Document ofThe World Bank

Report No: 20722-BUR

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 50.5 MILLION(US$ 66.7 MILLION EQUIVALENT)

TO BURKINA FASO

FOR THE

COMMUNITY-BASED RURAL DEVELOPMENT PROJECT

IN SUPPORT OF THE FIRST PHASE OF THE

NATIONAL PROGRAM FOR DECENTRALIZED RURAL DEVELOPMENT

October 31, 2000

Rural Development IIICountry Department 15Africa Region

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CURRENCY EQUIVALENTS(Exchange Rate Effective January 2000)

Currency Unit = CFA Franc (CFAF)650 CFAF = US$

US$ 0.0015 = 1 CAFF

FISCAL YEARJanuary I - December 31

ABBREVIATIONS AND ACRONYMS

AfDB African Development BankAPL Adaptable Program LoanCAS Country Assistance StrategyCAS Comite d'Action Spdcifique (Special Action Committee)CBRDP Community-Based Rural Development Project (PNGT2)CCTP Cadre de concertation technique provincial (Provincial Technical Coordination Committee)CFAF Franc de la Comm unaute Financiere Africaine (West African Franc)CVGT Commission Villageoise de Gestion de Terroir (Village Land Management Committee)CIVGT Commission Inter- Villageoise de Gestion de Terroir (Inter-Village Land Management Committee)CND Commission Nationale de la Decentralisation (National Commission on Decentralization)DOS Document d'Orientation Strategique (Sector Strategy for Agriculture)DGCL Direction Generale des Collectivites Locales (Department for Local Governments)DREP Direction Regionale d'Economie et de Prospection (Regional Of fice of the Ministry of Economy and Finance)EIA Environmental Impact AssessmentEO Equipe Opdrationnelle (Operational Team)EU European UnionFAO Food and Agriculture OrganizationGOBF Government of Burkina FasoIDA International Development AssociationIFAD International Fund for Agricultural DevelopmentINERA Institut National de l'Environnement et des Recherches Agricoles (National Institute of Environmental and Agricultural

Research)LIF Local Investment FundLPDRD Lettre de Politique de Developpement Rural Decentralise (Policy Letter for Decentralized Rural Development)MAT Ministere de l'Administration Territoriale (Ministry of Land Management)M&E Monitoring and EvaluationNGO Non-Governmental OrganizationNRM Natural Resource ManagementPAGIS Plan d'Action pour la Gestion el Investissement du Sol (National Soil Fertility Action Plan)PANALCD Plan d'Action National pour la Lutte Contre la Desertification (National Action Plan for the Fight Against

Desertification)PCU Project Coordinating Unit (Coordination Nationale du Projet)PNGT Progranime National de Gestion des TerroirsPNDRD Programme National de Developpement Rural Decentralise (National Program for Decentralized Rural

Development)PRSP Poverty Reduction Strategy PaperPSO Plan Strategique Operationnel (Operational Strategy for Agricultural Sector)TOD Textes d'Orientation sur la Decentralisation (Decentralization Laws)UGO Unite de Gestion Operationnelle (National Project Coordination Unit)UNDP United Nations Development Program

Vice President: Callisto E. MadavoCountry Director: Hasan A. TuluySector Manager: Jean-Paul Chausse

Task Team Leader/Task Manager: Jane C. Hopkins/Emmanuel Nikiema

BURKINA FASO

COMMUNITY-BASED RURAL DEVELOPMENT PROJECT

CONTENTS

A. PROGRAM PURPOSE AND PROJECT DEVELOPMENT OBJECTIVE ..................... .............................. 1

1. PROGRAM PURPOSE AND PROGRAM PHASING ........................................................................ I2. PROJECT DEVELOPMENT OBJECTIVE ....................................................................... 23. KEY PERFORMANCE INDICATORS ....................................................................... 2

B. STRATEGIC CONTEXT ....................................................................... 2

1. SECTOR-RELATED COUNTRY ASSISTANCE STRATEGY (CAS) GOAL SUPPORTED BY THE PROJECT ...................... 22. MAIN SECTOR ISSUES AND GOVERNMENT STRATEGY .......................... ............................................. 33. SECTOR ISSUES TO BE ADDRESSED BY THE PROJECT AND STRATEGIC CHOICES ....................... ............................. 84. PROGRAM DESCRIPTION AND PERFORMANCE TRIGGERS FOR SUBSEQUENT LOANS ............................................ 1 0

C. PROJECT DESCRIPTION SUMMARY ................................. 12

1. PROJECT COMPONENTS ................................. 122. KEY POLICY AND INSTITUTIONAL REFORMS SUPPORTED BY THE PROJECT .................................................... 183. BENEFITS AND TARGET POPULATION .......................... 194. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS ........................................ 20

D. PROJECT RATIONALE .................... 22

1. PROJECT ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION ............................................................... 222. MAJOR RELATED PROJECTS FINANCED BY THE BANK AND/OR OTHER DEVELOPMENT AGENCIES ....................... 233. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ...................................................................... 244. INDICATIONS OF BORROWER COMMITMENT AND OWNERSHIP ...................................................................... 255. VALUE ADDED OF BANK SUPPORT IN THIS PROJECT ....................... ............................................... 25

E. SUMMARY PROJECT ANALYSIS ...................................................................... 25

1. ECONOMIC ...................................................................... 252. FINANCIAL ...... ................................................................ 273. TECHNICAL ...... ................................................................ 284. INSTITUTIONAL ...... ................................................................ 285. ENVIRONMENTAL: CATEGORY B (PARTIAL ASSESSMENT) ...................................................................... 296. SOCIAL ...... ................................................................ 307. SAFEGUARD POLICIES ................................. 3.......1................... ....... 31

F. SUSTAINABILITY AND RISKS ................................. 32

1. SUSTAINABILITY ................................. 323. POSSIBLE CONTROVERSIAL ASPECTS ................................. 33

G. MAIN CREDIT CONDITIONS ................................. 34

1. EFFECTIVENESS CONDITIONS ................................. 342. DATED COVENANTS ................................. 34

H. READINESS FOR IMPLEMENTATION ................................. 35

I. COMPLIANCE WITH BANK POLICIES ................................... 35

Annexes

ANNEX 1: PROJECT DESIGN SUMMARY ............................................. 36ANNEX 2: PROJECT DESCRIPTION ............................................. 41

Proect Organizational Chart ............................................. . 52Flow Chartfor the Local Investment Fund .............................................. 53

ANNEX 3: ESTIMATED PROJECT COSTS ............................................. 54ANNEX 4: ECONOMIc AND FINANCIAL ANALYSIS ............................................. 55ANNEX 5: FINANCIAL SUMMARY ............................................. 63ANNEX 6: PROCUREMENT AND DISBURSEMENT ARRANGEMENTS ............................................. 64ANNEX 7: PROJECT PROCESSING SCHEDULE ............................................. 77ANNEX 8: DOCUMENTS IN THE PROJECT FILE ............................................. 78ANNEX 9: STATEMENT OF LoANS AND CREDITS ............................................. 79ANNEX 10: COUNTRY ATAGLANCE ............................................. . 80

MAP: IBRD 30893

BURKINA FASOCOMMUNITY-BASED RURAL DEVELOPMENT PROJECT

Project Appraisal DocumentAfrica Regional Office

AFTR3

Date: October 31, 2000 Team Leader: Jane C. Hopkins

Country Manager/Director: Hasan A. Tuluy, AFC15 Sector Manager/Director: Jean-Paul Chausse, AFTR3

Project ID: P035673 Sector(s): MC - Community Action Program, BD - Decentralization,

VM -Natural Resource Management, BI - Institutional Development

Lending Instrument: Adaptable Program Loan (APL) Theme(s): Rural Development

Poverty Targeted Intervention: Y

Program Financing Data

Estimated

APL Indicative Financing Plan Implementation Period Borrower(Bank FY)

IDA . Others Total Commit- Closing

US$ m % USS m US$ m ment DateDate

APL 1 66.70 58.1 48.15 114.85 FY2001 06/30/2006 Government of

Loan/ Burkina Faso

Credit ______.

APL 2 50.00 25.0 150.00 200.00 FY2006 06/30/2011 Government of

Loan/ Burkina Faso

CreditAPL 3 50.00 25.0 150.00 200.00 FY2011 06/30/2016 Government of

Loan/ Burkina Faso

Credit _ _ _ _ _

Total 166.70 32.4 348 15 514.85 _

Project Financing Data

Amount (USS millions): 66.7

Proposed Terms: Standard Credit

Grace period (years): 10 Years to maturity: 40

Commitment fee: variable (not to exceed 0.5%) Service charge: 0.75%

Financing Plan

Source Local Foreign Total

GOVERNMENT 14.30 0.00 14.30

BENEFICIARIES 9.15 0.00 9.15

IDA 56.30 10.40 66.70

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT

(IFAD) 9.50 2.00 11.50

GOVERNMENT OF DENMARK 3.20 1.00 4.20

GOVERNMENT OF THE NETHERLANDS 8.00 1.00 9.00

Total: 100.45 14.40 114.85

Borrower: GOVERNMENT OF BURKINA

Responsible agency: MINISTRY OF AGRICULTURE (PNGT)

Address: Deuxieme Programme National de Gestion de TerroirsB.P. 1487 Ouagadougou 01Burkina Faso

Contact Person: Albert Djigma, Project Coordinator

Tel: 226-32-47-53/54 Fax: 226-31-74-10 Email: albert.djigma@ agriculture.gov.bf

Estimateddisbursements(Bank FYIUS$M):

FY 2001 2002 2003 2004 2005 2006Annual 10.1 10.2 13.3 14.9 14.9 3.3

Cumulative 10.1 20.3 33.6 48.5 63.4 667 _

Project implementation period: 01/01/2001 - 12/31/2005

Expected effectiveness date: 01/01/2001 Expected closing date: 06/30/2006

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A. Program Purpose and Project Development Objective

1. Program purpose and program phasing

1.1 The Government of Burkina Faso's Poverty Reduction Strategy Paper (PRSP) places its emphasison improving the revenues and living conditions of the rural population, particularly food crop producerswho account for 75 percent of the rural poor. The strategy focuses on: (i) accelerating broad-based,equitable growth; (ii) increasing the access of the poor to basic social services (health, education, safedrinking water); (iii) increasing the employment and income generating potential of the poor; and (iv)promoting good governance.

1.2 The Programme National de Developpement Rural Decentralise (PNDRD) is a key program insupport of the PRSP. It will have a direct and immediate impact on poverty reduction by accelerating thepace of public transfers to rural areas for much needed socio-economic and productive infrastructure. Inaddition, it will have an indirect impact on sustainable development by building: (i) the local-levelcapacity to prioritize, plan, implement and manage local development efforts; and (ii) the institutionalcapacity at local, provincial and national levels to operationalize and support the decentralization process.

1.3 The recent Lettre de Politique de Developpement Rural Decentralise (LPDRD), endorsed by theGovernment of Burkina Faso (GOBF) and supported by its development partners, confirms and embodiesthe fundamental principles adopted in 1998 in the Textes d 'Orientation de la Decentralisation (TOD) --decentralization and participation are heralded as pillars of sustainable development. The PNDRD willpromote decentralized rural development and reinforce the capacity of local institutions to sustainablydeliver a number of services selected by and for their populations. The long-term vision is one ofparticipatory and representative local Governments and institutions planning and managing their owndevelopment programs and mobilizing the necessary resources through increased local revenues andGovernment fiscal transfers. To achieve these goals, the program will: (i) strengthen the capacity ofvillages and local Governments to prioritize, plan, implement, and maintain community-basedinvestments; (ii) provide decentralized funding for demand-driven and community-managed ruralinfrastructure and services; and, (iii) support the ongoing decentralization process.

1.4 The PNDRD intends to reach all rural communities in the country and implement a harmonized,multi-donor funded, decentralized rural development framework. It will be implemented over a 15-yearperiod, consisting of three 5-year phases. Each of these phases will be designed flexibly in order to adaptto the country's decentralization choices, the pace of resulting institutional reforms, and the need toharmonize various approaches (see detailed Program Description below).

1.5 Phase I represents the Project and is called hereafter the Community-Based Rural DevelopmentProject (CBRDP). Phase I will initiate the process, develop the capacity of rural inhabitants to managetheir own development in a sustainable, equitable and productive manner, and facilitate the emergence ofrural municipalities (communes rurales). To that effect, it will couple capacity building activities and ademand-driven local investment fund to enable communities to learn by doing. The CBRDP will alsomake a significant contribution to the debate over rural municipal institutions, the transfer ofresponsibilities to rural municipalities, fiscal decentralization, and participatory and decentralizedmanagement of village and municipal assets. Phase 11 (2006-2010) will build upon and expand theachievements of Phase I and allow the Program to reach national coverage. One of the greatest challengesduring this phase will be to build rural municipalities that are truly participatory and accountable to theirpopulation. During this second phase, the CBRDP will be part of a harmonized PNDRD that will reach allvillages, either individually or grouped together in rural municipalities. Phase III will consolidate whathas been achieved and prepare an exit strategy.

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2. Project development objective(see Annex 1)

2.1 The overall Program objective is to reduce poverty and promote sustainable development in therural areas. Specific phase I (Project) objectives are to (i) build local capacity to plan and implement ruraldevelopment, accelerate the pace of public transfers for decentralized rural development, and (ii)supportthe implementation of the country's decentralization framework.

2.2 The Project development objective is to increase the productive capacity of the rural sector andimprove the effectiveness of public investments by developing the institutional and organizationalcapacity necessary to enable local communities to plan, implement and manage their own developmentprocess. The end of the first phase will see the emergence of rural municipalities with functioningprovincial level coordination forums and a facilitating framework (regulatory, institutional, and fiscal) atthe national level.

3. Key performance indicators(see Annex 1)

3.1 Key performance indicators and triggers for the Program's successive phases are presented in detailin Annex I and paragraph B.4.2 below. They include: (i) the establishment of an efficient overallframework for decentralization in rural areas and the creation of rural municipalities; (ii) thestrengthening of rural communities' capacities for prioritizing, planning and managing their owndevelopment; (iii) the actual development and implementation, in a representative and participatorymanner, of local development plans by a significant proportion of the country's villages; (iv) theestablishment of an efficient mechanism for funding these development plans through the mobilization oflocal resources and fiscal transfers.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project(see Annex 1)

Document number: R96-140 Date of latest CAS discussion: 07/11/96

1.1 Burkina Faso is one of the poorest countries in the world with a GDP per capita of US$ 240 (1998)and human development indicators lower than those of most other Sub-Saharan Africa (SSA) countries.It was ranked number 172 out of 175 countries in the UNDP's 1997 Human Development Index.Literacy is 36 percent versus 57 percent for SSA, life expectancy is 44 years versus 51 years for SSA,infant mortality is 99/1000 versus 91/1000 for SSA, and maternal mortality is 930/100,000 versus822/100,000 for SSA.

1.2 With multi-donor support (UNDP, AfDB, EU and IDA), the Government of Burkina Faso carriedout a Living Standards Priority Survey in 1994 and again in 1998.The results confirm that the overallincidence of absolute poverty (based on minimal nutritional requirements) remains high. According tothe 1998 survey, 45 percent of the population falls below the poverty threshold, with annual incomes ofUS$74 per capita (less than 35 cents per day) to cover basic caloric requirements and non-foodexpenditures. For the lowest quintile, the average annual income is less than US$50. Poverty is largely arural phenomenon -- 95 percent of the poor reside in rural areas and 51 percent of the rural populationlive below the poverty line (versus 16 percent of the urban population).

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1.3 While Burkina Faso's macroeconomic performance has been good since the 1994 CFA Francdevaluation -- achieving a per capita real income growth rate of 1.6 percent per year -- it is fragile andbelow what is needed to reduce poverty substantially. At its current pace, it will take 44 years to doublethe country's real per capita income of $145 in 1997 (using 1985 as a base year). With almost half of itspopulation living under the poverty line, it will take even more time to reduce poverty and meet the 2015targets.

1.4 In pursuit of accelerated and sustainable poverty reduction, the 1996 Country Assistance Strategy(CAS) emphasized three goals: (i) maintaining a sound macroeconomic environment in which equitablegrowth can lead to poverty reduction; (ii) expanding the provision of social services, particularly in healthand education, to the poorest regions to provide the basis on which all Burkinabe can take advantage ofgrowth opportunities; and (iii) improving productive opportunities to raise incomes and increaseemployment. A new CAS is under preparation to support the Government's recently completed PRSPwhich focuses on reducing rural poverty by: (i) accelerating broad-based, equitable growth; (ii) ensuringaccess of the poor to basic social services (health, education, water); (iii) increasing the employment andincome generating opportunities of the poor; and (iv) promoting good governance. The PNDRD will beone of the Government's principal instruments to reduce poverty in rural areas and in the country as awhole.

2. Main sector issues and Government strategy

Rural sector issues

2.1 The agricultural sector (crop and livestock) is the main source of employment and income for about80 percent of the Burkinabe population and generates important growth and employment linkages withthe potentially dynamic non-agricultural rural economy. The sector is made up of around 1.3 million farmhouseholds, largely subsistence oriented, with limited access to services, markets and basic socio-economic infrastructure. The sector is also the principal source of growth for the economy -- contributing32 percent to GDP and 60 percent to export earnings in 1998.

2.2 Performance of the agricultural sector was erratic in the 1980s, but maintained an average annualgrowth rate of four percent. During the first half of the 1 990s, growth was lower (around 2 percent), butincreased in the post devaluation period, to more than 6 percent, largely as a result of a tremendous boomin cotton output and livestock exports. Real GDP growth reached 4 percent in 1995, 6 percent in 1996,4.7 percent in 1997, and 6.2 in 1998.

2.3 In spite of these relatively positive 'macro-level' indicators, the incidence of poverty in rural areasremains high, particularly among food crop producers. Fifty-one percent of the rural population livesbelow the poverty line (versus 16 percent of the urban population); the incidence is higher amongsubsistence farmers (77 percent) than commercial farmers (42 percent). With a population of 11 milliongrowing at about 2.7 percent per annum, intense pressure is being placed on the country's limited arableland resources. Shortened fallow periods, low use of organic and inorganic fertilizers, and overgrazingthreaten an already fragile resource base and have resulted in serious soil degradation and increasedconflict among different user groups. With limited arable land and rising population pressures, it is clearthat intensification and technological change will be necessary to restore and increase the productivepotential of the resource base. Yet, policy and institutional constraints (such as land tenure insecurity)often discourage farmers from making the productive investments necessary to reverse resourcedegradation, resulting in continued low productivity and increased poverty, rural and urban.

2.4 In addition to their natural resources, the income earning potential of small farmers and wagelaborers is strongly affected by their human capital. Improving the health status and cognitive skills of the

4

rural population should be a top priority -- not only as a goal in itself, but as a cost-effective way ofraising their productivity and incomes. The literacy rate in rural Burkina Faso is only seven percentcompared with a national average of 20 percent and rural primary school enrollment is 19 percentcompared with the national average of 36 percent. Health indicators place Burkina Faso among thelowest in Sub-Saharan Africa (SSA). More than one third of the children under five years of age sufferfrom malnutrition and Burkina Faso is strongly affected by the HIV/AIDS epidemic -- the prevalence is 7percent among the general population; 13 percent in the transport sector. An analysis of these healthindicators by socio-economic strata suggest large urban-rural disparities.

2.5 A poverty reduction strategy must give highest priority to rural development and its engine --agricultural growth -- not because this is where the bulk of the poor reside, but rather because this iswhere the productive potential resides, where linkages with the local economy are strongest, and wheregrowth can yield the largest impact on both rural and urban poverty. Efforts to improve thecompetitivityand productivity of the rural sector are at the core of the country's accelerated growth and povertyreduction strategy. However, the sector remains severely constrained by: (i) poor infrastructure (socialand economic) leading to high input costs and low labor productivity, (ii) limited access to and use ofimproved technologies, (iii) land tenure insecurity, (iv) inadequate access to financial services, and (v)ineffective agricultural and social service delivery mechanisms.

2.6 Recent economic reforms have been favorable to rural development and agricultural growththrough their price effects. However, they have been unfavorable through their public expenditure effects(reduced funding for rural infrastructure, agricultural research and extension). Coupled with reductions inforeign aid allocations to agriculture, the net impact has been a slowdown in rural growth and hence inpoverty reduction. It is often assumed that opening the economy to market forces is sufficient to ensurerapid growth of the agricultural sector. Although reforms that facilitate the expansion of the exportsectors are essential, specific characteristics of the rural sector such as: (i) a large number of smallholderfarmers who are geographically dispersed and poorly organized; (ii) high exposure to multiple sources ofco-variate risks (climate and market-related); (iii) complex institutional arrangements governing themarkets for productive factors (e.g., land); and (iv) numerous market failures preventing their efficientoperation suggest that, in addition to market reform, judiciously chosen public investment is needed.Specifically, public expenditure on rural infrastructure (hard and soft), technology generation, andinstitutional development/reform will be necessary for rural and agricultural growth to accelerate.

2.7 The challenge, in an era of limited and shrinking resources, will be to increase the relevance andcost effectiveness of public sector expenditures. Past efforts to tackle the policy, institutional andtechnological constraints facing the rural poor have been centrally driven and sectorally focused. As aresult their effectiveness has been low. Decentralized decision-making and economic empowerment ofbeneficiary communities is expected to improve the choice, relevance, cost effectiveness, andmaintenance of rural infrastructure (see box below for overview of decentralization in Burkina Faso). Inaddition, to meet the demands of the local population, the deconcentration of sectoral ministries (andengaging in public/private partnerships where appropriate) will improve the delivery mechanisms ofpublic goods and services and make them more demand-responsive. Such a vision is described in theGovernment's Poverty Reduction Strategy Paper and the Letter of Decentralized Rural DevelopmentPolicy.

5

Decentralization in Burkina Faso

Backsround

Decentralization in Burkina Faso has a long and arduous history. The first, closely controlled, communes werecrated under the colonial regime. Attempts at consolidating local organizations succeeded, but none managed toinstitutionalize locally elected councils and mayors. The process started anew in 1991 with the adoption ofConstitutional reforms. The Commision Nationale de la D4centrailsation (CND) was created and charged withdeveloping a framework for the decentralization process and advising the Government on its implementation.

In 1998, after five years of preparation and national debate the National Assenbly passed the Textes d')rientationde la Dcentralisation (TOD). The TOD sets up the fundamental principles guiding the organization andimplementation of decentralization in Burkina. Decentralization, or the right for decentralized entities to freelymanage their own affairs, has become an organizing principal for promoting development and democracy.

The TOD envisions two levels of decentralization: the province and the municipality. The provincial territory willinclude departments, municipalities, and villages. As a decentralized entity, the province will be headed by anelected provincial council and a presidet. As a deconcentated entity, it will continue to be administered by a haut-commissaire, assisted in his/her work by a consultative body named the Confirece des Cadres de la Province. Thedepartnental territory will include municipalities and villages. It is administered by aprifel.

Both urban and rural municipalities will exist, each headed by its own elected officials (mayor and council). Anurban municipality is a community of at least ten thousand people able to mobilize a budget of at least fifteen millionFCFA. A rural municipality is defined by a population of, at least, five thousand people and a minimun budget offive million FCFA.

Ktitutions

National Commission on Decentralization (Commission Nationale de la £McentralisationCND: The CND is underthe patronage of the Prime Minister and enjoys a good deal of autonomy in identifying and implementing itsprogam. The Commnission is responsible for conceptualizing and piloting the decentralization process through aprogram of action-research, dissemination of information, and training. With the design and implementation of ruraldecentralization still very much on the drawing board, it plays a major role in the process. The CND is financedlargely thoiu a consortium of donors. Of particular interest are two pilot instruments developed and managed bythe CND: the SAGEDECOM and the FODECOM. The SAGEDECOM is helping municipalities identify, design,and co-fnance their training plan. The FODECOM is a fund whose pwpose is to help fledgling municipalities startfunctioning. It co-finances recurrent costs and basic infrasuctues. In association with AFD, the CND is alsoinvolved in a study on sustainable municipal financing, and with CIDA. in assessing the results of decentralization todate and in designing a progran to support urban municipalities.

Ministry of Territorial Administration fMinssAre de I'Admlnistration Territoriale et de la Sicuritt. MATS): TheMATS is in charge of implenenting decentalization; it takes up where the conceptualizing role of the CND stops.It is also the lead ministry (Minist&re de Tutelle) for decentralization and is responsible for enforcing the laws anddecrees.

Government strategy for the rural sector

2.8 The PRSP places an emphasis on improving the revenues and living conditions of the ruralpopulation, particularly food crop producers who account for 75 percent of the rural poor. This is to be

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achieved by: (i) accelerating broad-based, equitable growth; (ii) increasing access of the poor to basicsocial services (health, education, safe drinking water); (iii) increasing the employment and incomegenerating potential of the poor; and (iv) promoting good governance.

