Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 53305-BD

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 76.2 MILLION (US$115 MILLION EQUIVALENT)

TO THE

PEOPLE’S REPUBLIC OF BANGLADESH

FOR THE

EMPOWERMENT AND LIVELIHOOD IMPROVEMENT “NUTON JIBON” PROJECT

(ALSO CALLED SOCIAL INVESTMENT PROGRAM PROJECT - SIPP II)

May 28, 2010

Sustainable Development Department Agriculture and Rural Development Sector Unit South Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective: April 30, 2010)

US$ 1 = BDT 68.5 BDT 1 = US$ 0.0146 SDR 1 = US$ 1.51

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AMTs Appraisal and Monitoring Teams IGVGD Income Generation for Vulnerable Group Development

CAP Community Assessment Process JG Jibikayan Group CAS Country Assistance Strategy JOTAP Joint Technical Assistance Program CDD Community Driven Development MDGs Millennium Development Goals CFPR Challenging the Frontiers of Poverty ML&E Monitoring Learning & Evaluation CFTs Cluster Facilitation Teams MFI Micro-Finance Institution COM Community Operational Manual MIS Management Information Systems CP Community Professional MoEF Ministry of Environment and Forests CPLTC Community Professional Learning and Training MoF Ministry of Finance Center MTR Mid Term Review DFID Department for International Development NGO Non-Government Organization DOE Department of Environment NSAPR National Strategy for Accelerated

Poverty Reduction EA Environmental Assessment PCN Project Concept Note EAF Economic Activity Federation PCT Procurement Core Team EAG Economic Activity Group PDO Project Development Objective ESMF Environmental and Social Management

Framework PIP Project Implementation Plan

EIA Environmental Impact Assessment PKSF Palli Karma Sahayak Foundation EMP Environmental Management Plan PMA Process Monitoring Agency GAAP Governance and Accountability Action Plan PRSP Poverty Reduction Strategy Paper GDP Gross Domestic Product SAC Social Audit Committee GoB Government of Bangladesh SDF Social Development Foundation GFC Governance Fraud and Corruption SIL Specific Investment Loan GP Gram Parishad SIPP Social Investment Program Project GS Gram Samiti SME Small and medium size enterprises HCP Hard Core Poor SMT Strategic Management Team HIES Household Income and Expenditure Survey SSC Sanchay Sangrakham Committees HR Human Resource SSNP Social Safety Net Programs IBRD International Bank for Reconstruction and Tk Taka Development TUP Targeting the Ultra Poor IDA International Development Assistance UNDP United Nations Development

Programme IEE Initial Environmental Examination VCO Village Credit Organization IEG Independent Evaluation Group VDRRF Village Development and Risk IUFRs Interim Unaudited Financial Reports Reduction Fund

Vice President: Isabel Guerrero Country Director: Ellen Goldstein

Sector Director John H. Stein Sector Manager: Simeon Ehui

Task Team Leader: Meena M. Munshi

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BANGLADESH Empowerment and Livelihood Improvement “Nuton Jibon” Project

TABLE OF CONTENTS

Page

I.  STRATEGIC CONTEXT AND RATIONALE ............................................................................... 1 

A.  Country and Sector Issues ................................................................................................................ 1 

B.  Results and Outcomes of Phase 1 Project and Three Additional Financings .................................. 3 

C.  Rationale for Bank involvement ...................................................................................................... 4 

D.  Higher level objectives to which the project contributes ................................................................. 5 

II.  PROJECT DESCRIPTION .............................................................................................................. 5 

A.  Lending instrument .......................................................................................................................... 5 

B.  Program objective and Phases ......................................................................................................... 5 

C.  Project Development Objective and Key Indicators (refer to Annex 3) .......................................... 6 

D.  Project Components (refer to Annex 4) ........................................................................................... 7 

E.  Lessons learned and reflected in the project design ......................................................................... 8 

F.  Alternatives considered and reasons for rejection ......................................................................... 10 

III.  IMPLEMENTATION ...................................................................................................................... 11 

A.  Institutional and implementation arrangements (refer to Annex 6) ............................................... 11 

B.  Monitoring, Learning and Evaluation of Outcomes and Results (Refer to Annex 3) .................... 13 

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

D.  Critical Risks and Possible Controversial Aspects (refer to Annex 9) .......................................... 15 

E.  Credit Conditions and Covenants .................................................................................................. 18 

IV.  APPRAISAL SUMMARY ............................................................................................................... 19 

A.  Economic and financial analyses (refer to Annex 10) ................................................................... 19 

B.  Technical ........................................................................................................................................ 20 

C.  Fiduciary (Refer to Annexes 7 and 8) ............................................................................................ 21 

D.  Social (Refer to Annexes 11 and 12) ............................................................................................. 23 

E.  Environment (Refer to Annex 11) ................................................................................................. 24 

F.  Safeguard Policies (refer to Annex 11) .......................................................................................... 25 

G.  Policy Exceptions and Readiness ................................................................................................... 26 

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Annex 1: Country and Sector Background ........................................................................................... 27 

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .............................. 35 

Annex 3: Results Framework and Monitoring ...................................................................................... 36 

Annex 4: Detailed Project Description ................................................................................................... 45 

Annex 5: Project Costs ............................................................................................................................ 55 

Annex 6: Implementation Arrangements .............................................................................................. 56 

Annex 7: Financial Management and Disbursement Arrangements .................................................. 64 

Annex 8: Procurement Arrangements ................................................................................................... 76 

Annex 9: Governance and Accountability Action Plan ........................................................................ 85 

Annex 10: Economic and Financial Analysis ........................................................................................ 90 

Annex 11: Safeguard Policy Issues ......................................................................................................... 99 

Annex 12: Youth and Gender Strategy ................................................................................................ 102 

Annex 13: Project Preparation and Supervision................................................................................. 107 

Annex 14: Documents in the Project File ............................................................................................. 109 

Annex 15: Statement of Loans and Credits ......................................................................................... 110 

Annex 16: Country at a Glance ............................................................................................................ 112 

Annex 17: Map IBRD No. 37833 .......................................................................................................... 114 

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BANGLADESH

EMPOWERMENT AND LIVELIHOOD IMPROVEMENT “NUTON JIBON” PROJECT

PROJECT APPRAISAL DOCUMENT

SOUTH ASIA

SASDA

Date: May 28, 2010 Team Leader: Meena M. Munshi Country Director: Ellen Goldstein Sector Manager: Simeon Ehui Sector Director: John Henry Stein

Sectors: Agricultural marketing and trade (5%); Agro-industry (5%); General agriculture, fishing and forestry sector (10%); General sanitation, water and flood protection (10%); Other social services (70%) Themes: Rural markets (12%); Gender (14%); Rural non-farm income generation (15%); Rural policies and institutions (17%); Participation and civic engagement (20%); Rural services and infrastructure (20%)

Project ID: P073886 Environmental screening category: B - Partial Assessment

Lending Instrument: Specific Investment Credit

Project Financing Data[ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: For Credits: Total IDA financing (US$m): 115.00 Proposed terms: Standard Credit with maturity of forty (40) years including a grace period of ten (10) years.

Financing Plan (US$m)Source Local Foreign Total

People’s Republic of Bangladesh (GoB has contributed its share of US$15 million towards the Endowment Fund)

0.00 0.00 0.00

International Development Association (IDA) 110.00 5.00 115.00Local Communities 5.00 0.00 5.00Total: 115.00 5.00 120.00 Borrower: People’s Republic of Bangladesh Responsible Agency: Social Development Foundation (SDF), Banking and Financial Institutions Division, Ministry of Finance, House 4, Road 21, Sector 4, Uttara Model Town, Dhaka, Bangladesh, Fax 880-2-896 1096 , Email: md@sdfbd.org

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Estimated disbursements (Bank FY/US$m)FY FY11 FY12 FY13 FY14 FY15 FY16 Annual 5.0 10.0 25.0 40.0 20.0 15.0 Cumulative 5.0 15.0 40.0 80.0 100.0 115.00 Project implementation period: Start July 1, 2010 End: March 31, 2016Expected effectiveness date: September 30, 2010 Expected closing date: June 30, 2016 Does the project depart from the CAS in content or other significant respects? Ref. PAD I. D. [ ]Yes [ x ] No

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

[ ]Yes [ x] No [ ]Yes [ ] No [ ]Yes [ ] No

Does the project include any critical risks rated “substantial” or “high”?Ref. PAD III D. [ x ]Yes [ ] No

Does the project meet the Regional criteria for readiness for implementation? Ref. PAD IV. G. [ x ]Yes [ ] No

Project development objective Ref. PAD II.C., Technical Annex The Project Development Objective (PDO) would be to improve the livelihoods, quality of life and resilience to climate variability, natural hazards and other shocks of the rural poor, especially the left-out poor and vulnerable households. The PDO will be achieved by employing a Community-Driven Development (CDD) strategy to: (i) empower the poor and strengthen local governance by developing sustainable, participatory and accountable rural community institutions; (ii) reduce vulnerability of the poor to risks, in particular those associated with natural hazards and climate variability; (iii) increase employment opportunities by enhancing skills, supporting the start up or expansion of income generating activities, and strengthening access to markets and financial institutions; and (iv) support small-scale demand-driven community investment sub-projects that are prioritized, implemented and managed directly by the rural poor. Project description [one-sentence summary of each component] Ref. PAD II. D., Technical Annex 4 Component A: Community and Livelihoods Development at the Village Level. This component would mobilize and empower the poorest and most vulnerable households, build and strengthen pro-poor community institutions; and fund village development and livelihood related investments incorporating risk reduction plans. Component B: Institutional Development and Livelihoods Promotion at the Inter-village Level. This component will promote inter-village development to consolidate and sustain livelihood activities and investments generated at the village level, promote business and establish market and informational linkages for community organizations, and facilitate job creation. Component C: Capacity Development and Partnership Building from Cluster to National Levels. This component will strengthen the capacity of the implementing agency - SDF - and other relevant partner agencies at all levels to deliver services and build linkages and synergy with the local governments and other public and private sector agencies; and support innovative and replicable interventions on a pilot basis in the areas of CDD approach, local level governance, climate risk management and community adaptation, environmental sustainability and livelihood development.

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Component D: Project Management, Monitoring and Coordination. This component will support overall project coordination and management at national, regional and district levels; and monitoring, learning, communication and evaluation. Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 11 OP/BP 4.01 Environmental AssessmentSignificant, non-standard conditions, if any, for:Ref. PAD III.E. Board presentation: None Credit effectiveness: The Subsidiary Grant Agreement has been executed on behalf of the Government of Bangladesh (GoB) and SDF. Covenants applicable to project implementation:

GoB to ensure that SDF shall be responsible for management and coordination of project activities and shall maintain: (a) a General Body consisting of broad representation from key stakeholders including civil society and the corporate sector and shall meet and function in accordance with quorum and frequency as described in the Articles of Association; (b) a Governing Body which shall include members from key stakeholders and shall meet and function in accordance with quorum and frequency described in the Articles of Association; and (c) the staff and management with skills, qualifications and experience and selection process as set out in the Human Resource Policy and Manual agreed with IDA on May 13, 2010.

GoB to ensure that Articles of Association of SDF shall not be amended, suspended, abrogated,

repealed, or waived without IDA’s prior consent.

GoB to cause SDF and all other project entities to implement the project in accordance with the Project Implementation Plan (PIP), the Community Operational Manual (COM), Community Professional Center (CPC) and Federations Manuals, the Governance and Accountability Action Plan (GAAP) and the Environmental and Social Management Framework (ESMF), as agreed with IDA.

GoB to set-up an Endowment Fund of at least US$15.0 million to ensure long-term sustainability

of SDF by no later than June 30, 2011. General Implementation and Project Management

SDF shall: (a) prepare and adopt an Economic Activity Federation Manual (EAF) by March 31, 2011; (b) take necessary measures to ensure that the national, regional, district and field teams carry out activities as agreed and set forth in the PIP, Manuals, GAAP and ESMF; and (c) not amend or waive any provision of PIP and Manuals without IDA concurrence.

SDF shall implement the Human Resource Policy and Manual dated May 13, 2010; and recruit

and retain staff as per the agreed policy outlined in the HR Manual, and according to the timeline for implementing the HR Policy and Manual, as reflected in the revised draft.

SDF shall maintain during the project implementation period, internal and external auditors,

whose qualifications and experience are satisfactory and acceptable to IDA.

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SDF shall prepare an annual plan and budget for implementing the project for the financial year, not later than March 31, of each year, starting from 2011, and such plan shall be finalized not later than June 30 of that year taking into account IDA’s comments.

Village Grants

SDF shall ensure that: (a) community subprojects are selected and appraised in accordance with the criteria and procedures specified in the COM; (b) Credit funds are released to community organizations, federations including producer federations and CPCs, implementing the project in accordance with agreed grant agreements; (c) the Grant agreements are used exclusively to finance goods, works and services, and on an on-lending basis to finance asset creation, household needs and livelihood enhancement; and (d) each Grant is calculated according to a pre-determined cost sharing formula as specified in the COM and other community manuals.

Land use Acquisition

In carrying out the project, SDF shall ensure that there would be no involuntary land acquisition; and the Project shall be implemented as far as reasonably practicable on publicly owned land, using exclusively land free from squatters, encroachments and other encumbrances; any acquisition of private land, if needed, would be through outright purchase at market rates or voluntary donation and in accordance with guidelines and procedures set forth in the PIP and COM.

Monitoring, Learning and Evaluation

SDF shall submit to IDA, Quarterly Progress Reports giving status of project processes, results and milestones, financial and technical progress.

SDF shall carry out a mid-term review of the project by not later than September 30, 2013. SDF shall prepare and adopt, by December 31, 2010, an information disclosure policy acceptable

to IDA and thereafter implement it through the project implementation.

SDF shall establish by December 31, 2010, and thereafter maintain throughout Project implementation in a manner satisfactory to IDA, a Village Rating System to recognize and reward well performing villages and channel assistance to poor performing villages.

SDF shall establish by December 31, 2010, and thereafter maintain throughout Project implementation period a Director level position in-charge of implementation, monitoring, evaluation and reporting of governance and accountability aspects included in the PIP, COM and GAAP.

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I. STRATEGIC CONTEXT AND RATIONALE

A. Country and Sector Issues

1. The proposed project is the second phase of the ongoing Social Investment Program Project (SIPP). The initial operation (Cr. 3740), in the amount of US$18.3 million equivalent, was approved in 2003 to respond to GoB’s request to pilot new ways of delivering critical small-scale infrastructure services and social assistance to the rural poor in two districts. Since then, three Additional Financing Credits approved in 2007 and 2008, amounting to approximately US$85.0 million, have expanded SIPP’s mandate to cover more districts and to include disaster risk management and livelihoods promotion for the poorest and most vulnerable, who have thus far been outside the reach of most development and microfinance interventions. The proposed project will now support GoB efforts to scale up the program further to reach the hard core rural poor and disadvantaged groups throughout a greater area of the country. The design of the proposed project builds on the implementation experience and lessons learned during the original project and three Additional Financings.

2. Country Context and Background: Bangladesh has made remarkable progress in reducing poverty over the last 15 years. The proportion of the population living in poverty has fallen from about 60 percent in the early 1990s to 40 percent in 2005. Economic growth has been strong, averaging 5.7 percent from 2001 to 2006. Inflation has been relatively low with fairly stable domestic debt, interest and exchange rates, and the country has made significant progress towards achieving a number of human development-related Millennium Development Goals (MDGs), such as infant and child mortality and gender parity in education. 1

3. Notwithstanding these achievements, about 56 million people (40 percent of population) are still living in poverty, and 85 percent of them are in rural areas, where income and employment opportunities, in addition to delivery of adequate basic services, are seriously constrained. Of the rural poor, nearly one third are suffering from chronic income poverty, and are therefore termed “hard core poor” (HCP)2. The exclusion of a large section of the rural population from sharing in available services and the benefits of recent growth is a challenging agenda for Bangladesh’s development. The many social safety net provisions intended for these groups are inadequate; the combined coverage rate of these programs has managed to reach only some 15 percent of the population in rural and 5 percent in urban areas; and they have faced major challenges in establishing clear targeting criteria. As a result, exclusion of eligible persons and inclusion of non-target groups have become more common occurrences. Recent evidence suggests that inequality and regional disparities in the country are increasing3 and that addressing the needs of the poorest is critical in order to enable more equitable, faster-paced, sustainable growth in the coming years.

4. The latest household survey for Bangladesh, on which national poverty data is based, was carried out in 2005. Since then, several major natural disasters and recurring community-wide weather-related shocks have had a significant accumulated impact and have likely eroded some of the above mentioned gains in poverty reduction. Some of these are seasonal, while others are more unpredictable, like the major floods and tropical cyclones that occurred in 2007 and 2009. It is estimated that the 2007 cyclone

1 Bangladesh is on track to meet the MDG in gender parity, having already achieved the goal in primary and secondary education. It increased gross primary enrollment from 72% in 1980 to 98% in 2001 and has already attained the MDG for eliminating gender disparity in primary and secondary enrollment. There has been a sharp decline in infant mortality from 145 to 46 per 1000 live births between 1970 and 2003, and child mortality from 239 to 69 per 1000. The country is well on its way to achieve the targeted two-thirds reduction from 1990 levels by 2015. 2 31%, as noted in ‘Chronic Poverty in Bangladesh’, Bangladesh Institute of Development Studies (2006). 3 Dhaka, Chittagong, and Sylhet divisions in the western part of the country experienced rapid poverty reduction, while in the west, meanwhile gains were much smaller for Rajshahi and nonexistent for Barisal and Khulna.

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and floods alone caused a combined loss to the Bangladesh economy of about BDT 189.4 billion, or 4.7 percent of the previous fiscal year’s GDP. The successive occurrence of these events is a reminder of the extreme vulnerability of the country to frequent hydro-meteorological hazards. As a country that is highly susceptible to natural disasters, climate variability is only likely to exacerbate the frequency and incidence of such calamities. Agriculture and natural resources are important components of the national economy, and are extremely sensitive to climate variability and sea level rise – to which it is broadly recognized that Bangladesh is one of the nations most at risk.

5. It has been projected that a large concentration of the population within a relatively narrow band of consumption around the poverty line is vulnerable to falling into poverty as a result of even small shocks; the impact is even more severe for those falling further down the distribution curve. Food security, health, livelihoods and access to basic services of water and sanitation, energy and shelter are sectors that are likely to be compromised. There is a vicious cycle of disaster and poverty and each new calamitous event deepens poor people’s vulnerability and slows development. The main challenge for policy makers and development practitioners is therefore to sustain and integrate vulnerability risk reduction as part of the life and livelihoods of the poor, while attempting to narrow prevailing inequities and remove impediments that have constrained the poorest from participating and gaining from poverty reduction and growth.

6. GoB is committed to addressing inequity and poverty through a broad reform program designed to accelerate economic growth. GoB’s vision was embedded in the Poverty Reduction Strategy Paper (PRSP), “Unlocking the Potential”, released in October 2005 as the country’s first National Strategy for Accelerated Poverty Reduction (NSAPR), and which centers on a policy triangle of growth, human development and governance. The more recent NSAPR II (FY 09-11) builds on this. Amongst the critical and cross-cutting strategies that are essential to achieve the ‘strategic blocks’ of pro-poor economic growth, reduced vulnerability and human development, are participation and inclusion, good governance and improved service delivery.

7. The Bangladesh Country Assistance Strategy (CAS) (proposed 2010-13) aligns IDA assistance with this NSAPR II, as reflected in its two pillars which emphasize empowering the poor and improving the climate for growth, as well as its cross-cutting focus on governance. Expanding poor people’s ability to make choices and take actions is at the heart of empowerment. Developing their capacity to organize, access and take advantage of available opportunities will enable both social and economic empowerment, and reduce vulnerability.

8. The project is in line with GoB’s vision of pro-poor growth and reduced vulnerability and human development. One way of empowering the poor is through a Community-Driven-Development (CDD) approach that increases community control over resources and decision-making, while developing their capacity to reach out to markets and services, and manage risks. Since 2003, GoB, with support from IDA, has been implementing the Social Investment Program Project (SIPP), implemented by the Social Development Foundation (SDF). This is a CDD operation, which was originally initiated in the two poorest north-western districts of Jamalpur and Gaibandha, to test new ways of delivering critical infrastructure services and social assistance to the rural poor.

9. The pilot successfully demonstrated the capacity of rural villagers, especially poor and HCP women, to develop participatory and inclusive village institutions, accountable to their members and capable of prioritizing needs, managing resources and implementing sub-projects. In 2007, the first Additional Financing Credit was approved to consolidate gains and deepen institutional development and to test an approach with greater focus on livelihoods in a small number of villages in four additional districts, to inform preparation of this larger follow-on operation. This was in response to demand from participating communities for more productive livelihoods opportunities, sustainable income and

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employment. GoB expanded the program further to respond to cyclone Sidr in 2007 and devastation caused by flood during 2008. As a result, two more Additional Financings were approved in January 2008 and July 2008 to cover affected areas. These Second and Third Additional Financings formed part of IDA’s comprehensive response to the flood and Sidr disasters, addressing the post-relief period and aimed at livelihoods and asset restoration of the poorest and most vulnerable families in the affected districts. The program thus has expanded from US$18.0 million (in 2003) to approximately US$100 million (by mid-2008).

10. GoB is now interested in preparing a much larger scale up of the program, to reach the hard core rural poor and disadvantaged groups in additional districts throughout the north and west of the country’s poorest divisions (namely Rajashahi, Rangpur, and Barisal). Since its pilot phase, the project’s focus has broadened to reflect the demands and priorities of rural communities: sustainable livelihood development, community finance, micro-enterprise development and employment. Furthermore, issues of vulnerability are a central concern given the level of community exposure to natural hazards and the additional risks related to climate variability. As under the original project, the operation would support the creation and strengthening of sustainable and effective institutional arrangements at the local level, through which communities are empowered to address their own basic needs with investments in small-scale infrastructure, social assistance and income-generating subprojects. The focus on capacity building of the poor via strengthening and direct financing to village level institutions has been maintained, with an enhanced focus on building resilience and preparedness for future natural disasters by mainstreaming risk management and reduction measures into people’s lifestyles and livelihoods.

B. Results and Outcomes of Phase 1 Project and Three Additional Financings

11. The original project and three Additional Financings have focused on building and strengthening community level organizations and developing institutional mechanisms to channel funding directly to these community organizations. To date, the program has reached 500,000 households (roughly three million population) in seven of the poorest districts in the country. The program has filled a unique niche by reaching the uncovered, most vulnerable, and the poorest. Noteworthy accomplishments of the program to date are:

(i) Pro-poor community organizations strengthened. About 1,350 community level pro-poor institutions have been established that are deciding their priorities and managing project funds in a transparent manner. Most decision-making positions are occupied by poor women.

(ii) Community infrastructure and social services to address connectivity needs of the poor delivered. About 1,700 community subprojects (roads, culverts, bridges, etc.) have been either completed or are under implementation; and are being operated and maintained by the community organizations.

(iii) Women expanded savings groups benefiting from financial resources. 80 percent of target beneficiaries have formed nearly 21,500 savings groups, with 90 percent women membership. 90 percent of these groups have started small-scale internal lending to members. Almost US$1.0 million has been mobilized; and about 205,000 households are benefiting from financial resources provided through revolving funds and have started income generating activities.

(iv) Skills enhancement and job creation. About 75,000 vulnerable youth have been organized into 1,900 youth groups, and are benefiting through skills enhancement and job creation in partnership with local growth industries and reputable private sector partners (e.g., garments; telecommunications; security services, etc).

(v) Grants for the poorest/destitute. Nearly 30,000 of the poorest and most vulnerable individuals have received occupational skills training and one-time grants for income generation.

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12. In terms of impact, an independent mid-term review (MTR) carried out in 2006 and subsequent assessments carried out during preparation4 showed that the quality of small-scale infrastructure activities financed by SIPP and managed directly by beneficiaries is much better than comparable works delivered under regular government programs. For example, the assessment found that the compactness and durability of the earthen works was much higher than that of the earthen works constructed by other institutions, such as Union Parishads (local governments). The study also demonstrated cost efficiency of the infrastructure subprojects – these activities cost about 15 to 20 percent less than similar activities delivered by traditional public sector programs. The assessment showed that the sustainability index of community led infrastructure is quite high due to close involvement of the beneficiaries in managing infrastructure. Connectivity and transportation gains have been significant, with costs reduced by 25 to 50 percent. Similarly, an assessment on Multiplicity of Credit found loan disbursement to be impressive: about 50 percent of the small group members have benefitted from the revolving funds; and 25 percent have benefitted from one-time grants. Early indications on employment also seem impressive when comparing the before and after situation – about 85 percent of trained youth have found employment. The rate of return on small income generation subprojects in agriculture and livestock was 45 percent and 31 percent respectively; returns on poultry and tree plantation investments were even higher and overall community satisfaction and ownership was found to be very strong.

C. Rationale for Bank involvement

13. The current program has thus far demonstrated that its community driven and participatory approach has been effective in empowering the poor, building and strengthening their institutions to deliver services, and improving incomes and response to shocks. GoB has now requested IDA to support phase 2 of the program and scale up the community led model to additional geographical areas of the country. IDA’s increasing global experience in the design and implementation of cross-sectoral, community-driven livelihoods programs makes it well placed to assist GoB in scaling up its achievements to date. Through the project, both tangible (i.e. physical and financial) and intangible (i.e. social and institutional) assets are being built that enhance peoples’ voice, well-being and livelihoods, thereby addressing both income and non-income dimensions of poverty. Several IDA-financed community driven and livelihood development operations in the South Asia region provide valuable lessons for the expansion of this approach in Bangladesh5. Apart from contributing to poverty reduction, per se, such projects also help to lay the foundations for greater transparency in the use of public resources and strengthen local governance by building voice and participation of citizens, communities and local institutions. The project is expected to have a demonstration effect and influence GoB’s other poverty reduction programs to adopt inclusive and participatory methodologies and direct funding approaches. IDA is also well placed to offer the continued support needed for longer-term operations of this nature. 14. Partnership arrangements: In the context of this program, IDA is in continuous dialogue with local and international agencies, and would further strengthen partnerships with the Department for International Development (DFID), under the Bangladesh Country Trust Fund, and partnership with the Palli Karma Sahayak Foundation (PKSF) under the Second Additional Financing for Flood Rehabilitation. Partnerships are also planned with selected local organizations specializing in disaster management and risk reduction, and co-production arrangements with the private sector will be deepened. While no formal co-financing arrangement is envisaged at this time, the current program has benefited from an active partnership with the UK’s DFID under their Joint Technical Assistance Program (JOTAP).

4 Impact and Sustainability of Community Infrastructure and Multiplicity of Credit 2010. 5 Projects are currently under implementation in Sri Lanka, Nepal, Pakistan, Bangladesh, Afghanistan and five Indian states (Andhra Pradesh, Rajasthan, Madhya Pradesh, Chhattisgarh and Tamil Nadu), with a combined portfolio investment of U$1.6 billion. In other regions (e.g., East Asia’s Kecamatan Development Project and Brazil’s Northeast Rural Poverty Reduction Program), useful lessons and experience have also informed SIPP. Please see paras 30 and 31.

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JOTAP resources have assisted SDF to build internal capacity and pilot innovations on the ground, particularly in the areas of social accountability and local governance; participatory methodologies for identifying/targeting the poor; innovations in community financing and community-led livelihoods development, etc. It is anticipated that such a productive capacity building and technical assistance partnership will continue, with further opportunities for cross-learning broadened to other development partners, such as UNDP – whose Urban Poverty and Livelihoods initiative is already engaged in dialogue and exchange with SIPP. D. Higher level objectives to which the project contributes

15. The proposed project is consistent with the Bangladesh Country Assistance Strategy (CAS) 2006-2010, which addressed improved investment climate and economic empowerment as the cornerstones of a poverty reduction strategy; and is fully aligned with the new CAS (2010-13) currently under preparation, that draws strongly from the GoB’s key priority areas for the country’s economic growth strategy. Its key objectives are to assist GoB to increase competitiveness and sustain growth; to improve access to service delivery and social safety nets for the poor; increase agricultural growth to improve food security; and implement effective climate and disaster risk management measures to reduce vulnerability. These objectives are closely aligned with, and will contribute to GoB and IDA’s strategic priorities, to bring vibrancy to agriculture and rural life, with an extension of the social safety net system to effectively capture the ultra poor. In the Government’s current manifesto, the elimination of poverty and inequality targets a reduction in poverty headcount to 25 percent by 2013. GoB also aims to increase employment opportunities in the rural economy through provision of credit and training for self employment and creation of employment opportunities for wage labor in industries. 16. GoB’s vision for addressing inequality and poverty is presented in its second National Strategy for Accelerated Poverty Reduction (NSAPR, FY09-11), which centers on achieving sustainable and inclusive pro-poor economic growth, through a matrix of strategic blocks and cross-cutting support strategies. The proposed project’s focus is on inclusive growth, through livelihoods development, employment generation, risk management and income generating opportunities for rural communities.

II. PROJECT DESCRIPTION

A. Lending instrument

17. The lending instrument would be a Specific Investment Credit (SIC), under standard IDA terms. B. Program objective and Phases

18. There is widespread agreement that a long-term approach of 12 to 15 years is needed to reach out to the most disadvantaged and hard core poor in a sustainable way, given the extent of poverty and vulnerability in rural Bangladesh, on the one hand, and the time needed for capacity building and institutional development to effectively provide voice and empower poor people and take them out of poverty, on the other.6 The proposed project, known as the Empowerment and Livelihood Improvement “Nuton Jibon” Project7 and included in the current CAS, should be seen as one of a series of such interventions to achieve the longer term goals of the program, to which IDA management is firmly committed.

6 See the “Effectiveness of World Bank Support for Community-Based and Driven Development”(2005) OED report. 7 Means “new life” in the local Bangla language.

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19. Through the proposed project, the ”Nuton Jibon” program will support holistic village development that includes vulnerability risk reduction (including adaptation to climate variability) as part of an overall strategy to ensure sustainability of investments and help the poor to cope, become more resilient and better prepared for future disasters and shocks. This model is currently being implemented under the Second and Third Additional Financings. The proposed project would focus on building and strengthening second generation community institutions at cluster and Upazila levels for community led financing and livelihoods improvement, direct productive investments and forward linkages with markets and the financial sector. Finally, given the introduction of untied block funds at the Union Parishad level of local government, the project will support the ‘demand-side of governance’ and downward accountability issues8 by: (a) organizing the rural poor, especially the poorest women and other vulnerable groups and including them in benefits and decision making, and providing special assistance for disadvantaged sections; (b) building linkages and partnerships with Union Parishads (Local Governments), credit and financial institutions, markets and corporate sectors; and (c) supporting institutional development of community groups through capacity building and development of strong federations that are institutionally and financially sustainable.

C. Project Development Objective and Key Indicators (refer to Annex 3)

20. The Project Development Objective (PDO) would be to improve the livelihoods, quality of life and resilience to climate variability, natural hazards and other shocks of the rural poor, especially the left-out poor and vulnerable households. 21. This PDO will be achieved by employing a CDD strategy to: (i) empower the poor and strengthen local governance by developing sustainable, participatory and accountable rural community institutions; (ii) reduce vulnerability of the poor to risks, in particular those associated with natural hazards and climate variability; (iii) increase employment opportunities by enhancing skills, supporting the start up or expansion of income generating activities, and strengthening access to markets and financial institutions; and (iv) support small-scale demand-driven community investment sub-projects that are prioritized, implemented and managed directly by the rural poor. 22. The key outcome indicators to measure the achievement of the PDO would be: (i) at least 75 percent of village institutions function in a transparent, inclusive and accountable manner and implement activities as per project (COM) guidelines; (ii) at least 50 percent of target households increase income by at least 50 percent against base year through employment and self-employment; and (iii) at least 80 percent of target households benefit from improved community infrastructure and social services like access to water and sanitation facilities, access to markets, education and health facilities, etc. Additional performance indicators to be tracked include: (i) at least 70 percent of target households have increased savings and have access to inclusive financial services; (ii) at least 70 percent of village organizations have applied participatory methods for risk and vulnerability analysis and implemented risk reduction and preparedness plans; and (iii) at least 70 percent of community organizations are graded as “A” or “B” in their performance (indicating attainment of key inclusion and accountability indicators and beneficiary satisfaction). 23. The proposed project would cover 15 districts (8 new districts and expansion in the 7 existing project districts) and 1,500 villages, benefitting about 300,000 target households, with about 3 million populations, directly and indirectly9. The project would also further strengthen the on-going village

8 Under the World Bank-financed Local Governance Support Project (LGSP) which is now active in over 4,000 of Bangladesh’s Union Parishads. Discussions between the two Bank teams are underway, with intentions that in SIPP/LGSP districts, activities focusing on demand-side accountability at the local level would dovetail, particularly through cross-learning, joint training, etc. 9 SDF may also test the model in some additional villages in the poorest Upazilas of Sunamganj and Sylhet districts.

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organizations and community groups being supported under the current program; and would help them form networks of federations and producer groups (so-called second generation institutions). In total, Phase 1 (including three additional financings) and the proposed project (Phase 2) will benefit approximately 800,000 target households, and about 6 million people10 directly and indirectly.

D. Project Components (refer to Annex 4)

24. The proposed project will include four components: (i) Community and Livelihoods Development at the Village Level; (ii) Institutional Development and Livelihoods Promotion at the Inter-village Level; (iii) Capacity Development and Partnership Building from Cluster to National Level; and (iv) Project Management, Monitoring and Coordination. 25. Component A: Community and Livelihood Development at the Village Level (US$82.5 Million). The objective of this component is to mobilize and empower village communities, build and strengthen pro-poor institutions, and fund village development and livelihood-related investments. The component would include two sets of activities: (i) Development and Strengthening of Community Organizations – to help mobilize, develop and strengthen self-reliant and self-managed people’s organizations; and (ii) a Village Development and Risk Reduction Fund (VDRRF) which would directly finance activities at the village which are prioritized, managed and maintained directly by communities, for purposes of income generation, institutional development and small-scale local infrastructure and services. All community planning for fund use would be undertaken using a vulnerability and risk reduction framework. 26. Component B: Institutional Development and Livelihoods Promotion at Inter-village Level (US$19.5 Million): The objective of this component is to promote inter-village development to consolidate and sustain investments generated at the village level. Through capacity building activities, support to expanded income generating activities and links to employment, the component would assist communities to build lasting social and economic capital from individual to inter-village level. The component would support three sub-components: (i) Development and Strengthening of Inter-village Organizations to enable the networking and aggregation of small groups and other community institutions, when established and mature, into federated organizations at a higher level, to maximize the benefits of scale in attracting partners and enabling greater bargaining power, broad-based representation and aggregation of demand. The main activities will include: (a) Support for the development and sustainability of aggregated community institutions beyond the life of the project, thereby helping to consolidate and build on higher level social and economic activities through technical assistance from public and private partners; (b) Financing livelihood and productive infrastructure activities of Economic Activity Federations to promote federations consisting of different producer or common economic activity groups, like dairy, fisheries, handicrafts or marginal farmers; and (c) Development of Community Professional Centers to promote community-to-community services and train and deploy experienced community members as ‘community professionals’ to share skills, provide technical support services and ensure the scaling up and sustainability of community established institutions beyond the life of the project; (ii) Business Promotion, Livelihoods and Market linkages and Partnerships. SDF and partner organizations would broker the development of institutional and informational linkages to enhance sustainability of the livelihoods of the poor, including strategic alliances and partnerships for promotion of savings; access to rural finance and development of microfinance linkages; and micro-enterprise, agri-business promotion and community-corporate partnerships (e.g., private sector, commodity boards, export

10 For calculating total beneficiaries (direct and indirect) average village size of 350 households has been used. Direct target beneficiaries would be 200 target households per village.

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processing zones; industry confederations, etc); and (iii) Creating Conditions for Employment Generation: SDF would develop training, counseling, job placement and employment generation opportunities for SIPP community members, particularly for rural un- and under-employed youth, through strategic partnerships negotiated with service sector, telecommunications, technology, garments, agribusiness and other growth sectors, as well as through linkages with key GoB training, vocational and job creation initiatives.

