the extent possible and desired by the participating communities, the Bureau de Monétisation will encourage/promote environmental protection/management subprojects.

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G. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [x] [ ] Natural Habitats (OP/BP 4.04) [ ] [x] Pest Management (OP 4.09) [ ] [x] Physical Cultural Resources (OP/BP 4.11) [ ] [x] Involuntary Resettlement (OP/BP 4.12) [ ] [x] Indigenous Peoples (OP/BP 4.10) [ ] [x] Forests (OP/BP 4.36) [ ] [x] Safety of Dams (OP/BP 4.37) [ ] [x] Projects in Disputed Areas (OP/BP 7.60)* [ ] [x] Projects on International Waterways (OP/BP 7.50) [ ] [x]

*By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas. H. Policy Exceptions and Readiness

102. There are no policy exceptions and the project is ready for implementation.

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Annex 1: Country and Sector or Program Background

HAITI: Urban Community-Driven Development Project (PRODEPUR)

Overall country context

1. Haiti is the poorest country in the Western Hemisphere and one of the most disadvantaged in the world. According to 2001 data, 78 percent of Haitians are poor (living on less than US$2 a day), and more than half (54 percent) live in extreme poverty (living on less than US$1 a day). With an infant mortality rate of 75 per 1,000 births, illiteracy of 47 percent, and the highest incidence of HIV/AIDS outside of sub-Saharan Africa, Haiti ranks 146th out of 177 countries in the United Nations 2007 Human Development Index.

2 Haiti is emerging from several years of political, economic, and social strife. Since 1996, Haiti has suffered little or negative gross domestic product (GDP) growth, accompanied by mounting political and social strife exacerbated by the departure of Jean-Bertrand Aristide in February 2004. The transitional government, led by M. Gerard Latortue, focused on restoring macroeconomic stability and improving economic governance, supported by external partners through the Interim Cooperation Framework (ICF) discussed at the donors’ conference of July 2004. In February 2006, René Préval was peacefully and democratically elected President. Parliamentary elections followed in April 2006, leading to the formation of a new government in May 2006, with M. Jacques-Edouard Alexis chosen as Prime Minister.

3. The Préval Administration is committed to consolidating the macroeconomic stabilization and deepening the reforms achieved during the interim period. The government’s economic framework for FY2007–09 seeks to raise medium-term GDP growth to 4 percent, reduce inflation to about 6 percent, and stabilize the current account deficit to around 8 or 9 percent of GDP (excluding grants). The government will continue to support the democratic transition and aims to reestablish a climate of security in Port-au-Prince and throughout the country.

4. Both the transitional government and the newly elected government have proven capable of managing the assistance programs underway: most ICF targets have been met, satisfactory progress has been achieved under the IMF’s Staff Emergency Post-Conflict Assistance (EPCA) program, and significant achievements have been made in improving economic governance with the support of IDA’s Economic Governance and Reform Operation (EGRO I) and other donors’ assistance, leading to the approval by the World Bank’s Board of Directors of EGRO II. This improved performance has also led to Haiti’s qualification for debt relief under the HIPC (Heavily Indebted Poor Countries) Initiative in November 2006.

5. During 2007, Haiti made remarkable progress in stabilizing its security situation and economy and restoring the population’s faith in political institutions. The economic reforms first introduced by the transitional government have continued to be implemented by the Préval Administration, and are showing positive results. For fiscal year 2006, real GDP growth was 2.1 percent. GDP growth is expected to continue to accelerate, to an annual average of 4 percent from 2007 to 2011. Inflation has been curbed, from a high of nearly 40 percent in 2003 to 8 percent in March 2007.

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6. A national dialogue among the government, the private sector, and civil society resulted in the endorsement of a Poverty Reduction Strategy Paper (PRSP), which was submitted to the World Bank and the IMF by the Government of Haiti (GoH) in November 2007. Haiti’s Poverty Reduction Strategy consists of three pillars: (a) drivers of growth (agriculture and rural development, tourism, infrastructure); (b) human development (education and training, health, water and sanitation, the handicapped, children in poverty, youth, HIV/AIDS, gender equality); and (c) democratic governance (justice, security, modernization of the state, territorial management, macroeconomic framework). 7. With respect to the security situation, a new Haitian National Police force has been created and, together with the United Nations Mission in Haiti (MINUSTAH), has pacified areas of Port-au-Prince that have been notorious for gang activities. Progress has also been achieved in restoring political institutions, as evidenced by the successful parliamentary, municipal, and local elections held in 2006. A key element of the Préval Administration’s drive to restore security in the disadvantaged urban areas of Port-au-Prince has also included the Disarmament, Demobilization, and Reintegration (DDR) Program, implemented through the National Commission for Disarmament. 8. The DDR program attempts to address the short-term stabilization objectives by dealing with moderate armed gangs that can be encouraged to enter a DDR process, while building the base for a longer-term sustainable solution to the problem of armed violence by developing capacity in each community to tackle it, which includes activities such as community-level social and economic investment and job creation. The DDR program is also pursuing a policy of constructive engagement with the former military. Currently, the majority of DDR activities focus on the negotiated disarmament and reinsertion into civil society of gangs throughout the country, with a focus on the urban areas of Port-au-Prince, in order to reduce crime and violence and build community confidence for development. 9. Overall, it is the GoH’s strategy to focus many of its interventions and those of donors in what it has defined as “Priority Zones.”14 As a result, these are the hotspot disadvantaged urban areas that the proposed project will be covering. The government’s strategy is based on the understanding that restoring basic services and creating opportunities for the residents of these neighborhoods go hand in hand with maintaining political stability. In turn, reducing violence and improving security conditions are of paramount importance to foster sustainable development in Haiti. Activities in these Priority Zones are coordinated by a special office and coordinator in the Office of the Prime Minister, the Bureau de Coordination Opérationnelle des Interventions dans les Zones Prioritaires (BCOIZP). In addition to directing efforts to strengthen law enforcement and combat crime, cementing a lasting peace requires efforts to address the socioeconomic drivers of gang membership and violence: poverty, unemployment, and the weakness of community groups and other legitimate social organizations in disadvantaged urban areas. There is a particularly urgent need to provide visible results—a peace dividend—in the form of jobs and improved services and living conditions in poor urban areas where gang control has recently weakened or has never taken strong hold in an effort to help prevent a resurgence or

14 Formerly knows as “no-go zones” or “red zones,” due to their high levels of violence.

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strengthening of that power. In addition, measures to establish a positive presence of the State, as a provider of public goods, would promote a stronger and more durable peace.15 10. Since December 2006, when gang-related crime and violence was at its peak, joint actions between the Haitian Government and United Nations Stabilization Mission (MINUSTAH) forces, particularly in the Port-au-Prince metropolitan area, have resulted in the arrest or removal of many gang leaders and a significant drop in levels of crime and violence and relative return to “normalcy” in the capital area and disadvantaged urban areas such as Cité-Soleil and Bel-Air. Nevertheless, it is recognized that while this represents a window of opportunity for development interventions in disadvantaged urban areas, this is a fragile “peace” dependent in large part on the continued presence of MINUSTAH, and that the underlying causes of the instability remain to be addressed.16 Population Growth, Urbanization, and Migration in Haiti 11. Haiti is slightly smaller than Wales and its population is growing rapidly (2.2 percent per year, and 5 percent in urban areas). In 1950, the population was estimated at just over 3 million. Today, the country’s total population has reached approximately 8.5 million, and could reach approximately 12.3 million by 2030.17 12. Haiti has become far more urbanized in the last two decades because the highest population growth has been in urban areas. In 2003, 40.4 percent of Haitians lived in urban areas, up from 24.5 percent in 1982. The urban population increased from 1.2 million to 3.2 million between 1982 and 2003. In other words, 115,000 people have been added to Haiti’s cities every year for the past 21 years. Among the 1.97 million people added to urban areas between 1982 and 2003, 1.3 million (or two-thirds), went to the West region (where Port-au-Prince is located). The metropolitan area has received an average of 75,000 migrants a year over the past 20 years, in addition to a natural growth of nearly 40,000 people a year, bringing its total annual population growth to 115,00 people.18 13. Migration in Haiti is directed mainly toward the metropolitan area, where 51 percent of current residents were born in other parts of the country. Nearly 17 percent of all Haitians over age 18 have migrated at some point to Port-au-Prince. Twelve percent of the area’s adult population moved into the metropolitan region in the past five years. In the most populous region, the West, 36.7 percent of the population was born elsewhere in Haiti. Those who migrate are mainly economic migrants.19

15 For further analysis of the social and institutional causes of violence in Haiti, see the “Country Social Analysis: Social Resilience and State Fragility in Haiti” (2006). For a discussion of the strategic rationale and design of targeted interventions in violence-prone urban areas, see the Country Economic Memorandum (2006). 16 The events of April 2008, where violent demonstrations occurred in several of Haiti’s cities in response to rising food prices, serve as reminders of the fragility of the political and economic progress already achieved in recent years. While the rise in food prices is a global phenomenon, the impact on Haiti has been particularly significant due to its heavy dependence on imports. 17 “Social Resilience and State Fragility in Haiti,” World Bank, Washington, D.C., 2007. 18 Ibid. 19 Ibid.

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14. While urban planning was well established in Haiti up until the 1970s, in recent decades the sector has been undermined by high political volatility and instability that has resulted in unchecked urban development. However, the government is reengaging in this area. Urban development is included as one the cross-cutting policies and strategies included in its PRSP. Urban Development forms part of the cross-cutting policies and strategies included in Haiti’s PRSP. The overall goal of the urban development strategy is to establish neighborhoods as the structural basis for job creation, poverty reduction, and the development of new relationships between socioeconomic and political actors, and between public and private institutions. Specific objectives of the Urban Development strategy include: (a) providing technical support to local actors (municipalities, organized beneficiary groups/Community-Based Organizations [CBOs], nongovernmental organization [NGOs]), so they can design, execute, implement, monitor, and evaluate disadvantaged urban area upgrading projects; (b) reinforcing municipal capacity to control the growth of disadvantaged urban areas and improve the administration of urban services; (c) improving the livelihoods of local populations; (d) contributing to the creation of networks between diverse actors working in disadvantaged neighborhoods, thereby creating the efficient use of resources in these areas; (e) contributing to the creation of a single entity in charge of the rehabilitation of disadvantaged neighborhoods, in view of improving project coordination and ensuring effective financing; and (f) beginning to systematize and diffuse successful urban development strategies throughout the country. 15. The Cities Alliance-supported disadvantaged urban area upgrading strategy will build on past experiences and studies in Haiti and the current stabilization projects and processes in place—replicating best practices wherever possible and addressing structural issues such as access to water and sanitation, roads, housing, social/community development, and crime and violence prevention. It is also proposed that in addition and concurrently, a few smaller but equally vulnerable disadvantaged urban areas will be selected to develop comprehensive disadvantaged urban area upgrading plans and associated pilot investments and activities. These disadvantaged urban areas can then serve as “incubators,” to build local capacity and knowledge, and be “rolled out” to other areas in due course.

Socioeconomic Situation within Disadvantaged Urban Areas of Haiti

16. Living conditions in violent and disadvantaged urban areas in Haiti are among the worst in the Americas. As more people move from the countryside to the cities, the social cohesion that characterizes the countryside becomes less effective in reducing the likelihood of dislocation and in reducing the opportunity costs for young migrants to engage in criminal and violent activities. Amid high unemployment and acute poverty, malnutrition is prevalent. Insufficient access to safe water and sanitation, and a lack of solid waste collection, threaten human health and the environment. There are few public facilities or services and little presence of state institutions of any kind, including law enforcement. 17. Poor urban neighborhoods in Haiti have been both victim and cause of explosive conflicts combining demographic, socioeconomic, institutional, and political risk factors.20

20 These findings are highlighted in the 2006 “Country Social Analysis: Social Resilience and State Fragility in Haiti, (World Bank, April 2006), which examines the triangle of key factors contributing to the country’s “conflict-poverty trap”: (a) demographic and socioeconomic factors at the individual and household levels; (b) the role of the

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Violent crime rates within Haitian disadvantaged urban areas are high, and the politicized armed gangs in the major disadvantaged urban areas—particularly those of the capital, Port-au-Prince—have used them as a base for kidnapping and other criminal activities across the city. Violence and insecurity in the Port-au-Prince disadvantaged urban areas in particular21 has undermined the political process, fuelled conflict, impeded economic activity, and imposed costs on residents and businesses, driven outward migration, and negatively affected development and reconstruction efforts. 18. In particular, the disadvantaged urban areas of Cité-Soleil and Bel-Air highlight the key challenges faced by Haiti today: high demographic pressure on poor metropolitan areas, without accompanied access to basic infrastructure and services, such as health and education. Specific information on the socioeconomic situation of these two disadvantaged urban areas can be found in Boxes A1.1 and A1.2. Although similar detailed information about the additional disadvantaged urban areas in which the proposed project will be implemented (Cité-Soleil, Bel-Air, Martissant, Delmas 32, and/or Simon Pelé (Port-au-Prince); La Fossette, Nan Bannann (Cap Haïtien); Kasoley, Raboto, Descahos (Gonaïves); and Portail Guêpe, Portail Montrouis/Fressinaut (St. Marc) was not readily available during project preparation, the socio-economic background studies, field visits, and discussions with representatives from the GoH and NGOs suggest similar socioeconomic conditions exist.

Box A1.1: Cité-Soleil Cité-Soleil, which comprises approximately 40 separate neighborhoods, is considered the largest disadvantaged urban area in the Port-au-Prince metropolitan area, with an estimated 350,000 inhabitants on 250 hectares, representing almost 20 percent of the total metropolitan area. In 2002, the commune of Cité-Soleil was created, which includes a disadvantaged urban area (the targeted project area) and two rural sections communales. Much of the insecurity in the capital area, including the violent disruption of public order and the social problems generated by crime, is deeply rooted in the disadvantaged urban area of Cité-Soleil. It is well documented that the armed gangs that have operated in Port-au-Prince in recent years have made Cité-Soleil their primary base. Poverty is rampant in Cité-Soleil, with average monthly income at approximately US$56. Almost three-quarters of households in Cité-Soleil are engaged in some form of economic activity: half have a formal business and half are street vendors. Fifty-five percent of women compared to 45 percent of men are engaged in economic activities. The largest group engaged in economic activity is concentrated between the ages of 30 and 34. During regular working hours, approximately 20 percent of the population is inactive (neither works nor studies). Health: Cité-Soleil has one hospital and one health center, which serve approximately 300,000 inhabitants, including people who come from outside Port-au-Prince. Diseases such as diarrhea, typhoid, and pneumonia are common. Education: Almost three-quarters of the population have attended primary school; approximately 20 percent has reached the first year of high school, approximately 5 percent the second year, and less than 1 percent has reached third-level education.

so-called “entrepreneurs of violence,” capable and willing to engineer violence for political, financial, and other purposes; and (c) the state’s institutional capacity to provide public goods and contain/manage social and violence risks arising from (a) and (b). 21 It is well documented (including in the above-mentioned Country Social Analysis) that the geographic sources of violence are highly concentrated in Port-au-Prince’s major disadvantaged urban areas of Cité-Soleil, Bel-Air, La Saline, and others (although gangs operate out of these areas and across the city).

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Basic Infrastructure:

• Housing: Almost three-quarters of the homes are built from cement blocks, approximately 80 percent have concrete floors, and the vast majority have metal sheet roofs.

Drainage: A proper drainage system does not exist. Water disposal flows along the streets to open canals

and ravines, which are typically already full of garbage, thereby increasing unsanitary conditions. This situation is particularly serious at Soleil 17 and Bélécou.

Solid waste disposal: Almost all households report throwing garbage into canals or simply on the street.

Garbage collection covers approximately 10 percent of households, of which half receive the service at least once a week.

Water: Approximately 5 percent of households have tap water within their homes, and 15 percent use a

public tap near their homes. Almost 90 percent of households pay for drinking water: approximately 45 percent from a public source, 25 percent from water containers, and 10 percent from a cistern-truck. Approximately 25 percent of the water is treated. One-quarter of households have daily access, one-third have access several times a week, and approximately 20 percent have access once a week. Almost 90 percent of residents surveyed felt it was necessary to pay for water.

Public markets: There are four public markets within Cité-Soleil. Approximately 40 percent have a market

in their own community and almost three-quarters of the residents have one within walking distance.

Public spaces: Approximately 85 percent of households have a public space within their immediate communities and approximately 60 percent have access to a public space within walking distance.

Presence of Community-Based Organizations (CBOs): The majority of CBOs that exist in Cité-Soleil seek to improve the socioeconomic conditions of the community and help reduce violence. Approximately 20 percent of residents surveyed were members of a CBO and almost three-quarters of residents surveyed responded that they would be willing to join one. Source: “Rapport Final du Diagnostic Socio-Economique et Environnmental du Bel-Air et de Cité-Soleil,” Group Croissance, January 2008.

Box A1.2: Bel-Air Bel-Air is the oldest established neighborhood in Port-au-Prince and today has an estimated population of approximately 100,000 spread over several hectares. Approximately 60 percent of the population is under 18 years of age and approximately 60 percent are migrants from rural areas. Bel-Air’s “hotspots” include the neighborhoods of Ti Chéri, Solino, Cité Marc, and Haut Rue Tiremas. In recent years, Bel-Air was at the forefront of the insecurity situation in the capital area. Although the disadvantaged urban area has been pacified in the context of Préval’s election in 2006, the relative calm achieved remains fragile and may revert to violence if socioeconomic interventions are not undertaken soon. Economic activities: Approximately 80 percent of the population works in the informal economy. Men engaged in economic activities represent approximately 55 percent and women approximately 45 percent. Almost three-quarters of those engaged in economic activities are under 40 years of age. Household conditions: Approximately 80 percent of households use charcoal for cooking and approximately 60 percent use candles due to lack of electricity. Because the majority of the population does not have a regular job, income varies from month to month. According to recent surveys, average three months’ income was slightly over US$280. Similar surveys found that during regular working hours, approximately half of the population is inactive (neither works nor studies).

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Health services: Bel-Air has one medical center with one doctor. The population suffers from the traditional diseases linked to poverty and unsanitary conditions, such as diarrhea and respiratory infections. Education: Almost 90 percent of the population has reached the second year of high school. Basic infrastructure:

Housing: Approximately 40 percent of households own their homes and nearly 60 percent of the families share their homes with at least one other family. Most houses are built from cement building blocks, approximately three-quarters have concrete floors, and approximately one-third have sheet-metal roofs.

Solid waste disposal: Surveys have found that almost the entire population typically throws garbage into

canals or simply on the street, and that approximately one-third of households were aware that there was garbage collection service at least once a week.