2.9 The strategy for accelerating broad-based, equitable growth and increasing the employment andincome generating potential of the poor relies heavily on improving thecompetitivity and sustainability ofthe crop and livestock sectors. This is to be achieved by addressing overall policy and institutional issuessuch as liberalization of the transport sector and reform of the public sector, as well as sector specificnatural resource, production and marketing constraints. The Government's agricultural strategy for the2001-2010 period, the Document d'Orientation Strategique (DOS) and Plan Strategique Operationnel(PSO), outline the sector specific technical, policy and institutional actions needed. They are summarizedin the following five priority action plans:

(i) Modernization of Agriculture: The main goal is to induce a fundamental shift from alow input, low output agriculture into a higher input (improved seed, water management,fertilizer, farm equipment), higher yield agriculture, in order to increase laborproductivity and incomes. A special effort is required to identify and promoteintensification technologies, appropriate to the country's various production zones. Thiscalls for strengthening semi-formal savings/credit channels and requires a special efforton seed selection/distribution and in quality control of inputs.

(ii) Soil Fertility: The main goal is to restore the nutrient content of the soil, aprerequisite for promoting agricultural intensification and land productivity increases.The strategy will comprise an incentive and institutional package designed to lower theprice and improve the distribution of chemical fertilizers; the promotion ofcomplementary organic fertilization technologies based on a greater integration oflivestock into the farming systems; and the execution of various small scale soil erosioncontrol structures and bush/tree plantings at the village level.

(iii) Food Security: The main goal is to increase the production of local staples in whichthe country has a comparative advantage (millet, sorghum, maize) through better researchand extension (service delivery) and to create an incentive framework favorable to theincreased involvement of the private sector in the transport, storage and marketing ofcereals.

(iv) Support to Producer Organizations (POs): The main goal is to strengthen producerorganizations so that they can: (i) participate in the formulation of sector and sub-sectorpolicies and in the choice of public investment priorities; and (ii) organize the provisionof key services and inputs to their members.

(v) Institutional Development: The main goal is to create public sector institutions thatare well adapted to the redefined role of Government, i.e. a role refocused on policy,regulation, planning, monitoring and the provision of demand-driven public services,consistent with a decentralized rural development strategy in which the resources anddecision-making power is in the hands of the rural population.

The National Environmental and Desertification Action Plan (PAN/LCD) and the National Soil FertilityAction Plan (PAGIFS) are in direct support of these sectoral priorities.

2.10 Given that land and labor are the principal income earning assets of the rural poor, increased accessto basic social services and infrastructure is important not only as a stand-alone poverty reduction

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objective, but also as an essential ingredient to increasing the productivity, and hence growth, of the ruralsector. The social sectors have set ambitious poverty reduction goals. For example, the Government'seducation objectives over the next 10 years include: (i) increasing at a reasonable cost, the primary schooleducational level from 40 to 70 percent, particularly in rural areas and especially girls and (ii) providingliteracy training and increasing the literacy rate from 22 to 40 percent. In terms of drinking water, theGovernment's goal over the next 10 years is to have a majority (over 90 percent) of villages in all 45provinces having one watering point for each 500 inhabitants, at a distance of no more than 500 metersfrom the residence, with sufficient capacity to provide 20 liters of water per capita per day. The socialsector strategies have each emphasized the need for a decentralized approach in order to meet theirtargets. For example, the health sector aims to: (i) improve health coverage by decentralizing theprovision and management of services to the district level, and (ii) improve the quality of health servicesby reinforcing the participation of users and communities in their management.

2.11 Decentralization and participation are the fundamental guiding principles of the LPDRD, they arealso the key to good governance as noted in the PRSP. Decentralization plays an important role in a ruralpoverty alleviation strategy, by placing key decisions and funds in the hands of those who stand todirectly gain or lose from the results of development actions. Effective allocation and management ofpublic resources must be done through a decentralized, participatory process in which beneficiaries areempowered to define their priorities and manage the supply of the services needed; and service providers,including public institutions, are responsive to beneficiary requests. This implies a devolution ofresponsibilities to the rural population for managing their own local development and a re-focusing of therole of the state on providing a supportive policy and institutional framework. The transfer ofresponsibilities must be accompanied by a transfer of resources, and at least a partial transfer of technicalservices. The Government also has a role to play in compensating for market and social failures.

2.12 The Government has decided to adopt a measured pace of implementation, consistent with thecountry's limited capacity to manage such a complex institution building process. It is expected that thefirst rural municipalities will be created within the next three years and full coverage of rural areas willtake many more years. The Textes d'Orientations de la D&entralisation (TOD) state that: (i) elections forurban communes will take place before the end of 2000; (ii) provincial elections must be organized forthe totality of the country before the end of 2003; (iii) elections for existing rural municipalities will beheld simultaneously with the provincial elections (if separate elections are needed, they will be organizedbefore 2005). In order to develop the management capacities at the local level, the Government strategyforesees the immediate devolution of responsibilities for local investment planning and execution tovillage organizations, along with the necessary financial resources.

2.13 There are 8,000 administrative villages in Burkina Faso with populations ranging from a fewhundreds inhabitants to several thousand. Village organization varies across the country depending onethnicity and history, but is often highly structured on the basis of lineage, gender and age. The VillageChief is generally the head of the main lineage and rules with the help of an elders council. The LandChief may or may not be the Village Chief, and may even live in another village. Since independence,the Government and various projects have attempted to build a village institution that would be theirinterlocutor at the local level and be composed of members of the different socio-cultural groups. The1996 Agrarian Reform Law (RAF) gave a legal existence to village level committees (CommissionsVillageoises de Gestion des Terroirs, CVGT) that were to play a role in land evaluation, allocation andwithdrawal. In February 2000, the Government passed a decree broadening the CVGT's range ofdevelopment responsibilities and enabling them to manage public funds. The CVGTs will facilitate thetransition towards rural municipalities, in particular since they will be able to federate into inter-villagecommittees (CIVGT). CVGTs and CIVGTs however, will not substitute for rural municipalities once thelatter are in place. Thus, the approach tested under the first phase of the proposed Program is expected topave the way for the creation of the country's future rural municipalities.

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3. Sector issues to be addressed by the project and strategic choices

Sector issues addressed

3.1 Decentralization and Local Empowerment: The proposed project will be in direct support of theGovernment's decentralized rural development strategy. It will do so by:

(i) Adopting a decentralized approach for the delivery of technical assistance and investmentsconsistent with the subsidiarity principle of the TOD, which calls for the transfer of Stateresponsibilities to the level most apt to effectively carry them out. Accordingly, small socio-economic and productive investments will be identified, executed, and managed by local levelorganizations.

(ii) Supporting the emergence of rural municipalities The project will build on existing socialcapital to strengthen local capacity and institutions and guide villages towards their incorporationinto rural municipalities. Villages will be able to learn municipal management and experienceinter-village collaboration before being formally set as decentralized entities. In addition, theproject will finance a pilot where the nature and the mode of transfer of municipal responsibilitieswill be tested along with participatory management techniques.

(iii) Helping central institutions in charge of conceptualizing and implementing decentralization, inparticular the CND and the National Decentralization Directorate (DGCL) to better perform theirwork.

3.2 Broad-Based Rural Growth Strategy: The Project will improve rural living conditions and addressagriculture and livestock production constraints by funding priority socio-economic and productiveinfrastructure (including environmental protection and natural resource management activities) and bystrengthening the link between service demand and service delivery. Desertification, land degradation,and the loss of biodiversity are factors that impact sustainable growth. The Project will tackle these issueswith the support and collaboration of two Global Environment Facility operations currently underpreparation (the Sahel Integrated Lowland Ecosystem Management (SILEM) and the National NaturalEcosystem Management Program (PRONAGEN) ).

3.3 Land tenure insecurity is an issue which features prominently in many communities. Populationpressures and resource degradation have resulted in increased conflicts between herders and farmers andbetween indigenous and immigrant populations. Boundaries of community lands are often ill-defined andcan also give rise to disputes with neighboring villages. Where intensification is an option, tenuresecurity can be a constraint on investment. For all these reasons, the proposed Program will pilot amethodology for improving land tenure security.

3.4 The Project itself will not directly address issues related to the establishment of the supportingsectoral policy and deconcentrated technical support framework for each subsector. This is the role of therespective line ministries and will be supported by other IDA/donor-funded operations. In the agriculturesector, the Bank is already funding a national subsector program for technology development and transferand for strengthening farmers organizations. Other donors are funding complementary interventions:rural finance (EU, DANIDA, AFD, Dutch Cooperation, IFAD), professional organizations (EU, AFD,Belgium Cooperation, DANIDA, Dutch Cooperation, IFAD), institutional development (EU, DutchCooperation, French Cooperation), and soil fertility (Dutch Cooperation, IFAD). The Government is alsoimplementing national sector programs for rural roads, health, HIV/AIDS, and education. All of thesesectoral programs place a strong emphasis on the decentralization/deconcentration of service delivery andthe close articulation between national strategy and local needs.

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Strategic choices

3.5 Why adopt a 'learning by doing' approach? The Government's decision to take a pragmaticapproach to decentralization will allow for lessons learned to be incorporated as the decentralization lawsare operationalized and will ensure political stability in the process. It will also allow issues related tofiscal decentralization to be resolved while the less sensitive political and administrative decentralizationprocesses continue. Effective decentralization to rural community groups will depend upon the success ofcapacity-building efforts. Consistent with the choice of the Burkinabe for a progressive decentralization,the Project will invest heavily in capacity-building of communities, local organizations, service providers,and institutions with the goal of transferring key decisions and abilities for prioritizing, planning andexecuting village (and inter-village) investments to the local level. At the same time, as experience isgained with community involvement in public sector investments, lessons will be drawn, from the Projectas well as other rural development actors, as to the organizational and technical needs of the future ruralmunicipalities. These will be discussed and evaluated in a transparent manner as part of the 'learning bydoing' process.

3.6 What investments will be eligible? Given the demand-driven nature of the Project, a decision wasmade to maintain flexibility and focus the eligibility criteria on the use of public funds in general. Threegeneral categories of investments/activities are envisioned, each pertaining to a different interest group:

* productive investments with a clear public-goods element for groups of individuals within oracross villages (e.g., bottomland development that has spill-over effect to the community as awhole, soil and water management investments of a structural nature, ...);

* socio-economic public service/infrastructure investments at the individual village or communitylevel (e.g., small roadwork, water supply, school, ...);

* socio-economic public service/infrastructure investments at the multi-village or province level(e.g., larger schools, micro-finance institution outpost, health posts, HIV/AIDS prevention andmitigation activities, inter-village roads, market, ...).

3.7 What institutions will be developed? The institutions strengthened by the Project at the village,provincial, regional and national levels are consistent with the TOD and the LPDRD and will build onexisting social capital. The Project will work with villages and clusters of villages throughCVGTs andCIVGTs in order to enable them to take charge of their own development. Skills and financial resourceswill be transferred to that level so that communities can devise and implement sub-projects based on theirown priorities. Particular attention will be paid to the participatory processes so that CVGTs andCIVGTsare sufficiently representative and local choices benefit all groups. This approach will prepare for theemergence of rural municipalities by building management capacities, participatory processes and byinforming the content of implementation decrees for decentralized rural development. In addition, theProject will directly support the emergence of the new rural municipalities by providing a trainingprogram to newly elected officials and complementing their investment resources with the localinvestment fund (LIF). Provinces will be strengthened in their coordination and planning role. Finally,national level institutions such as the CND and the Directorate for Local Collectives (DirectionGeneraledes Collectivites Locales, DGCL) will be supported in their policy-making and monitoring functions.

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4. Program description and performance triggers for subsequent loans

Program Description

4.1 The institutional challenges of the reforms under way and the necessarily gradualist approach tocapitalize on actual implementation experience have led the Government to formulate a 15-year nationalprogram (2001 to 2015). This Programme National de Developpement Rural Decentralise (PNDRD) issupported by an Adaptable Program Loan (APL) divided into three phases of five years each. Thesephases are described below. During the first phase, the overall program (PNDRD), funded by severaldonors under separate operations, will cover about two-thirds (5,000) of the 8,000 villages in BurkinaFaso, with the IDA-supported operation itself providing direct support to some 2,000 villages. All villagesin the country will be covered by the PNDRD by the end of the second phase (following redeploymentand extension of various donor supported decentralized rural development projects).

Phase 1: Support for village organization and the emergence of decentralized rural development

During the first phase, the progam will help develop the capacity of the rural population to sustainably manage their ownresources and will facilitate the emergence of rural municipalities. At the end of this phase, villages grouped together around alocal development plan will form the nucleus of municipal management mechanismns, and some will be ready to apply for ruralmunicipality status. The program will also have made a significant contribution to the debate over rural municipalities (transferof responsibilities, fiscal decentralization, and participatory management of village and municipal assets) and will havesupported the birth of the first ones. The project will also support the provinces so they can play an increased role in provincialplanning and serve as forums for debating and harmonizing approaches and procedures for community-based land managementand local development projects.

The project has five components: (i) local capacity building geared towards organizing villages and strengthening their capacityto plan, implement, operate and maintain investments- (ii) a local investment find with two windows, one that channelsresources directly to rural comnunuities on a matching grant basis to finance demand-driven socio-economic and productiveinvestments, and another window for larger investmnts identified by rral communities and implemented by provinces; (iii)institutional capacity building will include the costs of training, equipping, and operating the field teams and other serviceproviders with whom the CBRDP has signed agreements; it will also include activities in support of rural decentralization at thelocal, provincial, and national levels; (iv) a land tenure security pilot operation; (v) program coordination, administration, andmonitoring/evaluation.

During the first phase, the Project will liaise closely with other donor-funded participatory rural development programs, in orderto harmonize approaches and arrive at a single national community-based rural development policy supported by a multi-donorfunded investment program by the end of year five. The Project will act as a financier of last resort for other community-baseddevelopment prnjects operating in provinces not covered by the project to help them expand their geographic coverage and/ortheir range of local investment options. Nearly two-thirds of the rural communities (about 5,000 villages) will benefit directlyor indirectly from Phase I of the Program.

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Phase 2. Extendiug and Deepening Decentralized and Participatory Rural Development

During the second phase (2006-2010), mual municipalities will gradualy form from the clustess of villages established during

the first phase. Support will continue to be provided in the areas of docentralized and participatory plannuing and managemenL

The loeal investmnt find will open a window for municipal investments. During this second phase, all villages, either

individually or grouped together in rural muicipalities, will be covered by the PNDRD. The provinces will continue to be

supported in their planning role for dcentrized rural development

Phane 3: Pirogram Consolidation

The progressive approach adopted by fth Govermnent to decentralized rural development has the advantage of building a

consensus around broad national optiom but it will also mean that the decentralization process can be implemented according

to more than one schedue. This ast phase of the program is intended to provide further support to mral municipalities in

making priority investments and in consolidating their institutions on a sustainable footing throg a tanarent system of local

revenue raising and fiscal trasfers. The PNDRD will have become a key instrument for the provision of capacity building and

co-financing for the country's rural municipalities. As part of its technical assistance role, it will support the creation of social

control mechanisms which are needed to prevent municipal budgets from being appropriated by a small group of beneficiaries.

Performance Triggers for Subsequent Loans

4.2 The following triggers have been set for moving through the successive phases of the Program:

End of Phase I: Achievement Indicators

* At least 75 percent of villages targeted in the first phase have received capacity building support and

have adopted a local development plan.

* At least 60 percent of beneficiary villages have representative and participatory bodies assuming their

role in local development (planning, execution and management of local projects) and have

substantially completed their development plan in a satisfactory manner (economically and socially).

* At least 30 percent of villages have been regrouped into inter-village development structures that

have already undertaken sub-projects in common.

* 75 percent of target provinces have a functioning representative coordination body (bringing togetherthe State, representatives of the local community and development partners) providing soundcoordination of available resources and quality services to support local development efforts.

* The decentralization law is being implemented satisfactorily.

* A functioning national forum has made substantial progress towards harmonization of rural

decentralized development approaches.

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* Plans for decreasing the central administrative structure of the Project have been developed andpartially implemented.

* The financial management and M&E systems' performance is fully satisfactory.

End of Phase II: Achievement Indicators

* At least 90 percent of all villages are organized either in clusters of villages or in rural municipalitiesand have local development plans.

* At least 60 percent of all villages have substantially completed their development plan.

* At least 500 rural municipalities have been created and are operational.

* The Government has transferred significant responsibilities and resources to rural municipalities.

4.3 A strong monitoring and evaluation system, which includes participatory beneficiary assessmentsas well as independent technical and scientific assessments, has been put in place to allow the results ofthe first, and each subsequent, phase to be measured. In addition, household-level panel data will becollected for impact evaluation purposes.

C. Project Description Summary

1. Project components(see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Overview

1.1 The approach followed by the Program is based on the empowerment of rural communities fordecisions concerning their own local development. It is demand-driven and inclusive, i.e., based on aparticipatory needs assessment that seeks to involve all societal groups, howevermarginalized. It ensuresthe relevance, cost effectiveness and accountability of key investment decisions and managementresponsibilities by delegating them to the lowest level possible (i.e., as close as possible to the intendedbeneficiaries). It closely links agro-sylvo-pastoral development with the provision of socio-economicinfrastructure and services, thereby recognizing that rural development requires multi-sectoralinterventions. Accordingly, the range of village (and inter-village) level investment choices is wide andwill include productive sub-projects, in particular those associated with natural resource management(e.g., soil and water conservation infrastructure), as well as sub-projects aimed at improving access tosocial infrastructure and services.

1.2 Effective decentralization to rural community groups will depend upon the latter's capacity tomanage increasingly complex development activities. Hence, capacity building will be a fundamentalcomponent of the first phase of the program. Intensive training efforts will be undertaken, directed atcommunities and intermediaries (service providers such asNGOs, private contractors, and public serviceswhich will be in direct contact with the communities). As indicated in the components table below, thebulk of project funding will be for development of local and institutional capacity (33 percent) and localinvestments (48 percent). The Project will be co-financed by IFAD, the Government of the Netherlands,and the Government of Denmark. Global Environment Facility (GEF) funding, from operations currently

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under preparation, will complement existing funding and provide incentives to communities to undertake

sub-projects focused on biodiversity and global climate change issues

Indica- Bank- % ofComponent Sector tive % of Financ- Bank

Costs Total ing Finane-(US$M) _ (JSSM) ing

1. Local Capacity Building Rural 11.38 9.9 5.46 8.2Development

2. Local Investment Fund (LIF) Rural 54.79 47.7 33.75 50.6Development

3. Institutional Capacity Building Rural 26.52 23.1 12.73 19.1Development

4. Land Tenure Security Pilot Rural 3.82 3.3 3.10 4.7Development

5. Project Coordination, Rural 10.94 9.5 5.46 8.2Administration, M&E Development

6. Physical contingencies Rural 0.90 0.8 0.80 1.2Development

7. Price contingencies Rural 6.50 5.7 5.40 8.1Development

Total Project Costs 114.85 100.0 66.70 100.0

Total Financing Required 114.85 100.0 66.70 100.0

Project Description by Component

1.3 The Project includes five main components: (i) Local Capacity Building; (ii) Local InvestmentFund; (iii) Institutional Capacity Building (including support and advisory services); (iv) Land TenureSecurity Pilot Operation; and (v) Project Coordination, Administration and Monitoring/Evaluation.

Local Capacity Building

1.4 The specific objective of this component is to strengthen the technical and organizational capacityof the rural population so that they can prioritize, plan and execute the activities envisaged under theprogram, including the preparation and implementation of local development plans, and organization intosocially and economically cohesive rural municipalities. It has three sub-components:

(i) Awareness raising: This sub-component includes all communication, promotion, informationactivities. It aims to disseminate the project's objectives, explain the modalities for participation init, and encourage the regrouping of villages. Publicity and awareness campaign activities will bebased on existing modules developed and tested during the predecessor project. They include radioannouncements and theatrical presentations. These activities seek to mobilize the interest andparticipation of villagers, existing local-level institutions, and traditional authorities to organizethemselves at the level of the "terroir," and inter-terroir. They willinter alia explain the process ofestablishing a CVGT and/or a CIVGT and identify potential resource people in the village.

Villages are selected each year as part of the work programming exercise on the basis of expressedinterest, location, poverty profile, and access to other investments from donor and NGO supported

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activities. The final list is established in collaboration with the Provincial Technical CoordinationCommittee (Cadre de concertation technique provincial, CCTP). Villages that have agreed toestablish a CVGT/CIVGT become eligible for more in-depth training support. Upon establishmentof the CVGT/CIVGT they become eligible for participation in the investment program.

(ii) CVGT/CIVGT training programs: This sub-component is centered on the organizational,management and technical skills required for CVGTs/CIVGTs and their subcommittees, theComiti d'Action Specifique (CAS) to successfully plan, implement, and maintain village levelinvestments. This training program includes: organizing village assemblies and keeping records ofdecisions; obtaining legal recognition for village level organizations; carrying out communityneeds assessments and development plans; sorting out land rights in the process of community landdevelopment planning; accessing financial resources and mobilizing self contributions; andexecuting investment projects (contracting, cash management, record keeping, monitoring).

HIV/AIDS has become a threat to the country's long-term development. A specific HIV/AIDStraining and awareness raising program will therefore be put in place. This training will have asits'objective to raise awareness of HIV/AIDS and provide information on prevention, care and theidentification of specific interventions related to the alleviation and prevention of the disease thatare eligible for project financing. These interventions will be included in the local developmentplan.

An important alphabetization program will also be undertaken to accompany the establishment andstrengthening of local level organizations, as this has been determined to be a major determinant ofsuccessful local organizations. All such training will be provided by third parties hired by theproject.

(iii) Technical support to community organizations: This sub-component relates to the technicalsupport provided to the CVGT and the CAS for carrying out their annual investment plans. Thissupport was provided by provincial teams under the previous project but will be increasinglydelegated to third parties when and where capacity exists. The Project will enter into contractswith private providers (firms), NGOs or Government technical services to provide the neededservices. These service providers will support community organizations in preparing projectproposals on the basis of technical standards prepared by the Project (referentiel technique), in theselection of contractors or qualified local workmen, and in the supervision of the execution. Theymust alsc help the beneficiaries in setting up maintenance programs and mechanisms for cost-recovery.

Local Investment Fund (LIF)

1.5 The local investment fund will have two windows: one for financing village and inter-village sub-project (<US$ 30,000), and a special window (>US$ 30,000 - <US$ 150,000) to provide the provinceswith resources to undertake larger structural works. A detailed implementation manual has been preparedwhich specifies the rules and procedures attached to these sub-projects. The draft manual was madeavailable to the Association prior to negotiations. It will be finalized as a condition of effectiveness.

Village and inter-village investment window

1.6 Village or Inter-Village Committees for Community Land Management (CVGT or CIVGT) will beorganized and, following a participatory diagnosis, will develop multi-year community-baseddevelopment plans covering a variety of sectors. Based on the available budgetary envelope, the requiredcounterpart contributions, and other conditions laid out in the operational manual, the CVGT/CIVGT will

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identify an Annual Investment Plan (AIP) that prioritizes these local investments. Safeguards,recommended by a Social Assessment carried out during project preparation, will be introduced to makesure that all social groups are involved in the process of village needs assessment and projectidentification. The M&E system will allow for verification. Following a simple review by the CCTP forprocedural regularity and conformity with sectoral policies (school and health maps, for example), and thedeposit of the required beneficiary contribution, a contract for the AIP will be signed between the Projectand the CVGT (or CIVGT) and the funds will be transferred into a local financial institution accountopened in the name of the CVGT (or CIVGT).

1.7 The financial envelope provided will be calculated on the basis of a per-capita amount of someUS$ 3-5 per year. This amount may vary on the basis of the capacity of CVGT/CIVGT to make effectiveuse of the resources provided to them. Villages will be encouraged to collaborate on the basis of commongoals and in order to make more effective use of the pooled resources. This is an extremely flexibleapproach, intended to allow villages to learn on their own, and first hand, about municipal managementprocedures and to experiment with them without the constraint of overriding alliances and commitments.The process of decentralization and of forming rural municipalities should emerge the stronger because itwill be firmly rooted in participation and consensus.

1.8 The CVGTs and the CIVGTs will be responsible for executing the sub-projects and may recruitcontractors and workers for this purpose. The Project will provide contract management support throughservice providers contracted for this purpose, and through the provincial technical services ofGovernment, with whom protocols will be signed. The beneficiaries will also be able to recruit additionaland independent outside technical expertise for supervising the sub-projects (execution and acceptance).The funds to pay for such services (up to 10 percent of the total investment cost) are included in theinvestment budget covered by the LIF. Transparency in the selection of priority investments, the awardof contracts and the management of funds and works sites will be assured by greater community control(availability of information, contributions by beneficiaries, and CVGT and CAS supervision) and by ex-post supervision organized by the national program coordinator.