27. Component C: Capacity Development and Partnership Building from Cluster to National Levels (US$6.1 Million): The objective of this component will be to strengthen the capacity of SDF and other relevant agencies, from the cluster to the national level, and build synergies and partnerships to scale up delivery of SIPP’s community-driven development program across much of Bangladesh. The component includes the following activities: (i) Strengthening the institutional capacity and delivery of services by SDF and other relevant partner agencies at all levels to deliver services, develop and promote the CDD and livelihoods agenda in Bangladesh; and to build institutional linkages and partnerships for service delivery, and livelihoods promotion for the poor and their institutions; and (ii) Supporting Innovation that would promote innovative and replicable interventions in key areas relating to Nuton Jibon’s approach and objectives. These activities would be administered by SDF with two ‘windows: The non-competitive Strategic Partnerships for CDD window would enable SDF to partner with institutions to trial innovations that relate directly to promotion and expansion of the CDD model in Bangladesh. The competitive Innovations Marketplace window would enable a transparent, competitive fund, to be administered by SDF that would support individuals, groups, enterprises, organizations and institutions in both the private and public sectors to test innovative ideas in key thematic areas that need experimentation and incubation on a pilot basis in the project’s geographic area. 28. Component D: Project Management, Monitoring and Coordination (US$11.9 Million). This component will further strengthen Social Development Foundation (SDF) – the lead implementing agency – to coordinate, plan and monitor the program. The component will include support for: (i) overall coordination, planning, implementation and management at national, regional and district levels, including implementation of the revised HR policy and practices at all levels; and (ii) monitoring, learning, communication and evaluation. E. Lessons learned and reflected in the project design

29. The original project drew on international and regional experience in the design and implementation of rural CDD programs. The CDD approach adopted focuses on building village level institutions and transferring decision-making responsibilities and resources directly to communities. The focus on livelihoods in the proposed project is aimed at facilitating access to productive assets and employment opportunities to improve people’s income. Global experience suggests that sustainable community development is a long-term process, with the need for consistent inputs and long-term support to build capacity and leave behind workable ‘capital’ (human, social, financial) at the local level. The World Bank’s Operations Evaluations Department (OED, now re-named Independent Evaluation Group or IEG) report on the Effectiveness of World Bank Support for Community-Based and Driven Development (2005) found that Bank supported projects have been more successful when they have provided consistent long-term capacity building support, and supported indigenously-matured initiatives. Under the original project, important lessons have been learned regarding sequencing of activities at the outset, support and effective facilitation needed from the beginning to ensure ownership and sustainability of village institutions or the time and investments needed to bring them to social and economic maturity. These lessons have been reflected in the proposed design. 30. In enhancing the livelihoods of the poor, projects in the South Asia region have been concerned with investing in their institutions, assets and capabilities, to provide people more opportunities to access

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natural resources, public services and markets. It has been learned that, while critical, access to credit alone may not be sufficient for poverty reduction, nor is it always the appropriate starting point for reaching the very poorest and for those in situations of extreme need. This is reflected in the figures11 on those accessing micro-finance in Bangladesh’s credit-saturated environment – where the extent of participation of the poorest in microfinance has consistently been lower than expected. Even those few initiatives that have been oriented to drawing the HCP into micro-finance have experienced challenges, e.g., the IGVGD or TUP programs12, where poorest members were found less likely to join mainstream microfinance or take loans, and to borrow smaller amounts when they do. Appropriately designed matching grants are often the first best instruments for asset creation and investment capital amongst the poor, particularly for common assets or as seed capital to the poorest of the poor, who would have been selected using very specific and strict criteria. However, as community assets grow and extreme poverty is addressed, access to inclusive financial services, and a package including savings, credit and insurance become important. Recent projects in India and Sri Lanka have demonstrated that it is important to focus on building broader systems for capital development in the rural areas, expanding access to inclusive financial services for livelihoods enhancement through community-based finance and with effective linkages to banks, micro-finance institutions and other financial services providers. 31. Other regions have also provided useful experience and lessons for Bangladesh. In particular, Brazil’s Rural Poverty Reduction Project, with its similar focus on both local infrastructure delivery and income generating activities, has successfully linked community associations to markets and institutionalized participatory decision-making institutions for service delivery at the local level. The program has demonstrated how putting communities in the driver’s seat, following simple enforceable program rules, will lead to selection of appropriate, viable investments, which are owned and successfully managed by the communities themselves. As demonstrated, participatory models of infrastructure and service delivery centered on community organizations and/or local government institutions, often partnered with the private sector, perform better in terms of cost-efficiency, quality, sustainability and targeting of benefits, than the traditional ‘top-down’ model in which line ministries and central agencies plan, finance and execute local public investments. This is largely the product of greater local ownership of project outputs, greater transparency and accountability in use of funds, more realistic scope and size of projects, and the use of more appropriate technologies13. 32. The original project and three Additional Financings have also provided many direct lessons that have been incorporated into the preparation and design of the proposed project. These include:

(i) The rural poor are capable of organizing and identifying development priorities and implementing development sub-projects efficiently and effectively.

(ii) Simple and clear principles (participation, inclusion, transparency, accountability and cost-sharing) agreed up front with communities ensures commitment of stakeholders and resolves future conflicts and tensions.

(iii) Communities should be given an open menu and flexibility in using village development funds.

11 A study by Zeller and Johannsen (2006) found that the proportion of microfinance participants in the bottom two income quintiles were 24% and 23%, respectively. 12 Income Generation for Vulnerable Group Development (IGVGD) is a targeted food transfer program and Challenging the Frontiers of Poverty/Targeting the Ultra Poor (CFPR/TUP) is an asset transfer program, both of which utilize a micro-finance/credit-based strategy and which were implemented by BRAC and government partners. 13 As demonstrated in Indonesia’s Kecamatan Development Program, Community Empowerment projects in Timor-Leste, Community Development projects in West Bank and Gaza, Magdalena Medico Learning and Innovation Loan in Colombia, Northeast Rural Poverty Reduction Program in Brazil, National Solidarity Program in Afghanistan, and the Community Reintegration and Development projects in Rwanda, among others.

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(iv) The key demand of the HCP, which is for more sustainable income generation and decreasing their indebtedness and reducing their vulnerability, should become an integral part of their development.

(v) Women’s empowerment has raised awareness of and action on controversial social issues and pressing needs at the local level – e.g., dowries, domestic violence, registration of marriage, family health practices (especially sanitation).

(vi) Careful attention should be paid to sequencing interventions; supporting the formation of empowered communities with necessary capacity and then building partnerships to deliver services.

F. Alternatives considered and reasons for rejection

33. In designing the project, the following alternative models/options were considered: (i) Sector specific projects using conventional central or local government institutions for delivery.

While there is a role for projects focused on specific sectors and strengthening of core public institutions, there is also a pressing need in Bangladesh to harness the capacity of the rural poor and traditionally excluded groups to participate more actively in decision-making and implementation of small-scale investments intended to improve their own well-being and livelihoods and to be effective players in the national economic development. For this purpose, a CDD strategy and delivery mechanisms were judged appropriate and have been demonstrated under the SIPP pilot. With respect to local governments, while efforts are underway to strengthen the mandate and performance of the elected councils at Union level (including via the IDA-financed Local Governance Support Project), it was felt that SIPP should continue to play a complementary role, by focusing on community institutions at the individual village level (each Union in Bangladesh has about 15-40 villages) and mobilizing the ‘demand-side’ of the local governance equation. In addition, the project’s focus on access to resources and income generating opportunities lends itself to working with and through a multitude of local partners, including the private and non-governmental sectors.

(ii) Focusing principally on provision of credit through Microfinance Institutions: Given the local

context, where a vast number of established Microfinance Institutions (MFIs) are delivering credit services in rural Bangladesh, the option of delivering the program through them was considered during the implementation of three additional financings. However, access to credit alone, as indicated already, may not be sufficient for poverty reduction, nor is it always the appropriate starting point for reaching the very poorest and for those in situations of extreme need. In the context of rural Bangladesh, it was felt that a more holistic empowerment model that addresses investments in institutions, assets and capacities of communities would be more appropriate, particularly when specifically targeting areas of chronic poverty and those poorest currently missed by existing service provision and economic opportunities, including that of the widespread local NGO and MFI providers. These existing providers are mostly dealing in credit-only products, with the terms and conditions of those loans not meeting the needs of the HCP, and so 30-40 percent of the poor, those poorest, are left uncovered. The intention of the program is, however, to maximize potential benefits from working within the existing MFI-rich context of Bangladesh. The left out hard-core poor and poor’s capacity to save and to utilize small loans will first be strengthened through their own community savings and credit organizations. The experience and discipline gained from participating in group activities (weekly savings, inter group loaning and repayment of greater than 95 percent) of the groups and village organizations will enable the community members to become credit-worthy clients of the existing rural financial institutions. The project and the village organizations of the poor will work with MFIs to develop appropriate inclusive

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financial services that are tailored to reach those communities that are currently excluded. It is intended to build upon and maximize SDF’s existing relationship with PKSF including the use of the community empowering elements and inclusive financial services of the PKSF’s Ultra Poor Program – one of the few recent initiatives which have also tried to reach out and tailor products to the HCP.

III. IMPLEMENTATION

A. Institutional and implementation arrangements (refer to Annex 6 for details)

34. Project Implementation Process: The project will be implemented in accordance with the rules and procedures as agreed in the Project Implementation Plan (PIP), Community Operational Manual (COM) and other operational documents such as Community Professional Manual and Economic Activity Federation Manuals. The documents provide outlines of roles and responsibilities of all agencies involved in the project as well as details of project processes and implementation steps. The documents have been developed in a participatory way along with the communities; and have been updated to reflect and incorporate experiences from the three on-going Additional Financings and are the outcome of various studies, workshops and analyses conducted during project preparation. The documents will be subject to periodic review by GoB and IDA, with community participation, to address any constraints to successful implementation of the project. Any changes in these operational documents would require IDA’s prior approval. 35. Institutional and Human Resource Development: One major focus area during designing of the project was enhancing capacity of SDF – the main implementing agency – to implement the program effectively. SDF was set up in 2001 under the Ministry of Finance (MoF) and registered under the Company’s Act. The expansion and deepening of the program has put tremendous pressure on SDF and its staff as the capacity and skill-sets did not match the expanded demands. Since SDF started with an $18 million pilot project in two districts in 2003, the program has expanded to over 1500 villages with three Additional Financings totaling about $100 million, and has also grown in complexity, covering new geographic intervention areas and directly addressing disaster recovery (flood, cyclone) and risk management. The governance and management structure of SDF have not kept pace with these changes; and therefore, SDF’s capacity to implement its scaled up program and revised mandate has been a challenge. With the sizeable expansion envisaged under the proposed project and a further doubling in size, SDF has recognized that the present institutional structure developed to deliver the original project, is in need of review, reorganization and strengthening. The constitution of SDF, its Articles of Association, allows adequate flexibility to do this. 36. GoB and SDF, with IDA support, have reviewed the institutional structure, rationalized, and revamped it to ensure that SDF has in-house capacity and a management structure commensurate with a leading agency handling implementation of a sizeable, innovative operational portfolio. The new SDF would have to be more strategic, creating an organization that could deliver results. An independent Institutional and Human Resource (HR) consultancy was retained to advise SDF as they developed a comprehensive HR Strategy and associated manual and procedures to enable: (i) revamping its organization structure and enhancing its staff capacity with appropriate skills and relevant experience; (ii) developing a transparent and fair staffing and human resource policy and service rules for all staff including contract staff; (iii) delegating responsibilities to appropriate levels and ensuring accountability and job clarity (work load) at each level; (iv) exploring a seed fund (or endowment) for self-sustainability; and (v) improving communication and management efficiency in planning and speedy execution, monitoring and quick learning from experience.

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37. GoB envisages long-term development of SDF as a home-grown institutional resource on the community-driven approach to poverty reduction and livelihoods development. There is an agreement on key institutional and HR reforms that include: (i) a pro-active “eyes on the results” Governing Body under a dynamic leadership to hold the management accountable for their performance (delivery of work programs, and outcomes); (ii) a participatory management style consisting of a core group of programmatic and regional leaders that support decentralization and delegation; (iii) an organizational culture that enables innovation and learning, encourages initiative, promotes field orientation and motivates staff. Leadership at every level must be secure and committed to the mission of the organization of working for the hard-core poor; (iv) a transparent and fair HR Policy and System which clearly lays out processes and procedures for all employees from recruitment to promotion, resignation, termination or retirement, and will create a sense of “job security” among staff; and (v) an enthusiastic, committed and capable young workforce keen to show quality results benefiting the poor. GoB and SDF’s Governing Body have approved the institutional reforms and HR Policy and Manual dated May 13, 2010, and agreed with IDA a time-table for implementing the HR Policy and necessary staff recruitment to support SDF’s restructuring to deliver the project. 38. Proposed Institutional Model and Implementation Arrangements: The new HR system includes a revised organogram and institutional structure that addresses human resource gaps and a performance-oriented working culture, institutional governance and sustainability. The arrangements are summarized in paras 39 and 40 below and details are included in Annex 6. Given the long-term vision and future of the program, it is important that SDF establishes itself in a self-sustainable way, with the necessary flexibility, autonomy and enabling culture to respond quickly and effectively to needs and demands at the community level. Government has therefore decided to establish an Endowment Fund for SDF, which will inter alia enable the institution attract capable and results oriented staff and develop a core group of tenured/well performing senior program staff who would hold the institution together and realize the vision. Government had initially planned to allocate US$15.0 million as a co-financing contribution to the proposed project; instead IDA and GoB have agreed that these US$15.0 million will be used as the seed capital for the SDF Endowment Fund. GoB would set up the Endowment Fund by June 30, 2011; and transfer funds in four equal installments. 39. At the National Level, the Managing Director (MD) of SDF will be responsible for the overall coordination and monitoring of activities, and will be supported in this second phase project by a Deputy MD Programs, four thematic Directors, and an operational multi-disciplinary team of functional specialists. The Dhaka-based headquarters would be responsible for monitoring, quality control and compliance, communications and governance. Although the national team will be located in Dhaka, the members will undertake regular field visits to field teams and village communities. To ensure consistency and quality of facilitation and technical assistance programs across all regions, a Capacity Building Cell would be housed at the national level to coordinate and monitor a capacity building program that reflects staff/community demands and emerging issues. SDF will report to an independent Governing body, which would provide policy level support to the project. Appraisal and Monitoring Teams (AMTs) will be responsible for independently appraising the community proposals, checking compliance to rules and quality, and certifying milestones and readiness for fund release. They will report directly to MD at headquarters, though the AMTs would be based at Regional Offices. 40. At Regional level, three Program Offices in Rangpur, Jamalpur and Barisal, headed by Regional Directors, will be constituted, housing decentralized FM and procurement decision-making and with staff to oversee capacity building activities and provide technical assistance in the field as needed. This office will carry out its activities in close coordination with the District Units, Cluster Units and Community Units. At District level, each office, headed by a District Program Manager, would have teams of functional specialists responsible for the planning and implementation of the program, including delivery of milestones agreed in the district plans. These teams would primarily serve as ‘support/ facilitation’ for

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the field implementation teams, building their capacity and monitoring and guiding their performance. A Cluster Facilitation Team (CFT) will be formed to cover about 20 to 25 villages each. CFTs will comprise the field facilitators directly assisting village communities to build sustainable village institutions; helping communities to articulate and implement their village vision. 41. Implementation Arrangements for Community Level Activities Arrangement: The most basic institution at the community level will be the Jibikayan Groups (JGs), for savings and internal lending, comprising of 10 to 15 members (with priority given to hard core poor, women and vulnerable youth). JG members will form the Gram Parishad (GP), the overarching village-wide membership body, who then elect the 9 member Executive Committee, or Gram Samiti, to be responsible for implementing VDRRF activities at the village level. The independent Social Audit Committee (SAC), appointed by the Gram Parishad, will provide oversight of all village activities and funds. As institutions mature, any inter-village institutional or livelihood promotion activities would be implemented through aggregated federations of village organizations and producer groups. At the inter-village level, the project would support the networking and aggregation of matured institutions into federated organizations at a higher level, to maximize benefits of scale in attracting partners and enabling greater bargaining power, broad based representation and aggregation of demand. The inter-village level activities will be implemented by federation of Gram Samitis, Community Professional Centers and Economic Activity Federations (EAFs). 42. Fund Flow Arrangements: The funds for all community level activities (village and inter-village activities) would flow directly from SDF to the community organizations. 43. Retroactive Financing: Eligible expenditures incurred by SDF prior to Credit signing, but after April 30, 2010, would be financed under retroactive financing with a limit of about US$5.0 million subject to following IDA’s procurement rules and procedures. The activities covered under retroactive financing are consistent with the project’s financing categories. B. Monitoring, Learning and Evaluation of Outcomes and Results (Refer to Annex 3)

44. Under the original project and three Additional Financings, SDF has developed a satisfactory monitoring, learning and evaluation (ML&E) system. The focus of the current system has been on “learning” and “downward accountability”. The project has developed a comprehensive Management Information System (MIS) that includes hardware, software, communication links, wide area network, and information technology related training programs for staff and installation, maintenance and support. SDF is currently in the process of upgrading the existing MIS with the objective of connecting the head quarters with the field offices. This will go a long way in ensuring that decisions taken fully reflect real time situations. The proposed project will improve the ML&E system through upgrading the MIS, computerizing field operations, having dedicated ML&E staff at the regional, district and cluster level; and building capacity of regional and district managers to continuously monitor results and implementation progress and resolve day to day bottlenecks. The project’s Results Framework with the indicators elaborated in the PIP will form the basis for monitoring outcomes and results, which will be benchmarked and tracked by a baseline and impact evaluation. The ML&E activities will broadly consist of the following elements: 45. Community Level Self-monitoring: SDF has developed a simple and community friendly monitoring and benefit tracking system that captures key implementation milestones, selection of beneficiaries, functioning of community level institutions, and use of funds. SDF will continue to oversee community level monitoring processes and integrate it with the upgraded Management Information System (MIS), currently being refined to monitor the expanded program. At community level, Social Accountability mechanisms such as functioning of Social Audit Committees, public information

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displays, participation in Gram Parishad (village assembly) meetings, and a participatory conflict resolution system developed and used in the current program will be further strengthened through annual community assessment process (score cards) and grading of villages. These tools will be applied consistently at the village and inter-village level. 46. Program Monitoring, Learning and Oversight: SDF has developed and institutionalized a reasonably robust system of program monitoring that utilizes the presence of field teams, and combines routine monitoring data collection (e.g., for MIS) with a system of regular internal learning forums and process monitoring. The internal learning and monitoring forums have been effectively used to address and resolve implementation bottlenecks, improve quality of processes, and disseminate good practices. This system will be further strengthened through tracking in the MIS the recommendations and decisions taken during the monthly learning and monitoring meetings and institutionalizing thematic forums for regular learning across three regions. For routine data collection and reporting, the Regional and District Teams will compile and submit monthly and quarterly progress reports. The ML&E Unit at head-quarters will consolidate all data collected and generate village/cluster/district/project level reports, as well as coordinate Annual Planning Report and the internal learning workshops. 47. Independent Verification: Process Monitoring: As under the current program, SDF will retain a Process Monitoring Agency (PMA) to independently determine how effectively the project is running and to identify ways to improve quality of implementation and processes. Based on their field observations and analysis, the PMA teams will submit monthly reports on key livelihood activities and quarterly reports to summarize key lessons learned, case studies and follow-up status. This is an important mechanism that allows for addressing issues and challenges identified. 48. Independent Assessments and Impact Evaluations: An evaluation framework is being currently developed to assess outcomes and results of the expanded program and capture quality of processes and institutions. A baseline for the proposed project is underway, as the basis for a future impact evaluation. Independent impact evaluations will be conducted at mid-term and project completion to assess progress towards achieving the PDOs. In addition, SDF will also commission additional thematic studies as and when needed. C. Sustainability

49. The proposed project builds on lessons of the current program and represents a concerted effort to consolidate gains so far achieved, in term of institutional and financial sustainability of the institutions and their investments and assets. This will be achieved by federating mature community level institutions and linking them to the local governments, other programs and agencies, and the wider financial and private sectors. 50. The proposed project will continue focusing on ensuring institutional sustainability at the community level by building the capacity and skills of the poor to manage their development and investments themselves, including identifying and managing potential environmental and climate-related risks. Given that livelihoods projects such as the proposed model aim to leave ‘accumulated capital’ at village level, institutional sustainability should therefore be assessed with respect to the likelihood that the institutions of the poor that are promoted at the local level will persist and thrive, alongside increased human and financial capital, and in contexts of risk and vulnerability. Sustainability of the implementing agency at the end of a program is typically less of an issue to the extent that their flexibility and dedication is needed to build sustainable systems at the local level. Nonetheless, in the case of SDF, it has a mandate and vision to be a key facilitating and brokering agency for further investment in the poor in Bangladesh – a homegrown institutional resource for community-driven livelihoods development, and

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so, would be working to build the proposed project as a showcase for sustainability of their model and approach. 51. At the village level, the sustainability of community subprojects has been promoted through creating mechanisms to involve all sections of the community in prioritizing of investments, in the selection of technical options based on affordability and viability, in incorporating a risk reduction strategy to prepare for future disasters and shocks. The MTR evaluation and impact assessment of community infrastructure have shown high degree of community ownership as communities contribute to investment costs and are also managing and operating the resulting assets, including their protection and rehabilitation, if needed. For income generating activities, careful attention to financial feasibility and linkages to markets, as well as adequate technical assistance, are important and are key parts of the appraisal process before fund release. Finally, the program is also expected to have important social capital impacts and to help build voice and capacity, by providing opportunities for bottom-up participation by the rural poor in village decision-making. The practices of inclusion, transparency and accountability instituted under the current program will further influence and strengthen broader practices of local governance. The proposed project will pursue linkages and partnerships with the Union Parishads (elected local government councils at the higher Union tier)14, private sector and other programs and resources, such as those job creation and skills development initiatives under the Ministries of Youth, and Labor for the longer-term sustainability of investments and local level institutions.

D. Critical Risks and Possible Controversial Aspects (refer to Annex 9)

52. The results from the current program indicate that the project design is robust and good governance provisions included in the project were able to mitigate most of the governance and accountability risks. An assessment of governance and corruption risks and mitigation measures under the current program was carried out extensively in October 2008. In addition to a thorough review of documentation, the methodology used included holding workshops and focus group discussions with participants from communities and Regional, District and Headquarters level SDF staff. A mapping of risk areas, warning signals (red flags), and existing and proposed mitigation measures was done and validated. The result was a Governance and Accountability Action Plan (GAAP) that was adopted by SDF. This was reviewed and updated during the project preparation by SDF and IDA. The main risk areas are: political and bureaucratic; local governance failure in some villages; weak and ineffective grievance handling mechanism at the SDF level; lack of a functioning Governing Body for SDF; and lack of financial disclosure policy. 53. The governance, fraud and corruption risks for the project are rated Substantial (for Impact), Low/Moderate (for Likelihood) based on the above risk assessment, experience so far and the country context. About 80 percent of the project funds flow to the community organizations in the project, and are expended by them. Therefore good governance and control of corruption at this level is of paramount importance. SDF thus far has introduced governance measures as detailed in Social Accountability booklet of the COM; developed a governance training program and initiated training; mandated the Social Audit Committee at village level; retained an independent process monitoring agency whose recommendations are reviewed and actions taken at monthly meetings; and operationalised community procurement as reflected in the COM. There are a few cases of fraud and corruption by community organizations. The management has acted in all cases and, overall, so far, at the project level SDF has done a good job of preventing, detecting and sanctioning governance and corruption problems. The Process Monitoring findings and Internal Auditor reports show that the few problems are relatively minor. Nonetheless, specific measures are included as part of the project Governance and Accountability Action Plan to better mitigate such risks. A detailed risk matrix is included in the Project Implementation Plan.

14 Direct linkages may include a reserved post on the Gram Samiti for one of the elected UP female Ward representatives.

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54. Under the proposed project, existing accountability mechanisms will be strengthened through the following measures: (i) a Human Resource strategy will be implemented to institutionalize a transparent and fair recruitment policy that retains the best performers; (ii) a village rating system (including community/beneficiary assessments) will be established to recognize and reward good performers and focus greater attention on villages exhibiting governance weaknesses; (iii) a more proactive oversight and follow-up role by SDF management and Governing Body on the findings and recommendations of village rating systems, independent internal auditors, process monitoring agency and appraisal and monitoring teams; (iv) the disclosure practices under the project would be converted into a formal Disclosure and Right to Information Policy which would be publicly disclosed and staff trained in its implementation; and (v) SDF would develop and maintain a Complaints and Grievance handling system and publicly disclose data on complaints and actions taken. 55. SDF’s Managing Director would be responsible for implementing the above measures as included in the GAAP. He/she would be supported by two Directors – Finance and Governance/Accountability – at the national level; and will ensure that the GAAP is implemented at all levels. The PIP and Manuals have been revised to incorporate GAAP related roles and responsibilities. The table below describes the overall risk environment to the project – not just in terms of Governance and Corruption risks, but the broader risks that may affect achievement of the project’s development objectives.

Table: Key Risks and Mitigation Measures

Description of Risk

Mitigation Measures

Rating of Residual

Risk SDF’s operations are subject to political and bureaucratic interference

The institutional set up of SDF at national level has worked reasonably effectively in the past, with an independent Governing Body, a Managing Director and supporting staff tasked with ensuring professionalism and compliance to the project rules. However, recent months have shown that this arrangement is not immune to political interference. SDF was without a Governing Body for a period of over six months and the MD position is currently vacant. Absence of a coherent staffing policy had constrained implementation of additional financings. The development and adoption of a new HR Policy and Strategy will certainly mitigate against this risk and ensure transparent selection and promotion of staff and a degree of protection of SDF operations. Nonetheless, risk remains in investing in a single delivery mechanism that may be subject to interference or delays.

At the village level, clear operational rules and principles, combined with practical tools of social accountability and participatory targeting methodology, are demonstrably effective means to limit interference at the local level.

Substantial

Scaling up quickly may prove a challenge to the project team and implementing agency and therefore dilute quality of implementation and results

Given that the original project has been through a rapid expansion and the implementing agency SDF has been fully occupied in operationalizing the existing multi-district operation, doubling the size of the program runs the risk of over-straining the existing capacity and systems. Unlike other new operations, however, SDF already has a field team ‘architecture’ in its

Substantial

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existing districts and has been focusing on capacity building and skills development in preparation of scaling up the program. Existing staff/field offices would serve as a resource to those new districts and newly recruited staff.

The program is also focusing on building a network of ‘community professionals’ to supplement district level efforts and to enable scaling up in a sustainable and cost-effective manner. This mitigation strategy has already proven appropriate and effective both in other countries and in the current program itself.

The adoption of SDF’s new HR policy and strategy that focuses on due diligence in selection and retention of qualified and committed staff; and provides proper incentives to staff and partners for results based performance, would also assist in ensuring the right staff in place to meet the implementation challenge. However, this strategy in itself will be a new approach and may encounter some inevitable teething troubles as new practices are institutionalized. Therefore close supervision by IDA implementation support teams will be required to ensure compliance to the agreed rules and HR policy.

Vulnerable people’s voice is not heard and their interests are sidelined in the village institutions

This risk would be mitigated through: (i) participatory targeting methodology used to target and track the eligible beneficiaries; (ii) each hamlet/cluster of vulnerable households would select/nominate its representative for the village level institution; (iii) 80 percent of the decision making positions in the village institutions would be held by the representatives of vulnerable groups-mostly women; and (iv) setting up a village grading system to detect problem villages and take proactive actions to address problems.

At operational level, this would be further strengthened by setting up technical appraisal and monitoring teams at the regional level staffed with competent and committed members, to ensure compliance of the communities and project teams to the rules and safeguard interests of the poor. Such teams would be required to check compliance to the project rules of inclusion and participation of the poorest and fund release would be dependent on such compliance.

Modest

Inadequate bookkeeping and financial statements submission, creating risk of irregularities, lack of repayment discipline by village organizations due to lack of trained personnel and weak capacity.

The number of FM personnel at the national and field office of SDF will be increased to provide capacity building support to the village level individuals involved in financial management and auditing aspects.

A cadre of community level book-keepers will be developed to support the community organizations to provide day-today hand-holding and support.

Modest

Lack of a complaint handling mechanism and full compliance with the right to information policy at both village and local

SDF will strengthen its Complaints and Grievance Handling system. TORs of Independent Evaluators and External Auditors will be modified to include an item to comment on effectiveness of complaints handling and resolution mechanism and disclosure at all levels.

Low

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government level as well as at project level undermines villagers’ trust in the project Overall Risk Rating: Substantial Risk Ratings N – Low or negligible risk; M – Modest Risk; S – Substantial Risk; H – High Risk E. Credit Conditions and Covenants

56. The following are the main covenants: Covenants applicable to project implementation:

GoB to ensure that SDF shall be responsible for management and coordination of project activities and shall maintain: (a) a General Body consisting of broad representation from key stakeholders including civil society and the corporate sector and shall meet and function in accordance with quorum and frequency as described in the Articles of Association; (b) a Governing Body which shall include members from key stakeholders and shall meet and function in accordance with quorum and frequency described in the Articles of Association; and (c) the staff and management with skills, qualifications and experience and selection process as set out in the Human Resource Policy and Manual agreed with IDA on May 13, 2010.

GoB to ensure that Articles of Association of SDF shall not be amended, suspended, abrogated,

repealed, or waived without IDA’s prior consent.

GoB to cause SDF and all other project entities to implement the project in accordance with the Project Implementation Plan (PIP), the Community Operational Manual (COM), Community Professional Center (CPC) and Federations Manuals, the Governance and Accountability Action Plan (GAAP) and the Environmental Management and Social Framework (EMSF), as agreed with IDA.

GoB to set-up an Endowment Fund of at least US$15.0 million to ensure long-term sustainability

of SDF by no later than June 30, 2011. General Implementation and Project Management

SDF shall: (a) prepare and adopt an Economic Activity Federation Manual (EAF) by March 31, 2011; (b) take necessary measures to ensure that the national, regional, district and field teams carry out activities as agreed and set forth in the PIP, Manuals, GAAP and EMSF; and (c) not amend or waive any provision of PIP and Manuals without IDA concurrence.

SDF shall implement the Human Resource Policy and Manual dated May 13, 2010; and recruit

and retain staff as per the agreed policy outlined in the HR Manual, and according to the timeline for implementing the HR Policy and Manual, as reflected in the revised draft.

SDF shall maintain during the project implementation period, internal and external auditors,

whose qualifications and experience are satisfactory and acceptable to IDA.

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SDF shall prepare an annual plan and budget for implementing the project for the financial year, not later than March 31, of each year, starting from 2011, and such plan shall be finalized not later than June 30 of that year taking into account IDA’s comments.

Village Grants

SDF shall ensure that: (a) community subprojects are selected and appraised in accordance with the criteria and procedures specified in the COM; (b) Credit funds are released to community organizations, federations including producer federations and CPCs, implementing the project in accordance with agreed grant agreements; (c) the Grant agreements are used exclusively to finance goods, works and services, and on an on-lending basis to finance asset creation, household needs and livelihood enhancement; and (d) each Grant is calculated according to a pre-determined cost sharing formula as specified in the COM and other community manuals.

Land use Acquisition

In carrying out the project, SDF shall ensure that there would be no involuntary land acquisition; and the Project shall be implemented as far as reasonably practicable on publicly owned land, using exclusively land free from squatters, encroachments and other encumbrances; any acquisition of private land, if needed, would be through outright purchase at market rates or voluntary donation and in accordance with guidelines and procedures set forth in the PIP and COM.

Monitoring, Learning and Evaluation

SDF shall submit to IDA, Quarterly Progress Reports giving status of project processes, results and milestones, financial and technical progress.

SDF shall carry out a mid-term review of the project by not later than September 30, 2013. SDF shall prepare and adopt, by December 31, 2010, an information disclosure policy acceptable

to IDA and thereafter implement it through the project implementation.

SDF shall establish by December 31, 2010, and thereafter maintain throughout Project implementation in a manner satisfactory to IDA, a Village Rating System to recognize and reward well performing villages and channel assistance to poor performing villages.

SDF shall establish by December 31, 2010, and thereafter maintain throughout Project implementation period a Director level position in-charge of implementation, monitoring, evaluation and reporting of governance and accountability aspects included in the PIP, COM and GAAP.

IV. APPRAISAL SUMMARY

A. Economic and financial analyses (refer to Annex 10)

NPV= Tk 2.9 Billion; ERR=25.3%   and    NPV=Tk 3.4 Billion; FRR=23.8%  

57. The economic and financial analysis for the project is summarized in Annex 10. Major benefits that have been quantified for the economic analysis include (i) expected benefits from livelihood income

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generating activities targeting 300,000 hard core poor and poor households (HHs) in the project villages, (ii) expected benefits from the development and strengthening of community institutions in effective targeting of the beneficiaries as well as sustaining the livelihood activities once initiated, (iii) benefits from community infrastructure investments in the project villages, (iv) vulnerability reduction benefits, and (v) community led governance benefits. In addition, there are likely to be substantial indirect economic (or multiplier) benefits stemming from community led village level institutions with improved infrastructure, efficient access to credit, input and output markets and reduced shocks arising from natural risks. It is likely that quantifying the direct project benefits only understates the full economic impact of the project.  58. The economic rate of return is estimated to be 25.3% for the entire project. The livelihood development investments alone generate an ERR of 12.6 percent, which improves to 25.3 percent when benefits from community led sustainability impacts, improved village infrastructure, reduced natural shocks, and community led governance impacts are captured. At full project development, annual incremental financial benefits are projected at Tk. 9.2 billion, about US$ 1.3 million, contributed by livestock sector (62 percent), small business sector (16 percent), transport sector (11 percent), agriculture trade (8 percent) and farming sector (3 percent). Average incremental benefits realized across diverse livelihood activities is Tk 4,520, about US$66, per beneficiary during the first cycle, which increases to Tk 11,160, about US$163 during second cycle and further to Tk 21,120, about US$ 308, during third cycle, mainly driven by livestock sector. This has the potential of alleviating the poverty in the benefited hard core and poor HHs by about 34 percent, who will be able to meet and sustain their basic food and non-food needs by the end of project. 59. Sensitivity tests are done with critical variables like escalation in project costs, fall in livelihood activity incomes, sustainability risks in maintaining the livelihood activity cycles from institutional failures, and implementation delays. On the cost side, increased project costs at 120 percent of the base costs brought down the ERR to 19 percent. But, implementation delays had brought down the ERR to 14.4 percent and reduced the Net Present Value (NPV) by Tk 2.4 Billion. With 20 percent fall in the incremental benefits generated by various sources, project ERR came down to 17.7 percent. Limiting the sustainability of livelihood production cycles beyond project period to only 50 percent has brought down the ERR to just 19.7 percent and NPV came down by 59 percent. The rate of return is more sensitive to variations in benefits than costs. Timely implementation of the project interventions and building up strong community led village level institutions are critical to maximize the returns to scarce project resources invested.   60. Risk Analysis considered key risk variables like cost escalation, fall in benefits due to institutional failures and implementation delays by considering jointly 25 percent increase in costs and 25 percent decrease in benefits on the ERR. The simulated ERRs based on 1000 runs, ranged from 11.2 to 22.3 percent with a coefficient of variation of 11 percent. Hence, the expected ERR, estimated by the risk model at 16.7 percent is considered reasonably stable, since the probability of ERR exceeding 14 percent level is 93 percent and in any case the probability of project’s ERR to fall below 12 percent is just 0.2 percent as predicted by the risk model. B. Technical

61. The project will aim to be flexible in terms of activities financed but will adhere to certain key principles, such as: (a) demand-driven nature of investments; (b) community management of activities; (c) targeting the poor at all levels of the village organizations; and (d) financial efficiency and accountability.