Water: Approximately 20 percent of households have tap water within their homes and approximately 10

percent use a public tap near their home. The majority of households have to pay for different types of services: public tap (almost one-third), water container (approximately 15 percent), and cistern-truck (approximately 10 percent). Approximately one-quarter of the water is treated water. Almost half of the households receive water daily, one-quarter receive water several times a week, and one-quarter receive it once a week.

Public markets: Almost 60 percent of the population has a public market within walking distance.

Public space: Approximately 60 percent of households have a public square within their community, and

almost the entire population has one within walking distance. Community-Based Organizations (CBOs): Although several CBOs exist in Bel-Air, when surveyed, most community members (approximately 65 percent) were not aware of many of them, and less than 10 percent of community members were members of a CBO. However, almost 60 percent said they would be willing to participate in one. Source: “Rapport Final du Diagnostic Socio-Economique et Environnmental du Bel-Air et de Cité-Soleil,” Group Croissance, January 2008. Local governance/decentralization in Haiti 19. Haiti set forth an incipient legal framework for decentralization under the 1987 Constitution, in response to two needs: (a) to give citizens a voice in local politics, and (b) to provide citizens with basic services through the establishment of a functional local administration. The 1987 Constitution defined three categories of local governments (collectivités territoriales), each with both executive (conseils) and legislative (assemblées) bodies, as described here from the bottom up: (a) the section communale, with an Administrative Council of the Communal Section (Conseil d’Administration de la Section Communale, CASEC) and a Communal Section Assembly (Assemblée Section Communale, ASEC); (b) the commune,22 or municipality, with a municipal council (headed by a mayor) and a municipal assembly; and (c) the départment, with a departmental council and a departmental assembly. All bodies are to be elected every four years and would exercise financial and administrative autonomy; only the commune, however, is empowered to levy taxes. The other decentralized structures (that is, the section communale, the department) are therefore fully

22 Administrative changes in recent years increased the number (a) of departments from 9 to 10, (b) of communes from 133 to 140, and (c) sections communales from 565 to 570.

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dependent on budget appropriations from the central government.23 Table A1.1 presents the local framework.

Table A1.1: Framework of Local Governments Level Elected Bodies Appointed Representatives

of Central Government 1. Departments: 10

Assemblée Départmental (Departmental Assembly) Délégués/Delegates (Ministry of Interior); Departmental Directors of other Ministries.

2. Communes (Municipalities): 140

Conseil Municipal (Municipal Council) • 1 Maire (Mayor) • 2 Adjoints (Deputies)

Assemblée Municipale (Municipal Assembly)

• Representatives of the Conseil Section Communal

• Délégues de Villesa (City Delegates)

Local representation (when in place) varies among line ministries.

3. Sections Communales (Communal Sections): 570

Conseil d’Administration de la Section Communale (Administrative Council of the Communal Section, CASEC)

• 3 Conseillers (Councilmen) Assemblée Section Communale (Communal Section Assembly, ASEC)

a. Délégués de villes are only in “traditional” urban centers. Due to rapid and unregulated urban expansion, many disadvantaged urban areas can fall either within or outside of these traditional town boundaries, or straddle both. 20. In spite of this framework, Haiti has no adequately functional decentralization process, primarily due to the following reasons:

• The legal and regulatory framework is still incomplete: The 1987 Constitution was to be followed by detailed laws comprehensively defining all aspects of the decentralization process. Few of these laws were enacted, and those that were enacted were sometimes in direct contradiction of the 1987 Law, resulting in a gap and inconsistency between the constitutional prescriptions and actual progress of decentralization on the ground. At the section communale level, CASECs and ASECs are generally in existence, but their operational status varies widely. At the commune level, councils (headed by the mayors) have been established, but the election of a municipal assembly has yet to materialize.

• Day-to-day operation of the existing decentralized bodies is severely hampered by the

lack of human and financial resources: Operating and investment budget allocations are severely insufficient; taxes collected by communes are grossly inadequate; and the decentralization fund established in the 1990s remains weak with limited operational capacity, and has experienced delays in disbursing its funds.

23 The following national ministries have parallel decentralized structures, at varying levels, across the country: the Ministry of the Interior, the Ministry of Planning and External Cooperation, the Ministry of Agriculture, Natural Resources and Rural Development (MARNDR), the Ministry of Health, and the Ministry of Education.

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• The decentralized bodies have often operated in a context of bitter internal struggle between political parties vying to enlist the support of local constituencies: As a result, they often lack political clout since they are the product of a political process that is typically polarized and does not lend itself to the required collaborative management style.

21. Local government involvement in disadvantaged urban areas is particularly uneven. The commune structures have been one of the most functional and resilient local government units in the urban areas in recent decades, but even these are weakened by lack of financing and clear mandate. Moves to streamline local government municipal structures, starting with the election of mayors, are well underway, but there is still no clear local government framework that can give coherence and supervision to the multiple community development initiatives in the urban areas or take responsibility for planning and technical issues. In addition, there is a large distance between the community initiatives at the local neighborhood level and the commune structure. Adding to the complication is the fact that no official subdivisions exist within cities; the municipal council and the municipal assemblies technically represent the entire commune, not just the city itself. Overview of the Community-Driven Development Approach 22. Community-Driven Development (CDD) is a development approach whereby communities and their institutions are empowered with decision-making authority and control of financial resources for investments affecting their livelihoods. The CDD approach should be seen in the broader context of—and as complementary to—other development activities that are targeted at the municipal, departmental, and national levels. The CDD approach is based on the following principles: (a) communities are best positioned to determine their development priorities; (b) communities themselves are capable of managing financial resources and implementing projects (up to a certain scale), given appropriate technical assistance and training from local counterparts; and (c) prioritization and approval of community-scale investment subprojects are best handled through decentralized local governance structures. 23. Although different models of CDD projects exist, some typical factors include: (a) a participatory approach to determine community priorities; (b) training and organizational assistance to allow communities to manage subproject resources; (c) subproject implementation with direct participation by communities, including management of their own contributions (labor, materials, or cash), hiring of contractors, acquisition of goods, monitoring, and accounting; and (d) close interaction with local governance structures, such as district or municipal councils, oversight committees, or similar entities where project beneficiaries have direct participation. 24. CDD projects can have several positive impacts, including: (a) empowerment of communities; (b) building of “social capital,” as it strengthens social organization, promotes trust, and encourages collective action related to public investments and local development policy; (c) ability to increase cost-effectiveness, reduce implementation time, and increase the sustainability of subproject investments as a result of community ownership of subprojects; (d) increase in transparency in the use of public resources, and potentially an increase in the

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democratic accountability of local government officials and institutions; and (e) potential to be scaled-up effectively and have an aggregate impact on the provision of basic public infrastructure and services, targeted interventions for the benefit of marginalized populations, and overall poverty reduction. Table A1.1 demonstrates the role of CDD among a set of public policy approaches and interventions to address urban violence. Table A1.1: Public Policy Approaches and Interventions to Address Urban Violence



Sector-specific • Crime • Robbery • Corruption

Judicial reform

• Crime • Robbery

Police reform

• Delinquency • Robbery • Gender-based violence

Accessible justice systems Mobile courts

Criminal justice

Deterring and controlling violence through higher arrest and conviction rates and more severe punishment

• Gender-based violence Community policing Women’s police stations

Public health

Preventing violence by reducing individual risk factors

• Youth violence • Gender-based violence • Homicide

Preschool programs Home visitation programs School-based social development programs Restriction of alcohol sales Restrictions on gun ownership Gun buyback programs

• Political violence Conflict transformation and human rights

Resolving conflict nonviolently through negotiation and legal enforcement of human rights by states and other social actors

• Institutional violence • Human rights abuses • Arbitrary detention

Traditional systems of justice Government human rights advocates or ombudsman Civil society advocacy NGOs

Cross-sectoral Crime prevention through environmental design/urban renewal

Reducing violence by focusing on the settings of crime rather than the perpetrators


Local-level programs Urban renewal programs Integrated disadvantaged urban area upgrading programs

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Citizen security/ public safety

Using cross-sector measures to prevent or reduce violence


National-level programs Local-level programs

• Youth gangs Community-based solutions Community-driven development (CDD)

Social capital

Rebuilding social capital, trust, and cohesion in informal and formal social institutions

• Gender-based violence Crisis services for victims Ongoing support and prevention Communication campaigns School programs Programs for perpetrators

Source: Adapted from Moser and others (2005); and Moser and Winton (2002).

Potential for Community-Driven Development (CDD) Projects in Disadvantaged Urban Areas in Haiti 25. Although challenging, the Haitian context holds potential for CDD projects and approaches due to the following factors:

• CDD can contribute to service delivery and infrastructure needs: There is minimal public provision of services in Haitian disadvantaged urban areas. In the absence of government-run services and infrastructure, many private parties have filled the gap and provide services through charitable establishments (particularly in the case of health and education) or through commercially driven microenterprises (as in the case of housing, water, waste collection, and access to electricity). Even so, the service and infrastructure needs in the disadvantaged urban areas outweigh the supply. For example, it is estimated that over 72 percent of the population of the metropolitan areas in the country do not have access to safe water.24 The degraded physical environment of the most disadvantaged urban areas, with fragile housing, inadequate drainage, overwhelmed waste collection, and minimal sanitation facilities, is also evidence of the infrastructure needs. Subprojects selected and implemented under the Community Participation Development Project (Projet de Développement Communautaire Participatif, PRODEP) and the Pilot Community-Driven Development Project in Port-au-Prince Area (Projet Pilote de Développment CommunataireParticipatif dans l’aire Metropolitaine de Port-au-Prince, PRODEPAP) addressing these gaps include improved access to water, road rehabilitation, and marketplace improvement.

• CDD can promote community cohesion and build on the resilience of Haitian

communities: Research from the 2006 Haiti Country Social Analysis concluded that Haiti is a resilient society with a tradition of strong social cohesion, where social capital and people’s own coping capacity has in many parts substituted for central government provision and stability. However, this social cohesion, while strong in rural areas, is under threat in urban centers where violence and fear of violence undermine trust. CDD

24 “Social Resilience and State Fragility in Haiti, A Country Social Analysis,” World Bank, 2006.

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can therefore help protect and promote social capital by fostering collective action, joint communal responsibility, and transparent access to information and decision-making. In a disadvantaged urban area context, CDD can be a way to bring community members together to form a joint vision for their local area that may also promote a greater sense of cohesion. In a short time, PRODEPAP facilitated the creation of two Project Development Councils (COPRODEPs), which were able to identify, prioritize, and implement several subprojects within a highly polarized and politicized setting, along with broad acceptance and wide participation of various community stakeholders.

• CDD can foster and build capacity among existing and legitimate CBOs: Evidence

shows that Haitian disadvantaged urban areas are rich with a flourishing civil society and a diverse array of CBOs. These organizations compromise a wide spectrum, including faith-based charitable establishments and politically affiliated membership organizations. The quality of the services they deliver and their capacity for financial and project management also varies. CDD can help strengthen the resource base and social capital of CBOs, by connecting them to funding opportunities, creating vertical links between grassroots organizations and wider governance structures, and allowing horizontal alliances to develop among CBOs that work on similar issues. Under PRODEP and PRODEPAP, one of the elements of the project most valued by beneficiaries (as per beneficiary feedback) is the emphasis on training and capacity building of CBOs.25

• CDD can serve as an entry-point for community-based public safety and security initiatives: CDD in the Haitian disadvantaged urban area context has the potential to be the entry point for community-based crime and violence prevention activities. Mobilizing a community around the relatively neutral subject of small-scale infrastructure provision can help establish a starting point for a community-based development project that, over time, can tackle more sensitive topics like the management of crime, violence, and gangs, intra-family violence, and conflict resolution. Table A1.1 demonstrates CDD’s role among a set of public policy approaches and interventions to address urban violence. The CDD experience in Haiti has shown the approach to be very resilient under extremely challenging conditions, as evidenced by the successful implementation of PRODEP’s pilot and PRODEPAP during some of the worst political upheaval and violence in the country.

• CDD can serve as an entry point for strengthening of local government: CDD is a

promising methodology to get nascent municipal governments to work more closely with their constituencies, as evidenced by the active and enthusiastic participation of local government authorities of Cité-Soleil and Port-au-Prince in the COPRODEPs of PRODEPAP. CDD can also foster and build capacity of local government authorities

25 This emphasis on capacity building and promotion of social cohesion in a mid- to long-term development framework is one of the key ways in which this project distinguishes itself and adds value from other government and donor activities within disadvantaged urban areas.

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through a variety of institutional strengthening activities and Technical Assistance related to the project, as planned under Component 2.26

Other donor initiatives

26. Donor coordination remains a critical issue and a significant challenge in Haiti. At the level of disadvantaged urban areas, this is a particular problem in Cité-Soleil, where there are many ongoing initiatives; however, there are not as many programs in the rest of the disadvantaged urban areas in which PRODEPUR will be implemented. Moreover, many of the activities funded have focused on providing rapid impact physical infrastructure, which PRODEPUR intends to build on. Efforts are also being made to improve donor coordination at the central government level (via the Bureau de Coordination Opérationnelle des Interventions dans les Zones Prioritaires, BCOIZP), and at the municipal level (via the participation of municipal government representatives in the COPRODEPs (Project Development Councils). 27. Relevant existing and planned initiatives by other donors in the proposed project areas include: (a) the Disarmament, Demobilization, and Reintegration (DDR) Program, implemented through the National Commission for Disarmament, Demobilization, and Reintegration (CNDDR), with support from UNDP and MINUSTAH; (b) the USAID/State Department-funded Haiti Stabilization Initiative, PREPEP, and Project KATA (implemented by CHF, the International Organization for Migration [IOM], and the Pan-American Development Foundation [PADF]); (c) UNDP’s Community Security Project; (d) MINUSTAH’s Reduction in Community Violence Program; (e) IDB’s Urban Rehabilitation Program and Program for Rehabilitation of Basic Economic Infrastructure; (f) Oxfam Great Britain’s EAuCap Project; and (g) PADF’s Protecting Human Rights (PHR) in Haiti Program, funded by USAID. A brief description of each of these projects follows. 28. USAID’s Haiti Stabilization Initiative (HSI) (US$20 million): The HSI is an interagency effort combining funding from the U.S. Department of Defense with management, coordination, and guidance by the U.S. Department of State with a focus on Cité-Soleil. The HSI funds are provided to programs administered by USAID in community building, development, infrastructure, and justice, along with programs of police support administered by the Department of State. The project’s primary goal is to stop the recurring cycle of violence and instability that threatens the peace and stability of Haiti. The initiative has five main components: (a) police strengthening, (b) judicial outreach, (c) community-building activities; (d) public works/infrastructure, and (e) outreach and communications. 29. USAID’s Project KATA (US$85 million): Implemented by CHF International, this program focuses on economic revitalization in targeted areas of Port-au-Prince, Petit Goave, St Marc, Gonaives, and Cap-Haïtien. Project KATA facilitates the creation of immediate and durable jobs through infrastructure development and maintenance, and through workforce development and entrepreneurship programs.

26 This emphasis on municipal capacity building in a mid- to long-term development framework is one of the key ways in which this project distinguishes itself and adds value from other government and donor activities within disadvantaged urban areas.

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30. USAID’s PREPEP Program (Programme de Revitalisation et de Promotion de l’Entente et de la Paix). The PREPEP program, funded by USAID and implemented by the International Organization for Migration (IOM), is a continuation of the Haiti Transition Initiative (HTI), initiated in 2004. The overall goals of the program are to achieve stability, peace, and prosperity in volatile urban communities. The PREPEP program has four objectives: (a) to enhance citizen confidence and participation in peaceful political transition, (b) to empower citizens and the Haitian government to address priority community needs, (c) to build cooperative frameworks between citizens and government entities at all levels, and (d) to promote peaceful integration among conflicted populations. A special emphasis of the program is to provide short-term employment opportunities in communities that have a propensity for violence that is linked to unemployment. PREPEP works in Cap-Haïtien, Gonaives, Les Cayes, Petit Goave, Port-au-Prince (specifically Cité-Soleil, Bel-Air, Delmas, and Martissant), and St. Marc. 31. UNDP’s Community Safety Program (US$8 million over two years): This project seeks to support the government’s National Strategy for Disarmament, Reduction of Violence, and Community Safety, which was created in January 2007. The project’s main objectives include: putting in place a peaceful conflict resolution mechanism, using mayors as the main entry point; reinserting victims of armed violence through participation in community projects; and contributing to the design of a legal framework for the control of arms. Cité-Soleil, Martissant, Bel-Air, Carrefour Feuilles (Port-au-Prince), Raboteau, Descahos (Gonaives), and neighborhoods in Cap-Haïtien and Petit-Goaves were the first eight intervention zones to be identified.

32. IDB’s Urban Rehabilitation Program (US$50 million): This program consists of two components: Component 1: Neighborhood Upgrading, which will finance some basic infrastructure and community facilities; and Component 2: Capacity Building, which will finance activities aimed at strengthening the capacity of the executing agency to implement the program. The principal activities of the program are the construction of administrative and sociocultural buildings in 10 main cities of the country. The program includes the financing of several marketplaces in Carrefour, the rehabilitation of internal roads in Carrefour, and the rehabilitation of the landfill Truitiers, including the access road. The program foresees no intervention in Cité-Soleil or Bel-Air.

33. IDB’s Program for the Rehabilitation of Basic Infrastructure (US$70 million): This program consists of large infrastructure projects throughout the country’s principal cities. It does not intervene in Cité-Soleil or Bel-Air.

34. Viva Rio (US$1.4 million in 2007): This is a rehabilitation and renewal project in Bel-Air and focuses on cultural and youth activities and on water supply.

35. International Committee of the Red Cross (US$250,00–$300,000 annually): Funds are used for a water and sanitation project implemented with the water utility (CAMEP) in Cité-Soleil and Martissant.

36. Oxfam Great Britain/PROTOS/GTIH/European Union’s EAuCap Project (€4 million over four years: €3 million from EU and €1 million from Oxfam GB/PROTOS/GTIH): The goal of the project is to improve the health conditions of approximately 100,000 residents of the most

54

disadvantaged neighborhoods of Cap-Haïtien by improving their access to potable water and sanitation facilities, and by reinforcing local institutional capacity in this sector.

37. Pan-American Development Foundation (PADF)/USAID’s Protecting Human Rights in Haiti Program (PHR) (US$6.4 million over 3 years): The program’s overall objective is to improve Haiti’s capacity to protect human rights in all sectors of society (national and local government, civil society at the national and community levels, and the private sector). The specific objectives are to: (a) assess victim populations, their communities, and the availability and capabilities of services assisting them; (b) improve the strategies of services provided to victims of violence and trafficking; (c) improve access and quality of these services; (d) support the work of the GoH in the areas of legislation and law enforcement in protecting victims of violence and trafficking; and (e) increase advocacy, public awareness, and prevention of human rights abuses, in particular with regard to torture, organized violence, and trafficking. This project is being implemented in Cap-Haïtien, Gonaives, St. Marc, the Port-au-Prince Metropolitan Area, and Petit-Goave.