1.9 Eligible investments: The Project will provide support, on a matching grant basis, for socio-economic and productive investments. The Project will not, however, provide direct financing foractivities of a private or commercial nature. Any project that is not included on the negative list and thatmeets the eligibility criteria set out in the procedures manual may be financed.. The principal categoriesof eligible village and inter-village sub-projects are as follows:

a. Soil and water conservation;b. Reforestation and forest management;c. Structural support for improving animal husbandry;d. Structural support for improving agricultural productione. Water supply infrastructure;f. Feeder road improvement/infrastructure;g. Social and economic infrastructure;h. Renewable energy;i. Nutrition and health educationj. AIDS/HIV prevention and mitigation activitiesk. Support for expanding the network of decentralized financial institutions;1. Training and action research.

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Provincial window

1.10 This window will fund infrastructure projects that encompass a larger area and often several"terroirs". It will be available for sub-projects whose feasibility has been demonstrated and for whichadequate arrangements to ensure operation and maintenance have been worked out. Eligible subprojectswill be no larger than US$ 150,000, and could fall in the following broad categories: forest management;pastoral management; and socio-economic infrastructure. Arbitration among potential projects will beconducted by the CCTP, which will include representatives of beneficiary groups. Execution of theselarger sub-projects will be handled by the project's provincial operational teams which will procure therequired construction and technical services.

Institutional Capacity Building

1. 1 1 The specific objective of this component is to build institutional capacity at the local, provincial,and national level. It includes the costs of training, equipping and operating the field teams (largely oncontract basis) and other service providers with whom the Project has signed agreements (i.e., protocolswith Government technical services and decentralized financial services (DFS); contracts withNGOs andconsulting firms). It also includes the cost of PNDRD activities in support of rural decentralization at thelocal, provincial and national levels (i.e., strengthening institutional, human and financial capacities,piloting and implementing fiscal and financial decentralization, other studies and training). Specificsupport is as follows:

Local Institutions: The Project will train, contract, and equip field operators (NGOs, consultingfirms, Government technical services) to help communities organize themselves and prepare andimplement local development plans. Once rural municipalities are created, the Project will providethem with basic training and will make the local investment fund available to them.

Provincial Institutions: This sub-component will strengthen the coordination, management andfinancial capacities of province-level institutions and prepare the province for its future role as adecentralized entity. To achieve this objective, the Project will support basic operating costs,training and investments (provincial window of the FIL). It will revitalize the CCTP, improvetheir functioning and ensure that their membership is comprised of representatives of the provincialpublic services, donor-supported projects, NGOs, and beneficiaries. Among other responsibilities,the CCTP will monitor and orchestrate the harmonization and integration of various localdevelopment projects and programs.

Regional Institutions: The Project will provide support to the Regional Departments of theMinistry of Economy and Planning (DREP) to strengthen their capacity to monitor thedecentralized rural development process. Training, operating support and equipment will beprovided.

National Institutions: The Project will support the CND and the DGCL in their effort to design andimplement decentralized and participatory rural development, and to gradually establishrepresentative and accountable rural municipalities. The proposed program will include a pilot totest the social, economic, fiscal and institutional viability of about 15 rural municipalities, as wellas applied research, studies, training and equipment for the DGCL and the CND.

Land Tenure Security Pilot

i.12 As in most countries of the sub-region, land is officially the property of the State. However,customary rights continue to co-exist and are often the de facto rule of law. The 1996 Agrarian Reform

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(Rlorganisation Agraire et Fonciere, RAF) represented a major step forward in recognizing customarymodes of land management. However rising population pressures, a deteriorating resource base andintensification of the traditional production system have led to an increase in the number of land-relatedconflicts and have heightened the need for improved land tenure arrangements. Recognizing this, theGovernment has initiated several experiments to improve land tenure security. This pilot operation willsupport that effort. The National Forum for Decentralized Rural Development (National Forum) willensure coordination of the various pilot operations and be responsible for informing the public debate onthe basis of the pilot results [see paragraph C.1.14 (i)].

1.13 The objective of the pilot operation is to help improve land tenure security and access for all users.It will contribute to: (i) foster equity and social peace, (ii) encourage investment and raise agriculturalproductivity, and (iii) enhance the preservation and rehabilitation of natural resources. To that effect, itwill define and propose, on the basis of concrete experimentation in the field, an institutional, legal,technical and methodological framework for stable and equitable land tenure in rural areas. The pilot willbe conducted in six test sites representing the principal systems of land use and the ownership problemsassociated with them. It will experiment with methodologies for recording and securing user rights,initiating the formalization of customary systems, resolving conflicts, and demarcating land use units. Thewhole process will be demand-driven and participatory and will feed into policy-making at the nationallevel. It will pay a particular attention to the rights of traditionallymarginalized groups such as herders,women and youth.

At the end of the pilot operation, the component will have produced the following:

* A practical methodological guide (toolbox) for use in improving rural land tenure security;- A documentation system for information generated by the PNGT2 pilot operations;- A preliminary national action plan for securing stable and fair rural land tenure; and

A preliminary program of land tenure interventions for implementation in phases II and III of thePNDRD.

This pilot operation will be implemented by the regular provincial teams of the Project and reinforcedwith staff from line ministries and consultants.

Program Coordination, Administration and Monitoring/Evaluation

1.14 This component includes three sub-components: (i) support for the coordination office/forum of theoverall PNDRD and (ii) support for the coordination and management of the IDA-supported Project; and(iii) support for program and project monitoring and evaluation.

(i) Overall Program (PNDRD) Coordination: The Project is designed as part of the ProgramNational de Developpement Rural Decentralise (PNDRD), a national program involving adecentralized and participatory approach to community-based land management and localdevelopment. The PNDRD serves as a frame of reference for the various projects fostering localdevelopment in rural communities. One of its central objectives is to help harmonize theapproaches of these different programs and projects so as to make more efficient use of availableresources and to achieve swifter and more effective national coverage. A National Forum will beestablished to facilitate this process. Assurances were obtained during negotiations that such aForum will be established in form and with functions, staff and resources acceptable to theAssociation by March 31, 2001.

(ii) Project (CBRDP) Coordination: The national project coordination unit (PCU) will beresponsible for coordinating all activities under the Project, in particular for providing funding to

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beneficiaries within the established deadlines, monitoring and evaluating the program at thenational level, managing studies and the provision of services, and drawing lessons from thevarious national experiments in decentralized and participatory rural development.

(iii) Program and Project Monitoring and Evaluation: This will include setting up an integratedsystem of management and monitoring for both the overall PNDRD and the IDA-supportedProject. The system will include: (i) real-time monitoring of physical and financial execution of theProject; (ii) technical and financial audits of the Project; and (iii) monitoring and evaluating theeconomic, environmental and institutional impact of the Program and the Project. These systemsare detailed in the Project Implementation Manual.

2. Key policy and institutional reforms supported by the project

2.1 The Program will support the Government's strategy for poverty alleviation and rural developmentthrough a decentralized, demand driven approach. This strategy is outlined in the Government'sLetter ofDecentralized Rural Development Policy.

2.2 The minimum policy framework in support of decentralized rural development, and necessary forthe successful implementation of the Project, exists in Burkina Faso. The TOD (Decentralization Laws)provide the legal basis for the creation of rural municipalities and programs their creation as follows. Allchefs lieu de departement will automatically become communes rurales (rural municipalities) within fiveyears. The province, today an administrative division, will also become a collectivite territorialecovering the entire rural area within its jurisdiction, excluding rural municipalities. Villages will be ableto regroup, and request to become communes rurales, provided they have a minimum of 5,000 people anda self-financed budget of at least FCFA 5 million (some US$ 7,000). Elections for the first provinces andrural municipalities will take place no later than five years from the date of the TOD.

2.3 Responsibilities transferred to decentralized units are also consistent with the goals of decentralizedrural development that are supported by the Project. Specific responsibilities for education, health, socialand economic development, and the environment are assigned between the province and the ruralmunicipality according to the subsidiarity principle (the lowest level able to carry out the task) and mustbe accompanied by a transfer of resources and technical services.

2.4 The challenge in implementing the TOD is to find a way to establish rural municipalities with asize that permits sufficient administrative capacity without losing the active grassroots participation andshared identity. To that end, the CBRDP will adopt a progressive and flexible approach that will permitvillages to experiment working with other villages and develop a consensual approach to localmanagement. At the end of Phase I, villages should be able to decide on their incorporation as ruralmunicipalities. Lessons from CBRDP and other projects will be shared through the National Forum ofthe PNDRD and incorporated in the process.

2.5 Another challenge will be in deciding whether the totality of rural areas will be structured intomunicipalities or if large 'islands' will remain under the responsibility of the province. The coming yearswill be crucial in determining the concrete modalities of rural municipalities' functioning, financing, andmodes of representation. The Project will support pilots and applied research that will help informdecision-making at all levels.

2.6 The Project will be an active instrument in designing and implementing rural decentralization; itwill begin its operations during a transitional phase when no rural municipalities exist. Decentralizationof decision-making power and public funds to the local level for the planning and execution of publicly-funded investments requires the existence of a broadly representative village organization with legal

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status and operational capacity. The predecessor project successfully experimented with using the CVGTand their CAS to plan and implement natural resource management investments. An inter-Ministerialdecree (February 2000) has established the CVGT and the CIVGT as the main local decision-making andexecuting institutions during the transition preceding the creation of rural municipalities.

3. Benefits and target population

3.1 A Poverty Assessment conducted in 1998 identified the rural population as having the largestconcentration of poor people. Fifty one percent of rural people are in a state of absolute poverty(calculated on the basis of minimum caloric requirement). The Project will have a direct positive impacton the well-being, productivity and income of some two million people, living in the 2,000 villages to becovered by the Project (about 25 percent of the rural population).

3.2 Based on the results of the 1998 impact evaluation assessment of the predecessor project, it ispossible to predict four broad categories of benefits from the Program:

* Impact on living conditions. The Program will have an direct impact on rural incomes throughproductive investments, such as the development of bottom lands, and an indirect impact through thespillover or stimulative effect of such investments on the local economy. Increased productivityresulting from soil fertility interventions and increased access to markets will also lead to increasedincomes. Food security will be enhanced as a result of income increases, and also due to theconstruction of cereal banks and feeder roads. Clean water will lessen the impact of water bornediseases. Village health interventions will extend the outreach of the district level health centers, inall aspects of preventive health, including HIV/AIDS (the prevalence of HIV/AIDS is between 6 and10 percent among pregnant women). Village schools built in response to public demand will lead toincreased child enrollment. Contracting local artisans and small-scale entrepreneurs will generatelocal employment opportunities.

* Impact on natural resources. Better management of natural resources for long-term sustainable use isa fundamental aspect of the Program. Improved soil fertility, more abundant vegetation cover,reclaiming bare land, slowing down erosion, increased biodiversity will be the main results. A specialeffort will be made to monitor the impact of the Program on the environment, and beneficiary villageswill be trained to monitor key indicators (e.g. yields, presence or absence of certain species, waterlevel).

* Impact on local capacity. Strengthened capacity of broadly representative village organizations is aprerequisite to the efficient execution of the Program, the equitable distribution of its benefits and thesustainability of its results. The creation of CVGT and support to their internal organizations andprocedures will be a key step in the emergence of capable rural municipalities. To ensure that theirviews and priorities are fully represented, the participatory process will make it mandatory to includetraditionally disadvantaged groups, including women, youth, and those who suffer from severepoverty. Alphabetization programs will be an essential ingredient in this capacity-building effort.Additional training will be directed to the technical and organizational skills required to ensure themaintenance of project-funded investments.

* Impact on the institutional environment. The Program will play an essential coordination role at thevillage, province and national levels, integrating the interventions of a large number of actors across abroad range of sectors and sub-sectors. Significant results were obtained under the PNGT,eliminating duplication of effort and reducing intervention costs. This was been made possible byactors from a broad range of field organizations teaming up to support the promotion of the PNGTapproach: joint participatory needs assessment, harmonization of approaches, sharing responsibility

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for financing local development plans, exchange of experiences, joint evaluations, etc. The Programwill build on this effort and even greater cost effectiveness is expected, as lessons learned areincorporated, and coordination is institutionalized at the province level through the CCTP.

3.3 The participatory M&E system and socio-economic impact studies will place due emphasis onassessing the impact of the project on vulnerable groups.

4. Institutional and implementation arrangements

miplementation Period

41 The Program is scheduled to be implemented over a fifteen-year period, of which the proposedf;ve-year Project represents only the first phase. In line with the flexible approach taken under APL, theactual duration of each phase will depend on the progress made in attaining the agreed targets andmreeting the stipulated triggers. Subsequent credits will be extended in conformity with agreed milestonesand triggers.

pogram (PNDRD) Coordination and Monitoring

4.2 At the national level, the PNDRD supports the implementation of the Government's decentralizedrural development strategy as presented in the Government's Policy Letter. Several projects/programs,vvith the common central objective of supporting rural decentralization and local development but withdifferent designs, are currently in execution within this overall framework. A national forum will be putir, place to evaluate the experiences and harmonize various approaches to decentralized rural development

t-ie Cadre National de Coordination et de Concertation du Developpement Rural Decentralise . Therorum will play an important role in the exchange of ideas and experiences, the medium-term goal beingthle adoption of best practices by all donors and the evolution of the various on-going operations towards as;ngle national program. The Project will provide operating support to this National Forum.

4.3 At the regional level, the Project supports the gradual transfer of responsibility to the DREP for theexchange of ideas and experiences between donors-supported projects, Government technical services,and civil society.

4.4 Within each province, a framework for coordination among all development partners in theprovince will be established in the form of a Cadre de concertation. The composition and mandate of theCadre de Concertation Technique Provincial (CCTP) is described in the Government's Policy Letter.The Project will provide operating support and basic equipment to enable the Cadre de concertation tocarry out their mandate in all provinces.

Project Management, Administration and Monitoring

a5 Project Oversight: A Project Steering Committee will be established to guide Projectinplementation and review and approve the annual work program and budget. The approved workprogram and associated budgets and procurement plans will be submitted to IDA after approval by theSteering Committee.

4.6 Project Management: Day-to-day management of the Project will rest with (i) a nationalcoordination unit and (ii) operational units established at the provincial level. The main responsibilities of"he national project coordination unit (Coordination Nationale du Projet, PCU) will be to:

(i) manage the work program at the national level,

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(ii) ensure that funds from Government and donors' contributions are made available to thebeneficiaries in a timely manner and in accordance with the signed agreements with each donor,

(iii) provide technical support to the provincial operational units during the start-up phase of theProject,

(iv) organize workshops at the national and regional levels in support of the PNDRD; and

(v) monitor and evaluate the implementation of the work program and its impact, and report resultsto various stakeholders.

4.7 The Project will establish 19 provincial operational units (Equipes Operationnelles, EO) to coverthe 26 provinces of direct intervention. The responsibilities of the provincial EOs will be to (i) assist theCCTP in the coordination of the Program at the provincial level; (ii) provide support to the CCTP in itsreview of village/inter-village or terroir level development plans; (iii) enter into contracts with andsupervise the service providers hired by the Project to execute specific activities (e.g. training ofbeneficiaries, participatory needs assessments, project proposal formulation, execution of the annualinvestment plan); and (iv) implement the monitoring and evaluation system at provincial level.

4.8 Project Monitoring: Project execution, output and outcome data will be collected at thecommunity level by the beneficiaries themselves. To do so, they will receive training from the project.The data collected by the beneficiaries is computerized, analyzed and aggregated by the EOs and madeavailable to the CCTP and the DREP. At this level, the information is used to review the work program(supervision, approval of new investment budgets, ...), improve coordination between developmentprojects, NGOs and public agencies, and monitor development impact. A copy of the report is providedto the beneficiaries for information and feedback. After initial compilation and analysis by theEOs, thedata is forwarded to the monitoring and evaluation staff at the PCU to be further aggregated and analyzedat the national level. The findings will be used in the progress report and the national and regionalworkshops.

Cofinancing Arrangements

4.9 The project will be co-financed by a number bi-lateral and international donors. IFAD's co-financing will be on a pari passu basis. The Government of Denmark and the Government of theNetherlands will provide co-financing to support specific components of the Project (the M&E and thetraditional energy components, respectively). The Global Environmental Facility (GEF) will complementproject activities by providing incremental resources to support the community-based aspects of theGovernment's environmental and natural resource action plans through two operations currently underpreparation -- the Sahel Integrated Lowland Ecosystem Management Program (SILEM) and the NationalNatural Ecosystem Management Program (PRONAGEN).

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D. Project Rationale

1. Project alternatives considered and reasons for rejection

Centrally Executed Approach

1.1 Early rural development projects, and natural resource management projects, tended to rely oncentrally planned and command-and-control approaches (the environment, for example, was a resource toprotect from farmers' encroachments and state agencies were in charge of implementing conservationstrategies). Their success was mixed at best, because of the lack of ownership and participation ofbeneficiaries in decision-making and implementation. A new generation of projects now places theresource user at the center of the equation and is designed to provide incentives for the user to maintainthe environment. This change in paradigms has meant a shift from conservation strategies towardsparticipatory and decentralized approaches. The CBRDP is part of this new generation of projects andwill strengthen the capacity of communities to plan, finance, implement, and manage sustainable localdevelopment.

"Classic" Community-Based NRM Approach

1.2 The Environmental Management Project (PNGT), a Community-Based NRM Project, was alandmark in Burkina Faso for developing and systematizing the "Gestion des Terroirs" approach. Thisapproach turned over part of the responsibility for managing natural resources to the communities whoselivelihoods depended on it. It developed an array of participatory techniques to involve communities inneeds identification, priority setting, and implementation. The participatory approach proved to besuccessful but the project was confronted by a number of limitations:

(i) The devolution of responsibilities to communities was incomplete and the project retainedimportant implementation responsibilities on behalf of the communities;

(ii) The project had difficulty in scaling-up, partly due to the centralization of responsibilities and theextensive use of project personnel to implement capacity building activities;

(iii) The strategy developed by the PNGT was not fully inscribed in the national institutionalframework and this raised questions about its sustainability; and

(iv) The participatory approach raised expectations that the project could not fulfill since it was onlyfocused on NRM activities.

1.3 Pilots implemented under the PNGT and during the preparation of the CBRDP clearly indicated thepath to follow. Four main adjustments were made to the original project design: first, a decision wasmade to shift the responsibility for the execution of investment projects from the PCU to the beneficiarycommunities; second the menu of investment options offered by the Project was broadened so as toinclude basic social infrastructure and, thus, better respond to community demand; third PCU's role hasshifted from direct execution to the coordination of intermediaries responsible for the execution, withincreased emphasis placed on institutional capacity building of both public and private service providers;and fourth, the Project has inscribed itself into the national decentralization strategy and will become anactive instrument of its implementation.

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Sectoral Program Approach

1.4 Another option was to implement the program through a series of separate sub-sector nationalprojects. This option could perhaps achieve some efficiencies in execution but would lose the synergies ofan integrated community-based development approach. It would be difficult to foster ownership bycommunities since they would not be prioritizing sub-projects. Furthermore, such an approach wouldneither encourage, nor support, the emergence of efficient and accountable local Government.

Faso Baara Approach

1.5 Implementation of projects using Faso Baara (public executing agency for civil works) mayachieve speed and efficiency in executing large, standardized types of infrastructure. This institutionalarrangement, however, is not suited for community-based demand-driven investment programs. It relieson large contractors who have difficulty dealing with the numerous small-scale and varied requests fromrural communities. In addition, such an agency does not foster local empowerment and capacity buildingand, therefore, limits community ownership and the long-term sustainability of investments.

2. Major related projects financed by the Bank and/or other development agencies(completed, ongoing and planned)

Latest SupervisionSector Issue Project (PSR) Ratings

(Bank-finenced projects only)Implementation Development

Bank-financed: Progress (IP) Objective (DO)

Rural Development/Agriculture Environmental Management Project, PNGTI (completed); S S

Food Security Project, PSAN (completed); S S

Second Agricultural Services Development Project,

PNDSAII (ongoing); S S

Private Irrigation Project, DIPAC (ongoing) S S

Health Health and Nutrition Project (on-going) S S

Population and AID Project (on-going) S S

Environment Sahel Integrated Lowland Ecosystem Management N/A N/A

(GEF financed, Bank implemented) Program, SILEM (under preparation)

National Natural Ecosystem Management Program,

PRONAGEN (under preparation)

Education Post-Primary Education Project (ongoing) S S

Transport Transport Sector Adjustment Credit (ongoing) HS S

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Other development agencies:

AFD/French Cooperation Local Development Projects (ongoing)

IFAD (Intemational Fund for Soil and Water Conservation/Agro-Forestry I and 11,Agriculture Development) South West Rural Development Project, Rural Micro-

enterprise Support Project

EU Support to Decentralization (planned)

ACDI Pilot Environmental Fund (ongoing)

Swiss Cooperation Rural Equipment Fund (FEERI completed, FEER2

planned)

Dutch Cooperation Local Development Projects, Support to ProfessionalOrganizations, Support for Rural Financial Services ActionPlan, Support for National Soil Fertility Action Plan (on-going)

DANIDA Local Development/NRM Projects (PGRN-SY, PDR-B,PGRN-K), Suppon to Rural Financial Services ActionPlan, Support to Professional Organizations (ongoing)

GTZ Training Program for Locally Elected Officials (ongoing)

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design

Community-Driven Development

3.1 In many countries, limited Government success in managing natural resources, providing basicinfrastructure, and ensuring primary social services has led to the search for alternative institutionaloptions. One of these options is participatory community-driven development. The substantialexperience accumulated to date of what works and does not work, has been drawn upon in designing theproposed program. In particular, for the Government and outside donors to induce community-drivendevelopment on a large scale requires a substantial investment in local organizational capacity andsupport to community control and decision making. Experience also shows that community-drivendevelopment does not automatically lead to the inclusion ofmarginalized groups -- their inclusion mustbe highlighted as a goal of the program and specific actions undertaken. Lessons will be drawn fromIFAD's experience in targeting these groups. Finally, successful community-driven development ischaracterized by five main factors: local organizational capacity or the existence of viable communitygroups, the appropriate fit of technology to community capacity, effective outreach strategies, clientresponsive agencies, and enabling policies and Government commitment. All these factors have beentaken into account in the design of the proposed program. Specific features related to demand-drivenfunds, local institutions and representativity are discussed hereunder.

Demand-Driven Funds

3.2 Experience regarding procedures and mechanisms for successfully and sustainable community-level investments shows that sub-projects must be identified, planned, implemented and managed at the

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local level; procurement procedures have to be simplified and ex-ante controls replaced by ex-post audits;

and investments must be co-financed by the beneficiaries (according to an agreed-upon matrix that adjuststhe level and nature of co-financing according to the type of investment and local poverty levels). TheCBRDP incorporates good practices from a range of international experiences on local investment funds.

Decentralization and Local Institutions

3.3 A key to successful and sustainable operations is to build on the country's institutions. Burkina

Faso's recent reforms on decentralization and land tenure have been taken into account in the design ofthe CBRDP. The Project will prepare and pilot rural decentralization by strengthening local institutions'capacity to manage their own development in an equitable and sustainable fashion. The Project also gives

content to the land tenure framework by working with the CVGT/CIVGT and consolidating their role.Additionally an approach to resolving land tenure conflicts and promoting tenure security will be tested.

Representativity and Accountability

3.4 Lessons learned from participatory strategies show that all efforts at devolving authority and

resources to the local levels will fail if local institutions (traditional and modern) are not sufficientlyrepresentative of the rural population and accountable to them. The Project has developed an array ofmethods for participatory planning to ensure that all segments of village society are given a voice. Thesemethods are being further refined based on the outcome of the social assessment carried out duringproject preparation. Future rural municipalities will build on these participatory tools and thus developlocal Governments that are more accountable.

4. Indications of borrower commitment and ownership

4.1 The Government is committed to decentralizing investment decisions to the rural municipality andprovincial levels. The legal framework has been put in place and the creation of rural municipalities isscheduled to take place progressively over the next five to seven years. The Program will be a vehicle for

piloting rural decentralization and facilitating its successful implementation.

5. Value added of Bank support in this project

5.1 The Bank is in a unique position to support Government policy and institutional reforms (such asdecentralization and fiscal transfers) on a national scale, and to establish the necessary linkages andsynergy between these reforms and investment activities. In addition, the Bank is able to support long-term institutional reforms and investment programs through APLs.

E. Summary Project Analysis(detailed assessments are in the Project file, see Annex 8)

1. Economic(see Annex 4)

1.1 Because of the demand-driven, dispersed and flexible nature of its activities, the Project doesn'tlend itself to the standard quantitative cost-benefit or least-cost analysis. The ex-ante economic analysisis therefore couched largely in qualitative terms. However, the economic rationale of the Project remainsstrong and it is possible to demonstrate that (a) the Project will generate substantial economic benefits;and (b) compared with alternative approaches, the approach adopted by the Project improves the cost-efficiency and sustainability of the investments and activities undertaken.