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62. Community Infrastructure Activities: Technical viability of small-scale infrastructure works under the original project and additional financing has been demonstrated over the first six years of implementation. Technical standards have been regularly reviewed by the IDA task team during supervision missions, looking at engineering designs, financial and economic feasibility, environmental impacts and O&M arrangements, and they have continued to be satisfactory. The communities will have an open menu and may use their budget envelope for socio-economic infrastructure needs, social and institutional assistance and/or income generating subprojects. The current program has demonstrated the technical viability of small scale infrastructure subprojects. It also showed that communities are able to identify, plan, prioritize and implement and carry out operation and maintenance of small scale infrastructure of their choice. Communities have successfully carried out construction of subprojects (primarily covering small access roads, bridges, culverts and causeways, irrigation, drinking water and sanitation, etc.) with the assistance of technical service providers hired by the community. The communities have also demonstrated that they are able to operate and maintain their infrastructure assets and services. To ensure acceptable technical standards and cost effectiveness, technical manuals including design guidelines, typical designs, procedures and processes have been developed. Simple and cost effective technical options which meet the service level demanded by the community have been promoted. Independent Appraisal and monitoring teams appraise subprojects and ensure that they are not only compliance with technical standards and safeguard requirements but are financially sound, economically viable and easy to operate and maintain by the community for sustainability. The proposed project would build on these principles and approaches, and ensure that the future infrastructure subprojects are also taking into account risk reduction strategies for future disasters. Existing manuals, guidelines, specifications, etc. will be used and continued to be refined. 63. Community Financing (Savings and Credit Activities): Starting under the first Additional Financing, the communities organized their own local institutions which provided them with financial services from both their own savings and from external funds. The long term objective of this approach is to have these community organizations link to commercial sources for additional funding based on their performance and financial sustainability. Over 1500 village credit organizations (VCOs) have been organized across 11 districts. They have given out Tk 50 million in loans from the revolving fund and have attained a portfolio at risk (30 days) of 5 percent. The international best practice for Microfinance Institutions is 5 percent or less. Group members have mobilized Tk 60 million in savings and more than Tk 2 million in interest income has been generated. In the proposed project, the number of VCOs will be increased to 3000 across the 13 identified districts. In addition the VCOs will create second tier institutions to facilitate aggregation of demand and to provide services that need this level of aggregation. These services will include; producer federations, development of innovative financial products and agency functions for other commercial banks, amongst other services. These institutional forms and mechanisms will improve the profitability of the activities of the members of the VCOs and enhance their long term sustainability. C. Fiduciary (Refer to Annexes 7 and 8)

64. Financial management and procurement systems and procedures have been tested out and refined during implementation of the original project and additional financings; and will apply for the proposed project. Lessons learned and necessary changes are required to address weaknesses and expansion of the program. To reach out to the new areas, SDF is strengthening its capacity and hiring additional dedicated procurement, FM and accountability staff at the national office and in the regional appraisal and monitoring teams. 65. Experience to date has shown that the fiduciary controls in place at the national level have functioned well, with appropriate controls and accountability measures at community level in the original project districts. SDF, through its finance department, has established sound financial management at the

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corporate level and as such it has a reasonable FM system in place. Overall, the FM system is a combination of manual based functions and computerized accounting system for posting of transactions after they occur. Staffing to carry out statutory functions at the top level has been ensured throughout project implementation. It has successfully shifted the focus from centralized financial management to a downward multi-tiered financial management system although implementation capacity at various levels still remains weak. Institutional policy and implementation processes are embedded within SDF’s financial management framework and thus it has successfully moved away from involving partner organizations for its financial management activities at community level. 66. One area which needs to be further improved is clarity of roles and responsibilities of corporate and community level FM activities and compliance checks. To further strengthen its work in the new areas and address weaknesses in the system, SDF is reviewing existing controls and accountability tools to identify any high fiduciary risk areas or potentially corruption-prone processes, and will take any additional mitigation measures necessary to effectively reduce susceptibility and exposure to fraud and corruption. These activities are part of a project-specific Governance and Accountability Action Plan (GAAP), within the Project Implementation Plan, and as included in the Community Operational Manual. Regular field level supervision by SDF staff and IDA supervision missions will be continued. A detailed Fiduciary Risk Assessment, and mitigating measures, is included in Annex 7. For the current program, external audits have been conducted by a private audit firm within six months of the end of each fiscal year. Annual audited financial statements have been received on a timely basis. Audit observations included in the management letters have been followed up, and there are no outstanding audit issues pending from preceding years. Taking these various factors into account, the FM risk associated with the project has been rated as M (Modest). 67. Audits. The external audit will follow existing statutory requirements under the Company’s Act. A single audit covering the entire program will be carried out and there will not be any separate audit report for the proposed project. The audit report will include a separate opinion on the designated account. A private audit firm under an agreed ToR will conduct an annual audit on the consolidated financial statements and the report will be submitted to the Bank within six months of the end of each fiscal year. The Audit Committee together with the Finance department will provide update to the MD on the status of final audit including follow up action. Any major findings remaining unresolved beyond specified time frame will be subject to disallowable expenditure by IDA. All previous audit reports under the current program have been received in time. There is no pending audit issue requiring management action. 68. Disbursements and Flow of Funds. As in the current program, IDA funds will continue to be channeled to the Special Account operated by SDF for the proposed project under a Subsidiary Grant Agreement between the Banking and Financial Institutions Division, Ministry of Finance (MOF) and SDF. These arrangements have been working well under the current program. Under the current Country Financing Parameters, 95 percent and 100 percent financing by IDA has been selected for Category 1 and Category 2 respectively. The bulk of IDA funds will be transferred to communities directly as matching grants for subprojects under expenditure Category 1, for which there is no tax element; there is insignificant tax in expenditure Category 2. Local taxes will be financed by IDA. 69. Financial Reporting. Under the current program, SDF has been submitting interim unaudited financial reports (IUFRs) to IDA. A single set of financial reports which are generated by the mainstream accounting system of SDF will be continued in the proposed project with minor modification. The Finance department will be responsible for consolidating financial information from all cost centers, preparing variance analysis for actual expenditure against budget, making forecast of quarterly estimated expenditure and reconciling information with other units of SDF. Simple Financial reporting formats at District and Cluster level have been developed and submitted to the finance department after

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consolidation of cluster reports at district level. Formats for quarterly IUFRs have been agreed. The project will start with transaction-based disbursement and will switch to report-based disbursement in the second year, as and when it is assessed to be ready. 70. Procurement. About 80 percent of the project funds will flow directly to the community organizations in the proposed project, and are to be expended by them. The current program shows about 90 percent of the communities who received funds are doing a satisfactory job of mitigating Governance, Fraud and Corruption (GFC) risks. The procurement activities at community level are safeguarded by oversight by Social Audit Committee, an independent body formed by Gram Samiti. The mechanism works well as per the experience from the current program, and will be replicated for the proposed project. The demand-driven nature of the project design does not allow for up-front procurement capacity assessments of each village/community. The COM developed under the current program includes a book-let on procurement procedures to be followed at the community level; and incorporates key rules, procedures and process steps for community level procurement. The Social Audit Committee is responsible for monitoring the procurement process. 71. At the national level, a procurement assessment of SDF has been carried out, which shows reasonable improvement of performance during the last few years. SDF has a clear system of accountability with clearly defined responsibilities and delegation of authority on control of procurement decisions. SDF’s record keeping initiative requires more improvements especially on adequacy of documentation, electronic documentation and protection of documents against loss and unauthorized access. SDF recently recruited two procurement specialists for the previous program and will require at least one more additional staff on procurement and one short term consultant for development of MIS system for procurement activities. The project will finance adequate training for procurement staff to improve quality of training of cluster level staffs/consultants. The previous record for competitiveness in SDF’s procurement activities is reasonable in terms of number of bidders, consulting firms offering bids and proposals. However there are some inherent systemic issues pertaining to procurement processes as shown in the latest post procurement review conducted by IDA. The report suggests minor deviations characterized as negligence and reservation on competitiveness for small value procurement through request for quotation method. Nevertheless the overall procurement performance is acceptable with requirements of improvements. 72. Overall, procurement risk for the project is rated as “Substantial”. Several measures are introduced (detailed in Annex 8) to minimize the risk during the implementation of the project.

D. Social (Refer to Annexes 11 and 12)

73. The project specifically targets the most vulnerable sections, especially women, unemployed youth, landless and destitute, and has tested out and institutionalized a number of operational mechanisms that have successfully ensured proper targeting and social inclusion in a sustainable and socially cohesive manner. Under the current program, all social inclusion targets have been exceeded providing evidence of the effectiveness of its operational mechanisms. Social mobilization activities will seek to identify and include the poorest, youth and women, introducing the principles and benefits of collective action for both social and economic empowerment. The guidelines are detailed in the COM. The main social development outcome sought by the project is, therefore, to improve quality of life of poor and vulnerable groups in rural Bangladesh, particularly women, through enhancing their access to social and economic opportunities and in bolstering their risk mitigating abilities. The project’s entire design and approach is situated in an ‘ethical framework’ of key principles that villages must sign up to as a condition of participation and which are rooted in social development goals: inclusion; equity; participation; transparency; and accountability.

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74. More specifically, key design features include: (a) organizing the rural poor, especially the hard core poor, women and other vulnerable groups (marginal families) and including them in benefits and decision making, and providing special assistance for disadvantaged sections; (b) using participatory identification of the poor methodology to identify and target the poor and track and monitor their benefits from the program; (c) building and strengthening institutions of the poor to give them voice and bargaining and negotiating power with the private sector and empower these institutions to demand services from the public sector; (d) building linkages and partnerships with Union Parishads (local governments), credit and financial institutions and the private/corporate sector; and (e) supporting institutional development of community groups through capacity building and development of strong federations that are institutionally and financially sustainable. 75. While this holistic approach is oriented towards addressing the needs of women, the poorest and most vulnerable, and this is already reflected in key project documentation (e.g. the Community Operational Manual) and rules of operation, the project also has separate strategies for youth and gender focusing on mainstreaming their concerns and priorities in the project including institutional development, economic activities, project management and monitoring and learning. E. Environment (Refer to Annex 11)

76. The activities identified under the project are mainly livelihood assistance and income generating activities, institutional development, community-level infrastructure for village development and risk reduction and climate risk management and adaptation. The environmental impacts from majority of the sub-projects are likely to be minor. However, the proposed project may finance construction of some rural infrastructure like multipurpose cyclone shelter, embankment etc., which may have environmental ramifications. To avoid potentially adverse environmental impacts and improve existing environmental conditions, IDA Operational Policy on Environmental Assessment (OP 4.01) is triggered for this project. The project has integrated environment, climate change and disaster risk reduction in the project design. 77. Considering the nature and magnitude of potential environmental impacts from relatively limited scale and magnitude of community level infrastructure development, the proposed project is classified as category ‘B’. All community infrastructures will be subject to an environmental screening by the community and cluster team leader and will be reviewed by SDF district level officer and regional level/head office Environmental specialist. SDF’s district/regional level environmental specialist will prepare a report with mitigation measure for sub-projects with minor environmental impacts for Green and Orange A category project. SDF regional/head office environment specialist will conduct Initial Environmental Examination for subprojects with moderately significant and potentially significant environmental impact for Orange B and Red category project and prepare the Environmental Management Plan (EMP). If IEE indicates potential major environmental impact, head office level specialist/individual consultant will conduct the Environmental Impact Assessment (EIA) for the Red Category project and EMP will be prepared after the EIA. SDF will refer the larger subprojects with significant environmental impacts to the Department of Environment (DOE) for concurrent approval. 78. The Orange B (other than earthen roads) and Red category sub-projects will require IDA’s clearance before implementation. SDF will send the IEE/EIA report along with EMP of the subprojects to IDA after SDF’s internal review. In addition, IDA will review screening/IEE report for Green, Orange A and Orange B (only earthen road) category sub-projects on sample basis to ensure the quality. 79. SDF will maintain a database for environmental capacity building of staff and sub-project specific environmental screening/assessment, EMP and implementation monitoring of EMP. The project M&E system will capture that information as well. An independent (third party) environment audit will be carried out annually to assess and evaluate the quality of environmental compliance of the construction

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related subprojects. This will be part of the third party independent verification and compliance check of the project. 80. The Environmental and Social Management Framework (ESMF) has been prepared by SDF in consultation with concerned community, field staff and local stakeholders. It provides general policies, guidelines, codes of practice and procedures to be integrated into the implementation of all subprojects/ schemes implemented by SDF that will cover the proposed project and Additional Financing in flood affected areas and cyclone SIDR areas. The ESMF was disclosed in the client’s website on April 17, 2010; and has also been made available at IDA’s InfoShop on May 18, 2010. 81. As per their new institutional structure and HR Policy, SDF will create Environment, Climate Change and Risk Reduction (ECCRR) specialist positions at head office, regional and district level offices. The project will support the capacity building of the staffs and community on environmental management, Climate Change Adaptation and Disaster Risk Reduction. In addition to the ESMF, a simple booklet on ESMF will be included in the COM to elaborate the process to identify and address safeguard issues in sub-projects and disseminated among the communities and field staff. F. Safeguard Policies (refer to Annex 11)

82. The proposed project will not involve involuntary resettlement. Subprojects, where involuntary resettlement is likely to occur would be disallowed. Based on positive experience from the current program, OP 4.12 on involuntary resettlement will not be triggered. There would be no involuntary land acquisition; and the project shall be implemented as far as reasonably practicable on publicly owned land, using exclusively land free from squatters, encroachments and other encumbrances; any acquisition of private land, if needed, would be through outright purchase at market rates or voluntary donation and in accordance with guidelines and procedures set forth in the PIP and COM. This will be verified and certified during subproject appraisal. 83. Indigenous People (OP 4.10): While the tribal population is insignificant in the districts where the current project is operating, a Tribal Development Plan was nonetheless prepared for the first SIPP operation. While this OP has not been triggered, it is possible that the project may occasionally come across a group of tribals during the implementation. The ESMF identifies the various tribal groups found in the new project districts, and indicates that their population is negligible or insignificant in most of the districts. In the three districts with the greatest presence, there are populations of 0.87 percent, 0.89 percent, 0.92 percent of the total population. For these districts with such minority populations, the EMSF would contain a check list for ensuring culturally appropriate and informed consent/choice for tribal families in such rare cases. In any case, given the CDD nature and vulnerability focus of the project, there is already an inclusive process framework for addressing the concerns of all vulnerable groups through participation and informed consent, so it is anticipated that any tribal groups covered would be project beneficiaries.

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Safeguard Policies Triggered by the Project Yes NoEnvironmental Assessment (OP/BP 4.01) [X ] [ ]Natural Habitats (OP/BP 4.04) [ ] [ X]Pest Management (OP 4.09) [ ] [ X]Physical Cultural Resources (OP/BP 4.11) [ ] [ X]Involuntary Resettlement (OP/BP 4.12) [ ] [X ]Indigenous Peoples (OP/BP 4.10) [ ] [ x]Forests (OP/BP 4.36) [ ] [ X]Safety of Dams (OP/BP 4.37) [ ] [ X]Projects in Disputed Areas (OP/BP 7.60)* [ ] [X ]Projects on International Waterways (OP/BP 7.50) [ ] [ X]

G. Policy Exceptions and Readiness

84. The project is consistent with all applicable Bank policies, and there are no policy exceptions requiring management approval. As this is expansion of the current program, SDF is well staffed; and ready for implementation prior to effectiveness. The following measures have been taken to prepare for project implementation:

The operational documents detailing project activities, processes, time schedule, and rules and guidelines for transferring funds to various community organizations have been finalized and documented in the PIP and COM and agreed with GoB and SDF.

SDF has adopted the new HR policy and manual; and there is an agreement with GoB on the institutional arrangements and recruitment strategy of staff. Currently SDF is staffed with capable and dedicated team and critical operational and financial staff needed are in place. There is an agreement with SDF management on remaining new staff recruitment at the national, regional and field level and their roles and responsibilities (see Annex 6).

Fiduciary (financial management and procurement) arrangements have been agreed and further strengthened (see Annexes 7 and 8).

Safeguard requirements have been complied with and disclosure requirements met; and

operational manuals agreed and finalized.

The procurement plan for the first year has been finalized and procedures for community procurement are already in place. Revisions to procurement procedures at the community level and guidelines have been refined and further simplified during the preparation and have been agreed and included in the operational documents.

A participatory monitoring, learning and evaluation system is in place, and has been upgraded and improved to meet requirements of the proposed project.

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

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Annex 1: Country and Sector Background

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

A. Key Country Background and National Issues

1. Recent achievements: Bangladesh has recorded some remarkable economic and social achievements over the last two decades. The country’s poverty incidence declined from 57 percent at the beginning of the 1990s to 40 percent in 2005. Economic growth in recent years has averaged 5.7 percent and inflation has been relatively low with fairly stable domestic debt, interest and exchange rates. Furthermore, Bangladesh has made good progress towards achieving a number of human development related Millennium Development Goals (MDGs): it increased gross primary enrollment from 72 percent in 1980 to 98 percent in 2001 and has already attained the MDG for eliminating gender disparity in primary and secondary enrollment. There has been a sharp decline in infant mortality from 145 to 46 per 1000 live births between 1970 and 2003, and child mortality is down from 239 to 69 per 1000. In many respects, Bangladesh appears to defy the conventional wisdom that low incomes prevent gains in the social sector.

2. Poverty and regional disparities: Nonetheless, despite these improvements in key social indicators, Bangladesh remains a very poor country where rural poverty and regional disparities remain high, and where climatic and geographic vulnerabilities are contributing to further deepen poverty traps in certain areas of the country. In 2005, the rural poverty rate was 44 percent as compared to 28 percent in urban areas. Of the 56 million people still living in poverty, 85 percent of these in the country’s rural areas, with serious constraints to income opportunities and delivery of basic services. Nearly one-third of the rural poor suffer from chronic “hard core” poverty (HCP),15 and recent evidence suggests that inequality and regional disparities are increasing.16

3. Bangladesh has witnessed changing patterns in regional inequality with a growing divergence between eastern and western parts of the country. Between 2000 and 2005, regions in the east were found to have converged positively towards the Dhaka region in terms of incomes and poverty, but the western region continued to lag behind17. While most of the eastern region has benefited from increased integration with growth poles of Dhaka and Chittagong cities, the western region has been hampered by a number of factors that include a relative lack of remittance income, inadequate public infrastructures to access markets, and lack of assets and endowments among households.

Table 1. Project District Poverty Rates

Poverty Head Count Rate 2005,

Lower poverty line

Poverty Head Count Rate 2005,

Upper Poverty Line

No. District # of Upazila Average Average 1 Bagerhat 9 31.9 43.0 2 Barguna 5 39.1 57.8 3 Gaibandha 7 36.1 53.0 4 Jamalpur 7 46.3 60.5

15 31 %, as noted in ‘Chronic Poverty in Bangladesh’, Bangladesh Institute of Development Studies (2006) 16 The Gini coefficient for consumption inequality has risen from 0.36 to 0.41 in urban areas and from 0.28 to 0.31 in rural areas. 17 Bangladesh: Poverty Assessment for Bangladesh – “Creating Opportunities and Bridging the East-West Divide”, World Bank Report 2008

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5 Sirajganj 9 35.5 52.5 6 Patuakhali 7 47.4 59.9 7 Pirojpur 6 18.2 27.9 8 Rangpur 8 46.9 63.2 9 Nilphamari 6 55.0 70.2 10 Kurigram 9 52.6 68.6 11 Dinajpur 13 33.4 50.0 12 Sherpur 5 33.2 48.1 13 Mymensingh 12 45.6 59.6 14. Barisal 5 41.1 57.7 15. Naogaon 11 33.0 49.5

B. Rural Sector Issues

4. Rural development constraints: The findings have significant implications for rural communities in these areas that bear the brunt of both adverse economic effects and topographical vulnerabilities. Per capita expenditure for rural households tends to be significantly lower for communities with limited access to local markets and the further they are from thriving urban centers of the country. Although micro-finance access has increased rapidly in recent years, studies have suggested that expansion has occurred in areas that have experienced higher than average reduction in poverty, and therefore not in those rural areas in the western region and some pockets in the east, where poverty reduction rates have lagged or stagnated. For rural Western Bangladesh, the challenge is thus for policy makers to make investment efforts and tackle the policy and institutional impediments that constrain the poorest from benefiting more fully from wider growth and poverty reduction efforts.

5. Vulnerability and chronic poverty: The topographical nature and location of areas in large parts of the country make poor rural communities vulnerable to unexpected shocks and natural disasters, including flood, drought and cyclone. Flood risks affect much of the country, while high risks of cyclones are mainly concentrated in the southern districts of Khulna, Barial, Naokhali and Chittagong. Such risks impact the poorest rural households disproportionately, as these groups tend to live in places that are poorly connected to markets, electricity and transport, and this absence of key infrastructure and communications makes populations even more vulnerable targets for disasters.

6. Monga is a predicted area-specific phenomenon that tends to affect large areas in the northwest part of the Bangladesh, mainly in Rangpur district. It is a severe form of deprivation occurring during the lean agriculture season of mid-September to November and tends to trigger high chronic poverty, owing to lack of available income sources. About 7 percent of the entire population in Bangladesh is reported to inhabit Monga- affected districts and household consumption levels are found to be the lowest in these areas. In general, chronic poverty has been estimated to affect 31 percent of the rural poor in Bangladesh. The HIES 2005 estimated that 27 million people in Bangladesh continue to persist in deep poverty and fall at the bottom of the poverty ladder. This finding is further reinforced by a report conducted by Bangladesh Institute of Development Studies (BIDS) in which it was estimated that 25 to 30 million of the country’s citizens are chronically poor as a result of adverse household structural changes that include: continued involvement in agriculture as a means of livelihood with inability to adopt better and more innovative practices; declining natural and financial assets; and vulnerability to shocks such as natural shocks, health shocks and domestic violence against women.

7. Gender equity and women’s empowerment: With regard to the gender dimensions of poverty, poverty levels amongst women continue to be high, as reflected in the large number of women amongst

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the hardcore poor. The number of ultra poor and extreme poor (based on calorie intakes of 1600 and 1805 k.cal respectively) is higher in female headed households than in male headed households. Despite increasing education and declining fertility rates for girls/women noted above, women’s labor force participation rates are very low. Women’s employment in South Asia is among the lowest in the world and Bangladesh is at the lower end of the South Asian spectrum. Only 4 percent of women of prime working age earn a cash wage in Bangladesh and, for those that do - for example in the casual agricultural labor market - women earn about 60-65 percent of men’s wages. Indeed, women’s role in decision-making is still small and typically restricted to the domestic sphere.

8. Impact of Flood and Cyclone Disaster: The year 2007 brought two natural climate-related disasters to Bangladesh – floods and a devastating cyclone within a few months of each other. This caused wide spread damage to housing, roads, bridges and other rural infrastructure in the south western districts of Bangladesh. High winds, tidal waves and flooding affected about 1 million households. It was estimated that about 2 million people in the highest poverty stricken districts had lost income and employment. Poverty which was already very high in the affected areas has been worsened due to the losses caused by the disaster. The Bangladesh economy sustained combined effects of the cyclone and the floods of 2007 in the estimated amount BDT 189.4 billion, or 4.7 percent of GDP for the previous fiscal year, which is a measure of the negative impact of natural hazards in the country. The successive occurrence of these events is a reminder of the extreme vulnerability of the country to frequent hydro-meteorological hazards.

9. As a country that is highly susceptible to natural disasters, climate variability is only likely to exacerbate the frequency and incidence of such calamities. Food security, health, livelihoods and access to basic services of water and sanitation, energy and shelter are sectors that are likely to be compromised. These effects have the worst impact on the hard core poor who usually have limited resources and whose assets and livelihoods tend to be tied to climate sensitive factors of production. The high levels of poverty especially amongst the hard core poor only serve to increase the levels of vulnerability when impacted by climate variability, thereby, further eroding their capacity to maintain and sustain a progressive development path.

10. Effects of the Global Financial Crisis: The global financial crisis hit South Asia at a time when it was trying to recover from severe terms of trade shock brought about from the global food and fuel price crisis. The food and fuel crisis shocks had a negative impact on incomes in the region and current account and fiscal balances worsened sharply and inflation shot up to unprecedented levels. Bangladesh was largely shielded from the first round effects of the financial crisis due in part to sound macroeconomic management and also because of the undeveloped nature of the financial markets that are not well connected to international markets. However, the country remained vulnerable to the second round effects of a global economic slowdown that were likely to affect export earnings, tourism receipts, remittances and external financing for infrastructure.

11. Bangladesh’s recovery path from the crisis is expected to be largely positive because of its sound economic policies, resilience in trade, investments and remittances. However there are still some risks that remain and depend on the extent of severity and length of time that the global recovery takes. Bangladesh’s large interest payments place a huge constraint on the country’s ability to allocate resources for development activities. Debt payment problems that emerged in Dubai suggest potential problems in the economic activities of the Arabian Gulf economies that could impact negatively on Bangladesh’s large numbers of migrant workers and thereby reduce remittance inflows to the country. A supplementary concern relates to global rice markets that currently appear to be well supplied with normal levels of stock-to-use ratios, but a serious weather event or policy action could cause prices to rise significantly, and as country that is not a net producer of rice, Bangladesh remains highly vulnerable to these price shocks, in addition to those related to climate and natural phenomena.

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C. National Level Responses: Government of Bangladesh’s Poverty Reduction Strategy

12. The Government of Bangladesh has worked closely with non-governmental organizations and the private sector in making important strides in the fight against poverty, as already noted. Child mortality was cut in half by the 1990s, life expectancy increased to 61 years, women’s economic participation and net primary enrolment increased significantly and gender parity was achieved in both primary and secondary education. Despite these achievements, the fact that aggregate poverty levels in the country remain high and inequality has been a rising concern of the government. Women remain marginalized in their attempts to consolidate gains on social and economic fronts and the challenges of governance pose an impediment to an accelerated growth process.

13. The Government of Bangladesh’s (GoB) vision for addressing inequality and poverty was earlier presented in its Poverty Reduction Strategy Paper (PRSP), “Unlocking the Potential” (October 2005), which centered on a policy triangle of growth, human development and governance, with a strong emphasis on participation and empowerment. It recognized that the fight against poverty was not only a multi-dimensional approach that went beyond addressing budgetary targets, but included better understanding of the situation of the ground, transformation of institutional cultures, building dynamic partnerships and sustaining the political will to overcome challenges. A follow on strategy has been prepared by the Government of Bangladesh to cover the period FY09-FY11. The National Strategy for Accelerated Poverty Reduction II18 (October 2008) is aimed at stepping up poverty reduction through private sector development, more coordinated support from GoB and effective engagement with NGOs and civil society. The strategy has taken into account Bangladesh’s commitment to meeting the Millennium Development Goals (MDGs), South Asian Development Goals (SDGs) and other international agreements relevant to social and economic development.

14. NSAPR II has taken a very ‘people-centric’ approach to poverty reduction and focused on improving living standards, health, quality of education and other service delivery in addition to promoting life friendly environment and shelter. It is also focused on achieving fundamental human rights and freedom, gender equality and regional balance all within a sustained democratic environment. The emphasis on accelerated growth is anchored in broad participation of the people and ensuring distribution of income to the poorest sections of the communities.

15. NSAPR II has five key strategic blocks supported by five additional strategic measures aimed at enhancing the gains of developmental impact:

16. Strategic Block 1: Macroeconomic Environment for Pro-poor Economic Growth; In the first strategic block, GoB aims to enhance and sustain macroeconomic stability through high economic growth rates, low and stable inflation, prudent fiscal and monetary policy management and high productive employment. Furthermore, improved support of the external sector policy focusing on management of demand and supply sides of the economy will broaden the opportunity space for pro-poor economic growth.

17. Strategic Block 2: Critical Areas of Focus for Pro-poor Economic Growth; In this strategic block, GoB has placed primary importance on increasing productivity in the agriculture sector through developing and disseminating sustainable eco-friendly technologies. Profitability of investments, employment generation, crop diversification and focus on non-crop agriculture and developing agri-

18 The Second Poverty Reduction Strategy Paper (PRSP) entitled “Moving Ahead: National Strategy for Accelerated Poverty Reduction II (FY09-FY11)”, was prepared by the Planning Commission of GoB. The Government initiated country wide consultations that included stakeholders, academia, researchers, NGOs and members of civil society at both national and regional levels prior to finalization of the strategy.

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business services, are all important components to achieving food security, particularly, for the poor, extreme poor and vulnerable groups of society. The private sector is expected to play a critical role in the development of pro-poor economic growth and as such, GoB will create the necessary environment to allow the private sector to thrive. Small and Medium Enterprises (SME) will also be expected to play a critical role in achieving the national goal and GoB will provide the necessary support to facilitate this.

18. Strategic Block 3: Building Essential Infrastructure for Pro-poor Economic Growth; The focus of this strategy is to provide and improve infrastructure to enable increased service delivery to the poorer sections of society, women, youth, and vulnerable groups and especially those located in remote areas. Infrastructure development accompanied by development of electricity, gas, energy and other modes of transport and communication will act as important catalysts to transforming growth and promoting employment in agriculture, SMEs and other related sectors.

19. Strategic Block 4: Social Protection for the Vulnerable; GoB will pay critical attention to activities targeted at benefiting the extreme poor, women in poverty, the landless and other vulnerable groups as part of its poverty reduction strategy. At least five social safety net programs have been identified as key measures to prevent increased vulnerability; (i) food security, (ii) disaster management, (iii) micro-credit, (iv) rural non-farm activities (RNFA) and, (v) rural development.

20. Strategic Block 5: Human Development; GoB has recognized that the absence of knowledge and good health are detrimental to the development of human development and society’s progress. The final strategy is aimed at enhancing human development through increased access to knowledge and information and improved health care.

21. In addition to the strategic blocks, GoB has included five supporting measures to expand economic development and improve impact; (i) Supporting and ensuring participation, empowerment and social inclusion of all vulnerable groups such as women, extreme poor and poor in remote areas; (ii) Promoting good governance; (iii) Ensuring efficient service delivery; (iv) Caring for the environment and increased attention to sustainable development, and; (iv) enhancing productivity and efficiency through technology including ICT.

D. IDA’s Country Level Response

22. The 2010-2013 Bangladesh Country Assistance Strategy (CAS), currently being prepared, builds on the foundation laid by the previous CAS (2006-2010) in which improved investment climate and economic empowerment where the cornerstones for a poverty reduction strategy. IDA’s Country Assistance Strategy is well aligned with the NSAPR II, as reflected in its key objectives to assist GoB increase competitiveness, improve access to service delivery, expand social safety nets, implement effective climate and disaster risk management measures and increase agricultural growth.

23. The 2010-2013 CAS has outlined four strategic pillars to support the key areas identified by the GoB in its plan to address poverty reduction. The first strategic pillar looks to address the issue of sustaining and accelerating growth at a rate of 8 percent per year by 2013 as visualized in NASPR II. The IDA’s approach will be to support accelerated reforms in the financial and real sectors of the economy; addressing challenges of tax reform, public investment policy and implementation, decentralization and fiscal transfers, poverty monitoring, regulatory reforms, urban planning, energy sector reforms and financial sector strengthening are among the key areas of focus for the IDA.

24. The objective of the second pillar is to help reduce environmental degradation and vulnerability to climate variability and natural disasters by supporting the GoB’s in its various policies to address adverse impacts and the recently prepared action plan on climate change. IDA has proposed to assist

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GoB strengthen its policies and systems in water management to enhance water resource management and coastal protection. IDA will also undertake technical and policy interventions aimed at improving agriculture productivity and increasing food security. Other interventions will include building on existing programs and ongoing work to reduce environmental degradation and strengthen natural resource management. IDA will continue to learn from emerging lessons in disaster management/response projects in the country and apply these through improved technical assistance and other investments to help the country manage these types of risks.

25. The third pillar is focused on improving service delivery, especially for the poor. IDA will aim to help the GoB strengthen supply-side and demand-side approaches to increase utilization of essential services and assist the Government in addressing systemic governance issues to help raise the quality and cost effectiveness of service delivery as well as improve equity of access to services. These measures will go a long way in helping the Government achieve the MDGs, particularly in health, education, safe water and sanitation services and also ensure enhanced social protection for the vulnerable, reduce poverty and strengthen public systems.

26. As in the previous CAS, governance remains a critical area of focus in IDA’s strategy moving forward and the fourth pillar aims to further enhance governance and greater inclusion in Bangladesh. Drawing lessons from past governance efforts, IDA will promote mechanisms to include all segments of society, with a particular bias towards women’s empowerment. IDA will try to achieve this through interventions that integrate governance and inclusion in all aspects of its programs and promote its outcomes as part of the final result. Increasing people’s ability to organize and take decisions for themselves, providing opportunities to develop essential skills and improving access to knowledge and information creates an enabling base for social and economic empowerment, inclusion, and reduced vulnerability.

E. Sectoral Responses

27. Microfinance as a tool for rural poverty alleviation: Bangladesh has an established track record of tested methods of increasing access to finance for the rural poor. The country has a number of service providers availing micro-finance services to the poor who lack savings and capital. The most prominent service providers include GRAMEEN, BRAC and ASA who account for 85 percent of the 18.6 million active borrowers in the country. However, even with the presence of these large MFIs, the country has been unable to sufficiently increase the depth of reach of these programs to have meaningful impact on poverty reduction. A study in Bangladesh by Zeller and Johannsen (2006) found that the proportion of microfinance participants in the bottom two income quintiles were 24 percent and 23 percent, respectively. Up to December 2008, the total outreach of the top six hundred MFIs in Bangladesh was 36 million members, Even if one does not factor in the ‘double-counting’ through individual membership of multiple NGO-sponsored groups, this figure means that 35 percent of the poor – mainly the hard core and ultra poor - are still not included. This percentage would be very much higher if double-counting was addressed.

28. One of the important reasons why MFIs have not been able to reach out to the HCP is that they are mostly dealing with “credit only” products and the terms and conditions of these loans do not meet the needs of the HCP and so are inappropriate. The HCP need flexible terms that fit their circumstances. Without qualifying for MFIs, they end up taking loans from the local money lenders at exorbitant interest rate thus further eroding their income and reducing their ability to move out of poverty. Secondly, HCPs need several doses of intervention, e.g., grants and other support before they can benefit from MFIs and other commercial sources of funding. The experience is that after managing their own village institutions they are able to have a voice and operational experience to deal with MFIs and other financial service providers.

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29. GoB’s Social Safety Net Programs: A number of social safety net programs have been initiated by the Government of Bangladesh over the last two decades, to try and address the needs of the chronically poor and vulnerable populations. In 2007, the country spent 1.6 percent of GDP, and 10.58 percent of the total budget, on these. Presently, there are over 30 widely recognized SSNPs being implemented by thirteen government ministries and line departments that are largely focused on four key areas: (i) cash support programs; (ii) food aid programs; (iii) specific programs on poverty reduction; and, and (iv) self-employment through micro-credit schemes.

30. A recent social safety net study for Bangladesh showed that there have been some positive achievements in many cash-for-work and conditional cash transfer programs. Allowance schemes have been set up to cater to old-age individuals, disabled persons, poor pregnant mothers and school going children. A number of food security programs are currently being operated by the government of which, the Food For Work Program (FFW), Vulnerable Group Development Program (VGD), Vulnerable Group Feeding Program (VGF), Tests Relief (TR) and Gratuitous Relief (GR) are the major programs. In 2007-08, these programs were able to distribute a combined 1672 metric tonnes (MT) of food. Through Local Government Engineering Division (LGED), the government has also been implementing infrastructure development in the rural areas to facilitate agricultural productivity and access to markets. Some of these programs have also been designed to create short-term and long-term employment opportunities for the rural poor through construction and maintenance of infrastructure and food for work programs.

31. Although the government is implementing a sizeable number of safety net programs, the combined coverage rate of these programs has only managed to reach 15 percent of the population in rural and 5 percent in urban areas. This outreach is fairly limited when compared to both the number of programs being implemented and the population-wide needs and is an indication of possible coordination challenges in administration. In terms of regional dimensions, safety net programs have been inadequate in reaching the most backward and inaccessible areas such as Monga-prone areas and other difficult to reach groups. None of the safety net programs implemented so far have nation-wide coverage. Leakages in programs have been reported and found to be more pronounced in in-kind programs than in cash programs, resulting in very limited benefits for intended participants. Furthermore, programs have faced major challenges in establishing clear targeting criteria and as a result, exclusion of eligible persons and inclusion of non-target groups have become more common occurrences. Based on these set of challenges, there is a need to have a national institutional delivery mechanism that is able to address these issues in an efficient and streamlined manner. While IDA is in dialogue with GoB on such a national delivery effort, there remains significant opportunity for complementary interventions to explore improved modalities for more effective targeting of vulnerable groups and more transparent administration and reduced leakage of resources at the local level.

F. The Proposed Project

32. The Community Driven Development (CDD) approach is viewed as one way of achieving social and economic empowerment and inclusion, and reducing vulnerability. A mechanism that can be used to enhance livelihoods development and increases community control over resources and decision making, while developing their capacity to reach out to markets and services and manage risks. Since 2003, GOB, with support from IDA, has been implementing the Social Investment Program Project (SIPP), which uses a CDD approach by increasing community control over resources and decision-making and capacity building to help beneficiaries reach out to markets and services. This operation has been working in the two poorest north-western districts of Jamalpur and Gaibandha. It was designed to pilot new ways of delivering critical infrastructure services and social assistance to the rural poor, while at the same time addressing institutional organization and capacity-building at village level. As the operation builds on past experiences and lessons learnt from other similar projects, the key strategy for the proposed project

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will be to further focus on strengthening and empowering of community institutions and their federations, mobilizing the hardcore poor and poor into groups (Jibikayan Groups) while providing essential skills development training and resources for income generating activities. Community strengthening and empowerment will be further enhanced by mainstreaming disaster risk reduction measures into the livelihoods framework as part of building long term preparedness for future natural disasters. Community institutions will also be developed to effectively engage and partner with private sector organizations and government agencies to and improve the livelihoods of these groups and the most vulnerable in the villages.

33. The project will mobilize the excluded hardcore poor and poor with a special focus on women and youth to build accountable, inclusive and transparent village institutions. Financial resources will be transferred directly to villages based on village size and subject to satisfactory attainment of agreed milestones to ensure that resources reach their intended targets. In addition, the project will allow flexibility in allocation and use of project funds through an open menu of options that let communities identify and prioritize their needs and, utilizing a participatory planning and risk reduction planning framework. Communities would also have opportunities to incorporate changes depending upon realized results.

34. Linkages and partnerships are an important element of the new project and would involve partnering with Union Parishads (elected local governments at the higher Union administrative tier), other developmental organizations, and the private sector in exploring collaborations in the areas of resource mobilization, technical support, training and employment, market and micro-finance linkages.