55

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

HAITI: Urban Community-Driven Development Project (PRODEPUR) Donor/Agency – Sector Project Latest Supervision (ISR) Rating Bank Community-Driven Development (CDD) Disaster Risk Management Education Water and Sanitation

PRODEP (Rural CDD Project) PRODEPAP (Urban CDD Pilot Project) Emergency Recovery and Disaster Risk Management Project (community development component) Education for All (APG1) School Feeding Program Rural Water and Sanitation Project

S

S

MS

S Other Donors

• GoH/UNDP/MINUSTAH-DDR

• USAID/State Department –

community building, development, infrastructure, and justice

• UNDP – Public Safety • IDB – Urban rehabilitation

and basic infrastructure • MINUSTAH – Public

Safety • Viva Rio – Community

Development • International Committee of

the Red Cross – Water and Sanitation

• Canada – Employment

generation/multisectoral • Oxfam

GB/PROTOS/GTIH/EU – Water and sanitation/local capacity building

• PADF/USAID – Human

rights

Disarmament, Demobilization, and Reintegration program Haiti Stabilization Initiative (HSI) Project KATA PREPEP Community Safety Project Urban Rehabilitation Program Program for Rehabilitation of Basic Infrastructure Reduction in Community Violence Program Water and Sanitation in Cité Soleil and Martissant. Centre de Gestion des Fond Loceaux (CGF): Development and Employment Generation Fund ; Fon Bati Lavi (multisectoral with focus in Cité and Gonaïves) Project EAuCap Protecting Human Rights in Haiti Program (PHR)

56

Annex 3: Results Framework and Monitoring HAITI: Urban Community-Driven Development Project (PRODEPUR)

Results Framework

Project Development Objective Outcome Indicators Use of Outcome Information

To improve access to, and satisfaction with (a) basic and social infrastructure and services, and (b) income- generating opportunities for residents of targeted disadvantaged urban areas. This objective will be achieved through a participatory process in which CBOs propose, select, implement, and maintain subprojects.

Increased access to water in disadvantaged urban areas that selected such subprojects (i.e., water kiosks, standpipes, community cisterns, rainwater capture, etc.). Increased access to sanitation in disadvantaged urban areas that selected such subprojects (i.e., garbage collection, solid waste disposal, recycling, composting, sanitary blocks, etc.). Increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (i.e., cleared and rehabilitated drainage canals, ditches, rehabilitated street and/or footpaths, etc.). Increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (daycare centers, primary schools, secondary schools, health clinics, job training centers, etc.). Number of productive/income-generating subprojects that are self-sustaining six months after being fully operational. Percent of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms).

Year 1: Baseline survey designed and conducted will provide feedback on project design. Year 2–3: Beneficiary assessment at midterm to: (a) Determine project uptake among intended beneficiaries, (b) determine project quality and community satisfaction, (c) effectiveness and efficiency of subproject cycle. Year 4–5: Ex post evaluation to inform possible extension of project duration or expansion into other urban areas with similar socioeconomic conditions.

Intermediate Outcomes Intermediate Outcome Indicators

Use of Intermediate Outcome Monitoring

1. The project successfully mobilizes community groups to participate in the different stages of the subproject cycle in targeted disadvantaged urban areas.

1a. Percent of eligible CBOs joining COPRODEPs. 1b. Percent of member CBOs participating in COPRODEP

Year 1: Beneficiary survey, technical audits, and monitoring and evaluation reports.

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2. CBOs and COPRODEPs have the capacity to identify, prioritize, implement, operate, and maintain high-quality subprojects to improve basic infrastructure or to provide income-generating opportunities in a timely manner (as determined by the technical and financial audits). 3. The municipal governments participate in PRODEPUR, proposing and implementing subprojects to improve public goods jointly with CBOs. 4. CBOs and COPRODEP are inclusive in terms of women, youth, and the elderly. 5. CBOs acquire the capacity to tap into other sources of financing. 6. The project’s components are effectively coordinated and monitored.

meetings. 1c. Number of subproject proposals proposed. 1d. Number of subproject proposals prioritized. 2a. Percent of subprojects successfully implemented, operated, and maintained (as per technical audits). 3a. Percent of municipal governments successfully proposing and implementing subprojects in coordination with CBOs. 4a. Percent of women, youth, and elderly participating in CBOs and COPRODEPs (as measured by the percent of members in CBOs who are participating; CBO attendance at COPRODEP prioritization meetings). 4b. Percent of subprojects specifically targeting women, youth, and the elderly (subprojects proposed, managed, and/or benefiting these groups). 5a. Percent of subprojects obtaining additional financing from non-project sources. 6a. Timely completion of baseline survey and M&E reports. 6b. Percent of subprojects completed in a timely manner.

Years 2–3: Technical audits to optimize project implementation. Beneficiary assessment at midterm.

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Arrangements for Results Monitoring

Data Collection and Reporting Outcome Indicators

Baselinea Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Frequency and

Reports

Data Collection

Instruments

Responsibility for Data

Collection Increased access to water in disadvantaged urban areas that selected such subprojects (i.e., water kiosks, cistern pipes, rainwater capture, etc.)

Not yet available27

—b 3% 5% 10% 15% Annual Beneficiary survey

BMPAD

Increased access to sanitation in disadvantaged urban areas that selected such subprojects (i.e., garbage collection, solid waste disposal, recycling, composting, sanitary blocks, etc.)

Not yet available

3% 8% 15% 20% 20% Annual Beneficiary survey

BMPAD

Increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (i.e., clear and rehabilitated drainage canals, ditches,

Not yet available

—c 5% 5% 10% 10% Annual Beneficiary survey

BMPAD

27 Data not available during project preparation, but will be collected during baseline survey, which will be carried out within the first six months of project effectiveness.

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rehabilitated street and/or footpaths, etc.) Increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (i.e. daycare centers, primary and secondary schools, health clinics, job training centers, etc.)

Not yet available

—d 5% 5% 10% 10% Annual Beneficiary survey

BMPAD

Number of productive/ income-generating subprojects that are self-sustaining six months after being fully operational

Not yet available


BMPAD

Percent of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms)

Not yet available


BMPAD

Percent of eligible CBOs joining COPRODEPs

0 30% 45% 60% 75% 80% Biannual Headcount at meetings

MDOD

Percent of 0 30% 50% 70% 80% 90% Biannual

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member CBOs participating in COPRODEP meetings Number of subproject proposals proposed

0 240 480 480 320 0 Biannual

Number of subproject proposals prioritized

0 60 120 120 80 0 Biannual

Percent of subprojects successfully implemented, operated, and maintained (as per technical audits)

0 60% 70% 80% 90% 95% Biannual Technical audits

BMPAD

Percent of municipal governments successfully proposing and implementing subprojects in coordination with CBOs

0 30% 40% 50% 60% 65% Biannual MDOD records

MDOD

Percent of women, youth, and elderly participating in CBOs and COPRODEPs (as measured by the % of CBOs participating; CBO attendance at COPRODEP prioritization meetings)

0 10% 25% 50% 50% 55% Biannual Headcount at meetings/CBO reports

MDOD

Percent of subprojects specifically targeting women, youth, and the elderly (proposed,

0 10% 15% 20% 25% 35% Biannual MDOD records

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managed by, and/or benefiting these groups) Percent of CBOs obtaining additional financing from non-project sources

0 0 0 0 10% 10% Annual CBO reports/MDOD records

MDOD

Timely completion of baseline survey and M&E reports

N/A 100% 100% 100% 100% 100% Biannual BMPAD management data

BMPAD

Percent of subprojects completed in a timely manner

0 50% 60% 70% 80% 85% Biannual BMPAD management data/MDOD reports

BMPAD

Results Indicators for Each Component

Component One

Number of subprojects (a) proposed, (b) approved, (c) completed

0 240; 60; 40

480; 120; 80

480; 120; 80

320; 80; 53

0 Biannual MDOD monitoring data

MDOD

Component Two

Number of training events for CBOs and COPRODEPs 28

Not yet available

Biannual Training records/ attendance records

MDOD

Number of training events held for government (per training type) 29

Not yet available

Biannual Training records/ Attendance records

Number of people trained

0 1,500 2,500 2,500 2,000 0 Biannual Attendance records at training

MDOD

28 Number and types of training events to be determined during first six months of project implementation. 29 Ibid.

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Component Three

M&E reports completed and submitted to the Bank

N/A 2 2 2 2 2 Biannual BMPAD management data

BMPAD

Technical and financial audits completed and submitted to the Bank

N/A N/A 1 1 1 1 Biannual BMPAD management data

BMPAD

Midterm review completed

N/A N/A N/A. 1 1 1 Year 3 BMPAD management data

BMPAD

Final evaluation completed

N/A N/A N/A 1 N/A 1 BMPAD management data

BMPAD

a. A baseline survey, to be carried out within the first six months of project effectiveness, would seek to assess the impact of the proposed project on direct beneficiaries (member households of CBOs participating in COPRODEPs) in terms of their access to basic infrastructure, social services, and income-generating opportunities. In addition to the more traditional survey that will be used to gather data on access to infrastructure, services, and income-generating opportunities, additional survey tools will be used to measure beneficiary satisfaction with subprojects and the capacity of beneficiary CBOs. The Terms of Reference for the baseline survey are included in the Project Operations Manual. b. Given that providing access to water will require more sophisticated technology, it is not expected that subprojects of this type will be able to be completed within the first year of project implementation. c. Given that other donors are already working on the rehabilitation of street and drainage infrastructure, it is not expected that these types of subprojects will be proposed during the first year of project implementation. d. Given that social infrastructure and services subprojects require additional time to set up, it is not expected that subprojects within this category will be ready within the first year of project implementation.

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Annex 4: Detailed Project Description HAITI: Urban Community-Driven Development Project (PRODEPUR)

1. Building on the successful experiences of the Haiti Rural CDD Project (PRODEP) and the Pilot Urban CDD Project (PRODEPAP), the proposed project seeks to improve access to and satisfaction with: (a) basic and social infrastructure and services, and (b) income-generating opportunities for residents of targeted disadvantaged urban areas, through a participatory process in which community-based organizations (CBOs) propose, select, implement, and maintain subprojects.

2. The key indicators for this project would include: (a) increased access to water in disadvantaged urban areas that selected such subprojects (that is, water kiosks, standpipes, community cisterns, rainwater capture, and so forth); (b) increased access to sanitation in disadvantaged urban areas that selected such subprojects (that is, garbage collection, solid waste disposal, recycling, composting, sanitary blocks, and so forth); (c) increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (that is, clear and rehabilitated drainage canals, ditches, rehabilitated street and/or footpaths, and so forth); (d) increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (that is, daycare centers, primary and secondary schools, health clinics, job training centers, and so forth); (e) number of productive/income-generating subprojects that are self-sustaining six months after being fully operational; and (f) percentage of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms).

Project Components 3. Component 1: Community subproject funding, management, and support (US$13.5 million; IDA US$12.70 million) would finance subprojects in 10 targeted disadvantaged urban areas in 5 municipalities in Haiti. Disadvantaged urban areas identified that fulfill poverty criteria and are traditional “flash-point” communities include: Bel-Air/Solino/Tichéri, Martissant/Grand-Ravine/Cité de Dieu/Cité L’Eternel/Cité Plus, the disadvantaged urban area of Cité-Soleil (Metropolitan Area of Port-au-Prince); La Fossette/Nan Bannann/Shada, Bas-Ravine/Rival/Fort-Bourgeois/Bande-du-Nord, (Cap-Haïtien); Kasoley, Raboteau/Jubile-Blanc, Descahos/Trousable (Gonaïves); and Portail Guêpe/Blockhaus/La Scierie, Portail Montrouis/Fressinaut (St. Marc). Specifically, subproject funding would finance: (a) small-scale socioeconomic infrastructure and productive/income-generating subprojects, which are identified either by CBOs, or jointly by CBOs and municipal governments, and later prioritized by representative Project Development Councils (COPRODEPs) as a function of available resources under the project, and (b) contracting of service providers to mobilize CBOs to participate in the project and to provide the necessary training and technical assistance to CBOs in the preparation and subsequent execution of subproject investments. 4. Subproject selection will be demand-driven and will follow procedures detailed in a Project Operations Manual (POM), which is based upon the Rural Community-Driven Development Project (PRODEP) Operations Manual and revised to reflect the urban context. Subprojects proposed solely by CBOs would have a limit of US$20,000 in financing, and

64

subprojects proposed jointly by CBOs and municipal governments would have a financing limit of US$50,000 per subproject and would be expected to benefit the public good. Community contributions to subprojects implemented solely by CBOs—and to subprojects implemented jointly by CBOs and municipal governments—must be at least 10 percent of total subproject cost (in cash or in-kind). The minimum 10 percent contribution will be kept the same for both public good and income-generating subprojects for the sake of simplicity, but may be reviewed during project implementation. 5. In contrast to the Rural CDD Project, and as a way to mitigate the potential higher risk of mismanagement and/or capture in poor urban areas, community subproject funds in PRODEPUR will be managed jointly by the MDOD (service provider) and the CBOs, which together will be responsible for subproject financial management and expense reporting (in the form of Statements of Expenditure) following subproject completion. Although subproject proposal, prioritization, and selection will be carried out via a participatory and demand-driven approach, the project will incorporate the use of “negative” and indicative “positive” lists of subprojects to better inform the decision-making process of communities. The negative list will include, for example, subprojects having to do with religious beliefs and illegal activities, and the positive list will make an effort to guide project beneficiaries into proposing subprojects that will provide the most public good. To better assist CBOs in the implementation of their subprojects, the service provider(s) will create regional technical offices—Service Providers (MDOD)/Technical Coordination Bureau (BTCs)—one per each participating city and one for the Port-au-Prince area. 6. Component 2: Capacity-Building and Technical Assistance (US$0.90 million – IDA only): Implemented by the Project Coordination Unit (PCU)/Office of Monetization of Development Aid Programs (Bureau de Monétisation), this component would finance: (a) training-of-trainer events in basic management, administration, accounting, and financial management for Project Development Councils and municipal government officials; (b) capacity-building and technical assistance to strengthen governance, participatory development, supervision, and coordination capacity at the municipal-government level and to relevant ministerial staff; (c) workshops with service providers to harmonize practices to accompany CBOs and Project Development Councils in carrying out the activities under Component 1; (d) training of Bureau de Monétisation staff in order to effectively supervise overall project implementation; (e) various consultant services, including possible preparation of future operation and assessment of ways through which the Haitian Diaspora might be mobilized to finance and provide technical expertise to the community subprojects; and (f) policy dialogue to engage the Government of Haiti (GoH) and other relevant stakeholders on a medium- to long-term national strategy to facilitate the mainstreaming of the urban CDD approach and mechanisms. 7. Based on lessons learned from PRODEPAP (urban pilot project), the proposed project seeks to incorporate the following additional capacity-building activities, all of which are tailored to the context of disadvantaged urban areas: (a) training on local and participatory governance, public administration, social accountability, transparency, and reporting; (b) training on how to facilitate donor coordination at the disadvantaged urban area level, especially in disadvantaged urban areas where many donors are active (that is, donor coordination could go

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hand in hand with a participatory planning process in the community); and (c) training on participatory processes for geographic and administrative demarcation of the disadvantaged urban areas as needed. 8. Furthermore, given the high levels of violence in the targeted disadvantaged urban areas, specific training courses that have been shown to prevent and/or reduce violent behavior in similar contexts will be offered via the COPRODEPs, including: parenting training, life skills training for at-risk adolescents/youth, youth leadership training, conflict resolution skills, crime prevention through environmental design, and specific courses on domestic violence prevention. Efforts will also be made to offer, and deliver via the COPRODEPs and jointly with the local authorities, the existing Bank-designed Municipal Capacity-Building Course on Violence Prevention. 9. Component 3: Project Administration, Supervision, Monitoring and Evaluation (US$2.1 million – IDA only): This component would finance incremental costs associated with project implementation, administration, supervision, monitoring and evaluation (including the establishment and operation of a Management Information System or [MIS]) by the Project Coordination Unit (PCU), which is currently housed in the existing Bureau de Monétisation and operates under the oversight of the Ministry of Economy and Finance.30 10. Table A4.1 provides an overview of total costs per project component: Table A4.1: Summary of Project Costs per Component

Targeting 11. As requested by the GoH, the project will be intervening in 10 out of 17 of the government’s “Priority Zones” (see Section 1). In addition, consistent with the project’s overarching objective of poverty reduction, the selected project areas also conform to standard eligibility criteria: (a) poverty level, (b) population density, and (c) current and past levels of violence. Additional preliminary socioeconomic studies and field visits confirm that the selected disadvantaged urban areas all qualify under the poverty/density/violence criteria.

30 The Bureau de Monétisation (formerly the PL-480 Management Office) is also the implementing agency for the IDA-funded Haiti Rural CDD (PRODEP) project, the PCF-funded Urban CDD Pilot Project (PRODEPAP), and of components of the IDA-funded Haiti Emergency Recovery and Disaster Management Project.