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1.2 The design of the Project incorporates mneasures to maximize the economic benefits. First, theProject Implementation Manual will include strict eligibility criteria for specific investments to ensurethat they are economically justified (e.g. number of people served by spot improvement of a villageaccess road, distance from next water point for construction of a well or borehole, etc.). IRR forindividual subprojects, least cost alternatives, and cost per beneficiaries will be used where feasible orapplicable, for the larger sub-projects. Second, a carefully designed monitoring and evaluation systemwill trace the economic impact of the Project, by collecting relevant indicators from beneficiary villagesbefore and after investments. An external technical review will be carried out annually to assess, on thebasis of a representative sample, the technical quality of the sub-projects, their cost, and theirsocio-economic impact. A baseline household-level survey will allow quantitative assessment of thedevelopment impact of the Program as a whole.

1.3 Economic benefits: The main economic benefits of the Project can be summarized as follows:

* Investments in soil and water conservation infrastructure: Natural resources (land, forests, pastures,lakes) are the principal productive assets of the rural poor. Efforts to reverse the degradation of theresources and improve their productive capacity have a large payoff in terms of current and futureincome generation. Research from various parts of the Sahel shows positive net returns over the longrun to natural resource management (NRM) investments. For example, the net present value oftechniques such as composting, windbreaks, or rock bunding are all around US$ 700 per hectare.INERA research in the Bazega area of Burkina Faso shows an increase in sorghum yields of 85kilograms per hectare using erosion control techniques; an increase of 362 kilograms per hectareusing organic fertilizer and composting techniques; and an increase of 824 kilograms per hectare (adoubling !) using a combination of the two techniques.

* Maintenance and rehabilitation of rural roads. Better roads will increase access to markets and socialservices, such as health and education. Better access to markets will generate economic benefits frommarket transactions; access to social services increases productivity, which in turn contributes toincreased income.

* Investment in safe water, education and health care services: The impact of improved access tosocial infrastructure (e.g. safe water, education, health facilities) has both short-term and longer-term(generational) impacts in terms of improved health, nutrition and labor productivity. They contributeto poverty reduction in the short-term by improving the quality of rural life, and in the long-term,through a more productive work force, to overall economic development. Access to clean water, byimproving the health of rural population and reducing the time spent (especially by women) intransporting water, will contribute to poverty alleviation and significant improvement in theproductive capacity of rural people, particularly women. The benefits of improved water supplies(quantity and quality) on health outcomes are well documented. These health benefits in turn lead tolabor productivity and income gains via a variety of direct and indirect pathways.Directly, healthierindividuals are able to spend more 'effective' hours in wage and farm work and fewer 'sick days'releases labor for productive activities. Indirectly, improved health (a) decreases the amount of 'caretime' spent with sick relatives thereby releasing labor for productive activities, (b) decreases the timerequired for complementary activities such as fuetwood collection which might be necessary whenwater is contaminated, and (c) may alter the portfolio of income generating activities undertaken bythe household since individuals with health risks might engage in lower-output activities that are lesssensitive to labor supply interruptions (Hoddinott, 1997). One study estimates the labor productivitylosses due to stunted growth at 9 percent (Pinstrup-Andersen et.al., 1996). In addition, there are aseries of second round effects to improved health. For example, higher incomes lead to increasedexpenditures on commodities that improve health (e.g. higher quality diets) and expenses associated

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with being sick decrease. Studies also show that better health also leads to direct improvements in

schooling outcomes (Behrman, 1996).

* Employment creation: The Project will contribute to employment and income generation in rural

areas: (i) directly, through improvement of the productive capacity of the natural resource base andinvolvement of local artisans and village workers in the construction of basic infrastructure fundedunder the LIF; and ii) indirectly, through the new and/or additional economic opportunities generatedby road improvement and. improved capacity for economic activity due to better health and watersupply. Growth multiplier research in Burkina Faso indicates that each dollar of additional incomegenerated in the agricultural sector will generate an additional US$ 1.90 of income in the localeconomy through the stimulative impact of spending on local goods and services (Delgado, Hopkinsand Kelly, 1998).

1.4 Cost-efficiency and sustainability: The Project has been designed to enhance cost-efficiency andsustainability. Efficiency gains, due to increased relevance of investment decisions, are expected to bederived from the decentralized decision-making and implementation process. Experience with investmentfunds for decentralized rural development projects in Latin America and Asia has shown thatcommunities generally choose investments which can be expected to have a very high rate of return, suchas water supply, rehabilitation of roads and schools. In addition, decentralization of decision-making notonly creates incentives to keep investment costs low and the quality of service delivery high, but alsoincreases the likelihood of investment sustainability. The Project will promote cost-efficiency throughcontractual, rather than hierarchical, relationships of beneficiaries both with the administrative staff incharge of managing the LIF and with other technical support agencies. The standardization of the small-scale civil works project documents, technical designs and unit costs will simplify the preparation andevaluation of projects under the LIF, facilitate procurement, and provide a technical and financialreference for local communities. Such standardization encourages participation by poorer communitiesand reduces bottlenecks in the sub-project cycle.

2. Financial(see Annex 4)

2.1 The impact of sub-projects on recurrent costs at the village level will be evaluated during theiridentification and provisions will be made to ensure the operation, maintenance and renewal of thoseinvestments. In some cases the beneficiaries will assume the recurrent costs directly (e.g., productiveinvestments, water supply); in others, adequate provision will be made in the budget of the responsibleministry (e.g., schools, health posts). Emphasis will be put on cost-minimization measures and onanticipating additional funding requirements to ensure investment sustainability.

Fiscal Impact

2.2 The long-term objective is for rural municipalities to be able to raise their own fiscal resourcesfrom increased local economic activity and consumption, and thereby contribute to the funding of theirlocal development plans reducing the need for fiscal transfers from the central Government. In the short-to-medium term, fiscal transfers from the central Government will be needed to cover what thebeneficiary contribution does not. It must be recognized that the long-term capacity-building needs of therural communities of Burkina Faso will require considerable support, and that such support will need tocome largely from the outside, including support to cover the operating costs of the Program andintermediaries. Such operating costs are part of the investment required to build institutional, andultimately fiscal, sustainability. The goal here is to make large transfers to destitute areas over anextended timeframe.

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3. Technical

3.1 Under the Project, responsibility for sub-project identification, preparation and implementation willrest with villages and eventually rural municipalities. The issue of technical capacity and sub-projectquality is addressed in the following plan:

* The guiding premise for the Project is that there is considerable latent technical and managerialcapacity at the local level. The pilot phase activities, conducted during project preparation, haveshown that this capacity is released by empowering communities through a participatory process.Service providers (e.g., NGOs, private sector operators) will be recruited to assist theCVGT/CIVGT in elaborating participatory local development plans and annual investment.

* The Project will emphasize the promotion of sustainable mechanisms for the rehabilitation andmaintenance of rural infrastructures. A specific village committee (Comite d'Action Specifique,CAS) will be set up for the sub-project to manage project construction and maintenance. Theywill be in charge of users fee collection and mobilization of counterpart contributions.

* The Project provides the option for communities to use a portion of the resources allocated by theLIF, to finance the recruitment of technical expertise to assist in the design, supervision and finalreception of works to ensure the quality of the sub-project. The Project will also, under itscapacity building component, provide a variety of training programs at the village level (for theCVGT, CIVGT, and CAS) and at the province level (for the CCTP) to upgrade their managerialand technical skills.

3.2 A technical assessment of key components was carried out as part of Project preparation; reportscan be found in the Project File. The outcome of these assessments are the precise technical criteria(norms and standards) for sub-projects, which are included in the Project Implementation Manual. Inaddition, the Project will establish collaborative protocols with line ministries to ensure appropriatetechnical supervision of the design and execution of sub-projects in their respective sectoral plans. It isexpected that most village and inter-villageAIPs will consist of basic infrastructure that local artisans andentrepreneurs have sufficient knowledge and experience to execute. The design and execution of theseworks will be facilitated by the use of standard design plans. Project staff will undertake random qualitychecks of sub-project execution and independent technical audits will be undertaken.

4. Institutional

4.1 Executing agencies: The Project Coordination Unit (PCU) demonstrated its capacity to satisfactorilyexecute a village investment program during the predecessor project. One of the lessons learned was theneed to extensively engage the services of others: Government agencies, private service providers,NGOsand beneficiaries. This allowed the predecessor project to triple its coverage in a short period of time.Scaling up Project activities, from the level of 400 villages over a five year period to 2,000 over the sameperiod, to meet the poverty reduction goals of the Program will pose a significant challenge for the projectcoordination unit (PCU). It will require a large increase in activities over a relatively short period of time,which in tum will require selecting and training new service providers. Thus there is some risk of start-updelay. In order to minimize these delays, the PCU has started the process of identifying potential serviceproviders. Institutional strengthening of the PCU is required in the areas of financial management, andmonitoring and evaluation in order to undertake the program. These issues are being addressed usingproject preparation funds, a PHRD grant, and the support of DANIDA. A participatory monitoring andevaluation will be tested and put in place prior to project effectiveness. The financial management systemis discussed above. The PCU has satisfactorily proven its ability to applyIDA's procurement proceduresunder the predecessor project. Its ability to execute the expected increase in the work program will be

29

closely monitored during project implementation and additional staff may be hired on a contractual basiswhen the procurement volume so warrants. An implementation manual has been prepared detailingimplementation, procurement, financial, administrative, and monitoring and evaluation procedures.Finalization of this manual is a condition of effectiveness.

4.2 At the regional level, the Regional Directorates of the Ministry of Economy and Finance (DREP)will receive project support to allow them to increasingly take on the donor coordination activities nowcarried out by the PCU. As an institution they are still relatively weak. The Project therefore includestraining activities to reinforce their capacity to coordinate rural development activities at the regionallevel, and financial support to carry out these coordination activities. It is expected that over time theywill also play an increasingly active role in Project monitoring and supervision.

4.3 At the provincial level, the CCTP will be reinforced through training, operating budgets andvehicles and equipment. The CCTP is the provincial coordination mechanism for all local developmentactivities. As such it plays a vital role in the review process of socio-economic investments such asschools and health centers, and in the selection of villages that will participate in the investment program.It also plays an important role in Project monitoring, supervision, and reception of civil works asrepresentative of the Government. To implement the Project and assist the CCTP, small operationalteams will be created in 19 provinces. These teams will select and train the agencies (private or public)assisting in project implementation and will supervise their activities. The main constraint will be to findsufficient numbers of qualified staff and service providers. Identification of service providers will startprior to effectiveness and adequate training has been included in the project to ensure that sufficientcapacity exists. Procurement at the provincial level for project related activities and for the provincialinvestments under the FIL will be executed by the provincial teams. Their procurement capacity willinitially be weak. However, project activities will be scaled up gradually to match the implementationcapacity of the EO.

4.4 The investment part of the Project (the FIL) will be executed to a large extent by the beneficiariesthemselves. Tests with beneficiary executed investments were satisfactorily concluded during thepredecessor project and the need to strengthen capacity of village organizations was highlighted as a maindeterminant of future success. At present, the villages have weak institutional capacity to implement theactivities proposed under the program. Capacity building activities of village organizations, in particularthe CVGT and its CAS, are therefore an important part of the Project's design. The capacity buildingactivities will also lay the groundwork for the future communes rurales, which is an integral part ofGovernment's decentralization strategy.

5. Environmental: Category B (Partial Assessment)

5.1 The Project has a category 'B' rating. In fulfillment of the World Bank Environmental Assessmentguidelines OP/BP/GP 4.01, and in conformity to the recently adopted national environmental impactassessment legislation, the borrower prepared an environmental analysis. This analysis defines theproject environmental dimensions, and identifies measures needed to prevent the planned activities fromcausing ecological damage and social costs. It was prepared in consultation with a number of NGOsworking on environmental and natural resource management issues in Burkina Faso and has beenavailable publicly in country since July 1999.

5.2 The EA classifies the sub-projects in two major categories. The first one consists of investmentswith positive or relatively minor negative environmental impacts (e.g., forest management, maintenanceor repair of an existing physical work, construction of a building with a negligible footprint, etc.). Thesecond category consists of sub-projects that may have a negative environmental impact. This categoryincludes: rural roads, feeder roads through forest zones, tracks and pathways in pastoral zones, small-

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scale dams, small piped water systems for large villages, wetlands and ecosystem management, andrangeland management.

5.3 Environmental Management Plan. For sub-projects with a potential negative environmentalimpact, four types of interventions are envisioned to reduce or eliminate the possible adverse physicaland/or socio-economic outcome. These activities are included in the Project design and built into the sub-project investment costs:

* Planning of investments: For any sub-project with potential negative environmental impacts asystematic review is conducted at the planning stage in order to predict the magnitude of these effects.Clarifying the relationship between the sub-project and its physical, economic, and socialenvironment at the outset makes it easier to control or eliminate the adverse impacts. The EA hasprepared a set of guidelines that will help the environmental screening and scoping of sub-projectssubmitted for funding. The investment phase will begin only after the EA is completed, and effectivemeans for controlling negative environmental impacts are identified and properlycosted. The scopeand level of detail of the EA must match the nature and scope of the sub-project.

* Implementation: During the investment phase the environmental mitigation measures identified in theEA study are implemented. These are measures that effectively eliminate or significantly reduce thesub-projects' adverse environmental impacts. They may include relocating the project to a moreappropriate site, modifying the design or construction techniques, changing the implementationperiod, or undertaking specific investments to rehabilitate the environment. The EA has prepared aset of generic mitigation measures based on the lessons learned from the previous project. This setwill serve as a guide for formulating site-specific measures.

* Monitoring & Evaluation: The monitoring and evaluation system will include basic tools forassessing whether the identified mitigation measures have been implemented and are effective. Thesetools include the items to be monitored, the methodology used, and the assignment of responsibilities.The development of indicators is a condition for ensuring that environmental impact management isan integral part of the standard program of monitoring practices. The monitoring program will be tiedin with the existing GIS database developed under the previous project, and will allow the monitoringof changes due to project activities at national, provincial and local levels over the short, medium andlong-term.

* Capacity Building: EA legislation is new in Burkina Faso and national capacity in conducting EA isembryonic. Helping to build the administrative and technical capacity necessary for effectiveenvironmental assessment is therefore a key priority. A well-designed EA training module will bebased on a thorough review of the roles of all the stakeholders, including project administrators, EAteams, local consultants, line ministries,NGOs, technical experts, and local communities. On-the-jobtraining will play a critical role during this first phase of the program. In order to increase rapidly thecompetence of the operational staff, EA technical support mechanisms will be put in place at thebeginning of the project.

6. Social

6.1 A social and institutional assessment was carried out as part of Project preparation, with the goal ofunderstanding the social dynamics at the household, local institution, and community levels andmaximizing the impact of the Project on the poor and traditionallymarginalized groups. Key lessons andconclusions were fully integrated into the project design:

31

* Institutional Development: There is no conflict between the institutions promoted by the PNGT (i.e.,the CVGT and the CIVGT) and traditional community-level organizations. On the contrary,traditional structures that will be represented by the CVGT/CIVGT will find in these a beginning offormalization. Very importantly, the social assessment shows that "communities" of villages exist,tied together by social, cultural, kinship, religious and market relationships. This provides the basisfor encouraging villages to regroup and eventually to form rural municipalities.

* Vulnerable Groups: One of the critical issues in bringing the entire community together to select,finance, and implement subprojects is how to ensure an equitable and representative decision-makingprocess. Since most Burkinabe cultural groups are very stratified -- organized around caste, age,kinship, and gender divisions -- the LIF will use participatory planning and animation techniques toensure that vulnerable groups (e.g., women, herders, youth, casts) are fully included in the decision-making process. Moreover, village-level committees will include representation from vulnerablegroups. In addition, the Project's land tenure pilot operation is specifically designed to develop amethodology to enhance land access and security for vulnerable groups. Once this methodology isestablished, the Project will promote its implementation at the national level.

6.2 The project has been designed to be broadly participatory at all levels, and first and foremost at thecommunity-level. Well known participatory needs assessment techniques will be applied to involve themaximum number of beneficiaries in sub-project selection. The above mentioned social assessment willpermit to refine these techniques.

7. Safeguard Policies

Policy Applicability

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Yes

Natural Habitats (OP 4.04, BP 4.04, GP 4.04) Yes

Forestry (OP 4.36, GP 4.36) No

Pest Management (OP 4.09) No

Cultural Property (OPN 11.03) No

Indigenous People (OD 4.20) No

Involuntary Resettlement (OD 4.30) No

Safety of Dams (OP 4.37, BP 4.37) No

Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) No

Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) No

Provisions made by the project to ensure compliance with applicable safeguard policies are as follows:

* Environmental Assessment: The project is classified as Category B. The EA examines the project'spotential negative and positive environmental impacts and recommends measures needed to prevent,minimize, mitigate, or compensate for adverse impacts and improve environmental performance inline with BP/GP/OP 4.01 (as discussed in section 5 above).

* Natural Habitats: A positive natural habitat conservation outcome is expected through a collaborativeagreement between the Project and two Global Environment Fund (GEF) operations currently under

32

preparation, the Sahel Lowland Ecosystem Management Program (SILEM) and the National NaturalEcosystem Management Program (PRONAGEN). The incremental GEF funding will finance localcapacity building and LIF sub-projects related to the conservation of natural habitats andbiodiversityas well as land restoration.

* Forestry: The project supports forestry activities that are environmentally sound (e.g., reforestation ofdegraded watersheds or improved communal forest management). In line with OP 4.36, theseactivities are included on the basis of their own social, economic, and environmental merits.

* Pest Management: The project does not involve the direct promotion or support the use of pesticides.In the few cases where the Project might recommend the need of pest control, an Integrated PestManagement approach will be used (biological control, cultural practices, and the use of cropvarieties that are resistant or tolerant to the pest) that will minimize the need for chemical pesticides.The required mitigating measures are detailed in the implementation manual.

* Cultural Property: The project will not have a negative impact on any national or internationalcultural heritage or property.

* Indigenous People: Not applicable.

* Involuntary Resettlement: The project will not involve any activities that displace peopleinvoluntarily.

* Safety of Dams: The project will only support the construction of small dams of less than 15 meters inheight, such as farm ponds or local water retention structures. Generic dam safety measures designedby qualified engineers will be used in accordance with BP 4.37. The project will not finance anydams that are 15 meters or more in height and pose particular design complexities, as these do not fitinto the scope of the project and in general will cost more than the maximum allowable cost of aproject supported activity.

* Projects in International Waters: The project will not support any activities in the following types ofinternational waterways: any river, canal, lake, or similar body of water that forms a boundarybetween, or any river or body of surface water that flows through, two or more states, whether Bankmembers or not; any tributary or other body of surface water that is a component of any waterwaydescribed above; and any bay, gulf, strait, or channel bounded by two or more states or, if within onestate, recognized as a necessary channel of communication between the open sea and other states--andany river flowing into such waters.

* Projects in Disputed Areas: The project area does not include any disputed territory as defined inBP/GP/OP/7.60.

F. Sustainability and Risks

1. Sustainability

1.1 As previously noted, institutional sustainability of development actions is the main objective of thefirst phase of the Program. Considerable resources will therefore be directed to institutional strengtheningat all levels. At the sub-project/community level, sustainability also depends on the degree to whichbeneficiaries have ownership of the Project. This sense of ownership is an essential goal of theparticipatory process. The contribution required from beneficiaries, on average 20 percent in cash or in

33

kind, helps achieve this sense of ownership and therefore supports the sustainability of the investment.Where essential and feasible, community contribution for recurrent maintenance will be a condition ofsub-project funding.

2. Critical Risks(reflecting assumptions in the fourth column of Annex 1):

RiskRisk Rating Risk Minimization Measure

From Outputs to Objective

Goverment commitment to decentralized Ownership of the Program by the Government is high

decision-making and resource transfer to rural M (preparation by National team; high level Steering Committee

communities and their grouping (future rural with representatives of all major ministries involved)municipalities) is not sustained

From Components to Outputs

A training program for service providers is included, to teach

them the community-based land management/local

Competent service providers are not available S development approach. A roster of competent service

providers is being compiled as part of the preparation to assess

availability of skills required for Project execution

The Project execution manual sets clear rules and criteria for

Capacity to upscale project at desired rate is sub-project selection and approval and for processing rules;

capstraciteby t cupleprsojet atpdesired rate is model contracts and technical standards are included. This

contation by ceum es allows delegation of approval and supervision to

intermediaries, thereby accelerating the pace of projectexecution.

Development of local capacity is slower than The Project places heavy emphasis and resources on training

expected and providing technical back up to community organizations

Technical back up is inadequate M Model agreements and funding are provided for hiring public

and private technical service providers.

Marginalized social groups are excluded from M Social impact assessment has recommended safeguards, e.g.

project investments social control mechanisms will be established

The approach proposed under the Project has been tested

Overall Risk Rating M successfully elsewhere and in Burkina, and presents thereforerelatively low risks. Notwithstanding, the scale of

irnplementation envisaged will be a challenge.

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects

3.1 The Project is based on a previous operation that was very successful and has been preparedthrough a highly participatory process, involving a wide range of local stakeholders. The risk ofcontroversial aspects has thus been greatly reduced. The Project's monitoring and evaluation system,focusing on socio-economic and environmental impacts will be instrumental in defusing any unforeseenissues.

34

G. Main Credit Conditions

1. Effectiveness Conditions

The following conditions will be conditions of effectiveness of the IDA credit:

(a) the Borrower has established the Project Steering Committee in a form and with functions,staffing and resources satisfactory to the Association;

(b) the Project Steering Committee has approved: (i) the Project Implementation Manual in formand substance satisfactory to the Association; and (ii) the work program for the first ProjectYear;

(c) the Borrower has recruited the following key staff to the PCU, namely (i) a Project coordinator,(ii) a financial management specialist assisted by two accountants, and (iii) a monitoring andevaluation specialist, following an open and transparent selection process and withqualifications and experience satisfactory to the Association;

(d) the Borrower has (i) opened the Project Account; and (ii) paid into the Project Account theInitial Deposit;

(e) the Borrower has installed an accounting system, a financial management system, and amonitoring and evaluation system for the Project, in form and substance satisfactory to theAssociation;

(f) all conditions precedent to the effectiveness of the IFAD Loan Agreement, other than thoserelated to the effectiveness of this Agreement, have been fulfilled; and

(g) the Borrower has appointed the independent auditors, under terms and conditions acceptable tothe Association.

2. Dated Covenants

The following will be a dated covenant:

(a) The Government has agreed to establish the National Forum for Decentralized RuralDevelopment (Cadre National de Coordination et de Concertation du Developpement RuralDkentralise') in a form and with functions, staffing and resources satisfactory to theAssociation by March 31, 2001.

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H. Readiness for Implementation

Q la) The engineering design documents for the first year's activities are complete and ready for thestart of project implementation.

X lb) Not applicable.

DI 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

§3 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

%3 4. The following items are lacking and are discussed under loan conditions (Section G):

(i) The installation of a financial management system and a monitoring and evaluation systemmust be completed and key staff recruited as a condition of effectiveness; and

(ii) The draft Project Implementation Manual must be finalized and approved by the Associationas a condition of effectiveness.

I. Compliance with Bank Policies

s 1. This project complies with all applicable Bank policies.

D 2. The following exceptions to Bank policies are recommended for approval. The project complieswith all other applicable Bank policies.

Jane C. Hopkins Jean-Paul Chausse Hasan A. TuluyTeam Leader Sector Manager Country Director

36

Annex 1: Project Design Summary

MoRnitoliqg &hi00Serarcy of Objcivs : Keyt; PefraneIdicators0' 2 Critial upt 0;0 Wions 00

Reduce.poverty and improve the * Poverty Profile * Political stabilityReduce poverty and Improve the * Incidence of rural poverty * Annual UNDP Report * Successful development andliving conditions and productive * Human development indicators * Regular country monitoring implementation of requisite sectorpotential of the rural population strategies

P0rogram Prpose: -ii Zud-ofrogram Indicator: Prga repor0l ts: (from : :Purposet0 to o)

Sustainable improvement in the * Increase in household incomes at all socio- * Participatory evaluation * Government maintains strongproductive capacity of rural resources economic levels surveys commitment to decentralized rural(natural, physical, human, financial) developmentand the emergence of a more dynamic * CVGT annual activities andlocal economy through empowered * Improvement in the status of the natural budget reports * Support for public and privaterural communities leading their own resource base (soil fertility, vegetative cover, ...) technology generation and transferlocal development process * Project reporting maintained and improved

* Increase in yields of basic food and cash cropsProgram Phasing: * Baseline impact evaluation

Phase 1: Local organizations and * Evolution towards sustainable land use patterns studiesinstitutional mechanisms established/strengthened and refined * Increase in the % of the rural population

benefiting from access to basic servicesPhase 2: Accelerated emergence ofrepresentative and participatory rural * Evolution in the volume and diversity of localmunicipalities and increased local investment funding sourceseconomic growth

Phase 3: Program consolidation and * Evolution in the diversity, quality and cost oftransition to a sustainable system of services provided at local levelfiscal transfers

* Rural municipalities established with successfulmechanisms for sustainable resourcemobilization

37

HiEeroirchy of Objectves Ke efrnsc nictr oitoringo& Critical Asumptions

Project Developaent Outcome I Impact Indicators: Project reports: (fromObjective toObjective:Pupu

Participatory local development * At least 75 percent of villages targeted in the first phase have * CVGT annual activities * Resources for rural

a large number of iomcplemented by received capacity building support and have adopted a local and budget reports development are available ina large number of local communities ~~~~~~~~~~~~~~~~~~a timely and efficient manner

progressively allowing the development plan. * Project reportingemergence of rural municipalitieswith support from functioning * At least 60 percent of beneficiary villages have representative * Participatory evaluationprovincial level coordination forums and participatory bodies assuming their role in local surveysand a facilitating regulatory, development (planning, execution and management of localinstitutional, and fiscal framework at projects) and have substantially completed their development * Beneficiary assessment

the national level. plan in a satisfactory manner (economically and socially).