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

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Sector Issue  Project  Latest Supervision ISR Ratings (Bank­financed projects only) 

  Implementation Progress

Development Objective

Bank Financed  Poverty Reduction and Livelihoods           

Social Investment Program Project (Cr.25310-BD) Rajasthan District Poverty Initiatives Project (Cr.3339-IN) Madhya Pradesh District Poverty Initiatives Project (Cr.3430-IN) Chhattisgarh District Poverty Initiatives Project (Cr.3749-IN) Andhra Pradesh Rural Poverty Reduction Project (Cr.3732-IN) Tamil Nadu Empowerment and Poverty Reduction Project (Cr.31806-IN) Sri Lanka Community Development and Livelihood Project (H0780-LK)

MS S S

MS

S

S

S

S S S

MU

S

S

S

Social and Gender Specific Programs 

Rural Women’s Development and Empowerment Project (Cr.2942-IN)

S S

Other Development Agencies

ADB     

Rural Infrastructure Improvement Project Social Development for Erosion Affected Poor in the Jamuna-Meghna Floodplains (Agriculture and Natural Resources) Agribusiness Development Project Rural livelihood Project

Ausaid  

Food Security Project (GoB and WFP) Microfinance Project (BRAC)

CIDA  

Rural Maintenance Program (RMP III)

DANIDA   

Agriculture Sector Program Support II Local Initiatives for farmers Training Project (LIFT) Strengthening Plant Protection Services Project Phase-II Integrated Soil Fertility and Fertilizer Management Project – Phase II

DFID     

Research and Extension in Farm Power Issues Project (REFPI) Chars Livelihoods Program Agriculture Services Innovation and Reform Project (ASIRP) Livelihoods: On Farm and Off Farm Activities (PETRRA) CARE Livelihoods Program

EC     

Food Security through Sustainable Income Uplift and Poverty Eradication South Asia Agro Processing Program Advancing Rural Capacity in Haor Support to Vulnerable Food Insecure Farmers, CARE LIFE NOPEST Phase II

USAID  Agro Based Industry and Technology Development Project Phase II Strengthening Household Ability to Respond to Development Opportunities (SHOUHARDO)

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Annex 3: Results Framework and Monitoring

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Results Framework 1. Under the original project and three Additional Financings, SDF has had the opportunity to build capacity and develop a satisfactory monitoring, learning and evaluation (ML&E) system, operating at multiple complementary levels. The focus of the current system has been on “learning” and “downward accountability”; and the proposed project will further improve the ML&E system. The project’s Results Framework with the indicators elaborated below will form the basis for monitoring outcomes and results, which will be benchmarked and tracked by a baseline (carried out during project preparation) and impact evaluation (carried out at project completion). 2. The ML&E institutional arrangements and data collection activities will broadly consist of the following elements:

3. Community Level participatory Self monitoring, evaluation and learning: SDF has developed a simple and community friendly monitoring and benefit tracking system that captures key implementation milestones, selection of beneficiaries, functioning of community level institutions, and use of funds, known as the Village Matrix. This updated by communities, with the information fed back into SDF’s system. SDF will continue to oversee community level monitoring processes and integrate this with the Management Information System (MIS), currently being refined and upgraded to monitor the expanded program, as well as the system of internal learning forums being implemented at various levels. Social Accountability mechanisms such as functioning of Social Audit Committees, public displays, participation in Gram Parishad (village assembly) meetings, conflict resolution system, and participatory community assessments (report cards) developed and used in the current program will be further strengthened, and applied consistently at the village and inter-village level as additional modes of monitoring and oversight. 4. Program Monitoring, Learning and Oversight: SDF has developed and institutionalized a fairly robust system of program monitoring that utilizes the presence of field teams, and combines routine monitoring data collection (i.e., through the MIS) with externally facilitated process monitoring and regular internal learning forums at village, cluster, district and national levels. These internal learning and monitoring forums will be used to address and resolve implementation bottlenecks, improve quality of processes, and disseminate good practices. The system will be further strengthened and expanded under the proposed project, and recommendations and decisions taken during regular learning and monitoring meetings would be tracked and monitored through the MIS. 5. For routine data collection and reporting, the Cluster and District Teams will compile and submit monthly and quarterly progress reports. The ML&E Unit at headquarters will consolidate all data collected and generate village/cluster/district/project level reports, as well as coordinate Annual Planning Workshops and the monthly internal learning workshops. The upgraded project MIS will consist of a Project Management Information module to support programme monitoring and learning, as well as modules for finance and accounts, procurement, inventory, payroll, and later on human resource management. As a web-based and GIS supported system, comprising village and individuals databases, the MIS will permit the tracking, visualization and timely feedback to users at various levels a range of community and project performance indicators under the respective project components. 6. Independent Verification: Process Monitoring: As under the current project, SDF will retain a Process Monitoring Agency (PMA) to independently determine how effectively the project is running and

37

to identify ways to improve quality of implementation and processes. The PMA teams will submit monthly reports on key livelihood activities and quarterly field reports to summarize key lessons learned, case studies and follow-up status. This is an important mechanism that brings lessons from the field directly to project management, allowing for real-time response to address key challenges identified. Going forward under the proposed project, SDF has committed to institutionalize the tracking and response to issues raised by the process monitoring. Appraisal and Monitoring teams: At the heart of the program’s framework for quality assurance is a system of independent appraisal and monitoring teams (AMTs) who independently review community submissions for release of fund installments, verifying their following of the project’s guidelines and rules. 7. Independent Assessments and Impact Evaluations: A project results framework has been developed, combining quantitative and qualitative methods, to assess outcomes and results of the expanded program and capture quality of processes and institutions. Sufficient baseline information was available for project design and defining of indicators and targets (see matrix below). In addition, a comprehensive survey for the proposed project is underway, conducted by an independent research body, to benchmark current conditions as the basis for a future impact evaluation. A mid-term independent impact assessment will be conducted during project Year 3 and a full evaluation will be carried out at project completion to assess progress towards achieving the PDOs. SDF will also undertake additional focused thematic studies to complement and support other learning mechanisms, systematically document good practices and opportunities for scaling up, identify needed refinements to intervention approaches, and synthesize lessons to help fine tune project design.

Project Results Framework

PDO Project Outcome Indicators Use of Project Outcome Information

To improve the livelihoods, quality of life and resilience to climate variability, natural hazards and other shocks of the rural poor, especially the left-out poor and vulnerable households19

75 percent of total village institutions supported by the project are functioning in a transparent, inclusive and accountable manner, as per project guidelines

Increase in income by at least 50 percent against base year for 50 percent of targeted households by the end of the project

At least 80 percent of targeted households20 benefit from improved community infrastructure or social services sub-projects

All data to be sex-disaggregated to track gender outcomes; and also disaggregated by youth Data on outcomes will be the basis for assessing the effectiveness of the project and monitor the progress towards the development objective End Yr 2.5: review of project implementation and early results at Mid-Term and make any necessary adjustments to design/procedures End Yr 5: assess project impacts at completion and determine next steps for continued impact on rural poverty

19 Measuring resilience is difficult, unless and until a shock tests the communities’ ability to withstand such hazards. The design of the project is such that the three outcome indicators should be taken together as an ‘index’ for resilience that addresses communities’ social, physical and financial coping capacities. 20 Total households directly targeted by project = 300,000

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Intermediate Outcomes Intermediate Outcome Indicators

Use of Intermediate Outcome Monitoring

Component A: Community and Livelihood Development at the Village Level 1.1: Development and Strengthening of Community Organizations Inclusive, accountable and sustainable village institutions formed and accountable for receipt and effective use of resources, according to project rules

80 percent of target HHs mobilized and organized into Jibakayan Groups

80 percent of Gram Samitis have HCP occupying decision making/office bearer positions, as per COM guideline (and at least 50 percent are women)

80 percent of GSs accessing and managing VDRRF as per agreed rules and service standards as set out in the COM

To assess whether the poor have been empowered through development of inclusive, accountable rural community institutions

1.2 : Village Development and Risk Reduction Fund (VDRRF) Establishment and use of VDRRF for productive and social infrastructure, livelihood assets, service sector investment and risk mitigation measures.

At least 70 percent of village organizations have applied participatory methods for risk and vulnerability analysis and implemented risk reduction and preparedness plans

80 percent of JG members have mobilized savings and accessed additional sources of finance (e.g., Swabalombi Fund; banks; MFI, etc)

At least 80 percent of completed community infrastructure subprojects are being operated and maintained by communities

70 percent of the HCP and vulnerable in participating villages have accessed resources under the project (e.g one-time grant, skill development loan, Swabalombi fund, etc) and started income generating activities or employment

To assess the effectiveness and quality of fund utilization at the village level To assess the capacity of communities to cope with potential risks and hazards, in terms of social, economic and physical/environmental capacities

Component B: Institutional Development and Livelihoods Promotion at the Inter-village Level2.1 Development and Strengthening of Inter-village Organizations

50 percent of villages have at least 5 Community Professionals (CPs) identified, trained and offering services

At least 70 percent of graded

To assess whether the poor have been empowered though development of inclusive, accountable rural community institutions

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CPs are earning at least 10 days in a month

At least 50 percent of target HHs have benefited from value addition activities through Economic Activity federations (Phase 1)

At least 50 percent of GSs and VCOs of current program (Phase 1) are federated at Upazila/cluster level

At least 50 percent of the federations are rated A and B (Phase 1)

2.2 Business Promotion, Livelihoods and Market linkages

At least ten major business partnership established through public/private partnerships with communities

To monitor and revise project’s market linkage/partnership strategies if less than 3 business linkages established by project mid-term

2.3 Creating Conditions for Employment Generation

At least 50,000 direct jobs created through project facilitation (and at least 75 percent of them are sustained at EOP)

A youth database and employment exchange established and fully operational in at least 75 percent of project villages

To monitor efficacy of the project’s employment generation strategy and adjust if results are significantly less than expected numbers

Component C: Capacity Development and Partnership Building from Cluster to National Levels 3.1 Capacity building of SDF staff and other relevant agencies Project teams at various levels – State, District – Cluster – other service providers and partners working with the target population are responsive to the poor and have the skills and capacity to deliver and facilitate the project

Staff performance appraisal results (following HR Policy) indicate 70 percent of staff performing at Grades A and B, annually from year 221

At least 70 percent of the villages (Gram Samiti, SAC and VCO) are rated as A or B grades

To monitor and assess staff implementation capacity, functional knowledge and facilitation skills

3.2 Supporting Innovation Improved access to new technologies, markets and partnerships for innovation

Non-competitive window: At least 4 major partnerships established by SDF to promote CDD with organizations

To assess the effectiveness of the Innovation Fund in catalyzing new ideas, partnerships and practices to improve incomes, reduce risk, improve governance

21 In year 1, the project will introduce and test its performance appraisal system. This indicator will be tracked from year 2.

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spanning academia, private sector/markets, research institutes, NGOs and public sector

Competitive window: At least 9 successful proposals for Innovation Pilots awarded by EOP

and address rural poverty and risk reduction through CDD

Component D: Project Management, Monitoring and CoordinationThe project is well managed, coordinated and monitored; and service standards are established and met

GAAP recommendations implemented and reviewed annually with the community representatives in at least 70 percent of project villages

At least 70 percent of process monitoring recommendations reviewed and implemented/actions taken by SDF management

COM is revisited annually incorporating recommendations of process monitoring and other field experience and community feedback

SDF has Complaints and Grievance Redressal system established and 80 percent of complaints received have been addressed

At least 80 percent of SDF staff receiving positive score cards by the communities in annual Community Assessment Process (CAP)

To develop and institutionalize effective monitoring and learning mechanisms to enable mid-course corrections To monitor the quality and effectiveness of project management and implementation standards

41

Arrangements for results monitoring

Target Values Data Collection and Reporting No. Project Outcome Indicators Baseline YR1

(end22

)

YR2 (end)

YR3 (end)

YR4 (end)

YR5 (end)

Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

1. 75% of total23 village institutions functioning in an inclusive and accountable manner, as per project guidelines

0 5% 20% 60% 75% 75% Routine/Annual Mid-Term24 and

EOP

MIS Impact

Evaluation/HH Survey

SDF External

2. Increase in income by at least 50% against base year for 50% of targeted households by the end of the project

To be included once baseline avail.

- - 20% 30% 50% Mid-Term and EOP Impact

Evaluation/HH survey

External

3. At least 80% of targeted households benefit from improved community infrastructure or social services sub-projects

0 - - 40% 60% 80% Routine/Annual

Mid-Term and EOP

Impact Evaluation/HH

survey External

No. Intermediate Outcome Indicators (for each Component)

Baseline YR1 YR2 YR3 YR4 YR5 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Component A: Community and Livelihood Development at the Village Level 1.1 Development and Strengthening of Community Organizations

(a) 80% of target HHs mobilized and

organized into Jibakayan Groups 0 10% 30% 60% 80% 80%

Routine

MIS SDF

(b) 80% of Gram Samitis have HCP occupying decision making positions (and at least 50% are women)

0 10% 40% 60% 80% 80%

Routine

MIS SDF

22 Yr1 end is end of CY2011; Yr 2 is end of CY 2012; Yr 3 is end of CY 2013; Yr 4 is end of CY 2014; Yr 5 is end of CY2015 23 For the purposes of all indicators, progress/results will be tracked and percentage-wise targets assessed against the total planned universe at end of project 24 Mid-Term Review planned by September 2013

42

No. Intermediate Outcome Indicators (for each Component) Baseline YR1 YR2 YR3 YR4 YR5 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

(c) 80% of GSs accessing and managing VDRRF as per agreed rules and service standards as agreed in the COM

0 5% 25% 50% 70% 80% Routine MIS SDF

1.2 Village Development and Risk Reduction Fund (VDRRF)

(a) 80% of JG members have mobilized savings

0 20% 40% 60% 70% 80% Routine

MTR, EOP MIS

Impact Survey SDF

External (b) 80% of JG members have accessed additional sources of

finance

0 10% 20% 45% 60% 80% Routine

MTR EOP

MIS Impact Survey

(c) At least 80% of completed community infrastructure subprojects are being operated and maintained by communities

0 5% 15% 40% 65% 80% Routine

MTR EOP

MIS Impact Survey

SDF External

(d) 70% of the HCP and vulnerable have accessed resources under the project (e.g one-time grant, skill development loan, Swabalombi fund, etc) and started income generating activities or employment

0 5% 15% 40% 60% 70% Routine

MTR EOP

MIS Impact Survey

SDF External

(e) At least 70% of village organizations have applied participatory methods for risk mapping /vulnerability analysis and implemented risk reduction and preparedness methods

0 10% 20% 45% 60% 70% Routine

MTR EOP

MIS Impact Survey

SDF External

43

No. Intermediate Outcome Indicators (for each Component)

Baseline YR1 YR2 YR3 YR4 YR5 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Component B: Institutional Development and Livelihoods Promotion at the Inter-village Level 2.1 Developing and Strengthening of Inter-Village Organizations (a) 50% of villages have 5 Community

Professionals (CPs) identified, trained and offering services by EOYr 3; and 70% by EOP

0 - - 50% - 70% Routine MTR EOP

MIS Impact Survey

SDF External

(b) At least 70% of graded CPs are earning at least 15 days in a month

0 - - 30% 50% 70% Routine MIS SDF

(c) At least 40% of target HHs have benefited from value addition activities through economic federations

0 - 5% 10% 25% 40% Routine MTR EOP

MIS Impact Survey

SDF External

(d) At least 50% of GSs and VCOs of current program (Phase 1) are federated at Upazila/cluster level by EOP

0 5% 15% 25% 40% 50% Routine MTR EOP

MIS Impact Survey

SDF External

(e) At least 50% of the Ph. 1 federations are rated A and B

0 5% 15% 25% 40% 50% Routine MIS SDF

2.2 Business Promotion, Livelihoods and Market linkages (a) At least ten major business partnership

established through public/private partnerships with communities

0 2 4 6 8 10 Annual MIS SDF

2.3 Creating Conditions for Employment Generation (a) At least 50,000 direct jobs created through

project facilitation & at least 50% of them are sustained by EOP

0 2,000 10,000 20,000 35,000 50,000 Routine

MTR & EOP MIS

Impact Survey SDF

External

(b) A youth database and employment exchange established and benefiting at least 75% of project villages

0 10% 20% 45% 60% 75% Routine

MTR & EOP MIS

Impact Survey SDF

External

44

No. Intermediate Outcome Indicators (for each Component)

Baseline YR1 YR2 YR3 YR4 YR5 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Component C: Capacity Development and Partnership Building from Cluster to National Levels 3.1 Capacity building of SDF staff and other relevant agencies (a) Staff performance appraisal results indicate

70% of staff appraised performing at Grades A and B from year 2

0 n/a 70% 70% 70% 70% Annual Performance

Appraisal process SDF

(b) At least 70% of the villages (GS, SAC and VCO) are rated as A or B grades (Phase 1 and 2)

0 15% 20% 45% 60% 70% Routine/Annual MIS

Village grading SDF

3.2 Support for Innovations (a) At least 4 major partnerships established with

organizations spanning academia, private sector, research institutes, NGOs and public sector

0 1 2 3 4 4 Routine

EOP

MIS Impact Survey

SDF External

(b) At least 6 successful proposals for Innovation Pilots awarded by project mid-term and 9 by EOP

0 - - 6 - 9 Routine

EOP MIS

Impact Survey SDF

External

Component D: Project Management, Monitoring and Coordination (a) GAAP recommendations implemented and

reviewed annually with the community representatives in 70% of target villages

0 10% 20% 40% 60% 70% Routine Annual

Process Monitoring MIS

SDF External

(b) At least 70% of process monitoring recommendations addressed by SDF management taking actions

0 70% 70% 70% 70% 70% Monthly Routine

Process Monitoring MIS

SDF External

(c) COM is revisited annually incorporating recommendations of process monitoring and other field experience and community feedback

0 1 2 3 4 5 Annual Process Monitoring

SDF

(d) SDF has Complaints/Grievance Redress system established and 80% of complaints received have been addressed

0 80% 80% 80% 80% 80% Routine MIS

Process Monitoring SDF External

(e) At least 80% of SDF staff receiving positive score cards by the communities in annual CAP process

0 80% 80% 80% 80% 80% Annual CSC/Community

Assessment Process Communities

SDF

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Annex 4: Detailed Project Description

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project Project Area 1. The proposed project will be implemented in a total of 15 districts, covering the three regional divisions of Barisal, Rajshahi and Rangpur. This includes the 7 existing districts where the original project now has a presence, and 8 new districts where operations will be initiated for the first time under the proposed project (see Table 1 below). Overall, in these 15 districts, 1500 villages will be targeted for project intervention under the second phase25.

Target population

2. The proposed project would cover 1,500 villages, benefitting about 300,000 target households, with about 3 million populations, directly and indirectly. The project would also further strengthen the on-going village organizations and community groups being supported under the current program; and would help them form networks of federations and producer groups (so-called second generation institutions). In total, Phase 1 (including three additional financings) and the proposed project will benefit approximately 800,000 target households, and about 6 million people26 directly and indirectly. Project Phasing 3. Given the large number of villages, a three-phase approach will be adopted to initiate project activities, for purposes of manageability and cross-learning. The phases will be conducted at six month intervals, such that activities are eventually initiated in all villages within 18 months from project start-up.

Table 1: Implementation Phasing of Districts and Villages

No. District Status Batch I to cover

390 villages from Oct 2010

Batch II to cover 555

villages from June 2011

Batch III to cover 555

villages from December 2011

Total

1. Gaibandha Existing

200 Villages 205 Villages 205 Villages 610 villages

2. Jamalpur Existing 3. Sirajganj Existing 4. Patuakali Existing 5. Pirozpur Existing 6. Bagerhut Existing 7. Borguna Existing 8. Rangpur New district

190 Villages 350 Villages 350 Villages 890 villages

9. Nilphamari New district 10. Kurigram New district 11. Dinajpur New district 12. Sherpur New district 13. Mymensingh New district 14. Barisal New district 15. Naogaon New district Total 390 555 555 1500 villages

25 In addition to these 1500 villages, SDF may also test the model in some additional villages in the poorest upazilas of Sunamganj and Sylhet districts. 26 For calculating total beneficiaries (direct and indirect) average village size of 350 households has been used. Direct target beneficiaries would be 200 target households per village.

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4. Batch I, starting in October 2010, will cover a batch of 390 villages. During this phase, implementation activities will be initiated at both district and cluster level. Communication campaigns will be organized at the village level and facilitated by district teams. Gram Samitis, Village Credit Organizations and Social Audit Committees will be constituted and their members trained. Funds will then be released to the Gram Samitis to begin village operations. This pattern will be repeated in June 2011, with Batch II covering another 555 villages. The third Batch of the project, commencing in December 2011, will cover the remaining 555 villages. The indicative implementation phasing of project villages is shown in Table 1 above. Selection Process and Criteria 5. The following process was followed for selection of districts and upzillas:

(a) Selection of Project Regions: The three regional divisions have been selected on the basis of available poverty data, showing the significant disparities between different areas of Bangladesh. The World Bank’s Poverty Assessment Report for Bangladesh (2008) showed that regional gaps had expanded between 2000 to 2005, with inequality in the country increasing27. The divergence between the east and west of Bangladesh is more prominent when districts are grouped by poverty rates, with the country’s eastern districts showing more significant poverty reduction. In contrast, western districts have had notably less reduction in poverty28, and for this reason, the proposed project intervention would focus more on this geographic area.

(b) Selection of Upazilas: Having selected the four regions, Upazilas (sub-districts) in them were then ranked based on an index of poverty-related criteria, utilizing available secondary data, drawn from the updated poverty mapping exercise developed by the Bangladesh Bureau of Statistics and Planning Commission (2005). The three criteria used for ranking were:

Poverty Head Count Rate: The first selection criteria will be based on the poverty head

count rate. Upazilas will be considered for selection if the proportion of poor people living within those areas exceeds 30 percent.

Natural Disaster and Shock Prone Areas: The second criteria is based on vulnerability and will focus on those areas that are most prone to natural calamities/shocks where poor households are often disadvantaged with regard to accessing land and are further affected by famine and hunger.

Market Accessibility: The third criteria used was accessibility of village communities to nearest markets and facilities – to focus on Upazilas that are cut off from major markets and whose costs associated with market access are high.

6. While these criteria were the objective guiding factors, once the ranked list of upazilas was arrived at, the project then selected from amongst the poorest, whilst also ensuring clustering of the upazilas in the same district (i.e, at least 3 upazilas from the poorest list should be located in the same district, in order for those upazilas and that district to be selected). The resulting 8 new project districts were therefore on this basis.

27 Bangladesh: Poverty AssCalibri (Body)essment for Bangladesh – “Creating opportunities and Bridging the East-West Divide”, 2008, World Bank Report 28 Even though some poverty reduction did occur in some districts such as Dinajpur and Rangpur in the northwest, and where among the poorest districts in 2000, large areas in the southwest of Kulna and Barisal have continued to grow poorer, while other areas have stagnated.

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7. Selection of Unions and Villages: As for Upazilas, the selection of Unions within them will take into account a clustering effect where the project will decide on the minimum number of Unions to be selected from each Upazila so as to reduce costs. The selection process will also involve physical visits, consultation with local communities, local authorities and public representatives to strategically identify the areas with the highest concentration of most vulnerable communities, and those areas which are ‘thinnest’ in terms of other interventions. 8. For the selection of participating villages in the pre-selected Unions, a different strategy will be adopted based on a ‘self-selection’ modality. All villages will be eligible to participate and will be made aware of the project via the Union level awareness campaign and communications. However, they would be selected to participate only once they attain a number of key milestones or ‘readiness indicators’. The readiness criteria would include a resolution of the village, adopted at a village-wide meeting with attendance from at least two-thirds of households, whereby the community has agreed to follow the ‘non-negotiable principles’ (see paras. 12 and 13) in all project activities. Once this resolution has been passed, the villages would submit their application to the project, accompanied by a copy of that meeting’s minutes and a written request to participate in the program. In addition, the resolution must also be prominently displayed in the village as a form of open consensus. 9. Village Implementation Cycle: Once a village has adopted the program, it will then follow a step-wise sequence of planning and implementation activities that make up the Village Development Cycle. Communities will undertake a participatory planning process to determine local priorities and the best use for their funds. Given the core risk reduction and resilience goals of the proposed project, one of the key steps for the communities will be participatory vulnerability analysis and preparation of disaster preparedness plans to enable villages to better anticipate, withstand and recover from shocks and disasters. This vulnerability analysis and subsequent risk reduction efforts are fully integrated into the Village Development cycle and collectively, they make up the Resilience Cycle.

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10. Project principles: These non-negotiable principles form the basis of the project’s ethical framework, which guides all activities and to which all participating communities must sign up, in order to be eligible for project support:

Inclusion: All project activities will ensure that hard core poor, poor, most vulnerable, disabled, destitute, women and youth are targeted and included in project support; At least 90 percent of the hard core poor and 70 percent of the poor identified in the villages will be direct beneficiaries of the Village Development and Risk Reduction Fund (VDRRF) envelope.

Equity: The majority of key decision making positions (e.g. president, treasurer, or secretary) in all the village institutions created (Gram Samiti, SAC, VCO, and sub-committees of the Gram Samiti) will be occupied by hard core poor, poor, women and the youth.

Participation: All decisions and project activities undertaken will follow a participatory approach with at least two-thirds of target HHs being part of the process.

Transparency: All project decisions will be taken in the Gram Parishad in an open and transparent manner; Project information will be prominently displayed in the village and project documentation including minutes of accounts books, meetings and other records will be maintained and made accessible to the village community.

Accountability: At least 80 percent of all the Gram Samitis would have received all the installments of the VDRRF and must be rated satisfactory by village communities during community assessment process.

11. In addition to the non-negotiable principles, existing SIPP communities devised an additional 10 ‘rules’ to be followed in all their village level activities, called the “Dash Neeti”, and these would also guide communities in the proposed project:

Unite for our development. Be Transparent in all our activities We are accountable for our actions. Self-help is the best way to solve our problems. All decisions by majority. Equal rights and equal opportunity. Be honest in all activities. Save and Repay our loans. Complete our activities as per our plan. Use our resources properly

Project Components

12. The project will include four project components: (i) Community and Livelihood Development at the Village Level; (ii) Institutional Development, Livelihoods Promotion and Services from the Inter-village to National Level; (iii) Capacity Development and Partnership Building from Cluster to National Levels; and (iv) Project Management and Coordination. 13. Component A: Community and Livelihood Development at the Village Level (US$82.5 million): This component would empower and build institutional capacity of pro-poor village level organizations and their federations, and fund village development and livelihood-related investments at the village level. The focus would be on building transparent, inclusive and autonomous community organizations that are sustainable over time. Direct financing to these organizations would empower them through managing their own resources, and, with capacity built, would enable them, once mature, to graduate to a higher level of institutional aggregation, to capture economies of scale in operations. Through capacity building activities, support to income generating activities and links to employment (all

49

planned using a risk reduction framework), the component would assist communities to build lasting social and economic capital at the individual and village level. The component would support three major activities:

(i) Development and Strengthening of Community Organizations (US$7.5 million): These activities would provide support needed to initially build institutions of the poor at village level, including the Gram Parishads (GPs) and Gram Samitis (GSs), and to subsequently provide guidance and hand-holding as they strengthen their institutions and advance their activities. The project will invest in field teams to support the initial social mobilization and formation of such institutions and then in their strengthening and development, equipping the institutions with skills to plan and implement Village Development and Risk Reduction Fund measures (discussed below). This will include the development and training of field-based ‘cluster’ teams to effectively render support and facilitation services to village communities.

(ii) Village Development and Risk Reduction Fund (VDRRF) (US$75.0 million): This activity will be the mainstay of direct financing support to participating communities, which will self-manage the resources. The total resource allocation per village will be based on a budget of Tk. 15,000 per household permanently living in the village - as listed by the social mapping conducted through the Participatory Identification of the Poor (PIP) process. The overall village budget envelope would enable community institutional development, livelihood assistance, skill development training and resources for income generating activities and community-level infrastructure. Specific allocations across these priorities will be determined by community assessment of their own needs and priorities, as approved by the Gram Parishad. Beneficiary households will be classified under four categories using PIP, with the project targeting mainly the two poorest and most vulnerable categories. The key rules and guidelines, eligibility criteria and milestones for accessing resources have been detailed in the Community Operational Manual and the Project Implementation Plan (PIP). Priorities will include:

developing the Gram Samiti and Gram Parishad into inclusive, autonomous and accountable village institutions with financial and institutional capacity to plan, facilitate and monitor capacity building of its CBOs (e.g., Jibikayan Groups and the Village Credit Organization), and plan and execute village development and risk reduction activities;

developing communities’ capacity to apply the project’s Vulnerability Analysis Framework, such that any Village plans have risks identified and mitigation measures built-in; and so that vulnerable groups have been identified, via the social mapping and vulnerability analysis process. Funds may also be allocated to directly address vulnerability issues identified and to assist specific vulnerable and destitute groups with one-time grant assistance;

support to youth development by helping villages to prepare a database of their youth, and cluster teams and identify potential skills training and employment opportunities for youth groups and individuals, for which the GP may decide to provide financing;

developing a sustainable village-based savings and credit system that will expand opportunities for income generation to those people who do not currently have access to formal financial institutions, thereby enhancing their access to such formal financial institutions as their enterprises and activities prosper. The lead role will be played by the Village Credit Organisation (VCO), which is the specialized savings and credit arm of the Gram Parishad and is comprised of selected members from among its Jibakayan Groups. The VCO will administer the resources on a revolving basis, for lending to JGs and their members. For this purpose it will develop guidelines for savings and loans (including savings amount, service charges and repayment terms), to be

50

approved by Gram Parishad. The VCO will collect loan applications, disbursements, book maintenance and loan tracking, following simplified methods that communities can manage themselves. Loans will be prioritized and granted first to the most deserving JG members who have no access to other financial sources. An agreement would be signed between the Gram Samiti and the VCO to release funds directly to the VCO bank account. All implementation activities would be audited by the Social Audit Committee. Critical success factors will include the development of strong organizations whose members have a deep sense of ownership and a vision for long-term sustainability; a governance structure that empowers the members; transparent guidelines for resource management; and a reliable accounting and loan tracking system.

strengthening productive and social community infrastructure at the village level, and preparing communities to better manage and cope with risks and disasters The project will promote awareness of possible types of infrastructure requirements that are better able to mitigate and withstand the effects of natural and climate-related disasters. Cluster teams will assist communities to analyze and prepare maps that identify infrastructure/service delivery gaps and/or damaged areas and their corresponding infrastructure needs. Once sub-projects have been implemented, operation and maintenance of these physical and social service infrastructures will be taken up by communities themselves. There would be an open menu of activities eligible for funding, including but not limited to construction of rural earthen roads; repairing damaged roads, flood proofing existing roads with plantation; creating irrigation and/or drainage facilities (e.g., u-drains, culverts, canals, etc); creating embankments and/or raising road levels to protect villages; constructing new tube wells and latrines; flood proofing tube wells and latrines; constructing GS office and/or multipurpose buildings; and; protecting key infrastructures from potential disaster related damage, e.g. raising school buildings, etc.

14. Component B: Institutional Development and Livelihoods Promotion At the Inter-village Level (US$19.5 million): The objective of this component will be to promote the development and strengthening of inter-village level organizations and enterprise and business development for higher value livelihood activities. This component will include the following sub-components:

(i) Development and Strengthening of Inter-village Organizations (US$15.5 million): These activities will support the networking and aggregation of small groups and other community institutions, when established and mature, into federated organizations at a higher level, to maximize the benefits of scale in attracting partners and enabling greater bargaining power, broad-based representation and aggregation of demand. This will include livelihoods/producer groups that will take up enhanced livelihood and income generating activities and facilitate their linkages with market institutions. It will include the village-wide membership organization of Gram Samity and VCO, enabling them to act as information hubs and service providers to their members. It will include developing community professionals and their Centers to bridge the technical gap between communities and the external market. As these groups federate through different tiers, they gain economies of scale and are capable of representing an attractive market, either as producers of commodities and goods, or as consumers of services, while providing support to their members. Federations will be formed at either cluster level, Union or Upazila level contingent on how groups interact, the nature of their association and the number of similar activities, focusing on the following:

Support for the development and sustainability of aggregated community institutions beyond the

life of the project, thereby helping to consolidate and build on higher level social and economic activities through technical assistance from public and private partners. The initial process could involve the formation of federations of Gram Samitis and Village Credit Organizations at cluster level with the process then evolving to Upazila level and gradually to district level, dependent on

51

identified needs and capacity. Cluster level Federations will be constituted from representatives of Gram Samiti, Village Credit Organizations, Social Audit Committees selected from each member village. The main function of cluster federations will be to capture economies of scale in representing the interests of their member village organizations to external partners (public and private sector); to build the capacities and provide technical guidance to their member Gram Samitis and other sub-committees; and to engage in regular monitoring of activities. These federations will also actively seek opportunities for potential income generating activities and establish linkages with external service providers. Likewise, Upazilla or District Level Federations would be composed of members from the tier below. Using principles of subsidiarity, each level Federation will be responsible for providing assistance to its lower level member federations, providing technical support, exploring potential income generating and information provision activities and linking with public/private providers. These federations will also act as contact points with disaster management departments at those levels and channels for early warning and disaster response activities.

Promotion of Economic Activity Federations. The objective would be to promote economic

Activity Federations constituting different producer or common economic activity groups, like dairy, handicrafts or marginal farmers. The federations will provide a variety of services, inputs and support to their members in the areas of monitoring, capacity building, conflict resolution, establishing links with financial institutions and insurance companies, and linking with government departments and local authorities. It is expected that Producer Federations will also provide technical services that include bulk purchase of inputs, facilitation of access to market information and aggregation of produce for marketing and processing of goods. Appropriate institutional models will be explored during project implementation.

Development of Community Professional Centers. The objective would be to promote community-to-community services and train and deploy experienced community members as ‘community professionals’ to share skills, provide technical support services and ensure the scaling up and sustainability of community established institutions beyond the life of the project. These Centers will be established at the cluster level to support community institutions in sustaining their activities through the development and management of 50 – 150 community members as trainers and local resource persons. Community members who have been instrumental in capacity building efforts at the community level, who conduct regular savings and attend community meetings would be eligible for Community professional positions. The centers will perform various functions and activities that include: (i) Providing services to the project areas which may include training and guidance on COM, SAC manuals, FM and Procurement, PIP, and responding to villages various capacity building requests; (ii) Providing support services to communities for creating Jibikayan Groups and other institutions; (iii) Providing savings and lending activities support; (iv) Providing support for VDRRF applications to communities, including appraisal preparations; (v) Working with weak villages to facilitate their readiness and access to VDRRF funds; and (vi) Providing support to SDF and WB on issues relating to community development as and when they arise.

(ii) Business Promotion, Livelihoods and Market linkages and Partnerships (US$1.8 million). SDF and partner organizations would broker the development of institutional and informational linkages to enhance sustainability of the livelihoods of the poor, including strategic alliances and partnerships for promotion of savings; access to rural finance and development of microfinance linkages; and micro-enterprise, agri-business promotion and community-corporate partnerships (e.g., private sector, commodity boards, industry confederations, etc). They would focus on: (a) establishing links with financial institutions to improve quality of financial and other input services available to project beneficiaries; (b) providing information on regional, national and international

52

market data, product quality, pricing and consumer behavior trends; (c) collaborating with existing task forces and think tanks at both district and state level to establish strategic alliances and partnerships with producers, cooperative federations, private sector, commodity boards, industry confederations and export promotion organizations and; (d) establishing links with technology foundations and other international networks. (iii) Creating Conditions for Employment Generation (US$2.2 million). SDF would develop training, job placement and employment generation opportunities for SIPP community members, particularly for rural un- and under-employed youth, through strategic partnerships negotiated with service sector, telecommunications, technology, garments, agribusiness and other growth sectors, as well as through linkages with key GoB training, vocational and job creation initiatives.

15. Component C: Capacity Development and Partnership Building from Cluster to National Levels (US$6.1 Million): The objective of this component will be to strengthen the capacity of SDF and other relevant government agencies, from the cluster to the national level, and build synergies and partnerships to scale up delivery of SIPP’s community-driven development program across much of Bangladesh. The component includes the following activities: (i) Capacity Building of SDF and Other Relevant Agencies (US$3.2 million). This would

involve capacity building of SDF staff and relevant partner agencies in order to improve the capacity of SDF staff at national, district and field levels, and any local and national partner agencies, to operationalize and deliver the CDD and livelihoods approach to respond to the demands of the rural poor and HCP. Staff, resource persons and agencies would receive the necessary skills and abilities to support village and inter-village level institutions. Service standards would be established to enhance responsiveness and timely support of clusters and districts to village community needs. Support would also be provided to build linkages and strategic partnerships with support organizations and service providers to allow communities to broaden their livelihood options and improve sustainability of their activities. Finally, funds will also be used to coordinate with organizations and agencies to promote employment generation. Specifically, the activity will support: systematic orientation and induction of state and district staff on key project principles; preparation of capacity building modules and training programs for district and cluster level staff to be conducted through the Capacity Building Cell (CBC) of SDF; sensitization exercises targeted at partner organizations on how the project operates including its rules and guidelines; conducting exposure visits to successful project areas to promote cross-learning; and designing and implementing social accountability systems such as score cards/community assessment processes based on agreed service standards to instill downward responsiveness and accountability by project teams at all levels to the communities that they work with.