Component


Cont. (US$M) %

Total IDA

(US$M) % Bank

Financing 1. Community subproject funds, mgt. and support 13.50 82% 12.70 94% 2. Capacity-building and technical assistance 0.90 5% 0.90 100%

3. Project Administration, Supervision, Monitoring and Evaluation

2.1 13% 2.1 100%

TOTAL 16.50 100% 15.7 95%

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12. Level of funding per disadvantaged urban area. The level of funding per project area will be calculated on the basis of the population size of the disadvantaged urban area, using an approximate per capita allocation of 4.5 subprojects per 10,000 people in the Port-au-Prince region and 7 subprojects per 10,000 people in the three other cities to ensure an equitable distribution of resources. In total, it is estimated that PRODEPUR will finance between 360 and 400 community subprojects, with an average of US$20,000 per subproject (US$22,000 including counterpart contributions). 13. Indicative budget envelopes would be allocated to each eligible area for the purpose of prioritizing subproject proposals from their respective CBOs. Over the five-year horizon of project implementation, budget envelopes to the areas would be assigned biannually. In order to provide a simple and transparent rule for determining funding allocations, which will be perceived of as fair by the resident population, the amount of project funds allocated to each area will be based on an equitable geographic distribution. It is also expected that given the level of participation and counterpart contributions required, there will be a process of self-selection by the CBOs, contributing to the targeting of the project. Project Monitoring and Evaluation 14. The proposed project would use various monitoring and evaluation tools to assess the impact of the project on direct beneficiaries (member households of CBOs participating in COPRODEPs), and to provide feedback to improve future project operations. These tools would include: (a) a baseline survey, to be carried out within the first six months of project effectiveness, which would seek to assess the impact of the proposed project on direct beneficiaries in terms of their access to basic infrastructure, social services, and income-generating opportunities. In addition to the more traditional survey that will be used to gather data on access to infrastructure, services, and income-generating opportunities, additional survey tools will be used to measure beneficiary satisfaction with subprojects, and the capacity of beneficiary CBOs. The Terms of Reference for the baseline survey are included in the Project Operations Manual (POM); (b) semiannual technical audits, submitted within 120 days of the end of the six-month period being assessed; (c) a midterm review, which will include a qualitative beneficiary assessment, and an evaluation of the effectiveness of the various accountability mechanisms used throughout the project (financial and social); and (d) a final project evaluation, which will repeat the baseline survey, and the qualitative beneficiary assessment carried out during the midterm review. Sample tools for the baseline survey, beneficiary satisfaction and capacity of CBO assessments, and effectiveness of accountability mechanisms will be included in the POM. 15. Analysis of project implementation will depend on a database of subproject information from the project MIS, to be operated and maintained by the PCU/Burearu de Monétisation. The MIS would accompany all aspects of project implementation and specifically include: (a) subproject information, such as pertinent physical and financial information for each community subproject; (b) financial management data, from which Statements of Expenditure and financial reports would be generated and submitted to the Bank; and (c) project management information, from which all project reports (such as semiannual technical audits) would be generated.

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16. The PCU/Bureau de Monétisation will be responsible for maintaining and regularly updating the MIS, including key project information. Through periodic processing of database information, combined with field visits from MDODs and inputs from project supervision reports, project-contracted studies and audits, the PCU/Bureau de Monétisation, in coordination with the MDODs operating in the field, would monitor project characteristics and trends, identify implementation problems and accomplishments, and undertake or promote appropriate actions to improve project implementation. The PCU/Bureau de Monétisation would make available monthly summary MIS reports with which the Bank would monitor project performance indicators, review disbursements, and supervise subproject implementation progress, based on a sample of subprojects assessed in the field during regularly scheduled supervision missions. 17. Selected Project Monitoring Indicators:

• Percentage of eligible CBOs joining COPRODEPs • Percentage of member CBOs participating in COPRODEP meetings • Number of subproject proposals proposed • Number of subproject proposals prioritized • Percentage of subprojects successfully implemented, operated, and maintained (as

per technical audits) • Percentage of municipal governments successfully proposing and implementing

subprojects in coordination with CBOs • Percentage of women, youth, and elderly participating in CBOs and COPRODEPs

(as measured by the percent of members in CBOs who are participating; CBO attendance at COPRODEP prioritization meetings)

• Percentage of subprojects specifically targeting women, youth, and the elderly (subprojects proposed, managed, and/or benefiting these groups)

• Percentage of subprojects obtaining additional financing from non-project sources • Timely completion of baseline survey and monitoring and evaluation reports • Percentage of subprojects completed in a timely manner.

18. Selected Project Outcome Indicators:

• Increased access to water in disadvantaged urban areas that selected such subprojects (that is, water kiosks, standpipes, community cisterns, rainwater capture, and so forth).

• Increased access to sanitation in disadvantaged urban areas that selected such subprojects (that is, garbage collection, solid waste disposal, recycling, composting, sanitary blocks, and so forth).

• Increased access to rehabilitated street and drainage infrastructure in disadvantaged urban areas that selected such subprojects (that is, cleared and rehabilitated drainage canals, ditches, rehabilitated street and/or footpaths, and so forth).

• Increased access to social infrastructure and services in disadvantaged urban areas that selected such subprojects (daycare centers, primary and secondary schools, health clinics, job training centers, and so forth).

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• Number of productive/income-generating subprojects that are self-sustaining six months after being fully operational.

• Percentage of beneficiaries for whom the majority of expected subproject results, as defined by beneficiaries at the start of the project, were achieved (as per results from community evaluation forms).

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Annex 5: Project Costs


5.A. Project Costs by Component (US$ Million)

Project Cost By Component Local Foreign Total 1. Community subproject funds, management, and support 8.69 4.27 12.96

2. Capacity building and technical assistance 0.84 0.00 0.84

3. Project administration, supervision, monitoring and evaluation

1.85 0.15 2.00

Total Baseline Cost 11.38 4.42 15.80 Physical Contingencies 0.20 0.20 0.40 Price Contingencies 0.20 0.10 0.30

Total Project Costs 11.68 4.72 16.50

5.B. Project Financing Sources

Component


Contingency (US$M)

% Total

IDA (US$M)

% Bank Financing

1. Community subproject funds, management, and support

13.50 82% 12.70 94%

2. Capacity building and technical assistance 0.90 5% 0.90 100%

3. Project Administration, Supervision, Monitoring and Evaluation

2.10 13% 2.10 100%

Total 16.50 100% 15.70 95% 5.C. Allocation of Grant Proceeds Expenditure Category Allocation of Grant

Proceeds (USD$M) Financing Percentage

1. Grants for Community Subprojects 2. Goods 3a. Service Agreements 3b. Consultant Services (including audits), Training and technical assistance under Parts B and C. 4. Operating Costs 5. Unallocated

Total

7.80

0.10 4.20 0.70

1.90 1.00

15.70

100%of amounts disbursed by the

recipient 100 100 100

100

70

Annex 6: Implementation Arrangements

HAITI: Urban Community-Driven Development Project (PRODEPUR) 1. Implementation period: Five years

Executing Entities: 2. On behalf of the Government of Haiti (GoH), the Bureau de Monétisation (formerly the PL-480 Management Office), under the Ministry of Economy and Finance (MEF) and through its existing project coordination unit (PCU/Bureau de Monétisation), will have overall responsibility for project implementation. The other entities involved in project implementation include community-based organizations (CBOs), Project Development Councils (COPRODEPs), the Service Providers (MDODs), and the municipal government. These implementation arrangements are the same as those being used in both PRODEP and PRODEPAP, with the exception of the municipal government’s role, which has been slightly altered in the proposed project to reflect the realities of the urban context in Haiti. The roles and responsibilities of each of these entities are described below.

3. PCU/Bureau de Monétisation: The Bureau de Monétisation, under the oversight of the MEF, is an autonomous public institution created in 2007 to replace the 22-year-old PL-480 Management Office to: (a) receive and monetize food aid from international donors, and (b) identify and fund government development projects with relevant institutions and/or agencies in areas such as road construction, agriculture, education, health, and commerce. As the national executing agency of the project on behalf of the GoH, the PCU/Bureau de Monétisation will be responsible for overall project coordination and oversight, and will delegate day-to-day project execution to the MDODs under Component 1. Additional duties of the Bureau de Monétisation would include: (a) continuous oversight of the execution of information campaigns, in coordination with the MDODs; (b) project reporting, as needed, to the Bank; (c) overall project financial management; (d) maintenance and updating of the project Management Information System (MIS); and (e) project evaluation. The PCU/Bureau de Monétisation is also currently the implementing agency for the International Development Association (IDA)-funded Haiti Rural CDD Project (PRODEP), the Post-Conflict Fund (PCF)-funded Urban CDD Pilot Project (PRODEPAP), and the IDA-funded Emergency Recovery and Disaster Management Project. As currently is the case for PRODEP and PRODEPAP, the PCU/Bureau de Monétisation will also have direct responsibility for the implementation of Components 2 and 3 of the proposed project (Capacity Building and Technical Assistance and Project Administration, Supervision, Monitoring, and Evaluation).

4. Maîtres d’Ouvrage Délégués (MDODs): Under the overall guidance of the PCU/Bureau de Monétisation, MDODs are service providers (for example, NGOs) whose primary responsibility is the implementation of the activities under Component 1 of the project (Community Subproject Funds, Management, and Support), via: (a) assisting CBOs and Project Development Councils (COPRODEPs) in strengthening their organizational and operational capacities; (b) accompanying CBOs and COPRODEPS in the “on-the-ground” execution of subproject activities; (c) providing technical assistance to CBOs throughout the subproject cycle; (d) technically appraising subproject proposals approved by the COPRODEPs; (e) entering into

71

subproject agreements (contracts) with CBOs for the financing of subprojects; and (f) transferring funds for subproject execution directly to the joint MDOD/CBO bank account. To work more effectively with CBOs and COPRODEPs, and based on the positive results from the Rural CDD Project (PRODEP), MDODs will establish one field office (Technical Coordination Bureau (Bureau Technique de Coordination, BTC) in each city included in the project. MDODs will be recruited through a competitive bidding process. Proper arrangements are needed to ensure a smooth transition from the pilot project (PRODEPAP) to the proposed scaled-up PRODEPUR in Cité-Soleil and Bel-Air.

5. Community-Based Organizations (CBOs): CBOs are groups of disadvantaged urban area residents (approximately 100 to 200 individuals) with common interests that organize into formally constituted civil associations. Within the subproject cycle, CBOs are responsible for the identification, preparation, implementation, supervision, operation, and maintenance of community subprojects, with technical assistance and training from the service providers/MDODs and Project Development Councils (COPRODEPs). CBOs are also responsible for the hiring of consultants and/or contractors throughout the subproject cycle, as needed. See below for details.

6. Project Development Councils (COPRODEPs): COPRODEPs are formed by elected representatives of CBOs (a minimum of 80 percent of total membership), civil society, and local/municipal government representatives (up to a maximum of 20 percent of membership). As the principal entity for targeting benefits and allocating project resources at the communal level, COPRODEPs also provide a critical link to local government and have the potential to engage in other non-project activities. COPRODEPs play a fundamental role in mobilizing communities and promoting their participation in local decisionmaking. They receive, prioritize, and approve subproject proposals from the CBOs, and consequently submit the prioritized subproject proposals to the MDODs and Bureau de Monétisation for technical appraisal. COPRODEPs (together with MDODs/BTCs) also accompany CBOs during subproject implementation and operation and maintenance.

7. Municipal Governments: In the proposed project, municipal government representatives will play a more active role throughout the subproject cycle, and in the operation and management of the COPRODEPs. For example, municipal government representatives will have a permanent seat in the Executive Committee of the COPRODEPs, and will also be able to present subproject proposals jointly with CBOs and be directly involved in the management and implementation of these initiatives. It is expected that this enhanced role in PRODEPUR will allow local government officials to better coordinate and integrate PRODEPUR activities in the overall development agenda of the municipality.

Subproject Cycle 8. A step-by-step explanation of the subproject cycle follows.

(1) A communication and information campaign (carried out by the MDODs through locally tailored mediums) is targeted to disadvantaged urban area residents, with the goal of increasing public awareness about the project, its objectives, “rules of the game,” and expected outcomes.

72

(2) MDODs and their BTCs (Technical Coordination Bureaus/regional offices of MDODs) carry out diagnostics to identify existing CBOs and help get official recognition when needed.

(3) COPRODEPs (Project Development Councils) are constituted by representatives from CBOs (at least 80 percent of total membership) and the municipal/central government (up to 20 percent of total membership), all of whom are elected in a democratic and participatory process.

(4) CBOs identify their local investment needs and priorities, prepare subproject proposals, (following procedures detailed in the Project Operations Manual [POM]), and submit subproject proposals to their respective COPRODEP.

(5) COPRODEPs prioritize and approve subproject proposals and forward approved subproject proposals to MDOD/BTCs for technical appraisal.

(6) MDODs/BTCs evaluate approved subproject proposals in terms of technical, social, environmental, and financial guidelines established in the POM.

(7) Upon approval by MDOD of technical aspects of subproject proposals, the CBO hires an external consultant to carry out the technical design of the subproject.

(8) MDODs/BTCs evaluate technical design carried out by external consultant. (9) If technical design is approved, contract between MDOD/CBO is signed and

countersigned by the COPRODEP. The contract lays out the terms and conditions for the funding, execution, ownership, operation, and maintenance of the approved subprojects. If technical design is not approved, subproject proposal goes back to COPRODEP for reprioritization.

(10) Once contract is signed, CBOs open a joint bank account with the MDOD/BTC.

(11) MDOD/BTC transfers the first tranche (50 percent of the proposal) for subproject implementation to joint CBO/MDOD bank account for the first quarter.

(12) CBOs implement subprojects and are responsible for their operation and maintenance.

(13) MDOD/BTC transfers the second tranche (50 percent of the proposal) for subproject implementation to joint CBO/MDOD bank account for the second quarter.

(14) MDODs/BTCs and COPRODEPs supervise adequate technical and financial implementation of subprojects by CBOs.

9. Operational Procedures: The proposed project would be implemented according to detailed procedures defined in the POM, which is based on the Rural CDD project (PRODEP) and the Pilot Urban CDD Project (PRODEPAP) POM, revised to reflect the urban context and lessons learned during the implementation of these projects and from international CDD best practices.

10. Figure A6.1 provides a visual overview of and summarizes the subproject cycle, and Figure A6.2 displays implementation arrangements for community subprojects.

73

Figure A6.1: Subproject Cycle

INFORMATION AND COMMUNICATION CAMPAIGN

(Specific information on PROODEPUR given by MDOD)

CBOs - Identify subproject ideas - Prepare subproject proposals - Submit subproject identification sheets to

COPRODEP

AGC/COPRODEP - Prioritize subproject proposals (in

General Assembly of COPRODEP) - Approve subprojects - Submit approved subprojects to BTC

MDOD/BTC: - Evaluates subprojects - Verifies consistency with available budgetary

envelope

Contract between BTC and CBO

CBOs implement subprojects and are responsible for operation and maintenance

• BTC: Identifies and supports creation of CBOs/ Ensures initial formalization of CBOs • Formation of COPRODEPs

2

3 4

CBO finances the development of the technical dossier

Opening of joint bank account between CBO and BTC

- MDOD/BTC evaluate technical dossier

COPRODEPPAP and BTC Supervise the technical and financial implementation of subprojects

5a

6

No objection?

No

Yes

7a7b

8

10a

Subproject funds are transferred oto joint BTC/CBO account

9

10b

Validation of dossier

No

Yes

- CBOs select consultant to carry out technical dossier

5b

1

74

Figure A6.2: Implementation Arrangements for Community Subprojects

Subproject Cycle and Flow of Funds

Other Actors “on the ground”

Mayor/CASBC Representatives of GOH line ministries

Other Donors/ Projects USAID UNDP MINUSTAH IDB CHF IOM

BMPAD (PCU) Project Steering Committee

Operate Project Special Account

Supervise overall project implementation

MDOD/BTC

COPRODEP

Project Account

Transfer $ to MDOD for subproject financing

CBOs

Advise/ Policy

Appraise subprojects Supervise subprojects Mobilization/Training/ TA

Coo

rdin

atio

n

Prioritize and approve subprojects

Present subproject

Prioritize investment

Inform

Identify, Prepare, Contract, Manage,

Maintain, Co-finance

Evaluate project

75

Annex 7: Financial Management and Disbursement Arrangements

HAITI: Urban Community-Driven Development Project (PRODEPUR) B. Background 1. This annex summarizes the findings of the financial management capacity assessment for the Urban Community-Driven Development Project (PRODEPUR) during the project preparation. The objective of the assessment is to determine whether the entities that will be involved in implementing the project have acceptable financial management arrangements, including a sound accounting, reporting, auditing, and internal controls system. The conclusion of the assessment and the areas to be strengthened are summarized below. C. Summary of the project design and implementation arrangements 2. A detailed project description is available in the main text and Annex 4 of the Project Appraisal Document. This section summarizes the main features that are relevant to the financial management arrangements. 3. Project objective and activities. Building on the successful experiences of the Rural Community-Driven Development (CDD) Project (PRODEP) and the Pilot Urban Community-Driven Development Project in Port-au-Prince Area (PRODEPAP), the proposed project would seek to improve access to and satisfaction with: (a) basic and social infrastructure and services, and (b) income-generating opportunities for residents of targeted disadvantaged urban areas. This objective will be achieved through a participatory process in which community-based organizations (CBOs) propose, select, implement, and maintain subprojects. To achieve this objective, the project will finance the following components: 4. Component 1: Community Subproject Funding, Management, and Support would finance (a) small-scale socioeconomic infrastructure and productive/income-generating subprojects, which are identified by CBOs, and jointly by CBOs and municipal governments, and later prioritized by representative Project Development Councils (COPRODEPs) as a function of available resources under the project; and (b) the contracting of service providers to mobilize CBOs to participate in the project and to provide the necessary training and technical assistance to CBOs in the preparation and subsequent execution of subproject investments. 5. Component 2: Capacity-building and Technical Assistance would finance, among other things, (a) training-of-trainer events in basic management, administration, accounting, and financial management for Project Development Councils and municipal government/local government officials; (b) capacity-building and technical assistance to strengthen governance; participatory development, supervision, and coordination capacity at the municipal government level; (c) workshops for service providers to equip them to adequately accompany CBOs and Project Development Councils in carrying out the activities under Component 1; and (d) training of Office of Monetization of Development Aid Programs (Bureau de Monétisation) staff to effectively supervise overall project implementation.

76

6. Component 3: Project Administration, Supervision, Monitoring, and Evaluation would finance incremental costs associated with project implementation by the Bureau de Monétisation, through its Project Coordination Unit (PCU/Bureau de Monétisation), which operates under the oversight of the Ministry of Economy and Finance (MEF). 7. Institutional and implementation arrangements. The institutional arrangements of the project are presented in Figure A7.1. Figure A7.1: Institutional and Implementation Arrangements

The MEF would have overall oversight of the project. A Project Steering Committee

would be established to define the project’s strategic orientations and to review its annual workplans and budgets.

The Bureau de Monétisation, a national agency with administrative and financial autonomy, will be the executing agency for the project, including fiduciary responsibilities.

Service Providers (MDODs) with nationwide activities and expertise would be recruited by the Bureau de Monétisation to carry out day-to-day project implementation in the targeted urban areas. These MDODs would further establish and maintain regional technical offices throughout the project area.

CBOs would identify, prepare, implement, supervise, operate, and maintain their subprojects, assisted by technical specialists contracted externally and/or provided by the MDODs.

Municipal governments will have the possibility to identify and submit subprojects under certain conditions. A financial management capacity assessment of the municipalities will be conducted to determine if they can implement the subprojects. Based on the results of this review, municipalities could implement some subprojects

BMPAD

Project Steering Committee

PCU/BMPAD

MDODs

CBOs CBOs CBOs

(Advisory role)

COPRODEP

MEF

Municipal Governments

77

on a pilot basis. Otherwise, implementation responsibilities will be under the CBOs, which helped to identify subprojects.