* At least 30 percent of villages have been regrouped into inter-village development structures that have already undertakensub-ptojects in common.

* 75 percent of target provinces have a functioningrepresentative coordination body (bringing together the state,representatives of the local community and developmentpartners) providing sound coordination of available resourcesand quality services to support local development efforts.

* The decentralization law is being implemented satisfactorily.

* A functioning national forum has made substantial progresstowards harmonization of rural decentralized developmentapproaches.

* Plans for decreasing the central administrative structure of theProject have been developed and partially implemented.

38

Evaluation C~~~riitica Asnitdu

t; m #; tAi*$ghwntis 3; nI 0 tV-~~~~~~~~~(ro Ouput t

(1) Local capacity (organizational, * # of beneficiary villages with at least 75% of their annual * Participatory evaluation * Government carries outmanagerial, financial, and investment plan satisfactorily completed (quantity and quality) surveys commitment to reformstechnical) improved

* # of representative and participatory CVGT/CIVGT * CVGT annual activities * Territorial administration andestablished, trained and satisfactorily functioning and budget reports regional elected Governments

do not interfere in LIF* # and type of beneficiaries having received literacy training * Project reporting funding and operation

(2) Local investments realized and (2) Local investment fund 0 Effectiveness of training andsustainably managed awareness programs on

* 75% of local investments realized are technically sound and decentralization andcost effectively produced participatory processes

a Local banks and financialinstitutions are available tochannel LIF funds

(3) Institutional capacity built at (3) Institutional capacity building a Availability of counterpartprovincial and national levels for fundingdecentralized rural development * # of representative and participatory provincial coordination

committees established, trained and fumctioning a Local development plans* Provincial coordination committees reflect a transparent and

established and/or revitalized a # of service providers trained and 'in-demand' participatory process

* Capacity of service providers * At least 75% of the villages covered by the project havestrengthened received sound capacity building support

* A functioning communication & * # of national thematic working groups functioning effectivelyknowledge sharing network to build and share knowledge on approaches to decentralizedbetween local, provincial and rural developmentnational level established

* % of stakeholders (NGOs, donors, CCTP, CVGT, ministries)satisfied with the quality and accessibility of informationservices provided/managed by the project

39

Hierarchy of Objectrvcs ~Key Performance Indicators Monitoring &-

Hierarchy of Objectivgs Key Performan:ee Indleators Evaluation Critical Assumptions

)utput from each component: Output Indicators: Project reports: (from Outputs toOu.t .. Objective)

(4) Land tenure pilot study (4) Land tenure pilot operation PCU at national andprovincial levels provide

* A practical methodological guide * Heightened awareness of the constraints and possible timely review and response

(toolbox) for securing land tenure solutions to tenure security at the provincial and national to CVGT annual investment

developed levels plans

* A functioning forum established for * % of stakeholders within pilot zones with a perception of * World Bank provides

building knowledge and sharing increased tenure security. sufficient resources for

experiences on approaches to tenure project supervision

securitye Decentralized decision

* A national strategy / action plan for making processes used

land tenure security drafted

(5) Administration, monitoring and (5) Project management and monitoring * Informed choice of

coordination of project investments made by

* Decrease in the time lag between CVGT contract and communities

* The administrative capacity to disbursement of annual investment fundmanage a national coverage, 'faire- * Availability of local

faire' program * # of service provider contracts satisfactorily completed within enterprises to executethe given time and budget frame works

* A functioning information systemeffectively used for project * Decrease in the ratio of administrative costs to localmanagement and monitoring investmentpurposes __.

40

Moaitoriu ~ Moii po&

Prjc omoet I SDubDIcomponent: ; Inlputs det for ea Prjc reports (rom Compone ts oOutpts

(1) Local capacity building (US$ ,000,000) (% of total) * CVGT annual activities

* Organizational and management support 13.5 11.7 and budget reports* Technical support* Literacy training* Promotion of nutrition and health education

(including efforts to prevent AIDS/HIV)

(2) Local investment fund for demand driven socio- 54.8 47.7economic infrastructure and productive assets

(3) Institutional capacity building for decentralizedrural development at provincial and nationallevel

* Support for provincial coordination (training,equipment, operating costs)

* Training of services providers (private and public) 29.9 26.0* Support to the national program for decentralized

rural development (studies, impact evaluation,workshops, thematic working groups, equipment)

* Information, environmental education andcommunication

(4) Land tenure pilot study 4.3 3.7

(5) Administration, monitoring and coordination of 12.4 10.8project

41

Annex 2: Project Description

A. Introduction

The National Program for Decentralized Rural Development (PNDRD) is fully consistent with theGovernment's overriding policy objective of reducing poverty. In pursuit of this objective, the PNDRDwill implement a participatory and decentralized strategy to improve the provision of services andinfrastructure to the rural population and to help develop the productive potential of the rural sector, whilepreserving the environment. It will promote the devolution of responsibilities to rural communities underthe Government's decentralization policy, which has been recognized as an essential element forstimulating development by placing full responsibility at the local level for the management of localdevelopment and of the natural resources essential for that development. It will contribute to the effectiveimplementation of the national strategy for rural decentralization which is intended, through a gradual andconsensus-based process, to organize people into rural municipalities. These rural municipalities will beendowed with representative and participatory bodies that will have the capacity and the resources toplan, execute and manage local affairs related to the management of their natural resources, delivery ofsocio-economic goods and services, and the promotion of productive activities.

The success of this operation will depend in part on the capacity of the PNGT to extend its activities andincrease its impact on rural poverty without compromising the quality of the participatory process orinterfering with efforts to enhance the institutional maturity of communities. To this end, the Project willbe based on a strategy that will: (i) strengthen decentralization policy by transferring resources andresponsibilities to the communities and gradually transferring the intervention unit for developmentprograms from the village level to the rural municipalities; (ii) undertake training and capacity buildingactivities for communities and for operators providing services to those communities; (iii) encourage thecontracting out of work and services; and (iv) help participants already active in decentralized andparticipatory rural development to extend the scope of their efforts, harmonize their approaches andimprove the quality of their work.

B. General description of the Program

The PNDRD will be an active instrument for preparing and implementing rural decentralization. Thescope of the task, the institutional challenges of the reforms underway, and the necessarily gradualistapproach to capitalize on national experience have led the Government to formulate a 15-year nationalprogram (2001 to 2015) divided into three phases of five years each (see Detailed Program Descriptionbelow). It is planned that: (i) during the first phase, two-thirds of the 8,000 villages in Burkina Faso willbe covered by the PNDRD with the CBRDP itself contributing direct support to some 2,000 villages; and(ii) all villages in the country will be covered by the end of the second phase. The three phases of thePNDRD are described below:

42

Phas e 1: R Suprfor vilg ognztion an .th¢ e 7 emrec of deenraized T CCrural developme7t

By tenf th phae h wNRlillave hleto velop the capacity of rural inhabitants tocanage their own resources in a sustainable, equitabl and productive manner and it will havee met theirbasic infrastructw-e + needs. The PNDRJ wil also have made a significant contribution to the debate overrua uiia ntttos h tranfe of rsposblitiesto40 rualmnicipalities,t fisca decentralizainand participatoly and,decentralized management of village and municipal assets. By the end of the first

-Ana'ement m=chanisms, and some will be ready to apply for rural munwicipalitystatus;

The provinces and, th role inprovincial plnngadilsresormfrebtganhron gappioaches and

* A te ntinalleel,th vaios pogamsan prjets il besuficenly aroniedtomake themusefl tools for implementing decentralized naional ruraldevelpmentpoliyandto make a

Duin hescodphs (2006-2010), rural* muiiaiies w0^itllgadully aeover kt from the:uteso

for municipa gl vestments. Duringsthis second phase, all vilges, ei;therindividuallyorgroupe togetherin ruraled duicripalitiesn oil brjec coveredpbyothe Pnts D(with the roject itself covering about4,000) The

proines willt pasoe supp1- rted of thei PlNning hroeafoer raldteCmmnt-aeural development.

TeProgresive aCBRPproa adopted be Gmovenments: toal depacentralizedi, ral development has theadvanstiutiag ofpt b uilding,aco s Larnd brnuad nrtyionaloptt iperatio will alsojet Amean that the

decniturinalo Cnproces cdingb imLem.ente accring t Orath one shdule. ThisstpaseofMonsitutiongald CapacintyBildng,Ln.eueScrt io prain n rjc diitain

43

Project Component 1: Local Capacity Building - US$ 11.38 million

This component consists of promotional and training activities, directed at rural communities and theirorganizations, including both structured programs and on-the-job training in the form of technical supportfor a wide range of community activities. The specific objective of the component is to strengthen thetechnical and organizational capacity of the rural population so that they can execute the activitiesenvisaged under the program, including eventual organization into rural municipalities. It has three sub-components:

(i) Village level consultations: This sub-component includes all communication, promotion, andinformation activities. It aims to disseminate the project's objectives and explain the modalities forparticipation in it. The project thus seeks to elicit a demand for participation by villages fromwhich each year a pool of about 500 candidates can be selected based on the criteria outlined in theimplementation manual. This will ensure that the project is demand driven.

Promotional and information activities will be based on modules developed and tested during thepredecessor project. They include radio announcements and theatrical presentations. Villages areselected each year as part of the work programming exercise. Selection criteria iiclude: interest,location, poverty profile, and access to investment funds from other donor and NGO supportedactivities. The final list is established in collaboration with the CCTP.

Teams made up of project and/or contractual staff will visit as many of the selected villages aspossible during the dry season (an average of 40 per team) and explain the program in detail tovillagers and traditional authorities. This will allow villagers to get more detailed and tailoredinformation and obtain direct answers to their questions. The visits seek to mobilize the interestsand participation of villagers and their traditional authorities to organize themselves at the level ofthe "terroir," which is a prerequisite for participation in the program. They will explain the processof establishing a CVGT and identify potential resource persons and local institutions in the village.This initial contact will take approximately one day per village.

Those villages that have expressed an interest in the establishment of a CVGT will receive a oneday training session on the workings of a CVGT, the election of members, the need for opennessand accountability, etc. After this initial training, the project team returns to the village to observethe elections of the members of the CVGT, and the formal installation of the CVGT. Uponestablishment of the CVGT they become eligible for more in-depth training and participation in theinvestment program.

(ii) CVGT/CIVGT training programs: This sub-component is centered on the organizational,management and technical skills required for CVGT/CIVGT (and their subcommittees, theComited'Action Sp6cifique, CAS) to successfully plan, execute and maintain village level investments.The training program is started once a village has agreed to establish a CVGT and identifiedresource persons. Training modules include: the organization of village assemblies and keepingrecords of decisions; obtaining legal recognition for village level organizations; carrying out ofcommunity needs assessments and development plans; sorting out land rights in the process ofcommunity land development planning; accessing financial resources and mobilizing selfcontributions; and executing sub-projects (contracting, cash management, record keeping,monitoring). These one-week training sessions will be provided by third parties hired by theProject.

An important literacy training program will be undertaken to accompany the establishment andstrengthening of village level organizations, as this was found to be a major determinant of

44

successful village level organizations by the Social Assessment carried out during preparation ofthe Project. Basic literacy training will be given to resource persons identified by the village.These include the village notables and those identified as the most dynamic. For each cluster of 2-4villages, several volunteers will receive additional training as trainers. These trainers will thenprovide literacy training to interested villagers during the dry season (from January through May)each year. This module follows already established and tested literacy programs underway inBurkina Faso. The village trainers will be compensated for the literacy training activities carriedout in their own or neighboring villages. The basic literacy training will be carried out over alonger period of time and tests will be taken to assess progress.

H1V/AlDS has become a threat to the country's long-term development. A specific HIV/AIDStraining and awareness raising program will therefore be put in place. This training will have asobjective to raise awareness of HIV/AIDS and provide information on prevention, care and theidentification of specific interventions related to the alleviation and prevention of the disease thatare eligible for project financing. These interventions will be included in the village developmentplan. The creation of a specific CAS for HIV/AIDS will be supported in each village in which theProject intervenes. These CAS will help identify and implement activities eligible for fundingunder the Project.

Upon the start-up of the investment program, technical training will be provided tailored to theproposed investment program and existing capacities. A large number of modules have been testedduring the predecessor project and new ones will be developed on the basis of identified needs andas the investment program evolves. The technical training/support program will be a continuousactivity throughout the whole duration of the project.

(iii) Technical support to community organizations: This sub-component includes the cost of on-site technical support provided to the CVGT and the CAS and consists of contracts entered into bythe Project with various internediaries (which can be private contractors, NGOs or Govemrnenttechnical services). It corresponds to functions carried out by the provincial project teams underthe predecessor project (PNGT), and which will now be increasingly delegated to third parties onthe basis of existing capacity. To provide these technical services, the Project will enter into signedagreements with line ministries, NGOs, regional project agencies, and/or private consulting groups.These service providers will support community organizations in preparing sub-project proposalson the basis of the standards prepared by the Project (referentiel technique), selection of contractorsor qualified local workmen, and supervision of the execution of the sub-project. They will alsohelp the beneficiaries in setting up maintenance programs and mechanisms for cost-recovery.These service providers will also provide infortnation on prograrn execution to the Project'sprovincial teams so that release of tranches for the investment program coincide with needs.

Project Component 2: Local Investment Fund (LIF) - US$ 54.79 million

LIF Mechanisms

The local investment fund will have two windows: one for financing village and inter-village investments,and another for financing critical provincial-level infrastructure benefiting a large number of villages.

The village/inter-village window will provide resources to villages or groups of villages in the form of amatching grant for financing their Annual Investment Plan (AIP). CVGT and/or CIVGT will identify andprioritize these investments on the basis of participatory diagnoses, and will make a counterpartcontribution to finance their AIP, the amount and nature of which is defined in the Project

45

Implementation Manual. Finally, they will have responsibility for sub-project execution (localcontracting) and management (operations and maintenance).

The financial envelope provided will be calculated on the basis of a per-capita amount of some US$ 3 -5 per capita per year. This amount may vary on the basis of field experience, depending on the village's

capacity to make effective use of the resources provided to them.

Investments selected by villagers and their representatives will cover a variety of sectors but they will besubject to a negative list. After a simple check for procedural regularity, conformity withsectoral policies(school and health center planning maps, for example), and receipt of the beneficiary contribution, thefunds will be disbursed into an account in a local financial institution opened in the name of the CVGT orthe CIVGT.

The CVGTs and the CIVGTs will be responsible for executing the sub-projects and may recruitcontractors and workers for this purpose. The Project, however, will provide contract managementsupport through personnel recruited for this purpose and through the provincial Government technicalservices, with which protocols will be signed. The beneficiaries will also be able to recruit outsidetechnical expertise for supervising the works (execution and acceptance). The funds to pay for suchservices (up to 10 percent of the total investment cost) are included in the investment budget covered bythe LIF. Transparency in the selection of priority investments, the awarding of contracts and themanagement of funds and works sites will be assured by greater community control (availability ofinformation, contributions by beneficiaries, and works committees) and by ex-post supervision organizedby the national program coordinator.

In the case of the provincial window, arbitration among potential sub-projects will be conducted by aprovincial technical coordination committee (CCTP), which will include representatives of beneficiarygroups. Sub-project management will be delegated to the provincial operational team of the Project, onbehalf of the province. Once the province becomes an effectively decentralized entity, it will take oversub-project management itself.

Eligible investments

The program will provide partial support through investment grants, the level of which will be determinedin the procedures manual, to productive activities of a collective nature or those that promise positivesocial or environmental spillover effects. In this way, the program will make it easier for sociallydesirable investments to secure funding from the decentralized financial systems (DFS) by reducing thelending risk. The program will not, however, provide direct financing for activities of a private orcommercial nature. On the other hand, in order to make the DFS more accessible to beneficiary groups,the LIF may finance investments to expand or reinforce existing micro-finance networks. The specificprocedures are set out in detail in the LIF procedures manual.

Finally, in exceptional cases with a social welfare component, the LIF may, at the request of the grass-roots community, be used to finance 100 percent of the investment cost of a productive asset for theneediest groups to help them earn a minimum income. In no case will such exceptional financing beallowed to disrupt business for the DFS.

Any sub-project that is not included on the negative list and that meets the eligibility criteria set out in theprocedures manual may be financed and managed locally (by the beneficiaries). The principal categoriesof village and inter-village sub-projects are as follows:

a. Soil and water conservation;

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b. Reforestation and forest management;c. Structural support for improving animal husbandry;d. Structural support for improving agricultural production;e. Water supply infrastructure;f. Feeder road improvement/infrastructure;g. Social and economic infrastructure;h. Renewable energy;i. Nutrition and health education;j. AIDS/HIV prevention and mitigation activities;k. Support for expanding the network of decentralized financial institutions;1. Training and action research.

Organizational Mechanisms

The medium-term goal of PNDRD is to construct representative and participatory rural municipalities thatwill serve as pillars of local development. In pursuing this objective, the program has adopted aprogressive approach that takes into account the social and cultural dimensions underlying the unity andlegitimacy of the village/terroir and its mode of governance, the historical bonds linking communitieswithin and between villages (market, mosque, marriage) and the demands of development and of thenation-state, in light of which the village by itself is not a suitable level of organization for planning andfor state decentralization.

Three flexible operational mechanisms will be presented to villages as a means of becoming familiar withmunicipal and local development responsibilities. Participatory diagnoses will be conducted in thevillages, leading to the prioritization of needs. This diagnoses will serve to highlight the degree to whichvillages face common problems and show the advantages of villages grouping together (in terrns ofpooling resources to tackle common problems and designing more coherent investment strategies).

Mechanism 1: The villages meet their own individual resource needs and make no effortto create alliances among themselves. Each village submits a local community-basedland management/local development plan and works through its own CVGT.

Mechanism 2: The villages retain their own individual land management plans, butdecide to group together (associate themselves) for a specific investment (school orhealth center, for example) and to this end they create an umbrella CIVGT in addition totheir individual CVGTs.

Mechanism 3: Either spontaneously or on the basis of experience, villages decide toform a more stable grouping and produce a joint local development plan for the entirecluster of villages, to be managed by the CIVGT. The CIVGT, in this case, has thepower to arbitrate investment proposals within and between villages and has general sub-project management responsibility (even if it decides to transfer this function to particularCVGTs). This third mechanism should give rise to a pre-municipal entity that, ifexperience and criteria so indicate, could request the status of a rural municipality.

These three mechanisms are not necessarily sequential, in the sense that one or more villages could decideto "skip" a stage, to disengage from certain groupings/associations or even to backtrack and revert toearlier mechanisms. It is an extremely flexible approach, intended to allow villages to learn on their own,first hand, about municipal management procedures and to experiment with them without the constraintof imposed alliances and commitments. The process of decentralization and of forming ruralmunicipalities should emerge the stronger because it will be firmly rooted in participation and consensus.

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Project Component 3: Institutional Capacity Building - US$ 26.52 million

This component includes the costs of training, equipping and operating the field teams (largely on acontract basis) and other service providers with whom the Project has signed agreements (protocols withGovernment technical services and DFS; contracts with NGOs and consulting firms, etc.). It alsoincludes the cost of activities in support of rural decentralization at the local, provincial and nationallevels (strengthening institutional, human and financial capacities; piloting the implementation of fiscaland financial decentralization; other studies and training).

This component will revitalize the coordination committees at the provincial level and will pave the wayfor negotiating the integration of various programs into a national strategy. It will support the activities ofthe CND and the DGCL in terms of planning for decentralized and participatory rural development andthe gradual establishment of rural municipalities. It will also include activities in support of the projectteams, the contracting of services (training for the project teams and for service and equipment providers)and the functions of coordinating, funding and promoting decentralized and participatory ruraldevelopment.

The support program for the CND and the MATS is intended to: (i) lay the foundation for participatoryrural decentralization, the leaders of which will be responsible to the beneficiaries and the representativesof the various segments of rural society, consistent with its social and historical context, and (ii)strengthen the capacities of the CND and the DGCL for guiding and implementing this decentralization.The proposed program is organized as follows:

Pilot project: This involves testing the social, economic, fiscal and institutional viability of five orsix rural municipalities, especially in the following areas: fiscal and financial decentralization (atax-base census, managing the fiscal cycle), the feasibility of transferring responsibilities,representation mechanisms for municipal councils, participatory management of municipal assets.The resources for municipal investment will come from the local investment fund

Training, information, communication: The creation of 350 rural municipalities over a period oftwo or three years poses a major challenge. The CBRDP will give its support to training electedofficials of the new rural municipalities by offering immediate training in priority areas and bysupporting the preparation of municipal training plans. Training modules relating todecentralization will be taught in Project villages and will help make decentralization effective inrural areas.

Supportfor rural decentralization planning: Support to the CND and the DGCL for carrying outstudies and action-research on specific aspects of rural decentralization where a betterunderstanding is needed.

Administrative support: Support to the CND and the DGCL in terms of human and materialresources and operating assistance, will be provided to help it carry out the activities describedabove (approximately 8 percent of planned activity costs).

Project Component 4: Land Tenure Pilot Operation - US$ 3.82 million

This component is intended to improve the stability and fairness of tenure for all users of rural land, andthereby help to: (i) foster equity and social peace, (ii) encourage investment and raise agriculturalproductivity, (iii) enhance the preservation and rehabilitation of natural resources, and (iv) introducedecentralization.

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It will complement other experiments in securing land tenure that are already under way or in preparation.It will be conducted in six test sites representing the principal systems of land use and the ownershipproblems associated with them. The objective of the pilot phase is to define and propose, on the basis ofconcrete experimentation in the field, an institutional, legal, technical and methodological framework forstable and equitable land tenure in rural areas.

This intervention will be based on supporting participatory management of land resources so that uponrequest, and in a gradual and cautious manner, customary land rights and transactions and otherarrangements currently found in rural areas can be formalized. At the end of the pilot operation, thecomponent will have produced the following:

* A practical methodological guide (toolbox) for use in improving the security of rural land tenure;* A documentation system for information generated by the PNGT2 pilot operations;* A preliminary national action plan for securing stable and fair rural land tenure; and* A preliminary program of land tenure interventions for implementation in phases II and III of the

PNDRD.

Project Component 5: Program Administration, Monitoring and Coordination - US$ 10.94 million

This component includes: (i) support for the national coordination forum for the PNDRD and (ii) supportfor the coordination and management of the Project.

Program (PNDRD) coordination.

The PNDRD is a national strategy involving a decentralized and participatory approach to ruraldevelopment as outlined in the Government's Policy Letter. This national strategy serves as a frame ofreference for the various programs and projects for fostering local development in rural grass-rootscommunities. One of its central objectives is to help harmonize the approaches to these differentprograms and projects so as to make more efficient use of available resources and to achieve swifter andmore effective national coverage for poverty reduction. The Government's Policy Letter on DecentralizedRural Development provides the details of the strategy as well as on the role and functions of thedifferent players and how these will change overtime. A national monitoring mechanism for assessing andcapitalizing on all these initiatives in decentralized rural development will be created.

Project coordination/management:

The national Project Coordination Unit (PCU) will be responsible for coordinating all activities under theprogram, in particular for providing funding to beneficiaries within the established deadlines, monitoringand evaluating the program at the national level, managing studies and the provision of services, anddrawing lessons from the various national experiments in decentralized and participatory ruraldevelopment.

Monitoring and evaluation is an important activity of the Project and includes setting up an integratedsystem of management and monitoring for Project implementation (real-time monitoring of physical andfinancial execution, technical and financial audits) as well as a system for monitoring and evaluating itsimpact (reference studies on the initial situation, impact studies, and support missions).