(ii) Supporting Innovation (US$2.9 million). This set of activities would promote innovative and replicable interventions in key areas relating to Nuton Jibon’s approach and objectives. These activities would be administered by SDF with two ‘windows’: The Strategic Partnerships for CDD window would enable SDF to partner with institutions to trial innovations that relate directly to promotion and expansion of the CDD model in Bangladesh. Under such partnerships, the parties involved would each bring resources to the initiative, with a joint goal of operational learning and strategic promotion of SDF’s approach/the CDD model. As an example, SDF could partner with a Training Institute to explore design of a CDD training module or curriculum which could be used both by SDF and that Institute; with a University to institutionalize an Internship program that would both offer university students work experience and bring SDF a regular cadre of young motivated interns, etc. The Innovations Marketplace window would enable a transparent, competitive fund, to be administered by SDF that would support individuals, groups,

53

enterprises, organizations and institutions in both the private and public sectors to test innovative ideas that need experimentation and incubation on a pilot basis in the project’s geographic area. These pilots would address one of three fields: (i) Community/local level institutions and governance; (ii) climate risk management and community adaptation; and (iii) enhancing livelihood development through testing of innovative co-production, employment generation and marketing models between organizations and agencies across the private, public and ‘people’ sectors (i.e., community-driven organizations). Every 18 months, SDF would sponsor an Innovations Marketplace, in one of their three regions, where interested parties will be invited in advance to prepare proposals and participate at an innovations fair or ‘marketplace’, where their displays/presentations will be reviewed by an invited panel of experts and annual recipients in each field identified. Transparent eligibility criteria, guidelines and procedures have been included in the PIP.

16. Component D: Project Management, Monitoring and Coordination (US$11.9 million). This component will support: (i) overall office establishment, project coordination and management at national, regional and district levels, including implementation of the revised HR policy and practices at all levels; and (ii) monitoring, learning, communication and evaluation. Social Development Foundation (SDF) will continue to be the lead implementing agency, as under the current SIPP operation. (i) Coordination and Management ($9.4 million). Activities will include the oversight of

overall coordination, planning and implementation of the project at the national, regional, district and field levels. The National headquarters will act as “guardian of the rules” and ensure that village communities – and facilitating staff - are complying with the rules and procedures of the project and are fully functioning with clear job responsibilities and accountability as articulated in the approved Human Resources Policy and Manual. At each level, according to their agreed responsibilities and as guided by national HQ, offices will be responsible for key administrative and programmatic functions, such as office infrastructure and logistical support, identification and contracting of resource persons/support agencies, disbursement of salaries and benefits, procurement and maintenance of vehicles and equipment, liaising and convergence with other agencies and government departments, etc. Practical guidance on service delivery standards and performance would be provided, including monitoring and tracking of via MIS and a community score card process, to gather strategic input to how the project can effectively meet its objectives.

(ii) Monitoring, Learning, Evaluation and Communications ($2.5 million). Ongoing SIPP project monitoring, evaluation and learning activities (MEL) will be strengthened, to better track and respond to operational aspects and service delivery across districts and villages. The complementary elements of this system include community level self-monitoring; internal tracking by SDF at all levels; and independent review and verification via both continuous process monitoring and standalone evaluation. The project’s Results Framework will form the basis for monitoring outcomes and results, which will be benchmarked and tracked by a baseline and impact evaluation.

17. Under the original project, SDF has already institutionalized a reasonably robust system of program monitoring that utilizes the presence of field teams, and combines routine monitoring data collection (e.g., for MIS) with a system of regular internal learning forums, where implementation bottlenecks and qualitative issues of implementation concern are raised, reviewed and acted upon, and where innovations and successes can be shared. Such monthly internal learning meetings take place at all levels, from field to national level, with staff joined by the process monitors and community representatives to critically review field experience. This system will be replicated and expanded under proposed project. For routine data collection and reporting, the District Team will compile and submit monthly and quarterly progress reports. The MEL Unit at headquarters will consolidate all data collected

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and generate village/cluster/district/project level reports, as well as coordinating Annual Planning Workshops and the monthly internal learning workshops.

Management Information System (MIS): The project has developed a comprehensive MIS that includes hardware, software, communication links, wide area network, and information technology related training programs for staff and installation, maintenance and support. SDF is currently in the process of upgrading the existing MIS with the objective of connecting the head quarters with the field offices. This will go a long way in ensuring that decisions taken fully reflect real time situations. Process Monitoring: As under the original project, the implementing agency will retain a Process Monitoring Agency (PMA) to independently determine how effectively the project is running and to identify ways to improve implementation. The PMA teams will submit monthly reports on key livelihood activities and quarterly reports to summarize key lessons learnt, case studies and follow-up status. Furthermore, all issues arising from process monitoring will be captured in the MIS to ensure smooth follow-up and more flexible adjustments in the implementation process of the project. This is an important mechanism that allows for real-time response and management correction of key challenges identified.

Baseline and Evaluation Surveys: Sufficient baseline information was available for purposes of project design and establishment of indicators and targets for the Project Results Framework (Annex 3). In addition, a comprehensive survey for SIPP II is underway, to benchmark current conditions as the basis for future impact evaluation work at project mid-term and completion. SDF will also commission additional thematic studies as needed.

Communication processes will also be improved to ensure a wider dissemination and sharing of project information across all units for more effective responses.

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Annex 5: Project Costs

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Project Cost By Component and Subcomponents Local US $ million

Foreign US $ million

Total US $ million

Component A: Community and Livelihood Development at the Village Level

82.0 0.5 82.5

1.1: Development and Strengthening of Community Organizations

7.0 0.5 7.5

1.2: Village Development and Risk Reduction Fund 75.0 0.0 75.0 Component B: Institutional Development and Services at the Inter-Village and National Levels

17.5 2.0 19.5

2.1: Development and Strengthening of Inter-Village Organizations

14.5

1.0

15.5

2.2 Business Promotion, Livelihoods and Market Linkages

1.3 0.5 1.8

2.3 Creating Conditions for Employment Generation 1.7 0.5 2.2 Component C: Capacity Development and Partnership Building from Cluster to National Levels

5.1 1.0 6.1

3.1 Capacity Building of SDF and Partner Agencies 2.5 0.7 3.2 3.2 Supporting Innovation 2.6 0.3 2.9 Component D: Project Management Monitoring and Coordination

10.4 1.5 11.9

4.1 Project Coordination and Management 8.4 1.0 9.4 4.2 Monitoring, Learning, Communication and Evaluation

2.0 0.5 2.5

Total Project Costs 115.0 5.0 120.0

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Annex 6: Implementation Arrangements

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project 1. Project Implementation Process: The project will be implemented in accordance with the rules and procedures agreed upon in the Project Implementation Plan (PIP), Community Operational Manual (COM), Community Professional Center Manual, Federations Manual and the Human Resources Policy and Manual. An Economic Activity Federations Manual is also under preparation and will be completed by March 2011. All these documents outline the roles and responsibilities of the implementing agency, other stakeholder and community organizations and provide details of project processes and implementation steps. The operational documents have been developed and improved upon to respond to lessons and experiences gained under the previous project. The documents also reflect feedback and outcomes of various workshops, studies and assessments conducted in preparation of the project. The operational documents would be reviewed periodically by GoB/SDF in conjunction with IDA with stakeholder participation to ensure that they remain adaptable, relevant and responsive to issues arising during the implementation process of the project. Any changes made to the operational documents will require prior approval from IDA. 2. Institutional Model and Implementation Arrangements: SDF will continue to be the implementing agency for all the components of the project. As noted, while SDF functioned in a more subsidiary capacity managing partner organizations who implemented the early pilot project on the ground, changes have occurred since the pilot’s inception and SDF has assumed primary responsibility as the main delivery vehicle for the program, more recently being restructured and strengthened to deliver the next phase of the program.

3. The implementation arrangements are based on the previous project model but have been further augmented to reflect SDF’s new role as a multi-project, multi-region development organization. Although project component activities have been expanded, funds have been allocated to develop the necessary institutions to address the long term vision of how these institutions will function from village to national level. The revised institutional arrangements demonstrate a shift in SDF’s focus from merely delivering projects to being an organization that is able to successfully showcase a community driven poverty strategy on an on-going basis. The overall institutional model is summarized below as follows:

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4. Governing Body: The Governing Body has the primary responsibility of controlling and directing the formulation and administration of the Foundation’s policy. The Body is made up of nine members, out of which, three members are nominated and appointed by the Government of Bangladesh to represent its interests, four members would be elected by the 20 member General Body from the private sector, voluntary agencies or private individuals with proven experience in social development activities. The remaining two positions would be occupied by the Managing Director of SDF and Managing Director of PKSF. All the members would hold their positions for two years. The General Body’s responsibilities include, inter alia; i) preparing and executing plans that include service rules, operational guidelines and other manuals and procedures; ii) preparing the annual report and facilitating preparation of SDF’s accounts; and iii) approving the creation of staffing positions and appointment of senior staff.

5. Head Office: The Head Office would assume overall responsibility of realizing SDF’s vision to empower communities to overcome poverty. The Foundation will be headed by the Managing Director (MD) who is responsible for providing guidance on all aspects of the program and will be responsible for the overall coordination and monitoring of activities, assisted by a Deputy Managing Director (Programs), four thematic Directors, and an operational multi-disciplinary team of functional specialists. The Dhaka-based headquarters would be charged with the roles of monitoring, quality control and compliance, communications and governance. Although the national team will be located in Dhaka, the members will undertake regular field visits to make them accessible to field teams and village communities. SDF will report to the independent Governing body, who would provide policy support to the project.

6. A Capacity Building Cell (CB Cell) will be set up at the national level with the responsibility to design and plan capacity building programs that reflect issues emerging through the implementation process. The CB Cell will ensure the standardization of all capacity building trainings and oversee the

Facilitation & implementation support Role

Guardian of rules

Decentralized decision-making unit; Program Management

Capacity building role

Governance, Compliance, Planning, Coordination, Monitoring, Quality

Head Office

Regional Office

District Office

Field Office

Governing Body Policy support, Monitoring Results & Outcomes

Implementation Role

Figure 1: SDF Overall Organizational Structure

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organization of Training of Trainers (ToTs). The CB Cell will operate under the office of the Deputy Managing Director.

7. Appraisal and Monitoring Teams (AMTs) will be responsible for independently appraising the VDRRF applications from the villages and inter-village activities (e.g. GS Federations, Community Professional Centers, and EAFs, etc.), checking quality and certifying milestones for fund release for both intra and inter-village proposals. They will report directly to MD at headquarters, though would be based at the Regional Offices and spend majority of time in the field, checking compliance and verifying readiness for fund release.

8. A Strategic Management Team (SMT) would be constituted to ensure that key inputs from the core SDF team are fed into strategic decisions made by the Managing Director. SMT would be made up of the Deputy Managing Director and all other directors including Regional Directors. One important principle would be accountability of decision making. Management and leadership of the organization will be accountable to the Governing Body and to the staff members of the organization; and this will followed down the line at every level where team leaders would remain accountable to their team members as well as to the persons above in the hierarchy.

9. Regional Office: Three regional program offices would be set-up to operate as decentralized locations overseeing all programs within their jurisdiction. One such regional program offices is already functioning in Barisal and two other regional offices in the northern area would be set-up by December 31, 2010. Regional Directors would have both financial and administrative powers to run the regional offices and would report to the Deputy Managing Director for all program related issues. Each regional office would have functional area specialists that would constitute a regional capacity building cell to implement capacity building activities in the respective regions. Regional program offices would also house decentralized Financial Management and Procurement teams to ensure timely decision making and smooth operations of activities.

10. District Office: The district offices would primarily lend support and facilitate the implementation activities of the field teams. District Program Managers would be in charge and would be supported by district level functional area specialists who would ensure delivery of key milestones agreed in district plans. The district teams would also monitor and guide the performance of cluster teams. District offices would also be able to manage and monitor their financial accounts through District Finance Managers.

11. Field (Cluster) Office: The field office would be composed of implementation teams that would be responsible for undertaking all activities at the ‘cluster’ level. Cluster Team Leaders would be in charge of the field office and would be supported by teams of cluster facilitators to mobilize and build the capacity of community level institutions. Cluster Facilitation Teams (CFTs) would support about 20 to 25 villages each and would consist of field facilitators working directly with village communities to enable them to implement their village development plans. Facilitators would include a technical person supporting communities in all aspects of infrastructure development. Cluster Team Leaders would also be point persons for all issues related to environment, climate variability and risk reduction activities.

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GOVERNING BODY

MANAGING DIRECTOR

DIRECTOR

Finance & Procurement

DIRECTOR

Monitoring & Learning

DIRECTOR

HRD &

Administration

Subordinate Officers

& Support Staff

REGIONAL PROGRAMME DIRECTOR

(3 REGIONS)

REGIONAL SPECIALISTS

(GOV. & ACC., CF, LH, IB, TECH)

REGIONAL FINANCE MANAGER

REGIONAL PROCUREME

NT MANAGER

Subordinate Officers & Support Staff

DISTRICT PROGRAMME

MANAGER

DISTRICT SPECIALISTS

(CF, LH, IB, TECH,

GOVERNACE & ACCOUNTABILITY)

DISTRICT FINANCE &

ADMIN MANAGER

Subordinate Officers &

Support Staff

CLUSTER TEAM

LEADER CLUSTER FACILITATOR

S

FACILITATORS (BOOK KEEPING,

INFRASTRUCTURE Investments) Support Staff

Dy MD (PROGRAMMES)

Appraisal & Monitoring Team

(based in Regional Office)

DIRECTOR

Governance

& Accountability

SPECIALISTS Institution Building, Technical/ Infrastructure Livelihoods & Employment Environment, Climate Change & Risk reduction, Community Finance

Capacity Building Cell

Figure 2: Detailed Organizational Structure

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12. Village level institutional arrangements: Many lessons at the village level emerged during the earlier phase of SIPP and institutional arrangements were improved to bring more focus on the poorest and most vulnerable groups in the implementation activities. The most basic institution at the community level will be the Jibikayan Groups (JGs), for savings and internal lending, comprising of 10 to 15 members (with priority given to hard core poor, unemployed women and youth). JG members will form the building blocks for membership of the Gram Parishad (GP), the overarching village-wide membership body, who then elect the 9 member Executive Committee, or Gram Samiti, to be responsible for implementing VDRRF activities in the village. The Social Audit Committee (SAC), independently appointed by the Gram Parishad, will provide oversight of all village activities and funds. These institutional arrangements have been maintained for the next phase of the project and are described in greater detail below:

13. Gram Parishad (GP): This is the supreme body at the village level composed of all households in the village. All decisions relating to village development will be taken in this forum/assembly. The primary functions of the body are to review progress of all village activities, prepare quarterly plans, approve expenditures, and review reports of Social Audit Committees (SACs) and to take new decisions. GP meetings would be held at least once in 3 months with at least 70% of the hardcore poor and 60% of the poor attending such meetings. The meetings must also ensure that at least 50% of those present are women.

14. Gram Samiti (GS): The Gram Samiti is the executive committee of the Gram Parishad and would be composed of nine members selected from groups of hardcore poor and poor in the villages. At least two of the office bearers would be women and one youth. The GS would be responsible for implementing decisions taken by the GP; preparing and implementing the Village Development Risk Reduction Fund (VDRRF), preparing progress reports and financial reports on all activities relating to the use of the VDRRF as well as signing financing agreements with SDF. GS would hold meetings as often as required and at least six members of the GS consisting of at 50% women would be required to attend such meetings.

15. Social Audit Committee: This committee will act as an independent oversight committee directly appointed by the GP to monitor all activities relating to the implementation of the VDRRF activities in the village. The committee would act as a watchdog to all village institutions to ensure that activities undertaken are following the key principles of “Dash Neeti” and the COM guidelines. SACs will also verify books of accounts and procurement records of GS, Village Credit Organizations and other committees and present their finding and recommendations to the GP. Furthermore, SACs would make recommendations for applications for each installment of VDRRF after verifying achievement of completed activities. SACs would be composed of 5 members who would be selected from the target group of hardcore poor and poor community members. A minimum of three members of the group would be women and one youth member.

16. Jibikayan Groups (JGs): These savings and credit groups will be made up of 10 to 15 members of the community who are from hardcore poor and poor families. Groups can vary in actual composition ranging from those made up exclusively of youth, men, women and/or combinations of these groups. The quorum of JGs will consist of 80 percent of the members who will meet on a weekly basis to share and discuss issues pertaining to their livelihood development. JGs will ensure that all members follow the key principles of “Dash Neeti” and create the regular practice of savings. Members will also actively participate and attend group meetings and GP meetings. JGs will assist other village communities and work with the Gram Samiti and maintain an internal revolving fund to increase their own income generating activities.

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17. Shanchay Shangrakhan Committees (SSCs): The SSC would be organized by a cluster of three to seven Jibikayan Groups (JGs) and would oversee savings and internal lending of JGs. SSCs will be responsible for; i) opening bank accounts of JGs who are members of the SSC for savings purposes; ii) holding meetings regularly (at least every month) to address issues relating to savings and credit activities; iii)assisting JGs in proposal preparation of revolving fund applications; iv) assisting JGs to maintain books of accounts and savings, and; v) providing monthly, quarterly, bi-annual and annual accounts information to the VCO. 18. Village Credit Organization (VCO): The Village Credit Organization would be constituted by the leaders from Shanchay Shangrakhan Committee (SSC) and the Gram Samiti, who would nominate two of its members to be part of the VCO. At least 80 percent of VCO members will be made up of women. The VCO will meet as and when is required and will be largely responsible for lending and recovering Shabolombi Loan Fund (SLF) to Jibikayan Groups through a revolving process. The organization will evaluate viability of proposals submitted by JGs and also maintain the accounts of loans and savings of all groups. VCOs will submit monthly reports of all savings and loans activities to the Gram Samiti.

Figure 3: Village Level Institutional Arrangements

19. Inter-village Organizations. The Project would fund activities for developing inter-village level Institutions to consolidate and sustain investments generated at the village. It will support the networking and aggregation of matured village institutions, into federated organizations at a higher level, to maximize

JG JG JG JG

10-15 of HCP & Poor

10-15 of HCP & Poor

10-15 of HCP & Poor

10-15 of HCP & Poor

Gram Parishad

One adult members from each Household as member, Qaorum 70% of HCP, 60% of the poor. Out of those present, 70% women and 30% youth.

GRAM SAMITY

7-9 members out of who 6 members from Jibikayan Group and others from rest of the HHs and t least 5 women and one youth.

Savings Sangrakhan

Committee (SSC)

Social Audit Committee (SAC)

JG

Leaders and Cashier from 3- 5

JGs

Sub-Project Committee

Savings Sangrakhan Committee (SSC)

Village Credit Organization (VCO)

Livelihood Committee

Leaders and Cashier from 3- 5 JGs

JG

10-15 of HCP and Poor

10-15 of HCP and Poor

Finance Committee Procurement Committee

3-5 members out of whom 2-4 are from HCP/Poor and 70%

womenAll Leaders of SSC and 2 nominated

GS members

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the benefits of scale in attracting partners and enabling greater bargaining power, broad-based representation and aggregation of demand. 20. This will include livelihoods/producer groups that will take up enhanced livelihood and income generating activities and facilitate their linkages with market institutions. It will include village organizations, including savings groups and their Village Credit Organizations, who initially use savings mobilization and inter-loaning as the main instrument for social cohesion within the group, but after meeting their most basic needs may then leverage access to formal credit sources. Technological tools will also need to be improved to respond to market dynamism and advisory services will be provided for livelihood promotion and economic graduation. As these groups federate through different tiers, they gain economies of scale and are capable of representing an attractive market, either as producers of commodities and goods, or as consumers of services, while providing support to their members. In addition community professionals and their Centers will be promoted to bridge the technical gap between communities and the external market. Figure 4: Institutional Structure At Inter-Village Institutional Federations Of Gram Parishads  

21. Community Professional Learning and Training Centers: These Centers will be established at the cluster and district level to support community institutions in sustaining their activities through the development and management of community members as trainers and local resource persons. So far, the existing project has fostered the development of more than 1,500 “Community Professionals”, who have been instrumental in capacity building efforts at the community level and it is envisaged that the next

Cluster General Body One Gram Samiti, VCO, SAC, CP from

each village under the cluster

Staff

Cluster SAC

District General Body All Executive Committee and SAC members at Cluster level

Staff

Cluster SAC

District General Body All Executive Committee and SAC

members at Cluster level

Gram Parishad

Gram Parishad

Gram Parishad

District Executive Committee Finance Committee

Procurement Committee

Business Committee

Cluster Executive Committee Finance Committee

Procurement Committee

Business Committee

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phase of the program will move a step further and set up more organized structures that address a broader set of issues emerging in village communities and enable the performance development, management and effective deployment of CPs. The centers will be independent organizations owned and fully managed by the communities to enhance their productivity and utilize their services in a more efficient manner. CP Centers will be composed of a General Body, Executive Committee, Administrative Body and sub-committees and details of composition including selection process, roles and responsibilities, rules and guidelines for the centers have been developed and outlined in the Project Implementation Plan. 22. Economic Activity Federations (EAFs): Demand for EAFs has started emerging in the original project implementing area. These would be higher level federations at cluster and/or district levels to support producer or common interest groups who have aggregated around a common economic activity (e.g., dairy; fishing; embroidery/garment making, etc). Further details relating to their institutional structure and operating rules and guidelines would be elaborated during the early stages of the proposed project’s implementation and completed by March 2011. Funds would flow according to those guidelines and would be used to support investments in common assets or modalities to promote value addition and better organize and strengthen the supply/value chain.

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Annex 7: Financial Management and Disbursement Arrangements

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Introduction 1. Social Investment Program Project (SIPP) – a livelihoods project using the Community Driven Development (CDD) approach - is the first of its kind under IDA funded operation in Bangladesh. Given the nature of this project, a community focused multi-tiered financial management system was recommended. SDF, being a new organization at project start up, has implemented some of the proposed Financial Management arrangements like establishment of a Finance Department headed by a qualified accountant, introduction of community operational manual, staff training, formation of an Audit Committee, operationalization of internal audit and lately a downward or social accountability framework. Despite these achievements, SDF needs further improvement and strengthening to meet the institutional mandate to deal with community based organization and build effective community capacity in financial management. Besides financial management, other operational issues also emerged during implementation which needs further improvement. This is mainly due to initial project design requiring intermediary organizations (called Partner Organizations) to formulate and execute policy for financial management and lack of leadership with requisite knowledge and experience to run community led project. Although the project has undergone major restructuring bringing community focus in the entire operation, SDF’s overall Human Resource policy and organizational set up until recently is not aligned with a financial management system that is needed in a community driven project. 2. A financial management assessment has therefore been carried out to examine current policy and existing system at all the tiers of the operation, particularly planning, budgeting, accounting, their consolidation and reconciliation system, social accountability and sanctions mechanism, identify systemic and specific risk and finally recommend appropriate intervention to mitigate the risk and improve overall system. In brief, the assessment has focused on how a reliable financial management system starting from SDF to community level can accurately account for all receipts and utilize funds by following a set of principle based policy and procedures and ensure a system of planning and budgeting followed by timely accounting, reporting and auditing and culminate in a process of taking corrective action. Lessons Learned 3. With introduction of the original project in 2003, the community driven approach has first been implemented in Bangladesh and the project has largely succeeded in raising awareness among the stakeholders about the key pre-requisites of community led project and the importance of a well defined governance and social accountability framework. SDF was established as a nonprofit organization under the Company’s Act with prime purpose of formulating necessary policy to support implementation of community managed projects that are financed by donors and GoB. SDF being a new organization has received strong support from Ministry of Finance (MOF), IDA and other stakeholders and established a strong regulatory framework and basic foundations to base its support for project implementation. 4. SDF through its finance department has established a sound financial management (FM) at the corporate level and as such it has a sound FM system in place. Overall FM system is a combination of manual based functions and computerized accounting system for posting of transactions after they occur. Staffing to carry out statutory functions at the top level has been ensured throughout project implementation. It has successfully shifted the focus from centralized financial management to a downward multi tiered financial management system though implementation capacity at various levels still remains weak. Institutional policy and implementation process are embedded within SDF’s financial management framework and thus it has successfully moved away from involving partner organization for

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its financial management activities at community level.

5. The main problem that has confronted SDF’s financial management arrangements is its inability, as an institution, to differentiate financial management functions at the corporate and community level and provisioning appropriate positions within the existing organizational structure to bring in necessary skills and expertise to effectively lead the technical nature work at two levels. To date, financial management policy and procedures at the community level constitutes an important element of program department, while its implementation remains bifurcated between finance and program departments. Although the program has expanded in its reach and diversity during the last three years, in the absence of a Human Resource policy and clarity of functions, the institution could not adapt to the changes. As a result none of the departments and its managers were accountable for financial management performance and institutionalizing the financial management framework that the project supported during implementation. Most of the FM work managed on ad-hoc basis, often distributing the responsibility for implementing community FM policy and procedures to GM- Finance and Manager –Finance, GM-Program at the center and accountability facilitators at the district/cluster levels. Internal audit staff were often involved in day to day FM functions, which is clearly a case of conflict of interest. The expansion of the program with frequent staff turnover within Finance department and corresponding delay in staff recruitment has resulted in huge pile up of un-reconciled data which prevented SDF from preparing accurate financial reports for the project. 6. The management approach has hindered the effectiveness of the chain of accountability related to financial management activities at various levels. It evident that SDF suffers weak leadership in designing, implementing, monitoring a sound financial management system at the program level and its current governance set up is not supportive to lead and institutionalize a community focused and social accountability framework. Based on the lessons learnt and FM assessment, recommendations for further strengthening of the FM policy and system are outlined below including a time bound action Plan. Summary of Risk Analysis:

Risk Risk Rating Mitigation Measures

Inherent Risk:

SDF’s organizational and management structure is vulnerable to dual and confused accountability for FM function; it affects performance of the staff as well as overall financial management arrangements

The FM capacity is unlikely to

be sustainable

H

M

Separate FM functions, one responsible for carrying out mandatory functions under the Company’s Act and GOB rules while the other one responsible for designing, implementing and monitoring simple community based financial management policy and procedures.

Community FM will be part of program with a full time manager reportable to the head of program. The composition of the team will include…..and will be accountable to the program.

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Control Risk: Control Risk

FM staff are not familiar with the pre-requisites of community driven project, particularly the social accountability framework

Lack of strong leadership risks in developing appropriate knowledge base at all levels

Staff are unable to run the computer based financial systems and is dependent on Consultants or MIS leading to risk of sustainability and effectiveness of the computerized financial management system.

M

S

M

Intensive training both local and international through an agreed training plan acceptable to IDA. A designated component for building institutional capacity building especially on local governance and social accountability. A community and downward accountability team consisting of staff at SDF, District and cluster level and leadership training (TOT) in line with best practice examples. FM staff in Finance department is to include an accountant cum IT expert.

System Risk:

SDF management, particularly FM department’s commitment to mitigate fiduciary risk might be weak. .

M

Project governance includes

independent internal audit by a third party with TOR and selection process acceptable to IDA.

Overall Risk rating M Strengths and Weaknesses

7. Strengths: The project will have the following strengths in the area of financial management: (i) Already outlined, disseminated and practiced the community specific financial rule and regulations through Community Operational manual (COM) including introduction of social audit; (ii) SDF’s experience in implementing CDD program and its financial management requirements including exposure to Bank required FM issues; (iii) An already established and operational Financial Management department within SDF and a FM Manual stating specific FM rules and regulations at the corporate level; (iv) A system of internal audit both by SDF staff and by an independent audit firm; (v) A computer based financial management system; (vi) Improved awareness on the importance of financial management including benefit of social audit at the village levels; and (v) building a cadre of Community Professionals in FM aspects, those who have implemented the project activities and received on the job training; and would be hired during the expansion phase to build capacity of other communities. 8. Weaknesses: The project has the following weaknesses: (i) inadequate financial management capacity at the District and Cluster level; (ii) lack of engagement and commitment towards project by the staff not directly recruited and paid by SDF; (iii) inadequate trained human resource; and (iv) inadequate

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monitoring of financial reports including internal audit reports. The following actions have been or will be taken to address the weaknesses: (i) The management of operational expenditure at district and cluster will follow SDF’s corporate financial management policy and procedures and will be reportable to GM-finance; (ii) all administrative and financial management staff at the district and cluster levels will be directly recruited by the SDF and will be brought under SDF’s personnel policy; (iii) a comprehensive training plan on the administration of fund at each levels and implementation of sub-projects at village levels will be developed each year. The training plan will be prepared on the basis of annual assessment reports and trainers feedback which will be disclosed before approval; (iv) the preparation, consolidation and monitoring of financial reports will follow standard service standards and will be strictly monitored; and (v) internal audit report and summary findings and management response will be submitted to the Bank which will form one of the basis for filed monitoring by the Bank and SDF. Implementation Arrangements 9. Implementation arrangements for financial management will be at four tiers: (a) National Level: Social Development Foundation (SDF) will have overall responsibility for project

implementation. All financial management policy and procedures will be formulated by SDF and will be circulated to relevant sections including regional, district and cluster levels.

(b) Regional Level: On the basis of policy advice and direction from national level, Regional level finance team will be responsible to supervising and monitoring district level activities and reporting directly to SDF.

(c) District Level: Under the overall policy guidance from National level, and administrative guidance

from regional level, District level finance team will be responsible for supervising and monitoring cluster level activities and reporting directly to regional level.

(d) Cluster Level: Under the overall policy guidance from National Level, and District level supervision

and monitoring, cluster level finance team will ensure that financial management activities at village/community level are properly implemented, accounted for and reported in a timely manner.

Fund Flow Arrangements 10. Flow of Funds from IDA and GoB to SDF: The following arrangement is agreed:

(a) For establishing an endowment fund for SDF, the GoB through the Banking and Financial Institution Division (BFID) of the Ministry of Finance will allocate funds on the basis of agreed Annual Program Plan by June 30 each year and release the fund under a Subsidiary Grant Agreement between the BFID and SDF.

(b) SDF will receive Government contribution in four (4) equal installments and maintain a separate account in a commercial bank account to manage the endowment fund.

(c) From IDA, for the first year's implementation, an amount equivalent to 4 months worth of expenditures expected to be paid out of the designated account (DA) will be deposited into the segregated designated account to be established for the project. Ceiling of the DA will be subsequently adjusted to forecast of 2 quarters once the project is assessed to be ready for report based disbursement in the second year. SDF will draw down from the account on the basis of actual expenditure. On submission of Withdrawal Application by the SDF, the designated account will be replenished for actual program expenditure as per agreed percentage.

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11. Flow of Funds from SDF to Region, District, Cluster and Gram Samithy to communities: The following has been agreed: Graph 1 shows the flow of funds at various level of the operation. (a) SDF will disburse funds to meet operational and administrative expenditure at the Regional and

District level on the basis of approved budget. The disbursement will be in two installments, one at the beginning of the fiscal year and the other one three months before year end. The district office will be responsible for disbursement of funds to cluster offices and therefore will consolidate budgetary requirement for all cluster offices. The district office will submit a consolidated budget request to SDF together with its budget. The amount disbursed by SDF will be shown as advance in its book and will be adjusted monthly with the submission of actual expenditure statement by regional and district offices.

(b) For the part of the program implemented by the communities, SDF will make direct payment

from the designated Special Account to the eligible Gram Samithy (GS) on the basis of approved proposals. The fund will flow to a separate account to be maintained by the GS under a financing agreement between SDF and GS.

(c) SDF will also disburse funds directly to institutional Federations, CP Centers and EAFs under

financing agreements as incorporated in the manuals and agreed between SDF and IDA. (d) The Community Operational Manual includes processing steps from initiation to actual fund

disbursement including processing time, which will serve the basis for fund transfer from the designated account of SDF to village level GSs to community project accounts. Service standards have been developed to specifically monitor the turn-around time for fund transfer from SDF to various cost centers (District, Cluster) and GSs and from GS to communities.

(e) As the fund release and disbursement records are still done on a paper-based system, they are

subject to time lags and inadequate monitoring of actual expenditure against disbursed funds. In order to automate the disbursement and record keeping, the computerized financial management system has been configured to include a Fund Disbursement status by project components and village level program.

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Chart 1: Fund Flow

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Accounting Flow and Reconciliation

13. At the SDF Level:

(a) The existing financial management policy and procedures, which is adequate to cover all project related transactions will be followed for the proposed project. In addition to statutory accounting requirements under Company’s Act, a FM manual covering chart of accounts, book keeping principles, reporting requirements and project specific budgeting, accounting, reporting and auditing requirements has been developed and will be further modified before proposed project becomes effective.

(b) In SDF books of account, payment of first installments to GS will be treated as actual expenditure

and payment of subsequent installments would be recorded as actual expenditure only when physical milestones as per FA are reported by GS and certified by the authorized official of program section.

(c) The Finance department of SDF will be responsible to reconcile all financial data with the books of account maintained at regional and district levels, program section, Bank Accounts and account for all transaction within 15 days from the end of each month. For the part of fund directly disbursed by SDF to GSs, Finance department will reconcile fund disbursement information and data with the financial progress report of the program section.

At the Regional, District and Cluster Level:

14. The Operational manual includes the accounting functions to be performed at regional, district and Cluster level. At each of these levels, financial transaction will be promptly accounted for, consolidated and reported to the Finance department within 10 days from the end of each month. The district level office will be responsible for consolidation of accounting information of all cluster offices and reporting to SDF. The cash/ bank book will serve the basis for monthly reporting in a simple format.

At the Community Level:

15. The terms and conditions of the agreement between GS and SDF will outline the principle based community accounting requirements. The COM also outlines the detail community level accounting procedures to be followed when fund is transferred to GSs. The key accounting function at the village level includes (i) separate Bank account with two signatories (ii) Simple cash/bank book (iii) assets registers (iv) registers of contribution received from communities (iv) minutes of meetings/committees documenting decisions.

Internal Controls

16. The existing financial power, authority and payment responsibility outlined in the OM will be followed. There are clear guidelines for authorization and approval of financial transactions at the various levels of the operation. It has been agreed that OM will be updated to cover proposed changes in the organizational structure of SDF which will allow split of financial management functions, to be handled by two finance managers; one responsible for corporate issues at the center while the other for decentralized FM arrangements for communities i.e village fund.

17. To prevent unauthorized use of project funds, various controls have been introduced under current program. The internal controls will be further strengthened in line with the governance and downward accountability framework to ensure that at all stages of the project and sub-project

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implementation, there are checks and balances and mechanism whereby fund providers (financiers), and recipient/users (villagers /beneficiaries) can hold each other accountable.

18. Drawing from Operational Manual and COM, a summary of internal controls in the form of checklist will be prepared with specific focus on financial controls, assets/inventory management, disclosure of key financial transactions and remedies/sanctions for misuse of funds. Training will be provided on the internal control framework at each level. The internal control checklist will be reviewed during internal audit and other periodic monitoring by SDF and IDA’s FM team.

Staffing and Capacity building (Flow chart 1 indicates key positions and reporting flow) 19. At SDF Level:

(a) The financial management capacity to deal with community finance and social accountability framework remains weak due to lack of staff with requisite skills and knowledge at the SDF levels and also lack of organizational structure facilitating a community focused financial management system. Under the proposed program, the following has been agreed: (i) Finance department headed by Director-Finance will be responsible for planning, budgeting, accounting, consolidating and reporting for the entire operation in accordance with the requirements of the Company’s’ Act, GOB, and IDAs; (ii) Under the Director, there will be two managers, one manager (village fund) will be responsible for designing, implementing, monitoring the community focused multi tiered financial management system and the other manager (corporate) will be responsible for dealing with administrative and operational budget management at the corporate level. There will be two more positions under the manager (corporate) – one for accountant and one for IT officer. Provision has also been made for Accounts officer under the Accountants position.

(b) To ensure appropriate coordination with program department for the part of the program implemented by GS or communities, it has been agreed that manager ( Village Fund) will have dual reporting, one primarily to the Director –Finance and the secondary to the DMD-program.

(c) A capacity development component under the proposed project will contain TA to strengthen the financial management and bring the FM practice consistent with community driven project. Intensive local and international training and exposure visit to similar projects within and outside the region will be supported through the project.

20. At Regional, District/ Cluster levels: Regional, District and Cluster level staff will be SDF’s directly recruited staff and will be responsible for implementation of financial management policies and procedures related to SDF’s corporate level as well as community operations. Under the overall direction and supervision of regional program director, district program manager and Cluster team leader, the following financial management staff will work at the three tier of the operation:

(a) At the regional level, regional manager (Village fund) and regional accountant (corporate) will be responsible to oversee the respective financial management activities and will be reporting to SDF: (i) manager for Village fund management and manager ( corporate) for all administrative and operating expenditure

(b) At District level, district program officer (finance) and district accounts officer will be responsible to oversee district level village fund and other financial management and reporting to regional managers.

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(c) At the cluster level, cluster facilitator (book keeper) and cluster finance officer will be responsible for cluster level financial activities as well as village level monitoring of financial activities and reporting to the district program officer and district accounts officer.