Subprojects would be approved for financing by COPRODEPs, and technically appraised by MDODs, for up to 90 percent of total subproject cost, with the remainder representing the CBO counterpart contribution. COPRODEPs, comprised of CBOs (80 percent of total COPRODEP membership), locally elected officials, and public sector representatives and other civil society organizations at the communal level (20 percent of COPRODEP membership), would prioritize and approve subproject proposals received from CBOs and later co-sign subproject agreements with MDODs and CBOs.

D. Financial Management Arrangements 8. Overall financial management responsibilities and arrangements: The Bureau de Monétisation will have overall financial management responsibility for the project. The Bureau de Monétisation will transfer subproject funds to the MDODs, which, in turn, will transfer these funds to the CBOs under terms detailed in the subproject agreements. In addition, the Bureau de Monétisation will provide funds to the MDODs for the carrying out of their activities under the project. The CBOs will directly handle the funds for the implementation of the subprojects. 9. Adequacy of the financial management and disbursement arrangements. A review of the financial management capacity of the Bureau de Monétisation, the implementing agency, was conducted during project preparation. MDODs with acceptable financial management capacity will be selected by effectiveness of the project. Financial management requirements of the MDODs are summarized below. Moreover, given the demand-driven nature of the project, which implies that CBOs will be identified during implementation, it was not possible to conduct a capacity assessment of the individual CBOs. However financial management performance of the International Development Association (IDA)-funded Haiti Rural CDD Project (PRODEP) and the PCF-funded urban CDD Pilot Project (PRODEPAP) was reviewed to assess whether the arrangements proposed under the project will be commensurate with the capacity of the CBOs. The main findings of these reviews are summarized below. 10. The Bureau de Monétisation (formerly the PL-480 Management Office). As a national agency with financial and administrative autonomy, the Bureau de Monétisation has a well-established organizational structure, financial and administrative procedures, and computerized financial management system. It has extensive experience working with both government and international partners, managing large amounts of money, and implementing development projects. The IDA-funded Haiti Rural CDD Project (PRODEP) and the PCF-funded Urban CDD Pilot Project (PRODEPAP) are being managed by the Bureau de Monétisation. 11. Staffing. Financial management functions of the Bureau de Monétisation are under the responsibility of the Administrative and Finance Director, to whom the Accounting Unit reports. The Accounting Unit is composed of a Chief Accountant and two accountants with appropriate qualifications and experience. In addition, a financial analyst, reporting to the Administrative and Finance Director, performs the review of all documentation transmitted by the MDODs prior to any payment. A review of the existing workload of the finance and accounting team was

78

performed and it was agreed that an accountant assistant and a financial analyst would be recruited to strengthen the team within one month after effectiveness. 12. Accounting policies and procedures. Financial statements of the project will be prepared in accordance with the International Public Accounting Standards (IPSAS). The Operations Manual will be updated to reflect the new process and procedures being introduced by PRODEPUR particularly the role and functions of the municipalities. 13. Accounting System. The Bureau de Monétisation has a computerized accounting software (ACCPAC Plus), which is multi-use and operates in network. ACCPAC can be used for multi-sites, is multi-currency and allows managing a practically unlimited number of donors and projects separately. The World Bank is already recorded as a donor, so an additional project code and a chart of accounts can easily be set up for PRODEPUR in order to keep track of and report on project expenditures, which has to be done in accordance with the Bank’s financial management requirements. These requirements have already been met for the other World Bank-financed projects. The Bureau de Monétisation is capable of generating Financial Monitoring Reports (FMRs). 14. Reporting. The Bureau de Monétisation prepares regular financial statements for its own operations and individually for each project it manages. FMRs are regularly prepared and transmitted to the World Bank, though with delays. Under the PRODEPUR project, the Bureau de Monétisation will prepare and transmit quarterly Interim Unaudited Financial reports (IFRs) to the World Bank. Format and content of the IFRs will be agreed by negotiations. 15. Internal Audit. The Bureau de Monétisation has recently recruited a new internal auditor. Prior to the grant’s negotiations, the first year’s internal audit plan will be transmitted to the World Bank. This internal audit plan will cover the grants to CBOs. 16. External Audit. The Bureau de Monétisation’s financial statements have been regularly audited. The audit opinions for the PRODEP project for the semesters ending March and September 2006 did not raise any material issues. However, the audit report for the semester ended September 2007 was not transmitted to the World Bank in the agreed time frame, that is, by end of January 2008. Transmission of this audit report will be a negotiation condition. PRODEPUR will follow the same auditing requirements that the PRODEPs have:

Technical audits of the Project will be carried out semiannually and transmitted to the World Bank not latter than four months after the end of each semester.

Semiannual audited financial statements of the project will be transmitted to the World

Bank not latter than four months after the end of each semester. The audits will be conducted in accordance with the international auditing standards and the auditors will issue separate opinions on the financial reports prepared by each MDOD. Table A7.1 summarizes the audit requirements under the project.

79

Table A7.1: Financial Management Reporting Schedule

Audit reports Periods Due Date Financial Statements MDODs financial reports Management letter Technical audits

October 1st to March 31st

July 31st

Financial Statements MDODs financial reports Management letter Technical audits

April 1st to September 30th

January 31st

17. MDODs. The MDODs involved in the implementation of the project are expected to have a central office, as well as regional offices in each of the urban areas they will cover, which will be responsible for providing technical and coordination support. As indicated, approval of the MDOD’s financial management capacity will be part of the Terms of Reference. Each MDOD will be required to have a sound financial management capacity. This includes: (a) adequate financial management staff: the central office will have an accountant and an internal controller specifically dedicated to the project and reporting to the Finance Director of the MDOD, the regional office will have an accountant; (b) detailed written administrative and financial procedures; (c) a sound computerized accounting system and reporting at the central and regional levels, capable of recording and reporting separately project funds with a good level of detail; and (d) no major issues with its two last financial audit reports. 18. Community-Based Organizations (CBOs): The CBOs will be expected to manage subproject funds directly. As a result, they will need to have minimum financial management capacity. It will be necessary that the subproject review process consider experience and financial management capacity. Financial management capacity should not be a precondition for subproject approval. Instead, those CBOs that lack financial management capacity would be required to undergo financial management training prior to receiving the initial disbursement of subproject funds. Also, the capacity of the CBOs should be included in the criteria used by the MDODs to define the number and amount of disbursement tranches. These aspects should be detailed in the Project Operations Manual (POM). 19. Municipal Governments. A financial management capacity assessment of eligible municipal governments will be conducted. Based on the results of the assessment, selected municipalities would implement the subprojects. A financial management questionnaire has been prepared and will be distributed to the municipalities. The answers to the questionnaire will be collected and analyzed within three months after effectiveness. Then, the municipalities with weak financial management capacity will benefit from training. Activities to strengthen their capacity will be included in Component 2. E. Disbursement Arrangements 20. Disbursement/Flow of Funds: Disbursements will be made in accordance with procedures outlined in the Disbursement Handbook for World Bank Clients and allow for use of advances, reimbursement, direct payment, and issuance of Special Commitment. A single,

80

segregated designated account (DA) of US$0.5 million will be opened in the Central Bank of Haiti and managed by the PCU/Bureau de Monétisation. Funds deposited in the DA will be used to finance: (a) the activities implemented directly by the PCU/Bureau de Monétisation, and (b) other costs incurred by MDODs, including their administrative costs. Support to CBOs and the costs of the subprojects implemented by CBOs will be paid by the direct payment method on a quarterly basis. Transfers to other accounts (secondary advances) are authorized. Not later than 45 days after the end of each quarter, MDODs will prepare and transmit to the Bureau de Monétisation their consolidated financial and physical progress reports. After approval of these reports, the Bureau de Monétisation will transmit them to the World Bank together with a request for direct payment. The MDOD will then transfer these funds to the joint MDOD/CBO bank account under terms detailed in the subproject agreements, which will require the CBO to have an account in a commercial bank or a credit union. Upon signature of the subproject agreements, the World Bank will transfer, via the mechanism described above, 50 percent of the amount of the subproject for the quarter. After transmission of a satisfactory financial and physical progress report, the remaining balance of the subproject agreement (50 percent) will be released. The average lifetime of the subproject is estimated at six months. A condition of disbursement on Category 1 requires that the first three grant or financing agreements are subject to the Bank’s prior review and approval. After fulfilling this condition to the satisfaction of the Bank, further reviews of subproject and grant/financing agreements will de carried out during project supervision. 21. Reporting for project-related expenditures will be based on summary reports in the form of Statements of Expenditure for Categories 2, 3, and 4 for all expenditures related to goods, works, and consulting services (firms) contracts of less than US$50,000), individual consulting services contracts less than US$25,000, and all operating costs and training. For Category 1, reporting for project-related expenditures on subprojects will be based on unaudited financial management reports to be submitted quarterly. Figure A7.2 specifies the bank accounts to be opened at the various levels, and Table A7.2 presents an overview of Bank accounts associated to the Project.

81

Figure A7.2: Flow of Funds

World Bank

FMR MDODs

FMR PCU/BMPAD

-48

BMPAD-

MDODs

MDODs’ Account

DesignatedAccount

CBOs

CBO’s Account

Suppliers of goods

and services

Implementation Report

82

Table A7.2: Overview of Bank Accounts Associated to Project Administrative Level

Prime Respon-sibility

Account Type

Amount Nature of Expenditures

Signatories Bank Number of

Accounts National BMPAD Designated

Account US$ All activities Director

General, Deputy Director General

Finance and Administrative Director

Central Bank

1

National BMPAD Local Account

Gourdes All activities Director General, Deputy Director General

Finance and Administrative Director

Central Bank

1

National MDODs Local Account

Gourdes Subprojects To Be Determined (TBD)

Commercial Banks

TBD

Local CBOs Subprojects Accounts

Gourdes Subprojects TBD Commercial Bank or acceptable financial institutions

TBD

22. Table A7.3 specifies the categories of eligible expenditures that may be financed out of the proceeds of the financing (“Category”), the allocations of the amounts of the financing to each category, and the percentage of expenditures to be financed for eligible expenditures in each category: Table A7.3: Categories of Eligible Expenditures

Category Amount of the Grant Allocated

(expressed in SDRs)

Percentage of Expenditures to be

Financed (inclusive of taxes)

(1) Urban Community Subprojects under Part 1 of the Project

4,740,000 100% of amounts disbursed by the Recipient

(2) Goods and Non-consultant services 70,000 100% (3) Consultant services

(a) Service Agreements under Part 1 of the Project

(b) For Parts 2 and 3 of the Project, including training and audits

2,560,000

430,000

100%

100%

83

(4) Operating costs 1,160,000 100% (5) Unallocated 640,000 TOTAL AMOUNT 9,600,000 23. Retroactive Financing: Payments for eligible expenditures made prior to the date of signature of the Financing Agreement may be made on the condition that the payments were made on or after May 1, 2008 and do not exceed an aggregate amount of US$1.5 million. All goods and services related to the retroactive payments should be contracted in accordance with the World Bank’s procurement guidelines. F. Country Issues and Risk Assessment 24. Country Issues. The Country Financial Accountability Assessment (CFAA) was undertaken as part of the integrated Public Expenditure Review (PER), Country Procurement Assessment Review (CPAR), and CFAA, referred to here as Public Expenditure Management and Financial Accountability Review (PEMFAR), in 2007. The report noted that Haiti has made significant progress in strengthening fiscal discipline and improving the efficiency of its Public Financial Management (PFM) system in the last three years, in a relatively difficult context. Despite the improvements, there remain significant weaknesses and challenges. Among these challenges are: (a) the budget is not forward looking; (b) budget execution is affected mainly by the lack of cash flow planning and monitoring and the weak capacity of the line ministries; (c) a formal coordination mechanism to link aid policies, projects, and programs to the country’s priorities and budget needs to be established; (d) a sound accounting system, including clear standards and a related automated information system, still needs to be developed; and (e) despite a relatively comprehensive institutional and legislative framework, the internal and external oversight of the budget is still not effective given the lack of capacity of the institutions. Internal controls are very weak or not yet functioning. Finally, the major challenge to successful implementation of the PFM reforms is the inadequate quality and quantity of human resources, which have been a primary impediment to public sector efficiency in Haiti in recent years. As a result of these challenges, financial management risk at the country level is high. However, the impact on the project should be limited since the implementation of the project will not be done though the Public Financial Management system. 25. Risk Assessment and Mitigations. Appendix 1 presents a risk assessment matrix and mitigation measures of the financial management system for the project. If the action plan in Appendix 2 is implemented, the overall fiduciary risk is expected to improve from Substantial to Moderate. G. Loan conditions and legal covenants 26. Negotiation conditions:

First Year internal audit plan; Update of the POM and the accounting software Submission by PCU/Bureau de Monétisation of the short-list of MDODs.

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27. Standard financial management provisions. The legal documents should include the standard financial management provisions:

Requirement for Bureau de Monétisation and all MDODs involved to maintain an adequate financial management system, produce quarterly interim financial statements, and submit semiannual audited financial statements.

One designated account will be opened and managed by the Bureau de Monétisation and will be replenished using IFRs (Category 1) and Statements of Expenditure and records (Categories 2, 3, and 4).

Most of the measures of the action plan are expected to be completed before negotiations.

H. Supervision plan 28. Given the substantial risk of the project, close supervision of the financial management system would be required. Twice a year, supervision missions will be conducted. IFR and semiannual audit reports will also be reviewed.

Appendix 1: Financial Management Risk Assessment

Risk Assessment H S M L

Risk Mitigation Measures Residual Risk

Inherent Risk Country level X Based on the findings, an action plan was

elaborated by the Government. The Bank and the IDB are assisting the institutions in the implementation of this action plan through technical assistance grants (EGTAG I & II) and a DPL (EGRO I & II). There should be no impact on the project’s financial management arrangements.

S

Entity level X Strengthening of the financial management system of BMPAD will continue. The action plan in Appendix 1 will help mitigate the risks.

M

Program level X Implementation of the action plan in Appendix 1 will mitigate the risks.

M

Overall Rating Inherent Risk

X S

Control Risk Budget X A detailed budget of the project will be

developed and annual allocations will be reviewed and agreed with the Bank.

L

Accounting X The accounting system was already developed. It will be customized to include the project’s reporting requirements.

L

Internal controls

X Internal controls will be included in the Operations Manual. First-year audit plan

M

85

Risk Assessment H S M L

Risk Mitigation Measures Residual Risk

will be developed.

Funds flow X Flow of funds arrangements will be agreed prior to grant’s approval.

M

Financial reporting

X Format and contents of the reports (FMR) will be agreed by negotiations.

M

Auditing X An external auditor with qualifications and experience will be recruited.

M

Overall Control Risk

X M

Residual Risk Rating

S M

H = High; S = Substantial; M = Moderate; L = Low

Appendix 2: Financial Management Action Plan

Action Responsible Completion date 1. Recruitment of an accountant assistant and a financial

analyst BMPAD Within 1 month after

effectiveness 2. Update of the Operations Manual and the accounting

software BMPAD By negotiations

3. First year’s internal audit plan BMPAD By negotiations 4. Agreement on the format and content of the IFRs and

MDOD reports BMPAD By negotiations

5. Assessment of MDOD financial management capacity BMPAD / WB Prior to the signature of their contracts

6. Financial management questionnaire to be filled out by the concerned municipalities

Municipalities / BMPAD

Within 3 months after effectiveness

7. Recruitment of the external auditor BMPAD Not later than 4 months after effectiveness

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Annex 8: Procurement Arrangements


A. General 1. Procurement for the proposed project will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits,” dated May 2004, revised October 1, 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers,” dated May 2004, revised October 1, 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan, which will be updated as described in section C below. 2. Procurement of Works: Works procured under this project are expected to consist mainly of (a) small-scale socioeconomic infrastructure, costing on average US$20,000, which will be identified by Community-Based Organizations (CBOs) and later prioritized by representative Project Development Councils (COPRODEP) as a function of available resources under the project; and (b) small infrastructure and rehabilitation works, based on the experience under the PRODEPAP CDD Pilot Project. Works contracts will be identified during project implementation and procured according to the methods and thresholds identified in Table A8.1. This procurement will be carried out using the Bank’s standard bidding documents (SBDs) for all International Competitive Bidding (ICB) and national SBDs agreed with the Bank for other procurement methods. 3. Procurement of Goods: Most of the goods procured under this project will be purchased by CBOs for small-scale subprojects funded under Component 1 of the project. These goods will be procured following the community participation procedures described in the Project Operations Manual (POM). 4. In addition, the PCU/Bureau de Monétisation is expected to acquire some goods, such as office equipment, furniture, and vehicles. Procurement of these goods will be done using the Bank’s SBD for all ICB and national SBD agreed with or satisfactory to the Bank for other procurement methods. 5. Procurement of non-consulting services: Non-consulting services required for the implementation of subprojects will be procured using community participation procedures. Non-consulting services required by the PCU/Bureau de Monétisation will be procured using Bank standard bidding documents or national standard bidding documents agreed with the Bank. 6. Selection of Consultants: The Grant will finance contracts with consulting firms for project information and dissemination campaigns, technical assistance, studies and capacity building for the CBOs, COPRODEPs, and for the PCU/Bureau de Monétisation. Where teams of consultants are not required, individual consultants will be hired to provide specialized advisory services and services to support project monitoring, as well as technical assistance.

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7. When the broad range of services needed cannot be provided by consulting firms, NGOs and/or associations will be selected for the assignments, to the extent possible through competitive processes based on the Bank’s Consultant Guidelines. Entities selected for these services will be contracted under financing agreements signed with the PCU/Bureau de Monétisation. B. Assessment of the Agency’s Capacity to Implement Procurement 8. Procurement activities, including the contracting of Maitres D’Ouvrage Delegues (MDODs) for the implementation of component 1 of the project, will be carried out by the PCU/Bureau de Monétisation (formerly the PL-480 Management Office). The PCU/ Bureau de Monétisation is already managing procurement under Components 1 and 3 of the Bank’s Emergency Recovery and Disaster Management Project (ERDMP), and the PRODEP, as well as the community-based components of other Bank projects and small grants. The Bank’s assessment of the capacity of the Bureau de Monétisation to implement procurement actions for these projects is based on the Bureau’s satisfactory performance to date in implementing these ongoing projects. While the procurement team in the PCU/Bureau de Monétisation is well-equipped to execute procurement according to Bank Guidelines, the overall public procurement system in Haiti remains relatively weak. Despite recent reforms in the legal and institutional framework for procurement, there is still a lack of skilled personnel with knowledge of international norms, limited planning and follow-up capacity and insufficient use of standard documents and procedures. Consequently, the overall project risk for procurement remains HIGH. C. Procurement Plan 9. The Recipient, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan was agreed between the Recipient and the Project Team on March 28, 2008 and is available at the Project Coordinating Unit. The plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency of Procurement Supervision 10. Supervision will be carried out primarily through prior review by the Bank of virtually all procurement actions by PCU/Bureau de Monétisation. In addition, day-to-day procurement supervision will be supplemented by supervision missions at least twice a year. E. Details of the Procurement Arrangements Involving International Competition 11. Goods, Works, and Non-consulting Services (a) List of contract packages to be procured following ICB and direct contracting: NA. (b) All ICB contracts and all direct contracting will be subject to prior review by the Bank.