D. Implementation procedures

The operation to be financed by the IDA credit over the next five years (the Project) will represent Phase Iof the PNDRD. Financial support from Project will be provided in all provinces, either directly or

49

indirectly through supplemental funding for operations already under way. In all cases, the approachadopted will be coordinated with development partners active in the target provinces. The monitoringwill seek to ensure, as far as possible, that the work is performed by existing operators, with an emphasison subcontracting, harmonizing approaches and institutionalizing them in decentralized structures.

The provincial role

Over the longer term the objective is to ensure that there are durable provincial structures that can takecharge of coordinating and organizing participatory and decentralized rural development. At the end ofthe first phase, the province will be responsible for: (i) coordination at the provincial level, (ii)coordinating activities of the different projects or programs, (iii) contract management for certainactivities (service provision, large-scale projects), (iv) strengthening the capacities of service providers(State, NGO or private services), (v) support to beneficiaries, and (vi) monitoring and evaluating theimpact of activities.

In order to carry out the activities described above, the Project will support the establishment ofprovincial coordination committees (cadres de concertation), chaired by the High Commissioner, whichwill be responsible for coordinating and harmonizing all community-based land management and localdevelopment efforts within the province. These coordination committees will include representatives ofthe public services, the projects, NGOs and beneficiaries (villagers, committees and associations, electedofficials, civil society). They will meet for these purposes at least three times a year. The coordinationcommittees will serve as forums for reviewing and discussing land management and local developmentplans.

Daily management of the Project's provincial activities will be in the hands of a small operational unit.Given the diversity and fluidity of situations, the provincial operational units will take different forms,depending on whether the province has a major operator in place or whether it lacks established operators.

Provinces lacking established operators.

In provinces where the Project will be the principal player, a project operational unit (EquipeOperationnelle, EO) will be put in place. The EO may cover one or several provinces, depending on theirsize. The composition of the EO will depend on local circumstances. The EO will support localdevelopment planning through the recruitment of service providers (private operators and NGOs) whowill be trained for this purpose. It will also provide services directly to rural communities. This strategywill allow the role of the EO to be gradually reduced as the number and capacity of the service providersincreases. By the end of the first phase, the Project will be able to scale back its direct involvement and tofocus its effort on quality control and monitoring.

Provinces with a major operator

In these provinces, the Project will help to set up a coordination committee. The Project will work insynergy with the operator already in place, providing supplementary financing to help the operator extendthe coverage of its activities, to the extent that the operator accepts a common platform, summarized asfollows:

* Acceptance of a single coordination and harmonization committee (CCTP) with beneficiaryrepresentation

* Acceptance of a single representative organization at the village/inter-village level* Acceptance of the principle of local execution/management of sub-projects* Acceptance of the long-term goal of supporting the emergence of rural municipalities

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* Acceptance of the principle of shared monitoring and evaluating on the basis of commonindicators in order to harmonize efforts effectively

E. Project Organization

Program Coordination

At the national level, the program supports the implementation of the National Program for DecentralizedRural Development (PNDRD) elaborated in the Government's Policy Letter. As part of this strategy, anational coordination forum will be put in place to harmonize the approaches supported by all ruraldevelopment projects/programs. No approach is favored in the strategy and the forum will play animportant role in the exchange of ideas and experiences. The medium-term goal is the adoption of bestpractices by all donors and the evolution towards a single national program for decentralized ruraldevelopment with a common M&E framework.

Project Coordination and Management

As with all projects operating in Burkina Faso, an inter-ministerial steering committee will be established.The role of this committee will be to review and approve annual work programs and budgets. Theapproved work program and associated budgets and procurement plans will be submitted to IDA for non-objection after approval by the Steering Committee.

Day to day management of the project will rest with the national Project Coordination Unit (PCU). ThePCU's main responsibilities will be to: manage the work program at the national level, manage the donorscontributions to the project in accordance with the signed agreements with each donor, ensure that fundsare made available to the beneficiaries in a timely manner, carry out procurement, provide technicalsupport to the provincial teams during the start-up phase of the project, and monitor and evaluate theimplementation of the work program and its impact. In addition, the PCU will organize workshops at thenational level and regional level in support of the national coordination framework. At the regional levelthese workshops will be organized in broad collaboration with the Regional Departments of the Ministryof Economy and Finance (DREP).

The PCU will manage specific time bound activities for donors using contractual staff/organizations thatare hired for a duration not exceeding the length of the agreement between the PCU, the donor andGovernment. This will avoid an increase in staffing beyond the minimum necessary for the PCU to carryout its mandate. Examples of such activities are renewable energy, environmental education,decentralization and land tenure security. These activities will be executed by others, under a contractualarrangement, yet financial management and overall follow-up responsibility will be lodged with the PCU.

At the level of the provinces, Provincial Technical Coordinating Committees (CCTP) will be established.These Committees will include representatives from the provincial level of Govermnent, donors andNGOs active in the zone, and beneficiaries. They will be chaired by the Provincial High Commissioner.The mandate of the CCTPs will include the coordination and supervision of donor and Governmentfunded activities at the provincial level and to ensure that these activities properly respond to thedevelopment priorities for each province. The project will provide operating support and basic equipmentto enable the CCTPs to carry out their mandate in all provinces where the project or other donors, thathave agreed to a common approach to community development, intervene.

The Project will establish operational teams (EO) in 19 provinces. These operational teams will cover the26 provinces where the Project intervenes directly and will consist of 2-4 professional staff plus 1-2support staff whose primary responsibilities will be to (i) support the CCTP in its review of village/inter-

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village or province level development plans, (ii) enter into contracts with and supervise service providersthat have been hired by the project to execute specific activities (training of beneficiaries, assistbeneficiaries in the identification, proposal formulation and execution of the small scale projects, and inthe identification and proposal formulation of larger scale projects), and (iii) implement the monitoringand evaluation system. Once a sufficient number of service providers has been trained in each province,the EO will be downsized.

Changes in Staffing during Implementation

After the first two years of project implementation, the functions of the PCU will retrench to its coreresponsibilities of national coordination, financial management, procurement support for the larger scaleprojects and monitoring and evaluation. The technical support activities will be reduced to a minimumand be targeted to donor funded special initiatives (e.g. traditional energy). As a result, staffing at thePCU will be substantially reduced. Activities for which the PCU lacks the required expertise or for whichthe expertise is needed on an ad-hoc basis will be contractualized (short-term technical support). Thefunction of internal auditor/controller will be contracted in the beginning of the project as the timing andscope of the work cannot be carried out properly by one person, and building up a team within the PCUwill not be cost-effective. As mentioned above, the staffing of the EOs will be reduced once sufficientcapacity exists in each province. The organizational chart is attached below.

Information Flows

All information flows in two directions in order to avoid that the provider of information feelsdisconnected from the user. All sub-project execution and impact data are collected at the communitylevel by the beneficiaries themselves. In order to do so, they will receive training from the project. Thedata collected by the beneficiaries is analyzed and aggregated by the EO and made available to themembers of the CCTP and the DREP. At this level, the information is used to plan the work program(supervision, approval of new investment budgets, etc.), improve coordination between developmentprojects, NGOs and public agencies, and monitor development impact. A copy of the report is providedto the beneficiaries for information and feedback. After initial compilation and analysis by the EO, thedata is aggregated and further analyzed at the national level by the monitoring and evaluation staff at thePCU and included in regular progress reports.

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Project Organizational Chart

National Program for DecentralizedRural Development

Other donor Project Steering Committee Other donorfunded fundedprojects projects

National Coordination Unit

National Coordinator (I)Secretary to Coordinator (I)

Information Technology Specialist (1)Secretaries/Data Entry (4)Reproduction Assistant (I)

Receptionist (1)Librarian (1)

General Office Assistant (1)

Financial Management Technical Support Unit M&E Unit

Financial Administrator (I) Training Specialist (I) Socio-EconomicAccountants (2) Local Planning Specialist (I) Monitoring (1)Human Resource Village Investments Specialist (1) Ecological ImpactAdministrator (1) Coordination and Collaboration Monitoring (1)

Drivers (3 at PCU & 4 Specialist (1) Institutional Impactprovincial) Environmental Training Monitoring (I)

Specialist (1)Communications Specialist (1)

Renewable Energy Specialist (1)

Provincial Team Provincial Team Provincial Team

ProvincialCoordinator (1)

TechnicalSpecialists (2-3)

Secretary /data entry (I)

Driver (I)

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Flow Chart for the Local Investment Fund

National Forum for Decentralized Rural Development

Project Steering Committee

Submission and approval ofthe Annual Work Programand Budget

National Coordination Unit

submissionof provincialprogram

Provincial CPATProvince Team (CCTP) a i

contractsFlow of Funds

ContractsService Local between

Providers Develop- Projectment and

Strengthening of Plans CVGT /Local Capacities CIVGT

Inter-village CIVGT

4 | ~~~CVGT | |CVGT | [CVGT I CVGT l

ProectIdentification C I

B B a aImplementation of sub-project: beneficiaries and/or service provider (civil workscontractor, architects, engineers, studies, supervision, support, etc.)

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Annex 3: Estimated Project Costs

ProLectaCostl Foreign TFotai.__._______________________::__________ (US million)j (USSmilloio) ( mll iow

1. Local Capacity Building 11.02 352 11.38

2. Local Investmnent Fund (LIF) 9.31 5.48 54.793. Institutional Capacity Building (support & advisory

services) 21.80 4.71 26.52

4. Land Tenure Pilot Operations 3.13 0.69 3.82

5. Program Administration, Monitoring and Coordination 8.66 2.28 10.94

Total Baseline Cost 93.93 13.52 107.45

Physical Contingencies 0.84 0.55 0.90

Price Contingencies 5.67 0.83 6.50

Ttal Proe Cosio ts ;100.45 14.40 145

Total Fibancing Rquired 100A 14.40 :1185

Pr tost B Local Foreign Total

i. .... : .i, 0 ;_ ..$il_lion) iLS$ milio (US$ millin

1. Works 0.49 0.12 0.61

2. Goods (vehicles and equipment) 1.82 2.23 4.05

3. Services 14.35 3.54 17.89

4. Training 12.00 0.15 12.15

5. Local Investment Fund (LIF) Sub-Projects 49.31 5.48 54.796. Operating Costs (support to project

implementation) 13.17 1.72 14.89

7. Operating Costs (project management) 2.76 0.28 3.05

8. Physical contingencies 0.84 0.55 0.90

9. Price Contingencies 5.67 0.83 6.50

Total ProetCost 1004 14.40 114.85

TotalFancing Required 100A4 ________r_4.40 114_85

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Annex 4: Economic and Financial Analysis

1. Introduction

Decentralization in Burkina has a long and arduous history. The first, closely controlled,municipalities were created under the colonial regime in 1955. None of the various attempts atconsolidating local organizations succeeded, for any substantial length of time, in institutionalizinglocal elected councils and mayors. The process started anew in 1993 with a referendum on theConstitution that proclaimed decentralization as the country's mode of territorial organization andmanagement; and with the creation of the CND in charge of conceptualizing the process andadvising the Government.

Five years passed before the National Assembly voted in favor of the Textes d'Orientation sur laDecentralisation (TOD) in 1998. The TOD set up the fundamental principles guiding theorganization and implementation of decentralization in Burkina Faso. Decentralization, or the rightof decentralized entities to freely manage their own affairs, is intended to become the main axis forpromoting development and democracy.

Burkina Faso currently has 'deconcentrated' public service/administrative structures at theprovincial level (administered by the Haut Commissaire) and at the department level (administeredby the Prefet). 'Decentralized' governance structures are envisioned at the provincial level(governed by an elected president and provincial council with responsibility to promote provincialeconomic and social development) and the urban/rural municipality level (governed by an electedmayor and municipal/ rural council). An urban municipality is a community of at least ten thousandpeople able to mobilize a budget of at least fifteen million FCFA. A rural municipality is defined bya community of at least five thousand people and the ability to mobilize a budget of five millionFCFA.

Geographic level Decentralized governance Deconcentrated administrativestructure structure

Province Elected President and Provincial Appointed Haut-Commissaire andCouncil Conference des Cadres de la Province

Departmnent Appointed Prefet

Municipality Elected Mayor and Council

Village Appointed D&legu6 Administratif andVillage Council

Implementation of decentralization is laid out in the TOD as follows: (1) elections for urbanmunicipalitities will take place no longer than two years after the publication of the TOD (i.e. beforethe end of 2000); (2) before 2003, provincial elections must be organized for the totality of thecountry; (3) simultaneously, elections for rural municipalities will be organized for existing ruralmunicipalities (if separate elections are needed, they will be organized before 2005).

Examples of the kind of sectoral responsibilities to be transferred to decentralized levels are given inTable 1. The responsibilities are allocated between the province and the municipality according towhich is the lowest level with the ability to carry out the task. The transfer of responsibilities mustbe accompanied by a transfer of resources, and at least a partial transfer of the technical services.

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Table 1: Sectoral responsibilities to be transferred to decentralized governance levels

Scto0r0V V 0;;?:f: ;0Province Municipality

Regional Development Plan (consulted) Urban Development Plan (consulted)Land management Construction and maintenance of rural Allocation of land (owned &

feeder roads administered on behalf of the State)

Environment Participate in the protection of resources Communal Environmental Action PlanImprovement of livestock pathwaysConstruction and management of health Construction and management of health

Health centers (CSPS) centers (CSPS)Participate in the elaboration of the Participate in the elaboration of thehealth map health mapConstruction and management of pre- Construction and management of pre-

Education school units school unitsParticipate in the school map Participate in the school map

The Program National de Developpement Rural Decentralise (PNDRD) seeks to strengthen localgovernance and sustainably improve the productive capacity of the rural sector through socio-economic infrastructure investments and capacity building that empower rural communities to leadtheir own local development process. Upon completion of the final phase of the PNDRD: (I) localcommunities and their representative local Governments will have developed the capability toidentify, implement and manage their own infrastructure investments and service needs, and (2) thelocal economy will be more dynamic. For an APL operation such as the PNDRD, detailed economicanalysis is required for the first phase. Operations in the first phase of the PNDRD, however, arelargely directed towards institutional strengthening and provision of basic infrastructure via demand-driven community funds. They do not lend themselves to quantitative ex-ante cost-benefit and rateof return calculations. Instead, a qualitative analysis is required to discuss the economic rationale forundertaking the operation and its benefits and costs.

In the first phase of the Program, the targeting of capacity building and basic services (potable water,health, education) most needed by the poor will contribute to poverty alleviation, while the choice oflabor-intensive implementation and the use of local entrepreneurs in the provision of these serviceswill create employment and increase rural income. In turn, better access to health care, education,roads and markets will raise productivity and increase economic incentives. Thus, along withcapacity building to strengthen the Government's ongoing efforts to achieve fiscal, administrativeand political decentralization, the first phase will pave the way for a more dynamic local economy.

The local investment fund (LIF) will be used mainly for the provision of public goods and serviceswhich justifies the use of public funds to finance the proposed Program. In addition to responding tothe collective desire of the community, productive investments funded under the program must havea large public element or externality associated with them. The PNDRD will give a strong emphasisto empowering local communities, local Governments, and other key stakeholders to enable them toplay an increasing role in the identification, design, implementation and management of ruraldevelopment projects, and contribute more efficiently to local and national economic growth.

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2. Analysis of Alternatives

The following alternatives were considered for the program and rejected as being less cost-effective in reaching the stated program objectives than the design chosen:

* The traditional approach of integrated rural development keeps the responsibility forplanning and implementation essentially in the hands of central Government. Thisapproach fails to generate community ownership, thus leading to inferior operation andmaintenance of investments. The coordination and top-down implementation of multiplesmall-scale public infrastructure works is generally too complex and suffers from a lack ofadequate and timely information, poor incentives, and inadequate resources. This approachhas typically fallen short of expectations.

* The traditional approach to environmental management projects also relied on centrallyexecuted approaches. The environment was viewed as a resource to protect from farmers'encroachments and State agencies were in charge of implementing conservation strategies.This approach proved to be limited mainly because Governments did not have theresources to enforce the laws that were promulgated and because people dependent on theresources for their livelihoods had not been taken into account.

e The PNGT was designed as a Community-Based Land Management project and was alandmark in Burkina for systematizing and developing the Gestion des Terroirs approach.This new generation of projects placed the resource user at the center of the equation andwas designed to provide incentives for the user to maintain the environment. They focuson how to sustainably improve agricultural production and productivity. This change inparadigms (to Community-Based Land Management) has translated into a shift fromconservation strategies towards participatory approaches to natural resource managementwith a focus on strengthening the local-level capacity to plan, implement and managesustainable rural development. Despite their success, community-based land managementprojects suffer from two major problems. First, they have proved difficult to scale-up.Second, they have not been sustainable because institutional changes (such as fiscaldecentralization and evolution of accountable local Government structures) that improvethe way Government operates have not been introduced. The PNDRD design builds onthese small-scale initiatives, but offers a more systemic means of bringing aboutsustainable change on a large scale.

The PNGT design, however, evolved based on internal assessments and lessons learned.The project team sought solutions to three main limitations: (i) the need to scale up theproject in order to have an aggregate impact on poverty, (ii) the need to increase the totalamount of resources reaching the beneficiaries; and, (iii) the need to improve the allocationand economic efficiency of investments.

During the mid-term review, four main adjustments to the project design were made; first,since the participatory approach had proved successful, the project was scaled up tointervene in more than 400 villages instead of merely a hundred; second, a decision wasmade to shift, on a pilot basis, the responsibility for the execution of investment projectsfrom the PNGT to the beneficiary communities; third, the menu of investment optionsoffered by the PNGT was broadened so as to include basic infrastructures and, thus, betterrespond to community demand; fourth, a new framework for coordination at provinciallevel was successfully tested. In the course of preparation, further design adjustmentswere made. It became clear that to extend the project to a substantial portion of the

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country's rural areas, while avoiding the build up of a cumbersome project executingagency, will require other changes: (i) the PNGT's role would need to shift from directexecution to a delegation of that execution to intermediaries; and (ii) the direct execution ofprojects by beneficiaries would have to be generalized;

The AGETIP-type approach relies on contractors to realize economies of scale in executinglarge, standardized, types of infrastructure. However, the very speed and efficiency inrealizing such large-scale, top down infrastructure is particularly ill-suited for demand-driven, small-scale, numerous and varied rural infrastructure investments in localcommunities. In addition, AGETIP does not foster local empowerment and capacitybuilding and, therefore, limits community ownership and the long-term sustainability ofinvestments.

3. Fiscal Impact and Cost Recovery

The PNDRD will increase the level, and change the structure, of public investments in rural areaswith potentially large long-term benefits, both public and private. There will be a direct impact,varying over time, on at least three groups: the central Government; local communities andbeneficiaries. Although the demand-driven and innovative nature of the program is not conducive toex-ante quantitative analysis, a monitoring and evaluation system is being designed to provide thedata needed to track progress and measure impact. The qualitative ex-ante analysis that follows,suggests positive fiscal impact and cost recovery over the long term, provided complementaryinvestments are made to improve the productivity and economic opportunities of a primarilyagriculturally-based rural population.

Central Government

Through borrowing from IDA and IFAD, the central Government will increase the level of publicspending for the provision of public goods (roads, basic education and health facilities) at the locallevel. Cost recovery based on increased economic activity and tax collection at the local level islikely to be limited in the short-term. Tax income on inputs for LIF investments and fromincremental economic activities will be small and the low initial income level of rural householdsprecludes any short-term prospects for cost-recovery. In the long run, the increased productivity ofrural assets and a better educated, healthier rural workforce, will increase the capacity of the ruralpopulation to contribute to tax income. In the absence of a head or income tax, this will occur largelythrough increased expenditures and hence increased VAT revenues. Complementary investments toimprove the agricultural productivity and economic opportunities of a primarily agriculturally-basedrural population will be needed to ensure such cost recovery.

In comparison with alternative approaches, involving similar levels of public investment, the fiscalimpact of PNDRD on the central Government will be minimal. Under the PNDRD, unit investmentcosts will be lower since local beneficiaries in control of their own budgets are more likely to choosethe most cost-effective investment option. Also, for a given investment scheme, the willingness ofbeneficiaries to contribute to the cost will reduce the central Government's outlays. In comparison,the recurrent costs that would have been borne by central Government under alternative approaches,will now be paid at the local level. Decentralization will result in an improvement in the efficiencyof public expenditure, which should reduce the strain on the central budget and increase the chancesfor sustainability. In the long run, the economic benefits of PNDRD should largely offset the initialnegative impact on the central Government's budget.

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Local Government

Fiscal decentralization shifts resources from the central Government to the local Government. ThePNDRD will substantially increase the local investment budget and improve the local capacity tomanage such resources. Sustainable local revenue generation (at the household and localGovernment level) will depend on an increase in the productive capacity of local populations which,in the case of rural Burkina Faso, will require an increase in agricultural productivity throughtechnological innovations and improved market (output, input, credit) access.

Beneficiaries

Given the demand-driven nature of the program, the financial impact on beneficiary communities isexpected to be positive. Better access to water and health will increase productivity and thusfinancial rewards; better access to roads by improving market access will also boost financialinflows to local beneficiaries. Labor-intensive implementation of basic infrastructure will alsoincrease income through additional employment. In the case of education and, to some degree healthservices, the financial benefits will be realized in the long run.

Beneficiary communities will contribute, about 20 percent (in kind or/and cash) of the totalinvestment cost of basic infrastructure sub-projects. Such a contribution is in line with currentpractices for construction of basic rural infrastructure under ongoing traditional projects. It is highenough to provide incentives for increased ownership and sustainability of sub-projects, while beingsufficiently modest to encourage participation by poor communities. The average investment isexpected to be less than US$ 10,000. Beneficiaries will assume responsibility for operation andmaintenance of basic infrastructure funded under the LIF, in line with current policies and practices.Corresponding recurrent costs to the beneficiary communities will usually be modest, around 5percent annually of the investment cost for the average investment.

Contribution to productive investments will be substantially higher than for basic infrastructure andmay reach, or exceed 50%. In addition to assuming full responsibility for operation and maintenanceof these activities, cost recovery at community level will be sought to help promote sustainability,generation of resources at the local level, and better accountability.

4. Cost-Benefit Analysis

The demand-driven and adaptable nature of this program does not lend itself to standard cost-benefitor least-cost analysis. However, the economic rationale of the project remains strong and it ispossible to demonstrate that (a) the PNDRD will generate substantial economic benefits; and (b)compared with alternative approaches, the PNDRD improves cost-efficiency and sustainability.

Economic benefits: The impact of improved access to social infrastructure (e.g. water, education,health facilities) has both short-term and longer-term (generational) impacts in terms of improvedhealth, nutrition and labor productivity. In the first phase of the PNDRD, the main economicbenefits can be summarized as follows:

* Maintenance and rehabilitation of rural roads will increase access to markets and social services,such as health and education care. Better access to markets will generate economic benefits frommarket transactions, whereas access to social services increases productivity, which in turncontributes to increase income. Improvement of access roads will account for a major share ofdemand under LIF.

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* Investment in education and health care services contribute to poverty reduction in the short-term by improving the quality of rural life, and in the long-term, through a more productive workforce, to overall economic development.

* Investment in safe drinking water, by improving the health of rural population, as well as areduction of the time spent, especially by women, in transporting water will contribute to povertyalleviation and increase the productive capacity of rural people, particularly women. Thebenefits of improved water supplies (quantity and quality) on health outcomes are welldocumented. These health benefits in turn lead to labor productivity and income gains via avariety of direct and indirect pathways. Directly, a) healthier individuals are able to spend more'effective' hours in wage and farn work and b) fewer 'sick days' releases labor for productiveactivities. Indirectly, improved health a) decreases the amount of 'care time' spent with sickrelatives thereby releasing labor for productive activities, b) decreases the time required forcomplementary activities such as fuelwood collection which might be necessary when water iscontaminated, and c) may alter the portfolio of income generating activities undertaken by thehousehold since individuals with health risks might engage in lower-output activities that are lesssensitive to labor supply interruptions (Hoddinott, 1997). One study estimates the laborproductivity losses due to stunted growth at 9% (Pinstrup-Andersen et.al., 1996). In addition,there are a series of second round effects to improved health. For example, higher incomes leadto increased expenditures on commodities that improve health (e.g. higher quality diets) andexpenses associated with being sick decrease. Studies also show that better health also leads todirect improvements in schooling outcomes (Behrman, 1996).

* Investments in soil and water conservation infrastructure: Natural resources (land, forests,pastures, lakes), are the principal productive assets of the rural poor. Efforts to reverse thedegradation of the resources and sustainably improve their productive capacity have a largepayoff in terms current and future income generation. Research from various parts of the Sahelshows positive net returns over the long run to natural resource management (NRM)investments. For example, the net present value of techniques such as composting , windbreaks,or rock bunding are all around 700 US$/ha. INERA research in the Bazega area of BurkinaFaso show an increase in sorghum yields of 85 kg/ha using erosion control techniques; anincrease of 362 kg/ha using organic fertilizer and composting techniques; and an increase of 824kg/ha (a doubling !) using a combination of the two techniques. This translates into significantincome increases for rural producers.