Chart 2- Key staff positions and reporting flow

Audit Arrangements 21. Internal Audit:

(a) SDF has been carrying out internal audit by two staff which is not adequate to cover such a highly decentralized operation and remote village level programs. Internal audit which is directly reportable to MD and an audit committee to oversee management action are yet to be fully functional. It has been agreed that the two staff will continue conducting periodic internal audit and reporting to the Director (Governance and Accountability).

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DirectorFinance

Deputy Managing Director

Finance Manager Village Fund

Regional Manager (Finance)

Cluster Finance Officer

Cluster Facilitator – Book

Finance Manager Corporate

Regional Accountant

District Accounts officer

District Program Officer (finance)

Accounts Officer

IT Officer

Accountant

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(b) In addition, outsourcing internal audit to a private audit firm with TOR and selection process acceptable to IDA will continue. It has been agreed that continuous internal audit will be carried out by the independent private audit firm and the report together with management response and status of previous recommendation will be submitted to IDA within one month from the receipts of internal audit report. The internal audit report will be an important input for FM supervision, periodic Program Review and FM performance indicators. The FM training module would include internal audit, roles and responsibilities of management, its impact and effectiveness.

22. External Audit:

(a) The external audit will follow existing statutory requirements under Company’s Act. A single audit covering the entire program will be carried out and there will not be any separate audit report for the proposed project. The audit report will include a separate opinion on the designated account. A private audit firm under an agreed ToR will conduct annual audit on the consolidated financial statements and the report will be submitted to IDA within six months of the end of each fiscal year.

(b) Audit Committee will be reconstituted with MD, Director (Governance and Accountability), Director (Finance) and deputy Managing Director (program) as well two members from the Governing Body. The AC will provide update to the GB on the status of audit findings and management action.

(c) In case of any major audit findings remaining unresolved beyond specified time frame will be subject to disallowable expenditure by IDA. All previous audit reports under the current program have been received in time. There is no pending audit issue requiring management action and there is no ineligible expenditure under Bank financed project currently being implemented by SDF. ARCS of IDA will keep track of the following audit for the proposed project:

Implementing Agency Audit Auditors

SDF Annual consolidated Financial Statements

Private auditor

SDF Designated Account Private auditor Financial Reporting and Monitoring 23. Under the current program, SDF has been submitting interim unaudited financial reports (IUFRs) to IDA. A single set of financial reports which are generated by the mainstream accounting system of SDF will be continued in the proposed project with minor modification. The Finance department will be responsible for consolidating financial information from the region, district, cluster and all cost centers, preparing variance analysis for actual expenditure against budget, making forecast of quarterly estimated expenditure and reconciling information with other units of SDF. 24. Simple Financial reporting formats at Regional, District and Cluster level have been developed and will be submitted to the finance department after consolidation of cluster reports at district level. 25. Formats for Quarterly interim unaudited financial reports (IUFRs) would be finalized during negotiations. It has been agreed that the project will not use IUFRs as basis for disbursement until second year of project implementation when capacity for timely and accurate IUFR will be in place.

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Information System 26. The Finance section has maintained accounting software and used Excel program to account for financial data and prepare various reports. However the computerized financial management system has not yet been fully functional and there is dependency on IT or program section for an automated financial management system and report generation. With the recruitment of IT officer in Finance department, it is expected that the computerized financial management system which is being developed will be maintained and updated as and when necessary. The capacity building component will have provision for further automation of financial management system and proving training.

Coordination and Supervision

27. The project will undergo intensive supervision, including field visits which will be conducted in collaboration with SDF. IDA’s project task team will include in addition to designated financial management specialist, a full time FM specialist to guide, supervise and monitor all major issues affecting financial management of the proposed project, and will be primarily responsible for guiding and monitoring of the program at various tiers including monitoring of FM arrangements and improvement plan. 28. The periodic field monitoring reports will be shared with SDF management and agreement will be reached on follow up actions. SDF will issue necessary circular/office order for implementation of agreed action arising out of field monitoring reports. Any serious issues raised by annual, special audit or procurement audit as well as field monitoring review will be immediately taken up and will be notified to the SDF for action within a time-frame. Any allegation of corruption will be dealt with by Bank’s Anti-Corruption Unit in accordance with its procedures. Financial Management Improvement Plan 29. Agreement has been reached on a time-bound FM improvement plan to address weaknesses identified in the FM assessment and to further strengthen FM capacity at various levels of operation. Below is the FM Improvement Plan: Actions/ Activities Responsibilities Completion

Internal Control Checklist

Finance Director July 31, 2010

Job description for new positions

Deputy Managing Director – Program and Director- Finance

June 30, 2010

Recruitment of staff- SDF, regional, district and cluster level

MD

Reconstituted Audit Committee

MD July 01, 2010

Updated with functioning computerized system

Finance Director July 01, 2011

Workshop on FM Arrangements

WB and SDF July 01, 2010

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Disbursement Arrangements: 30. Disbursements under the project will follow transaction based method in the first year of project implementation and will switch over to report based in the second year. The initial advance to the segregated Designated Account (to be opened in convertible Taka with a commercial bank or financial institution acceptable to IDA) will be the amounts equal to 4 months worth of expenditures to be paid out of the designated account. Once the project is assessed to be ready for report-based disbursement in the second year, ceiling of the designated account will be adjusted to funding forecast of 2 quarters as provided in the Interim Unaudited Financial Report. 31. Disbursements under the program will also be admissible beyond the Designated Account, through Direct Payment to the beneficiaries and issuance of Special Commitment as and when required. The needs for such disbursements shall be captured in the fund forecasts to be included in the UIFRs and funding of DAs will be adjusted accordingly. Disbursement letter will further clarify the fund disbursement process. 32. The proceeds of the Credit will be disbursed over a period of five years under the following categories:

Expenditure Categories Allocation (USD $M) Percentage of Financing

1. Grants to communities (under Parts A2 and B)

92.0 95%

2. Goods, works consultant services, training and operating costs for the project

23.0 100%

Total: 115.0 34. The community contribution is expected for community infrastructure subprojects and Economic Activity Federation subprojects. For these subprojects, the community contribution would be calculated at the time of sub-project preparation; and could be in any form of cash, labor or material. The total cost of the subproject would include both IDA and community contribution. Community contributions for each subproject would be calculated as per the rules and guidelines as included in the COM and Federation Manual. Overall, community contribution in total is expected about US$5.0 million about 5 percent of Category 1.

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Annex 8: Procurement Arrangements

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project A. General 1. Overview: The Empowerment and Livelihood Improvement “Nutun Jibon” Project is a US$120 million project of which the IDA credit will finance US$115 million. Due to Community Demand Driven (CDD) approach of the project, it is estimated that US$92.0 million of the total project cost will comprise of community procurement. The remaining US$23 million of total project cost will be financed for consultants’ service, small value goods and works procurement; and payment to contractual staff and operational expenses. 2. Procurement for the proposed project would be carried out in accordance with the World Bank’s "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 (Revised October 2006 and May 2010); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 (Revised October 2006 and May 2010) (cumulatively know as “Bank Guidelines”), and the provisions stipulated in the Legal Agreement. Within the overall context of the Bank Guidelines, local procurement of goods, works, and consultant services (for which shortlist entirely comprised of national consultants) will follow the Procurement Laws. For the purpose of the project, Procurement Laws means Recipient’s Public Procurement Act 2006, the Recipient’s Public Procurement Rules 2008 (as amended in August 2009), and the Recipient’s Public Procurement Act (1st Amendment) 2009, with the exceptions as outlined in Paragraph 3 below. In case of any conflicts between the Bank Guidelines and Procurement Laws or ambiguous/ confusing interpretation in between, the Bank Guidelines shall prevail. Procurement by the community village institutions e.g. Gram Samithys, Producer Federations, GS-Federation, and Community Professional Learning and Training Centers, will be carried out in accordance with the Procurement Book-let of the Community Operational Manual (COM), developed and updated through practical needs and agreed with IDA. 3. For the purpose of National Competitive Bidding (goods and works), the following shall apply: (a) post bidding negotiations shall not be allowed with the lowest evaluated or any other bidder; (b) bids should be submitted and opened in public in one location immediately after the deadline for submission; (c) rebidding shall not be carried out, except with the Association’s prior agreement; (d) lottery in award of contracts shall not be allowed; (e) bidders’ qualification / experience requirement shall be mandatory; (f) bids shall not be invited on the basis of percentage above or below the estimated cost and contract award shall be based on the lowest evaluated bid price of compliant bid from eligible and qualified bidder; and (g) single stage two envelope procurement system shall not be allowed. 4. The project is composed of four major components as below:

(i) Component 1: Community and Livelihood Development at the Village Level; (ii) Component 2: Institutional Development and Livelihoods Promotion at Inter-village Level; (iii) Component 3: Capacity Development and Partnership Building from Cluster to National Level; (iv) Component 4: Project Management and Coordination

5. Social Development Foundation (SDF) will have the responsibility for overall procurement management and will also be responsible for oversight of the community level procurement. The major procurement for Components C and D will be carried out by SDF; and for Component A and part of B, the procurement will be mostly be carried out by community. The procurement arrangements for various items under different expenditure categories are described below.

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6. All expected major procurement of goods and consultants’ services will be announced in the General Procurement Notice (GPN), published in the dgMarket and United Nations Development Business (UNDB). 7. Procurement of Works: Works procured under this project would include community sub-projects; sub-projects are typically demanded by the community and are small scale community infrastructure works e.g. rural connecting roads, culverts, foot-bridge, drainages, water points, sanitation schemes, and community schools etc. At national level SDF will procure small renovation works of office buildings in the proposed project areas. Provision of permanent office building for SDF is also envisaged upon appropriate approval of authority. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all ICB and National SBD under Procurement Laws acceptable to the Bank. At community level, procedures for procurement of community based works would be executed by the communities and will be governed by the procedures as set out in the in the Procurement Book-let of the COM. For the purpose of the project, International Competitive Bidding (ICB), National Competitive Bidding (NCB), Shopping, Direct Contracting and Community Participation in Procurement methods shall be used. The Procurement Plan shall specify the circumstances and threshold under which specific methods may be used. 8. Procurement of Goods: There will be a large number of small value Goods procurement executed by the community to implement the sub-projects. SDF will procure as deemed required goods e.g. vehicles, office furniture, computers, printer and communication peripherals, electronic equipment etc. Community level procurement of goods will follow the procedures and SBDs outlined in the Procurement Booklet of the COM as well as Federation and CP Manuals. At national level, procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all ICBs and National SBD under Procurement Laws acceptable to the Bank. For the purpose of the project, International Competitive Bidding (ICB), National Competitive Bidding (NCB), Shopping, Direct Contracting and Community Participation in Procurement methods shall be used. The Procurement Plan shall specify the circumstances and threshold under which specific methods may be used. 9. Procurement of non-consulting services: Procurement of non-consulting services is not foreseen for the project. However if at a later stage non-consulting services become apparent for project execution, SDF will carry out such procurement using bidding procedure and bidding documents acceptable to the Bank and as agreed in the Procurement Plan. 10. Selection of Consultants: The project would contract private firms, NGOs and other service providers including social, technical, accounting, procurement, and environmental specialists, other individual specialists with specific expertise as required for supporting project implementation. These services would include management support for: mobilizing, developing and strengthening community level institutions and their federations, implementation technical assistance; community financing and micro-enterprise support services including public-private partnerships to improve livelihood opportunities; conducting special studies, developing, monitoring, learning and evaluation systems (ML&E); and capacity building agencies. IDA’s standard request for proposal (RFP) will be used for all consultant services. For services, short lists of consultants may be composed entirely of national consultants, in which case provisions of paragraph 2.7 of the Consultant Guidelines will apply. For the purpose of the project, Quality and Cost Based Selection (QCBS) Quality Based Selection (QBS), Fixed Budget Slection (FBS), Consultants’ Qualification (CQ), Single Source Selection (SSS), Least Cost Selection (LCS) Individual Consultant Selection (ICS) and Commercial Practices will be used. The Procurement Plan shall specify the circumstances and threshold under which specific methods and Guidelines/ Rules will be applicable for selection of consultants.

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11. Community Procurement: About 80 percent of the project funds will flow to the community village institutions; and would be expended and managed by them. The community village institutions e.g. Gram Samithys, Producer Federations, GS-Federation, will carry out the procurement in accordance with the Procurement Booklet of the Community Operational Manual (COM), as well as Federation and CP Manuals.. The Procurement Booklet is developed and updated through practical needs and agreed with IDA. The Procurement Booklet outlines a set of procedures written in simple language (both in English and Bangla) for guiding procurement functions at the village level. 12. Professional Learning and Training Centers (CPLTCs): CPLTCs will be setup as non-profit institutions, legally and financially autonomous, registered under commercial law or society’s act or NGO registration and fully owned and managed by the communities. Same organizational structure will be followed for all the CPLTCs. In general a CPLTC will be composed of a General Body, Executive Committee, Administrative Body and sub-committees; all members of these committees will be selected from the community. Initially the CPLTCs will be setup at district level with the objective of supporting the community institutions in sustaining their activities through the development and management of community members as trainers and local resource persons. Once trained the community members will be known as Community Professionals (CP). A trained CP will have specialized experience and training in various thematic areas such as social mobilization, community financing, procurement, book-keeping, social accountability, infrastructure, marketing and business etc. The CPs over the period proved to be a valuable resource for the project to scale up in a cost effective and sustainable manner. Fully functional CPLTCs are expected to provide village mobilization and facilitation, training and awareness programs, and other similar services using the skills and experiences of CPs. Further details of the CPLTCs are summarized in Annex 6, para.21 of the PAD and detailed in CP Manual dated May 2010. 13. The Articles of Association of CPLTCs, approved by IDA, will provide clear eligibility criteria for establishment of the institution. The principles of the eligibility criteria will be legal, financial and administrative autonomy to avoid any conflict of interest between CPLTC committee members, the village institutions and SDF. The eligibility criteria will therefore guide the selection process consistent with general requirements and giving due consideration to avoid any conflict of interest. To guide the functioning of the centers, Community Professional Center manual has been developed. The manual provides clear eligibility criteria for hiring community professionals, and a system of grading and promotion, starting from entry level trainees, through to “grade A” CPs who have at least three years field experience and one year as trainers. 14. Initially the community will finance the establishment cost of the CPLTCs on a “gap financing” basis. Required procurement and expenditures for the establishment cost will follow the fiduciary principles as agreed in the COM. Once established, the services of CPLTCs will be contracted by SDF as per the Community Professional Center manual and agreed rates acceptable to the Bank. Bank’s Guidelines: Procurement Under IBRD Loans and IDA Credits, outlines through method of Community Participation in Procurement will be the basis of MOU between SDF and CPLTCs. The MOU will be Indefinite Delivery Contract type having agreed upon unit Price as outlined in Paragraph 5.4 of the Guidelines: Selection and Employment of Consultants by World Bank Borrowers. The size of each contract will vary depending upon the need and demand of the community. Services of CPLTCs will also be contracted by the community and other third parties. 15. Operating Costs: These costs will include incremental operating costs incurred by SDF directly related to the Project, including the cost of operations and maintenance of vehicles, office rental, office utilities and supplies, printing materials, advertising costs, communication costs, bank charges, costs of consumables procured under the Project, salaries and allowances of contracted staff of SDF, and travel allowances and costs for attending Project related meetings and workshops, but excluding salaries of the Recipient’s officials.

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B. Assessment of the Agency’s Capacity to Implement Procurement 16. Procurement Environment: The Country Procurement Assessment Report (CPAR) broadly accepted by the Government in February 2001 identified inadequate public procurement practices as major impediments to project implementation. The procurement deficiencies include: absence of a sound legal framework; protracted bureaucratic procedures allowing multi-point rent seeking; lack of critical mass of professionals to manage public procurement; inordinate delays in completing the procurement process; ineffective contract administration; and absence of mechanisms for ensuring transparency and accountability in public procurement. 17. Procurement Reform Actions: To carry out the procurement reform that followed the CPAR recommendations, the Government has implemented a Bank-supported Public Procurement Reform Project (PPRP) which closed in September 2007. As part of the reform under PPRP, the Government has established the Central Procurement Technical Unit (CPTU) within the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning with staffing funded from own resources. The Government has approved and issued Public Procurement Act (PPA) 2006, and has also issued Public Procurement Rules (PPR) 2008 with associated implementation procedures, including streamlined procurement approval process, delegation of financial powers, and standard set of documents for procurement of goods, works and services. The PPA and the PPR have been made effective from January 31, 2008. With the exceptions mentioned in Paragraph 1, the PPA and the PPR contain good international practices including: (i) non-discrimination of bidders; (ii) effective and wide advertising of procurement opportunities; (iii) public opening of bids in one place; (iv) disclosure of award of all contracts above specified threshold in the CPTU’s website; (v) clear accountability for delegation and decision making; (vi) annual post procurement audit (review); (vii) sanctions for fraudulent and corrupt practice; and (viii) review mechanism for handling bidders protests. In order to build procurement management capacity, CPTU, in collaboration with ILO and local institutes, has developed a critical mass of 25 national trainers and provided training to about 1800 staff of different public sector agencies up to September, 2007. 18. The procurement regulations are being implemented by all public sector entities with varying degrees and all the public sector entities are required to follow the new rules. Public procurement has been reshaped in the last several years due to the procurement reform that include harmonized procedures. The new rules have also increased awareness among the stakeholders (such as the procuring entities, bidding community) by building confidence. However, there are still potential challenges concerning the implementation of the Act/rules including: inadequate enforcement of rules and delegated financial powers; inadequate adherence to the provision of streamlined procurement approval process; delays in contract award for large value contracts; ineffective contract administration; allegations of fraud and corruption; and political interference. To sustain the reform, the Government launched a follow-on project, Public Procurement Reform Project II (PPRP II) in September, 2007 that, among others, focuses largely on implementation and monitoring at key sectoral agencies, capacity development, monitoring, and management of procurement reforms, introduction of electronic government procurement (e-GP), and behavioral change and social accountability. Till date, under PPRP-II about 600 officials received three-week training on procurement. 19. Major procurement activities, primarily selection of consultants and/or NGOs, will be carried out by SDF. The community organizations will take lead in implementing community level sub-projects and procurement of goods and services. An assessment of the capacity of the implementing agencies to implement procurement sections under the project was carried out by the Bank, during the project preparation period November 2009 to March 2010. The assessments reviewed the organizational structures for implementing the project components and the interaction among the entities responsible for

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procurement processing, monitoring and providing guidance and training. The assessment highlighted the following observations and issues: 20. Social Development Foundation (SDF) SDF, currently implementing the original project and three Additional Financings, has over the years gathered reasonable capacity on understanding of IDA’s procedure as well as country’s procurement law and implementation procedure. SDF has clear system of accountability with clearly defined responsibilities and delegation of authority on control of procurement decisions. At the national level, a Procurement Core Team (PCT) is established within SDF, and is primarily accountable to handle all procurement activities including all the contracts that are being executed with the approval of organization head, Managing Director of SDF. The PCT has clear TOR for implementation of all procurement. Recent capacity assessment of SDF shows reasonable improvement of performance during the last few years. However there are some inherent systemic issues pertaining to procurement processes as shown in the latest post procurement review conducted by IDA. The report suggests minor deviations characterized as negligence and reservation on competitiveness for small value procurement through request for quotation method. Nevertheless the overall procurement performance is acceptable with requirements of improvements. 21. SDF’s record keeping initiative requires more improvements especially on adequacy of documentation, electronic documentation and protection of documents against loss and unauthorized access. SDF has recently recruited two procurement specialists for the Additional Financings; and will require at least one more additional staff on procurement and one short term consultant for development of MIS system for procurement activities. The project will finance adequate training for procurement staff to improve quality of training of cluster level staffs/consultants. The previous record for competitiveness in SDF’s procurement activities is reasonable in terms of number of bidders, consulting firms offering bids and proposals. However SDF’s capacity to contract management requires more methodical and objective oriented intervention from procurement and non-procurement staffs. 22. SDF’s handling of procurement complaints is yet to reach satisfactory standard. Capacity assessment of SDF reveals although there is a system in place for procurement complaints handling, the system is weak in terms of effectiveness due to lack of dissemination of existing complaint procedures to the bidding community. Also SDF does not keep data on volume of complaints and nature of complaints and report on them. 23. Other systematic issues are delays in completing procurement cycle, at times poor quality of technical specification and/or clarity of TORs, evaluation of expression of interest and proposals, internal control, administration of contract including follow up, payments etc. In addition to above, given the country environment, SDF is not immune to systematic issues affecting procurement efficiency and performance. There are significant rooms for improvement in the context of capacity development and institutional improvement. The project would require technical assistance in terms of imparting training as well as facilitating human resources recruited from the private sector, particularly on procurement specialization. 24. Community Village Institutions The community village institutions e.g. Gram Samitis, Economic Activity Federations, GS-Federation, will carry out the procurement at the village and inter-village level. The demand driven nature of the project design does not allow for up-front procurement capacity assessments of each village/community organization. The experience of the original project and three additional financings shows that more than 90 percent of the communities who received funds are doing a satisfactory job of mitigating Governance, Fraud and Corruption (GFC) risks. On the contrary, in a few cases, where community organizations are weak and not facilitated effectively, there have been instances of poor governance and in a few cases of fraud and corruption by Community Organization committee members have been uncovered. The project design by nature is embedded in social and

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community accountability framework. The five non-negotiable principles (Annex 4, Paras 10 and 11) that villages have to follow in order to be eligible for project support are Inclusion, Equity, Participation, Transparency and Accountability. By these principles, both beneficiaries and participants at community level are identified along with the transparency and accountability requirements as eligibility criteria. In addition procurement activities at community level are safeguarded by oversight by Social Audit Committee, an independent body formed by Gram Parishad (Village Assembly). The mechanism works well as per the experience from the current program; and will be replicated for this program. Procurement at community level will mostly be done through National Competitive Bidding, Shopping and direct contracting on conditions as will be outlined in the Procurement Book-let Community Operational Manual. It is foreseen that a number of direct procurement may be required due to thin market as the project is implemented at remote places having very less number of suppliers and where circumstance arises where lack of enthusiasm among local suppliers to go through formal process of bidding. 25. Capacity of community level procurement will be dependent upon how effectively SDF and Capacity Building Cell within SDF disseminates key messages “Dash Niti” or ethical framework among the community members and provides hands-on training and exposure to the members of Gram Samithy, Procurement Committee and Social Audit Committee. In addition, oversight and guidance would also be provided by the Community Professionals assigned at cluster level; and the Community Professional Learning and Training Centers would play an important role in the future in building capacity of the community members in procurement and accountability aspects. 26. Risk Rating: Overall, procurement risk for the project is rated as “Substantial-Risk”. Several measures need to be introduced to minimize the risk during the implementation of the project as given in subsequent sections. 27. Measures for Improving Governance in Procurement. Several measures have been introduced and agreed with the SDF toward improving governance in procurement and minimizing procurement risks under the proposed project. The major action plans are: (i) SDF management shall conduct a Monthly Procurement Meeting to be chaired by the Managing

Director. The meeting will review procurement activities of the preceding month and plan future activities to align procurement activities with project implementation.

(ii) Introduction of quarterly review meetings of PCT with specific focus on improvement of competitiveness in Shopping method. The PCT will comment and/or suggest specific recommendation on ways to increasing competitiveness in each procurement packages;

(iii) SDF will appoint one short term Procurement Consultant in addition to existing three procurement staffs. The short term Procurement Consultant should be having experience in IDA financing projects and the specific responsibility of the consultant will be preparing bidding documents for contracts required to be awarded within the first six months of the project. Within the Procurement Consultant’s contract period, SDF will also complete recruitment of procurement staff within the first four months of credit effectiveness;

(iv) A separate unit within SDF headed by a senior position to be responsible for GAAP implementation. Main functions of this unit would be to ensure that GAAP risks are properly addressed & monitored and to build awareness on impact of fraud and corruption on poverty. Also the Unit will develop communication material that will create public awareness on the right to information Act.

(v) Appoint MIS consultant who will work closely with Procurement Core Team to establish a functional webpage with procurement related information including complaint handling procedure accessible to public. The MIS consultant will also develop manual outlining the processes to update procurement related information;

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(vi) Strengthen SDF’s record keeping and filing of procurement documents. Also SDF will ensure handling of complaints following Complaint Handling System and be accountable for responding to various complaints;

(vii) Introducing a procurement risk mitigation plan (PRMP) with a set of performance indicators as described in paragraph 34 below to monitor procurement performance through reports submitted to IDA on a periodic (semi-annual or quarterly) basis.

28. Establish a system for handling complaints. Although SDF has a complaint handling mechanism is in place, the system is ineffective due to lack of publicity and awareness within the bidder community. PCT will be responsible for making the complaint handling mechanism effective. Specifically to make aware the bidder community on the complaint mechanism and complaint handling procedure, establish a credible database for record keeping of complaints and redress resolution. Procurement staff will be responsible for managing the effectiveness of the complaint handling mechanism and the PCT will be responsible for the oversight role. For ICBs and all consultancy contracts above US$100,000 for firms and US$ 50,000 for individual consultants, the Bank’s prescribed complaint redress mechanism will apply. 29. Introducing a procurement risk mitigation plan (PRMP). SDF will prepare and share with IDA semi-annual reports capturing the following issues provided below (with monitoring indicators). (i) Complaint Handling System: A credible system of handling complaints which shall be put

in place in SDF and community level. This will include information regarding details of complaints and its disclosures with redress mechanism;

(ii) Disclosure of Information and Procurement Website (For SDF only): Information relating to bidding and procurement above the specified thresholds, as per PPA, to be published in SDF’s website (if any), and in that of the CPTU.

(iii) Competitiveness of the Bidding Procedure: Information relating to adequate advertisement of invitations for bids and/or requests for expressions, number of bidding documents/RFPs given to bidders/firms, number of responses received, number of responsive bidders/ consultants, etc.;

(iv) Timeliness of Bid Evaluation and Contract Award: Information on bid evaluation and contract award within initial bid/offer validity period;

(v) Information on Corrupt Practices: Information on corrupt practices undertaken by bidders/ consultants, if any, and actions taken by SDF;

(vi) Information on Corrupt Practices by SDF staff and/or Consultants: Information on corrupt practices undertaken by SDF staff and/or consultants, and actions taken by SDF;

(vii) Delayed Performance by Contracted Suppliers/Consultants: Information on milestones provided in the contracts, delay in performance by the contracted suppliers/consultants, and actions taken by SDF;

(viii) Procurement Filing System and Checklist: SDF will maintain a credible and efficient filing system to mitigate long and costly delays in the search for documents at critical moments. It should be a written manual with provision of periodic oversight by SDF and semi-annual report on performance.

30. In addition, the following steps will be followed as a part of procurement risk mitigation: (i) SDF in reference to the provisions in the PPA and the legal agreement to be signed with IDA,

will issue alert letter(s) notifying about the fraud and corruption indicators and the possible

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consequences of corrupt and similar behavior in procurement practices and actions to be taken against the officials/staff if they get involved in such practices.

(ii) SDF, through appropriate notification, will alert all bidders/ consultants on consequences of corrupt practices (fraud and corruption, collusion, coercion, etc.).

(iii) A formal structured BOC and BEC will be constituted for each contract package, as per the provisions of the PPA. During the same day of bid opening, photocopies of the bid opening minutes (BOM), signed by bid opening officials and the bidders’ representatives (present at the bid opening), with read-out bid prices of participating bidders will be shared with the bidders either by email, fax or special messenger. Also, for prior review packages, copy of such BOM will be sent to The Bank the same day of bid opening.

(iv) In case of re-bidding, SDF will enquire into the matter, record and highlight the grounds of re-bidding (i.e. corruption or similar, high bid prices etc.) along with recommended actions to be taken. For prior review cases, all such detailed reports will be sent to the Bank.

(v) SDF will preserve records and all documents regarding their public procurement, in accordance with provisions of the PPA. These records will be made readily available on request for audit, investigation or review by The Bank.

(vi) The approved procurement plan of the project will be published in the website of CPTU as stipulated in the PPA, and in the website of The Bank (if applicable), and updated semi-annually.

31. As per the provision of the PPA, SDF will carry out annual post procurement audit (review) based on sample contracts of at least 15 percent by hiring chartered accounting firm (with international affiliation). This is in addition to The Bank’s procurement post review that would cover a minimum of 20 percent of contracts. C. Procurement Plan 32. SDF has developed a draft procurement plan for project implementation which provides the basis for the procurement methods, prior and post review by IDA. This plan has been agreed with IDA and is available at the headquarter office of SDF in Dhaka. It will also be available in the project’s database and in IDA’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 33. In view of the community driven and demand driven nature of project implementation, detailed procurement plans at the community level cannot be prepared in advance. A sizeable portion of project investment will be for community subprojects, the nature of which will be known only when the village communities and federations plan sub-projects and submit the proposals during project implementation. A simple procurement plan has been agreed with IDA, as part of the checklist/framework for the community proposals, and is included in the Procurement Booklet of COM. 34. Procurement Review and Monitoring: The review by IDA of procurement decisions and selection of consultants will be governed by Appendix 1 of the Bank’s Guidelines. For each contract to be financed by the Credit, threshold for prior review requirements and post review contracts will be identified in the Procurement Plan. During the first 18 months of the project, IDA will carry out Prior Review of the following contracts:

(i) For Goods: All the ICB contracts and Direct Contracts irrespective of estimated cost. The NCB Contracts estimated cost equivalent or more than US$ 300,000.

(ii) For Works: All the ICB contracts and Direct Contract irrespective of estimated cost. The NCB Contracts estimated cost equivalent or more than US$ 500,000 and the first NCB contract irrespective of value.

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(iii) For Consultant’s Services: Prior review will be required for consultants’ services contracts estimated to cost US$ 200,000 equivalent or more for firms and US$ 50,000 equivalent or more for individuals. All single-source contracts will be subject to prior review by and in agreement with IDA. All Terms of references of the consultants are subject to the IDA’s prior review.

35. The above threshold for prior review will be updated after 18 months of credit effectiveness based on performance of SDF as reflected in the early post review carried out by the Bank or Bank appointed firm. 36. Due to a large number of small value contracts at community level, direct review by IDA is deemed not feasible. At community level, audit responsibilities will mostly be relied upon the Social Audit Committee (SAC). However SDF will conduct community-wise yearly review of contracts managed by community on sample basis and report back to IDA on compliance performance by the community. 37. The quarterly project management and financial reporting formats submitted to IDA will include a section on procurement progress at all levels of implementation, and will included the updated procurement plans. The following information will be included in the quarterly procurement plans: (i) Component-wise contract award information; (ii) Physical progress and expenditures on awarded contracts; (iii) Analysis of timing of procurement activities and revised timings for contracts not yet awarded;

and (iv) Details of procurement related complaints received and actions taken to address them. E. Frequency of Procurement Supervision 38. In addition to the prior review supervision to be carried out by IDA, the capacity assessment of the Implementing Agency has recommended semi-annual supervision missions to visit the field to carry out post review of procurement actions. A customized review process will be developed for reviewing procurement at the community level.

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Annex 9: Governance and Accountability Action Plan

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project 1. Background: Improving governance and maximizing effectiveness of investments is an integral part of the current program, and is incorporated in the operational rules and guidelines. In 2008, the original project went through a comprehensive Governance and Accountability Action Plan (GAAP) development process. The methodology used was to hold workshops and focus group discussions with participants from communities and Regional, District and Headquarters level SDF staff. A mapping of risk areas, warning signals (red flags), and existing and proposed mitigation measures was done and validated. The result was a Governance and Accountability Action Plan (GAAP) that was reviewed and adapted by the SDF management. 2. The resulting GAAP was comprehensive in nature, reviewing risks at all levels from community to national level, providing a risk rating, identifying existing mitigation measures and proposing new ones. It is available in the project file. Following the validation process, this first GAAP identified 80 risk areas, with 104 mitigation measures. Notably, only 31 of these were new as the team found the project to have been diligent in implementing existing measures, already existing under the project principles and operational guidelines, which are rooted in principles of participation, accountability and transparency. 3. This assessment was reviewed and updated in February 2010 by SDF managers and IDA. Five major risk areas have been identified and rated, before mitigation, for Likelihood and Impact (Consequences). The risk areas and ratings are shown in Table 1 below. The Likelihood refers to the probability that the risk will occur. Impact refers to the impact of the risk on PDO if it occurs. A rating of 1 corresponds to low risk and rating of 5 corresponds to high risk on a 5 point scale. This Annex provides a summary of the process of updating the GAAP and its content; and details have been included in the Project Implementation Plan. 4. GAAP Preparation Process: The underlying premise of the GAAP is that its principal purpose is to assess, and mitigate, the risks of poor governance, fraud and corruption (GFC) to achievement of the key results of the project. Such risks exist at all levels of the results chain (shown below) for a community driven project.

Table 1: Governance, Fraud and Corruption (GFC) Risks Assessment

GFC Risk Area Likelihood (L) Impact (I) Risk Score =L x IMalfunctions in village and SDF governance systems

3 5 15

Financial management weaknesses leading to inadequate accounting or leakages

2 5 10

Irregularities in procurement at village, district, or SDF level

3 5 15

Weaknesses in agreed disclosure policies, actions and poor communications

2 5 10

Effectiveness of complaint and grievance redress mechanism

2 3 6

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Figure 5: GAAP Results Chain

5. The GFC Risk Mitigation System. SDF is currently employing a three level risk mitigation system (listed below) to prevent, detect and sanction (penalize) poor governance, fraud and corruption. The system emphasizes downward accountability of SDF to project’s target beneficiaries’ i.e. poor and vulnerable households in the current project areas. (a) At the first level, the beneficiaries are empowered through community based organizations to

hold themselves as well as SDF accountable through the use of social accountability mechanisms. Good governance at this level is of paramount importance since about 80 percent of the project funds are directly transferred to the community based organizations to be used for approved purposes following the ten non-negotiable principles (Dash Neethi) and other policies and procedures described in the Community Operations Manual (COM).

(b) The community based organizations and individuals are held accountable, for compliance with the governance and accountability provisions in the Community Operations Manual, by the staff of SDF. The project M&E system tracks results and reports them on a monthly basis. The policies and procedures to be followed at this level are described in the Project Implementation Plan.

(c) A Process Monitoring Agency (PMA) and an Internal Auditor (IA), contracted by SDF, independently monitor and report on the extent to which the community based organizations and SDF are adhering to the SIPP policies, systems and procedures. PMA submits a monthly report while IA submits an annual report. Scope and methodology for the PMA and IA are described in the terms of reference for the consultancy.

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(d) The three level systems of checks and balances when functioning effectively is expected to provide reasonable assurance of preventing, detecting and sanctioning instances of poor governance, fraud and corruption. The IDA Implementation support missions are expected to check on effective functioning of these systems and do random field checks. The key measures in place under each part of the system and how they are functioning are briefly described below.

6. Communities Holding Themselves Accountable: A number of policies and procedures are prescribed in the COM to ensure that the community organizations (Gram Samiti, Village Credit Organization, Jibikayan Groups, Sanchay Sangrakhan Committee) are accountable to the community members. Key provisions include:

(a) Clearly articulated governing values espoused in the Dash Neethi- the Ten Non-negotiable Principles, including the core values of transparency, accountability, equality, consensus, thrift and sincerity that are consistent with good practices in the areas of project management, community organizing and corruption control.

(b) Publicly available records at all sites, especially those with village offices. Accounts, ledgers and records of community organizations and committee proceedings are updated and made available for review.

(c) Procurement and Financial Management procedures are included in the Community operations Manual and community members handle these functions with training and support from the SDF staff.

(d) Social accountability mechanisms, within and between village organizations and community and

service providers, and between the SDF and the communities, have been promoted and institutionalized. These include points (a) – (c) above and also: participatory identification of the poor; benefit tracking and monitoring system; social audit committees to check compliance to the agreed rules and utilization of funds; peer community assessments and report cards on service providers from the SDF.

(e) Grievances redress and conflict resolution system called the Communication Tree. 7. Holding the Community Accountable: As noted above, while the communities are expected to hold themselves accountable there is a risk that governance malfunctions can happen. The experience so far shows that these risks have materialized in some cases. The project PIP therefore includes the following procedures to monitor and address GFC risks at the village level:

(a) The Appraisal and Monitoring Teams comprising staff skilled in the areas of financial

management, engineering, community participation and rural development have been set up. They certify achievement of physical and other milestones during implementation of community activities and assist in release of installments of Project funds and, importantly, are independent of the SDF implementation field staff.

(b) The M&E system includes a Village Matrix tool that contains many indicators of governance such as: number of meetings of key committees held; participatory identification of the poor; number of social audit reports submitted in the last six months; compliance with information display and record keeping; timing and outcome of Community Report Card Assessment; understanding and display of the golden rules.

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(c) Internal Auditor (IA) employed by SDF will be responsible for auditing 10-15 percent of the proposed project Villages. According to its TOR, the IA is expected to check the extent to which the Village Development Funds and Institutional Development Funds are used in full compliance with procedures; proper records are being maintained by community organizations/committees; procurements are made per provisions per COM; and savings and loan transactions are properly conducted and recorded.