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12. Consulting Services (a) List of consulting assignments with short-list of international firms or NGOs.

1 2 3 4 5 6 7

Ref. No.

Description of

Assignment

Estimated

Cost (US$)

Selection Method

Review by Bank (Prior / Post)

Expected Proposals

Submission Date

Comments

Cons 1 Contracts for two MDODs

4,266,000 QCBS Prior Aug.2008 Expression of interest received March 28, 2008

(b) All consultancy services contracts and single source selection of consultants (firms) will be subject to prior review by the Bank. (c) Short-lists composed entirely of national consultants: Short-lists of consultants for services estimated to cost less than US$100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. F. Thresholds for Procurement Methods and Prior Review 13. Recommended thresholds for use of the procurement methods specified in the legal agreement, and for Bank prior review of procurement actions, are identified in the Table A8.1. These thresholds, as well as the requirement for Bank prior review of all but the smallest contracts, are common to all World Bank projects in Haiti and have served as the basis for the agreed Procurement Plan. Specific contracts that are subject to prior review are detailed in the Procurement Plan agreed at negotiations.

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Table A8.1: Works Contracts: Category, Thresholds, and Procurement Method Expenditure Category Contract Value

(Threshold) US$ Thousands

Procurement Method

Contracts Subject to Prior Review

1. Works >1,000 ICB All 100–1,000 NCB All <100 Shopping All Regardless of value Direct Contracting All 2. Goods >100 ICB All 25–100 NCB All 5–25 Shopping All <5 Shopping None Regardless of value Direct Contracting All

>100 QCBS, QBS, FBS, LCS All

3. Consulting Services 3.A Firms

<100 QCBS, QBS, FBS, LCS, and CQS

All

Regardless of value Single Source All 3.B Individuals Regardless of value Comparison of 3 CVs in

accordance with Chapter V of the Guidelines

All

4. Works, Goods, and Services under Subprojects

Per Operational Manual (Maximum subproject

size: US$50,000)

Community Participation procedures detailed in

Operations Manual

None

CQS = Selection Based on Consultants’ Qualifications FBS = Fixed Budget Selection NCB = National Competitive Bidding ICB = International Competitive Bidding QBS = Quality-Based Selection LCS = Least-Cost Selection QCBS = Quality- and Cost-Based Selection

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Annex 9: Economic and Financial Analysis

HAITI: Urban Community-Driven Development Project (PRODEPUR) 1. The proposed project seeks to increase access to (and satisfaction with) basic infrastructure, social infrastructure, and services, and income-generating opportunities for residents of targeted disadvantaged urban areas, through a participatory process in which community-based organizations (CBOs) propose, select, implement, and maintain community subprojects. The project seeks to achieve this objective by: (a) financing small-scale investments to improve basic infrastructure (for example, streets/roads/footpaths, water, drainage, sanitation facilities), social infrastructure (for example, rehabilitation of schools and health centers), and income-generating activities (for example, bakeries, community stores, cybercafés); (b) strengthening social cohesion and building social capital of local communities so that they can organize collectively to better meet their own needs; and (c) improving local governance via greater citizen participation and transparency in open decision-making processes, through the creation and strengthening of CBOs and Project Development Councils (COPRODEPs).

2. Given the demand-driven nature of the proposed Community-Driven Development (CDD) project, it is not possible to know a priori precisely how the resources will be allocated. Therefore, an ex ante estimation of cost-effectiveness, economic rate of return, and fiscal impact is not possible. However, data received from the Urban CDD Pilot Project (PRODEPAP) financed by a World Bank Post-Conflict Fund (PCF) grant and currently in implementation in two disadvantaged urban areas in the Port-au-Prince metropolitan area (Cité-Soleil and Bel-Air) provides some insight into the types of subprojects that CBOs in disadvantaged urban areas would propose.

3. This annex includes: (a) an analysis on cost-effectiveness, in order to assess the economic benefits of basic and social infrastructure subprojects; (b) a financial analysis to evaluate the viability of productive subprojects; and (c) an analysis of the fiscal impact, in order to evaluate the impact of the project on the government’s fiscal system.

A. Cost-Effectiveness and Sustainability of Infrastructure and Social Subprojects 4. The subproject investments under the proposed urban CDD project would support infrastructure (for example, rehabilitation of streets/roads/footpaths, drainage, and potable water systems) and social infrastructure subprojects (for example, rehabilitation of schools, medical clinics, and construction of community training centers). These public-good subprojects would be identified and proposed by municipal governments jointly with at least two CBOs in the targeted disadvantaged urban areas. Subproject design would ensure these investments represent the least-cost and best alternative.

5. First, the demand-driven nature of the subproject cycle would allocate scarce financial resources to where they are most needed by the communities. The COPRODEPs would ensure that subprojects proposed by the municipal government jointly with CBOs are prioritized and that the best alternative in terms of technical design and cost savings are chosen for financing. Second, the technical assistance provided under the project by the Service Providers (MDODs) would decrease search costs. Third, direct subproject implementation by CBOs has proven to generate cost savings compared with project implementation by public sector agencies. All of

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these characteristics would contribute to cost-effectiveness of the subprojects financed by the project. Although no infrastructure subprojects have been proposed so far by CBOs under the ongoing urban CDD pilot in Cité-Soleil and Bel-Air (PRODEPAP), informal discussions with community members during project preparation revealed that residents were keen on improving the infrastructure in their neighborhoods

6. Community centers would provide facilities to train community members in various areas (that is, job training for youth, productive and proper nutrition skills for women, and so forth). This training would indirectly increase labor productivity and employment opportunities, and allow women to be more self-sufficient.

7. Experience from CDD projects around the world shows that having CBOs implement, operate, and maintain infrastructure and social subprojects works very well. Under the pilot CDD project, the CBOs charge a fee for the use of drinking and irrigation water in order to cover the cost of operation and maintenance (O&M). However, the CBO leaders expressed to the Bank during the preparation mission that the fee would not be enough to cover the total O&M cost. An accurate estimate of the O&M cost of infrastructure subprojects would be needed, therefore, in order to determine the proper fee amount for the use of facilities under the proposed project.

B. Financial Viability of Productive Subprojects

8. Since the productive subprojects under the urban CDD pilot project are not in full operation yet (as of March 2008), it is difficult to collect actual data on costs and benefits incurred, and therefore the analysis must be based on hypotheses and on an estimate of costs and benefits, which are found in the subproject technical designs.

9. In general, the productive subprojects include income-generating activities carried out by CBOs. The types of subprojects proposed include cybercafés, a bakery, a candle-making facility, a fisheries subproject (investment in cold chamber and fishing equipment), community stores, sewing workshop, and an Information Technology Center (ITC). Based on the data provided so far, the productive subprojects under the urban CDD pilot project would be profitable—particularly the fisheries subproject, the bakery, the sewing workshop, and the candle-making. The financial rate of return of these activities ranges from 14 percent to 33 percent. However, since these subprojects are still under implementation, their operation is not yet fully underway. Technical Assistance in financial management and business development should be provided to help these community micro-enterprises.

10. Below are the productive subprojects from the urban CDD pilot project, which were assessed for the purposes of the proposed project:

11. Fisheries subproject. Subproject investments include the purchasing of equipment (motorboats, cold chamber for storage, and fishing tools), and rehabilitation of the fish market facility. The motorboats not only enable the fishermen to go fishing in areas further away from the coast and improve their catch, but they also provide fishermen with a more secure work environment, since the motorboats allow the fishermen to return to land more quickly in the event of unfavorable weather conditions, or to undertake rescue interventions and reduce the rate

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of fishermen lost at sea. Currently, all catches are sold to a middleman. The subproject proposed having its own fish store to keep all profits within the CBO.

12. Community store. This subproject would support the rehabilitation of an existing space or the rental of a new space, the purchase of basic furniture, and working capital. The store will sell basic living necessities and food (for example, rice, beans, pasta, salt, milk). Working capital would cover staff salary for three months, utilities, and purchasing of inventory. This community store would provide local residents a great convenience since currently there is a lack of community stores in the disadvantaged urban areas.

13. Bakery. The bakery will be run by women-led CBOs. The subproject would finance the workshop space (either rental or rehabilitation), purchase of equipment (oven, tables, shelves), and working capital to purchase raw materials. The main products produced by the bakery included bread, cookies, and local specialties. Given that food processing requires meeting hygiene standards, this could potentially pose a constraint in terms of selling products outside of the community.

14. Cybercafés. Cybercafés are the most popular type of subproject proposed by the CBOs under the urban CDD pilot project. The main services provided by the cybercafés include Internet connection, a space to hold conferences and seminars, international calls, fax services, printing and photocopy services, copying of CDs and DVDs, and design logos, business cards, and banners. The subproject would finance the space (either construction or rental), and the purchase of computers, fax machine, photocopier, and furniture, and working capital to cover the operation costs. Since the income is derived from provision of services, and there are many existing cybercafés, competition is very likely; therefore, developing a business plan would help ensure sustainability.

15. Sewing shop. The sewing shop is another income-generating activity carried out mainly by women-led CBOs. This subproject would finance the rehabilitation or rental of a working space, the purchase of sewing machines, furniture, funds for training, and working capital. This is a good employment opportunity for women. However, technical weakness and business development are the main constraints. Training in both technique and business development should be provided under this type of subproject.

16. ITC Center. The services provided by the Information Technology Center (ITC) include consultation services, Internet research, training, seminars, international calls, fax services, copying of CDs and DVDs, printing, and design of logos, cards, and banners. The subproject would finance the purchase of computers, fax machine, photocopier, furniture, and improvement or rental of library. This type of subproject is very similar to cybercafés, which also require the development of a business plan to ensure sustainability.

17. Candle-making. Candle-making is an income-generating and processing-type of subproject. The subproject would finance the rental or rehabilitation of a workshop space, the purchase of equipment for making candles, and working capital to cover operation costs, including purchasing raw materials. This business would have a local market, given the unreliable electricity supply in the disadvantaged urban areas. However, a solid cost-benefit

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analysis would help make the business profitable and sustainable in terms of reducing processing costs and increasing income.

18. Based on the data collected during project preparation, budgets were constructed, costs and benefits identified and monetized, and financial rates of return were estimated. The results of the financial analysis are summarized in Table A9.1.

Table A9.1: Result of Financial Analysis of Selected Subprojects Type of Activity Investment (HTG) IRR (%) NPV

(HTG at 12%) Net Annual

Income (HTG) Fisheries subproject 915,200 14 110,346 205,762 Community store 808,113 22 392,881 199,768 Bakery 836,000 29 884,437 330,937 Cybercafé 853,755 26 755,220 319,837 Sewing workshop 781,620 33 1,087,249 375,627 ITC center 853,753 18 266,206 192,101 Candle-making 765,805 18 243,030 167,756 * The exchange rate: US$1 = HTG37. 19. The average subproject investment cost was about US$22,000, including counterpart contributions from CBOs (10 percent of the total costs of subproject). As shown in Table A9.1, the Financial Internal Rate of Return (FIRR) of all subprojects is viable. Due to incomplete data, some assumptions have been made: (a) the model to estimate the financial rate of return covers 15 years, and the discount rate is 12 percent; (b) for services-type of subprojects (cybercafé, community center, and so forth), the annual growth rate of the business is 3 percent for the first three years, then 5 percent for the rest of 12 years; (c) for processing type of subprojects (bakery, candle-making, sewing workshop), the annual growth rate is 5 percent through 15 years. The FIRR of the fisheries subproject is low, because the catch is relatively modest with maintenance costs relatively high. The sensitivity analysis shows that the most sensitive factor is benefit. If benefit falls by 10 percent, the FIRR would drop dramatically at the margin. The production costs are less sensitive than the benefit, while the investment costs are the least sensitive factor. 20. It is estimated that the proposed project would create more than 2,000 jobs as a result of newly established businesses. The direct beneficiaries would reach approximately 84,000 people and indirect beneficiaries would reach approximately 480,000. The annual economic revenue generated from the productive subprojects (370) would reach $2.6 million. All of these factors would help contribute to the social stability of these communities. 21. Given the characteristics of CDD projects, in which the investment scale is relatively small, all subprojects could be classified into two categories. The first category of subprojects includes “service” subprojects, such as cybercafés, community centers, community stores, and seafood stores. These types of subprojects would directly benefit the CBO members and indirectly benefit the entire community since everybody has access to the service being provided. However, these subprojects do not only require proper O&M, but they also need to include an element of business management, including marketing.

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22. The second category of subprojects includes those that promote to a greater extent income and employment generation opportunities for local communities. These subprojects include the bakery, candle-making, and sewing workshops. The products produced by these subprojects would be sold to markets outside of the community. However, these kind of market-oriented activities require management and marketing skills, which would be a challenge for CBOs that are not experienced and have no access to market information. In those cases, relevant technical assistance would be needed. In addition, one must take into account the competition that exists in the market, and how difficult it would be for some community members to expand the scale of their businesses due to constraints on the sources of working capital and on the lack of a marketing strategy. To engage in the food-processing business (for example, a bakery), it is important to keep in mind that meeting the hygiene standards is just as important as providing a good variety of products. C. Fiscal Impact 23. Two methods can be used to estimate the fiscal impact of PRODEPUR: (a) evaluation of government financial support of the project through subsidies and taxes collected from activities supported by the project; and (b) reduction or replacement of the government budget to support public infrastructure and social services. The Government of Haiti’s current financial situation would not allow it to provide any financial support to the project, or to collect taxes from the activities given the small scale of the subprojects. Therefore, the first method is not appropriate to estimate the fiscal impact. 24. The second method provides a more plausible way to evaluate the fiscal impact. First, in the absence of the project, it is assumed that the government would have to devote public funds for the construction of public infrastructure, roads/streets/footpaths, drainage, a potable water system, and communication, and provision of social services, such as schools and health clinics. According to this assumption, the following analysis is made. First, the probability that the government would carry out these actions in the near future is low due to its tight financial budget. Second, if the government did allocate a budget for the construction of infrastructure and support of social services in disadvantaged urban areas, it would use public sector agencies or private companies to implement the works, the costs of which would be higher than the CDD approach. Therefore, the proposed project would save the government budget on infrastructure. Since data on actual costs for a private company to carry out the construction of roads and potable water system are not readily available, the estimate, based on CDD implemented in other countries, is based on the hypothesis that cost savings would be approximately 20 to 30 percent. 25. Currently, the government has limited funds allocated toward the improvement of disadvantaged urban areas or toward employment creation for its residents. The proposed project would support income-generating activities for disadvantaged urban area residents, which, since they are being proposed and implemented by community members themselves, increases their chances for sustainability. The financial support and Technical Assistance provided by the proposed project would offer community members with additional knowledge, skills, and access to information and organizations—all of which would increase the probability of community members being engaged in economic activities in the future. In the long run, the government’s taxation system would also benefit from local economic development.

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Annex 10: Safeguard Policy Issues

HAITI: Urban Community-Driven Development Project (PRODEPUR) A. Background

1. The proposed project seeks to improve access to, and satisfaction with, (a) basic and social infrastructure and services; and (b) income-generating opportunities for residents of targeted disadvantaged urban areas, through a participatory process in which community-based organizations (CBOs) propose, select, implement, and maintain community subprojects. The proposed Urban Community-Driven Development (CDD) Project seeks to build on recent and successful Bank-funded CDD interventions in Haiti, including (a) the Rural CDD Pilot Project supported by a US$1.0 million Post-Conflict Fund (PCF) grant in 2004; (b) a Labor-Intensive and Basic Infrastructure Rehabilitation Pilot Project, financed by a US$1.0 million Low-income Country Under Stress (LICUS) grant in 2005; (c) a US$38 million International Development Association (IDA)-funded Rural CDD Project (PRODEP); and (d) a US$1.25 million PCF grant for the design and implementation of an Urban CDD Pilot Project (PRODEPAP) in the Port-au-Prince metropolitan area, all executed by the PL-480 (now the Bureau de Monétisation de Programmes d’Aide au Développement), under the Ministry of Planning and External Cooperation (now under the Ministry of Economy and Finance [MEF]). 2. This annex provides information on the Safeguard Policies triggered by the project, safeguard-related risks and/or impacts identified through studies or assessments, the measures to be taken to address them, and procedures for ensuring that those measures are adequately addressed during project implementation. B. Environmental Safeguard Policies 3. The Project is rated as a category B project and intends to finance a variety of small-scale infrastructure works and income-generating activities that could have adverse environmental impacts. An Environmental Management Framework (EMF) was prepared for the Project and checklists are designed to identify these potential impacts and to direct communities and implementation partners to practical ways of avoiding or mitigating them. Should local government entities and implementation partners determine that more detailed planning work is required, they will require that an acceptable Environmental Management Plan (EMP) be prepared before project application can be considered further. 4. The Project triggers the Environmental Assessment (OP 4.01) Safeguards Policy. The EMF was undertaken in accordance with OP 4.01 and with the Environmental Decree of Haiti (2006). C. Experience under the PCF-funded CDD Pilot Project (PRODEPAP) 5. In 2006, a US$1.25 million Post-Conflict Fund (PCF) grant was awarded to finance the design and implementation of an Urban Community-Driven Development Pilot Project in the Port-au-Prince Metropolitan Area, to be executed by the Pan-American Development Foundation (PADF), under the oversight of the Ministry of Planning and External Cooperation/PL-480, now

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the Office of Monetization of Development Aid Programs (Bureau de Monétisation) (under the MEF). This pilot project is currently being implemented in two disadvantaged urban areas of the Port-au-Prince metropolitan area (Cité-Soleil and Bel-Air). The pilot activities were detailed in a Project Operations Manual (POM), which included an Environmental Checklist for subproject screening and related mitigation measures. As of January 2008, a total of 17 subprojects (9 in Cité-Soleil and 8 in Bel-Air) have been financed under the pilot project, including primarily productive/income-generating projects (see Table A10.1). The end date for the pilot project is September 2008. Table A10.1: Subprojects Financed through PRODEPAP

Subproject Type Cité-Soleil Bel-Air Total Workshops (workspace, equipment, and training for artisanal crafts, confection, etc.)