* The PNDRD will also contribute to employment and income generation in rural areas, bothdirectly (through improvement of the productive capacity of the natural resource base andinvolvement of local artisans and village workers in the construction of basic infrastructurefunded under the LIF) and indirectly (through the new and/or additional economic opportunitiesgenerated by road improvement and improved capacity for economic activity due to better healthand water supply). Growth multiplier research in Burkina Faso indicates that each dollar ofadditional income generated in the agricultural sector (through technological change, reducedtransactions costs due to improved roads, ...) will generate an additional US$ 1.88 of income inthe local economy through the stimulative impact of spending on local goods and services(Delgado, Hopkins, Kelly).

Cost-efficiency and sustainability: The PNDRD has been designed to enhance cost-efficiency andsustainability. Efficiency gains are expected to be derived from the decentralized decision-makingand investment process. In particular recent project evaluations indicate that the cost sharingarrangements along with active participation of the beneficiaries in sub-project selection and

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implementation bring the decision-making closer to the beneficiaries. Such conditions not onlycreate incentives to keep investment costs low and the quality of service delivery high, but they alsoincrease the likelihood of sub-project sustainability. The PNDRD will also promote cost-efficiencythrough contractual, rather than hierarchical, relationships of beneficiaries to both administrativestaff in charge of managing the LIF and other technical support agencies. The standardization of thesmall-scale civil works project documents, technical designs and unit costs will simplify thepreparation and evaluation of projects under LIF, facilitate procurement, provide a technical andfinancial reference for local communities and reduce the over-design of sub-projects. Suchstandardizing encourages participation by poorer communities and reduces bottlenecks in sub-project cycle.

In conclusion, experience with investment funds for similar decentralized rural development projectsin Latin America and Asia has shown that communities generally choose investments which can beexpected to have a very high rate of return, such as water supply, rehabilitation of roads and schools.In addition, the LIF Operational Manual will include simple eligibility criteria for specificinvestments to ensure that they are economically justified (e.g. number of people served by spotimprovement of a village access road, distance from next water point for construction of a well orborehole, etc.).

5. Risk Analysis

There are three principal risks that could jeopardize the achievement of the project's objectives. Thefirst would arise if the Government were to waver in its commitment to promote effectivedecentralization. To mitigate the risk, project support will be provided for the formulation andimplementation of decentralization reforms. The second risk pertains to possible fraud and lack oftransparency in the management of funds at the local level. Direct involvement of beneficiarycommunities in implementation and funding of sub-projects, tight project controls on the use offunds, penalties for fraud, and an information campaign will greatly reduce this risk. Last, thePNDRD needs to ensure an equitable and representative decision-making process. To that effect, theprogram will use participatory planning ar,d animation techniques in order to include vulnerablegroups in decision-making processes. Moreover, all committees at the local level will be mandatedto include representation from vulnerable groups.

6. Poverty Analysis

The economic benefits derived from the PNDRD will reach all segments of the rural populationincluding the poorest. Targeting to the rural poor will be achieved indirectly through:

(a) the kinds of projects financed under LIF (e.g., small, inexpensive projects for improvementof village roads, water supply, school classrooms);

(b) participatory processes at community level designed to ensure that the views and priorities ofall segments of the rural population are represented in the selection of investments to be fundedunder LIF; and

(c) the choice of labor intensive methods for sub-project implementation that will result inemployment generation for the poor.

The M&E system will place due emphasis on assessing the impact of the Project on marginalizedgroups (e.g., women, youth, pastoralists) and on insuring that their views are represented in theparticipatory planning process. Lessons will be drawn from IFAD's experience in targeting thesegroups.

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7. Monitoring, Evaluation and Impact Assessment

A participatory and flexible M&E system has been designed and field tested. The system relieslargely on beneficiary input, with quality control provided by Project provincial staff. The systemwill serve a) as a tool for capacity building at the local level, and b) as a tool for project decision-makers to use in monitoring project implementation. In addition, independent baseline surveys, withmid-term and end-of-phase follow-up, will be carried out to evaluate the impact on developmentobjectives in the socio-economic (poverty reduction), environmental and institutional realms.

The participatory M&E system is intended to monitor both project execution and impact. Thus, closelinks and coordination with the financial recording system will exist. At each stage of projectimplementation -- identification of intervention sites, participatory diagnosis at the community level,development of the community resource management and annual investment plan, disbursement ofcommunity-level funds and execution of annual workplans, evaluation of workplan execution andimpact -- information will be collected and entered into the project's M&E system.

Community and household level data will be collected by the beneficiaries, by province-level Projectstaff, and by contractual staff. Data will be entered at the provincial level and transferred via disketteat monthly intervals to the PCU M&E staff. Any data related to financial disbursements will becollected and entered by provincial and national Project staff using a consistent coding system touniquely identify the beneficiary community, the activity, and the time frame.

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Annex 5: Financial Summary

IMPLEMENTATION PERIOD

Total Financing Required Year 1 Year 2 Year 3 Year 4 Year 5Project Costs

Investment Costs 13.1 13.4 18.6 21.9 27.6Recurrent Costs 4.3 4.2 4.3 3.7 3.7

Total Project Costs 17.4 17.6 22.9 25.6 31.3

Total Financing 17.4 17.6 22.9 25.6 31.3

Financing1BRD/IDA 10.1 10.2 13.3 14.9 18.2Government 2.2 2.2 2.9 3.2 3.8

Co-financiers 3.8 3.8 4.9 5.5 6.7Beneficiaries 1.4 1.4 1.8 2.0 2.6

Total Project Financing 17.4 17.6 22.9 25.6 31.3

OPERATIONAL PERIOD

Total Financing Required Year 1 Year 2 Year 3 Year 4 Year 5Project Costs .

Investment Costs 30.0 35.0 40.0 45.0 50.0Recurrent Costs 4.0 4.5 5.0 5.5 5.5

Total Project Costs 34.0 39.5 45.0 50.5 55.5

Total Financing 34.0 39.5 45.0 50.5 55.5

Financing _ _ _ _IBRD/IDA 10.0 10.0 10.0 10.0 10.0

Government 4.0 5.0 5.0 6.0 6.0Co-financiers 17.0 19.0 21.0 22.0 25.0

Beneficiaries 3.0 3.5 4.0 4.5 5.0Others 0.0 0.0 0.0 0.0 0.0

Total Project Financing 34.0 37.5 40.0 42.5 46.0

Main assumptions: These costs include the activities foreseen under Phases II and III. All costsfor the operational period exclude expected inflation.

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Annex 6: Procurement and Disbursement Arrangements

Procurement

GeneraL A Country Procurement Assessment Review (CPAR) was carried out in March 2000. Thefindings of this review are valid for this Project. Public procurement in Burkina Faso is regulated bydecree No. 96-059/PRES/PMJMEF of March 7, 1996. Its application is elaborated in severalMinisterial directives. In general, Burkina Faso's laws and regulations do not conflict with IDAGuidelines and allow IDA procedures to take precedence over any contrary provision in nationallaws and regulations.

All IDA financed contracts for Works and Goods or contracts financed by other donors, but forwhom IDA serves as Administrator, will be procured in accordance with the World Bank guidelineson procurement of goods, works and services: "Guidelines for Procurement under IBRD Loans andIDA Credits, January 1995, revised January and August 1996, September 1997, and January 1999,"hereafter called the Goods and Works Guidelines, for goods and works, and "Guidelines for theSelection and Employment of Consultants by World Bank Borrowers, January 1997 and revisedSeptember 1997, and January 1999," hereafter called the Consultant Guidelines. A domesticpreference of 15 percent will apply to the procurement of goods under Intemational CompetitiveBidding (ICB) procedures, in accordance with the provisions of Annex 2 of the Guidelines.

National Competitive Bidding (NCB) will be carried out in accordance with Burkina Faso'sprocurement laws and regulations provided that: (i) any bidder is given sufficient time to submitbids (at least 30 days); (ii) bid evaluation and bidder qualification are clearly specified in the biddingdocuments; (iii) no preference margin is granted to domestic manufacturers; (iv) eligible firms arenot precluded from participation; (v) award will be made to the lowest evaluated bidder inaccordance with predetermined and transparent methods described in the bidding documents; (vi)bid evaluation reports will clearly state the reasons for rejecting any non-responsive bid; and (vii)prior to issuing the first call for bids, draft standard bidding documents will be submitted to IDA andfound acceptable.

The Bank's standard bid documents will be used for the procurement of all goods and works, exceptfor those used for the execution of the village and inter-village sub-projects. In the latter case, theBank's standard documents have been simplified and are included in the Project ImplementationManual. For all consulting assignments, the Bank's standard Request for Proposals will be used forthe recruitment of consulting firns. Simplified contracts will be used for short-term time-based orsimple assignments not exceeding six months and carried out by individual consultants or firms.

Goods, works and consulting and non-consulting services to be financed under this credit may notbe supplied from nationals of the following countries: The Bahamas, Bahrain, Barbados, Brunei,Darussalam, Cyprus Oman, Qatar, Singapore and the United Arab Emirates. In all other respects,procurement eligibility will follow the current version of the Guidelines referred to above.

A General Procurement Notice (GPN) has been published in the United Nations DevelopmentBusiness and in a national newspaper as provided for under the guidelines. The GPN will beupdated each year in December and show all expected ICB tenders for works, goods andintemational consulting contracts for the following years. In addition, a Specific ProcurementNotice is required for all ICB and for all consulting services in excess of US$ 100,000, prior to thepreparation of the shortlist. Project procurement staff have been briefed on the revised consultant'sguidelines during the appraisal mission.

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The program elements by disbursement category and procurement methods are summarized in TableA below. Consultant selection methods and thresholds for procurement methods are summarized inTable B below.

Civil Works (US$ 0.75 million, including contingencies). Project financed works relate mostly tothe rehabilitation of Government owned buildings that will be made available to the Project (US$750,000 total). The sites are highly dispersed (19 sites in 19 different provinces) and the expectedcost for most contracts is low (less than US$ 30,000 each). Few contracts are expected to exceedUS$ 30,000. It is unlikely that any contract for civil works will exceed US$ 500,000. Should thisevent occur, however, it will be subject to ICB procedures. Works exceeding US$ 30,000 and lessthan US$ 500,000 will follow NCB procedures. Small civil works costing less than US$ 30,000each, up to an aggregate amount of US$ 0.7 million, will be procured under lump-sum, fixed pricecontracts awarded on the basis of quotations obtained from at least three qualified domesticcontractors operating in the area on the basis of specifications prepared by the Project unit. Worksfor sub-projects financed under the LIF are discussed separately below.

Goods (US$ 2.95 million, including contingencies). The credit will finance the procurement ofvehicles, motorcycles, office equipment (including computers), and field equipment. To the extentpracticable, goods will be lumped into lots estimated to cost US$ 100,000 or more and will beprocured under ICB procedures. Goods that cannot be easily lumped into lots of US$ 100,000 ormore for a variety of reasons (timing, specificity, etc.), but are expected to cost no less than US$30,000 and are available locally can be procured using NCB procedures up to an aggregate amountof US$ 700,000. Procurement for readily available off-the-shelf goods and/or standard commoditiesthat cannot be grouped in lots of sufficient size, and not exceeding an aggregate amount of US$300,000 over the life of the Project, will be procured through prudent local shopping, on the basis ofa comparison of quotations from at least three reputable suppliers. In the rare event that these goodswould not be available in the country, international shopping procedures will be followed. Goodsmay also be procured from UN agencies (UNIPAC or IAPSO) provided each contract does notexceed US$ 100,000 and the aggregate amount does not exceed US$ 1.0 million over the life of theProject.

Consultant Services, Training and Audits (USS 26.9 million, including contingencies). Consultingservices financed by IDA will be for: (i) studies, architectural design, civil works supervision,preparation of bidding documents, financial management support, financial and technical audits; and(ii) technical matters (monitoring and evaluation, environmental impact, technical assistance tocommunities, etc.) and training (skills gap analysis, skills development and training of staff andlocal communities).

Consultant services will normally be procured through the selection of short-listed firms on the basisof Quality and Cost-Based Selection (QCBS), except where noted below. All consultantassignments estimated to cost the equivalent of US$ 100,000 or more will seek an expression ofinterest through an advertisement in at least one national newspaper with wide circulation, inDevelopment Business (UNDB), and/or in an international newspaper or technical magazine. Inaddition, all such consulting assignments will be listed in the annual GPN.

TIhe following other methods will also apply. For audits (financial and technical) and other servicesof a standard nature, the Least Cost Selection (LCS) method will be used up to an aggregate amountof US$ 2.0 million. The firm with the lowest price will be selected, provided its technical proposalwill receive at least the minimum qualifying score.

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Consulting services for architectural design, civil works supervision, preparation of biddingdocuments and training (estimated to cost less than US$ 50,000 per contract and up to an aggregateamount of US$ 2.0 million) will be based on the consultant's qualifications (QBS), i.e. based onwork experience and competence relevant to the assignment. Services for seminars and smallstudies, which can be delivered by individuals and do not need teamwork or back-up supportservices, will be selected through comparison of qualifications among individual consultantsexpressing interest in the assignment or approached directly.

Single Source Selection (SSS) will only be used under exceptional circumstances for the selection ofservices for simple tasks not expected to cost more than US$ 5,000 or for local community supportservices, such as technical assistance and training, provided the aggregate amount of such servicesdo not exceed the equivalent of US$ 250,000 over the life of the Project.

Services for tasks, such as the organization of seminars and small studies, that are generally of low-cost (generally less than US$ 20,000) and do not require the use of support systems shall beprocured under contracts awarded to individual consultants.

Short-lists of consultants for contracts estimated to cost less than US$ 100,000 each may becomprised entirely of national consultants, provided at least three qualified firns are locallyavailable at competitive costs. However, if foreign firms have expressed an interest for thosecontracts, they will not be excluded from consideration.

The training program is geared towards the strengthening of the managerial and technical capacitiesof the Project's implementing agency, its partners, and CVGTs. The Project's training program willbe reviewed annually and will be subject to IDA's prior review and approval, as will be allparticipation in workshops and seminars.

To establish a roster of consultants for carrying out studies, provide technical assistance tocommunities, preparation of bidding documents and construction supervision, the PCU willpublicize each year procurement notices in the local press to get expressions of interest fromconsultants. Based on the criteria detailed in the Project Implementation Manual, the PCU willmnaintain and update the roster of consultants, which will be used to establish short-lists or selectfirms with the required qualifications. The PCU will also maintain a list of qualified constructioncompanies and engineers, with agreed upon rates that can be accessed by Project beneficiaries.Updates to this database will also be made annually, at which time interested qualified constructioncompanies and consultants in different fields of expertise can be added and poorly performing onesremoved. Performance will be rated based on feedback from the beneficiaries and the results of thetechnical audits.

Local Investment Fund Sub-projects (US$ 48. 79 million). The LIF has two windows. Firstly, theprovincial level sub-projects (US$ 12.4 million) range in size from US$ 30,000 to US$ 150,000 andare executed for the beneficiary communities by the Project. The sites will be highly dispersed overthe country (about 50 new sites per annum), making it difficult to group them. The content of thesesub-projects are demand driven and can therefore not be predicted with any accuracy. For thesesub-projects, the regular procurement procedures for civil works, goods and consultant servicesdescribed above apply. In order to increase efficiency, only provincial level executed sub-projectsover US$ 50,000 will be subject to an ex-ante review by the Bank until a threshold of about US$ 1.0million has been reached. After this, only those sub-projects expected to costs more than US$100,000 or non-standard sub-projects (i.e. those for which no detailed description has been clearedby the Bank as part of the implementation manual), will be subject to Bank prior review. Priorreviews of all sub-projects in excess of US$ 30,000 by the Bank will cause serious delays in project

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implementation, as all these sub-projects will have to be reviewed in the same month (October) eachyear. Secondly, the village and inter-village level sub-projects (valued at less than US$ 30,000 andwith an aggregate cost of US$ 36.8 million) are executed by the CVGT/CIVGT. Individual sub-projects will be of limited size (80 percent less than US$ 500 each), widely dispersed, and co-financed by beneficiaries using varying combinations of in-kind and cash contributions. Thebidding documents and contracts used for this category will follow procurement and disbursementprocedures as presented in the "Guidelines for Simplified Procurement and Disbursement forCommunity-Based Investments" and detailed in the Project Implementation Manual. During theProject appraisal, the Government agreed that its own procurement procedures will not apply to LIFsub-projects executed by the CVGT/CIVGTs. However, once the rural communes emerge,Government procedures will apply.

Prior Review. All goods and works contracts estimated to cost US$ 100,000 or more will be subjectto IDA's prior review of bidding documents, including draft contracts and technical specificationsprior to inviting bids and bid evaluation prior to contract award. As noted above, in the case of LIFfinanced sub-projects at the provincial level, only those provincial level executed sub-projects inexcess of US$ 50,000 will be subject to an ex ante review by the Bank or until a threshold of aboutUS$ 1.0 million has been reached. After this, only sub-projects in excess of US$ 100,000 or non-standard sub-projects (i.e. those for which no detailed description has been cleared by the Bank aspart of the Project Implementation Manual), will be subject to Bank prior review.

Prior Bank review will also be required for contracts for consulting services valued at US$ 100,000or more for firms and US$ 50,000 or more for individuals. In these cases, the draft Request forProposals and the shortlist of consultants must be cleared with IDA prior to inviting proposals fromthe short-listed consultants. In addition, the evaluation of the technical proposals must be clearedwith IDA before the financial proposals of the qualifying firms are opened. For contracts withconsulting firms valued at more than US$ 50,000 but less than US$ 100,000, the results of thetechnical evaluation together with the technical scores will be notified to IDA. With respect to eachcontract for the employment of individual consultants estimated to cost the equivalent of US$20,000 or more, the qualifications, experience, terms of reference and terms of employment of theconsultants shall be furnished to the Association for its prior review and approval. The terms ofreference for consulting assignments and training, single source recruitment, and assignments of acritical nature as determined by IDA, as well as amendments to contracts raising them above theabove mentioned prior review thresholds, will be subject to IDA prior review regardless of contractamount. All the procedures in Appendix 1 of the Consultant Guidelines will apply.

Post Review. All contracts not subject to the thresholds listed in the preceding paragraph will besubject to an ex-post review. Once a year a procurement accredited staff will accompany asupervision mission and conduct a post review of a sample of contracts not subject to prior review.The Borrower will maintain all documents related to procurement below the prior review thresholdfor such an ex-post review and for a review by project auditors for up to one year after projectcompletion. The Project will hire engineers to perform technical audits of a random sample of sub-projects. The technical audit will focus on quality of execution and adequacy of procurementprocedures followed. The results of the technical audit will be included in the annual reports.

Frequency ofprocurement supervision. One supervision mission every twelve months will includea procurement accredited staff to carry out post-reviews of procurement. This mission will alsoreview the technical audit reports prepared by independent consultants. Those reports have to beissued within six months after the close of the fiscal year.

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Modification or waiver of the scope and conditions of contracts. Before agreeing to any materialextension, or any modification or waiver of the conditions of contracts that will increase theaggregate cost by more than 15 percent of the original price, PCU needs to specify the reasonsthereof and seek IDA's prior no-objection for the proposed modification.

Capacity Assessment and Proposed Procurement Arrangements. The CPAR has outlined anumber of weaknesses in the national procurement legislation that are not likely to affect thisproject. With respect to this project, the main concerns relate to the capacity of the MinisterialProcurement Commission (Commission Ministerielle d'Attribution des Marches) to respond in atimely manner to project needs. The LIF is expected to generate a large number (about 50) ofadditional procurement review requests each year. These requests likely fall around the same timeeach year and have the potential to create a bottleneck at the level of the Ministerial ProcurementCommission. At the individual province level, however, the incremental procurement review needsare small (2-3 per province). It has therefore been agreed with Government that the existingProvincial Procurement Commissions (Commissions Provinciales d'Attribution des Marches) willhandle all procurement under the LIF. Training will be provided for those who have insufficientexperience with the project procurement procedures as detailed in the Project ImplementationManual. This arrangement will be reviewed at the time of the project's mid-term review.

The CPAR underscored the lack of competitiveness at the level of FASO BAARA. Rather thansub-contracting provincial level sub-projects to this AGETIPE, the Project will group provinces andselect service providers on a competitive basis that will manage the procurement for these sub-projects. These procurement intermediaries will follow the guidelines established in the ProjectImplementation Manual.

Procurement of all goods, works and services, other than those related to LIF sub-projects executedby the CVGT/CIVGT will be the responsibility of the PCU. This unit has staff that is fully familiarwith IDA's procurement procedures and its procurement performance has been satisfactorythroughout the predecessor project. No increase in staffing is needed for project implementationsince intermediaries (FASO BAARA or other service providers) will handle most of the incrementalprocurement. The situation will be closely monitored during project implementation and additionalstaff will be recruited and trained if the situation so warrants. The Project appraisal missionconcluded that performance of PCU procurement staff was satisfactory and that sufficientsafeguards are in place to ensure transparency and efficiency. Procurement filing and tracking isadequate. No system is in place, however, to aggregate procurement by procedure or to monitorunit prices. Such a system will be put in place as part of the action plan for LACI compliance.

Procurement for village and inter-village sub-projects under the LIF will be executed by theCVGT/CIVGT using procedures described above and detailed in the Project ImplementationManual. As capacity to execute these types of sub-projects will be weak initially, substantial effortswill be made to train beneficiaries before the start-up of the investment program. Tests wereundertaken during the predecessor project to assess the capacity of beneficiaries to executemoderately complex sub-projects. Results were encouraging. Beneficiaries managed the funds welland were fully implied in all stages of execution. The test pinpointed the need to assist beneficiariesin the selection of engineers to design and supervise civil works where no standard plans exist. Thislesson has been incorporated into the design of the Project. In addition, care will be taken to avoidoverloading beneficiaries -- the investment program will proceed at a pace consistent with theimplementation capacity of the beneficiaries.

Monitoring and Filing. The PCU will set up monitoring and filing procedures in preparation of theProject being cleared for participation in the Loan Administration Change Initiative (LACI). At the

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present time, the procurement monitoring system is not fully LACI compliant. In order to achievecompliance, procurement planning and monitoring (procurement progress, unit costs, etc.) willbecome an integral part of the annual work program and reporting cycle. The annual workprograms and progress reports will include, the updated procurement plan, an overview of allprocurement to date and by procurement method, and an evaluation of procurement problemsencountered during the year under review.

Manuals. A Project Implementation Manual has been prepared. It consists of a main manual withreference to manuals for specific procedures (e.g., Administrative and Financial Procedures, LocalInvestment Fund Procedures, Monitoring and Evaluation). These manuals will be finalized as acondition of credit effectiveness. The manuals clearly detail: (i) eligibility criteria; (ii) proceduresfor calling for bids, selection of contractors, service providers and vendors, and contract award; (iii)supervision procedures; (iv) financial management and disbursement procedures; and (v) proceduresfor reception and handing over of completed works.

Assurances obtained at negotiations. The following assurances were obtained during negotiations:(a) the use of IDA's standard bid documents and standard evaluation reports; (b) application of theprocurement procedures as outlined above and detailed in the Project Implementation Manual; (c)adherence to a target processing schedule as outlined in the table below; (d) annual review of theprocurement plan and procurement arrangements as part of the annual reports; (e) the procurementplan will be updated quarterly and submitted to IDA; and (f) procurement information will becollected as follows: (i) prompt recording of contract information by the Borrower; and (ii) annualand semi-annual progress reports to IDA by the Borrower showing revised cost estimates forindividual contracts and the program as a whole, updated procurement time table, compliance withaggregate limits on specified methods of procurement, and review of procurement issues during thepreceding year with proposals on how to address these.

Procurnemnt Phbas Time delay (in weeks)

Preparation of bidding 4 (6 weeks for large contracts)documents

Preparation of bids by bidders 4 (6-10 for ICB)

Bid Evaluation 2 (3 for large contracts)

Signature of contracts 2

Payment 3

The following will be conditions of effectiveness: the Project Steering Committee has approved: (i)the Project Implementation Manual in form and substance satisfactory to the Association; and (ii)the work program for the first Project Year.

Disbursements

The amounts and percentages to be financed through the IDA credit are detailed in Table C. below.The IDA credit will be disbursed over a period of five years and a half, from January 1, 2001 tillJune 30, 2006. The Credit closing date has been set at six months after the expected date for

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completion of project activities (December 31, 2005), to allow for the orderly processing of finaldisbursement requests and the production of the project's final audit and annual progress reports.