(d) The Process Monitoring Agency (PMA) is required to visit all project villages in a phased manner

(visiting about 120 villages per month) and produce a Monthly Process Monitoring Report. The Report comments on irregularities in compliance with COM procedures and recommends remedial measures that are considered and acted upon by Community authorities as well as SDF staff and managers.

8. In order to further improve the system for monitoring and mitigating governance malfunctions at the village level, the following measures will be introduced under the proposed project: (a) A village governance score card/community assessment process (CAP) will be developed as part

of, or along the lines of, Village Matrix. The objective of the score card would be to rate each village on a number of indicators that are indicative of state of compliance with key governance related provisions in the COM (see paragraph 4 for an illustrative list). Each may be assigned a rating by the Cluster Teams on basis of the score card. The rating will help SDF focus special effort on the small number of problem cases that may be present at any given point of time.

(b) An action plan will be formulated to provide intensive technical assistance and capacity building to problematic villages. This may include peer assistance from good governance villages. The plan would also include a clear exit rules in case the problems are not resolved in a reasonable time despite the TA and capacity building.

(c) A synthesis report will be prepared to pull together all information on GAAP related matters and updated on a quarterly basis. The report would cover both quantitative and qualitative information. A small number of GAAP monitoring indicators have been included in the project M&E system including the Results Framework.

(d) A high level management position has been created in the new SDF organization with responsibility to coordinate all field and HQ level matters related to GAAP implementation and be accountable for ensuring actions and reporting including to the Audit Committee of the Governing Body of SDF.

9. Holding Social Development Foundation accountable. The current measures in place include: (a) Score cards/CAP by communities to hold staff accountable; (b) Mid-term evaluation for SIPP 1 assessed SDF performance (c) Internal audit to review the internal checks and controls work well (d) External audit of SDF financial accounts (e) The new human resources policies being adopted with provisions for handling staff grievances,

code of conduct, and sanctions in event of staff misconduct. (f) Regular public reporting of results through website and other communications/media (g) Review by the Bank’s Implementation Support Mission (h) Oversight by the SDF’s Governing Body.

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10. Overall SDF is doing a good job of preventing, detecting and sanctioning governance, corruption and fraud (GFC) problems. SDF staff has good information and knowledge of the villages which are experiencing GFC problems. The internal audit team has uncovered ineligible and fraudulent charges by some of the NGO partners. The management has acted on the few cases of alleged corruption by SDF staff. The results of mid-term evaluation, PMA and Internal Auditor reports show that problems are few and relatively minor. However, there is room for improvement and, under the proposed program, the following enhancements will be implemented: (a) A formal Disclosure and Right to Information Policy will be drafted and adopted to guide the

staff and management on what needs to be disclosed, by whom, how, when and where. It should be in conformity with the Right to Information act. Once adopted the policy should be publicly disclosed, staff trained in its implementation and its implementation monitored regularly as part of GAAP implementation monitoring.

(b) Complaints and Grievance Handling system may be strengthened by: (i) adding dedicated telephone line for complaints related to governance, fraud and corruption and (ii) publicly disclose data on complaints/grievances and action taken.

(c) A senior position – Director level - is appointed with full time responsibility for ensuring GAAP implementation, M&E and reporting.

11. Recommended Implementation Arrangements for the GAAP: (a) The Social Audit Committees at the Village level will have primary responsibility for ensuring

compliance with the GAAP measures at the village level.

(b) The Community Assessment Process (CAP) or score card– needs to be introduced and consistently applied/implemented on an annual basis.

(c) The Regional and District Teams will include a full time Accountability staff; and would be

termed as Governance and Accountability Specialist/Officer. (d) At SDF national level three arrangements are recommended to ensure implementation of GAAP:

(i) the checklist used by the Appraisal and Monitoring Team should include relevant benchmarks from the GAAP; (ii) the Process Monitors should report on compliance with GAAP; and (iii) the MD will be responsible for overall implementation of the GAAP. He would be supported by a small cell called Governance and Accountability, led by a Director level position.

12. As part of finalizing the GAAP, the following information has been updated during the preparation and reflected in the revised project operational documents: (a) Changes in the Community Operations Manual have been made to reflect the GAAP measures

and responsibilities; in particular the roles and responsibilities of the Social Committee, Procurement Committee, Accountants, and Community Assessment Process;

(b) Job descriptions of the Governance and Accountability staff at the District, Regional and National level to reflect the GAAP related responsibilities and included in the PIP; and

(c) Modifications in the terms of reference of the Appraisal and Monitoring Team and Process

Monitors to ensure that they review and report on compliance with GAAP provisions when they review community and SDF level activities.

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Annex 10: Economic and Financial Analysis

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

1. The Project targets CDD led sustainable improvement in the livelihoods of 300,000 poor and vulnerable households spread over 1500 villages in 15 districts. This will be achieved through community and livelihood development, building institution and partnership for service delivery and funding for promoting innovations. Project supported village development and risk reduction fund would be managed by strengthened community organizations to enable income generating livelihood activities for the needy poor that will be sustained with reduced vulnerability to natural shocks and improved village infrastructure. Product aggregation, market access and linkages will be supported for the small scale producers. Major benefits from the project interventions will come from multiple sources like: (i) livelihood investment benefits, (ii) community led livelihood sustainability benefits, (iii) community infrastructure benefits, (iv) vulnerability reduction benefits, and (v) community led management benefits. Using cost benefit and cost efficiency analyses, multiple impacts expected from the project interventions are quantified. They include (i) income impacts, (ii) employment impacts, (iii) poverty alleviation impacts, (iv) governance impacts and (v) cost efficiency impacts. 2. Project Cost: Total base line cost for the project is USD 120 M to be implemented over six years, out of which, community and livelihood development component accounts for USD 100 M. Within this component, village development and risk reduction fund gets USD 75 M, accounting for 63 percent of the base line cost of the project. Community-led VDRRF management will provide for livelihood investments, for the participating households, through village level community institutions for generating income and/or reducing the risk from natural shocks. Price contingency is taken as 5 percent and total project cost is USD 126 M. 3. Project Benefits: a. Livelihood investment benefits: Major source of quantifiable benefits will come from the CDD-led livelihood investment initiatives. While the participating households will be self selected based on the pre-defined criteria, choice of investment activity will be participatory driven and both are unknown for ex-ante economic analysis. But the expected choice of livelihood investment portfolio and associated distribution of project beneficiaries in case of the proposed project can be reasonably projected from the currently ongoing similarly designed project experiences covering 11 out of 13 proposed districts (T-1). During SIPP-I, livelihood investment loans have been availed by the VCO members for 46 types of income generating activities, broadly grouped into five major livelihood sectors (T-1). Ten livelihood activities are predominantly chosen by the beneficiaries, together accounting for 71 percent of the loan amount disbursed and 74 percent of the loan beneficiaries. Livestock related income generating activities

Table 1: Choice of livelihood investment portfolio in SIPP‐I  

Livelihood Sectors  Beneficiaries  Loan Amount 

Livestock Sector  53%  53%    Goat/Sheep 

Rearing  19%  17% 

   Beef fattening  15%  19%    Duck & Hen 

rearing  12%  9% 

Small Business Sector  19%  20% 

   Small Trades  12%  11% 

   Grocery shop  3%  5% 

Transport Sector  12%  11% 

   Van & Rickshaw  11%  10% 

Agriculture trade sector  12%  9%    Rice 

Husking/Trading  5%  3% 

   Vegetable shop  3%  3% 

Farming Sector  4%  5% 

   Share Cropper  3%  3% 

   Rice cultivation  1%  2% 

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alone accounted for more than half of the beneficiaries and the loan amount disbursed. SIPP-II projected beneficiaries are 180610 and their choice of livelihood investment portfolio for allocating Tk 1750 M is expected to be similar to that of SIPP-I beneficiaries as outlined in T-1. b. Community led Livelihood sustainability benefits: Project interventions are designed with community taking the centre stage of the livelihood development process, aided by pro-poor dominated village institutions and decision making bodies. Community led more inclusive growth as witnessed in SIPP-I gets translated into the following impacts; (a) 1500 VCOs operate within the 5 percent PAR (30 days) limit of international best practice for Microfinance Institutions, (b) beneficiaries with on time loan repayment discipline maintained at more than 95 percent level and (c) more inclusive and better targeting of livelihood benefits with 63 percent of both the beneficiaries and the loan amount disbursed covering the hard core poor households. Given the spatial expansion of the coverage (13 districts) during SIPP-II, sustainability of VDRRF operations proposed in the project can be conservatively taken at 75 percent based on the SIPP-I experiences. Such livelihood investment interventions without strong community led institutions would; (i) restrict the inclusion of hard core poor, and (ii) limit the cash flow with low probability (33 percent) of livelihood activities being continued beyond first cycle. This difference is captured and attributed to the community led management of VDRRF. 4. Community Infrastructure Benefits: The community infrastructure works (CIW) portfolio of SIPP-I as decided and executed by the community is dominated by rural earthen roads. 74 percent of the CIWs, 76 percent of the CIW investment costs and 84 percent of the beneficiaries are accounted by earthen roads. Cost efficiency analysis is done. Sample analysis of 10 percent of the CIW works covering 240 beneficiaries in 43 villages revealed that SIPP-I roads are better compacted and more durable with least periodic and annual maintenance costs29. As compared to other public funded similar roads, in SIPP-I under community management, construction cost of road per km is less by 27 percent; annual maintenance cost is less by 20 percent; periodic maintenance cost is less by 33 percent; and economic life is 33 percent more. Overall, on annual basis, community led construction and maintenance of infrastructure works will cost 26 percent less30. Under SIPP-II, CIW expenditure is about Tk 1750 M. Hence, cost efficiency due to community management will save about Tk 450 M. Besides this, maintenance cost savings will be about Tk 115 M per year and more importantly, community will contribute to maintain the SIPP-II roads constructed by them. More than 80 percent of the SIPP-I villages have established O&M plan and funds and started implementing it. Annual O&M expenditure of Tk 425 M will be saved for the government due to community management of CIW works in SIPP-II villages. 5. Vulnerability Reduction Benefits: In SIPP-II, about 42 percent of the Upazillas are projected to have 20 percent and above area vulnerable to cyclone/drought/flood related natural shocks. These Upazillas are also having about 40 percent of the HHs as HCP, with poor connectivity to hospitals and urban centers. Based on this, 42 percent of the projected beneficiaries will be experiencing natural shocks with significant adverse impacts in alternate years. Hence, they will need livelihood assistance for at least six production cycles to reach the level of self sustaining poverty alleviation impacts. Without vulnerability reduction interventions in the project areas, 40 percent of the HHs which are HCP will not be able to cope up with natural shocks and continue to live in abject poverty due to their inability to sustain the livelihood activity cycles. The remaining 60 percent HHs will take at least six production cycles before being able to expand the unit size. While with vulnerability reduction interventions, all the 42 percent of the HHs will be able to reduce the effects of natural shocks but will still take at least six livelihood assistance activity cycles to make it viable and sustainable for poverty alleviation. Accordingly, cash flow is developed separately for 42 percent of the projected beneficiaries susceptible to

29 Impact Evaluation of Community Infrastructure Works, UCIL-PAL-DPC 2nd Draft Report, 2009 30 Estimated from data collected by SDF units in Gainabndha and Jamalpur districts. Data source is from LGED district units.  

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natural shocks for with and without vulnerability reduction assistance. Here also, while projecting project level benefits, sustainability is limited to 75 percent of the vulnerable HHs benefited by the project interventions. 6. Community led Management Benefits: a. Better governance: Community led participatory, inclusive and transparent decision making led to effective delivery of the funds for community infrastructure and village development. Dominant role for the community in managing their funds had two impacts. One, efficient delivery of funds and two, cost-effective management of the funds. About 85 percent of project funds in SIPP-I are disbursed directly to the community and managed by village institutions. SIPP-I had positioned 13706 JGs, 2285 SSCs, 943 VCOs, and 943 GSs for managing the community funds under the project. 37640 office bearers selected by the community are managing the functioning of these village institutions. These funds are managed and operated by village institutions with least overhead and other transaction costs leading to recurrent savings in annual operating costs due to community led fund management. Based on SIPP-I experiences, 95 percent of the funds can be taken as delivered/utilized for the intended purpose. SIPP-II has USD 100 M allocated for community-led management. b. Efficient delivery and use of funds: Evidences in the country show that public funds targeting rural development, end up losing on an average about 30 to 40 percent as leakage before reaching the intended use, which increases the cost and reduces the cost-effectiveness of targeted programmes31. Under food for work programme, WGFTI estimated that the FFW program delivered one taka (Tk) of income to a participating household at a cost of Tk 1.8 to Tk 2.4. Several targeted public programmes for the poor in Bangladesh have to be terminated due to high leakages and transaction costs32. Under Rural Rationing Program in the past, the government had to spend Tk 6.55 to transfer Tk 1.00 to an eligible household. Hence, even conservatively considering 20 percent leakage level for rural development programmes, it is estimated that savings due to efficient delivery of funds by community-led institutions during SIPP-II will be at least USD 25 M. c. Efficient targeting of Beneficiaries: Targeted HCP, poor and youth are identified by the village institutions and deserving poor are selected for project interventions through transparent decision making process in SIPP-I. Of the total 179220 JG members, 51 percent are HCP and 49 percent are Poor. Of the 13706 JGs formed, 48 percent are for HCP, 42 percent for poor and 10 percent for youth. In the disbursement of livelihood loan assistance by 943 VCOs, 63 percent of the beneficiaries and the loan amount disbursed went to HCP and 36 percent to poor33. Thus, community led selection process resulted in better targeting of the poor. Most deserving HCP HHs is well targeted in the project coverage. This is compared with Social safety net programmes for the poor in Bangladesh, which accounts for 1.5 percent of the GDP and 10.5 percent of the annual public expenditure during 2006/0834. HEIS 2005 finds spatial targeting of SSNP is not effective. In regions with high poverty incidence, in terms of percentage of population below the poverty line, percentage of SSNP recipients household is less than the regions with lower poverty rate. Among the SSNP recipients only 72 percent HHs are considered poor, leaving out 28 percent of the more deserving section of the society. Various estimates for ineffective targeting of beneficiaries ranged from 27 to 47 percent for various rural poor targeted programmes. 31 Source: Government and Rural Transformation: Role of Public Spending and Policies in Bangladesh, Mohinder S. Mudahar and Raisuddin Ahmed, The University Press Limited, 2010. 32 WGTFI (Working Group of Targeted Food Interventions). 1993 Options for targeting food interventions in Bangladesh. International Food Policy Research Institute, Dhaka.; and Ahmed, A. U. Operational performance of the rural rationing program in Bangladesh. Working Papers on Bangladesh 5. Washington, D. C: International Food Policy Research Institute. 33 Monitoring of Key Milestones of SIPP, District wise Performance Reports for Gaibandha and Jamalpur, March 2010. 34 Same as reference under end note 6 as above. The data is based on budget allocation.

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7. Database: The analysis is based on a sample of 90 livelihood support activities taken up by 26 village communities spread over 17 clusters in two districts of the project. Sample livelihood activities covered 10 types of livelihood investments (goat rearing, beef fattening, hen/duck rearing, fruit/vegetable selling, dairy cow, paddy husking, small trade, share cropping, rice cropping and rickshaw van). Data on sub project impacts was collected through focus group discussions organized for each sub project type in the village communities visited during 2009/10. The database covered the above major livelihood activities categorized in to five sectors for which VCO loans are availed by the beneficiaries for improving their livelihood income. They are; Livestock sector-goat/sheep rearing, beef fattening and duck/hen rearing; Small business sector-small trades and grocery shops; Transport sector-rickshaw and van; Agriculture trade sector-rice husking/trading and vegetable shop; Farming sector-share cropping and rice cultivation. These livelihood activities are expected to cover more than 70 percent of the livelihood portfolio of the beneficiaries. 8. Methodology: The project’s cost-benefit analysis is conducted for the ten major livelihood activities and then aggregated by five major sectors and then for the entire project. Project costs and benefits are estimated at 2009 prices over a period of 15 years with 12 percent as the opportunity cost of capital. For the analysis of the project as a whole, total project costs (including project management, etc.) were included. While analyzing the impact of sample livelihood activities, monthly repayment schedule with ten equal installments covering both the principal amount and service charge is considered35. With and without project assumptions are guided by the data collected under the current program. Other expected benefits relating to multiplier effects of the access to VDRRF by the village communities and other positive impacts of strengthened and empowered village institutions have not been quantified and to this extent the analysis understates the expected returns to the proposed community empowerment and livelihood development investments. 9. Economic Analysis: The economic rate of return is estimated to be 25.3 percent for the entire project. Table T-2 shows how the aggregate project returns build up from various sources of benefits. The livelihood development investments alone produces an ERR of 12.6 percent, which improves to 17 percent when benefits from community led sustainability benefits of livelihood activities are captured. Adding benefits due to vulnerability reduction enhanced the ERR to 19.5 percent, which further improved to 21.2 percent with the inclusion of saved costs due to community led infrastructure investments. Finally CDD led management resulted in efficient delivery of funds with least leakages, when included in the investment analysis, ERR reached 25.3 percent for the project as a whole. For spreading the benefits to cover more beneficiaries with better targeting; sustaining the livelihood activities once initiated, for subsequent production cycles; and increasing the unit size with the accumulated savings and working capital, strong community led village institutions are needed which will enhance both the private as well as societal benefits to the proposed project investments. The project is expected to yield net present value of Tk 2.9 Billion in 2009 prices over a 15-year period.

35 Loan repayment period for principal and service charges vary from 10 to 11 months and installment period varying from weekly, fortnightly and monthly. But, in more than half of the 26 villages visited, the loan amount with service charge is to be repaid monthly, within ten months.

Table 2:  Project Investment Analysis Summary (2009 prices, Tk Billion) 

Sources of project benefits 

ERR (%) 

NPV‐15 yr 

FRR (%) 

NPV‐15 yr 

Livelihood activities  12.6%  0.1   10.5%  (0.4) 

Plus CDD led sustainability  17.0%  1.2   16.1%  1.3  Plus Vulnerability 

reduction  19.5%  1.8   18.1%  2.0  Plus Community 

infrastructure  21.2%  2.2   19.7%  2.4  

Plus CDD led management  25.3%  2.9   23.8%  3.4  

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10. Sensitivity analysis: Sensitivity tests were conducted by considering alternative scenarios for critical variables such as escalation in project costs, institutional failures resulting in reduced returns to livelihood investment benefits and implementation delays leading to delayed realization of projected benefits (T-3). Even when annual incremental benefits generated by various sources have been reduced by 20 percent, the project ERR reduced (17.7 percent) but remained above the opportunity cost of capital. This implies that the project is capable of absorbing substantial negative impacts. On the cost side, inflating project costs to 120 percent of the base costs brought down the ERR to 18 percent. 11. Sustainability of livelihood activity cycles and covering more targeted HHs with livelihood loan coverage are critically dependent on the effective functioning of community institutions. This is underlined by the fact, that limiting the sustainability of livelihood activity production cycles beyond project period to only 50 percent due to institutional limitations, has substantially brought down the ERR to 19.7 percent and NPV came down by 59 percent. Delayed implementation, captured through the delayed realization of benefits, reduced the rate of return to 14.4 percent. Switching value analysis indicated that either 49 percent escalation in project investment costs or 33 percent fall in the project benefits is required to bring down the ERR to 12 percent. To sum-up, the rate of return is more sensitive to variations in benefits than costs, and the overall expected return for various sensitivity tests seems robustly above the opportunity cost of capital of 12 percent. Timely implementation of the project interventions and building up strong community led village level institutions to effectively manage the VDRRF and other village institutions will ensure maximum private and societal returns to the scarce project resources invested.

Table 3:  Summary of Sensitivity analysis results  

Scenarios for the project  ERR (%)  NPV‐15 yr, 2009 prices, Tk Billion 

FRR (%)  NPV‐15 yr, 2009 prices, Tk Billion 

Base Level  25.3%  2.9  23.8%  3.4 

Escalation in costs 

Costs at 120% of the base level  19.0%  1.7  18.4%  2.1 

Risks in livelihood investment returns  

Benefits at 80% of the base level  17.7%  1.2  17.2%  1.4 

Sustainability of production cycles 

Limited to 50% beyond project period  19.7%  1.2  17.1%  1.1 

Cost escalation and risks in livelihood investment returns combined   

Costs at 115% & benefits at 85%of base level  15.1%  0.7  15.1%  0.9 

Delayed implementation  

Benefit lagged by two years  14.4%  0.5  14.9%  0.9 

Switching values for costs and benefits independently 

Escalation in costs by 52%         12.0%  0.01  

Fall in Benefits by 34%   12.1%  0.02  

Escalation in costs by 49%   12.1%  0.02  

     Fall in Benefits by 33%   12.0%  (0.01) 

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12. Risk Analysis estimated the effects of uncertainty on the projected outcomes of the project investments and determined the confidence limit for realizing the expected economic benefits. Monte Carlo simulation model is used to analyze the distribution of incremental benefits and costs by modeling the likely distribution for each of the identified critical risk variables. Sensitivity analysis indicated varying sensitivity levels for the project’s rate of return to cost escalation, fall in benefits due to institutional failures and implementation delays. To assess the risk scenario, 25 percent increase in costs and 25 percent decrease in benefits on the relevant risk variables are considered and Monte Carlo simulation was done (1000 runs) to capture their combined effects on the projected results (T-4). The simulated ERRs ranged from 11.2 to 22.3 percent with a coefficient of variation of 11 percent. Expected ERR, estimated by the risk model at 16.7 percent is considered reasonably stable, since the probability of ERR exceeding 14 percent level is predicted to be 93 percent by the risk model (Fig.1).

13. Financial Analysis: At full project development, annual incremental financial benefits are projected at Tk. 9.2 Billion, contributed by livestock sector (62 percent), small business sector (16 percent), transport sector (11 percent), agriculture trade (8 percent) and farming sector (3 percent). The estimated FRR for the project is 23.8 percent with NPV of Tk 3.4 Billion at 2009 prices over a project cycle of 15 years (T-2). The main difference between the project FRR and the ERR is due largely to the difference between the financial and economic costs of the project as well as the prices of the inputs. For example, for the shadow wage rate36 factor of 0.75 is used for the economic analysis and for the other non-traded inputs, SCF of 0.9 was used. In addition to this, financial returns are estimated for the major livelihood activities likely to be taken up by the project beneficiaries. 14. Livelihood Investment Benefits: Annual financial gross margins from major livelihood investments for the SIPP-I beneficiary HHs for three production cycles is given in T-5. Cycle-1 is based on actual data, Cycle-2 is based on both realized as well as projected data and Cycle-3 is based on the projected data. Average livelihood investments varied from Tk 3100 to 9780 (2009 prices) for various

36 Source: (i) DFID Final report on the value of time in Least Developed Countries, Knowledge and Research (KaR) 2000/01 DFID Research No. R7785,  July 2002 and  (ii) Transport Notes on  the Economic Evaluation of Transport Projects, The World Bank, Washington DC Transport Note No. TRN‐15 January 2005   

Fig.1  SIPP‐I I  C

0%

20%

40%

60%

80%

100%

10.0% 12.0% 14.0%

probability

Table 4:  Risk analysis summary  

Risk analysis  ERR  NPV (Tk M) 

Expected value  16.7%  1,068 

Standard deviation  1.9%  417 

Minimum  11.2%  (175) 

Maximum  22.3%  2344 

Coefficient of variation  0.11  0.39 

Probability of negative outcome  0.0%  0.2% 

Table 5: Annual Incremental Gross margin (Tk/HH) 

Livelihood Sectors  Cycle‐1  Cycle‐2  Cycle‐3 

Livestock Sector  4650  13440  27330 Goat/Sheep 

Rearing  3400  16680  33360 

Beef fattening  5870  12360  26120 Duck & Hen 

rearing  5100  9590  19190 

Small Business Sector  3870  9020  18030 

Small Trades  3540  9110  18210 

Grocery shop  5070  8690  17380 

Transport Sector  4280  10720  10720 

Van & Rickshaw  4280  10720  10720 

Agriculture trade sector  5020  7100  14210 Rice 

Husking/Trading  5850  5850  11690 

Vegetable shop  3600  9260  18520 

Farming Sector  5000  5000  7160 

Share Cropper  4470  4470  4470 

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activities. Monthly repayment schedule is taken as ten equal installments covering both the principal amount and service charge since in most of the sample VCOs, the loan amount with service charge is to be repaid within ten months. Following the original project experience, about 70 percent of the JG members would get covered by the livelihood loans by the end-project. To factor in the likelihood of institutional failures in managing the VDRRF, It is further assumed that the sustainability of livelihood activity cycles beyond the project implementation period will happen in at least 75 percent of the benefited families. Hence, only about half of the JG members are accounted as livelihood loan beneficiaries for quantifying the benefits. Out of these projected beneficiary families, about 42 percent of them are living in areas vulnerable to natural shocks from floods/cyclones/droughts. In normal areas, the project beneficiaries would take at least 2 to 3 production cycles before accumulating enough savings and working capital to expand the unit size. Income elasticity of demand for food in rural Bangladesh is 0.73 for extreme and HCP37. Hence, most of the income earned during the first cycle of livelihood activity will be diverted for food consumption. This necessitates that livelihood loan assistance should be available for at least three production cycles for most of the poor HHs. Average incremental benefits realized across diverse livelihood activities is Tk 4520 per beneficiary during the first cycle, which increases to Tk 11160 during second cycle and further to Tk 21120 during third cycle. This is mainly driven by livestock activities whose annual incremental benefit includes the value of stock also. 15. Poverty Alleviation Impacts: Average annual income of hard core poor (HCP) and poor HHs at 2009 prices in the project districts is estimated at Tk 15830 and 19700 respectively38. Average number of members per family in rural poor HHs is five39. Monthly per capita income level for lower poverty line is Tk 890 and upper poverty line is Tk 103540. At current levels of income, HCP family can support just one person to be above upper poverty line and poor HH can at best support two persons to be above lower poverty line. In the project area, there are 300,000 HHs out of which it is estimated that by end-project, about 180610 HHs will be benefited by the livelihood loans. 63 percent of them are HCP and rest 37 percent are poor HHs. Average annual HH income for these beneficiaries will improve by Tk 21120 by end-project, which has the potential of alleviating the poverty in the benefited HHs by about 34 percent, who will be able to meet their basic food and non-food needs by the end of third cycle/project onwards. 16. At national level, average annual public expenditure during 2002-05 for SSNP was Tk 30500 M in 2009 prices. SSNP impact on poverty in 2005 is estimated at 215,000 people. Based on this, per capita public expenditure to alleviate poverty is Tk 0.14 M in 2009 prices. Per capita allocation for SSNP targeted beneficiaries in FY 2008 is Tk 15090 at 2009 prices41. Rate of poverty reduction is considered to

37 HIES 2005 Detailed report, Bangladesh Bureau of Statistics 38 Source: Village Matrix for 26 villages, Social Investment Program Project, Social Development Foundation. The reference year for the baseline HH income data in this matrix is 2007, which was converted to 2009 constant prices by using consumer price index (general) as the inflator. 39 Average number of members per HH varies from 4.79 to 5.0 for rural HHs in Bangladesh with a monthly income of less than Tk 1000 per capita. Source: Report of the Household Income and Expenditure Survey 2005, Bangladesh Bureau of Statistics, Planning Division, Ministry of Planning, Government of the People’s Republic of Bangladesh, May 2007 40 Source: Preliminary Report on Household Income and Expenditure Survey-2005, Bangladesh Bureau of Statistics, Planning Division, Ministry of Planning, Government of the People’s Republic of Bangladesh, September, 2006. HIES estimated lower and upper poverty line income/expenditure levels are at 2005 prices, which was converted to 2009 constant prices by using the consumer price index (general) as the inflator. We have used the data for Dhaka rural and Rajshahi rural divisions in which the project districts fall. 41 CPD Dialogue on State of the Bangladesh Economy and Budget Responses 2008, An Analysis of the National Budget for FY2007-08 Prepared under the programme Independent Review of Bangladesh’s Development, Centre for Policy Dialogue, June, 2007.

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be not commensurate with the funds spent under SSNP42. Compared to this, community led poverty alleviation initiative under the proposed project is cost effective as seen from the following: Under the proposed project, per capita allocation is only Tk 5880 for the targeted beneficiary population, 61 percent less than the SSNP allocation. Per capita expenditure for poverty alleviation is Tk 0.02 M, which is 1/7th of the per capita expenditure spent under SSNP. Consequently, about 324,670 SIPP-II beneficiaries are projected to come out of poverty trap permanently by the end-project at a total project cost of about Tk 8695 M. More importantly, the proposed project impact on poverty alleviation is sustainable over time since it is built on sustainable livelihood improvement; per capita expenditure is not expenditure but a revolving investment fund to be recycled with much higher impact on poverty alleviation than estimated here; while SSNP expenditure is predominantly recurring in nature. Employment Generation Impacts: 17. Unemployed Youth Skill Development: Labor is the main asset and the income source of the poor and HCP HHs in Bangladesh. For reducing poverty, increasing the returns to labor in both agriculture and non-agricultural activities is necessary. This necessitates improving the skill development, access to credit and technology and basic infrastructure services in rural areas. The original project provided revolving funds for skill development training for unemployed youth to be managed by the project village GS. Unemployed youth database is created covering 820 project villages. Total unemployed youth in project villages is 17286, out of which 60 percent are HCP and rest from poor HHs. Youth unemployment rate is 6.3 percent and about half of the unemployed youth are women. Training need assessment was done for all unemployed youth, based on which the GS provided a loan of Tk 6.3 M at 2009 prices and organized the skill development training for 2650 persons, out of which 1793 are employed as of now. The employment covers self-employed as well as regular paid employee in formal as well as informal sectors. The employed youth earn average monthly income of Tk 2500 to 7000 across diverse jobs43. They have started repaying the skill development loan to the village community which can be utilized for training more unemployed youth. Until now, about 10 percent of the unemployed youth has found jobs through skill development trainings in existing project villages. Youth unemployment rate came down from 6.3 percent to 5.6 percent in the existing project villages, which was achieved at an average training expenditure of Tk 3500 per employed youth, which is cost effective as compared to other public spending programs in the country. 18. In Bangladesh, 2.1 M persons are unemployed as of now. Among them, unemployed youth account for 1.2 M. Annual growth in labour force is 1.5 M, out of which 1/3rd is youth. While the unemployment rate for the labor force as a whole is 4.2 percent, the youth unemployment rate is 6.3 percent. Public spending to provide social safety net targets creation of employment opportunities for the poor. For instance, during 2009/10, cost of generating youth employment for 20000 HSC graduates through technical and vocational training is estimated at about 0.8 M per person44. 100-day employment generation program has an annual budget of Tk 20 billion to provide employment for 2 million persons45. With CDD strategy, at less than one-third of this budget, entire 1.2 M unemployed youth can be gainfully employed. Thus, in comparison, CDD strategy under the existing project helped in using the scarce

42 Macroeconomic Implications of Social Safety Nets in the Context of Bangladesh, Centre for Policy Dialogue Occasional Paper Series 75 by Md. Ashiq Iqbal, Towfiqul Islam Khan and Tazeen Tahsina, Nov.2008. The data is based on budget allocation.  43 Quarterly Reports for the Reporting Period January to March 2010, SIPP Jamalpur and Gaibandha Districts, SDF and Project database 44 Recent Employment Situation and Labour Market Developments in Bangladesh, Policy Paper 0807, Policy Analysis Unit, Bangladesh Bank, June 2008. 45 State of the Bangladesh Economy in FY2008‐09, (IRBD 2008-09: Third Reading), Independent Review of Bangladesh’s Development (IRBD), Centre for Policy Dialogue (CPD), 6 June 2009.  

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capital most efficiently in creating rural jobs for the unemployed youth. More importantly, since the skill development funds available with the community is recovered with six months as grace period, these funds can be recycled for generating more jobs. 19. Based on the unemployed youth database set up under the existing project, 75,000 unemployed youth may be projected in the 1500 new project villages. The proposed project plans to further develop the unemployed youth database to cover all project villages and link it to the employment exchange besides providing skill development to benefit at least 75 percent of the targeted youth. By end-project, at least 50,000 unemployed youth will have employment/self-employment. 20. Livelihood Development: The proposed project area has 1500 villages with a population of 1.5 million. About 5 percent of the labour force is unemployed and 29 percent of the labour force is underemployed in the project villages. 180,370 persons are either unemployed or underemployed in the project, accounting for 34 percent of the labour force in the project area. Underemployment rate is very high in female labour (58 percent) as compared to male labour (8 percent). The project, through revolving fund, operated by VCOs, provide livelihood assistance loans to the poor and HCP HHs. Averaged over three production cycles, livelihood activities started by about 180,610 beneficiaries will generate self-employment equivalent to 38,930 jobs annually. While 22 percent of the jobs are benefiting unemployed persons, 78 percent of the jobs are going for the underemployed persons. With additional self employment opportunities created through livelihood activities, unemployment and underemployment rate will come down from 34 percent to 27 percent during the project period. This impact is noteworthy when compared with the fact that at national level, rural unemployment and underemployment rate has gone up from 22 percent in 2000 to 31 percent in 200646. And more importantly, this significant reduction in unemployment and under employment is achieved in original project villages by providing only revolving funds to the village community organizations, which will continue to grow in size and be available for repeated recycling to generate more and more jobs annually.     

46 Recent Employment Situation and Labour Market Developments in Bangladesh, Policy Paper 0807, Policy Analysis Unit, Bangladesh Bank, June 2008; Report on Labour force survey, 2002/03, Bangladesh Bureau of Statistics, 2004 and Report on Social safety Net Programmes, 2007, Bangladesh Bureau of Statistics.  

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Annex 11: Safeguard Policy Issues

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Introduction 1. The activities identified under the project are mainly livelihood assistance and income generating activities, institutional development, community-level infrastructure for village development and risk reduction and climate risk management and adaptation. The environmental impacts from majority of the sub-projects in the project are likely to be minor. The proposed project may finance construction of some rural infrastructure like multipurpose cyclone shelter, embankment etc., which may have environmental ramifications. Considering the nature and magnitude of potential environmental impacts from relatively limited scale and magnitude of community level infrastructure development, the proposed project is classified as category ‘B’. Environmental and Social Assessment and Management 2. The subproject triggers one safeguard policy ‘Environmental Assessment (OP/BP 4.01)’, which will be addressed through an agreed Environmental Management Plan. The objective of Environmental and Social Management Framework (ESMF) prepared by SDF is to ensure that environmental and social considerations and associated legal compliance requirements are efficiently and appropriately addressed during all stages of the project. It provides general policies, guidelines, codes of practice and procedures to be integrated into the implementation of the project. The environmental impacts expected from this project are: (i) localized pollution or environmental degradation; (ii) loss of biodiversity; (iii) top soil degradation and erosion; (iv) drainage congestion; (v) decline in water quality; (vi) inappropriate waste disposal; (vii) cutting and/or trimming of trees; (viii) temporary sound and air pollution; and (ix) potential public health concerns. 3. The ESMF details the environmental and social screening criteria and mechanisms to be used during sub-project appraisal. This screening tool will include activity specific checklist designed to identify any potential social and environmental negative impacts linked to an individual sub-project and ensure that an appropriate Environmental Management Plan is prepared and appropriate mitigating measures are put in place, if necessary. Environmental Screening

4. Environmental screening/assessment and related management measures will be integral part of the sub-project planning and implementation. Since the physical intervention and detail design of the infrastructure is not known at this stage and may not be known at appraisal, environmental screening will be carried out during project implementation prior to approval for any sub-project. The purpose of the environmental screening is to get relevant concerns addressed early on before further design of a project and to ensure that actions to mitigate environmental impacts or enhance environmental opportunities are budgeted for. The environmental screening is about taking stock in time and to avoid losing later opportunities. IEE is the descriptive approach of the screening format. If no major issue is identified in the IEE, Environmental Management Plan (EMP) will be prepared. If IEE indicates that there are significant environmental impacts from the small-scale sub-projects, the implementing agency will conduct the EIA and the EMP will be prepared after the EIA.