3 1 4

Cybercafé/ITC center 3 3 6 Communal store 1 2 3 Professional skills center 1 1 2 Fisheries subproject 1 0 1 Communal pharmacy 0 1 1 Total 9 8 17

D. Potential Environmental Impacts 6. Cities in Haiti have become major environmental “hotspots” that require urgent attention. Population growth, commercial activity, energy and resource use, and waste generation within these areas have resulted in overloaded natural systems and overwhelmed management systems. Urban areas are inundated with their own wastes as a result of inadequate waste management policies and practices. The impacts of greatest concern are found at the household and community level, and are related to deficiencies in urban infrastructure and services. The urban poor bear the brunt of deteriorated environmental conditions through health and productivity losses and diminished quality of life. 7. Given the poor environmental conditions of urban areas (that is, lack of waste management systems), many of the rehabilitation works would improve the environmental health of the zones of influence. The environmental management activities that will be supported through the Project represent a significant environmental improvement relative to both the status quo and to the pilot project. Potential negative impacts (direct, indirect, and cumulative) related to the construction, operation, and maintenance phases of any subproject, in particular for civil works, would be mitigated and/or avoided, where possible. Mitigation measures will be identified and assessed during subproject preparation and addressed in contracts as clauses with associated costs. 8. CDD subprojects: The project would finance subprojects in 10 targeted communities in disadvantaged urban areas. Subprojects would finance: (a) small-scale investments, costing on average US$22,000, including community contributions, (but up to US$50,000 subject to pre-approval), which are identified by CBOs and later prioritized in representative project councils (COPRODEP) as a function of available resources under the project; and (b) the contracting of service providers in the project areas to mobilize CBOs to participate in the project and provide

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the necessary training and technical assistance to these CBOs in the preparation and subsequent execution of subproject investments. The component would also finance training and technical assistance to prepare the respective Project Development Councils (COPRODEPs) to fulfill their responsibilities related to subproject prioritization, monitoring, and supervision. 9. Municipal government projects: In the proposed project, the municipal governments will play a more active role (compared to the PRODEP and PRODEPAP projects) with respect to subproject identification and proposal. The following are the proposed requirements for subprojects proposed by municipal governments: (a) all municipal government subproject proposals must be developed with the participation and/or the support of at least two CBOs from the respective area, or otherwise, with the support of the Executive Committee of the COPRODEP; (b) subprojects proposed by municipal governments will follow the same prioritization process detailed in the POM, which calls for a prioritization process carried out via democratic voting by COPRODEPs; (c) the financing ceiling for subprojects proposed by municipal governments will be US$50,000; (d) subprojects proposed by municipal governments can only serve the public good and not be productive/income-generating in nature; (e) like CBOs, municipal governments interested in proposing subprojects must contribute 10 percent (in cash and/or in-kind) of total subproject costs; (f) execution of subprojects must be carried out by the CBOs that helped identify the subproject and/or the COPRODEP; (g) subproject O&M plans must detail the administration and financial responsibilities of municipal governments; and (h) the aggregate amount designated for municipal subprojects shall not exceed 10 percent of the total community subproject budget in the 10 targeted disadvantaged urban areas/ Priority Zones. 10. Various subprojects in the areas of health, education, environmental protection, and income generation were identified by the communities through a participatory process. Many of the priority subprojects identified by the communities under the PRODEPAP pilot are related to income generation. However, because the project will eventually include other cities in the country, the socioeconomic activities and the ecological specificities/sensitivities will differ. All CDD subprojects will take into account the ecological/environmental dimensions of the urban areas and the scope and magnitude of the proposed subprojects within the preparation and implementation cycle. 11. The EMF evaluated a sample of subprojects financed under PRODEPAP and PRODEP and the potential impacts of subprojects likely to be supported under the Project. Given the demand-driven nature of these subprojects, it is not possible to know a priori the specific types or the specific parcels of land on which they will be installed. The EMF found that subprojects implemented under PRODEPAP could generate unintended environmental consequences, such as:

• Changes in water, air, and soil quality: Small-scale infrastructure and installation of productive activities could lead to deterioration in water, air and soil quality over the short to long term.

• Energy production and consumption: Inappropriate consumption and production of energy for home, business, and transport could lead to pollution problems and natural resource depletion.

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DEFINE SUBPROJECT TYPE:

Type I, II or III

EVALUTE SITE SENSITIVITY

Use Map

IS SUBPROJECT IN CRITICAL

AREA??

YES

NO

NOType I or II: YES

VISIT SITE PARCEL

IS SUBPROJECT COMPATIBLE WITH SITE?

YESNODEFINE SCOPE AND

TYPE OF ENVIRONMENTAL WORK

APPLY MATRIX

MONITORING AND EVALUTION

SUBPROJECT INELEGIBLE

IS SUBPROJECT IN FRAGILE

AREA?

SubprojectType III

Type I or II

• Degradation of land and ecosystems: Inappropriate land use development/practices could lead to increased pressure on surrounding natural ecosystems. Impacts may include the loss of coastal zones and forest resources.

• Public health impacts: Several subprojects have the potential to create habitats for disease vectors (for example, ponding).

E. Environmental Management Plan 12 The EMF for this project is adapted from the rural CDD EMF to reflect the urban context and the different relationship with local government and resultant institutional arrangements. The EMF also incorporates the lessons learned from the implementation and application of the EMF on the PRODEP and PRODEPAP. 13 All Project activities, including technical assistance, will be subject to the environmental impact screening. The principles and procedures for environmental management are set forth in this annex and articulated in the POM. The main elements of environmental management include:

• Development of key instruments to enable identification of potential environmental impacts;

• Subproject screening and classification based on potential environmental impacts of the project type and site sensitivity;

• Definition of required environmental work (EMP with associated costs); • Environmental monitoring; • Technical assistance, capacity building; and • Institutional arrangements.

14. These elements are described in the following sections, and presented in Figure A10.1. Figure A10.1: Environmental Management Elements

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F. Development of Key Instruments to Enable Identification of Potential Environmental Impacts 15. Three key instruments will be developed and used to identify and minimize the potential environmental impacts of the subprojects: (a) a map of sensitive areas in each region, (b) state- level diagnostics setting forth key environmental constraints, and (c) standard subproject environmental management plans for common subproject types. 16. All sensitive areas in the selected communes will be identified and located on maps. This information will be collected by the PCU/Bureau de Monétisation prior to Project initiation. These maps will be at an appropriate scale to facilitate subproject screening. Maps will use existing information from the regional environmental authorities (Ministry of Environment, the Ministry of Agriculture, Natural Resources, and Rural Development), and the regional land use agency (MPCE), and information on protected areas and other areas of cultural or conservation concern. The maps will be used for macro-level screening to differentiate the following types of areas: (a) Critical Areas, (b) Fragile Areas, and (c) Areas with Minor Environmental Risks. 17. For each major subproject type that is expected to be funded, the Project will finance the preparation of standard environmental management plans. These management plans would be presented in the form of a concise guide, with simple drawings, and will include information about the types of activities expected, associated potential environmental impacts, and mitigation measures with costs. The objective of these plans is to define the best environmental practices for each type of expected subproject and/or activity. These management plans will be developed by the PCU/Bureau de Monétisation and updated as new types of subprojects are financed. G. Screening 18. All subprojects will be subject to a process of environmental classification and site- sensitivity screening. The classification will be done based on field reviews of each proposed parcel by the MDODs and will be summarized in an environmental checklist. This process is described further in Step 2. Step 1: Project Typology 19. All subprojects will receive an environmental classification based on their potential environmental risks. In general, risk classification will be defined in the following manner: Type I: Subprojects that have minimal negative impacts. Type I1: Subprojects that have moderate negative environmental impacts. Type 111: Subprojects with high potential for environmental impact, that is, the impacts may affect an area beyond the site. 20. It is expected that the majority of subprojects proposed would be Type I, and the project will support only Type I and II subprojects.

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Step 2: Evaluate Sensitivity of Parcel 21. Site sensitivity is defined by the MDODs, based on an initial screening consulting the map of the areas to determine whether the subproject location is within any critical or fragile areas. Results of this assessment are used to determine initial subproject eligibility, which is then confirmed during a field review undertaken for all proposed subprojects by the MDODs. 22. Ineligible Subprojects: All subprojects located within a critical area are ineligible for funding under the project. 23. Eligible Subprojects are of two types:

• Outside of critical or fragile areas: All subprojects are eligible (Type I or II); Type II projects may receive a flag indicating the need for additional environmental work.

• In Fragile Areas: Type I and II subprojects are eligible; Type II projects receive a flag indicating the need for additional environmental work, and Type I projects may receive a flag (see Table A10.2).

Step 3: Determine Environmental Work Necessary 24. Necessary environmental work is determined by the site screening undertaken by the MDOD, and is a function of the project categorization and the site sensitivity. Table A10.2 presents the type and scope of environmental work necessary for each project category. Table A10.2: Matrix of Environmental Work for Eligible Subprojects Project Type No Flag With Flag Type I • Apply standard management

plans (developed by project). • Apply standard management plans

(developed by project). • Apply additional mitigation measures

defined by MDODs based on preliminary site visit.

• Monitor every two years. Type II • Apply standard management

plans (developed by project). • Apply additional mitigation

measures defined by MDODs based on preliminary site visit.

• Monitor every two years.

• Apply standard management plans (developed by project).

• Apply additional mitigation measures defined by MDODs based on preliminary site visit.

• Monitor every year. 25. Environmental Licensing: In all cases, MDOD will verify whether subprojects require an environmental license or other type of authorization by the federal authorities. If so, the MDOD is responsible for ensuring the necessary licenses are attained and valid. The specific activities that require environmental licenses will be determined during project appraisal. 26. Construction Activities: Environmental clauses for contractors will be included in the bidding documents for any construction activities supported by the Project. These rules include “Chance Find Procedures” for Culturally Significant Artifacts.

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Step 4: Environmental Monitoring 27. Environmental procedures include ongoing monitoring to determine whether the classification system and mitigation measures are adequate. If necessary, monitoring results will be used to refine the required environmental procedures. Environmental monitoring will pay special attention to identifying and mitigating cumulative environmental impacts. Subproject monitoring 28. Environmental monitoring procedures vary according to the potential subproject impacts as presented in the environmental work matrix. In all cases, the Bureau de Monétisation, in coordination with the MDODs and their field offices, has the responsibility for assuring subproject compliance with defined mitigation measures. Documentation 29. The MDODs will summarize the screening and monitoring process using an environmental checklist. This checklist should include sufficient project information to enable monitoring. The checklist should include data such as the project type, location, affected area (in hectares), environmental categorization (including project type and flag, if necessary), type of environmental work necessary, and monitoring results. All of these data should be maintained by MDODs. Local-level monitoring 30. Subprojects that are Type I with flag and Type II without flag: MDOD staff will undertake site monitoring of each subproject at least once every two years to verify compliance with site-specific management plans and to identify capacity-building needs or improvements to environmental management requirements. 31. Subprojects that are Type II with flag: The MDOD field staff will undertake site monitoring of each subproject at least once a year. Central-level monitoring (PCU/Bureau de Monétisation) 32. To identify lessons learned, capacity-building needs, inadequate mitigation measures, and/or cumulative impacts (at the regional or project level), the Bureau de Monétisation will: (a) undertake annual site monitoring of a sample of Type II with flag subprojects (in coordination with MDODs); and (b) will review potential cumulative impacts at the project and regional level to identify whether environmental procedures should be modified (specifically, whether changes are warranted for subproject classification, required environmental work, capacity-building needs, and so forth). This could require additional field visits. Where necessary, the resulting recommendations will be integrated into the environmental procedures.

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Step 5: Technical Assistance 33. Technical Assistance and capacity-building needs will be determined by the MDODs and the Bureau de Monétisation. The MDODs are responsible for ensuring the provided Technical Assistance includes environmental management techniques and training to guarantee adequate implementation of the environmental procedures (including application of environmental management plans, development and application of sufficient mitigation measures, and so forth). Environmental monitoring/management should also be included in the operations and maintenance plan for each of the subprojects. The environmental capacity-building program will be included in the annual operating budget. G. Institutional Arrangements 34. This section describes the primary environmental management-related activities to be undertaken by each of the key organizations involved in Project implementation. Central Level (PCU/Bureau de Monétisation) 35. The PCU/Bureau de Monétisation will include adequate capacity for the following functions: (a) developing standard environmental monitoring plans for each type of subproject/activity to be financed by the Project; (b) providing guidelines for additional mitigation measures to be applied when subprojects are undertaken in sensitive sites (fragile areas; Type I or II with flag); (c) ensuring the consistent, adequate application of environmental procedures across communes; (d) providing support to MDODs and their field offices as needed, on all environmental issues; (e) contracting experts to provide additional environmental training and support, as needed; (f) identifying potential cumulative impacts and determining necessary mitigatory actions; (g) establishing necessary institutional arrangements; (h) monitoring risky projects (Type II with flag) and any others with potential cumulative impacts; (i) evaluating environmental information and determining necessary changes to environmental procedures; (j) establishing links with other institutions to strengthen environmental capacity within each region; (k) developing and implementing an environmental training program; (l) working with environmental agencies to facilitate environmental licensing procedures, where necessary; and (m) promoting conservation-friendly projects in each region. Local Level 36. The MDODs, through their field offices, will be responsible for evaluating proposals for productive projects and approving credits to those projects considered financially, socially, environmentally, and technically satisfactory. This evaluation will include the screening activities and identification of environmental management activities set forth in this EMP, and will be undertaken by specialists hired by the MDODs. 37. At the local level, the MDODs will include capacity for assuring the following functions: (a) ensuring the adequate application of environmental procedures to all subprojects; (b) monitoring environmental management in all subprojects; (c) defining and coordinating environmental capacity-building activities; (d) coordinating relations with environmental

103

authorities; (e) presenting regular monitoring results to the Bureau de Monétisation; and (f) promoting conservation-friendly projects. 38. Public Consultation and Disclosure: The draft EMF, which was made publicly available in Haiti and in the Bank’s InfoShop prior to Appraisal, was the subject of a public consultation on March 7, 2008 in Port-au-Prince. The event, which was organized by the Bureau de Monétisation, included a variety of environmental professionals representing academia, private sector organizations (including NGOs), and government. The attendees and conclusions of the consultation are being summarized in the final EA (Environmental Assessment), which will be made publicly available through the Bureau de Monétisation’s website and the Bank’s InfoShop in Washington. H. Training 39. The EMF specifies that training activities will consider all participants who will have responsibilities for implementing the EMF. It will distinguish among their different training needs in terms of raised awareness, sensitization to the issues, and detailed technical training:

• Awareness-raising for participants who need to appreciate the significance or relevance of environmental and social issues;

• Sensitization to the issues for participants who need to be familiar enough with the issues that they can make informed and specific requests for technical assistance; and

• Detailed technical training for participants who will need to analyze potentially adverse environmental and social impacts, to prescribe mitigation approaches and measures, and to prepare and supervise the implementation of management plans. This training could address such matters as community participation methods; environmental analysis; using the EMF checklist; preparing Environmental Management Plans (EMPs), Resettlement Actions Plans (RAPs), Pest Management Plans (PMPs), and so forth; EMF reporting; and subproject supervision and monitoring.

40. The EMF will consider including a training-of-trainers (TOT) component in the training plan. In the TOT approach, identified groups that have a special role or access to communities are given a combination of technical and pedagogical training, and are provided with manuals and other training aids, so that they can organize their own courses at local levels.

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Annex 11: Project Preparation and Supervision

HAITI: Urban Community-Driven Development Project (PRODEPUR) Planned Actual PCN review 10/29/07 10/29/07 Initial PID to PIC 11/2/07 11/9/07 Initial ISDS to PIC 11/9/07 11/9/07 Appraisal 3/3/08 3/11/08 Negotiations 3/24/08 4/15/08 Board/RVP approval 5/29/08 Planned date of effectiveness 09/01/08 Planned date of midterm review 04/01/11 Planned closing date 03/31/14 Key institutions responsible for preparation of the project: Bureau de Monétisation des Programmes d’Aide au Développement (Bureau de Monétisation), under the Ministry of Economy and Finance. Bank staff and consultants who worked on the project include: Name Title Unit Garry Charlier TTL/Senior Operations Officer LCSAR Bernice Van Bronkhorst Co-TTL/Urban Specialist LCSUW Zhong Tong Agricultural Economist LCSAR Maria Elena Castro-Muñoz Senior Social Scientist LCSSO Nina Chee Senior Environmental Specialist AFTEN Alessandra Heinemann Junior Professional Associate LCSSO Fily Sissoko Sr. Financial Mgmt. Specialist LCSFM Yao Wottor Procurement Specialist LCSPT Solange Alliali Senior Counsel LEGLA Carolina C. Hammond Program Assistant LCSAR Lorena Cohan Extended Term Consultant LCSUW Paul Altidor Consultant — Gilbert Landart Consultant FAO/CP Magaye Gaye Consultant FM — Bank funds expended to date on project preparation:

1. Bank resources: US$293,603 2. Trust funds: 0 3. Total: US$293,603

Estimated Approval and Supervision costs:

1. Remaining costs to approval: US$103,397 2. Estimated annual supervision cost: US$90,000

105

Annex 12: Documents in the Project File

HAITI: Urban Community-Driven Development Project (PRODEPUR) Group Croissance. 2008. Rapport Final du Diagnostic Socio-Economique et Environnemental du

Bel-Air et de Cité-Soleil. Operations Manual, Haiti Community-Driven Development Project (PRODEP). 2005. Pan-American Development Foundation. 2008. Rapport d’avancement. Projet Pilote de

Développement Communautaire Participatif Urbain (PRODEPAP). Post-Conflict Fund (PCF), Development Grant Facility (DGF), FY 2006 Application Form,

“Haiti: Port-au-Prince Area Community-Driven Development Pilot Project.” République d’Haïti. 2007. Document de Stratégie Nationale pour la Croissance et pour la

Réduction de la Pauvreté (DSNCRP). World Bank. 2005. “Haiti Community-Driven Development Project (PRODEP).” Project

Appraisal Document. World Bank. 2005. “The Effectiveness of World Bank Support for Community-Based and

Driven Development.” Independent Evaluation Group. Washington, D.C. World Bank. 2006. “Haiti Social Protection Brief.” Caribbean Country Management Unit. ESSD

Sector Management Unit. Latin America and Caribbean Region. World Bank. 2006. “Interim Strategy Note for the Republic of Haiti for the Period FY07–08.” World Bank. 2007. “Social Resilience and State Fragility in Haiti.” World Bank. 2007. “Urban Community-Driven Development Project (PRODEPUR.” Project

Concept Note.