Special Account. To facilitate project implementation and reduce the volume of withdrawalapplications, the PCU will open a Special Account in FCFA in a local commercial bank acceptableto IDA. The authorized allocation will be FCFA 1,500 million and will cover about four months ofeligible expenditures. Upon credit effectiveness and submission of the initial withdrawal request bythe borrower, IDA will deposit the amount of FCFA 750 million representing 50 percent of theauthorized allocation into the Special Account. The remaining balance will be made available whenthe aggregate amount of withdrawals from the Credit Account plus the total amount of alloutstanding Special Commitments entered into by the Association shall be equal or exceed theequivalent of US$ 21 million. The Special Account will be used for all payments inferior to twentypercent of the authorized allocation and replenishment applications will be submitted monthly.Further deposits by IDA into the Special Account will be made against withdrawal applicationssupported by appropriate documentation.

Statement of Expenditures (SOEs). Disbursements for all expenditures should be made against fulldocumentation, except for items of expenditures for: (i) contracts for goods, works, consulting firmsand LIF sub-projects in an amount equivalent or inferior to US$ 50,000; (ii) contracts for individualconsultants in an amount equivalent or inferior to US$ 20,000 and (iii) training, studies andoperating costs, which will be claimed on the basis of Statement of Expenditures (SOEs). Allsupporting documentation for SOEs will be retained at a suitable location and readily accessible forreview by periodic Bank supervision missions and external auditors.

90-day Advance Accounts: Six 90-day advance accounts will be opened for 6 provinces. Theseaccounts will be opened once the provincial teams have been reinforced with a qualified accountantwho has been trained in operating the financial management software and in internal controlprocedures used by the Project. The initial deposit in these advance accounts will be equal to threemonths of anticipated expenditures associated with the LIF sub-projects (matching grants, serviceprovider contracts) and the provincial project team operating costs. The PCU will replenish theadvance accounts monthly based on incurred eligible expenditures.

Counterpart Funds, Project Account. The PCU will open up a project account in a financialinstitution, acceptable to the Association, in which Government's counterpart contribution will bedeposited. The initial deposit will be in the amount of FCFA 500 million, which is equivalent to 6months of expenditures. Replenishments will be done on a semi-annual basis on the basis offorecasts included in the annual work programs and semi-annual progress reports. Theestablishment of this account and the first deposit into it, will be a condition of effectiveness.

Accounting, Auditing and Reporting

The implementing agency (PCU) has a performing financial management system in place which is,however, not compliant with the requirements outlined in the Loan Administration Change Initiative(LACI). This system will be replaced prior to the launch of the Project by a newer generationsoftware which will allow for the monitoring of physical project implementation progress. Theterms of reference and the administrative manual related to the new system have been cleared by theBank as part of the Project preparation process. The PCU and its provincial offices will maintainproject accounts in accordance with International Accounting Standards (IAS) to reflect theiroperations and financial positions and will have all accounts audited in accordance with the IAS, byan external and independent audit firm with terms of reference acceptable to IDA. An audit firm hasbeen recruited as a condition of effectiveness. The contract can be renewed up to a maximum of

71

three years provided performance of the auditor is judged satisfactorily. Assurances will be soughtat negotiations that the auditor's report, including the Management Letter and a statement as towhether or not Bank funds have been used for their intended purpose, will be submitted to IDA nolater than June 30 of each year. In addition, the function of internal auditor will be reinforced andan independent accounting firm will be retained for this purpose. Renewal of the contract with theinternal auditor will be contingent on the conclusions and recommendations of the external auditors.

No later than November 30 of each year, the PCU will submit to the Project Steering Committee,with a copy to IDA, the proposed Annual Work Programs and Financial Report. The report formatwill detail activities, associated unit costs and an implementation timetable. It will also includemonitorable progress indicators for each proposed activity.

In addition, the PCU will submit semi-annual progress reports to its Board showing budgeted andactual expenditures, source of funds used, statements of progress achieved on the basis of the agreedupon indicators and the (revised) objectives and financial reports for the forthcoming six months.

To ensure proper accountability of funds managed by beneficiaries, technical and financial auditswill be carried out on a sample basis. These audits will focus on the technical execution of theworks (technical quality and progress), systems in place to ensure appropriate maintenance, and thatbasic information is available to track the use of the funds (receipts, contracts, comparison ofprices/bids, etc.). Where funds are inappropriately utilized, the Project will cease supportingactivities until all funds have been accounted for. In cases where fraud is suspected, localauthorities will be notified.

Assurances obtained at negotiations. The following assurances have been obtained duringnegotiations: (a) the standard clauses related to appropriate financial management (keeping ofseparate accounts by source of funds, maintenance of information, implementation of annual audits);and (b) a detailed statement on the use of funds at the village level, with an action plan to combatfraud.

The following will be condition of effectiveness: the installation of the new financial managementsystem, including the training of key staff of the PCU.

Monitoring and Reporting

The World Bank is introducing an initiative to change loan administration in the World Bank Groupfinanced projects, the Financial Management Initiative (FMI). This initiative assists projects to putin place sound financial management, procurement, and output monitoring systems. Whereappropriate, if these systems are in place, disbursements may be made on the basis of agreedquarterly Project Management Reports (PMR) rather than on the basis of individual invoices orstatements of expenditure.

During Phase I, the Project will not be considered as being in full compliance with the FMI forpurposes of disbursements. The following action plan has been established in order to make theProject ready for FMI within 18 months of Credit Effectiveness.

72

Action Plan for setting up an accounting and financial management system inpreparation for PMR based disbursements

~~~~~~~Ation D.0;00000:t.A00 dit by Resp0 onsible 7

-Consulting firm to draft Administrative, Accounting & Already doneFinancial Management Manual describing accounting systems Already done Consultingand procedures; internal controls; and flow of funds processes: Firm, PCU,

-IDA comments on first draft; May 31, 2000 IDA/OQKS to- Incorporation of IDA comments August 15 2000 review- Appointment of PCU's key staff

- Other PCU staff August -October, 2000

2 -Agreement on terms of reference for external audit firm; Already done GOVT/PCU,-Agreement on terms of reference for Consulting Firm to IDAestablish a computerized Program Financial Management Already doneSystem (PFMS)

3 IDA FMS carries out an interim assessment of the Financial Already done IDA/OQKSManagement set-up, and issues recommendations for (April 2000)compliance with OP/BP 10.02

4 Recruitment process of Consulting Firm and Auditors:- Finalize bidding documents; Already done GOVT/PCU- Seek IDA no objection;- Publish bids;- Receive and evaluate bids and select winners;- Seek IDA no objection on selected winners.

5 Appointment of External Auditors July 15, 2000 GOVT

6 Appointment of Consulting Firm to design and establish the Already done GOVTcomputerized Progranm Financial Management System

7 Installation of the computerized Program Financial Already done ConsultingManagement system (operationalize the Manual) firm and PCU

-Finalization of a Chart of Accounts;-"Parametrage" of software and agreement on financialreporting format/content;- Test of Financial Management System based on PPFoperations and produce opening financial statements;-Set up all bank accounts (SA, PA, Imprest system, etc.) October 31, Consultingand 2000 firm- Consulting Firm conducts initial training of staff January 31 - Consulting- Continue test for the first semester and produce monthly March 31, 2001 firm and PCUreports.

8 External Auditors review the Program Financial Management November 15- PCU,system for soundness and reliability. 30, 2000 IDA/OQKS

9 Implementation of Auditors recommendations December 1-15, PCU2000

73

Act-- - Da*-due by R- sposlbh

10 IDA FMS carries out the final Assessment of the Program December 15- IDA/OQKSFinancial Management system, issues the LACI sign-off 30, 2000certificate along with the 18-month action plan for adoptingPMR-based disbursement

11 Program Effectiveness. IDAILEGAF

Final Phase

12 Review Program fiancial management at implementation and 6th month of IDA/OQKSmake corrections as required: implementation

-Beef up and accelerate training of staff;-Reinforce PFMS eliminate redundancies;-Up date 18-month action plan.

13 First Program financial audit reports issued. June 30, 2002 PCU

14 Review Program audit reports and follow on implementation Sept. 30, 2002 IDA/OQKSof recommendations.

15 Second PFMS review assessment to ensure compliance with 12th month of IDA/OQKSthe 18-month action is on target. implementation

16 Update PFMS and start PMR-based disbursements on a l5th month of PCU,parallel basis (pilot). implementation IDA/OQKS

17 Third PFMS review assessment and initiation of PMR-based 18th month of PCU,disbursement (LACI). implementation IDA/OQKS

1]8 PMRs issued on a quarterly basis. PCU

74

Table A: Project Costs by Procurement Arrangements b(US$ million equivalent)

: Procurementi Metho

Ependr!iture Ctegory N.B.F. Total CostICB ~~NCR Other

1. Works 0.00 0.00 0.75 0.00 0.75(0.00) (0.00) (0.45) (0.00) (0.45)

2. Goods 1.95 0.70 0.30 1.38 4.33(1.58) (0.63) (0.27) (0.00) (2.48)

3. Services (including 0.00 0.00 26.85 6.90 33.75training & audits) (0.00) (0.00) (22.83) (0.00) (22.83)

4. LIF sub-projects 0.00 12.00 36.79 6.00 54.79(0.00) (8.50) (25.25) (0.00) (33.75)

5. Miscellaneous 0.00 0.00 13.39 5.84 19.23(0.00) (0.00) (6.19) (0.00) (7.19)

6. PPF 0.00 0.00 2.00 0.00 2.00(0.00) (0.00) (2.00) (0.00) (2.00)

Total 1.95 12.70 80.08 20.12 114.85(1.58) (9.13) (56.99) (0.00) (66.70)

1 Figures in parenthesis are the amounts to be fnanced by the IDA Credit. All costs include contingencies' Includes civil works and goods to be procured through national shopping, consulting services, services of

contracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the Project, and (ii) re-lending project funds to local Governmentunits.

75

Table B: Thresholds for Procurement Methods and Prior Review

1. Works US$ 500,000 and above ICB 0.00

US$ 30,000 - US$ 500,000 NCB 0.00

Less than US$ 30,000 Comparison of quotes from 3 0.00established contractors

2. Goods US$ 100,000 or above ICB 1.95

US$ 30,000 - US$ 100,000 NCB 0.00

Less than US$ 30,000 Other (local shopping) 0.003. Services(including US$ 100,000 and above QCBS (international

training & audits) advertised/shortlist) 2.00US$ 50,000 -US$ 100,000 QCBS (intemational /national

shortlist) 6.00Less than US$ 50,000 QBS (for LIF related technical

services)/LCS (for financial 0.00and technical audits)

4. Incremental Operating US$ 100,000 or below Direct contracting, local 0.00Costs shopping, etc.

5. LIF (sub-projects over Initially all sub-projects NCB 2.50US$30,000) over US$50,000 up to an

aggregate amnount ofUS$1.0 million, after this

only all projects overUS$100,000

6. LIIl (sub-projects Less than US$ 30,000 Small works procedures and 0.00under local shopping

US$30,000)

Total value of contracts subject to prior review: 11.45

Overall Procurement Risk Assessment

High

Frequency of procurement supervision missions proposed: One every 12 months includingspecial procurement supervision for post-review/audits.

76

Disbursement

Table C: Allocation of Credit Proceeds

1. Civil Works 0.40 60 %

2. Vehicles and Equipment 2.20 100 % of foreign expenditures and 65 %of local expenditures

3. Consulting Services and Training 19.40 100 % of foreign expenditures and 80 %3.onultngSericsadraiin1.40 of local expenditures

4. Grants (sub-projects financed from 30.40 100%the LIF)

5. Operating Costs 6.10 50 %

6. Project Preparation Facility 2.00 Amount due pursuant to Section 2.03 (c)of the Credit agreement

7. Unallocated 6.20

Total 66.70

77

Annex 7: Project Processing Schedule

Project Schedule Planned Actual

Time taken to prepare the project (months) 18 22First Bank mission (identification) 10/01/1998 10/15/1998Appraisal mission departure 01/15/2000 01/24/2000Negotiations 05/15/2000 08/04/2000Planned Date of Effectiveness 10/31/2000 01/01/2001

Prepared by:

The project has been prepared by a multi-disciplinary Government team assisted by consultants.Members of this teamn included staff of the UGO and technical ministries. It was supervised by theDirector General for Development Cooperation of the Ministry of Economy and Finance.

Preparation assistance:

PPF (US$ 2.0 million) and PHRD Grant (US$ 400,000)

Bank staff who worked on the project included:

Name ecialty

Jane C. Hopkins Task Team Leader, Senior Agricultural EconomistEmmanuel Nikiema Co-TTL, Natural Resource Management SpecialistAndrea Vasquez/Basra Abdillahi-Chire Task Team AssistantsSuzanne Piriou-Sall Decentralization/Community Participation SpecialistMamadou Yaro Financial Management SpecialistFrancois Gadelle Irrigation Specialist

Dirk Prevoo Operations Officer, procurement accreditedR6nee Desclaux Disbursement OfficerPascale Dubois Senior Legal CounselIbrahim Nebie Agricultural Services SpecialistYves-Coffi Prudencio Soil Fertility SpecialistR6mi Kini Environmental EconomistMatthieu Koumoin Traditional Energy SpecialistIbrahim Magagi Health Sector/AIDSCelestin Bado Operations OfficerAmaud Desmarchelier Rural Roads Specialist

78

Annex 8: Documents in the Project File

A. Project Implementation Plan

* Manuel de mise en ceuvre du PNGT2 (juillet 2000)* Manuel des procedures FIL (juillet 2000)* Manuel des procedures administratives et financibres (juillet 2000)* Manuel de formation (juillet 1999)* Manuel de concertation et de capitalisation (juillet 1999)* Manuel de suivi-evaluation (avril 2000)* Referentiel technique

B. Bank Staff Assessments

* Aide-memoire de la mission de preparation du PNGT2 (Girardot-BerglNikiema, fevrier 1999)* Aide-memoire de la mission de pre-evaluation du PNGT2 (Girardot-Berg/Nikiema, juillet 1999)* Aide-memoire de la mission d'evaluation du PNGT2 (Hopkins/Nikiema, fevrier 2000)* Manuel d'execution des micro-projets (Sallier, juillet 1999).* Manuel d'execution des macro-projets (Gadelle, juillet 1999);* Rapport de Mission: Aspects Ncentralisation et Developpement Rural (Piriou-Sall, f6vrier 1999)* NEDAIDGIS Co-financed Traditional Energy Component -- Activity Initiation Brief (Koumoin,

janvier 1999)* PCD Traditional Energy Component (Koumoin, fevrier 1999)* Rapport sur l'am6nagement des ressources naturelles (Coffi-Prudencio, fevrier 1999)* Community Water Supply and Sanitation and Rural Roads (Boukari Tare, fdvrier 1999)* Manuel de procedures du PNGT pour la realisation d'infrastructures de transport rural

(Desmarchelier, fevrier 1999)

C. Other

* Formulation de la phase II du PNGT: Rapport Principales et Annexes (Ministere de IlAgriculture,fevrier 1999)

* Bilan de realisations & resultats de l'evaluation d'iimpact par les beneficiaires et les 6quipes d'appui(Kalala/Lachance, decembre 1998)

* Evaluation environnementale (Andredou et Toe, juin 1999)* Etude d'impact social (Faure, juillet 1999)* Copies of legislation that apply to the Program (decentralization laws and inter-ministerial decrees)

79

Annex 9: Statement of Loans and Credits

DIfference between expected

and actual

Original Amount In USS Mlillons dlaburmients

Project ID Borrower Purpose IBRD IDA Cancel. Undlab. Orig Frm

FY Rev'd

P000296 1998 Burkidn Faso AG SERVICES II 0.00 41.30 0.00 28.99 14.54 8.61

P000287 1994 Buridna Faso HEALTH/NUTRITION 0.00 29.20 0.00 4.55 4.76 2.40

P000283 1997 Burkina Faso MINING CAPACITY BUIL 000 21.40 0.00 15.78 7.40 0.00

P000308 1994 Burkina Faso POPULATION/AIDS CONT 0.00 26.30 0.00 4.90 5.38 0.00

P000304 1997 Burkina Faso POST-PRIMARY EDUC. 0.00 26.00 000 16.36 9.31 0.00

P050886 1999 Burkina Faso PRIVATE IRRIGATION 0.00 5.20 0.00 3.85 1.07 0.00

P000297 1995 Burkins Faso URBAN ENV 000 3700 000 12.85 12.17 12.21

Total: 0.00 186.40 0.00 87.28 54.63 23.22

BURKINA FASOSTATEMENT OF IFC's

Held and Disbursed Portfolio15-Oct-2000

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1999 AEF FasoMine 1.00 0.40 0.00 0.00 0.00 0.00 0.00 0.001997 Ecobank-Burkina 0.00 0.25 0.00 0.00 0.00 0.25 0.00 0.001998 SGBB 0.00 0.38 0.00 0.00 0.00 0.38 0.00 0.00

Total Portfolio: 1.00 1.03 0.00 0.00 0.00 0.63 0.00 0.00

Approvals Pending CommitmentFY Approval Company Loan Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

80

Annex 10: Country at a Glance

BURKINA FASO: COMMUNITY-BASED RURAL DEVELOPMENT

Sub-POVERTY and SOCIAL Burkina Sahamn Low- -

Faso Aflc Income Developmwnt dianond"1908PopulaUion, mid-yew (mnilions) 107 628 3,515 Life expectancyGNP per capa (A0as mehod, USS) 240 480 520GNP (Aftas meho US$SS bl/ons) 2.8 304 1,844

Avrg annuw growth, 190248

Populaton (%) 2.4 2,6 1.7Labor force() 2.0 2,6 1.9 GNP Gross

Motrecentastlmat. ~~atestyearsvaJlsble, 1992-98) per primaryMostmreentwdma atntyaravallabl 199240) Qcapita enrollment

Povety (% Vpoputaoq blow natconl powrty s,e)Urban population (3 olftotalpopulaton) 17 33 31Life expectancy at bih (ears) 44 51 63lnfantemortalfy Owr1,000Mmveblrths) 99 91 s9Child malnututn (% oftchidran under 5) 33 Acces to safe waterAcces to safe water ( f populaton) 4 74Illiteracy (3 0populaIon "a 15+) 79 42 32Grosspmwy enro9hsf (%3 ofaslhool-sgepopuanl 40 77 108 Buwkna Faso

Male 48 84 113 Low-income groupFemale 31 89 103

KEY ECONOMIC RATK3S and LONG-TERM TRENDS

1977 1987 1997 199IEconomic ratloe

GDP (USSbWion) 1.0 2.2 2.4 2.6Gross dontst6ic lnvestnient/GOP 22.1 20.9 27.0 28.8 TradeExports of goods and servIces/GDP 9.0 10.6 11.2 13 8'Gros dometc savhigs/GDP -1.1 0.6 10.5 12.4Gros natna avingsGDP 3.5 8.2 16.8 18.6

Current account balance/GOP -15.7 -12.7 -102 -9.7 \Intees payroneWt/DP 0.2 0.7 0.6 0.6 \yomestIcenTotal debtGOP 16.4 38t4 54.5 54.2 Savings ve nTcotal debt e tvIcl/eXpora 3.1 9.0 14.0 11.5Present value of debtGDP 298Prerent value of debt/exports 189 7

Indebtedness1977-07 1988.8 1997 1S98 199903

(avenige annualf gw1h)GDP 3.7 3.1 4.7 6.2 5.5 - Bw*na FasoGNP per capta 12 0.3 1.7 3.4 2.9 1 Lowncomo gmupExports of goods and services 0.7 0.9 14.2 10.5 5.4

STRUCTURE of the ECONOMY1977 1987 1997 1998 Growth rates of output and Investment (%)

(% of GDP) r,oAgriculture 34.3 31.5 31.8 32.0 4Industry 24.4 24.0 26.9 27.8 20

Manufacturing 18.2 17.3 20.4 21.4 04-Serrices 41.3 44.5 41.3 40.3 -20 - ' 97 go

Private consumption 89.7 84.5 74.9 73.0 0General govemment consumption 11.3 14.9 14.6 14.7 - GDI -;---GDPImports of goods and services 32.1 30.9 27.7 30.0

(average aninual growth) 197747 1988-98 1997 1998 Growth rates of exports and Inmorts (%

Agriculture 2.5 3.0 -1.3 6.5 40Industry 3.6 2.2 10.6 10.9 20-

Manufacturing 2.8 2.2 11.2 12.4Services 6.2 3.2 8.0 4.5 o,

Y 9,3NV 96 S1gS 7 9'6Private consumption 2.9 2.9 3.6 6.8 20General govemment consumption 8.4 2.4 5.7 6.2Gross domesic investment 7.2 3.2 0.2 0.9 0 -Impots of goods-and servkes 3.6 1.4 0.9 55 - Exports O ImportsGross national product 3.7 3.1 4.5 6.3

Note: 1998 data are preliminary estimates.

* The diamonds show four key Indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe incomplete.

81

Burkina Faso

PRICES and GOVERNMENT FINANCE

Domestic prIces 1977 1987 1997 1998 Inflation (%)

(% change) 30 -Consumer prices -2.9 2.3 2.5 20impicit GDP detlator 18.7 1.6 2.2 31f

10.Government finance(% of GDP, Includes curent grants) 90 94 95 95 97 9O

Current revenue 12.2 13.8 14.4 -10Current budget balance 1.2 3.7 4.0 GDP denator *CPOverall surplus/deficit -23.6 -9.5 -8.4

TRADE

(US$ millions) 1977 1987 1997 1998 Export and Import levels (U8$ millions)

Total exports (fob) 229 307 gmCotton 128 207meat . .. 48 48Manufactures 4.

Total imports(f) (510 607Food 71 111 200IFuel and energy 69 72 - g 9 9 99Capital goods 155 198 6

Export price index (1995100) 102 98 92 93 94 95 9r 97 go

Import price Index (1995=100) 110 104 a ExporsTen,s of trade (1995=100) 93 95

BALANCE of PAYMENTS

(USS millions) 1977 1987 1997 1998 Current account balance to GDP rauo (%)Exports ofgoods and serioe 112 229 267 359 e Importsofgoodsandservioes 316 687 680 772Resource balance -203 -438 -393 -413 .*

Netincome 6 0 -13 -12Netcurrenttransfers 40 164 164 174 4*

Current account balance -157 -274 -242 -251

Financing items (net) 139 307 208 218Changes in net reserves 18 -33 35 33 -12

Memo:Reserves Including gold (USS millions) .. 323 350 373Conversion rate (DEC, hDcalVS$) 245.7 300.5 583.7 589.9

EXTERNAL DEBT and RESOURCE FLOWS1977 1987 1997 1998

(US$ millions) Compoewon of total debt, 1998 (USS mililons)Total debt outstanding and dIsbursed 164 828 1,297 1,399

IBRD 0 0 0 0 G. 9IDA 31 221 639 710 E: 130

Total debt service 6 36 52 53IBRD 0 D 0 0IDA 0 2 10 10

Composition of net resource flows D: 38S 8:710Official grants 42 110 207 225Ofcial creditors 41 99 39 38Private creditors 1 -4 0 0Foreign direct investment 5 0 0 0Portiblioequlty 0 0 0 0 c:112

World Bank programCommitments 13 0 12 15 A-IBRD E-BilateralDisburseffents 13 22 47 42 B -IDA D-Othermuatral F -PrivatePrincipal repayments 0 1 5 5 c - IMF G - Shorlt-ermNetflows 13 21 42 37Interest payments 0 2 5 5Notransfers 13 20 37 32

Development Economics 9/20/99

MAP SECTION

BURKINA FASO 50 100 150 200 M A L I MAURITANIA A o

COMMUNITY- BASED RU RAL KLOMETERS / KILOMETRES ,M A L If NG

DEVELOPMENT PROJECT(PNGT2) BU , IILRKINA FASC

INTERVENTION AREAS OUDALAN ,- G ' r' o d N'\

PNGT2 DIRECT INTERVENTION , 3'I''S ATE /GHANA 'COTE

PNGT2 INDIRECT INTERVENTION ) CM ,•-~ IEM W0IOIR >

|A f NATIONAL CAPITAL DORIbo $ I

® PROVINCIAL CAPITALS (before 1997) ToORt

-~--~•~- RIVERS 2' <AM

PROVINCE BOUNDARIES (after 1997) SANMAtNGA

= - INTERNATIONAL BOUNDARIES SOUyROU Vb

- PAVED ROADS T,I SoGro

UNPAVED ROADSNon -ALL WEATHER USE OMRE- 'o

9'4r

tLWeA e u5L ~~~~~-0 t9/~NAYALA2 K7£ ;XOtNDJ,gz;8 r

- ---- UNPAVED ROADS\~ MO~ INTERMITTENT USE -' kAP

M A L I T<o:tT K ANWA. .MOUO VN ANAA \ POA

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boundaries, colots, denorosh-ons

this sop do rot imply, on the port of> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The World Bork Group, -oy judgmet j,

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