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Guidelines for preparation of Environmental Management Plan

5. The primary objective of the environmental management is to record environmental impacts resulting from the sub-project activities and to ensure implementation of the ‘mitigation measures’ identified earlier in order to reduce adverse impacts and enhance positive impacts from specific sub-project activities. Having identified the potential impacts of the relevant sub-project through screening, the next step is the identification and development of measures aimed at eliminating, offsetting and/or reducing impacts to levels that are environmentally acceptable during implementation and operation of the project through the preparation and implementation of an Environmental Management Plan (EMP). EMP provides an essential link between the impacts predicted and mitigation measures specified. The entities implementing sub-projects will prepare EMP according to the guideline provided in the ESMF. In addition, a monitoring plan will be prepared. Environmental Review and Clearance

6. The reviews of environmental assessments (EAs) are essential to assess the adequacy of the EA for decision making on project proposals and to ensure that its conclusions and implications are taken forward into the implementation stage. The environmental screening and IEE reports will be reviewed internally at different levels (cluster, district, regional and national) at SDF depending on the nature of the subproject. SDF will send the EIA report to the Department of Environment (DoE) for the subprojects having significant environmental impacts following the standard procedure outlined in Environmental Conservation Rules (ECR), 1997. Monitoring of Safeguard Framework Implementation

7. The Orange B (other than earthen roads) and Red category sub-projects will require IDA’s clearance before implementation. SDF will send the IEE/EIA report along with EMP of the subprojects to IDA after SDF’s internal review. In addition, IDA will review screening/IEE report for Green, Orange A and Orange B (only earthen road) category sub-projects on sample basis to ensure the quality. 8. SDF will maintain a database for environmental capacity building of staff and sub-project specific environmental screening/assessment, EMP and implementation monitoring of EMP. The project M&E system will capture that information as well. An independent (third party) environment audit will be carried out annually to assess and evaluate the quality of environmental compliance of the construction related subprojects. This will be part of the third party independent verification and compliance check of the project. 9. The SDF will be responsible for preparing an Operational Manual which will elaborate the process to identify and address safeguard issues in sub-projects. This may include: (a) Systems and procedures to identify and address safeguard impacts of sub-projects; (b) Capacity building measures required; and (c) a monitoring system. The OM may also include a negative list of activities that the CDD will not fund, as well as a list of goods and services the CDD will not procure. Capacity-Building

10. The SDF Head Office Environment Climate Change and Risk Reduction (ECCRR) Specialist under the Deputy Managing Director will be responsible for environmental compliance in relevant subproject activities. The SDF Head Office Inclusion & Institution Building Specialist will be responsible for social safeguard compliance in relevant project activities. SDF shall have one Environment Climate Change and Risk Reduction (ECCRR) Specialist at Regional Level and one Environment, Climate

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Change and Risk Reduction (ECCRR) officer at district level as per new HR structure. The Cluster Team Leader or other another staff will be assigned as the environmental focal point at the cluster level. The project will support the capacity building of the SDF staffs and the community groups on environmental management, climate change adaptation and disaster risk reduction. The environment Climate Change and Risk Reduction (ECCRR) specialist at SDF Head Office will be key focal person for preparing a six-monthly training plan and organizing training for the staffs. The district level officer will prepare six monthly training plans in consultation with the cluster team leader, which will be reviewed and monitored by the regional environmental specialist. Social Safeguards

11. On the social side, impacts are expected to be positive, owing to the overall inclusion and empowerment objectives of the proposed project. With specific regard to social safeguards, the proposed project will not involve involuntary resettlement. Subprojects, where involuntary resettlement is likely to occur would be disallowed. Based on positive experience from the current program, OP 4.12 on involuntary resettlement will not be triggered. There would be no involuntary land acquisition; and the project shall be implemented as far as reasonably practicable on publicly owned land, using exclusively land free from squatters, encroachments and other encumbrances; any acquisition of private land, if needed, would be through outright purchase at market rates or voluntary donation and in accordance with guidelines and procedures set forth in the PIP and Community Operational Manual. This will be verified and certified during subproject appraisal.

12. Indigenous People (OP 4.10): While the tribal population is insignificant in the districts where the current project is operating, a Tribal Development Plan was nonetheless prepared for the first SIPP operation. It has been reviewed and slightly modified to reflect the increased geographic scope of the proposed project. While this OP has not been triggered, it is possible that the project may occasionally come across a group of tribals during the implementation. The EMSF would therefore contain a check list for ensuring culturally nature and vulnerability focus of the project, there is already an inclusive process framework for addressing the concerns of all vulnerable groups through participation and informed consent. Appropriate and informed consent/choice for tribal families in such rare cases. In any case, given the CDD

Consultation and Disclosure

13. The ESMF has been prepared in consultation with the SDF field level staffs, community groups and local NGOs. The ESMF was disclosed in the client’s website on April 17, 2010 for comments; and was made available at the World Bank’s InfoShop in May 2010. In addition, the ESMF was disclosed in Bangla by the SDF in May, 2010 and copies of both English and Bangla version are available in SDF Head Office and Regional offices and in the InfoShop. Relevant subproject specific safeguard documents/mitigation plans (EMPs) prepared subsequently will also be disclosed to the public. The ESMF will be submitted to the Department of Environment (DOE) for their clearance.

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Annex 12: Youth and Gender Strategy

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project A. Youth

1. Youth represent one third of the total population of Bangladesh and, if properly nurtured, will be an asset to stimulate social and economic development. Under the country’s National Youth Policy (2003), all those citizens aged 18-35 are considered as ‘youth’, and they are recognized in the policy as the most energetic and productive segment of the total population in Bangladesh. The Department of Youth Development (DYD) under the Ministry of Youth and Sports has been given the responsibility of transforming the disorganized and unproductive youth into an organized, disciplined and productive workforce.

2. Under the original project, youth were also recognized by SDF as an important potential source of leadership, drive and innovation at the village level. The project made efforts to ensure inclusion of young people in community institutions and as participants and beneficiaries of project funds and processes. The proposed project will continue to include an explicit focus on youth inclusion in order to try to harness the many young people in rural areas as assets in the capacity building and management of community-run institutions and as productive sources of labor, quality goods and services. Through youth participation and involvement, the proposed project’s objective is to increase their employment and income opportunities and, by mainstreaming their participation and encouraging their leadership, will try and address the common disregard for young people as a neglected, yet significant, portion of the population.

3. Typical challenges facing rural youth in Bangladesh are:

(a) Poverty and lack of employment opportunity (b) Exploitation and discrimination (c) Lack of mobility (both physical and social) (d) Gendered dimensions of vulnerability and exclusion 4. As point (d) suggests, such challenges may often be further exacerbated for young women. Girls are traditionally less likely to be educated, which further limits their chances of escaping poverty. Their physical mobility is more constrained, owing to both physical barriers, but also prevailing social norms. They typically marry and bear children at a young age, facing associated physiological risks47 and a limited role in decision-making and little voice48. Adolescent girls are therefore an under-served, under-employed and typically disempowered group within the community.

47 In Bangladesh, over 30% of 15-19 year old girls are mothers or pregnant, yet use of maternal health services is low among young women. Nearly 50% of teenage mothers in Bangladesh reported seeking no help for maternal complications.

48 In an international survey of 15 to 24 year-olds, very few young Bangladeshi women thought they had the most influence on schooling or marriage choices.

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5. On the other hand, dispossessed and under-educated male youth form part of the demographic-driven growing labor force in Bangladesh that is un- and under-employed. If investments are not made to transform these human resources into assets, there are instead great potential costs and risks to the economic and social fabric of the country in their dispossession.

6. During project preparation, workshops were held with young people in the existing and proposed project districts, in order to consult them and ask them to articulate the Youth Strategy for the proposed project. The resulting objectives of the project’s youth strategy are:

to create a skilled young force as a national asset; to enhance family income; and, to enhance social responsibilities.

7. The consultation process will continue during early implementation and, indeed, during implementation. In the project’s first phase, ‘youth’ as a category was taken as young men and unmarried young women, aged 18-35. Married young women participated only as part of the project mainstream, e.g., as regular JG group members; and were not targeted as youth for skills development or other specific benefits. This arrangement ignored many of the needs of married young women. Under the proposed project, therefore, the project will consider ‘youth’ as all those aged 18-35, regardless of marital status. During field based consultations, the project will also identify appropriate ‘stage of life’ based sub-categories, where young people may have different needs (e.g., adolescent youth of 14-18 years). At this point, in order to ensure explicit attention to young people across all project activities and funds, the Youth Empowerment Strategy and Action Plan’s key elements include:

(a) Youth Capacity Building: Institutional development and capacity building are a key part of the project approach. Under the proposed project, a cross-section of youth members (not just office bearers) would be involved in all offered trainings and capacity building (e.g., COM, FM and book-keeping, procurement). Staff – and then the GS – would facilitate parent-youth meetings and cluster level youth meetings; exposure visits; job fairs; funds and partnering for training and skills development. Capacity building tailored towards young people and job seekers would focus on ‘life skills’ as well as direct technical job skills.

(b) Mainstreaming And Increasing The Role Of Youth In Village Institutions: Inclusion and active participation of poor and vulnerable youth in the project will be a non-negotiable principle and one of the pre-conditions to accessing project funds, as detailed in the Community Operational Manual. For example, the Gram Samiti must have one youth member; youth may form exclusive Jibakayan ‘youth’ groups; young people will be nurtured as community professionals, etc;

(c) Opportunities For Youth In Economic Opportunities: Under the Livelihood Development Fund, funds are available for skill development training to assist youth in developing marketable and vocational skills, that will assist them in earning income. Youth are also entitled to 30 percent of the available loan support under the Swabalombi Fund. In addition, one of the main focal areas for the project will be youth employment, with preparation of a village-wise unemployed youth database; initiation of job forums/fairs at the district with potential employers and training partners; productive partnerships with both governmental and private sector partners for recruitment and placement of young people, etc. Under the project, such partnerships have already been initiated with Grameen Phone, G4Security, the garment sector and DYD’s training and access-to-credit initiatives.

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(d) Targeting Poor Youth: Unemployed youth in project districts will be supported to form youth groups, who meet weekly and discuss both common issues and potential avenues to expand opportunities and be useful to the community. Specific funds will be set aside for those poorest young people without education or skills, with specific strategies identified (e.g., vocational training and job linkages; skill upgradation and new technologies for agricultural laborers, etc.)

(e) Youth as Social Change Agents: Given their dynamism and energy, youth are valuable agents for social change around key issues (e.g., sanitation and health promotion; education (for children and adults, e.g., functional literacy; cultural show/skills and heritage preservation, etc); environmental protection; childcare provision for pre-school age, etc). Via their youth groups, youth would be encouraged to access resources in innovative ways (e.g., Institution Building Fund; linkages with other NGOs or local government) to support key priority ‘campaigns’, self-identified, which will contribute to important and beneficial social transformation. This gives their youth groups an additional ‘social action’ role, in additional to the savings/credit function of the regular Jibakayan Groups.

(f) Youth-Focused/Led Monitoring, Evaluation and Learning: Owing to their commitment and dynamism, youth have great potential to lead their communities in key areas. M,E and L is one such area, where a combination of youthful energy and new technologies may lead to great innovations. Youth will be trained to handle new media such as digital and video cameras and document their own and their communities’ stories. They will also be involved in more conventional monitoring modalities, such as data gathering and record keeping.

8. Key lessons learnt in implementation of the original project and other CDD/livelihoods initiatives and which will help inform implementation under the proposed project are:

Needs and aspirations for youth are different and may not always be obvious or understood by elders in the village level organizations

Youth must be involved from the outset (e.g. social mobilization stage) to stimulate interest, raise awareness across the community about youth contribution and role, and engender support for their participation and leadership

Youth strive for networking and interaction with other youth

Youth need quick availability of funds to implement their action plans, or enthusiasm is lost

Youth need jobs, and better preparedness/employability though appropriate skills development (both technical and life skills) to join the labour market; and stronger linkages between trainings and available job opportunities

Youth are a mobile and dynamic group and project-supported institutions for their participation must recognize that and respond in a flexible manner

Youth include both men and women

Vulnerable and uneducated youth require a specific strategy and interventions to support their participation and benefits under the project.

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B. Gender

9. It has been noted elsewhere49 that in recent years, there have been far reaching social changes in Bangladesh. For example, attainments in girls’ access to education, or improvements in fertility rate. Nonetheless, paradoxes and constraints to achievement of further gains remain, as seen in marginal change in maternal mortality rates (closely associated with women’s overall status in the household), remaining low income levels, and low labor force participation for women. In the rural sector, women’s participation in rural non-agricultural work has declined and unpaid work has increased. Even if women do find work, they earn on average 65 percent of men's wages. As a community-driven livelihoods operation focused on social and economic empowerment and inclusive growth, once of the primary constituents of the project are rural women and one of the explicit goals is gender inclusion and equity – as mainstreamed into all project guidelines, activities and indicators. This is owing to both the intrinsic and instrumental value of gender equity in rural Bangladesh. Gender inclusiveness is important as a goal in and of itself, for reasons of equity, decency and human values. Gender inclusiveness has also been demonstrated to have an important influence on the quality of development outcomes: investments in women yield large social and economic returns.

10. While the project has explicitly recognized this in its overall design, it is nonetheless remains important to concisely articulate a project Gender Strategy, to ensure that women will continue to be active participants and empowered decision-makers under the program.

11. Gender goals: The proposed project aims to:

empower and increase women’s voice through their sensitization, active participation and leadership in the project;

empower women economically through improved livelihoods opportunities, including access to finance, increased income and employment options ;

build women’s capacities in technical, vocational and life skills;

promote village level initiatives for social and community inclusion and betterment.

12. A number of key operational mechanisms are designed to mainstream and assure attention to women’s participation and improved gender outcomes. As for the youth strategy, key elements include:

(a) Women’s Capacity Building: Institutional development and capacity building are a key part of the project approach. Under the proposed project, as key members and leaders of village level institutions, women will be targeted in the trainings and capacity building offered (e.g., COM, FM and book-keeping, procurement). The project’s capacity building for women will aim to build women’s social capital and skills base through their mobilization into groups and investment in their functional and leadership skills, as well as their vocational and employable skills.

(b) Mainstreaming And Increasing The Role Of Women In Village Institutions: Inclusion and active participation of poor and vulnerable women in the project will be a non-negotiable principle and one of the pre-conditions to accessing project funds, as detailed in the Community Operational Manual. For example, the Gram Parishad must have a quorum of 50 percent women for decisions

49 ‘Whispers to Voices – Gender and Social Transformation in Bangladesh’, March 2007, World Bank.

106

to be taken; 3 members of the Social Audit Committee must be women and at least 2 members of the executive body the Gram Samiti, etc;

(c) Opportunities For Women In Economic Opportunities: Under the Livelihood Development Fund, funds are available for skill development training to assist youth (including young women) in developing marketable and vocational skills, that will assist them in earning income. In addition, under the revolving Swabalombi Fund, at least 70 percent of recipients must be women. Women will be targeted from the outset for mobilization into the small savings-and-credit groups.

(d) Vulnerability and Risk Analysis with a Gender Lens: The project will mainstream application of a vulnerability and risk assessment framework in all village level planning activities. Based on experience in the existing flood and cyclone, it will be critical for a gender lens to be used in such assessment efforts to ensure that resulting interventions are practical and sensitive to the needs of rural women. During participatory workshops, a community-owned manual has been prepared which flags key gender-related issues in vulnerability and risk assessment and potential responses that will ensure adaptation and risk preparedness actions that factor in the socio-cultural norms in rural Bangladesh, e.g., constraints on women’s mobility, and restrictions on sharing of public/communal facilities and spaces reflected in flood shelter designs. Having women in key leadership positions and with facilitators sensitized to gender equity issues will ensure application of such tools.

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Annex 13: Project Preparation and Supervision

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Project Process Schedule Planned Actual PCN review 01/15/2008 01/15/08Initial PID to PIC 04/10/2008 04/09/08Initial ISDS to PIC 04/10/2008 04/13/08Appraisal 05/07/2010 04/26/2010Negotiations 05/24/2010 05/24/2010Board/RVP approval 06/24/2010 Planned date of effectiveness 09/30/2010 Planned date of mid-term review 09/30/2013 Planned closing date 06/30/2016 Key institutions responsible for preparation of the project: Social Development Foundation Ministry of Finance Bank staff and consultants who worked on the project included:

Name Title UnitMeena Munshi Sr. Economist/Task Team Leader

(TTL)SASDA

Natasha Hayward Sr. Rural Development Specialist/co-TTL

SASDA

Pushina Kunda Ng’andwe Rural Development Specialist SASDAToufiq Ahmed Procurement Specialist SARPSHenry Bagazonzya Sr. Financial Sector Specialist SASFPSuraiya Zannath Sr. Financial Management Specialist SARFMLuis O. Coirolo CDD Institutions Consultant SASDAVinaya Bhargava Governance Consultant EASERShakil Ahmed Ferdausi Environmental Specialist SASDIFarzana Morshed Operation Analyst SACBDNadia Sharmin Environment Consultant SASDSWinston Dawes Microfinance Specialist SASDAMd. Aminul Islam Khandaker Rural Development Consultant SASDAC.S. Renjit Community Institutions Consultant SASDAAbdur Rahman Khan Technical/Engineering Consultant SASDAM. Jahangir Alam Chowdhury Impact Evaluation Consultant SASDAChau-Ching Shen Senior Finance Officer CTRFCMei Wang Sr. Legal Counsel LEGESBrenda Scott Information Assistant SASDOVenkatakrishnan Ramachandran Program Assistant SASDO Amani Haque Program Assistant SACBD Bank funds expended to date on project preparation:

1. Bank resources: US$ 456,040 2. FAO: US$ 62,643

108

3. Total: US$ 518,683 Estimated Approval and Supervision costs:

1. Remaining costs to approval: $50,000 2. Estimated annual supervision cost: $250,000

109

Annex 14: Documents in the Project File

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

The following studies and assessments were carried out as part of preparation and are in the project files:

Study/Assessment

1. Project Implementation Plan (May 2010)

2. Procurement Plan 2010-15 (May 2010)

3. 1st Year Implementation Plan (May 2010)

4. Human Resources Policy and Manual (May 2010)

5. Multiplicity of Credit Use and Its Impact on SIPP Operating Area (November 2009)

6. Community Operational Manual (December 2009, updated May 2010)

7. Social Accountability Manual (May 2010)

8. Participatory Identification of the Poor Manual (August 2009)

9. Appraisal and Monitoring Manual (August 2009)

10. Impact and Sustainability of Community Infrastructure (February 2010)

11. Baseline Survey (Flood and Additional Financings – to be completed in August 2010)

12. Management Information System Upgrading (to be completed in August 2010)

13. Economic and Financial Analysis (April 2010)

110

Annex 15: Statement of Loans and Credits

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

Original Amount in US$ Millions

Difference between expected and actual

disbursements

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

P098146 2008 Public Procurement Reform Project II 0.00 23.60 0.00 0.00 0.00 23.58 0.00 0.00

P040712 2008 Water Management Improvement Project 0.00 102.26 0.00 0.00 0.00 104.64 0.00 0.00

P102305 2007 Avian Flu Preparedness 0.00 16.00 0.00 0.00 0.00 15.97 0.00 0.00

P098273 2006 Local Governance Support Project 0.00 111.50 0.00 0.00 0.00 111.54 1.24 0.00

P089382 2006 Investment Promotion Financing Facility 0.00 50.00 0.00 0.00 0.00 48.51 4.16 0.00

P074841 2005 HNP Sector Program 0.00 300.00 0.00 0.00 0.00 289.11 -9.71 0.00

P086791 2004 Reaching Out of School Children Project 0.00 0.00 0.00 0.00 0.00 37.46 4.02 0.00

P074966 2004 Primary Education Development Program II

0.00 150.00 0.00 0.00 0.00 89.78 9.49 0.00

P078707 2004 Power Sector Development TA 0.00 7.10 0.00 0.00 0.00 13.67 11.19 5.51

P086661 2004 BD - Water Supply Program Project 0.00 0.00 0.00 0.00 0.00 41.43 3.27 0.00

P081969 2004 Enterprise Growth & Bank Modernization 0.00 250.00 0.00 0.00 0.00 145.91 90.42 0.00

P083890 2004 Economic Management TA Program (EMTAP)

0.00 0.00 0.00 0.00 0.00 19.81 11.11 0.00

P081849 2003 BD: Telecommunications Technical Assist.

0.00 9.12 0.00 0.00 0.00 6.94 5.37 3.27

P071435 2003 Rural Transport Improvement Project 0.00 190.00 0.00 0.00 0.00 105.92 54.68 0.00

P062916 2003 Central Bank Strengthening Project 0.00 37.00 0.00 0.00 0.00 37.57 33.00 0.00

P053578 2003 Social Investment Program Project 0.00 18.24 0.00 0.00 0.00 12.55 2.50 -1.60

P044876 2002 Female Secondary School Assis. II 0.00 120.90 0.00 0.00 31.12 15.82 28.15 -1.31

P071794 2002 Rural Elect. Renewable Energy Dev. 0.00 190.98 0.00 0.00 0.00 63.58 20.81 -30.72

P074040 2002 Renewable Energy Development 0.00 0.00 0.00 8.20 0.00 1.49 7.95 0.00

P074731 2002 Financial Services for the Poorest 0.00 5.00 0.00 0.00 0.00 0.79 0.00 0.00

P059143 2001 Microfinance II 0.00 151.00 0.00 0.00 0.00 15.16 -9.48 -8.20

P057833 2001 Air Quality Management Project 0.00 4.71 0.00 0.00 0.91 0.98 1.32 -1.37

P050752 2001 Post-Literacy & Continuing Education 0.00 53.30 0.00 0.00 0.00 22.56 13.55 -9.45

P069933 2001 HIV/AIDS Prevention 0.00 40.00 0.00 0.00 21.98 0.73 18.30 -1.70

P044810 2001 Legal & Judicial Capacity Building 0.00 30.60 0.00 0.00 0.04 14.84 9.89 0.00

P041887 1999 Municipal Services 0.00 138.60 0.00 0.00 0.68 17.79 14.07 13.42

Total: 0.00 1,999.91 0.00 8.20 54.73 1,258.13 325.30 - 32.15

111

BANGLADESH STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed

IFC IFC

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

2001 BRAC Bank 0.00 1.63 0.00 0.00 0.00 1.60 0.00 0.00

1997 DBH 1.91 0.65 0.00 0.00 1.91 0.65 0.00 0.00

1991 Dynamic Textile 0.00 0.00 0.00 1.48 0.00 0.00 0.00 1.48

GTFP Dhaka Bank 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00

GTFP Eastern Bnk 2.59 0.00 0.00 0.00 2.59 0.00 0.00 0.00

2004 GrameenPhone Ltd 24.00 0.00 0.00 0.00 24.00 0.00 0.00 0.00

2006 GrameenPhone Ltd 59.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1998 IPDC 3.13 0.00 0.00 0.00 3.13 0.00 0.00 0.00

1998 Khulna 10.40 0.00 0.00 11.99 10.40 0.00 0.00 11.99

1998 Lafarge/Surma 35.00 10.00 0.00 0.00 35.00 10.00 0.00 0.00

2000 Lafarge/Surma 0.00 0.00 0.00 15.00 0.00 0.00 0.00 15.00

2003 RAK Ceramics 7.20 0.00 0.00 0.00 7.20 0.00 0.00 0.00

2000 United Leasing 2.57 0.00 0.00 0.00 2.57 0.00 0.00 0.00

Total portfolio: 150.80 12.28 0.00 28.47 91.80 12.25 0.00 28.47

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic.

2000 USPCL 0.00 0.00 0.00 0.00

1998 Khulna 0.00 0.00 0.00 0.00

Total pending commitment: 0.00 0.00 0.00 0.00

112

Annex 16: Country at a Glance

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

P OVER T Y and SOC IA L So uth Lo w-

B angladesh A sia inco me2007Population, mid-year (millions) 146.9 1,470 2,353GNI per capita (Atlas method, US$) 510 684 580GNI (Atlas method, US$ billions) 74.5 1,005 1,364

A verage annual gro wth, 2001-07

Population (%) 1.9 1.7 1.9Labor force (%) 2.1 2.1 2.3

M o st recent est imate ( latest year available, 2001-07)

Poverty (% of population below national poverty line) .. .. ..Urban population (% of to tal population) 26 29 31Life expectancy at birth (years) 64 63 59Infant mortality (per 1,000 live births) 54 66 80Child malnutrition (% of children under 5) 48 45 39Access to an improved water source (% of population) 74 84 75Literacy (% of population age 15+) 41 60 62Gross primary enro llment (% of school-age population) 109 110 104 M ale 107 116 110 Female 111 105 99

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

1987 1997 2006 2007

GDP (US$ billions) 23.8 42.3 61.9 67.7

Gross capital formation/GDP 16.0 20.7 24.7 24.0Exports of goods and services/GDP 5.2 12.0 19.0 22.0Gross domestic savings/GDP 9.1 15.9 20.2 20.5Gross national savings/GDP 16.1 21.6 27.7 29.1

Current account balance/GDP -4.1 -2.0 1.3 1.4Interest payments/GDP 0.8 0.4 0.4 ..Total debt/GDP 33.9 36.2 30.6 30.3Total debt service/exports 22.9 10.3 4.8 3.5Present value of debt/GDP .. .. .. ..Present value of debt/exports .. .. .. ..

1987-97 1997-07 2006 2007 2007-11(average annual growth)GDP 4.4 5.6 6.6 6.5 6.3GDP per capita 2.1 3.6 4.8 4.6 4.5Exports of goods and services 12.8 11.2 25.8 27.0 11.6

Bangladesh

Low-income group

D evelo pment diamo nd*

Life expectancy

Access to improved water source

GNIpercapita

Grossprimary

enro llment

Bangladesh

Low-income group

Eco no mic rat io s*

Trade

Indebtedness

Capital formation

Domesticsavings

ST R UC T UR E o f the EC ON OM Y

1987 1997 2006 2007(% of GDP)Agriculture 32.4 25.8 19.6 18.9Industry 20.8 25.1 27.9 28.5 M anufacturing 13.3 15.6 17.2 17.9Services 46.8 49.1 52.5 52.6

Household final consumption expenditure 86.6 80.9 76.1 77.3General gov't final consumption expenditure 4.3 4.4 5.5 5.6Imports of goods and services 12.1 18.0 25.2 28.9

1987-97 1997-07 2006 2007(average annual growth)Agriculture 2.5 3.4 4.9 3.2Industry 6.8 7.4 9.7 9.5 M anufacturing 7.0 6.9 10.8 11.2Services 3.9 5.7 6.4 6.7

Household final consumption expenditure 3.2 3.9 4.6 5.6General gov't final consumption expenditure 4.1 8.6 6.0 6.4Gross capital formation 7.1 8.4 8.3 7.2Imports of goods and services 8.3 8.0 18.2 23.6

Note: 2007 data are preliminary estimates. Group data are for 2005.

* The diamonds show four key indicators in the country (in bo ld) compared with its income-group average. If data are missing, the diamond will be incomplete.

0

5

10

15

02 03 04 05 06 07

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Gro wth o f capital and GD P (%)

-20

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Bangladesh

P R IC ES and GOVER N M EN T F IN A N C E1987 1997 2006 2007

D o mestic prices(% change)Consumer prices .. 2.5 7.2 7.2Implicit GDP deflator 10.9 3.1 5.2 5.6

Go vernment f inance(% of GDP, includes current grants)Current revenue 8.6 9.2 10.7 10.6Current budget balance 2.9 2.3 2.2 1.5Overall surplus/deficit -3.9 -4.3 -3.3 -3.1

T R A D E1987 1997 2006 2007

(US$ millions)Total exports (fob) 1,074 4,334 10,412 12,053 Raw jute 104 116 148 147 Leather and leather products 135 222 257 266 M anufactures 669 3,637 9,535 11,118Total imports (cif) 2,620 6,447 13,301 15,511 Food 413 184 1,372 1,918 Fuel and energy 230 515 2,004 2,233 Capital goods 856 1,937 1,458 1,929

Export price index (2000=100) 50 86 122 132Import price index (2000=100) 51 84 141 153Terms of trade (2000=100) 97 102 87 86

0

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4

6

8

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Inf lat io n (%)

0

5,000

10,000

15,000

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

B A LA N C E o f P A YM EN T S1987 1997 2006 2007

(US$ millions)Exports o f goods and services 1,301 4,991 11,752 13,537Imports o f goods and services 2,876 7,656 15,664 18,256Resource balance -1,576 -2,665 -3,912 -4,719

Net income -122 -107 -702 -883Net current transfers 731 1,907 5,438 6,554

Current account balance -966 -865 824 952

Financing items (net) 1,169 696 -486 360Changes in net reserves -203 169 -338 -1,312

M emo :Reserves including gold (US$ millions) .. 1,671 2,296 3,638Conversion rate (DEC, local/US$) 30.6 42.7 67.2 69.1

EXT ER N A L D EB T and R ESOUR C E F LOWS1986 1996 2005 2006

(US$ millions)Total debt outstanding and disbursed 8,062 15,341 18,928 20,521 IBRD 61 46 0 0 IDA 2,450 5,713 8,688 9,297

Total debt service 448 672 805 685 IBRD 5 8 0 0 IDA 28 92 223 242

Composition of net resource flows Official grants 553 596 671 490 Official creditors 843 548 338 553 Private creditors 55 -30 -14 -24 Foreign direct investment (net inflows) 2 14 802 697 Portfo lio equity (net inflows) 0 -117 20 31

World Bank program Commitments .. 239 600 462 Disbursements 337 279 547 398 Principal repayments 8 54 153 172 Net flows 330 225 394 226 Interest payments 25 45 70 70 Net transfers 305 180 325 155

Development Economics 12/5/07

-3

-2

-1

0

1

2

01 02 03 04 05 06 07

C urrent acco unt balance to GD P (%)

G: 1,178

D: 5,688

C: 476

B: 9,297

F: 502

E: 3,380

A - IBRDB - IDA C - IM F

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

C o mpo sit io n o f 2006 debt (US$ mill.)

114

Annex 17: Map IBRD No. 37833

BANGLADESH: Empowerment and Livelihood Improvement “Nuton Jibon” Project

R A J S H A H IR A J S H A H I

D H A K AD H A K A

S Y L H E TS Y L H E T

K H U L N AK H U L N A

B A R I S A LB A R I S A L

C H I T T A G O N GC H I T T A G O N G

PANCHAGARPANCHAGAR

THAKURGAONTHAKURGAONNILPHAMARINILPHAMARI

LALMONIRHAT

LALMONIRHAT

DINAJPURDINAJPUR

RANGPURRANGPURKURIGRAMKURIGRAM

GAIBANDHAGAIBANDHA

JOYPURHATJOYPURHAT

NAOGAONNAOGAON

NOWABGANJNOWABGANJ

RAJSHAHIRAJSHAHI

NATORENATORE

BOGRABOGRA

JAMALPURJAMALPUR

SHERPURSHERPUR

NETROKONANETROKONA

MYMENSINGHMYMENSINGH

TANGAILTANGAILSIRAJGANJSIRAJGANJ

PABNAPABNA

KUSHTIAKUSHTIA

MEHERPURMEHERPUR

CHUADANGACHUADANGA

JHENAIDAHJHENAIDAH MAGURAMAGURA

RAJBARIRAJBARI

FARIDPURFARIDPUR

MANIKGANJMANIKGANJ

DHAKADHAKA

GAZIPURGAZIPUR

KISHORGANJKISHORGANJHABIGANJHABIGANJ

SUNAMGANJSUNAMGANJ

SYLHETSYLHET

MOULVI BAZARMOULVI BAZAR

BRAHMANBRAHMANBARIABARIA

NARSINGDINARSINGDI

NARAYNGANJNARAYNGANJ

MUNSHIGANJMUNSHIGANJ

SARIATPURSARIATPUR CHANDPURCHANDPUR

COMILLACOMILLA

MADARIPURMADARIPURGOPALGANJGOPALGANJ

NARAILNARAILJESSOREJESSORE

SATKHIRASATKHIRA

KHULNAKHULNA

BAGERHATBAGERHAT

PIROZPURPIROZPUR

BARISALBARISAL

JHALUKATHIJHALUKATHI

PATUAKALIPATUAKALIBHOLABHOLA

BARGUNABARGUNA

LUXMIPURLUXMIPUR

NOAKHALINOAKHALI FENIFENI

KHA

GRA

CH

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KHA

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RI

RANGAMATIRANGAMATI

CHITTAGONGCHITTAGONG

BANDARBANBANDARBAN

COX’SCOX’SBAZARBAZAR

RangpurRangpur

GaibandhaGaibandha

DinajpurDinajpur

BograBogra

SirajganjSirajganjNatoreNatore

JoypurhatJoypurhat

NaogaonNaogaon

NowabganjNowabganj

JamalpurJamalpurSherpurSherpur

NetrokonaNetrokona

SunamganjSunamganj

PabnaPabna

KushtiaKushtia

RajbariRajbariMeherpurMeherpur

ChuadangaChuadanga

JhenaidahJhenaidahMaguraMagura

NarailNarail

SatkhiraSatkhira

BagerhatBagerhat

PirozpurPirozpur

JhalukathiJhalukathi

GopalganjGopalganj

MadaripurMadaripurSariatpurSariatpur

FaridpurFaridpur

JessoreJessore

NoakhaliNoakhali

KhagrachhariKhagrachhari

PatuakaliPatuakali

BholaBhola

BargunaBarguna

ComillaComilla

Moulvi BazarMoulvi Bazar

MymensinghMymensingh

TangailTangail

ManikanjManikanj

RangamatiRangamati

BandarbanBandarban

Cox's BazarCox's Bazar

ThakurgaonThakurgaon

NilphamariNilphamari LalmonirhatLalmonirhat

KurigramKurigram

PanchagarPanchagar

FeniFeni

GazipurGazipurNarsingdiNarsingdi

NaraynganjNaraynganj

MunshiganjMunshiganj

ChandpurChandpur

LuxmipurLuxmipur

BrahmanbariaBrahmanbaria

HabiganjHabiganj

KishorganjKishorganj

RajshahiRajshahi

KhulnaKhulna

SylhetSylhet

BarisalBarisal

ChittagongChittagong

DHAKADHAKA

JJaammuunnaa

GGaannggeess

GGaannggeess

MMeegg

hhnnaa

Kaptai KaptaiLakeLake

GG aa nn gg ee ss DD ee ll tt aa

SS uu nn dd aa rr bb aa nn ss

R A J S H A H I

D H A K A

S Y L H E T

K H U L N A

B A R I S A L

C H I T T A G O N G

PANCHAGAR

THAKURGAONNILPHAMARI

LALMONIRHAT

DINAJPUR

RANGPURKURIGRAM

GAIBANDHA

JOYPURHAT

NAOGAON

NOWABGANJ

RAJSHAHI

NATORE

BOGRA

JAMALPUR

SHERPUR

NETROKONA

MYMENSINGH

TANGAILSIRAJGANJ

PABNA

KUSHTIA

MEHERPUR

CHUADANGA

JHENAIDAH MAGURA

RAJBARI

FARIDPUR

MANIKGANJ

DHAKA

GAZIPUR

KISHORGANJHABIGANJ

SUNAMGANJ

SYLHET

MOULVI BAZAR

BRAHMANBARIA

NARSINGDI

NARAYNGANJ

MUNSHIGANJ

SARIATPUR CHANDPUR

COMILLA

MADARIPURGOPALGANJ

NARAILJESSORE

SATKHIRA

KHULNA

BAGERHAT

PIROZPUR

BARISAL

JHALUKATHI

PATUAKALIBHOLA

BARGUNA

LUXMIPUR

NOAKHALI FENI

KHA

GRA

CH

HA

RI

RANGAMATI

CHITTAGONG

BANDARBAN

COX’SBAZAR

Rangpur

Gaibandha

Dinajpur

Bogra

SirajganjNatore

Joypurhat

Naogaon

Nowabganj

JamalpurSherpur

Netrokona

Sunamganj

Pabna

Kushtia

RajbariMeherpur

Chuadanga

JhenaidahMagura

Narail

Satkhira

Bagerhat

Pirozpur

Jhalukathi

Gopalganj

MadaripurSariatpur

Faridpur

Jessore

Noakhali

Khagrachhari

Patuakali

Bhola

Barguna

Comilla

Moulvi Bazar

Mymensingh

Tangail

Manikanj

Rangamati

Bandarban

Cox's Bazar

Thakurgaon

Nilphamari Lalmonirhat

Kurigram

Panchagar

Feni

GazipurNarsingdi

Naraynganj

Munshiganj

Chandpur

Luxmipur

Brahmanbaria

Habiganj

Kishorganj

Rajshahi

Khulna

Sylhet

Barisal

Chittagong

DHAKA

I N D I A

I N D I A

I N D I A

MYANMAR

BHUTAN

Jamuna

Ganges

Ganges

Meg

hna

KaptaiLake

B a y o f B e n g a l

M o u t h s o f t h e G a n g e s G a n g e s D e l t a

S u n d a r b a n s Mt. Mowdok(957 m)

26ºN

25ºN

24ºN

23ºN

22ºN

21ºN

25ºN

24ºN

23ºN

22ºN

21ºN

88ºE 89ºE 90ºE 91ºE

89ºE 90ºE 91ºE 92ºE

92ºE

BANGLADESH

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

0 10 20 30 40

0 10 20 30 40 50 Miles

50 Kilometers

IBRD 37833

MAY 2010

BANGLADESH

EMPOWERMENT ANDLIVELIHOOD IMPROVEMENT(NUTON JIBON) PROJECT

PROJECT PHASE 1 DISTRICTS (ORIGINAL SIPP AND ADDITIONAL FINANCING)PROJECT PHASE 2 DISTRICTS (SIPP II EXPANSION)

DISTRICT CAPITALSDIVISION CAPITALSNATIONAL CAPITALDISTRICT BOUNDARIESDIVISION BOUNDARIESINTERNATIONAL BOUNDARIES