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Annex 13: Statement of Loans and Credits


Original Amount in US$ Millions

Difference between expected and actual

disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

P089839 2007 HT Rural Water and Sanitation 0.00 0.00 0.00 0.00 0.00 4.91 -0.36 0.00

P098531 2007 HT Electricity Project 0.00 0.00 0.00 0.00 0.00 6.31 3.65 0.00

P099918 2007 HT (APL1) Education For All 0.00 0.00 0.00 0.00 0.00 26.38 -0.20 0.00

P100564 2007 HT 2nd Econ. Governance Reform 0.00 0.00 0.00 0.00 0.00 13.44 -0.34 0.00

P104690 2007 Haiti Catastrophe Insurance Project 0.00 0.00 0.00 0.00 0.00 4.01 0.86 0.00

P093640 2006 HT CDD Project (PRODEP) 0.00 0.00 0.00 0.00 0.00 29.18 6.99 0.00

P095371 2006 HT Economic Governance TAG II 0.00 0.00 0.00 0.00 0.00 2.13 0.00 0.00

P095523 2006 HT Transport and Territorial Development 0.00 0.00 0.00 0.00 0.00 16.47 3.58 0.00

P090159 2005 HT Emergency Recovery & Disaster Management

0.00 0.00 0.00 0.00 0.00 5.39 2.77 0.23

P093936 2005 HT Governance Technical Assistance Grant 0.00 0.00 0.00 0.00 0.00 1.30 1.20 1.17

Total: 0.00 0.00 0.00 0.00 0.00 109.52 18.15 1.40

HAITI STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

2006 Digicel Haiti 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00

1998 MicroCredit 0.00 0.27 0.00 0.00 0.00 0.27 0.00 0.00

Total portfolio: 15.00 0.27 0.00 0.00 15.00 0.27 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

107

Annex 14: Country at a Glance


Lat inP OVER T Y and SOC IA L A merica Lo w-

H ait i & C arib. inco me2005Population, mid-year (millions) 8.5 551 2,353GNI per capita (Atlas method, US$) 450 4,008 580GNI (Atlas method, US$ billions) 3.8 2,210 1,364

A verage annual gro wth, 1999-05

Population (%) 1.4 1.4 1.9Labor force (%) 2.7 2.2 2.3

M o st recent est imate ( latest year available, 1999-05)

Poverty (% of population below national poverty line) .. .. ..Urban population (% of to tal population) 39 77 30Life expectancy at birth (years) 52 72 59Infant mortality (per 1,000 live births) 74 27 80Child malnutrition (% of children under 5) 17 7 39Access to an improved water source (% of population) 54 91 75Literacy (% of population age 15+) .. 90 62Gross primary enro llment (% of school-age population) .. 119 104 M ale .. 121 110 Female .. 117 99

KEY EC ON OM IC R A T IOS and LON G-T ER M T R EN D S

1985 1995 2004 2005

GDP (US$ billions) 2.0 3.0 3.8 4.2Gross capital formation/GDP 16.7 24.2 .. ..Exports of goods and services/GDP 15.9 8.8 .. ..Gross domestic savings/GDP 3.2 6.3 .. ..Gross national savings/GDP .. 10.4 .. ..

Current account balance/GDP .. -14.5 -2.6 -7.9Interest payments/GDP 0.4 0.8 1.2 ..Total debt/GDP 37.3 26.9 32.0 ..Total debt service/exports .. 26.0 9.5 ..Present value of debt/GDP .. .. 24.8 ..Present value of debt/exports .. .. 68.0 ..

1985-95 1995-05 2004 2005 2005-09(average annual growth)GDP -2.2 0.7 -2.2 2.0 3.7GDP per capita -4.0 -0.7 -3.6 0.5 1.8Exports of goods and services -10.1 7.1 .. .. ..

Haiti Low-income group

D evelo pment diamo nd*

Life expectancy

Access to improved water source

GNIpercapita

Grossprimary

enro llment

Haiti Low-income group

Eco no mic rat io s*

Trade

Indebtedness

Domesticsavings

Capital formation

108

ST R UC T UR E o f the EC ON OM Y1985 1995 2004 2005

(% of GDP)Agriculture .. 24.7 .. ..Industry .. 31.5 .. .. M anufacturing .. 20.0 .. ..Services .. 48.0 .. ..

Household final consumption expenditure 85.3 86.9 .. ..General gov't final consumption expenditure 11.5 6.8 .. ..Imports of goods and services 29.4 26.6 .. ..

1985-95 1995-05 2004 2005(average annual growth)Agriculture -2.3 4.5 .. ..Industry -3.3 -10.3 .. .. M anufacturing -2.1 -8.8 .. ..Services -2.2 5.3 .. ..

Household final consumption expenditure 3.1 .. .. ..General gov't final consumption expenditure -11.3 .. .. ..Gross capital formation -6.9 6.0 .. ..Imports of goods and services -5.0 8.0 .. ..

Note: 2005 data are preliminary estimates.This table was produced from the Development Economics LDB database.* The diamonds show four key indicators in the country (in bo ld) compared with its income-group average. If data are missing, the diamond will be incomplete.

-10

0

10

20

00 01 02 03 04 05

GCF GDP

Gro wth o f capital and GD P (%)

-15

0

15

30

45

00 01 02 03 04 05

Exports Imports

Gro wth o f expo rts and impo rts (%)

Haiti

P R IC ES and GOVER N M EN T F IN A N C E1985 1995 2004 2005

D o mestic prices(% change)Consumer prices 10.6 27.6 22.8 15.7Implicit GDP deflator 10.4 27.9 20.6 15.5

Go vernment f inance(% of GDP, includes current grants)Current revenue .. 5.3 8.6 9.1Current budget balance .. -3.2 1.1 0.2Overall surplus/deficit .. -7.0 -2.3 -5.9

T R A D E1985 1995 2004 2005

(US$ millions)Total exports (fob) 217 137 322 381 Coffee 49 18 .. .. Sisal and sisal strings 7 1 .. .. M anufactures 127 97 317 335Total imports (cif) 334 481 1,272 1,302 Food 86 149 .. .. Fuel and energy 64 71 .. .. Capital goods 83 95 372 3,387

Export price index (2000=100) .. .. .. ..Import price index (2000=100) .. .. .. ..Terms of trade (2000=100) .. .. .. ..

0

500

1,000

1,500

99 00 01 02 03 04 05

Exports Imports

Expo rt and impo rt levels (US$ mill.)

0

15

30

45

00 01 02 03 04 05

GDP def lator CPI

Inf lat io n (%)

109

B A LA N C E o f P A YM EN T S1985 1995 2004 2005

(US$ millions)Exports o f goods and services .. 241 520 549Imports o f goods and services .. 802 1,456 1,727Resource balance .. -560 -954 ..

Net income .. 11 -13 ..Net current transfers .. 109 870 844

Current account balance .. -441 -98 -336

Financing items (net) .. 556 156 376Changes in net reserves .. -115 -59 -40

M emo :Reserves including gold (US$ millions) 13 219 213 269Conversion rate (DEC, local/US$) 5.0 14.5 38.3 40.7

EXT ER N A L D EB T and R ESOUR C E F LOWS1985 1995 2004 2005

(US$ millions)Total debt outstanding and disbursed 749 816 1,225 .. IBRD 0 0 0 0 IDA 174 389 504 505

Total debt service 47 97 133 .. IBRD 0 0 0 0 IDA 2 20 56 19

Composition of net resource flows Official grants 61 512 185 .. Official creditors 57 71 -59 .. Private creditors -4 0 0 .. Foreign direct investment (net inflows) 5 7 7 .. Portfo lio equity (net inflows) 0 0 0 ..

World Bank program Commitments 32 140 0 .. Disbursements 20 49 0 9 Principal repayments 0 10 41 14 Net flows 20 39 -41 -5 Interest payments 1 10 16 5 Net transfers 18 29 -56 -10

Note: This table was produced from the Development Economics LDB database. 8/13/06

-10

-8

-6

-4

-2

099 00 01 02 03 04 05

C urrent acco unt balance to GD P (%)

G: 28

D: 483C: 11

B: 504

E: 199

A - IBRDB - IDA C - IM F

D - Other mult ilateralE - BilateralF - PrivateG - Short-term

C o mpo sit io n o f 2004 debt (US$ mill.)

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Annex 15: Risk Identification Worksheet


Risk Risk Rating


Residual Risk

1. Country-level Risks Macroeconomic framework:

• Budget underexecution, due largely to sectoral capacity constraints, could continue to hold back economic growth.

• Weaknesses in the monetary policy framework limit ability of Central Bank to control inflation.

• Government spending, fiscal balance, and economic growth are highly susceptible to any drop-off in aid inflows, due to dependence on donor resources.

• The economy remains highly susceptible to shocks from natural disasters, particularly hurricanes and flooding.

S • Overall: An IMF macroeconomic program is in place for FY07–09, supported by an SDR73.7 Poverty Reduction and Growth Facility. Haiti remains broadly on track with this.

• Ongoing IDA technical assistance supports the further streamlining of budget execution procedures to reduce expenditure processing times. Donors are providing technical assistance to strengthen capacity in line ministries and sectoral institutions.

• Despite limited tools, Central Bank slashed annual inflation from 38 percent at end-2003 to 8.3 percent in May 2007, mainly through discontinuing Central Bank financing to the government. IMF provides ongoing support to enhance monetary management.

• Haiti has obtained more than US$1.5 billion in multiyear pledges of donor assistance since 2004, and most donors have committed to long-term support. Government is committed to boosting own revenues from 10 percent of GDP (FY06) to 15 percent in medium term.

• Considerable additional relief is set to be provided by MDRI, and IDB’s early-2007 commitment to MDRI-type post-completion point debt relief and its switch to grant-only financing for the next two years. IDA financing has been 100% grants since FY06. In addition, the HOPE Act is expected to increase exports of goods and non-factor services, reducing the ratio of debt to exports.

• Ongoing assistance from IDA and other donors is supporting disaster preparedness and responsiveness. Haiti’s participation in the Caribbean Catastrophe Risk Insurance Facility (CCRIF) provides macroeconomic insurance against the impact of a catastrophic hurricane or earthquake.

M

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Risk Risk Rating


Residual Risk

Country engagement with the World Bank:

• History of on-off involvement by donors including Bank increases need to foster trust and cooperation of government.

M • Bank has maintained close support and engagement since 2004. IDA funding is now 100 percent grants.

L

Governance: • Limited capacity of ministries

and government agencies slows project implementation.

• Despite considerable recent progress, general fiduciary environment is risky, with weak budget processes and financial controls. The budget is not comprehensive and many key. reforms not yet implemented.

• Rule of law is weakly applied and judiciary does not function well.

S • Bank program balances institution building with delivery of quick results. Two investment projects are implemented directly by state entities. Others use Project Implementation Units (PIUs), but seek close government involvement.

• IDA projects are ring-fenced and procurement and financial management rules strictly applied. At the same time, IDA provides ongoing technical assistance and advisory support for economic governance reform (EGRO I and II, EGTAG I and II, PEMFAR).

• Other donors, including UN system, are supporting police and judicial reform.

S

Systemic corruption: • Corruption is perceived to be

widespread, with Haiti ranking 176 out of 179 countries in 2007 Transparency International Corruption Perceptions Index.

H • President Préval has put great emphasis on fighting corruption. Measures are being taken to increase transparency and accountability in public sector, including the introduction of asset declarations for government. A Port-au-Prince tribunal has been investigating high-level corruption in the private sector. A government anti-corruption unit was created and staffed in 2004.

H

Security and social stability: • Despite improvements in

security since December 2006, the peace is fragile, particularly in disadvantaged urban areas.

• There is a risk that economic growth, needed to underpin external stability and bring about significant improvement in social outcomes, will not accelerate. Without tangible social progress, gang activity and civil conflict could resurface.

H • The 8,800-strong UN Stabilization Mission in Haiti (MINUSTAH) maintains order in cooperation with police.

• Government and donors are working to strengthen infrastructure and improve the business environment to promote private-sector-led growth. Focused initiatives to provide jobs and services in impoverished urban areas, to improve living conditions, foster economic development, promote social stability, and diminish gang activities.

H

Political stability and inclusion: • Haiti has long been troubled by

serious political instability, despite President Preval’s

H • The PRSP (DSNCRP) has been developed through a broad consultative process, to build political consensus around it.

• President Préval maintains strong support

S

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Risk Risk Rating


Residual Risk

personal achievements in promoting unity and inclusion.

from Haitians in the international community.

II. Sector Governance, Policies, and Institutions

• Political transition (e.g., upcoming 2010 elections) leads to lack of support for CDD as a development approach.

H • Encourage wide and transparent participation in and dissemination of project results to build awareness and support for CDD at all political levels. Maintain continuous dialogue with GoH, local elected officials, and civil society.

S

• Lack of urban planning tradition, severe systemic problems in delivery of basic urban services, and nascent local government with very limited capacity may lead to lack of integration/ institutionalization of CDD methodology and mechanism.

H • CDD project will not rely only on the delivery of basic services by state agencies/local governments. At the same time, project will work to strengthen local government capacity for planning and implementation.

S

III. Operation-specific Risks Technical/design:

• CDD model does not function well in disadvantaged urban areas: weakness of social capital/CBOs in disadvantaged urban areas makes it more difficult to mobilize community groups.

S • Methodology has been tested through rural CDD (PRODEP) and adapted to urban setting through ongoing pilot PRODEPAP in Port-au-Prince metropolitan area.

M

Implementation capacity and sustainability:

• Overall weak project planning and management capacities of implementing agencies may result in excessive delays in project implementation.

• CBOs and project councils unable to implement quality subprojects.

S • Combination of skills between BMPAD and service providers (MDOD) found satisfactory in previous and ongoing CDD operations (since 2004).

• Additional training in project planning and management will be provided.

• Significant Technical Assistance is provided under the project. CBOs formally agree to be responsible for the operation and maintenance of subprojects. PCU will provide training for the management of subprojects by CBOs.

M

Financial management: • Overall weak national financial

management environment in Haiti.

• CBOs and project councils unable to financially manage subprojects.

S • FM capacity of implementing agency (BMPAD) found satisfactory for previous and ongoing CDD operations.

• Training in financial management will be provided by the PCU; subprojects will be co-managed with Service Providers/ MDOD.

M

Procurement: • Overall weak national

procurement environment in Haiti could result in excessive delays in procurement process.

S • Procurement capacity of implementing agency (BMPAD) found satisfactory for previous and ongoing CDD operations.

• All contracts are subject to Bank prior review.

• Additional training in procurement will be

M

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Risk Risk Rating


Residual Risk

provided to the PCU and service providers on a regular basis, including training under the Capacity Building IDF being developed for Haiti.

Social and environmental safeguards: • Project is not expected to have

negative social or environmental impacts.

L • Environmental framework will be in place.

L

Other: • Politicization of project

councils.

S • Membership of the COPRODEP is at least 80% comprised of representatives from CBOs.

M

• Elite capture of project councils (this could include gang capture); project councils co-opted by local government.

• Gangs/criminal elements in communities impede, obstruct, or attempt to extort from project activities.

H • Ensure membership is at least 80% comprised of representatives of genuine CBOs; transparent CDD process in place at all times; subprojects will be co-managed with service provider/PADF; close project supervision.

S

• Difficult to find contractors/ consultants to work in these volatile areas, which may lead to higher costs and delays.

H • The CDD model implies that CBOs and project councils themselves contract and supervise the works and will be more likely to use small contractors based in the community.

S

• Natural disaster (e.g., flood, landslide) impairs implementation.

S • The proposed project will support, among other things, investments in hazard risk prevention and management, as demanded and approved by CBOs and project councils.

S

• Communities do not cover O&M for subprojects.

S • Subproject proposals must include provision of O&M by the CBO. Ownership of subproject resides with CBO, thereby increasing sense of responsibility for its maintenance.

M

• Project preparation/ implementation delayed due to deteriorating security situation/ political instability, particularly in the project areas.

H • Continuous, active engagement of the government and the broader range of stakeholders in the CDD approach. Broad dissemination of the positive outcomes of the CDD pilot project.

S

Overall Risk (including Reputational Risks) Sa

a. Considering the accumulation of experience with CDD in Haiti in general and of the Bureau de Monétisation in particular, and considering the mitigation measures in place—effectively ring-fencing the project—it is felt that the project itself merits a risk rating of M. However, given the overall country and sector context, the overall risk rating of S is deemed more appropriate.

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Annex 16: Sketches

HAITI: Urban Community-Driven Development Project (PRODEPUR) City of Port-au-Prince – Bel-Air/Solino Area

115

Sketch HAITI: Urban Community-Driven Development Project (PRODEPUR) City of Port-au-Prince – Martissant/Grand Ravine/Village de Dieu Area

116

Sketch HAITI: Urban Community-Driven Development Project (PRODEPUR)

Cité-Soleil Area

117


City of Cap-Haïtien – Areas of La Fossette/Nan Bannann/Chada; Bande du Nord/Bas-Ravine/Rival/Fort Bourgeois

118


City of Gonaïves – Areas of Raboto/Jubilé Blanc; Décahos/Trousable

119


City of Gonaïves – Kasoley Area

120


City of St. Marc – Areas of Fressinaud/Portail Montrouis and Portail Guêpe/Blockhaus

121

Annex 17: Government of Haiti List of Priority Zones


Department Commune/ Municipality

Population Priority Zones

Port-au-Prince 802,566

1. Bel-Air 2. Martissant/Grand Ravine 3. Carrefour-Feuille

Cité-Soleil 206,917 4. Cité-Soleil

Delmas 341,791 5. Delmas 32 6. Simon Pelé

Carrefour 426,024 7. Carrefour

WEST

Petit-Goâve 143,191 8. 2ème Plaine 9. Dos Rémus

Saint-Marc

209,639 10. Portail Montrouis/ Fressinaud

11. Portail Guêpe/Blockhaus

ARTIBONITE

Gonaïves

280,149 12. Raboteau 13. Ka Soley 14. Descahos

NORTH Cap-Haïtien 225,740 15. La Fossette/Nan Bannann/Shada 16. Bas-Gravine/Bande du Nord/Forte Bourgeois 17. Ste.-Philomene/Kiteyo/ Bel-Air

Government criteria for Priority Zones: Insecurity (lack of rule of law and armed violence) current or in recent past, disintegration of the socioeconomic fabric, level of urban poverty, presence of armed gangs, neighborhoods without presence of law enforcement/no-go zones, and so forth. Sources: (a) Priority Zones: “Appui à la Stratégie Nationale de la CNDRR en Haïti – Projet de Sécurité Communautaire,” Project document prepared jointly by the Government of Haiti, UNDP, and MINUSTAH, July 13, 2007. (b) Population data: “Inventaire des Ressources et Potentialités d’Haïti 2005,” Haitian Statistical Institute.

122

Annex 18: Map – HAI36099
